ITC Q3 net up 16% at Rs 831cr

Improved returns from businesses like hotels and paper and firm control in the FMCG business amidst stagnating tobacco revenue enabled ITC post a 15.8% rise in net profit at Rs 831 crore during the third quarter ended December 31, 2007 on the back of 11% growth in turnover at Rs 3,458 crore.

Analysts said non-cigarette FMCG revenues grew nearly 50%,  thanks to growth in business of new FMCG businesses like foods, lifestyle retailing and stationery to Rs 655 crore from Rs 436 crore in Q3FY07,  losses were restricted to Rs 64 crore as against Rs 46 crore in Q3 of the last fiscal.

The tobacco division, reeling under a high taxation regime, reported sales of Rs 1,693 crore and segment profit of Rs 961 crore as against net sales of Rs 1,520 crore and segment profit of Rs 828 crore in Q3FY07.

The company attributed this to significant increases in taxation but said significant investments in product design, innovation and manufacturing technology, and improved marketing and distribution processes had fortified the market standing of its brands.

ITC said that with cigarettes facing the full impact of VAT in most states, central sales tax and trade taxes in UP along with the increase in excise duties on cigarettes in excess of 6%  led to indirect taxes during the quarter growing by Rs 513 crore, thanks to increase in taxes of 29% per pack over the corresponding quarter of the previous fiscal.

This meant taxation was at nearly 132% of the value of the product (ex-factory price net of taxes), and this would drive consumers to switch to cheaper and inferior forms of tobacco, resulting in lower revenue from the sector.

Hotels revenue moved up to Rs 313 crore and segment profit to Rs 137 crore in Q3 as against revenue of Rs 281 crore and profit of Rs 118 crore in Q3FY07.

Paperboards and packaging revenue increased to Rs 603 crore and segment profit to Rs 118 crore as against revenue of Rs 543 crore and profit of Rs 104 crore in Q3FY07.

The agribusiness, despite success of the e-choupal and Choupal Sagar  model, saw revenue drop to Rs 662 crore from Rs 731 crore in Q3FY07, but segment profit increased to Rs 27 crore from Rs 21 crore in the third quarter of the last fiscal.

Earnings per share stood at Rs. 2.21 against Rs 1.91 in Q3FY07.

While packaged foods sales rose 60% led by the success of the Bingo snacks range, biscuits sales moved up 58% thanks to excise relief announced in Budget 2007 for low- and mid-priced biscuits.