Tobacco and hotels major ITC Ltd has clocked a massive 100 per cent growth in its operating cash flow generations to Rs 969 crore in 1996-97, up from Rs 488 crore the previous year. The ITC board, which met over the weekend, decided to recommend a dividend of Rs 4 per share, up substantially as well, from the previous years Rs 2.50 per share.
ITC has said the current fiscal would also see the strong performance of the companys businesses continue, particularly in the light of the investments made by ITC in technology, products and people. The first two months of 1997-98 have already started showing the good signs, the company said.
According to an ITC spokesperson, the marked increase in cash flow generations has been the result of better management of resources by the company. ITCs profit after tax also moved up substantially to Rs 347 crore in the 1996-97 from Rs 261 crore the previous year.
The directors have also recommended creation of a contingency reserve of Rs 190 crore out of unappropriated profits for exigency payments.
Unveiling the audited results for the year 1996-97, ITC said in a statement that the results continued to reflect sustained growth: gross income at Rs 5,960 crore represents a 15 per cent increase over the previous year, despite the restructuring and consolidation of export operations. Pre-tax profits stood at Rs 587 crore, and was 30 per cent higher than the previous fiscal. Foreign exchange earnings at Rs 653 crore were marginally higher than last year, as was predicted by most corporate analysts.
According to its corporate strategy, ITC would focus on making the company the market leader in the core businesses that it has identified: tobacco and cigarettes, hotels, paper, printing and packaging. The company wants to move out of financial services, which it feels is not part of its core competencies. The company has already drawn up a Rs 1900 crore investment plan for the core businesses for the next five years.
In cigarettes, ITC has consolidated its position as the market leader in all segments, with five of the top six trademarks belonging to the company. The Wills Gold Flake family is the largest single trade market in the consumer goods sector in the country.
The launch of Classic Ultra Milds and Wills Natural Lights has further enriched ITCs brand portfolio.
The companys leaf tobacco exports registered a 30 per cent increase in volume and 65 per cent increase in value. ITC is confident of maintaining the momentum in 1997-98 too.
In the hotels business, the Welcomgroup chain turned in another good year. The flagship hotel, Maurya Sheraton Hotel and Towers in New Delhi, also consolidated its position as the capitals preferred hotel for upmarket business travellers, celebrities and heads of state. The capacity of the hotel is being augmented with a second tower, currently under construction. Subsidiary ITC Hotels recommended a 30 per cent dividend and recorded a 17 per cent increase in post-tax profits. ITC has decided to invest in hotel properties in a major way both through greenfield projects and direct acquisitions and through ITC Hotels.
In packaging and printing, the company made marked improvement, with focus on cigarette and liquor packaging, where it has leadership position. Fresh investments have been initiated in this segment to support the export programme, particularly since the division has earned the status of top exporter in its category from Capexil. Substantial investments have been pumped in for modernising and expanding the Tribeni Mill.
The company plans to substantially contribute to foreign exchange earnings through export and hotels. ITC will, therefore, enlarge the exports of leaf tobacco, packaging, paper and cigarettes by progressively making these businesses more internationally competitive.
