ITC has achi-eved a turnaround of three times on the Rs 2,084 crore it employed in various businesses during 1996-97. This means the Rs 2,084 crore employed has got the company a hefty Rs 5,960 crore by way of turnover.
The performance is also important when viewed against the Rs 325 crore increase in ITC's gross fixed assets during the year, and is better than the performance of the previous two years in this respect. ITC also raised Rs 308 crore of long term resources during 1996-97 to meet its funding requirements.
The company has a very comfortable debt-equity position of 0.53:1, which has been coming down over the years. With ITC set to make investments in hotels and other projects with long gestation periods, it will still have no cause for concern even if the ratio increases to between 0.7:1 and 0.8:1, company sources said yesterday. The debt-equity ratio as on March 1996 stood at 0.68:1 while in March 1995 it was at 0.92:1.
The three-times turnaround of funds employed is higher when compared to previous years, when Rs 1,885 crore was invested and generated Rs 5,187 crore in 1995-96, and in the fiscal prior to that, when Rs 1,640 crore was employed and generated a turnover of Rs 4708 crore. The increase, the sources said, has come despite the addition in assets. ITC invested Rs 112 crore in acquiring ITC Agro-Tech's Mantralayam plant and another Rs 150 crore or so in investments in the tobacco business. ITC, whose loans stand at Rs 725 crore, still has a lot of leverage to go in for further borrowings to fund its Rs 1,900-crore expansion plan over the next five years. An external commercial borrowing (ECB) of about $100million is also being contemplated by the company.
The funds situation has been well managed by ITC during 1996-97, despite the heavy requirements. While the Central Excise and Gold Appellate Tribunal (Cegat) order required the company to deposit Rs 350 crore, concurrently Rs 240 crore of existing long term debt had to be retired during the year. In addition, ITC increased its investments and capital expenditure programme to support core businesses.
ITC has recommended a dividend of Rs 4 per share, up from Rs 2.50 per share in 1995-96, which would involve an outgo of Rs 107.99 crore, higher than the previous year's Rs 61.35 crore. While Rs 190 crore of unappropriated profits was transferred to a contingency reserve to take care of unforeseen developments, ITC has also transferred Rs 34.26 crore to general reserves out of the profits, after appropriating Rs 38.51 crore to the debenture redemption reserve.
Consequently, Rs 128.46 crore was the retained profits carried forward to 1997-98.
