The Hindu Business Line : Non-cigarette biz lifts ITC net up 15.8%

Kolkata, Jan. 18 ITC Ltd, riding on a 50 per cent growth in revenues from new FMCG businesses such as foods, lifestyle retailing and stationery, has recorded a 15.8 per cent increase in profit after tax at Rs 831 crore (Rs 717.40 crore) for the third quarter ended December 31, 2007. Provision for taxation is up at Rs 394.83 crore (Rs 343.96 crore).

Net turnover for the quarter under review, at Rs 3,458 crore, has shown a 11 per cent increase over the Rs 3,115 crore for the corresponding quarter of the previous fiscal. EPS for the quarter is placed at Rs 2.21. Gross income for the quarter has climbed to Rs 5,489.29 crore (Rs 4,993.61 crore). Other income has shown a nearly 100 per cent increase at Rs 137.40 crore (Rs 69.79 crore). This is attributed to judicious treasury management operations.

The company has stated that despite a 9 per cent drop in agri-business revenues, primarily owing to restrictions on export of non-basmati rice, the segment has posted a robust growth in profits on record exports (37 per cent increase during the quarter) of leaf tobacco. It is learnt that pricing of export orders have been successfully re-negotiated to offset the impact of a stronger rupee.

Rural Retail

On the rural retail front, some 21 ‘Choupal Sagars’ are operational in Madhya Pradesh, Maharashtra and Uttar Pradesh. The Sagars, in synergy with the e-choupal network, are expected to serve as the core infrastructure to support ITC’s rural distribution strategy. The company is already pursuing a pilot project for retailing fresh fruits and vegetables.

According to a company statement issued here today, after the third quarter results were taken on record by the board at its meeting in Delhi, the increase in revenues from the Hotels and Paperboard & Packaging businesses have also mitigated the “muted” growth in the cigarette business as a result of increases in taxation rates.

Cigarette taxation

Citing value-added tax, CST as applicable and trade tax in Uttar Pradesh (since replaced by VAT effective January 1, 2008), it is stated that the company’s Cigarettes and Smoking Mixtures have been subjected to additional taxation amounting to Rs 436 crore and Rs 1,228 crore for the quarter and nine months ended December 31, 2007 respectively (same for the corresponding previous quarter and it was nil for the nine months ended December 31, 2006 ).

According to the company, the extra burden of indirect taxes during the quarter aggregated to Rs 513 crore, consequent to the increase in such taxes of 29 per cent per pack over the same quarter of previous fiscal. Tax rates are said to be at nearly 132 per cent of the value of the product (ex-factory price net of taxes).

Related Stories:
Scale-up of business segments drives ITC Q2 net 13% higher
ITC's non-cigarette business drives Q3 profits

More Stories on : Financial Performance | Diversified | I T C Ltd

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