Financial Daily from THE HINDU group of publications
Thursday, May 23, 2002
Corporate Results - Cigarettes
ITC net up 18 pc at Rs 1,190 cr -- To pay dividend of 135 pc
KOLKATA, May 22
ITC Ltd has recorded a post-tax profit of Rs 1,190 crore, an increase of 18 per cent over last financial year's Rs 1,006.26 crore, for the 12 months ended March 31. The gross turnover has increased by 13 per cent to Rs 9,840 crore (Rs 8,827 crore). Net profit for the quarter ended March 31 is put at Rs 296.21 crore (Rs 277.07 crore). Pre-tax profits at Rs 1,780 crore for the whole year has registered a growth of 11 per cent. Gross profit is placed at Rs 1,978.71 crore (Rs 1,740.24 crore).
The company's board, at its meeting here on Wednesday to take on record the annual results, recommended a dividend of Rs 13.50 per share (135 per cent) subject to deduction of income tax. This, if declared, will be paid on or after July 29.
Net sales for the period under review are placed at Rs 5,059.23 crore (Rs 4,208.12 crore). Total expenditure is up at Rs 3,155.96 crore (Rs 2,516.44 crore). Net interest has dropped to Rs 66.91 crore (Rs 95.91 crore), and the provision for taxation is at Rs 590.54 crore (Rs 594.04 crore). Depreciation is at Rs 198.45 crore (Rs 139.94 crore).
The company has clarified that the proposed dividend includes dividend payable on the new ordinary shares of the company, issued and allotted to shareholders of erstwhile ITC Bhadrachalam Paperboards Ltd, which rank pari passu in all respects with the existing ordinary shares, in accordance with the Scheme of Amalgamation of ITC Bhadrachalam with ITC.
The company's official note points out that net of adjustment for the impact of the amalgamation and other one-off items, like income-tax refunds and reversal of provisions upon fulfilment of export obligations, the underlying growth in post-tax profits was a healthy 22 per cent. The amalgamation of ITC BPL, with ITC, becoming effective from March 13, 2002 and operative from April 1, 2001, has contributed an incremental Rs 511 crore to the company's gross turnover, after excluding inter-divisional sales.
Cash profits from operations (PBDIT) increased by Rs 101 crore, and the PBIT grew by Rs 59 crore as a result of the amalgamation. According to the note, the aggregate increase in capital employed consequent to the amalgamation amounted to around Rs 281 crore only, thus enhancing the EPS. Significant operational synergies are also now expected.
The performance for 2001-02 is seen as even more satisfying ``as it has been achieved despite severe cost and revenue pressures stemming from a steep increase in cigarette taxes, the tobacco crop holiday in Andhra Pradesh, gestation of new hotel investments and the incubation costs of new businesses''.
The focus on the efficiency of capital deployment, it is pointed out, has contained the increase in net assets employed to a mere 7 per cent, including the impact of the amalgamation and strategic capital outlays towards attaining international competitiveness.
According to the company, the net cash flows from operating activities at Rs 1,770 crore represented an increase of 79 per cent. This has also enabled the company to retire debt significantly, leading to further reduction in interest costs.
The steep hike of 15 per cent in excise duties compounded by the increases in state level taxes and the growing menace of contraband, it is pointed out, have contributed to the domestic cigarette industry volumes declining by about 11 per cent during the year.
ITC has managed to contain its domestic volume decline to 8 per cent through competitiveness and market standing.
During 2001-02, the lifestyle retailing business scaled up operations to 42 exclusive Wills Lifestyle stores across 35 cities in the country. The greeting cards business has continued to expand its reach, says the official release. During the year, ITC made an entry into the branded packaged foods industry by launching ready-to-eat gourmet foods under the brand ``Kitchens of India''. The market response is said to be encouraging. ITC has also acquired the ``mint-o'' trademark in the confectionery segment, and the pre-launch product development is now under way.
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