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ITC net dips on excise duty hike on cigarettes

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Go green: Mr. Y. C. Deveshwar, Chairman, ITC Ltd, at the 97th annual general meeting of the company in Kolkata on Wednesday.
Go green: Mr. Y. C. Deveshwar, Chairman, ITC Ltd, at the 97th annual general meeting of the company in Kolkata on Wednesday.

Our Bureau

Kolkata, July 30 ITC Ltd reported 4 per cent drop in net profit at Rs 748.67 crore for the quarter ended June 30, 2008, from Rs 782.87 crore during the corresponding quarter of last year.

The drop in net profit was attributed to the increase in excise duties on non-filter cigarettes in the Union Budget 2008, steep rise in commodity prices and store rentals. The launch costs of the additions to the new personal care portfolio and the continuing brand building costs in the foods business combined to exert pressure on profitability during the quarter, said a press statement issued by the company.

Net turnover of the company increased by 18 per cent to Rs 3,900 crore driven by a 29 per cent growth in non-cigarette businesses due to the continued scale up of new FMCG businesses, higher agri business revenues and a healthy performance by the hotels and paperboards and packaging businesses.

The hotels business posted a 17 per cent increase in revenues to touch Rs 239 crore. This was supported by better occupancies and room rates and higher food and beverage sales.

Agri business segment recorded revenue growth of 32 per cent while branded packaged foods sales grew by 23 per cent during the quarter under consideration. “The growth was supported by strong performance in soyabean trading and record leaf tobacco exports, which registered a topline increase of 49 per cent,” the release said.

Sales from stationery business grew by 25 per cent. ITC has renamed the business as ‘Education and Stationery Products’ (earlier known as Greeting, Gifting and Stationery) to reflect its current focus on the Rs 9,000-crore market comprising notebooks, copier and printer paper, writing instruments and scholastic products.

Segment revenues from paperboards, specialty papers and packaging increased by 27 per cent driven by the 30 per cent growth of the premium value added paperboard segment and good performance of the packaging business.

ITC scrip fell by 1.11 per cent to close at Rs 187.80 on the BSE on Wednesday.

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(This article was published in the Business Line print edition dated July 31, 2008)
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