Companies

ITC profit up 17% on strong demand

Abhishek Law Kolkata | Updated on January 19, 2018

Y.C. Deveshwar, Chairman, ITC (file pic)

Improved consumer demand and an exceptional gain saw diversified conglomerate ITC Ltd report a 17 per cent jump in net profit to ₹3,090 crore for the October-December quarter.

Net profit in the corresponding quarter last year stood at ₹2,647 crore.

Exceptional gain of ₹413 crore (₹270 crore post tax) from write back of Tamil Nadu entry tax based on a favourable order boosted the bottom line during the current quarter.

The company also reported an over 6 per cent increase in sales in the December quarter. The comparable gross sales value (net of rebates/discounts) stood at ₹16,746 crore for Q3 FY18 against ₹15,747 crore in Q3 FY17.

Gross revenues – which stood at ₹9,853 crore for the period under review – are not comparable with the year-ago period following a change in the accounting structure. Revenues are now net of GST, while earlier, it was gross of excise.

Improved demand

The quarter also saw a gradual revival of demand for the Indian economy that witnessed major structural reforms since late 2016. The November 2016 demonetisation and 2017 roll out of GST had upended consumption and stocking patterns.

“The FMCG industry witnessed progressive recovery during the quarter from the transitional impact of GST rollout,” ITC said in a statement.

In fact, the company’s other FMCG segment – that includes packaged food, lifestyle retailing, agarbattis and matches – saw an over 16 per cent growth in gross sales value.

In terms of revenue, the segment reported a turnover of ₹2,872 crore and profit before tax of ₹47 crore.

“Performance of lifestyle retailing business, however, remained impacted due to the ongoing restructuring of retail and trade footprint,” it added.

Cigarettes under pressure

For Q3 FY17, cigarettes reported a revenue of ₹4,629 crore and a profit before tax of ₹3,269 crore. Cigarettes remained the single largest contributor towards gross revenues (47 per cent) and accounted for nearly 71 per cent of the company’s profit before tax.

According to ITC, the cigarette industry volumes remained under pressure due to sharp increase in tax incidence and intense regulatory pressures.

The combined impact of increase in excise duty announced by the Union Budget 2017 and the revision in GST compensation cess as aforestated resulted in an incremental tax burden of over 20 per cent on ITC, the country’s largest cigarette-maker.

Other businesses

During the quarter, the hotel business reported a near ₹55 crore profit before tax against revenues of ₹404 crore. An increase in average room rates and food and beverage sales, saw revenues grow at 10 per cent on a comparable basis, the company said.

Despite, the agri-business reporting a ₹233-crore profit before tax in Q3 FY18, the segment performance was impacted by shortage of leaf tobacco in Andhra Pradesh.

During the quarter, ITC forayed into the fruits and vegetables segment with the launch of potato variants in select markets under the ‘Farmland’ brand and dehydrated onion flakes under ‘ITC Master Chef Smart Onions’ brand for the institutional segment.

The ITC stock closed at ₹273.85; up by 0.37 per cent, on the BSE, on Friday.





Published on January 19, 2018

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