ITC net rises 4 per cent to Rs 3,209.7 crore

Diversified conglomerate ITC on Wednesday reported a 3.85 % year-on-year rise in its net profit to Rs 3,209.7 crore during the quarter to December 2018, although its comprehensive income witnessed a 13.8% y-o- y jump to Rs 3,637.01 crore taking into account the other comprehensive income it had during the quarter. The comprehensive income registered the highest growth during the last 17 quarters driven by enhanced scale, product mix, sustained investment brand building and cost management, according to a company statement. This was much in line with the market expectations.

The 29% growth in hotel segment, 24% growth in paper, paper boards and packaging segment and trading opportunities in wheat coffee, oil seeds and aqua products were the main growth drivers, though inputs costs continued to remain under pressure as cigarrettes continued to face discriminatory and regulatory taxation regime. Even trade in illegal cigarettes continue to grow unabated, a company statement said.

Robust growth in segment EBITDA, which was up by 42% to `173 crore was mainly driven by larger scale of operation, product mix and cost management, although gestation cost of new categories and start -up costs of new facilities had to be taken into account.

Gross revenue at `11,340.15 crore during the quarter under review was up by 15% y-o-y, while revenue from operations jumped to `11,431 crore during the quarter under review from `9,952.19 crore during the corresponding period last fiscal. Total expenses during the quarter was also up to `7,446.46 crore from `6,377.90 crore. Diluted earnings per share during the quarter was `2.60 up from `2.52 during the year ago period.

While FMCG and others posted a steady performance during the quarter with revenue growing by 11.5%, revenue was partially impacted by the ongoing restructuring of the lifestyle retailing business and structural changes pertaining to the timing of trade promotions in the matches and aggarbatti business.

The branded packaged food business sustained its high growth trajectory with most major categories recording improvement in market standing. But the 13% increase in tax incidence on cigarettes (19% increase for the king-size filter segment) under the GST regime coupled with the increase in excise duty rates announced in the Union Budget 2017, resulted in an incremental tax burden of over 20% on the Cigarette business post implementation of GST.

The tax incidence on cigarettes has nearly trebled over the last six years, on a comparable basis. The high rates of tax on cigarettes also provided attractive tax arbitrage opportunities to unscrupulous players, fanning the growth of illegal cigarette trade in the country. While the legitimate cigarette industry has declined steadily since 2010-11 at a compound annual rate of 4.8% per annum, illegal cigarette volumes in contrast have grown at about 5% per annum during the same period, an ITC statement said.

Operations at the recently commissioned hotels – ITC Kohenur and ITC Grand Goa, Resort & Spa were scaled up.