Cigarette-to-hotel-to-FMCG major ITC Ltd on Friday posted a 12.13 per cent rise in its standalone net profit to Rs 2,669.47 crore for the quarter ended March 31, 2017, from Rs.2,380.68 crore in the year ago period.
The diversified company’s revenue from operation during the quarter increased to Rs 15,008.82 crore from Rs 14,138.78 crore in the corresponding period of the previous fiscal.
While cigarette revenue grew 4.79 per cent at Rs 8,954.94 crore during the January-March period, other FMCG business revenue posted a 6.45 per cent growth at Rs 2,885.76 crore during this period, the company said in a BSE filing.
The company saw a modest recovery in the performances during the period under review after severe disruption in operations in third quarter last fiscal due to currency crunch post demonetization, it said in a statement, adding that the wholesale channel and rural markets remained sluggish.
Operating profit from the cigarette business increased by close to 8 per cent to Rs 3,258.76 crore during the quarter under review. Other FMCG business reported a de-growth of more than 29 per cent over last year in its operating profit to Rs 55.56 crore during March quarter last fiscal against Rs 78.60 crore in the corresponding period previous fiscal.
The city-headquartered company said despite the extremely challenging operating environment, it retained its leadership position in the cigarette industry and improved its standing in key competitive markets across the country.
It said the FMCG industry witnessed further deceleration in growth rate during the last financial year with demand conditions remaining subdued for the fourth successive year.
“The much anticipated pick-up in consumption expenditure on the back of good monsoons in 2016, low inflation and implementation of the recommendations of the 7th Pay Commission did not play out fully. The incipient recovery in demand witnessed around the middle of the year was adversely impacted by the cash crunch especially during the third quarter,” it added.
The company said the industry had to contend with sharp escalation in the cost of major commodities in the midst of heightened competitive intensity, leading to compression in margins.
In regards to its hotel business, it said: “While second half initially indicated signs of pick-up in the hotels industry, collateral impact on the economy on account of currency crunch limited the recovery. Segment revenue recorded a growth of 4.3 per cent during the year driven by improvement in average room rates and higher Food & Beverage sales.”