FMCG major ITC Ltd on Friday reported a 16.8 per cent increase in its net profit to Rs 3,090.20 crore in the quarter ended December 31, 2017 as compared to Rs 2,646.73 crore in the year-ago period.
On a comparable basis, gross sales during the quarter stood at Rs 16,746.20 crore representing a growth of 6.3 per cent over Rs 15,746.93 crore in the corresponding period of 2016-17.
EBITDA (earnings before interest, tax, depreciation and amortisation) at Rs 3,904.50 crore registered a growth of 10.1 per cent during the quarter.
The company said it delivered steady performance during the quarter despite a challenging operating environment marked by severe pressure on legal cigarette industry volumes and limited trading opportunities in agri-business.
While the FMCG industry witnessed progressive recovery during the quarter from the transitional impact of goods and services tax (GST) rollout, overall demand conditions remained subdued.
Total comprehensive income (TCI), for the quarter, was at Rs 3,177.06 crore registering a growth of 27.8 per cent.
The cigarette maker said that the legal cigarette industry volumes remained under severe pressure due to sharp increase in tax incidence and intense regulatory pressures.
The sharp upward revision in GST Compensation Cess announced by the GST Council at its meeting on July 17, 2017 exacerbated the situation.
“While the intention of the government was to correct an apparent anomaly in cigarette taxation under the new tax regime announced earlier on account of the removal of the cascading effect of Excise Duty which existed in the pre GST regime, the upward revision resulted in significantly higher tax incidence on cigarettes compared to the pre-GST scenario which is not in keeping with the fundamental principle of revenue neutrality,” it said in a statement.
Further, the company said that in fact the combined impact of increase in excise duty announced in the Union Budget 2017 and the revision in GST Compensation Cess resulted in an incremental tax burden of over 20 per cent on the company.
In terms of others fast moving consumer goods (FMCG), comparable growth, based on gross sales Value (which includes adjustments only for taxes that are excluded from reported gross revenue), stood at 16.2 per cent during the quarter.
Such growth was driven by the branded packaged foods, personal care and education and stationery products businesses.
Performance of the lifestyle retailing business, however, remained impacted due to the ongoing restructuring of retail and trade footprint, the city-headquartered firm said.
The firm also said performance in the agri business during the quarter was impacted by shortage of leaf tobacco in Andhra Pradesh due to successive reductions in authorised crop size exacerbated by drought in 2016.
During the quarter, the agri business forayed into the fruits and vegetables segment in select markets under the ‘Farmland’ brand. It also launched dehydrated onion flakes under the ‘ITC Master Chef Smart Onions’ brand for the institutional segment.
“The product, a first-of-its-kind in India, offers convenience and consistent quality along with lower oil absorption. Plans are on the anvil to roll out the product in consumer packs in the ensuing months,” it added.