Cigarette-to-FMCG major ITC Ltd on Friday reported a 11.9 percent increase in its net profit at Rs 2,954.67 crore in the quarter which ended on September 30 of the current fiscal as compared to Rs 2,639.84 crore in the year-ago period.
Its revenue operations, during the quarter under review, was at Rs 11,272.51 crore, up by about 15.5 percent from Rs 9,763.92 crore in the corresponding period last year.
Gross revenue from sale of products and services for the quarter stood at Rs 11,094.89 crore, representing a growth of 14.7 percent driven mainly by FMCG others (other than cigarette), agribusiness and hotels.
Its revenue from the cigarette business, during the September quarter, stood at Rs 5,026.06 crore, up by 10.36 percent from Rs 4,554.21 crore in the same period last year.
The city-headquartered company said a punitive and discriminatory taxation and regulatory regime continues to exert severe pressure on the domestic legal cigarette industry even as illegal cigarette trade grows unabated.
“The legal cigarette industry, already reeling under the cumulative impact of steep increase in taxation over the previous five years and intense regulatory pressures, was further impacted by a sharp increase of 13 percent in tax incidence on cigarettes (19 percent increase for the king-size filter segment) under the GST regime,” the company said in a stamement.
Coupled with the increase in excise duty rates announced in the Union Budget 2017, this resulted in an incremental tax burden of over 20 percent on the cigarette business post implementation of GST, according to cigarette maker.
Despite an extremely challenging operating environment, the cigarette business consolidated its leadership position in the industry and continued to improve its standing in key competitive markets across the country, the company said.
“Segment results for the quarter include the net impact of stocks damaged due to floods in Kerala and costs relating to changeover to the new graphic health warnings on cigarette packs with effect from September 1, 2018,” a company statement said.
Revenue from FMCG-Others, which include branded packaged foods businesses, apparel, education and stationery products, personal care products, safety matches and agarbattis, registered robust growth of 12.7 percent to Rs 3,160.35 crore during the quarter as against Rs 2,804.11 crore in the year-ago period.
The company reported that the segment earnings before interest, tax, depreciation and amortization (ebitda) at Rs 158.84 crore posted a growth of 77 percent on the back of enhanced scale, product mix enrichment and cost management initiatives, despite sustained investment in brand building, gestation costs of new categories and input cost pressures.
Hotels business revenue and the segment Ebitda posted a growth of 20.8 percent and 35 percent respectively. This was driven by higher room rates, increase in occupancy, strong food and beverage sales and high operating leverage notwithstanding gestation costs of new properties.
The FMCG major said its agri-business continues to step up initiatives in the area of value added agriculture to create new vectors of growth by leveraging its agri-commodity sourcing and processing expertise and the strong distribution network of the company.
During the quarter, ITC forayed into the frozen snacks category in the retail segment and the the product range is currently available in Bengaluru, Chandigarh and Ludhiana.
“Plans are afoot to rapidly scale up presence in the ensuing months,” it said.
In paperboards, paper and packaging segment, revenue growth of 8.8 percent was driven by strong demand and capacity augmentation in value added paperboard segments.
Capacity utilisation of the recently commissioned DA¿cor machine at the Tribeni unit was also scaled up during the quarter and an extensive rebuild of a paperboard machine at the Bhadrachalam unit was completed during the quarter, adding 1.5 lakh TPA value-added paperboard capacity.