Cigarette and hotels major ITC Ltd on Friday beat street estimates with a 26% growth in net profit for the quarter ended March 31, 2012, at Rs1,614.3 crore as against Rs1,281.4 crore posted in the same quarter of the previous fiscal.
Cigarette and hotels major ITC Ltd on Friday beat street estimates with a 26% growth in net profit for the quarter ended March 31, 2012, at Rs1,614.3 crore as against Rs1,281.4 crore posted in the same quarter of the previous fiscal.
Total income from operations during the reporting quarter grew 17% at Rs6,954.64 crore.
The January-March quarter saw lower losses in other (non-cigarette) FMCG business – packaged foods and personal care products. Total FMCG sales grew 19% at Rs4,866.3 crore, in which cigarette business grew 17% at Rs3,249.8 crore and other FMCG business increased 23% at Rs1,616.5 crore.
ITC said the cigarette business that saw excise duty hike in Union Budget 2012 was facing daunting challenges of an unprecedented high incidence of taxation, complex tax structure, rising illegal trade and a discriminatory regulatory climate.
“The steep increase in the tax rates on cigarettes, both at the central and the state level, has led to the undesirable consequence of shifting consumption patterns to lightly taxed or tax-evaded tobacco products besides fuelling the rampant growth of illegal cigarettes,” the company said in a statement.
ITC said its hotels business which saw fourth-quarter net sales decline by 5% at Rs285.8 crore continues to be impacted by the weak economic environment in global source markets and slowdown of the domestic economy. Sales in the agri business grew 31% at Rs1,414.22 crore, while paperboards, paper and packaging business grew 7% at Rs980 crore.
The non-cigarette FMCG business reduced losses by 76% to Rs16 crore from Rs68 crore year on year. “The highlight of the quarter was the growth in the non-cigarette FMCG business which has been showing 20% plus growth for consecutive three quarters. Improved revenue mix and efficient buying efficiencies are helping this growth,” Kaustubh Pawaskar, analyst, Sharekhan Institutional Research, said. Analysts expect volume growth to be impacted in the cigarette business in the next two quarters as the company passed on price hikes to consumers; but offtake is likely to improve once this price hike is absorbed in the market.
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