KOLKATA: ITC LtdBSE 1.30 % reported 21.2% jump innet profit at Rs 1836.42 crore for the second quarter ended September 30, on back of 19.6% growth in net sales at Rs 7146 crore.
The Kolkata-based marketer's non-cigarette FMCGbusiness, comprising of packaged food, personal care, lifestyle retail and stationery products, registered robust revenue growth of 26.4% at Rs 1690 crore and reduced losses by 45% at Rs 30.31 crore over same period last year. boosting the company's over-all profitability.
The company's flagship cigarette business too grew by 14% recording net sales of Rs 3385.15 crore, despite wide-spread anticipation that the sales growth might be impacted due to steep hike in taxes on cigarettes which formed the company to increase cigarette prices.
ITC attributed the strong performance to its branded packaged food, agri-business and cigarettes.
The company said the branded packaged food business, comprising of Sunfeast biscuits, Aashirvaad atta, Sunfeast Yippee! Noodles and the Bingo! range of savoury snacks, recorded significant growth during the quarter across all major categories, which along with smart commodity sourcing and supply chain optimisation helped enhance profitability. ITC said Sunfeast biscuits has emerged as the market leader in the highly competitive premium cream biscuits segment, led by differentiated and innovative products such as Dream Cream, Dark Fantasy Choco Fills.
ITC said it enriched its soap category during the quarter with new variants and consumer response to recent launches such as Vivel Summer Fair, a differentiated summer offering for fresh and fair skin, has been encouraging. In the education and stationery products, Classmate notebooks consolidated its leadership position.
The company said the sharp increases in excise duty and VAT on cigarettes during the year has exacerbated the problem of discriminatory and high taxation on cigarettes within the tobacco industry, thereby creating severe pressure on industry volumes. ITC said the high taxes on cigarettes is creating a shifting consumption to lightly taxed or tax evaded tobacco products such as bidi, khaini, chewing tobacco and gutkha which constitute 85% of overall tobacco usage in India.
However, ITC undertook multiple initiatives during the quarter across key brands such as Classic, Gold Flake, Flake and Navy Cut such as pack modernisation, introduction of new variants and limited edition packs to further enhance market standing. ITC said the launches in the new filter segment (cigarette length not exceeding 65 mm) have met with favourable consumer response and the business is rolling out the products to target markets.
However, the company's hotel business -- which is the second largest chain in India -- failed to boost sales during the quarter which ITC attributed to the weak economic conditions prevailing in key international source markets and India, and a significant addition in room supplies in several cities. The business grew sales marginally by 2% at Rs 216.96 crore, while profitability came down by 64% at Rs 15.3 crore.
During the quarter, ITC launched its premium 600-room Chennai property. Construction activity of the new luxury properties at Kolkata and at the Classic Golf Resort near Gurgaon are also progressing as per plans.
The paperboard, paper and packaging business grew sales by 6% during the quarter, despite a marginal dip in profitability which ITC attributed to the steep hike in input prices, particularly that of wood. This business is also investing in a paperboard machine at Bhadrachalam and new packaging and printing facilities at Haridwar. The agri-business recorded a robust growth of 41% during the quarter aided by wheat exports. This business provides sourcing support to the company's cigarettes and branded packaged foods business.
(Source: economictimes.indiatimes.com)
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