The Hindu : Business : ITC net rises 16 % to Rs. 3,120 crore

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Business

ITC net rises 16 % to Rs. 3,120 crore

Special Correspondent

The company recommends a higher dividend of Rs. 3.50 per share

Y. C. Deveshwar

KOLKATA: Led by a 49 per cent growth in its non-cigarette FMCG business, tobacco major ITC ended 2007-08 with a 15.6 per cent increase in post-tax profit and a 14.7 per cent increase in turnover. While the net turnover stood at Rs. 13,948 crore, post-tax profit touched Rs. 3,120 crore.

The board of directors has recommended a dividend of Rs. 3.50 per share of Re. 1 each against Rs. 3.10 paid last year.

Net turnover had grown by 17 per cent in the fourth quarter to touch Rs. 3,934 crore while the post-tax profit at Rs. 736 crore reflected a 14 per cent growth after adjusting for income tax refunds.

Dividend payout will involve a cash outflow of Rs. 736 crore comprising proposed dividend of Rs. 1,319 crore and income tax on the proposed dividend of Rs. 224 crores, an company release said.

Commenting on its cigarette business, the release said that the year witnessed an unprecedented increase of about 30 per cent in tax incidence on the item, arising out of increased excise duty rates and imposition of VAT. This led to the increased consumption of lightly-taxed tobacco products such as guthka and bidis, even as it spurred a doubling in the volume of illegal cigarettes’ arrival into the country. The company has underscored the need for a balanced fiscal and regulatory agenda on tobacco.

The company’s agri business was impacted by the government’s anti-inflationary measures such as export ban and market intervention at subsidised process. The company was forced to liquidate its inventories at prices lower than the prices paid to farmers on purchases through its e-choupal network. However, the business regained its momentum in the second-half.

On its branded foods business, the company said sales had grown by 57 per cent with the atta and the biscuit segment doing well. Lifestyle retailing business saw a 26 per cent growth in domestic sales and a 17 per cent growth in exports. During the year, the new brand Miss Players was launched targeting young women. The company said that in apparel exports, the turnover growth was healthy despite dollar depreciation against the rupee.

During the year, revenues from hotels business grew by 12 per cent to Rs. 1,100 crore. The segment’s operating profit at Rs. 475 crores would have been higher but for strengthening of the rupee, the statement said.

On paperboards, the company saw a 15 per cent growth in sales of value-added paperboards. The business also built up critical volumes of supply of value-added packaging to the consumer electronic industry from its Chennai facility.

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