Our Bureau
ITC Ltd reported a 16 per cent growth in profit after tax for the first quarter ended June 2004 to Rs 461.9 crore compared with Rs 397 crore in the corresponding previous quarter.
This was thanks to a 24 per cent rise in net sales to Rs 1,775 crore from Rs 1,428 crore in the first quarter of the last fiscal. Gross income rose to Rs 3,294 crore from Rs 2,812 crore.
Earnings per share rose to Rs 18.65 crore from Rs 16.05. EPS for 2003-04 fiscal was Rs 64.34. Tobacco continued to be the mainstay of operations, notching up sales of Rs 2,538 crore (against Rs 2,291 crore in the first quarter of the last fiscal) and profit before tax of Rs 585 crore.
Sales of other consumer goods such as garments, greetings cards, foods, matches and agarbattis, doubled to Rs 105 crore (Rs 51 crore) and segment losses were checked at Rs 39 crore (against Rs 35 crore last year).
Hotel revenues rose to Rs 62 crore (Rs 50 crore) as did PBT at Rs 7 crore from Rs 86 lakh. Agri-business revenues were at Rs 459 crore (Rs 331 crore) as the e-choupal initiative of the company started paying off, with PBT at Rs 25 crore in Q1 of this fiscal against Rs 23 crore in the last one.
The paper, boards and packaging business grew strongly, with revenues at Rs 377 crore (Rs 295 crore) while PBT also jumped to Rs 81 crore (Rs 52 crore).
Tobacco can yield $10bn, says Deveshwar
Finance minister P Chidambaram would love this- one of the best ways to enhance revenues without pain would be to rationalise taxation on the tobacco sector, according Deveshwar.
Speaking on ITC's core business of tobacco, he said lower taxes on cigarettes and widening of the tax net to cover chewing and non-cigarette smoking tobacco products could yield up to $10 billion in revenues for the government.
"China as the largest tobacco economy generates more than $13 billion in revenues, so India as the second largest tobacco economy could yield $10 billion or so", he said.
Deveshwar said the Indian tobacco sector was stuck in a rut with low end products of poor quality yielding very low revenues. The tobacco basket could shrink, but the sector itself should be upgraded to produce superior products that generated revenues for the government's social projects, he added.
The upgradation of the tobacco economy could be achieved through enlightened taxation that was non-discriminatory in nature. The millions of growers and other stakeholders in the tobacco economy stuck to the low end of the market because taxation structure favoured this structure, he indicated.
Only 14 per cent of the market was represented by cigarettes which yielded almost 80 per cent of revenues.
In a parallel development, ITC would be adding more muscle to its e-choupal network by integrating it with its watershed management initiative to create a rural hub that would benefit both the trader as well as the community.
"The division has been empowered today to take up watershed management projects at e-choupal locations", ITC chairman Y C Deveshwar said a media meeting on Friday evening.
This would be done in parallel with an exercise to reorganise the e-choupal network into a hub-and-spoke model in rural India.
"Four to five villages will be served by one choupal under the model, and 40 choupals would be linked to a hub, and from this location the rural citizen can pick up his goods as well as value added services like tractor rentals, leasing of consumables and other facilities", said Deveshwar.
"The situation was grim till some weeks ago when rains were playing truant, but since rains have revived in many areas in the last few weeks, things have started looking up," said S Sivakumar, chief executive of the ITC agri-business division which manages the e-choupal network. Sales of drought related goods like pumpsets and storage tanks had picked up in the lean season.
The integration of watershed projects with the e-choupal network was part of the new 'triple bottomline approach" adopted by ITC this year which would seek to deliver greater economic, environmental and social benefits in the rural areas in which the company was present.