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Hotel, FMCG segments push ITC net up 16% in Q3
The Hindu Business Line - 18 Jan 2014

Cigarettes-to-hotel group ITC Ltd has reported a 16.25  per cent rise in net profit at Rs 2,385 crore for the quarter ended December 31  against Rs 2,052 crore reported in the year-ago period.

Higher profit came on the back of a 13 per cent growth in  net sales. While cigarettes continue to be the mainstay, the Kolkata-based  company witnessed substantial growth in other businesses, including hotels,  agri-business, food, personal care, education and stationery, lifestyle apparels,  agarbattis and matches.

During the third quarter, the hotels business reported a  near 11 per cent growth in profit at Rs 62 crore. The growth was largely  attributed to “superior performance by ITC Grand Chola” in Chennai The FMCG  business (other than cigarettes) reported a profit of over Rs 10 crore against  a loss of around Rs 24 crore in the corresponding quarter last fiscal.

“Segment profits … were driven by enhanced scale and  improvement in operating leverage,” a company release said. Driven by higher  realisation, the agri-business reported 19 per cent growth in profit at Rs 205  crore. Paperboards, paper and packaging division recorded a marginal one per  cent rise in profit at Rs 232 crore.

Cigarettes

Cigarettes contributed 48 per cent (or Rs 4,116 crore) to the net sales and 84  per cent (nearly Rs 2,653 crore) to profit (Rs 3,162 crore) before finance cost  and tax.

Contribution of cigarettes to net revenue and profit  remained more or less unchanged across the comparable quarter last fiscal.

According to Rikesh Parikh, Vice-President Institution  Corporate Broking, MotilalOswal Securities Ltd, ITC’s cigarette business  volumes saw a decline of 2 per cent during the third quarter. “We expect the  cigarette volume decline to arrest towards the fourth quarter of FY14 and  recover in FY15, while the non-cigarette business to report EBIT break-even in  FY14.”