Click here
to download the Financial Results
Financial Results for the quarter ended 31st December 2007
Post tax profits up 15.8%
ITC's Net Turnover
for the quarter, at Rs. 3458 crores grew by 11% with a 50% growth in
revenues from the newer FMCG businesses such as Foods, Lifestyle
Retailing and Stationery coupled with healthy increases in revenues
from the Hotels and Paperboards and Packaging businesses mitigating
the muted growth in the cigarette business as a result of
significant increases in taxation.
While the Company's
Pre-tax Profit for the quarter at Rs. 1226 crores registered a
growth of 15.5%, Post-tax profit at Rs. 831 crores grew by 15.8%.
Earnings Per Share for the quarter stood at Rs. 2.21.
FMCG - Others
Branded Packaged
Foods
The Company's Branded
Packaged Foods business continued to expand rapidly with sales
growing 60% over last year. The unwavering commitment to benchmarked
high quality standards enabled ITC to rapidly gain market standing
in all its six brands, namely Aashirvaad, Sunfeast, Bingo!, Candyman,
Minto and Kitchens of India.
The 'Bingo!' range of
salty snacks continued to make waves with its extension into target
markets during the quarter. 'Bingo!' has delighted the consumer with
its varied range suited to the Indian palate, developed with the
company's proven strengths in the branded cuisine businesses. Such
synergies, coupled with deep consumer insights and high decibel
communication have resulted in Bingo! emerging as a major brand
within three quarters of its launch. Its recognition as the best
brand launch of the year 2007 by Business Standard and 4Ps
underscores its significant success.
The biscuit category
continued its growth momentum with sales growing by 58%. The excise
relief accorded in the budget to low and mid priced biscuits,
consistent with the government's stated intention to promote the
food processing industry, has given a fillip to the sector. It is
hoped that the government would consider the industry's
representation favourably and extend the relief to the entire
category. During the quarter, the 'Sunfeast' range of biscuits was
further enhanced with the launch of 'Coconut' and 'Nice' variants
and the addition of 'Sunfeast BenneVita Flaxseed' biscuits. These,
together with increased sales of higher value variants like Creams,
Crackers and Cookies have further improved the product mix.
In the Staples
category, 'Aashirvaad Atta' continued to build on its leadership
position amongst the branded players with revenues growing by 39 %
during the period. The recent launch of Aashirvaad MP Chakki Atta
has met with excellent consumer response and is being extended to
target markets. The business is also scaling up the branded spices
volumes under the Aashirvaad brand, further strengthening the
portfolio of healthy cooking aids for the discerning Indian
homemaker.
The Confectionery
category grew by 38% driven mainly by Deposited Mint and Eclairs.
The product range was further expanded with the launch of Natkhat
Go-wawa and 'Mint-O Blue' singles, a compressed tablet confectionery
in a pillow-pack packaging format . As per AC Nielsen data for the
July – Sep 07 quarter, ITC emerged as the market leader in the
throat lozenges segment. A blend of effective distribution,
aggressive trade level activity and consistent marketing efforts
have helped the business to gain a substantial market share in this
segment.
Sales of Ready to Eat
foods under the Kitchens of India and Aashirvaad brands grew by 63%
during the quarter due to higher volumes of Instant mixes and Pasta.
Rasmalai and Vada mixes, the latest entrants to the portfolio, met
with excellent response from the consumers during the festival
season.
Lifestyle Retailing
The Lifestyle
business posted a robust growth of 26% during the quarter. With the
addition of two more stores, the retail footprint now stands at 44
'Wills Lifestyle' stores, complemented by an expanded network of
John Players 'exclusive brand outlets' and increased presence at
reputed 'large format stores' and 'multi-brand outlets'. These
exclusive stores through their world-class ambience, customer
facilitation and clearly differentiated product presentation offer
the fashion conscious consumers a truly 'international shopping
experience'.
'Wills Lifestyle'
received recognition as the RETAILER of The Year - Fashion &
Lifestyle (Apparel) – part of the Reid & Taylor Awards for Retail
Excellence. The nationwide chain of stores offers a complete fashion
wardrobe comprising of 'Wills Classic' formal wear, 'Wills Sport'
relaxed wear, 'Wills Clublife' evening wear and fashion accessories
for both men and women. The Wills Lifestyle range is a classy
expression of cutting-edge trends in tune with the international
fashion mood, styled and accessorized to give discerning customers
the look of the season.
In the popular
segment, the 'John Players' brand posted handsome gains fuelled by
both increased volumes and improved realizations. The business
continues to leverage celebrity association. Hrithik Roshan with his
innate style, vibrancy and playfulness best personifies the John
Players brand. The recent launch of 'Miss Players' with its range
of trendy fashion wear for young women has been a success.
Given the strength of
its brands, ITC is committed to building a dominant presence in the
apparel market through a robust portfolio of offerings.
Personal Care
The portfolio of
products in the premium personal care segment continued to be
expanded with the launch of Fiama Di Wills soaps, which offer the
benefit of gentle and effective care by combining nature and
science. 'SkinSense Soft Green' soap from the Fiama Di Wills stable
is a gentle caring soap. It helps enhance the radiance of skin
proteins to create a beautiful look. The packaging has a
contemporary look. The fragrances have been developed by a leading
international house.
The 'Fiama Di Wills'
range of shampoos and shower gels launched in the last quarter are
now available at all major markets. The company has recently
launched Fiama Di Wills Polishing Drops (conditioner), which is
enriched with Avocado Oil and Burdock extract to make the hair feel
smooth and shiny. These superior products are an outcome of years of
R & D based product development. They reflect ITC's deep consumer
insight.
The 'Superia' range
of Soaps and Shampoos in the mass-market segment have gained wide
acceptance from consumers. It is now being extended to select
markets.
Greeting, Gifting &
Stationery Business
The stationery
business continued to be scaled up with sales during the quarter
increasing by 39% over last year. Leveraging the trade marketing and
distribution strengths of the FMCG business, Classmate and Paperkraft have become the most widely distributed brands in the
country. The Classmate range builds in regional preferences and
caters to the requirement of All India & State Education Boards
thereby addressing needs across all school going children. The
Paperkraft designer range consisting of notepads and multi subject
notebooks in varied binding formats, is gaining wide acceptance
among working executives and college students. The business has
launched in select markets a range of Children's Books comprising
read aloud tales, activity books and puzzles.
In line with its
'Citizen First' philosophy, the Company continues to contribute Re.1
for every notebook sold to its social responsibility initiatives.
Safety Matches &
Incense Sticks
The safety matches
business continued to draw on the synergies arising from the
acquisition of Wimco Ltd by Russel Credit Ltd., (a wholly owned
subsidiary of the Company), to improve the profitability of the
business. The value added brands such as 'Aim Mega' and 'Aim Metro'
launched in the first half of this fiscal are now more widely
available and continue to gain market share. The business has
launched 'Homelites Glo' matches in select markets. This is an
innovative offering with 'Glow in The Dark' features, enabling
consumers to locate the matchbox in the dark.
Increased consumer
preference for the Company's 'Mangaldeep' brand of Agarbattis is
reflected in the revenue growth of 31% this quarter. 'Mangaldeep' is
now a visible national brand in the incense sticks category. Towards
ensuring a consistent quality product, the business has successfully
collaborated with small producers, seven of whom have obtained the
ISO 9001 quality certification.
FMCG-Cigarettes
The Company's
persistent efforts in value creation through internationally
benchmarked quality products have enabled it to sustain its
leadership position in the industry. Significant investments in
product design, innovation and manufacturing technology, and
improved marketing and distribution processes have fortified the
market standing of its brands.
The cause for
anxiety, however, stems from the steep increase in indirect taxes on
cigarettes in India. During the quarter, the business continued to
suffer the full impact of VAT imposed by most States in India,
central sales tax as applicable and trade taxes in the state of U.P
along with the increase in excise duties on cigarettes in excess of
6% - all of which has affected the cigarette industry adversely. The
additional burden of indirect taxes during the quarter aggregated to
Rs 513 crores, consequent to the staggering increase in such taxes
of 29% per pack over the corresponding quarter of the previous year.
Such high rates of taxation at nearly 132% of the value of the
product (ex factory price net of taxes) will only drive consumers to
switch to cheaper and inferior forms of tobacco, resulting in lower
revenue collections by the Exchequer from this sector. The
implementation of VAT in U.P. with effect from 1st January 2008 and
the concurrent withdrawal of trade tax in the state is however a
welcome development.
The requirement to
print pictorial health warnings on tobacco product packs under the
'Cigarettes and Other Tobacco Products (Prohibition of Advertisement
and Regulation of Trade and Commerce, Production, Supply and
Distribution) Act, 2003' (COTPA) and the consequential constriction
in consumption will jeopardise the livelihood of 35 million people
dependent on the tobacco industry. Restrictive measures of this
nature should be preceded by the creation of alternative sources of
income for those so affected.
Hotels
The Hotels business
continued to record healthy growth during the quarter with Segment
revenues growing by 11%, driven by improved REVPAR (revenue per
available room) and superior food & beverage performance.
The renovation of the
premium Towers Block at ITC Hotel The Maurya New Delhi - The Luxury
Collection ("Maurya") was successfully completed during the quarter.
Like wise, product upgradation and renovation at three other hotels
were also completed consistent with the premium positioning of the
chain. The Maurya has joined hands with the Singapore based Tung Lok
Group to open its hugely popular Chinese restaurant, My Humble
House. The roof-top restaurant's minimalist décor with bold design
elements is conceptualized by the renowned Japanese design firm Myu
Planing. The menu consisting of generous international flavours
fuses with the ambience to create an enjoyable experience of
contemporary Chinese cuisine.
Construction activity
in respect of the new super-deluxe luxury hotels at Bangalore and
Chennai is also progressing satisfactorily as per project plans.
Paperboards,
Specialty Paper & Packaging
The business posted
steady growth with segment revenues improving by 11% during the
quarter. This was driven by a 14% improvement in volumes of the
Value Added Portfolio of paper and paperboards and robust
performance of the packaging business.
The new pulp mill
project is nearing completion and is slated for commissioning in the
last quarter of this fiscal. Steady progress is also being made in
the completion of the new paper machine. The pulp mill with a
capacity of 120000 tons of hardwood pulp will provide a distinct
cost advantage, apart from removing the dependency on imported
hardwood pulp, which has seen an unprecedented run-up in prices,
adversely affecting margins across the industry. The paper machine
will augment capacity by about 1,00,000 TPA in 2008/09 and will
drive growth based on strong forward linkages with the stationery
business.
The business recently
commenced marketing a range of paper cups under the brand name
'Spectra' made out of paperboard manufactured with the environment
friendly ECF (Elemental Chlorine Free) technology. The ECF
paperboards conform to the standards for food grade paperboards as
per US FDA. This will enable the business to exploit new
opportunities in the marketplace.
In line with the
Company's objective of achieving total self-sufficiency in fibre, the business is according high priority to its accelerated fibre
programme for high yielding disease resistant clonal saplings
developed by its in-house R&D. This project provides sustenance and
livelihood to tribal farmers located in proximity to the paper mill.
The business continues to provide free support and extension
services for land development, planting of saplings and maintenance
of plantations.
In the Packaging and
Printing business, capacities are being augmented in the flexibles
and carton lines at Chennai and Uttarkhand to deliver innovative
packaging to the Foods business and other external customers. The
business is steadily scaling up supplies of value added packaging to
the Consumer Electronic industry from its Chennai facility. It also
continues to supply distinctive and superior quality packaging to
the cigarette business. State-of-the-art technology, world-class
standards and a highly skilled and dedicated team have all come
together to deliver sustained competitive advantage to the company.
Agri business
Though segment
revenues have de-grown by 9% primarily due to restrictions on the
export of non-basmati rice, the business posted robust growth in
profits riding on record exports of leaf tobacco. The business has
also successfully re-negotiated pricing of its export orders to
offset the impact of the appreciating rupee.
The business
continued to source high quality agri produce at competitive prices
by leveraging the e-Choupal channel, particularly in the wheat and
potato verticals. The rural distribution initiative made good
progress, nearly doubling the channel throughput. On the rural
retail front, 21 'Choupal Saagars' are now operational in the three
states of Madhya Pradesh, Maharashtra and Uttar Pradesh. These 'Choupal
Saagars', in synergistic combination with the e-Choupal network,
would serve as the core infrastructure to support ITC's rural
distribution strategy. The business is progressing a pilot project
for retailing fresh fruits and vegetables. Three Choupal Fresh Cash
& Carry Stores and six Choupal Fresh retail stores are currently
operational at Hyderabad, Pune & Chandigarh. The Company has set up
a comprehensive supply chain for ensuring the availability of fresh
products in the market, besides establishing direct linkages with
the farmers for sourcing farm fresh produce.
Cigarette leaf
tobacco exports grew by 37% during the Quarter. The business, one of
the largest integrated source of quality tobaccos, serves customers
in 48 countries across 69 destinations whilst co-creating and
delivering value at every stage of the leaf tobacco value chain.
Contribution to
Sustainable Development
In pursuit of its
abiding commitment to create stakeholder value through service to
society, the Company made steady progress during the quarter in its
social and environmental initiatives.
The Company continued
to intensify its footprint in the social sector by expanding to
newer districts during the year and retained focus on the three main
areas of interventions under 'Mission Sunehra Kal': (a) natural
resource management, which includes wasteland, watershed and
agriculture development; (b) sustainable livelihoods, comprising
genetic improvement in livestock and women's economic empowerment;
and (c) community development, with focus on primary education and
health and sanitation. The Company currently runs 61 social
development projects in 44 districts spread over the states of Kerala, Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Madhya
Pradesh, Uttar Pradesh, Rajasthan, Orissa, West Bengal and Bihar.
The Company's unique
initiative of wasteland development through its Farm and Social
Forestry Programmes was scaled up to take the total area under
coverage to 77,000 hectares providing approximately 35 million
person days of employment among the disadvantaged. The Company's
Social Forestry Programme has so far promoted plantations covering
11,571 hectares in 388 villages reaching out to more than 13,300
poor households. Not only have their earnings per acre improved
significantly, most beneficiaries have also ensured that their
contribution to the Village Development Fund continues apace. Their
own incomes have been invested wisely into productive assets to
ensure a long-term virtuous cycle of development.
ITC has recently won
two prestigious awards for its watershed development initiatives.
The Company won the Corporate Social Responsibility Crown Award for
Water Practices from UNESCO and Water Digest for its distinguished
work carried out in the water sector in India. ITC also received the
National Award for Excellence in Water Management 2007 in the
'beyond the fence' category from the CII Sohrabji Godrej Green
Business Centre for its leadership role in implementing water and
watershed management practices.
In the recent past,
ITC has also won the Ryutaro Hashimoto Incentive Prize given by the
Asia Pacific Forum for Environment & Development, which aims at
promoting information dissemination of good practices towards
sustainable development in the Asia-Pacific region; and the Asian
CSR Award for Environmental Excellence from the Asian Institute of
Management.
The soil and moisture
conservation programme, designed to assist farmers in identified
moistures-stressed districts continued to expand its coverage during
the quarter. To date, about 1,782 water-harvesting structures
provide critical irrigation to about 16,556 hectares. In all, the
watershed development programme today covers 31,976 hectares.
In continuation of
its policy of providing an integrated solution for promoting a
sustainable water management regime, the Company lays equal emphasis
on ensuring efficient usage of water through interventions aimed at
improving farm productivity, promoting group irrigation projects and
demonstrating the use of sprinkler sets. Sustainable agricultural
practices have been supported with the promotion so far of more than
11,629 organic fertiliser units through vermi-composting and NADEP
technologies.
The sustainable
livelihoods initiative of the Company strives to create alternative
employment for surplus labour and decrease pressure on arable land
by promoting non-farm incomes. Among many such activities, the
programme for genetic improvement of cattle through artificial
insemination to produce high-yielding crossbred progenies has been
given special emphasis because it reaches out to the most
impoverished and has the potential to pull them out of poverty.
Ninety-Five cattle development centres already cover more than 1,900
villages. To date, these centres have provided integrated animal
husbandry services to more than 1.36 lakh milch animals. The
initiative for the economic empowerment of women also continued
apace: to date, 13,807 women have been organised under 913 self-help
groups (SHG) with total savings of Rs 76.94 lakhs. Nearly 7,300
women have been gainfully employed either through micro-enterprises
or as self-employed through income generation loans.
Chairman Y C
Deveshwar was conferred the SAM/SPG Sustainability Award 2007 in
Zurich, Switzerland in recognition for his extraordinary leadership
and pioneering work in developing, implementing and promoting
sustainability in ITC, through innovative corporate strategies that
led to significant societal development. The Award has been
instituted by the Sustainability Asset Management group and
Sustainable Performance Group of Switzerland.
The Board of
Directors, at its meeting in New Delhi on 18th January 2008,
approved the financial results for the quarter ended 31st December
2007, which are enclosed.
Click here for the
Financial Results
