Financial Results for the
quarter ended 30th
June, 2007
ITC's
Net Turnover at Rs.3325 crores
posted a strong growth of 16.7% driven by the non-cigarette
business, which grew by 18 %. The key growth drivers have been the
continued scale up of the Foods business, higher agri business
revenues and a healthy performance by the Hotels business.
The Company's
post-tax profit for the quarter
ended 30th June 2007 at Rs. 783 crores recorded a 20% growth while
pre-tax profit at Rs. 1129 crores grew by 16.7%.
Earnings Per Share for the
quarter stood at Rs.2.08.
FMCG - Others
Branded Packaged Foods
The Company's Branded
Packaged Foods business continued to expand rapidly with sales
growing 66% over last year.
The
'Bingo!' range of potato chips
and finger snack foods, which was launched end of March 07, has met
with an encouraging response in the market. The launch of Bingo! is
reflective of the Company's strategy of introducing well-researched,
innovative and unique products in an exciting and fast growing
category. The product range comprising of 16 distinct flavours and
differentiated shapes has been specifically developed to suit the
Indian palate. The business is gearing up its manufacturing capacity
to meet higher levels of demand.
The
'Sunfeast' range of biscuits
continued its stride forward with extension into target markets
during the quarter. Product mix witnessed further improvement on the
back of enhanced sales of value added products like Creams and
Cookies. Production capacities are being located to maximise
logistical efficiencies in the value chain. The excise relief
accorded in the budget to low and mid priced biscuits, consistent
with the government's stated intention of promoting the processed
food 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.
In the Staples
category, 'Aashirvaad Atta'
continued to build on its leadership position amongst the branded
players with volume increasing month on month. Sales of 'Aashirvaad
Select', a premium offering is gaining critical volumes in target
markets. The product range of the branded spices business under the
'Aashirvaad' brand was further enhanced with the launch of value
added blended products.
The Confectionary
category recorded robust sales with growth of 58% during the period.
Sales volumes of hard boiled candies doubled aided by variants such
as 'Natkhat Mango' and
'Maha Mango'. Product range was
further expanded with the launch of 'Mint-O
Fresh Cool Green' and 'Candyman
Mango Licks'.
Lifestyle Retailing
Market standing of
the Lifestyle Retailing business stood further enhanced with sales
growing by an impressive 31% during the quarter. The business
continued to increase its retail footprint with the addition of 4
new stores in strategically located malls. The premium segment,
comprising of the 'Classic'
range of formal wear, 'Wills Sport'
relaxed wear and 'Wills Clublife'
evening wear has already established its appeal to the highly
fashion conscious discerning consumers with 'Wills Lifestyle' being
voted as one of the widely recognized fashion brands in the country.
In the popular
segment, the 'John Players'
brand posted notable gains with sales growing by 40% over last year.
Distribution reach was further strengthened through the expansion of
the 'exclusive brand outlet' network and increased presence in key
'multi-brand outlets'.
The Quarter also
marked the launch of "Miss Players",
a trendy fashion wear for the spirited young Indian woman,
positioned to make a lively and playful statement. This complete
range complemented by a whole set of accessories has been specially
designed for the young Indian female. Extensive research has driven
the 'fits' profile to provide a great combination of comfort and
fashion.
The business
continued to actively pursue opportunities in the
Exports arena establishing
long-term partnerships with high potential customers. The business
has enhanced manufacturing capacities to take full advantage of the
emerging growth opportunities.
Home & Personal Care
'Essenza Di Wills', an exclusive
line of prestige fragrance and bath and body care products has been
extended beyond 'Wills Lifestyle' to modern retail and other select
outlets. The range continues to receive encouraging response from
high-end quality conscious consumers.
Greeting, Gifting & Stationery Business
The Stationery
business continued to strike an impressive growth path with sales
increasing by 62% over last year. Whilst the premium range under the
'Paperkraft' brand has been
positioned as a designer stationery product for the discerning
executive and college goer, the mid market range
'Classmate' is the most widely
distributed notebook brand across the country. It has established
itself as the quality leader in a short span of time by clearly
addressing the needs of the school going children. Its range builds
in regional preferences and caters to the requirements of All India
& State Education Boards. The business is in the process of scaling
up its mass-market range under the brand name
'Saathi'. In line with its
'Citizen First' philosophy, the Company continues to
contribute Re.1 for every notebook sold to its social responsibility
initiatives.
Though the Greeting
Cards segment continued to be impacted by multiple modes of
messaging services, the 'Expressions'
brand sustained its leadership status in multi-brand outlets
across the country. The market coverage is being consolidated to
optimise servicing costs.
Safety Matches & Incense Sticks
In the Safety Matches
business, quality research and developmental inputs coupled with the
synergy benefits arising from the acquisition of WIMCO Ltd. by
Russell Credit Ltd., (a wholly owned subsidiary of the Company),
have ensured that the business continues to enjoy product
leadership. The Company has built an extensive supply chain by
partnering capable SSI units and assisting them to enhance their
process and quality standards. The business launched product
variants such as AIM Mega and
Aim Metro in select markets,
providing greater benefits and value to the consumer.
Market standing of
the Company's 'Mangaldeep' brand
of incense sticks (agarbattis) was further enhanced during the
quarter with sales increasing by nearly 29% over last year. The
business strengthened its collaboration with various NGOs to provide
vocational opportunities to rural youth and economically
disadvantaged women in keeping with the Company's commitment to the
'triple bottom line'.
FMCG-Cigarettes
The Company's
unrelenting focus on providing its consumers world-class quality
products has enabled it to cement its leadership position in the
industry. The business continues to deliver superior value to
consumers through innovative packaging, fine blends and use of
contemporary technology in state-of-the-art production facilities.
The cause for
concern, however, remains the severe taxation and regulatory milieu
for cigarettes in India. During the quarter, VAT on cigarettes at
the rate of 12.5% became effective in most States. In the State of
UP, a trade tax of 33.5% (inclusive of Development Cess) was levied
on cigarettes. These imposts were in addition to the increase in
excise duties on cigarettes in excess of 6% in the Union Budget
2007. Such high rates of taxation on cigarettes will only drive
consumers to switch to cheaper forms of tobacco, resulting in lower
revenue collections from the sector.
The proposed
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) will further constrain
the industry. While these provisions of COTPA were notified to be
effective from 1st June 2007 the implementation has been deferred to
enable a Committee of Ministers to examine the issues arising from
these provisions and make suitable recommendations to the
Government.
Hotels
The Hotels business
maintained its upward momentum during the quarter with Segment
Revenues growing by 11% to touch Rs.221 crores, driven by improved
REVPAR (revenue per available room) at most properties and superior
food & beverage performance.
Consequent to an
exclusive tie up with its partner Starwood, seven of ITC's
first-class properties have been up-scaled and re-branded as the
premium Luxury Collection with effect from 15th May 2007. It will
offer discerning global travelers a unique experience that carries
the true essence and warmth of Indian hospitality. This association
is reflective of ITC's leadership in the premium segment and
positions it as one of the finest hotel chains in the world.
The business made
steady progress as per project timeline in the construction of its
new super-deluxe luxury hotels at Bangalore and Chennai.
Paperboards, Specialty Paper & Packaging
During the quarter,
segment revenues witnessed a slower growth of 5% on account of the
planned shutdown of a paperboard machine at Bhadrachalam for its
upgradation. The rebuild of the machine is now complete and it is
expected that the business will regain its earlier growth trajectory
as the machine stabilizes. The Kovai mill improved its operating
efficiencies and posted a satisfying performance.
Steady progress is
being made in completion of the capacity augmentation projects - a
new paper machine and an additional pulp mill, both at Bhadrachalam.
The pulp mill, expected to be commissioned in the latter half of
this fiscal, will remove the dependency on imported pulp, which has
seen an unprecedented run-up in prices and adversely affected
margins across the paper and paperboard industry. The paperboard
project will augment capacity by appx. 90,000 TPA in 2008/09.
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. It would also provide 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 plantation
maintenance.
In Packaging and
Printing, investments towards capacity augmentation at the Chennai
unit have gone on stream to meet the enhanced value added
requirements of the cigarettes business. Similarly, the flexibles
and carton lines have been commissioned satisfactorily at
Uttarakhand to cater to the distinctive and innovative packaging
requirements of the Foods business and other external customers.
Agri business
Agribusiness revenues
grew by a robust 27% driven primarily by increased exports of leaf
tobacco, higher levels of soya trade and enhanced wheat sales to the
Company's branded packaged foods business.
The pioneering
eChoupal model found mention by the President of India in his
special address during the National Symposium to Commemorate the
60th year of Independence. He commended this unique IT enabled
platform, which is a multi-business two way channel designed to
trigger a virtuous cycle of higher efficiencies and higher incomes
thereby enlarging the capacity of the farmer to re-invest and become
more productive.
On the sourcing
front, the e-choupal network continued to contribute towards
strengthening the Company's branded packaged foods business through
access to high quality, identity preserved wheat at competitive
prices. The network is also being scaled up for securing supply of
quality chip grade potato for its Salty Snacks business. The rural
distribution throughput posted robust growth during the quarter
driven by sale of vehicles, FMCG products and agri inputs. The
business also made significant progress on the rural retail front
with the launch of 3 more 'Choupal Saagars'
during the quarter.
Eighteen 'Choupal Saagars' are
now operational in the 3 states of Madhya Pradesh, Maharashtra and
Uttar Pradesh, while 8 more are in an advanced stage of
construction. These 'Choupal Saagars', in synergistic combination
with the e-choupal network would serve as the core infrastructure to
support ITC's rural distribution strategy.
Cigarette leaf
tobacco exports continued to be buoyant during the quarter,
supported by new business development initiatives and the strategy
of providing customised product and service offerings to key
customers. The business completed the upgradation of its green leaf
threshing plant at Anaparti, Andhra Pradesh, realising gains in
throughput.
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. It continued to 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 further with the addition of 2,076
hectares during the quarter, taking the total area under coverage to
67,076 hectares providing approximately 29 million person days of
employment among the disadvantaged. The Company's Social Forestry
Programme has so far promoted plantations covering 9,425 hectares in
380 villages reaching out to more than 11,000 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.
The soil & moisture
conservation programme, designed to assist farmers in identified
moistures-stressed districts continued to expand its coverage during
the quarter. To date, about 1,630 water-harvesting structures
provide critical irrigation to about 14,999 hectares. In all, the
watershed development programme today covers 27,953 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
4,500 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 improvements 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 lakh milch animals. The initiative
for the economic empowerment of women also continued apace: to date,
10,232 women have been organised under 801 self-help groups (SHG)
with total savings of Rs 53.40 lakhs. Nearly 6,000 women have been
gainfully employed either through micro-enterprises or as
self-employed through income generation loans.
The Board of
Directors, at its meeting in Kolkata on 27th July, 2007, approved
the financial results for the quarter ended 30th June 2007, are as
follows.
Unaudited
Financial Results
for the Quarter ended 30th June, 2007 |
|
(Rs. in
Crores) |
| |
|
Quarter ended
30.06.2007 |
Quarter ended
30.06.2006 |
Twelve
Months
ended 31.03.2007 |
|
|
| GROSS INCOME |
|
5279.71 |
4719.06 |
19841.54 |
| NET SALES TURNOVER |
(1) |
3325.23 |
2849.75 |
12369.30 |
| OTHER INCOME |
(2) |
101.57 |
84.94 |
336.49 |
| NET INCOME (1+2) |
|
3426.80 |
2934.69 |
12705.79 |
| Less: |
|
|
|
|
| TOTAL EXPENDITURE |
(3) |
2197.67 |
1879.18 |
8412.89 |
| a) (Increase) / decrease in
stock-in-trade |
|
(165.26) |
(241.13) |
(259.48) |
| b) Consumption of raw materials, etc. |
|
1599.68 |
1471.66 |
5644.34 |
| c) Staff cost |
|
176.55 |
152.55 |
630.15 |
| d) Other expenditure |
|
586.70 |
496.10 |
2397.88 |
| INTEREST (Net) |
(4) |
(0.83) |
0.72 |
3.28 |
| DEPRECIATION |
(5) |
101.03 |
87.64 |
362.92 |
| PROFIT BEFORE TAX AND EXCEPTIONAL
ITEMS (1+2-3-4-5) |
(6) |
1128.93 |
967.15 |
3926.70 |
| Less: |
|
|
|
|
| PROVISION FOR TAXATION (Including
prior year adjustments) |
(7) |
346.06 |
314.87 |
1226.73 |
| PROFIT AFTER TAX (6-7) |
|
782.87 |
652.28 |
2699.97 |
| PAID UP EQUITY SHARE CAPITAL |
(8) |
376.22 |
375.52 |
376.22 |
| (Ordinary shares of Rs. 1/- each) |
|
|
|
|
| RESERVES EXCLUDING REVALUATION
RESERVES |
(9) |
- |
- |
10003.78 |
| EARNING PER SHARE (Rs.) |
(10) |
|
|
|
| On Profit after Tax |
|
|
|
|
| - Basic |
|
2.08 |
1.74 |
7.19 |
| - Diluted |
|
2.08 |
1.73 |
7.16 |
| AGGREGATE OF PUBLIC SHAREHOLDING |
(11) |
|
|
|
| - NUMBER OF SHARES |
|
3713677557 |
3689623001 |
3706609279 |
| - PERCENTAGE OF SHAREHOLDING |
|
98.71 |
98.25 |
98.52 |
| |
|
| Note : |
| (i) |
The above results were reviewed by the Audit Committee and approved at the meeting of the Board of Directors of the
Company held on 27th July, 2007. |
| (ii) |
Figures for the corresponding previous quarter have been re-arranged, wherever necessary, to conform to the figures of the
current quarter. |
| (iii) |
Gross Income comprises Segment Revenue and Other Income. |
| (iv) |
(a) During the quarter Value Added Tax (VAT) (at 12.5% by most States), central sales tax as applicable and trade tax (at
33.5% in UP) have been imposed on cigarettes. Consequently the Company's Cigarette sales have been subject to
additional taxation amounting to Rs. 388 Crores (30.06.2006 - Rs. Nil). Gross Income stated above is net of this figure. |
|
(b) Gross Income includes Rs. 1853 Crores (30.06.2006 - Rs. 1784 Crores) being Excise Duties and other Local Taxes. |
| (v) |
During the quarter, 2 Investor complaints were received, which were promptly attended to by the Company. No complaints
were pending either at the beginning or at the end of the quarter. |
| (vi) |
Provision for Taxation includes Rs. 8.76 Crores (corresponding previous quarter Rs. 3.08 Crores) for Fringe Benefit Tax. |
| (vii) |
The above is as per Clause 41 of the Listing Agreement. |
Limited Review
The Limited Review, as required under Clause 41 of the Listing Agreement has been completed and the related Report forwarded
to the Stock Exchanges. This Report does not have any impact on the above 'Results and Notes' for the Quarter ended 30th
June, 2007 which needs to be explained.
|
Segment-wise Revenue, Results and Capital Employed
for the
Quarter ended 30th June, 2007 |
(Rs. in Crores) |
| |
Quarter ended 30.06.2007 |
Quarter ended 30.06.2006 |
Twelve Months ended 31.03.2007 |
| 1. Segment Revenue |
|
|
|
| a) FMCG - Cigarettes |
3441.49 |
3159.20 |
12833.70 |
|
- Others |
542.24 |
359.68 |
1704.39 |
| Total FMCG |
3983.73 |
3518.88 |
14538.09 |
| b) Hotels |
221.23 |
198.77 |
985.67 |
| c) Agri Business |
1418.06 |
1111.09 |
3691.36 |
d) Paperboards, Paper &
Packaging |
526.18 |
501.48 |
2100.06 |
| Total |
6149.20 |
5330.22 |
21315.18 |
| Less : Inter-segment revenue |
971.06 |
696.10 |
1810.13 |
| Gross sales / Income from
operations |
5178.14 |
4634.12 |
19505.05 |
| 2. Segment Results |
|
|
|
| a) FMCG - Cigarettes |
939.10 |
815.56 |
3172.15 |
|
- Others |
(44.64) |
(58.18) |
(201.99) |
| Total FMCG |
894.46 |
757.38 |
2970.16 |
| b) Hotels |
64.26 |
57.55 |
350.78 |
| c) Agri Business |
54.48 |
47.13 |
123.55 |
d) Paperboards, Paper &
Packaging |
86.58 |
104.62 |
416.78 |
| Total |
1099.78 |
966.68 |
3861.27 |
Less :
i) Interest (Net) |
(0.83) |
0.72 |
3.28 |
| ii) Other un-allocable
income net of un-allocable expenditure |
(28.32) |
(1.19) |
(68.71) |
| Total Profit Before Tax |
1128.93 |
967.15 |
3926.70 |
| 3. Capital Employed |
|
|
|
| a) FMCG - Cigarettes * |
2069.18 |
1503.52 |
2018.64 |
|
- Others |
1546.89 |
793.23 |
940.32 |
| Total FMCG |
3616.07 |
2296.75 |
2958.96 |
| b) Hotels |
1512.49 |
1379.47 |
1466.25 |
| c) Agri Business |
1441.26 |
1232.87 |
1480.00 |
d) Paperboards, Paper &
Packaging |
2699.61 |
1959.81 |
2559.46 |
| Total Segment Capital Employed |
9269.43 |
6868.90 |
8464.67 |
| |
|
* Before considering provision of Rs. 560.26 Crores (30.06.2006 - Rs.
449 Crores) in respect of disputed State taxes, the levy/ collection of which has been
stayed. |
| Notes : |
| (1) |
The Company's
corporate strategy aims at creating multiple drivers of growth anchored on its core
competencies. The Company is currently focused on four business groups : FMCG, Hotels,
Paperboards, Paper & Packaging and Agri Business. The Company's organisational
structure and governance processes are designed to support effective management of
multiple businesses while retaining focus on each one of them. |
| (2) |
The business groups comprise the
following : |
|
FMCG |
: Cigarettes |
- |
Cigarettes & Smoking Mixtures. |
|
|
: Others |
- |
Branded Packaged Foods
(Staples, Confectionery, Biscuits, Snack Foods and Ready to Eat Foods). Garments, Greeting, Gifting &
Stationery, Agarbattis and Matches. |
|
Hotels |
- |
Hoteliering. |
|
Paperboards, Paper &
Packaging |
- |
Paperboards, Paper including Specialty Paper
& Packaging. |
|
Agri Business |
- |
Agri commodities such as Rice, Soya, Wheat,
Coffee and Leaf Tobacco. |
| (3) |
Segment results of the new
business activities namely 'FMCG : Others' largely reflect business
development and gestation costs. |
| (4) |
The Company's Agri Business
markets agri commodities in the export and domestic markets; supplies agri raw materials
to the Branded Packaged Foods Business and sources leaf tobacco for the Cigarettes
Business. The segment results for the quarter are after absorbing costs relating to the
strategic e-choupal initiative. |
| (5) |
Figures for the corresponding
quarter last year have been recast to conform to current presentation.
|
Registered
Office:
Virginia House, 37 J.L.Nehru Road,
Kolkata - 700 071, India
Dated : 27th July, 2007
Place : Kolkata, India |
For and on
behalf of the Board
| Sd/- K Vaidyanath |
Sd/- Y C Deveshwar |
| Executive Director |
Chairman |
|
