ITC Logo
Media Centre
Press Release

Pre-Tax Profits up 28%
22 Jan 2010

Click here to download the Financial Results

Financial Results for the quarter ended 31st December, 2009


Profits from Operations : + 26 %
Pre-Tax Profits : + 28 %
Post Tax Profits : + 27 %

Non-cigarette FMCG segment registers robust revenue growth at 24%.

Paper and Pulp investments leveraged to improve value capture and margins. Segment results grow by 81%.

Agri business profits more than double for two quarters running with a growth of 107%, driven by robust leaf tobacco exports.

Hotels business revenues remain flat due to weak global economic recovery, although sequential improvement has begun.

The ‘ITC Hotel Royal Gardenia’ is declared the world’s largest LEED Platinum rated Green Hotel – It is the only Hotel in India to get Platinum rating.

ITC ranked 2nd in India and 7th in Asia in the first of its kind Asian Sustainability Rating (ASR(TM)) released by CSR Asia.

ITC delivered an impressive performance for the quarter ended December 2009 with Net Profit growing by 27% over the previous year to touch Rs.1144 crs. Pre- Tax Profit at Rs.1701 crores grew by 28% driven by handsome growth in non-cigarette FMCG, Agri and Paperboard & Packaging businesses. Improved product mix, smart sourcing in the face of commodity inflation and intensive cost management actions contributed to this sizeable growth in bottom line.

Whilst the FMCG and Paperboard & Packaging segments grew handsomely in net revenues led by growth in volumes, revenue growth in the Agri business was driven by both volume and improved realisations. While the performance of the Hotels business has improved sequentially, it is still caught in the throes of a weak recovery momentum.

Earnings Per Share for the quarter stood at Rs.3.02.

FMCG – Cigarettes | Branded Packaged Foods
Personal Care Products | Education & Stationery Products
Hotels  | Paperboards, Specialty Papers & Packaging
Agri Business | Sustainable Development

FMCG - Cigarettes

The Company’s relentless focus on providing world-class products to consumers sustained its leadership position in the industry. Innovation and consumer centricity have enabled the business to deliver superior value through its brand portfolio of well crafted blends, contemporary packaging styles and use of state-of-the-art manufacturing technology. Several key initiatives across the brand portfolio in terms of pack modernization, improvement in smoke profile and introduction of new brands such as ‘Gold Flake Kings Gold’ and ‘Navy Cut Kings’ have bolstered the Company’s market standing in the premium categories and improved market shares in all segments. On the manufacturing front, investments are being progressed towards enhancement of quality, productivity and variety. Similarly, focussed initiatives have commenced to strengthen the trade and distribution channels

Disparate imposition of graphic health warnings on tobacco products has provided a fillip to the growth of contraband trade which does not comply with the regulatory requirement of graphic warnings. Restrictive and asymmetric regulations encourage tobacco consumers to switch to cheaper forms of tobacco, adversely impacting the earnings of farmers who grow cigarette type tobaccos.

An increasing cause of concern is the upward revision of VAT rates on cigarettes in certain states. Indiscriminate increase in VAT rates will distort the basic concept of a common Indian market based on uniformity of rates in taxes. VAT was introduced on cigarettes in 2007 at 12.5% uniformly across the states. Such a uniform levy is critical to prevent an unhealthy tax rate ‘war’ and the consequent trade diversion amongst States/Union Territories. Recent increases in VAT will provide an attractive tax arbitrage opportunity and encourage illegal inter-state flow of cigarettes. Consequently, States with higher rates are likely to lose out on revenue collection. Such an outcome would not only defeat the purpose of augmenting revenue, but would also result in trade falling into the hands of undesirable syndicates. The cigarette industry has urged the deviating states to retain the consensus VAT rate of 12.5%. Leaving the VAT rate on cigarettes untouched will help expand the tax base to augment revenue collections for the State Governments and prevent illegal inter-state trade diversion.

The vacuum created by the exit of the popular low priced micros and plain non-filter cigarettes (in the wake of the heavy imposition of excise duties last year) has been occupied by duty-evaded illegal regular size filter cigarettes which are sold to consumers at Rs.10/- per packet of 10 cigarettes. These low priced tax-evaded illegal cigarettes are a growing threat to the legitimate industry, Government revenues, market stability and the social objective of regulating tobacco consumption. Some reports indicate that funds from illegally produced and contraband cigarettes often find their way to finance terrorism and other anti-social activities. It is imperative that the authorities strengthen enforcement to eliminate this fast growing illegal industry. In addition, the Government could also consider the introduction of a new excise duty slab that would enable the legitimate industry to offer the consumer tax paid cigarettes at this price point.

Despite the current challenging market conditions, the Company remains confident of leveraging its internationally benchmarked product quality, the resilience of its brands and the superiority of its competitive strategies to deliver strong results and shareholder value. 

Branded Packaged Foods

Notwithstanding difficult market conditions, the Branded Packaged Foods business grew by an impressive 24% during the quarter. The business has driven consumer franchise, improved the product mix, ensured smarter sourcing of inputs, improved market servicing and driven supply chain efficiencies.

The “Bingo!” range of potato chips and finger snack foods witnessed a handsome revenue growth of 59% with the launch of new variants. The award winning marketing campaign along with focussed marketing schemes continue to reinforce the unique selling proposition of the exciting array of products. Relaunch of ‘Tedhe Medhe’ variant in select Northern markets has met with enthusiastic response from the consumers.

Sales of “Sunfeast” range of biscuits grew by 11% aided by a richer product mix of value added variants of cookies and creams, the sales of which increased by 21% and 38% respectively. The re-launch of ‘Marie’ has found wide acceptance among consumers with sales increasing by 78% yoy.

In the Staples category, “Aashirvaad’s” leadership position continues to consolidate with sales improving by 34% supported by both improved price realization and higher market share. The Confectionery category revenues grew by 34% with the launch of ‘GOL’ (mint chew), enhanced sales of Eclairs, and wider consumer acceptance of variants such as Lactos and Tofichoos.

The business is focusing on specific actions to minimize the impact of inflationary commodity prices.

Personal Care Products

The carefully architected portfolio of brands is gaining increasing consumer acceptance. Research and product development are being leveraged innovatively to enhance brand equity. Existing and proposed investments in tax exempt manufacturing capacities will provide flexibility and cost advantage. The business has extended its line of soaps, shampoos and shower gels to widen its product portfolio and establish a larger position in the growing Personal Care market. Whilst celebrity endorsed brand communication has improved brand salience, attractively crafted schemes are triggering consumer trials. Enhanced consumer engagement and focussed consumer activation programmes are building appreciable brand franchise.

The ‘Mikkel’ Eau De Toilette and aftershave lotion launched a few months earlier are now widely available at the exclusive Wills Lifestyle stores.

Education & Stationery Products

The Education & Stationery Products business continued on its impressive growth trajectory (33%), emerging as the largest player in the notebook segment with a market share of 12%. The “Classmate” brand which has established a strong presence amongst the student community in India is extending its franchise with an enhanced portfolio of scholastic products comprising geometry boxes, pens, pencils, markers, highlighters etc. Classmate aspires to be the most trusted student education and stationery brand.

The business has leveraged the Company’s environment friendly superior paper, high-end knowledge of printing and its trade marketing expertise to successfully attain a position of leadership in the Education and Stationery products market. It has recently signed Yuvraj Singh, the stylish India team left hand bat and Soha Ali Khan, the versatile actor as its brand ambassadors.


India’s resilient growth has enabled the hotels business to commence a sizeable recovery. The business has seen substantial improvement in both occupancies and average room rates during the quarter. In the challenging circumstances that prevailed for the last 12 months, the business held its leadership position in most markets.

ITC Hotel Royal Gardenia, which opened its doors to guests during the quarter, was conferred the highest rating for green buildings in the world – the LEED India Platinum Rating. This recognition makes it the world’s largest platinum rated hotel – yet another endorsement of ITC’s leadership in sustainability practices. Apart from its Green credentials, The Royal Gardenia scores high on natural sophistication and elegance, promising its discerning guests unsurpassed refined living.

The business continues to pursue an aggressive investment led growth strategy recognising the longer-term potential of this sector and the need for increased room capacities commensurate with India’s economic growth.

Paperboards, Specialty Papers & Packaging

With segment revenues of the quarter posting a strong growth of 29% over the previous year, segment results registered an even more impressive growth of 81%. The improvement in profitability was driven by an enriched mix of valued added products, which grew by 50%, higher capacity utilisation, lower input costs and significant value capture in pulp mill operations.

Recent investments in paper and pulp capacities have enabled the business to tap the emerging growth opportunities in the writing and printing paper segments and further consolidate its market standing. The doubling of pulp capacity, as a result of the investment in the ‘Ozone Bleached’ Pulp mill, has enabled the business to achieve cost competitiveness.

In the Packaging and Printing business, satisfactory commissioning of investments in the flexibles and carton lines has enhanced its capability to deliver value added packaging to key customers in the consumer electronics and FMCG industries. Sales of carton packaging to external customers rose by 47% over the previous year. The business continues to provide state-of-the-art strategic sourcing support to the cigarette business. Its full range of capabilities riding on multiple packaging platforms will enable the business to build a strong position in the domestic and export markets.

Agri Business

The Agri business improved its profits significantly, driven by the continuing strong performance of the leaf tobacco portfolio. The business maintained its position as the foremost exporter of leaf tobacco with export revenues for the quarter registering an unprecedented growth of 194% on the back of growing demand for Indian tobaccos. Gains were made in new business development, even as the business continued to make customised product and service offerings to both existing and new customers. The business continued to provide strategic sourcing support to the Company’s cigarette business by ensuring international quality supplies.

Contribution to Sustainable Development

In pursuit of its abiding commitment to create stakeholder value through service to society, the Company continued to make progress during the quarter in its social and environmental initiatives.

The Company deepened its social sector imprint by expanding to newer districts during the period. Social development projects are currently being progressed in 55 districts spread over the states of Andhra Pradesh, Bihar, Kerala, Karnataka, Maharashtra, Madhya Pradesh, Orissa, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal.

The pioneering social development projects include initiatives in watershed development, social farm and forestry programmes, soil & moisture conservation programmes designed to assist farmers in identified moisture-stressed districts, preservation of precious topsoil for agriculture and group irrigation projects. Towards improving the income earning capability of the farming community, sustainable agricultural practices were provided a major boost during the quarter with the promotion of organic fertiliser units through vermi-composting and NADEP technologies. Similarly, programme for genetic improvement of cattle was undertaken through artificial insemination to produce high-yielding crossbred progenies. Integrated animal husbandry services were provided during the quarter. These included addressing the needs of problem breeders, vaccines, feed additives and awareness drives. The initiative for the economic empowerment of women also continued apace with provision of gainful employment either in micro-enterprises or through self-employment with the support of income generation loans.

The Company’s initiative in the recycling programme ‘Wealth out of Waste (WOW)’ in various southern cities and towns has created considerable awareness on the benefits of the “Reduce, Reuse, Recyle” process. The success of this unique initiative, acclaimed by Indian civic authorities and applauded beyond India’s borders, will be leveraged to extend this programme to other cities in the country.

Flowing from its commitment to the triple bottom line philosophy, ITC has chosen Wind Energy as a focus area for enhancing its positive environmental footprint. The Company’s total investment in Wind Energy will soon touch Rs.275 crores post commissioning of wind turbines in Maharashtra and Karnataka. The Company has already invested close to Rs.125 crores in wind energy generation in Tamil Nadu and Maharasthra to meet the requirements of its Packaging business in Chennai and Hotels business in Mumbai. These Clean Energy Initiatives have delivered high performance parameters. The Company’s investments in Wind Energy are eligible for Carbon Credits under the Clean Development Mechanism of the Kyoto Protocol, resulting in substantial cost savings.

The Company’s social sector footprint can be seen at a glance in the following chart:

Intervention Areas Unit of Measurement Dec 2009 (Cumulative Achievement)
Total Districts Covered Number 55
Social and Farm Forestry
         Area Planted
Hectare 102,973
Soil Moisture Conservation Programme                         Area Covered Hectare 47,812
Sustainable Agricultural Practices
    Organic Fertiliser Units
Number 13,727
Sustainable Livelihoods Initiative
    Cattle Development Centres
    Animal Husbandry Services
Milch Animals
Economic Employment of Women
    SHG Members
    Women Entrepreneurs
Primary Education
Children 216,422
Health and Sanitation
    Low Cost Sanitary Units
Number 2,746

Click here for the Financial Results