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Post-tax Profits up 20.4%
17 May 2013

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Financial Results for the Year ended 31st March, 2013

Post-tax Profits up 20.4%


  • Net Turnover :    +19.4%
  • Pre-tax Profits :    +20.1%
  • Post-tax Profits :    +20.4%
  • Q4 Pre-tax profit of Rs. 2729 crores and Post-tax profit of Rs. 1928 crores represent a growth of 20.3% and 19.4% respectively.
  • Board recommends Dividend of Rs. 5.25  per share for 2012-13 (previous year Dividend Rs. 4.50 per share).
  • Non-cigarette FMCG segment registers robust revenue growth of 26.4% and continues to demonstrate improving profitability. Non-cigarette FMCG segment records maiden profit during Q4 2012-13.
  • ITC Grand Chola achieved the distinction of being the world’s largest 'Leadership in Energy and Environmental Design' (LEED) Platinum rated hotel under the New Construction category and India’s first 5 Star 'Green Rating for Integrated Habitat Assessment' (GRIHA) rated luxury hotel by the Ministry of New and Renewable Energy.
  • Hospitality industry continues to be impacted by the weak economic environment and significant additions to room inventory.
  • Agri Business profits grow 13.7% driven by better realisations and higher volumes.
  • Paperboards, Paper & Packaging Segment Revenues up 9.1% aided by higher volumes and product mix enrichment. Profitability impacted by steep increase in wood, coal and chemical costs.
  • New state-of-the-art Paper Machine commissioned at Bhadrachalam in March 2013.

The Company  posted another year of strong performance across all financial parameters,  leveraging its corporate strategy of creating multiple drivers of growth. This  performance is even more encouraging when viewed against the backdrop of the  extremely challenging business context in which it was achieved, namely, the  continued economic slowdown, steep increase in taxes/duties on Cigarettes,  gestation costs relating to the new FMCG businesses and recent investments in  the Paperboards, Paper & Packaging and Hotels businesses.

Gross Revenue  for the year grew by 19.9% to Rs. 41809.82 crores. Net Revenue at Rs. 29605.58  crores grew by 19.4% primarily driven by a 26.4% growth in the Non-cigarette  FMCG segment, 26.4% growth in Agri business segment and 13.4% growth in the  Cigarettes segment. Pre-tax profits increased by 20.1% to Rs. 10684.18 crores  while Net Profits at Rs. 7418.39 crores registered a growth of 20.4%. Earnings  Per Share for the year stood  at Rs.  9.45 (previous year Rs. 7.93). Cash flows from Operations aggregated Rs. 9596  crores compared to Rs. 8334 crores in the previous year.

During the 4th quarter of the year, Net Turnover at Rs. 8180.30  crores registered a growth of 19.2% driven by robust performance in the  Non-cigarette FMCG, Agri and Cigarettes segments. Pre-tax profits at Rs.  2729.34 crores and Post-tax profits at Rs. 1927.98 crores grew at an impressive  rate of 20.3% and 19.4% respectively over the same period last year.

The Directors are pleased to recommend a  Dividend of Rs. 5.25 per share (previous year – Dividend Rs. 4.50 per share)  for the year ended 31st March, 2013. Total cash outflow in this regard will be  Rs. 4853.49 crores (previous year Rs. 4089.04 crores) including Dividend  Distribution Tax of Rs. 705.03 crores (previous year Rs. 570.75 crores).

FMCG - Branded Packaged Foods Businesses | Personal Care Products
Education & Stationery Products  | Lifestyle Retailing
Safety Matches and Incense sticks (Agarbatti) | Cigarettes | Hotels
Paperboards, Paper & Packaging | Agri Business | Contribution to Sustainable Development

FMCG - Branded Packaged Foods Businesses

The Company’s  Branded Packaged Foods businesses continued on a high growth trajectory  recording impressive growth in market shares and enhanced market standing  across operating segments.

During the  year, the Branded Packaged Foods businesses had to contend with high levels of  input costs. Global demand-supply dynamics, policy uncertainties and adverse  currency movement led to steep hike in prices of key commodities such as wheat,  maida, edible oils, packaging material and industrial fuels particularly during  the first half of the year. These cost pressures were however mitigated through  a combination of improvements in product and process efficiencies, smart  sourcing and supply chain initiatives.

In the Bakery  and Confectionery Foods business, the Biscuits and Confectionery categories  gained significant scale and market standing during the year. ‘Sunfeast’  biscuits sustained its robust growth trajectory, especially at the value-added  and premium end. Product range stood significantly augmented with the launch of  several 'first-to-market' variants including ‘Dark Fantasy Choco Fills –  Coffee’, ‘Dark Fantasy Choco Meltz’, ‘Butterscotch Zing’, ‘Kaju Badam Cookies’.  During the year, the brand emerged as the clear market leader in the highly  competitive premium cream biscuits segment. In the Confectionery category,  ‘Candyman’ and ‘mint-o’ continued to register strong growth during the year.  The business launched ‘Creme Lacto’ and ‘mint-o Ultramintz’ – a sugar-free  extra-strong mint in select markets. The products have met with encouraging  consumer response.

In the Snack  Foods business, the Company continued to enhance market standing and expand  scale in the fast growing Savoury Snacks, Noodles and Pasta categories. In the  Savoury Snacks category, the market standing of ‘Bingo!’ brand has  significantly improved, leveraging an innovative product range, enhanced brand  building efforts, use of digital media to spur word-of-mouth and  clutter-breaking advertising campaigns. The business’ ‘new-to-market’ format of  snacks, ‘Bingo! Tangles’, has been well received in target markets and is  gaining impressive consumer traction. In the Instant Noodles and Pasta  category, the Company’s brand ‘Sunfeast Yippee!’ has been well received by consumers  and is the second largest brand in the market.

In the Staples,  Spices and Ready to Eat Foods business, ‘Aashirvaad’ atta consolidated its  leadership position aided by the strong performance of Aashirvaad ‘Multi-grain’  atta. The premium ‘Multi-grain’ and ‘Select’ variants continued to grow rapidly  with an increasing proportion of consumers shifting to these value-added  offerings.

The businesses continues to invest in  distributed capacities and capabilities to meet anticipated growth and develop  a differentiated and distinctive range of products.


Personal Care Products

The Personal Care Business continued to grow at a fast  clip, distinctly ahead of industry despite competitive pressures from  entrenched players. This was achieved through a combination of innovative and  differentiated offers in the Personal Wash, Skin Care, Face Wash and Deodorants  categories and by leveraging the distribution network of the Company to reach  target consumers. The business continues to leverage the umbrella  brands, namely, ‘Essenza Di Wills’, ‘Fiama  Di Wills’, ’Vivel’ and ‘Superia’ and is focused on addressing various consumer  benefits with the introduction of new variants.

During the year, the business forayed into the high growth  Deodorants market with the launch of ‘Aqua Pulse Deodorant Spray’ under the  ‘Fiama Di Wills Men’ franchise. The Skin Care range was also expanded during  the year with the launch of 'Vivel Cell Renew' Body Lotion, Hand  Crème/Moisturiser and ‘Vivel Perfect Glow’ Skin Toner in target markets. The  new product launches have received encouraging consumer response.

As in previous years, in recognition of excellence in  product quality and innovation, two of the Company’s products - ‘Fiama Di Wills  Men Aqua Pulse De-Stressing & Brightening Face Wash’, and ‘Vivel Cell Renew  Fortify & Repair Moisturiser’ - were voted 'Product of the Year’ in their  respective categories.

The business is well poised to seize the  emerging opportunities in this rapidly evolving industry and continues to  invest in creation of vibrant brands, cutting-edge products, flexible and  responsive manufacturing and supply chain operations to build sustainable  competitive advantage.


Education & Stationery Products

The  Stationery business recorded robust growth in revenues during the year,  consolidating the Company’s position as the leading and fastest growing player  in the Indian Stationery market. The Company’s flagship brands - ‘Classmate’  for the student community and ‘Paperkraft’ for office and executive  requirements - continue to gain increasing consumer franchise.

Continuing  investments in a superior product range, effective consumer engagement and an  efficient  supply chain network has  enabled Classmate gain significant market share. During the year, brand  Classmate was strengthened through a series of interventions resulting in  further improvement of market standing. The business also made good progress  during the year in the non-paper categories comprising pens, wood-cased &  mechanical pencils, mathematical instruments, art stationery & scholastic  products. Such complementary products are helping position Classmate as a  complete stationery brand.

The Education & Stationery business, with  its collaborative linkages with small & medium enterprises, and a strong  product portfolio of notebooks & writing instruments under the Classmate  and Paperkraft brands, is well poised to strengthen its leadership position in  the Indian stationery market.


Lifestyle Retailing

During the  year, the Lifestyle Retailing business posted high growth in revenues and  continued to strengthen its position in the branded apparel market. While revenue  growth was impacted in the initial part of the year due to weak consumer  sentiment, there was a marked improvement as the year progressed. The  restoration of exemption of excise duty on branded readymade garments as  announced in the Union Budget 2013, is expected to provide the much needed  impetus for the industry.

In the  Premium segment, 'Wills Lifestyle' further strengthened its consumer franchise  on the back of significant improvements in product variety, enhanced  availability and impactful visibility. Retail footprint was expanded to 90  exclusive stores across 40 cities and more than 500 ‘shop-in-shops’ in leading  departmental stores and multi-brand outlets.

In the Youth  segment, ‘John Players’ has established a strong pan-India presence with availability  in over 400 stores and 1500 multi-brand outlets and departmental stores. Brand  reach was further augmented during the year with the launch of nearly 100  stores, penetrating more markets and acquiring new franchise.

The business continued to receive industry  recognition during the year. While Wills Lifestyle was accorded ‘Superbrand’  status, John Players was rated amongst the ‘Top 10 Most Trusted Apparel Brands  2012’ by The Economic Times.


Safety Matches and Incense sticks (Agarbatti)

The Agarbatti category recorded an impressive growth in revenues well  ahead of the industry, driven by increasing consumer franchise for the  `Mangaldeep’ brand and enhanced distribution reach. Product portfolio was  augmented during the year with the launch of variants such as ‘Fragrance of  Temple’ series and ‘Dhoop 4-in-1’, under the umbrella brand ‘Mangaldeep’. The  business maintained its market leadership in the Safety Matches category aided  by continued consumer preference for its strong brand portfolio across all  market segments. 



Discriminatory  and punitive taxation coupled with a growing incidence of smuggling and illegal  manufacture are the biggest challenges confronted by the domestic cigarette  industry. These challenges were further compounded during the year by the steep  increase of 22% in cigarette Excise Duty rates announced in the Union Budget  2012 and the arbitrary increases in Value Added Tax (VAT) on cigarettes by some  States. The sharp increase in Excise Duty on cigarettes announced in the Union  Budget 2013 will exacerbate the problem of discriminatory and high taxation on  cigarettes within the tobacco industry leading to sub-optimisation of the  revenue potential from this sector.

The  imposition of discriminatory and punitive VAT rates by some States provides an  attractive tax arbitrage opportunity resulting in illegal inter-state diversion  of stocks by criminal elements thus depriving the State Governments of their  legitimate revenue share. Punitive tax rates on cigarettes have proved  detrimental to revenue collection and have led to multi-fold increase in  illegal trade of cigarettes without any visible decrease in overall tobacco  consumption. A case in point is the State of Uttar Pradesh which increased VAT  on cigarettes from 17.5% to 50% with effect from 1st July 2012. The steep  increase in VAT rates led to a sharp drop in legal cigarette sales in the State  even as illegal and duty-evaded cigarettes and inter-state movement of stocks  gained significant traction leading to loss of potential tax revenues to the  State exchequer. The recent pragmatic decision of the State Government of Uttar  Pradesh to reduce VAT on cigarettes from 50% to 25% is a step in the right  direction and is expected to result in enhanced revenue buoyancy and arrest the  growth of illegal trade in the State.

Despite such  a challenging business scenario, the business has successfully enhanced its  market standing through robust strategies and excellence in execution. The  business continues to invest in development of products that are  ‘best-in-class’ and offer superior and differentiated value propositions to  consumers.

The pattern  of tobacco consumption in India is unique and is dominated by non-cigarette  products which are not only cheaper but also revenue inefficient. It is also  pertinent to note that while cigarettes account for less than 15% of the  overall tobacco consumption (by weight) in the country, they contribute about  75% of the total tax revenue from the tobacco sector accruing to the exchequer.  In contrast, other forms of tobacco are lightly taxed in India, and in some  cases are even duty exempt, leading to a high degree of potential tax loss.

The fact that  cigarette consumption is price elastic, while consumption of tobacco per se is  not, is borne out by the fact that the total tobacco consumption in the country  increased from 406 million kg in 1981-82 to 475 million kg in 2010-11 even as  the tobacco consumption in the form of cigarettes declined from 86 million kg  to 72 million kg during the same period. Thus, while overall tobacco  consumption is increasing in India, the share of cigarettes in overall tobacco  consumption has declined from 21% to 15%. In fact, India’s annual per capita  consumption of cigarettes is the lowest in the world. The requirement therefore  is an India-centric tax and policy framework for tobacco that cognises for the  unique consumption pattern in the country.

A  cross-country study of cigarette prices and affordability based on evidence  from the Global Adult Tobacco Survey, and published in Tobacco Control (British  Medical Journal), found that the price of cigarettes was the highest in India  relative to its income (in terms of Purchasing Power Parity). Interestingly,  the Study also established the fact that bidis in India were extremely  affordable with a large price differential of more than 8 times as compared to  cigarettes on account of the high levels of taxation on cigarettes. At 2.25% of  per capita GDP, cigarette taxes (per 1000 cigarettes in most popular price  category) in India are the highest in the world. In comparison, tax incidence  on cigarettes (per 1000 cigarettes in most popular price category) as a  percentage of per capita GDP in other countries such as Japan (0.37%), Germany  (0.62%), China (0.81%), Pakistan (0.85%), Thailand (1.20%) is much lower.

The policy of  high taxation narrowly focused on cigarettes has also led to the rapid growth  of the illegal cigarettes segment. This segment has grown exponentially from 11  billion sticks in 2004 to 22 billion sticks in 2012, of which, 2 billion sticks  have been added in the last one year alone. The illegal segment now accounts  for 18% of  cigarette trade and India is  now the 5th largest market in the world for illegal cigarettes comprising  smuggled foreign as well as domestic duty-evaded cigarettes. Most of these  illegal regular sized filter cigarettes are offered to consumers at a  convenient and low price of Re. 1 per stick. Such low consumer prices are  feasible only if taxes are evaded, as the Excise Duty component alone on a  regular size filter cigarette is significantly higher than the price point.

The  introduction of a new segment of filter cigarettes of length not exceeding 65  mm announced in the Union Budget 2012, was a positive step towards arresting  the growth of illegal cigarette trade. The industry has responded swiftly  making significant investments and launched several offerings in the new  segment. While  initial market response  has been encouraging, the high central Excise Duty rate of Rs. 689 per thousand  applicable to this segment coupled with a steep increase in the rate and  incidence of VAT, have made it difficult for the legitimate industry to fully  counter the menace of illegal cigarettes.

With steep Excise Duty hikes, discriminatory VAT  taxes by various States, rising illegal trade and heightened competitive  intensity, the year ahead will indeed be challenging. The business remains  confident that despite the severe pressures, its robust product portfolio,  innovation in processes and investments in cutting-edge technology and superior  execution of competitive strategies will enable it to sustain and reinforce its  market standing in the years to come.



The domestic tourism industry remained sluggish during the year in  the backdrop of a weak global and domestic economic environment. While growth  in foreign tourist arrivals slowed down to 2.8% during the year versus 9.9% in  2011-12, domestic air travel recorded de-growth. Industry performance was also  affected due to the significant increase in room inventory in some of the key  domestic markets.

Such a challenging business environment adversely impacted  business performance leading to a muted growth in Segment Revenues during the  year. While the Company's Hotels business maintained its leadership position in  terms of operating margins, Segment Results were adversely impacted largely by  the relatively weak pricing scenario and the gestation costs relating to ITC  Grand Chola, which commenced operations in September 2012.

During the year, the Company unveiled its latest offering in the  super premium segment - ITC Grand Chola in Chennai. The hotel has achieved the  distinction of being the world’s largest 'Leadership in Energy and  Environmental Design' (LEED) Platinum rated hotel under the New Construction category  and India’s first 5 Star 'Green Rating for Integrated Habitat Assessment'  (GRIHA) rated luxury hotel by the Ministry of New and Renewable Energy, thereby  bolstering the unique positioning of 'ITC Hotels' as the greenest luxury hotel  chain in the world.

In line with the Company’s commitment to the ‘Triple Bottom Line’,  investments have been made in renewable energy to provide clean power to the  Company’s hotels in Bengaluru (ITC Windsor and ITC Gardenia), Chennai (ITC  Grand Chola), Mumbai (ITC Maratha) and Jaipur (ITC Rajputana). With these  investments, the Company’s Hotels business met over half of its energy  requirements from clean and renewable sources.

In view of the positive long-term outlook for  the Indian Hotel industry, the Company continues to sustain its investment-led  growth strategy. Construction activity of two new luxury properties at Kolkata  and at Classic Golf Resort near Gurgaon is progressing satisfactorily. In  addition, the Company, through a newly formed subsidiary, acquired a prime plot  of land in Colombo, Sri Lanka on a 99-year lease from the Government of Sri  Lanka, for developing a mixed-use project including a 5-star luxury property.  Further, several new projects, including joint ventures and management  contracts, are on the anvil to rapidly scale up the business across all brands.


Paperboards, Paper & Packaging

During the  year, the Paperboards, Paper and Packaging segment recorded a growth of 9% in  revenues aided by higher volumes and   product mix enrichment. The relatively lower growth in Segment Results  during the year reflects the steep hike in input prices particularly of wood,  coal and chemicals.

The business continues to focus on the value-added product  segment in which it is a clear market leader. The business successfully  commissioned a state-of-the-art and highly energy efficient paper machine with  an installed capacity of over 1 lakh tonnes per annum at the Bhadrachalam plant  during the year. With this, the total capacity of the Bhadrachalam plant stands  at over 5.5 lakh tonnes per annum, thereby sustaining its position as the  single largest integrated pulp and paperboard/paper unit in the Indian  industry.

The Packaging  and Printing business continues to provide strategic support to the Company’s  FMCG businesses through innovative packaging solutions, faster speed-to-market  for new launches and security of supplies in addition to delivering benchmarked  international quality at competitive costs.

During the  year, the business augmented the capacity and capability of its Haridwar plant  with the successful commissioning of a new state-of-the-art line for cigarette  packaging, expansion of carton line capacity and other downstream conversion  facilities towards meeting the growing demand from the northern markets.

The integrated nature of the business model on  the one hand and robust forward linkages with the Company's FMCG businesses on  the other, strategically positions the business to further consolidate and  enhance its leadership status in the Indian paperboard, paper and packaging  industry.


Agri Business

Notwithstanding  a sluggish global demand scenario, the business recorded robust growth in leaf  tobacco export revenues by leveraging its strengths in crop development,  superior sourcing and processing capabilities. The business not only  strengthened its presence in existing markets but also accessed customers in  new markets. The business also made progress during the year in growing the  smokeless tobacco segment through customised offerings.

The recently  commissioned Green Leaf Threshing plant in Mysore has stabilised and exceeded  benchmarks on all operating parameters of throughput, processing yield and  quality. This investment has enhanced the processing capability of the business  and reduced transportation costs given the factory’s proximity to the tobacco  growing areas in Karnataka.

The business’  uniquely structured commodity sourcing business model with strong competencies  in multi-location sourcing, logistics and supply chain management enabled  achieving enhanced scale and value capture in the wheat and soya market. The  business continued to source identity preserved and special varieties of wheat  through its e-Choupal network for the Company's Branded Packaged Foods  businesses.

The business continued to provide strategic  sourcing support to the Company’s Cigarette business and leverage the e-Choupal  network to source identity preserved specific grades of high quality wheat for  the Branded Packaged Foods business. In sourcing chip stock potato for the  ‘Bingo!’ brand of potato chips, the business  continued its initiative of sourcing locally grown potatoes (closer to  manufacturing units) in order to support local farmers and minimise logistics  costs.


Contribution to Sustainable Development

The Company's  Vision to subserve larger national priorities and create enduring societal  value is the inspiration for its multi-dimensional sustainability initiatives  that are today acknowledged as global exemplars. The Company's sustainability  strategy aims to significantly enhance national wealth through superior 'Triple  Bottom Line' performance that builds and enriches the country's economic,  environmental and societal capital. It is premised on the belief that the  transformational capacity of business can be very effectively leveraged to  create significant societal value through a spirit of innovation and  enterprise. The Company's 'Triple Bottom Line' contribution is manifest in the  creation of innovative business models that not only generate new sources of  competitive advantage for its businesses, but also in the process enables the  replenishment of natural capital and augmentation of sustainable livelihoods.


The footprint of the Company’s Social Investments Programme can be viewed at a glance in the following chart:

Intervention AreasUnit of MeasurementCumulative till date
Total Districts CoveredNumber60
Social and Farm Forestry
Soil and Moisture Conservation Programme
Sustainable Agricultural Practices
       Compost Units
Sustainable Livelihoods Initiative
       Cattle Development Centres
       Animal Husbandry Services

Artificial Insemination doses (in lakhs)

Economic Empowerment of Women
      Self Help Group Members
      Livelihoods created
Primary Education
Children ( in lakhs)3.07
Health and Sanitation
      Low Cost Sanitary Units

The Board of Directors, at its meeting in Kolkata on 17th May 2013, approved the financial results for the year ended 31st March 2013, which are enclosed.

Click here for the Financial Results