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Financial Results for the Quarter ended 30th June, 2015
30 Jul 2015

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Financial Results for the Quarter ended 30th June, 2015


  • FMCG-Others Segment registers revenue growth of 12.2% amidst subdued demand conditions.
  • Legal cigarette industry volumes remain under severe pressure even as illegal trade grows unabated.
  • Hotels segment registers a healthy revenue growth of 15.7% driven by strong growth in room occupancies and Food & Beverage revenues. Segment Results include the impact of gestation costs of ITC Grand Bharat commissioned in November 2014.
  • Agri Business Segment Revenue impacted by lack of trading opportunities in wheat & soya. However, Segment Profits up 15.5% driven by superior product mix and higher realisations.
  • Paperboards, Paper & Packaging Segment impacted by the continuing slowdown in the FMCG and Cigarette industry, reduction of import duty under various regional Free Trade Agreements.

The Company’s performance during the quarter was  subdued reflecting the unprecedented pressure on legal cigarette industry  volumes, sluggish demand conditions prevailing in the FMCG industry and lack of  trading opportunities in wheat and soya. Net Revenue for the quarter stood at  Rs. 8505.53 crores. Profit Before Tax at Rs. 3432.23 crores and Net Profit at  Rs. 2265.44 crores registered a growth of 5.1% and 3.6% respectively during the  quarter. Earnings Per Share for the quarter stood at Rs. 2.83.

FMCG | Cigarettes | Hotels
Paperboards, Paper & Packaging | Agri Business


The Branded Packaged Foods Businesses posted healthy growth in revenues  during the quarter, despite sluggish demand conditions and regulatory  challenges in the Instant Noodles category.

- In the Staples, Snacks and Meals  Business, ‘Aashirvaad’ atta sustained its high growth trajectory  consolidating its leadership position across markets. The  ‘Bingo!’ range of snack foods registered robust growth driven by the finger  snacks portfolio comprising the ‘Mad Angles’, ‘Tangles’ and ‘Tedhe Medhe’  sub-brands. The ‘Bingo! Yumitos’ potato chips portfolio also gained strong  traction in the market. In the Instant Noodles category, while sales of  ‘Sunfeast YiPPee!’ noodles recorded robust growth in the initial part of the  quarter, regulatory issues largely pertaining to a competitor’s products  impacted sales in recent weeks. It is pertinent to note that Sunfeast YiPPee!  noodles are manufactured in state-of-the-art facilities complying to strict  quality and hygiene norms. Stringent tests are conducted at ITC’s internal  world-class laboratories as well as at external laboratories which are  FSSAI-approved and also NABL-accredited. In all these tests, Sunfeast YiPPee!  noodles have been found to be in compliance with all food safety regulations.

- In the Confections Business, the  recently launched ‘Mom’s Magic’ premium cookies and ‘Yumfills Whoopie Pie’  continue to garner increasing consumer franchise. Market standing of the  ‘Sunfeast Bounce’ range of cream biscuits improved further during the quarter  with the brand consolidating its position as the largest selling cream brand in  the country thereby sustaining the Company’s leadership position in the overall  creams segment. The Business also migrated the  popular range of cookies under a new sub-brand ‘HiFi’ for sharper positioning  in the market.

- The ‘B Natural’ range of juices, which is  now available across all target markets, has garnered impressive consumer  franchise in a relatively short span of time. The Company seeks to leverage its  agri-sourcing expertise and deep distribution reach to scale up the brand going  forward.

During  the quarter, the Personal Care Products Business posted robust revenue  growth driven by improved volumes and enriched mix in the Personal Wash and  Deodorants categories. The Business augmented its product portfolio with the  launch of ‘Vivel Neem’ in the Personal Wash category and several variants in  the Skin Care category under the ‘Vivel Cell Renew’ brand aimed at addressing  specific consumer needs. The recently acquired trademarks ‘Savlon’ and ‘Shower  to Shower’ have been fully integrated with the existing operations of the  Business.


The  performance of the Cigarette business during the quarter reflects the extremely  challenging operating environment for the legal cigarette industry in India  which is facing unprecedented pressure on sales volumes. The punitive taxation  regime on legal cigarettes in India was exacerbated with two rounds of sharp  increase in Excise Duty – in July 2014 and February 2015. This includes a  cumulative increase of 115% on filter cigarettes of ‘length not exceeding 65  mm’, which has widened the price differential between legal and illegal  cigarettes and made it extremely difficult for the legal cigarette industry to  counter the unabated growth of illegal cigarettes in the country.

Over the  last 3 years, the incidence of Excise Duty and VAT on cigarettes, at a per unit  level, has gone up cumulatively by 98% and 104% respectively. The combined  impact of such sharp increase in Excise Duty and VAT, is exerting severe  pressure on legal industry sales volumes.

High  incidence of taxation and a discriminatory regulatory regime on cigarettes in  India have over the years, led to a significant shift in tobacco consumption to  lightly taxed or tax-evaded tobacco products like bidi, khaini, chewing  tobacco, gutkha and illegal cigarettes which presently constitute over 88% of  total tobacco consumption in the country. Thus, the share of legal cigarettes  in overall tobacco consumption has progressively declined from 21% in 1981-82  to below 12% in 2014-15 even as overall tobacco consumption has increased in  India. Besides adversely impacting the performance of the legal cigarette  industry, this has led to sub-optimisation of the revenue potential from the  tobacco sector.

According  to a recent independent study, it is estimated that products representing 68%  of overall tobacco consumption in the country escape taxation as they are  manufactured in the unorganised sector with little statutory oversight. As a  result, revenue collections from the tobacco sector are sub-optimised even as  the overall tobacco control and health objectives remain substantially  unfulfilled. The requirement therefore is an India-centric tax and policy  framework for tobacco that cognises for the unique tobacco consumption pattern  in the country.

The  imposition of discriminatory and punitive VAT rates by some States provides an  attractive tax arbitrage opportunity for illegal cigarette trade by criminal  elements. The consequential decline in legal cigarette volumes in such States  has led to stagnation/decline in revenue collections, even as illegal  cigarettes gained significant traction. On the other hand, the pragmatic  decisions of several State Governments to rationalise VAT on cigarettes have  facilitated improvement in revenue buoyancy and arresting the growth of illegal  trade.

According  to an independent study conducted by Euromonitor International - a renowned  global research organisation - India is now the 5th largest market for illegal  cigarettes in the world. In fact, illegal trade comprising smuggled foreign and  domestically manufactured tax-evaded cigarettes is estimated to constitute  one-fifth of the overall cigarette industry in India resulting in a huge  revenue loss of over Rs.7000 crores per annum to the national exchequer.

There  is an urgent need for stability in tax rates on cigarettes to reverse the  undesirable consequences of a punitive and discriminatory tobacco taxation  policy. The Company continues to engage with the concerned authorities, both at  the Central Government and State level, highlighting the need for moderation in  tax rates on cigarettes to maximise the revenue potential from the tobacco  sector and contain the growth of the illegal segment.


The hospitality sector continues to be adversely impacted by a  weak pricing scenario in the backdrop of excessive room inventory in key  domestic markets and sluggish macroeconomic environment both in India and key  source markets. Despite a challenging operating environment, the Business  recorded robust growth in revenue driven by improved room occupancies and  strong growth in the Food & Beverage segment. 

Segment Results remained muted during the quarter, reflecting  gestation costs of the recently commissioned ITC Grand Bharat, Gurgaon and  higher depreciation charge due to revision in useful life of fixed assets in  accordance with Schedule II of the Companies Act 2013 with effect from 1st  April 2014.

Construction  activity at the luxury hotel projects in Kolkata and Hyderabad is progressing  satisfactorily. Requisite approvals are also in place to commence excavation  works for the construction of a luxury hotel - ITC Narmada - in Ahmedabad.

Agri Business

Segment  Revenue during the quarter was impacted by the lack of export opportunities in  wheat and soya. While export of Indian wheat was adversely impacted by lower  international prices and poor quality due to unseasonal rains, soya trading  opportunities were constrained due to adverse price parity in view of higher  crop output in major origins. Robust growth in leaf tobacco exports, on the  back of new business development and strengthening trade with existing  customers, partially mitigated the impact. 

Segment  Results, on the other hand, recorded strong growth on the back of superior  product mix and improved realisations leading to significant improvement in  Return on Capital Employed.

The  Business continued to provide strategic sourcing support to the Company's  Cigarette business and leverage its deep rural linkages to source superior  quality wheat, chip stock potatoes and fruit pulp at competitive prices for the  Branded Packaged Foods Businesses.

Paperboards, Paper & Packaging

The  Paperboards, Paper & Packaging segment continued to be impacted by the  slowdown in the FMCG and Cigarette industry. Reduction of import duties under  various Free Trade Agreements, especially with ASEAN which became effective  from 1st January 2014, also weighed on the performance of the domestic Paper  and Paperboard industry. Cheap imports from China also impacted the domestic  industry. Consequently, Segment Revenue and profit were impacted during the  quarter.    

The  recently completed in-house pulp mill expansion project has been fully  operationalised and is performing optimally. To further reduce the dependence  of imports, the Business has embarked on setting up India’s first Bleached  Chemical Thermo-Mechanical Pulp mill at its Bhadrachalam unit. The project is  progressing as per schedule.

In the Packaging & Printing Business, capacity and capability in cartons  and flexibles manufacturing is being augmented at both its plants in Chennai  and Haridwar. These interventions are expected to be completed shortly.

Contribution to Sustainable Development

The  Company’s Social Investments Programme aims to address the challenges arising  out of poverty, environmental degradation and climate change through a range of  activities with the overarching objective of creating sustainable sources of  livelihood for stakeholders.

The  footprint of the Company’s Social Investments Programme has spread to 71  districts across the country and can be viewed at a glance in the following  chart:

Intervention AreasUnit of MeasurementCumulative till date
Total Districts CoveredNumber71
Social and Farm Forestry
Soil and Moisture Conservation Programme
Sustainable Agricultural Practices
       Compost Units
Sustainable Livelihoods Initiative
       Cattle Development Centres
       Animal Husbandry Services

Artificial Inseminations (in lakhs)

Economic Empowerment of Women
      Self Help Group Members
      Livelihoods created
Primary Education
Children ( in lakhs)4.22
Health and Sanitation
      Low Cost Sanitary Units
Vocational Training
      Students Enrolled

The Board of Directors, at its meeting in Kolkata on 30th July 2015, approved the financial results for the quarter ended 30th June 2015, which are enclosed.

Click here for the Financial Results