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Financial Results for the Quarter ended 30th June, 2016
21 Jul 2016

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Financial Results for the Quarter ended 30th June, 2016



Revenue from Operations up 8.3%

Net Profit up 10.1%

  • Healthy growth in revenue and profit amidst a challenging operating environment.
  • Legal Cigarette industry continues to be severely impacted due to the cumulative impact of steep increase in taxation and intense regulatory pressures. Illegal trade continues to grow resulting in significant revenue loss to the exchequer.
  • FMCG-Others Segment Revenue up 9.5% amidst a persistently sluggish demand environment. Continued improvement in Segment Results despite start-up cost of new categories and sustained investment in brand building.
  • 'Fabelle Chocolate Boutique' launched in ITC Gardenia, Bengaluru; being extended to other ITC Hotels.
  • Robust growth in Agri Business Segment Revenue driven by wheat sales in domestic market and leaf tobacco exports.
  • Financial results for the quarter prepared in accordance with Indian Accounting Standards (Ind-AS). Results for quarters ended 30th June, 2015 and 31st March 2016, and year ended 31st March 2016 have been recast in accordance with Ind-AS to facilitate comparison.

The Company delivered steady performance during  the quarter despite a challenging operating environment marked by continuing  pressure on legal Cigarette industry volumes and persistently sluggish demand  conditions prevailing in the FMCG industry. Operating conditions in the Hotels  and Paperboards, Paper and Packaging segment also remained subdued. Revenue  from Operations for the quarter stood at Rs. 13156.68 crores representing a  growth of 8.3%. Profit Before Tax at Rs. 3675.40 crores and Net Profit at Rs.  2384.67 crores registered a growth of 10.0% and 10.1% respectively during the  quarter. Earnings Per Share for the quarter stood at Rs. 1.97.

Pursuant to the approval of the Shareholders through  postal ballot and e-voting on 27th June 2016, the Company, on 7th  July 2016, issued and allotted 402,66,57,100 Ordinary Shares of Re. 1/- each,  as fully paid-up Bonus Shares in the proportion of 1 Bonus Share of Re. 1/-  each for every existing 2 Ordinary Shares of Re. 1/- each held on the Record  Date i.e. 4th July, 2016. The Earnings Per Share (Basic and Diluted)  have been duly adjusted consequent to the issue of Bonus Shares as aforestated.

Total Comprehensive Income (TCI) for the quarter stood  at Rs. 2448.24 crores representing a growth of 17.6%. The higher growth in TCI  relative to Net Profit is attributable to a positive swing of Rs. 148.34 crores  in Other Comprehensive Income primarily on account of favourable movement in  fair value of the Company’s strategic investments in equity.


Segment  Revenue grew by 9.5% during the quarter amidst weak demand conditions and a  price deflationary scenario particularly in the Personal Care business. Most  categories witnessed margin expansion driven by enhanced scale of operations  and product mix enrichment. Segment Results recorded improvement in comparison  to the corresponding period in the previous year despite higher investment in  brand building, consumer and trade promotion activities and gestation costs  relating to new categories viz. Juices, Dairy, Gums and Health & Hygiene  segment in the Personal Care Products Business.

The Branded  Packaged Foods Businesses posted healthy growth in revenue led by Staples,  Snacks and Noodles categories despite sluggish demand conditions.

- In the Staples,  Snacks and Meals Business, ‘Aashirvaad’ atta continued to perform well  consolidating its leadership position across markets. During the quarter, the  Business launched ‘Aashirvaad Sugar Release Control Atta’, which has received  encouraging consumer response. Made using a unique blend of whole wheat and  pulse/legume flours, the product is high in protein & fibre with a low glycemic  index and helps in diabetes control, weight management besides maintaining  heart health. During the quarter, the Business also augmented the recently  launched ‘ITC Master Chef’ range of premium blended spices with the addition of  four new variants in select markets in South India. The range, which presently  comprises nine differentiated variants, has been crafted based on deep consumer  research and customised to regional tastes and preferences leveraging the  strong sourcing and processing capability of the Company’s Agri Business.

The ‘Bingo!’ range of snack foods registered healthy growth  driven by the ‘Tedhe Medhe’ and ‘Mad Angles’ sub-brands. ‘Bingo! Yumitos  Original Style’ potato chips continued to gain consumer traction in focus  markets. The snacks portfolio was augmented with the launch of two new  innovative variants - ‘Yumitos Dilli Masala’ and ‘Tangles Masala Cheese’ - in  addition to ‘Tedhe Medhe Achaari Masti’, which was introduced in the preceding  quarter. The variants have received good response from consumers in launch  markets. In the Instant Noodles category, YiPPee! sustained its high growth  trajectory leveraging a superior value proposition anchored on best-in-class  product quality, safety and taste.

- In the Confections Business,  the ‘Sunfeast Mom’s Magic’ range of premium cookies grew rapidly on the back of  superior product attributes and sustained investment in brand building. The  Biscuits portfolio stood expanded during the quarter with the launch of  ‘Delishus Expressions’ in three premium variants viz., ‘Walnut & Choco  Chip’, ‘Oats and Hazelnut’ and ‘Rich Choco Chip’, and a new cheese cracker  variant under the ‘Snacky’ sub-brand in the North-East markets. Portfolio  premiumisation continued in the Confectionery category with the share of ‘Re.1  and above’ products increasing during the quarter. The range of higher value  products in the Confectionery category was also augmented with the launch of  ‘Jelimals’ gummy bears under the ‘Jellicious’ sub-brand.

- In the Dairy and Beverages  Business, the ‘B Natural’ range of juices continued to garner increasing  consumer patronage. During the quarter, the Juices portfolio was augmented with  the launch of ‘Punjab Da Kinnow’ variant in the North markets. ‘Aashirvaad  Svasti’ – Pure Cow ghee, launched during the previous year, was extended to  target markets. The quarter also marked the Business’s entry into the Dairy  Whitener category under the brand ‘Sunfresh’.The product is currently available  in the North-East markets.

- During the quarter, the Business launched a luxury  range of chocolates under the ‘Fabelle’ brand at an exclusive ‘Fabelle  Chocolate Boutique’ in ITC Gardenia, Bengaluru. Fabelle offers a range of  exquisite handcrafted chocolate creations such as Fabelle Elements -  intricately crafted pralines inspired by the elements of nature, Fabelle  Ganache - velvety soft cubes of exotic cocoas delicately churned with  butter & fresh cream and Fabelle As You Like It - personalised  chocolate cup creations offering myriad possibilities of fillings and toppings.  In addition, the chocolate boutique offers a range of exquisitely crafted  desserts and cocoa beverages, created live by Fabelle Master Chocolatiers. Made  from impeccable single-origin cocoas sourced from the best growing regions in  Africa and South America and combined with unique ingredients, Fabelle is set  to redefine the luxury chocolate segment in India. Plans are on the anvil to  open Fabelle Chocolate Boutiques in select ITC Hotels in the ensuing months.

The Personal Care Products Business posted  robust revenue growth during the quarter driven by higher volumes and richer  product mix. The Business continues to leverage the recently acquired  trademarks – ‘Savlon’ and ‘Shower to Shower’ – to expand its product portfolio  and gain access to newer consumer segments and markets. New variants in the  Hand Wash and Antiseptic Liquid categories launched under the Savlon brand  continue to gain traction with consumers. The Business also augmented its skin  care portfolio during the quarter with the launch of ‘Vivel Cell Renew – Aqua  Quench Cleansing Mousse’.

The Company continues to make steady progress in  building several state-of-the-art owned integrated consumer goods manufacturing  and logistics facilities across regions in line with long-term demand forecast.  Currently, over 20 projects are underway and in various stages of development –  from land acquisition/site development to construction of buildings and other  infrastructure.


The performance of the Cigarette  Business during the quarter remained subdued on account of continued pressure  on the legal Cigarette industry in India. Over the last 4 years, the incidence of Excise Duty and VAT  on cigarettes, at a per unit level, has gone up cumulatively by 118% and 142%  respectively thereby exerting severe pressure on legal industry volumes even as  illegal trade grows unabated. It is pertinent to note that steep increases in  Excise Duty on cigarettes in recent years have resulted in widening the  differential in Excise Duty rates (on a per kg. of tobacco basis) between  cigarettes and other tobacco products from 29 times in 2005/06 to over 53 times  currently. 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  89% of total tobacco consumption in the country. Besides adversely impacting  the performance of the legal cigarette industry, this has led to  sub-optimisation of the revenue potential from the tobacco sector.

The operating  environment for the legal Cigarette industry in India was rendered even more  challenging during the quarter in the wake of a further increase of 10% in  Excise Duty announced in the Union Budget 2016 and introduction of the new 85%  graphic health warnings (GHW) on cigarette packages. Ambiguities surrounding  the implementation of the new GHW led to severe supply chain disruptions during  the quarter including intermittent stoppage of manufacture at the Company’s  units. Besides, cigarette stocks manufactured prior to 1st April,  2016 bearing the old health warnings were seized at some locations by  regulatory authorities – most of which were subsequently released following an  order of the Honourable Bombay High Court, clarification from Union Health  Ministry and representations made by the Company.

On 4th May  2016, the Honourable Supreme Court directed the Honourable High Court of Karnataka  to hear and dispose of within six weeks, the legal challenge to GHW pending in  several High Courts. The Honourable Supreme Court, however, also ordered that  any stay order granted by any High Court would not be given effect to till the  cases are finally disposed of. As a consequence of the above development, in  compliance with the interim requirements pending hearing in the Honourable  Karnataka High Court, the Company progressively commenced manufacture of  cigarettes with 85% warning. The matter is currently pending before the  Honourable Karnataka High Court.

The Tobacco  industry in India supports the livelihood of over 45 million people including  vulnerable sections of the society like farmers, farm labour, rural poor,  women, tribals etc. and contributes around Rs. 30,000 crores to the national  exchequer apart from generating valuable foreign exchange earnings of around  Rs. 6000 crores.

The proposed  GHW is excessively large, extremely gruesome and unreasonable. There is no  evidence to suggest that cigarette smoking would cause the diseases depicted in  the pictures or that large GHW will lead to reduction in consumption. In fact  this inadequacy of evidence prompted the courts in USA to hold that the US  FDA’s proposal for introduction of similar GHW in that country as  unconstitutional. Further, over 100 countries representing 60% of the  signatories to the Framework Convention on Tobacco Control have not adopted  GHW. It is pertinent to note that other major tobacco producing countries have  taken a considered view on the matter and have not adopted over-sized and  excessive graphic health warnings, thus striking a balance between the  interests of the consumer and of their farmers. It may also be noted that the  global average size for GHW is only about 30% coverage of the principal display  area. Moreover, the top three cigarette consuming countries - USA, China and  Japan - which together account for 51% of global cigarette consumption have  only text based warnings and have not adopted pictorial / graphic health  warnings.

The new GHW  will encourage the flow of illegal trade of brands owned by international  companies into the country since such brands are manufactured in many  jurisdictions which do not mandate the printing of graphic health warnings on  cigarette packages as applicable in India. The legal cigarette industry in  India will be hard pressed to counter the menace of illegal cigarettes as they  will be perceived by the consumer to be safer in the absence of the statutorily  mandated health warnings. Coupled with the fact that illegal cigarettes are  available at a fraction of the price of legal cigarettes, the new GHW will  provide further fillip to the growth of illegal cigarettes in the country.

According to  an independent study, India is now the 4th 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 and is estimated to cost  the exchequer a revenue loss of more than Rs. 9000 crores per annum.

It is  pertinent to note that the Department of Commerce, in its submissions to the  Parliamentary Committee on Subordinate Legislation, has stated that “large  warnings will lead to an increase in overall tobacco consumption and illegal  cigarettes; when large quantities of non-cigarette tobacco products from  unorganised sector are sold loose and / or without any health warnings, it  gives an impression of these products being relatively safer than cigarettes.”

As always, the  Company complies fully with all regulations and laws in letter and spirit and  continues to engage with policy-makers for reasonable, pragmatic and evidence  based regulation and taxation policies that balance the health, employment and  economic imperatives of the country.

Despite the challenging operating environment,  the Company continues to consolidate its market leadership through relentless  focus on delivering world-class products, continuous innovation & value  addition and best-in-class execution.


The hospitality  sector continues to be adversely impacted by a weak demand and pricing scenario  against the backdrop of excessive room inventory in key domestic markets and  sluggish macroeconomic environment both in India and key source markets.  Against this backdrop, Segment Revenue during the quarter was flattish in  comparison to the corresponding period of the previous year.
Although Segment Results improved as compared to  the corresponding quarter in the previous year, the same remained muted due to  the challenging business context as aforestated and gestation costs of the  recently commissioned ITC Grand Bharat, Gurgaon.

Construction activities at the luxury hotel  projects in Kolkata, Hyderabad and Ahmedabad are progressing satisfactorily.

Agri Business

The Business  continues to provide strategic sourcing support to the Company's Cigarette  business and leverage its deep rural linkages to source superior quality wheat,  chip stock potato, spices and fruit pulp at competitive prices for the Branded  Packaged Foods Businesses.
The Business scaled up wheat sourcing during the  quarter to meet the growing requirements for Aashirvaad atta. The Business  continues to leverage the e-choupal network to source superior quality wheat at  competitive costs and deliver substantial savings to the system through  efficient logistics management and other cost-optimisation initiatives.

Segment Revenue recorded robust growth during  the quarter driven by domestic agri commodity sales and leaf tobacco exports.

Paperboards, Paper & Packaging

The Paperboards,  Paper & Packaging segment remained impacted by the subdued demand  environment prevailing in the FMCG and legal Cigarette industry. Zero duty  imports under Free Trade Agreement with ASEAN countries and cheap imports from  China along with capacity expansion / ramp-up by other industry players,  continued to adversely impact the Paper and Paperboard industry. Consequently,  Segment Revenue and Segment Profits were impacted during the quarter.
In an endeavour to reduce its dependence on  imported pulp, the Business is in the process of setting up India’s first  Bleached Chemical Thermo Mechanical Pulp mill at its Bhadrachalam unit. The  facility is expected to be commissioned in the second half of the current  financial year. Capacity expansion in the Value Added Paperboards and Décor  segments is also underway.

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 167 districts across the country and can be  viewed at a glance in the following chart:

Intervention AreasUnit of MeasurementCumulative till date
Total Districts CoveredNumber167
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
      Ultra Poor Women covered
      Self Help Group Members
      Livelihoods created


Primary Education
      Children covered

Number (in lakhs)

Health and Sanitation
      Low Cost Sanitary Units
Households covered under  Solid Waste Management


Vocational Training
      Students Enrolled



The Board of Directors, at its meeting in  Kolkata on 21st July 2016, approved the financial results for the  quarter ended 30th June 2016, which are enclosed.

Click here for the Financial Results