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ITC Q3 Net Jumps 21%
The Economic Times - 19 Jan 2013

Sales of cigarettes-to-hotels  conglomerate rise 23% to Rs. 7,627.07 crore

Cigarettes-to-hotels conglomerate ITC Ltd said third-quarter net profit jumped  20.6% year-on-year to Rs. 2,051.85 crore on the back of strong growth in its  FMCG and agricultural businesses. ITC said on Friday net sales for the  quarter-ended December rose 23.1% from a year ago to Rs. 7,627.07 crore. Net  sales from its FMCG business grew 30% while revenue from its agri-business was  up 43%. Investors cheered the news, pushing ITC's shares up to Rs. 289.7 in  intra-day trade on the Bombay Stock Exchange on Friday. The scrip closed 0.67%  higher at Rs. 287.05.

"The FMCG business and agribusiness is going to drive ITC's  growth next quarter as well, since we do not expect any significant improvement  in the cigarette business volume or the hotel business," said KaustubhPawaskar,  research analyst at Sharekhan. Revenue of the company's flagship cigarette  business grew by more than 13% to Rs. 3,657.36 crore, despite a steep hike in  taxation,whichhasledto10-17% increase in cigarette prices over the last two  quarters.

In volume terms, ITC's cigarette business grew by 1.25%, according to Religare  Institutional Research. Sharekhan'sPawaskar attributed the growth in revenue  from the cigarette segment to the price hike and ruled out any significant jump  in volumes in the next quarter.

ITC said its sub-65 mm cigarettes, launched to fight illegal trade and offer an  entry-level pricing, has received favourable response and the company is now  planning a nationwide rollout.

Net sales of the company's non-cigarette FMCG business, which comprises  packaged food and personal-care products, grew 30% to Rs. 1,782.70 crore. The  segment reduced losses by 50% to Rs. 23.98 crore during the quarter.

ITC said sales growth of its packaged food business was led by its biscuit  brand Sunfeast, Sunfeast Yippee! noodles and Bingo! range  of snacks.

In personal care, the company strengthened its presence in soaps with a premium  range and also launched newer products in the deodorants, body lotion, hand  moisturiser and skin toner segments. However, ITC's hotel business failed to  make a significant recovery during the quarter. The company  attributedthistothecontinuing weakness in the domestic and global economy and a  significant addition of rooms in several markets. Sales in this segment grew  11% to Rs. 309.46 crore, while profitability was down 45% to Rs. 55.49 crore.