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ITC posts 18.4% rise in Q4 net
The Times of India - 24 May 2014

FMCG-to-hotel-to-tobacco major ITC has witnessed a 18.4% jump in net profit to Rs 2,278 crore in the fourth quarter of 2013-14 from Rs 1,927 crore in the year ago period following better performance in new FMCG, tobacco and agri business segments. The new FMCG business registered its maiden profit for the whole year of Rs 11.96 crore. However, its hospitality business continues to remain sluggish.

For the fourth quarter, new FMCG business has recorded a profit of Rs 43 crore from Rs 11.87 crore in the same period of the previous year. The agri business posted a profit of Rs 145 crore while the hotel segment witnessed a profit of Rs 59.85 crore.

During the fourth quarter of the year, the company registered a net turnover growth of 11.8% at Rs 9,145.14 crore driven by robust performance in the non-cigarette FMCG, paperboard, paper & packaging and cigarettes segments. ITC said in a statement that the company continued to deliver strong financial performance with healthy growth in revenues and high quality earnings.

This performance is particularly commendable when viewed against the backdrop of the extremely challenging business context in which it was achieved, namely, a sluggish macro-economic environment; steep increase in taxes/duties on cigarettes for two years in a row; weak demand conditions in the FMCG industry; gestation costs relating to the new FMCG businesses; sharp escalation in input costs in the paperboards, paper & packaging business and a weak demand and pricing environment in the hotels businesses, an official said. ITC board has also recommended a dividend of Rs 6 per share compared to Rs 5.25 previous year. The total cash outflow in this regard will be Rs 5,582 crore.

Commenting on the maiden profit of the new FMCG business, ITC officials pointed out that there was a positive swing of Rs 103 crore over FY13 driven by enhanced scale, operating leverage, supply chain efficiencies and strategic cost management initiatives. According to them, the cigarette industry had to contend with a steep increase in excise duty for the second year in a row along with discriminatory and punitive increases in value added tax (VAT) rates by some states.