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ITC Q2 profit up 13 p.c.

KOLKATA: ITC posted a 14.2 per cent increase in its net turnover which touched Rs. 3,273 crore and a 13.4 per cent rise in post-tax profit at Rs. 771 crore even as it suffered a 13 per cent decline in its agri-business revenues during the second quarter of 2007-08.

This takes the half-yearly net turnover to Rs. 6,877 crore from Rs. 5,849.80 crore in the previous year, with a net profit of Rs. 1,553.74 crore as compared to Rs. 1,331.80 crore in the first half of 2006-07.

ITC continued to suffer anxiety on account of the high rates of taxation on cigarettes saying that despite lower volumes, the additional burden of indirect taxes during the quarter aggregated Rs. 411 crore. Advertisement stipulations like pictorial health warnings (proposed to be made effective from December 1, 2007) will further constrain the industry, says a release.

In the FMCG segment, branded packaged foods business grew by 58 per cent with the biscuit-segment growing well following budgetary sops given for low and mid-priced biscuits. ITC’s retail business through its lifestyle stores saw increased footfalls with three new stores at malls and increased business of 21 per cent.

Hotels business contributed 13 per cent, with a shift from a dual-pricing methodology to rupee-billing from September to insulate itself from the impact of the appreciating rupee.

The performance of the agri business was adversely affected by the business having to dispose of agri commodities in the domestic market at prices lower than those paid to farmers through the e-choupal network.

Apart from hedging, ITC is renegotiating prices to neutralise the impact of the rising rupee.

The pilot project for the retailing of horticulture products was extended during the quarter with the launch of four stores and nine shop-in-shops in Hyderabad and Pune.

The recent acquisition of the Australian company, Technico Pty Ltd., and its six wholly-owned subsidiaries, by ITC subsidiary Russel Credit, is likely to give the snacks business a sourcing support.

Technico is also proposed to be leveraged for the horticulture retail initiative, says the release.

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