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ITC eyeing IT space

Y. C. Deveshwar

KOLKATA: ITC is planning an acquisition in the IT space, Chairman Y. C. Deveshwar told reporters after the company’s annual meeting here on Wednesday.

To a question as to whether ITC would utilise its huge reserves to make an acquisition, Mr. Deveshwar said the company was always on the look-out, in its area of operations but for now group company, ITC Infotech, was set to make a buy in infotech business. He was unwilling to give out any details beyond saying that the target company was based in the U.S. “ITC Infotech is doing well in Europe,” he said.

He said that while cigarette business would continue to be the main stay for the company, despite being battered by regulatory measures and taxation, ITC would continue to aggressively grow its other businesses taking on competition by almost every major brand in the FMCG sector.

Mr. Deveshwar told shareholders that “they should fasten their seatbelts as there may be air pockets ahead. Return on new businesses will take time, however, we will succeed,” he said.

He said Rs. 4,000 crore had been invested in various sectors and the next few years might see the existing resources getting absorbed in the creation of new assets.

On the implementation of announced plans in segments such as paper and food, he said that these were linked with the availability of land and various other permissions.On strategic investments in related areas of its operations (like the one with East India Hotels or with Ballarpur Industries), the ITC chief said that these would continue.

Meanwhile, the board of ITC finalised the first quarter results. Its net turnover at Rs. 3,900 crore registered a growth of 18.4 per cent driven by the non-cigarette businesses. However, pre-tax profit was lower during the quarter with post-tax profit dipping too.

The unprecedented increase in excise duties on non-filter cigarettes in the Union Budget 2008, steep increases in commodity prices and store rentals, launch costs of new personal care portfolio and the continuing brand building costs in the foods business combined to exert pressure on profitability during the quarter. Consequently, the pre-tax profit at Rs. 1,114 crore was lower by 1.3 per cent over the same period last year.

Post-tax profit at Rs. 749 crore represents an underlying degrowth of one per cent after adjusting for income tax refunds of Rs. 29 crore received in the same quarter last year.

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