ITC Limited :: Newsroom :: Media Releases

Highlights

Net Turnover : + 20%

Profits from Operations : + 22%

Pre-tax Profits : + 23%

Post-tax Profits : + 25%

Non-Cigarette Profits grow 36% (Rs. 360 crs in Jun '11 from Rs. 265 crs in June '10).

Non-Cigarette FMCG segment registers robust revenue growth of 20% and improved profitability.

Hotels business posts strong profit growth of 33%.

Agri business delivers strong performance with Segment Revenues up 26% and Segment Results growing 21%.

Strong showing by Paperboards, Paper and Packaging business, leveraging investments in Paper and Pulp capacities. Segment Revenues and Profits up 21% and 20% respectively.

The Hotels business achieves the unique distinction of being the first hotel chain in the world to have all its premium luxury hotels certified at the highest LEED Platinum rating.

ITC to hold its 100th Annual General Meeting on 29th July 2011.

The Company posted yet another stellar performance with healthy topline growth and high quality earnings during the quarter. Net Turnover at Rs. 5767 crores grew by 19.6% driven primarily by Branded Packaged Foods, Agri, Paperboards & Packaging and the Cigarettes business. Pre-tax profits grew by 23.4% to Rs. 1937 crores while post-tax profits at Rs. 1333 crores registered a growth of 24.5%. Earnings Per Share for the quarter stood at Rs 1.72.

The Branded Packaged Foods business continued to expand rapidly with sales recording an impressive growth of 21% during the quarter. The business achieved significant improvement in profitability driven by an enriched product mix, better realisations, smart sourcing, improved market servicing and cost management actions. During the quarter, the business continued to focus on enhancing consumer franchise through new product launches, product extensions and focused communication.

In the Biscuits category, 'Sunfeast' recorded significant growth, especially in the value-added and premium end. The 'Sunfeast' range witnessed enrichment and premiumization of its product mix with the re-launch of 'Bourbon' and extension of its premium 'Dark Fantasy' range of biscuits to more markets.

In the Staples category, 'Aashirvaad' atta consolidated its leadership position through improved realisations and higher volumes. The branded Spices segment which saw the launch of 'Aashirvaad' rasam and sambhar blended powders last year continued to scale up its presence in target markets.

In the Savoury Snacks segment, 'Bingo!' range of potato chips and finger snacks continued to gain consumer franchise and demonstrated robust sales growth during the quarter. Clutter-breaking advertising along with 360 degree brand inputs and impactful brand promotions continue to maintain buzz around the brand.

'Sunfeast Yippee!' noodles, launched last year, continued to gain increasing consumer franchise. The product which is available in two exciting flavours was extended to additional markets during the quarter.

In the Confectionery segment, 'Candyman' sustained its market leadership position in the hard boiled category. The quarter witnessed the launch of a green mango variant of 'mint-O Gol' which was very well received by target consumers.

The business continues to invest in manufacturing and distribution infrastructure to support larger scale in view of the growing demand for its products and to maximise the benefits of distributed manufacturing for servicing proximal markets.

The Personal Care Products business made significant strides in gaining consumer franchise during the quarter. The business continues to roll out its product offerings under the 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel' and 'Superia' brands and is focused on addressing various consumer benefit segments with the introduction of new variants in the soaps, shampoos and skin care categories. The business continues to receive accolades for its product innovation initiatives.

The quarter saw the roll-out of 'Vivel Active Fair' fairness skin cream to more target markets. In a very short period of time, the brand has garnered a healthy market share in launch markets. 'Fiama Di Wills' with its new 'Aqua Pulse Bath Care' line of shower gel and bathing bar has augmented the brand franchise to men and has been well received in launch markets. The 'Vivel' brand saw new product launches directed towards enhancing consumer benefits through 'Vivel Luxury Creme', 'Vivel Healthy Glow' and 'Vivel Sandal Glow' soaps.

The business entered the domestic Talc market with the launch of 'Fiama Di Wills Face and Body Talc' in May 2011 in select markets. This product contains 'Enviro Defense Complex' that protects skin from sun damage and provides differentiated skincare benefits. It has been launched in three variants viz., 'Swiss Soft', 'European Lite' and 'Australian Care in Sun'.

The business continues to invest in building a strong portfolio of products and brands through well-defined research and development strategies backed by the Company's state-of-the-art R&D Centre. It is also continuously enhancing the quality of engagement with consumers through efficient deployment of media, direct contact and promotional activities across conventional and new age consumer connect avenues.

The Education & Stationery Products business registered a robust revenue growth during the quarter. The business continues to consolidate its market leadership position in the notebook segment while the recent additions in the scholastic products range are gaining larger consumer franchise.

The 'Classmate' range of products continued to be sourced from best-in-class vendors. The paper used in Classmate notebooks leverages the Company's world-class fibre line at Bhadrachalam which is India's first ozone treated elemental chlorine free facility. Classmate notebooks continue to feature different aspects of sustainability as core themes, such as 'Global Warming', 'Save the Environment' and 'Save the Tiger', to name a few. These product values, which are contributing significantly to creating sustainability awareness among the country's younger population, have distinctly enhanced Classmate's brand equity.

Working in tandem with the Company's Paperboards & Specialty Paper Division (PSPD), the business has positioned 'Paperkraft' as the finest 'green' paper for business applications viz. copy-scan-print-fax. Paperkraft's 'green' credentials are supported, among other factors, by the Company's membership of the prestigious Global Forest & Trade Network, an international initiative of the WWF (World Wide Fund for Nature).

During the quarter, the business consolidated and strengthened its position in the branded apparel market with the presence of 'Wills Lifestyle' expanding to 75 exclusive stores in 40 cities and more than 150 'shop-in-shops' in leading departmental stores. Continued association with the country's most prestigious lifestyle event 'Wills Lifestyle India Fashion Week', helped reinforce the premium imagery of the 'Wills Lifestyle' brand.

In the popular segment, 'John Players' continued to expand its strong pan-India presence during the quarter. 'John Players' has become a leading brand in the segment, with new products such as denims, knits and jackets. The continued celebrity association with the popular film star, Ranbir Kapoor, was well received by consumers and further enhanced brand desirability.

The Company's relentless focus on providing world-class products to consumers enabled it to sustain its leadership position in the industry. Innovation and consumer centricity have enabled the business to deliver superior value through its brand portfolio of well crafted blends, contemporary packaging styles and use of state-of-the-art manufacturing technology. Several initiatives across the brand portfolio in terms of pack modernization, improvement in smoke profile and introduction of new brands and variants have bolstered the Company's market standing and improved overall market share. On the manufacturing front, investments continued to be made towards enhancement of quality, productivity and variety.

The cause for concern, however, remains the severe taxation and regulatory milieu for cigarettes in India. Despite cigarettes constituting only 15% of overall tobacco consumption, the larger proportion of tobacco consumption is in other forms such as bidi, khaini, gutkha, zarda etc., both Central and State governments have followed a regime of high rate of tax increases on cigarettes with little or no tax on other forms of tobacco consumption. The resultant discriminatory taxation on cigarettes coupled with a growing incidence of smuggling and illegal manufacture, continue to be the biggest challenge for the Indian cigarette industry.

The problem of discriminatory taxation on cigarettes was further exacerbated during the quarter with many State Governments increasing the rate of VAT. These rate increases by the States is completely against the basic tenets of VAT enshrined in the White Paper on VAT issued by the Empowered Committee of State Finance Ministers, wherein it is unequivocally stated - " ...the multiplicity of rates in the existing structure will be done away with under the VAT system... Under 4% VAT rate category, there will be the largest number of goods (about 270), common for all States, The remaining commodities, common for all States, will fall under the general VAT rate of 12.5 %."

The Company has, repeatedly drawn the attention of policy-makers to the fact that sub-optimal taxation practices of States - like differential VAT rates - may well derail the implementation of GST with a unitary standard of tax across the Indian market, apart from encouraging unscrupulous tax arbitrage.

The high rates of Central Excise and VAT has helped fuel the menace of illegal trade in cigarettes. It is estimated that the burgeoning illegal trade in cigarettes costs the Exchequer more than Rs. 3,000 crores per annum in lost revenues apart from offering products of dubious and inferior quality to consumers. As per recent independent international market studies, illegal trade constitutes more than 16% of the total industry size making India 6th largest globally in illicit cigarette trade and one of the fastest growing in the world - 58% over the period 2004 - 2009. In line with international trends, contraband trade in cigarettes results in funds flowing into the coffers of criminal syndicates with consequential detrimental impact on civil society by way of heightened law and order problems.

Despite the challenging market conditions, the Company remains confident of leveraging its internationally benchmarked product quality, the resilience of its brands and the superiority of its competitive strategies to consolidate its leadership position in the industry.

The Company's commitment to 'Responsible Luxury' was further reinforced with all its premium luxury hotels being certified at the highest LEED Platinum rating. This milestone has uniquely positioned the Company's Hotels business as the first hotel chain in the world to achieve such distinction.

In view of the positive long term outlook for the Indian hotel industry, the business continues to sustain its aggressive investment-led growth strategy. Construction activity of the new super luxury properties at Chennai, Kolkata and at Classic Golf Resort near Gurgaon are progressing satisfactorily. In addition, several new projects including joint ventures and management contracts are on the anvil to rapidly scale up the business.

The business posted an impressive performance during the quarter with Segment Revenues and Segment Results growing over 20% driven by a combination of enriched product mix and better realisations.

The business, continued to leverage its integrated model - access to high-quality fibre from the economic vicinity of the Bhadrachalam mill, in-house pulp mill and state-of-the-art manufacturing facilities on the one hand and a robust forward linkage with the Education and Stationery Products business on the other - to further consolidate its leadership status in the Indian Paper and Paperboards industry. In order to sustain its pre-eminent position in the Paperboards segment, investment in a state-of-the-art machine is underway and is progressing as per schedule.

The Packaging and Printing business continues to provide strategic sourcing support to the Cigarette, Foods and Personal Care businesses. The business also leveraged its state-of-the-art investments in flexibles and carton lines to deliver value-added packaging to key customers in the consumer electronics and FMCG industries. Sales to external customers registered robust growth. Investments in a new carton line are underway to cater to the growing demand in this segment.

The Agri business segment posted a strong performance during the quarter with Segment Revenues and Segment Profits growing by 26% and 21% respectively. This impressive performance was driven by higher trading volumes and improved realisations in soya, wheat and coffee.

The business continues to provide strategic sourcing support to the Company's Cigarette and Branded Packaged Foods business by ensuring high quality supplies. Construction activity of the new green leaf threshing facility in Karnataka is progressing satisfactorily.

The Company, foreseeing the unprecedented threat to sustainable development arising out of poverty, environmental degradation and climate change, has vigorously pursued a conscious strategy to align its businesses to serve a larger societal purpose. Unique business models have been crafted to synergistically deliver economic, environmental and social value. ITC today, is the only company in the world of comparable size to be 'carbon positive', 'water positive' and 'solid waste recycling positive' even as it has created sustainable livelihood opportunities for over 5 million people.

The Company's Social Investments Programme aims to address these challenges through a range of activities with the overarching objective of creating sustainable sources of livelihood for the stakeholders. The footprint of the Company's Social Investments Programme has spread to 60 districts in the States of Andhra Pradesh, Bihar, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Haryana, Uttar Pradesh and West Bengal.

With the objective of improving the quality of life of people living in proximity of the Company's manufacturing units, the Economic Empowerment Programme for Women covered 15,744 women through 1,359 self-help groups (SHG) with total savings of Rs. 222 lakhs. More than 38,000 women were gainfully employed either through micro-enterprises or assisted with loans to pursue income generating activities. Over 2,80,000 children have been covered under the Supplementary Education Programme, through 2,715 Supplementary Learning Centres.

The advances made towards contributing to India's sustainable development goals have been possible, in large measure, due to the Company's partnerships with some globally renowned NGOs like BAIF Institute for Rural Development, DHAN Foundation, Foundation for Ecological Security (FES), Mysore Resettlement and Development Agency (MYRADA), Pratham, Self Employed Women Association (SEWA), Self Reliant Initiatives through Joint Action (SRIJAN) and Watershed Organisation Trust (WOTR). These partnerships, which bring together the best-in-class management practices of the Company and the development experience and mobilisation skills of NGOs, will continue to provide innovative grassroot solutions to some of India's most challenging problems of development in the years to come.

The Company pro-actively pursues a low-carbon growth strategy that addresses climate change mitigation and adaptation through several innovative and pioneering initiatives. This integrated strategy encompasses large scale afforestation initiatives for carbon sequestration, increasing use of renewable energy in its operations, continuous efforts towards energy conservation and efficiency, establishment of inspirational green buildings, extensive watershed development programmes and promotion of sustainable agricultural practices amongst farming communities. This is manifest in the Company's Social and Farm Forestry programme that covers nearly 1,16,000 hectares, its Integrated Watershed Development programmes that irrigate over 69,000 hectares of water-stressed land, as well as in the credo of 'Responsible Luxury' of the Company's Hotels business which is today the world's greenest hotel chain, with all premium luxury hotels being LEED Platinum certified.

The Company's 'WOW - Wealth Out of Waste' programme has been instrumental in creating awareness amongst the public on the benefits of the 'Reduce-Reuse-Recycle' approach. The waste recycling initiatives implemented by the programme have contributed significantly to the protection of the environment, as well as in improving civic amenities, public health and hygiene. The Company benefits from the generation of sustainable raw material sources, while conserving precious environmental resources and providing considerable livelihood opportunities.

Intervention Areas	Unit of Measurement	Cumulative till date
Total Districts Covered	Number	60
Social Farm Forestry Soil and Moisture Conservation Programme	Hectare Hectare	116143 69484
Sustainable Agricultural Practices Organic Fertiliser Units	Number	13812
Sustainable Livelihoods Initiative Cattle Development Centres Animal Husbandry Services	Number Artificial Insemination doses (in lakhs)	250 6.15
Economic Employment of Women Self Help Groups Members Livelihoods created	Persons Persons	15744 38746
Primary Education Beneficiaries	Children (in lakhs)	2.80
Health and Sanitation Low Cost Sanitary Units	Number	3221