ITC's Q3 net profit rose 22% year-over-year to 17.01B Indian rupees, due in part to pack modernization, improvement in smoke profile, introduction of new brands and variants; sales rose 14% year-over-year to 61.95B Indian rupees

BANGALORE, India , January 23, 2012 (press release) – Net Turnover : +14.2%
Pre-tax Profits : +21.9%
Post-tax Profits : +22.5%

Non-Cigarette profits grow 27%
Non-Cigarette FMCG segment registers robust revenue growth of 25% and continues to improve profitability.
Hotels business continues to be impacted by the weak economic environment in global source markets and slowdown of the domestic economy.
Agri Business profits grow 10% driven by better realisations and higher volumes.
Paperboards, Paper and Packaging business registers strong growth in profits aided by improved mix and higher volumes.

ITC posted yet another impressive performance during the quarter with healthy topline growth and high quality earnings. Net Turnover at ` 6195 crores grew 14.2% driven primarily by Branded Packaged Foods, Personal Care, Agri and Cigarettes businesses. Pre-tax profits grew by 21.9% to ` 2477 crores while post-tax profits at ` 1701 crores registered a growth of 22.5%. Earnings Per Share for the quarter stood at ` 2.19.

FMCG - Branded Packaged Foods

The Branded Packaged Foods business continued to grow rapidly driven by further premiumisation of the portfolio, higher volumes and improved profitability. The business achieved significant growth in revenues aided by new launches and introduction of product variants and extensions in target markets. Improvement in profitability was further aided by improvements in product and process efficiencies and smart sourcing.

During the quarter, the 'Sunfeast' Biscuits category continued to grow significantly, especially in the value-added and premium end. The 'Sunfeast' 'Dream Cream' split cream variants, launched during the year in two flavours viz., 'Choco-Vanilla' and 'Strawberry-Vanilla', continued to gain consumer franchise. With the extension of its premium 'Dark Fantasy' range of cream and 'Dark Fantasy Choco Fills' biscuits to more markets and new variant launches, the 'Sunfeast' range witnessed further enrichment of its portfolio.

In the Staples category, 'Aashirvaad' atta continued to consolidate its leadership position with revenues being driven by improved realisations and higher volumes. At the premium end, Aashirvaad 'Multi-grain' and 'Select' brands continued to demonstrate increasing consumer franchise and grew rapidly.

In the Savoury Snacks segment, the 'Bingo!' range of potato chips and finger snacks achieved robust sales during the quarter, driven by further strengthening consumer connect, through clutter-breaking advertising, 360 degree brand inputs and impactful consumer offers. The initial response for 'Bingo! Tangles' – an innovative product format launched earlier this year – has been encouraging and the product is being extended to newer markets.

In the Noodles segment, 'Sunfeast Yippee!' continued to gain consumer preference and is being rapidly extended to target markets.

In the Confectionery segment, 'Candyman' sustained its market leadership position in its operating segment. ‘mint-o GOL Green Mango’, 'mint-o Strong' and variants of ‘Toffichoo’, that were launched earlier this year, have been well received in launch markets and are being rolled out to more target markets.

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


Personal Care Products

The Personal Care Products business’ product offerings under the 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel' and 'Superia' brands continued to gain consumer franchise with revenues growing significantly during the quarter. The business continues to launch new products that deliver various consumer benefits in the soaps, shampoos and skin care categories.

During the quarter, the business launched ‘Vivel Clear 3 in 1’ soap which offers a unique three-fold benefit by providing germ protection, moisturisation and nourishment. In the shampoos segment, the business launched the Fiama Di Wills range of hair care treatment in three variants viz., ‘Anti Hair fall Control Shampoo with Conditioner and Serum’, ‘Colour Damage Control shampoo with Conditioner and Serum’ and ‘Total Damage Control shampoo with Conditioner’ which are enriched with rare natural oils and incorporate damage repair technology. These are being rolled out to select markets and have been well received by consumers. With continuing extensions to target markets, 'Vivel Active Fair' fairness cream 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 and 'Vivel' with its new product variants - 'Vivel Luxury Crème', 'Vivel Healthy Glow', 'Vivel Sandal Glow' – rolled out earlier this year, continued to be well received by the consumer and are being extended to more target markets.

The business' foray into the domestic Talc market with the launch of 'Fiama Di Wills Face and Body Talc' in select markets has been well received.

The business continues to leverage its state-of-the-art manufacturing facilities and make investments in product innovation, quality and R&D aimed at delivery of specific consumer benefits. 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.


Education & Stationery Products

The Education & Stationery Products business maintained its impressive revenue growth trajectory during the quarter. The business continues to consolidate its market leadership position in the notebooks segment under the brand 'Classmate' and is leveraging the 'Classmate' and 'Paperkraft' brands to enhance its portfolio of scholastic products comprising pens, pencils and geometry boxes.

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 which have distinctly enhanced Classmate's brand equity.

Working in tandem with the Company's Paperboards & Specialty Papers 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).


Lifestyle Retailing

The Lifestyle Retailing business posted a strong growth in revenues during the quarter through an enhanced product range, retail expansion and robust performance in the large format and multi-brand outlet channel. Consumer experience levels were sustained at high levels with superior store ambience and facilitation through its retail footprint of 'Wills Lifestyle' stores which currently stands at 80 exclusive stores in 40 cities and more than 200 '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.

'John Players' continues to strengthen its position as a leading brand in the popular 'Youth' segment. The continued celebrity association with the popular film star, Ranbir Kapoor, further reinforced the core value proposition of the brand 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 a consumer focussed strategy 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 modernisation, improvement in smoke profile and introduction of new brands and variants such as ‘Player’s’, ‘Classic Citric Twist’ and ‘Hero’ during the quarter have bolstered the Company’s market standing in the premium categories and improved overall market share. On the manufacturing front, the business continues to make investments towards improving process efficiencies, enhancing quality and adding variety.

Despite cigarettes constituting only 15% of overall tobacco consumption, the continuing discriminatory taxation and polarised regulatory framework against cigarettes in India is a major cause of concern. Inelasticity of tobacco consumption coupled with lower incidence of taxation on other forms of tobacco products has adversely impacted cigarette consumption while that of other forms of tobacco continues to grow unabated. The resultant disproportionate taxation coupled with a growing incidence of smuggling and illegal manufacture, continue to be the biggest challenge for the Indian cigarette industry.

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 Goods and Services Tax (GST). In addition, cigarettes being highly taxed products are vulnerable to large scale smuggling. The differential rate of VAT on cigarettes across the States only encourages unscrupulous tax arbitrage.

The high rates of Central Excise and VAT have helped fuel the menace of illegal trade in cigarettes. It is estimated that the burgeoning illegal trade in cigarettes costs the Exchequer more than ` 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 the 6th largest globally in illicit cigarette trade and one of the highest 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.

The Company continues to engage with the authorities on this issue, highlighting the fact that punitive rates of tax and lack of tax harmonisation across States fuels the menace of illicit cigarette trade with consequential adverse impact on the legitimate industry. While there have been some reports of seizure of such illegal stocks by Enforcement Agencies, illicit cigarette units continue to mushroom and grow. Illegal cigarette trade has serious concerns for the country and needs to be reined in quickly through appropriate policy and enforcement attention. The effective and sustainable solution lies in eliminating the tax arbitrage that encourages these activities by ensuring harmonious and moderate tax rates on cigarettes.

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.



During the quarter, the hospitality industry was impacted by the weak macroeconomic environment in the US & Europe - the two key source markets and the slowdown of the Indian economy. With a lower level of demand on the one hand and significant additions to supply in key markets on the other, the hospitality industry in India is witnessing challenging times. During the quarter, the Hotels business posted a topline of ` 311 crores and improved its profits by 15% to ` 102 crores.

During the quarter, the Company launched the pan-ITC consumer loyalty programme - ‘Club ITC’ – targeted at the premium clientele of ‘Wills Lifestyle’ and ‘ITC Hotels’.

The Company's commitment to 'Responsible Luxury' stands 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 a distinction.

In line with the positive long-term outlook for the Indian hospitality industry, the business continued to pursue its investment-led growth strategy. While the setting-up of the new super luxury properties at Chennai, Kolkata and at Classic Golf Resort near Gurgaon are progressing satisfactorily, the Company is also in the process of investing in land for a luxury hotel property in Colombo, Sri Lanka. In addition, several new projects including joint ventures and management contracts are on the anvil to rapidly scale up the business.


Paperboards, Paper & Packaging

The business witnessed healthy growth in Segment Revenues during the quarter with Segment Results growing at a faster pace at 17% despite facing challenges of high fuel and fibre costs that were offset by a combination of product mix enrichment and enhanced value capture through fully integrated operations.

The Company continued to leverage its integrated business model viz., access to high-quality fibre, in-house pulp mill and state-of-the-art manufacturing facilities and a robust forward linkage with the Education & Stationery Products business to further consolidate its leadership position in the Indian Paper and Paperboards industry. The new paperboard line project at Bhadrachalam with a capacity of one lakh tons per annum is progressing as per schedule.

The Packaging and Printing business continues to provide strategic sourcing support to the Cigarettes, Foods and Personal Care businesses. Sales to external customers also registered robust growth. 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. Significant Investments in new technologies and processes are underway to cater to the growing demand in this segment.


Agri Business

The Agri Business posted a strong performance during the quarter with Segment Revenues and Segment Profits growing by 10%. This impressive performance was primarily driven by higher trading volumes and improved realisations in leaf and wheat.

The business continues to provide strategic sourcing support to the Company's Cigarette and Branded Packaged Foods business by ensuring high quality supplies. The new green leaf threshing facility in Karnataka has commenced trial production and will be commissioned shortly.


Contribution to Sustainable Development

The Company, with its abiding vision to subserve larger national priorities, and recognising the serious threats arising out of poverty, environmental degradation and climate change, has vigorously pursued a conscious strategy to align its businesses to create larger societal value. Unique business models have been crafted to synergistically build economic, environmental and social capital. 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, Odisha, Rajasthan, Tamil Nadu, Haryana, Uttar Pradesh and West Bengal.

ITC's sustainability initiatives, built assiduously in the spirit of public-private-people partnership, have been able to contribute meaningfully to India's goals of sustainable and inclusive development. The Company's partnerships with some globally renowned NGOs bring together the best-in-class management practices of the Company with the development experience and mobilisation skills of NGOs, to provide innovative grassroot solutions to some of India's most challenging problems.

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 over 1,25,000 hectares, its Integrated Watershed Development programme that irrigate over 77,000 hectares of water-stressed land. With the objective of improving the quality of life of people living in proximity of the Company's manufacturing units and catchment areas, the Economic Empowerment Programme for Women has benefited 16,075 women.

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.

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