ITC’s net profit up 5.7% in Q3, FMCG, cigarette revenue hit by demonetisation

Kolkata, Jan 27 (IANS) FMCG to cigarette major ITC Ltd on Friday reported a 5.7 percent rise in its standalone net profit to Rs 2,646.73 crore in the quarter ended December 31, 2016 as compared to Rs 2,503.76 crore in the corresponding quarter last year.

Its revenue from operations in the quarter under review stood at Rs 13,470.89 crore representing a growth of 4.5 percent over Rs 12,887.78 crore in the year-ago period.

The company said the operating environment was extremely challenging during the quarter. FMCG sales were adversely impacted as a result of lower consumer offtake and reduction in trade pipelines particularly in the immediate aftermath of the government's decision to withdraw specified high denomination currency notes.

While the impact was felt across all operating segments, sales of biscuits, snacks, noodles, personal care products and branded apparel were impacted the most in the initial phase, it said.

The revenue from cigarette in the three months period ended December 31, was at Rs 8,287.97 crore as compared to Rs 8,106.31 crore.

The cigarette major said the performance of the cigarette business during the quarter was "subdued" on account of "tight liquidity conditions" prevailing in the market and continued regulatory and taxation pressures on the legal cigarette industry in India.

Similarly, the other FMCG segment revenue recorded a growth of 3.4 percent during the quarter against the backdrop of subdued demand conditions exacerbated by the "tight liquidity position".

In agri business, the segment revenue grew by 12.9 percent driven by trading opportunities in the domestic wheat market, external sales of leaf tobacco offset by lower supplies to the company's FMCG businesses (mainly account timing differences in offtake), it said, adding the business provides strategic sourcing support to cigarette business and leverages its deep rural linkages to source wheat, chip stock potato, spices and fruit pulp at competitive prices for the branded packaged foods businesses.

The hospitality sector continues to be adversely impacted by a weak pricing scenario in the backdrop of excessive room inventory in key domestic markets and sluggish macroeconomic environment both in India and major source markets, the company added.

The city headquartered company appointed Sanjiv Puri as the chief Executive Officer with effect from February 5.