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Non-cigarette, farm biz drive up ITC [Indian Tobacco

Company] sales
Non-Cigarette Business Share Rises To 52.3% Of Turnover; Nets Rs 2,700 Crore In
FY07 Registering A Growth Of 20.08%


TOBACCO-to-hotels & FMCG major ITC on Friday reported a 18.6% growth in net
profit for the fourth quarter (Q4) ended March 2007 at Rs 650.69 crore after adjusting
for income tax refunds. Net sales revenues rose 24.5% to Rs 3,466.34 crore.

Net turnover for the year at Rs 12,369.30 crore grew 26.3%, driven by the non-
cigarette FMCG businesses, higher agri-business revenues and the continuing strong
performance of the hotels business, the company said in a statement issued after its
board meeting held in Kolkata on Friday. Earnings per share (EPS) for the year stood
at Rs 7.19.

The non-cigarette portfolio grew by 37.6% during the year and accounts for 52.3% of
the company’s net turnover. Pre-tax profit increased by 20.1% to Rs 3,926.70 crore,
while post-tax profit at Rs 2,699.97 crore registered a growth of 20.8%.

The board also recommended a dividend of Rs 3.10 per ordinary share of Re 1 each
entailing a cash outflow of Rs 1,364.49 crore. It has also approved the setting up of a
strategic business unit for ‘home & personal care products’ as part of the FMCG
portfolio. ITC’s operating profit margin (OPM) declined during the year, primarily due
to a sharp increase in raw material costs. OPM fell by 200 basis points to 32% during
the year; due to a 35.2% increase in raw material consumption compared with a
26.3% increase in net sales.

Key raw material components for ITC include tobacco, paper pulp and agri-inputs.
One of the reasons for the dip is also a higher proportion of agri-products in the
topline. Relatively lower margins in the agri business tend to affect overall margins
too. Overall agri-business revenues during the year grew 38% driven by soya and rice
exports and leaf tobacco.

Cigarettes remain the key contributor to profits. It contributed to over 80% of segment
profits despite contributing to just 60% of segment sales. Cigarette sales volume grew
by about 7% during the year, and a 13% increase in rupee terms indicates the effect
of price hikes during the year.

Presentation by Ganesh Srinivasan; for

Knowledge Exchange and not for any Page 1
commercial gains
Non-cigarette, farm biz drive up ITC [Indian Tobacco
Company] sales
The branded packaged foods business is growing handsomely, with the ‘others’
segment up by 68% in revenues. Profitability is still an issue, with a segment loss of
Rs 202 crore compared with Rs 172 crore last year.

Hotels and paper did very well, with profits running far ahead of sales in terms of

In terms of consumer spend, ‘Aashirvaad’ and ‘Sunfeast’ have both become Rs 500-
cr brands within a short span. ‘Aashirvaad Atta’ now commands a 52% market share
among national branded players. The year also marked ITC’s foray into the fast
growing organised salty snacks market with the launch of the ‘Bingo!’ range of potato
chips and finger snacks.

Revenue from ITC’s hotels business was impressive with segmental revenues
growing by 26% to touch Rs 986 crore because of better room rates, improved
occupancies and food & beverage sales. The hotels business saw ITC-Welcomgroup
entering into a new franchisee agreement with Starwood Hotels & Resorts.

Sale of value-added paperboards grew by 15% over the last year. Besides, the new
Haridwar facility, which will add manufacturing capacity both in the paperboard
cartons and flexibles segments, was commissioned during the year. The facility will
enable the business to cater to the foods business and also service external
customers. The company’s lifestyle retailing business posted a 52% growth in both
the premium and popular segments.

Presentation by Ganesh Srinivasan; for

Knowledge Exchange and not for any Page 2
commercial gains