ITC Ltd, the multi-business conglomerate and India’s market leader in cigarettes posted a 10.08% rise in its profits during the first quarter on the ongoing fiscal year on Thursday.
The increase in profits was driven by higher taxes on cigarettes, combined with healthy performance of its other business segments. The company recorded a profit of ₹2,818 crore during Q1, while its gross sales grew by 13.5% to ₹18,171 crore.
ITC’s profits on cigarettes took a huge hit from the resulting tax burden of 20% after the implementation of the Goods and Services Tax (GST). Operating profit from cigarettes in QI grew by 8.7% to ₹3,558.39 crore, which is 83% of its total pre-tax profit of ₹4,299.94 crore. However, Revenue gained by the ITC Hotel Business was up 12% in the quarter at ₹341 crore.
The company’s revenue from its hotel business was up by 12% in the quarter to ₹341.28 crore, owing to higher room rates and strong food and beverage sales, but after taxing the revenue fell from ₹13.22 crore to ₹5.31.
The paper and packaging department of the business had a 15% rise in it’s pre-tax profits during the quarter, which translates to ₹295.66. The company attributed the growth to “strategic investments in imported pulp substitution and process innovation leading to improved pulp yield”.
Overall, ITC’s financial performance was largely in line with market expectations.