Diversified conglomerate Indian Tobacco Company (ITC) on Friday reported a 5.71 per cent increase in standalone net profit at Rs 2,646.73 crore for the third quarter to December as its cigarette business continued to face headwinds, coupled with demand slowdown following demonetisation.
ITC also appointed Sanjiv Puri the CEO, with effect from February 5, to take independent charge of the executive leadership of the company while its Chairman Y C Deveshwar will play the role of mentor from the said date.
The company had posted a net profit of Rs 2,503.76 crore during the same period last fiscal.
Total income from operations was up 4.69 per cent at Rs13,569.97 crore for the quarter under review, as against Rs 12,961.85 crore in the previous fiscal, ITC said in a BSEB filing.
"The operating environment was extremely challenging during the quarter. FMCG sales were adversely impacted as a result of lower consumer off-take and reduction in trade pipelines, particularly in the immediate aftermath of the government's decision to withdraw specified high-denomination currency notes," ITC said in a statement.
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."
Revenue from the FMCG business, including cigarettes, increased by 2.51 per cent to Rs 10,857.23 crore, from Rs10,591.22 crore in the same quarter a year ago.
During the quarter, revenue from cigarettes went up 2.24 per cent to Rs 8,287.97 crore, from Rs 8,106.31 crore in the year-ago period.
"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," ITC said.
Similarly, revenue from the other FMCG segment was up 3.39per cent at Rs 2,569.26 crore during October-December as against Rs 2,484.91 crore last fiscal.ITC's other FMCG segment includes branded packaged foods business such as staples, snacks and meals, dairy and beverages and confectionery, apparel, education and stationery, personal care products, safety matches and aggarbattis.
ITC said it implemented several initiatives towards mitigating the impact of demonetisation, including increasing the service frequency of grocery outlets, enhancing presence in modern trade outlets, increasing direct servicing of select low population group markets and extending temporary credit to select customers.
"These initiatives, coupled with a progressive easing of the liquidity situation, led to substantial recovery of sales momentum towards the end of the quarter," it added.