ITC to reduce exposure from tobacco business
Kolkata, Jul 27: With FMCG major ITC Limited's net profit touching Rs 783 crore in the first quarter of 2007-08 compared to Rs 652.28 crore previous year, up by 20 per cent, the share price of the company started pushing up.
Speaking at ITC's 96th Annual General Meeting (AGM), company chairman Y C Deveshwar said the company is planning to shrink the 'tobacco basket' in the coming year.
''Tobacco business is the major cause of concern for us following severe taxation and regulatory millieu in India. We have discussed the matter with the government several times,'' he said.
He further said cigarette contributes only 15 per cent of the total tobacco consumed in the country and the government gets a high rate of duty from it. With VAT being introduced now, there would be a level-playing.
The cigarettes continued to be discriminated against the cheaper and revenue inefficient forms of tobacco products like bidi and chewing tobacco, the annual report of the company mentioned.
From first April 2007, cigarettes have been brought under the ambit of VAT by the state at a rate of 12.5 per cent.
Speaking on the company's future plans, Mr Deveshwar said ITC would be focussing on a number of greenfield business and would be growing organically.
Talking about ITC's retail business, he said, ''We are present in two segments the premium, 'John Players and Wills' and the low-end 'choupas saagar'. We are exploring opportunities and will enter mid- segment in appropriate time.'' So far about 6400 choupas had been set up in 38500 villages in nine states of the country.
Meanwhile, the net turnover of the company in the first quarter stood at Rs 3,325 crore, up by 16.7 per cent, compared to 2849.75 crore in the corresponding period in the previous year.