Despite an increase in provisioning for taxes to Rs 116.21 crore and 20 per cent increase in depreciation, the Rs 7,700 crore tobacco conglomerate with interests in hotels, packaging and paperboard, posted a 23.21 per cent increase in net profit to Rs 167.19 crore in the third quarter to December 31, 1999.

A company spokesman declined to divulge the volume numbers for cigarettes during the third quarter. According to a company release, the cigarette market is on a recovery path despite decline in sales of micro-cigarettes due to a steep hike in excise levied during the last budget. In order to overcome this, the company has maintained its leadership position through value-addition and product mix.

The spokesman stressed that the increase in sales was not gained from a hike in cigarette prices but fromvalue-addition.

Net sales turnover for the quarter to December 31, 1999, increased by nearly 15 per cent to Rs 960.75 crore from Rs 837.64 crore in the corresponding period of the previous year.

For the nine months to December 31, 1999, though depreciation and tax provisioning increased, interest cost went down by 26 per cent to Rs 90.27 crore, helping ITC post a 17 per cent increase in net profit to Rs 567.51 crore.

The company said it achieved substantial savings in interest cost following better working capital management and debt refinancing.

On the massive hike of 61 per cent in tax provisioning to Rs 116.21 crore in the third quarter of fiscal 1999-2000, the company said the jump was on account of income tax disallowances relating to certain state taxes. The provisions have been made as a matter of prudence though the collection by such states has been stayed by the courts.

Insight
a good show

Despite serious concerns that the cigarette consumption is falling, ITC hascontinued to post a healthy growth. A 23 per cent growth in sales and a 23 per cent jump in profit was certainly impressive. While the company put up a good show, Monday's fall in stock price was partly on account of market sentiment. The results appear to have just about met expectations.

Deepak Singh Tanwar