The third quarter results to December 2000 continue in the same vain as of the earlier quarter. The topline grew by 15 per cent to Rs 1,107 crore from Rs 961 crore. A near strangle hold in the premium segment has ensured steady volumes for ITC. In fact, the volumes have seen a decline in the last two years. Though in value terms there has been a marginal pick-up. The sales of 67,753 million sticks in 1998-99 has not been matched in 1999-00.

A leash on expenditure has ensured steady operating profits. But for the higher tax provision and depreciation, bottomline would have been higher.

Net profits rose by 29 per cent to Rs 216 crore from Rs 167 crore. ITC hiked prices twice during the quarter that helped the bottomline. Prices of the lower segment Gold Flake and Scissors were raised in the range of Re one to Rs 1.50.

Whereas, prices of the premium segment cigarettes like India Kings, Wills Classic and Gold Flake Filter besides Benson & Hedges have been hiked in the range of Rs two to Rs four. Further, the operating and net margins improved to 35 and 19 per cent respectively. The fact that over 75 per cent of the cigarette produce by the company is in the filter format has ensured the steady growth.

ITC foray in the Greetings card business through Gold Flake Expressions (GFE) would draw upon the synergies of the printing and packaging segment of the company.

The huge distribution network and the brand management strength could come as a shot in the arm. GFE intends to garner Rs 100 crore in the next three years. Also, with the hotel and paper business perking up ITC could further spruce up its showing.

The scrip had been discarded earlier on pessimistic outlook for the tobacco business. However, a strong rebound by the company has brought the focus back on this defensive stock. The present price earnings multiple of 30 amply reflects this point.

Sachchidanand Shukla