Cigarettes still ITC’s profits milch-cow

Despite being a conglomerate that runs luxury hotels and sells notebooks and clothing, as well as cigarettes, ITC’s bread and butter continues to be the tobacco business, according to a story by Kiran Kabtta Somvanshi for The Economic Times of India.

Its performance during the quarter to the end of September continued to display this trend as the bulk of its profits – as much as 85 percent – came from the company’s cigarette business, while its hotels and consumer goods businesses continued to bleed.

‘Though it posted a healthy 15 percent growth in revenues, its net profit rose a mere nine percent – the lowest quarterly growth in the past six years, the Times’ report said…

‘What should worry investors is the looming threat of regulatory clamps on the company’s cash cow. Since cigarettes are a major tax source for the government, it is unlikely [to] do anything that could threaten the very survival of the industry.

‘But faced with a vocal antismoking lobby, the government may increasingly make it difficult to market cigarettes – forcing ITC and others to find new ways to do business.’