ITC’s cigarette business demonstrated resilience in the quarter that ended Sept. 30, the company announced in a trading update.
Net segment revenue and segment profit before tax and interest were up 8.5 percent and 8 percent year-on-year, respectively.
Stable fiscal policies, along with a crackdown by law enforcement on illicit tobacco sales, allowed the company to claw back sustained volumes from the black market, boosting demand for Indian tobaccos and bolstering revenue to the exchequer.
Meanwhile, ITC continued fortifying its product portfolio through innovation, premiumization and enhancing product availability, “backed by superior on-ground execution.”
Several recently launched brand variants launched continue to perform well, according to the company.
While the cost of leaf tobacco and inputs escalated during the quarter, the company was able to mitigate these developments through improved mix, strategic cost management and calibrated pricing.
During the quarter, ITC’s IndiVision subsidiary (IIVL) received regulatory approvals for its facility to manufacture nicotine and nicotine derivative products conforming to U.S. and EU pharmacopoeia standards.
ITC believes that its unique crop development capabilities, along with its ability to provide complete traceability and assure sustainability across the value chain, will establishing IIVL as a trusted partner for high quality nicotine/nicotine derivative products.
For the company’s paperboards, paper and packaging segments, the quarter was characterized by competition from low-priced Chinese suppliers and muted demand in export markets, along with a sharp reduction in global pulp prices. Domestic demand was also relatively subdued in certain discretionary categories
ITC believes the drop in net sales realization and global pulp prices are likely to have bottomed out, however, and says it detected “green shoots of revival” in demand toward the end of the quarter