ITC Ltd reported a marginal rise in its net profit at Rs 2,652.82 crore for the third quarter, ended 31 December, 2015, from Rs 2,635 crore in the corresponding period last fiscal, while operating revenues grew 3.43% to Rs 9,102.66 crore, the company said in a regulatory filing with the BSE on Friday.
The Kolkata-based company attributed the sluggish growth in its FMCG business to contnuing illegal trade in cigarettes and weak demand, coupled with the Chennai floods.
While cigarette sales (net) grew 3.37% to Rs 2,983.83 crore during the December 2015 quarter, from Rs 2,886.31 crore in the year-ago period, the agri-business at Rs 231.44 crore was down 3.09% from Rs 238.84 crore.
"The agri business segment revenue (was) impacted by lack of trading opportunities in wheat, coffee and soya, coupled with subdued demand for leaf tobacco exports on the back of decline in global cigarette volumes," the company said.
ITC said high excise duties on cigarettes have changed the pattern of tobacco consumption in the country over the years.
"High incidence of taxation and a discriminatory regulatory regime on cigarettes in India have over the years led to a significant shift in tobacco consumption to lightly taxed or tax-evaded tobacco products, like bidi, khaini, chewing tobacco, gutkha and illegal cigarettes," the company said.
"Thus, the share of legal cigarettes in overall tobacco consumption has progressively declined from 21% in 1981-82 to 11% in 2014-15, even as overall tobacco consumption has increased in India," it added.
ITC quoted a study by Euromonitor International to say India is now the fourth-largest market for illegal cigarettes in the world.
Revenues from the company's hotel business declined to Rs 25.83 crore in the December 2015 quarter, from Rs 28.71 crore in the year-ago period.
Shares of ITC closed at 308.65 on the BSE on Friday, up 0.69% from its previous close. In the past three months, the stock has corrected sharply from Rs 358.30 on 23 October, 2015, to its current level.