Itc Net Profit Likely To Cross Rs 400 Crore

Tobacco giant ITC Ltd is set to announce its unaudited financial results for 1996-97 today amidst the backdrop of expectations that the company will clock a 60 per cent rise in post-tax profits.

The net profit, stockbrokers tracking ITC say, could shoot up from Rs 261.08 crore last year to around Rs 420 crore.

The ITC board is meeting today in Calcutta to approve the results but the board members have already met informally between themselves yesterday.

While the financial results will obviously be the key point on today's agenda, the management committee being set up by the company may also come up for discussions at the meeting.

The company has been beleaguered by allegations of Fera violations, and top officials of ITC have been questioned for alleged involvement in the case. ITC has also been charged of ducking excise dues payable between 1983 and 1987 though the company has already complied in large part with the Central Excise and Gold Appellate Tribunal (CEGAT) order and has paid the dues.

However, despite the problems, ITC is expected to improve substantially upon last year's performance. The reason for this optimism is that the company has managed to clean up its books to a large extent, and has already provided Rs 34.99 crore on account of receivables from ITC Global Holdings Pte. Ltd, Singapore, in the first-half results of the company.

Market operators feel that the recent problems of high level company officials with the Enforcement Directorate has not resulted in a backlash with regard to market sentiments about ITC. In fact, the clean-up forced by the series of investigations has been welcomed by the capital markets as better checks and balances were enforced by the company management, and the tenets of good corporate governance were activated.

Also, siphoning off funds outside the country was stalled with ITC Global Holdings Pte Ltd being put under judicial management. As the international business was losing money, this signaled good news for the ITC counter as the company would not waste money any more on that front.

The company declared a net profit of Rs 180.80 crore in the first-half results announced for the six months ended September 30, 1996 after provisioning Rs 34.99 crore for ITC Global.

So, the net profit was actually about Rs 215.79 crore. Marketmen said that the second-half results usually show an improvement of about 10 per cent over the first-half results. If this holds true, the company should declare a net profit of about 237.37 in the second half. This means that the consolidated profits for 1996-97 will be around Rs 420 crore.

Lower raw material costs will also contribute to better net profits of ITC, feel marketmen, as tobacco prices have gone down.

The ITC scrip has been in high demand in the past few weeks with backwardation charges touching the high level of Rs 10 on the Bombay Stock Exchange at one time. Sources said that FIIs and large operators have evinced particular interest in the ITC counter perhaps in anticipation of good results, and have thus pushed up volumes.