Kolkata: Cigarette and consumer goods maker ITC Ltd on Wednesday said its net profit in the March quarter rose 9.86% from a year ago to Rs2,932.71 crore as margins expanded. Gross revenue from sales rose only 3.56% to Rs17,933.48 crore, which the company attributed to subdued demand and disruptions in supply chain.

The cigarette segment contributed Rs3,505.76 crore of pre-tax profit compared with Rs3,258.76 crore, up 7.57% year-on-year (y-o-y). Pre-tax profit from other consumer goods jumped to Rs91.21 crore from Rs55.56 crore in the same period a year ago. The results were in line with the expectations of its analysts, Edelweiss Capital Ltd said in a report.

For the full year, ITC’s net profit is up 10% over the previous year to Rs11,223.25 crore, or Rs9.16 per share, compared with Rs8.38 in fiscal 2017. The company will be paying a dividend of Rs5.15 per share of Re1 each for the year till 31 March. Net profit for the year, however, includes an exceptional item—a writeback of provision of Rs270 crore.

ITC’s shares closed at Rs285.95 each on BSE on Wednesday, up 1.47% in a weak market.

According to Edelweiss, cigarette sales by volume were down 1-2% y-o-y in the March quarter. In the December quarter too, cigarette sales by volume had contracted by an estimated 5%, Edelweiss said. The performance reflects “severe pressure" on tax-compliant cigarette manufacturers in the wake of “steep escalation" in tax rates, ITC said in a statement.

ITC has hiked prices of cigarettes by 10-11% to offset the hike in taxes, according to Edelweiss, and that, in turn, may have impacted sales by volume.

Revenue from the hotel business in the March quarter rose 5.5% y-o-y to Rs408 crore, but pre-tax profit jumped to Rs75.47 crore from Rs66.93 crore in the same period a year ago, a growth of 12.75% thanks to an improvement in room rates. The performance of the segment was impacted by huge room inventory, ITC said in its statement.

The company’s farm commodities trading business was weak in the March quarter and turned in pre-tax profit of Rs123.97 crore compared with Rs134.92 crore in the same period a year ago as the shortage of leaf tobacco due to a drought in Andhra Pradesh weighed heavily on performance, ITC said. Pre-tax profit from the paper and paperboards business was flat at Rs242.42 crore.

Adjusted for the change in tax regime, revenue from ITC’s non-tobacco consumer goods business in the March quarter grew 10% to Rs3,051.82 crore over the same period a year ago, driven by a wide range of products such as Bingo! Snacks, Sunfeast biscuits, B Natural juices, personal care products and Classmate notebooks, the company said in its statement.

“Progressive stability of the Goods and Services Tax (GST) regime... and expectations of normal monsoons augur well for the company business going forward," ITC said.

In the year till March, this segment generated a pre-tax profit of Rs164.12 crore, compared with Rs28.12 crore in the previous year.