CALCUTTA, June 14: The board of ITC Ltd today declared a dividend of 40 per cent for the year to March 31, 1997 against 25 per cent paid last year. The net profit for the year was Rs 346.90 crore, 33 per cent higher than the Rs 261.08 crore recorded in the previous year.Significantly, the company has created a contingency reserve of Rs 190 crore against nil last year.Company sources said the contingency reserve has been created as a measure of abundant caution and to take care of unforeseen liabilities in future.The company said better working capital management and higher operating profit margins enabled it to report a 100 per cent growth in operating cash flows to Rs 969 crore from Rs 488 crore last year.Total income in 1996-97 was Rs 5960.33 crore against the previous year's Rs 5187.86 crore, a growth of 14.9 per cent. Profit before tax was 29.72 per cent higher at Rs 586.65 crore against Rs 452.23 crore. Foreign exchange earnings were marginally higher at Rs 653 crore against Rs 622 crore in 1995-96.After appropriations of Rs 15.20 crore to hotel foreign exchange earnings reserve, Rs 38.51 crore to debenture redemption reserve and Rs 34.26 crore to general reserve, the company has an undistributed surplus of Rs 128.46 crore against Rs 156.62 crore last year.ITC's leaf tobacco exports increased 30 per cent by volume and 65 per cent in value. This trend is likely to be maintained in 1997-98, company sources said. ITC accounts for nearly 45 per cent in volume terms and 55 per cent in value terms of India's leaf tobacco exports.Leaf tobacco exports, at Rs 256 crore in 1996-97, formed 39 per cent of ITC's export turnover for the year.In the cigarettes business, the company has consolidated its position as the market leader in all segments. It owns five out of the top six trademarks in the industry.The hotels division, which contributes about five per cent to sales (excluding excise) continues to do well. The flagship Maurya Sheraton Hotel & Towers is adding to capacity with a second tower, work on which has already begun.ITC Hotels, which is 72 per cent owned by ITC, has recorded 17 per cent growth in profit after tax despite "declining tourist arrivals".As a conscious strategy, ITC has decided to invest in hotel properties both through greenfield projects and direct acquisitions, as well as through ITC Hotels. ITC chairman Y C Deveshwar has made it clear that the management will continue to leverage cash earnings from the cigarettes business by investing in hotels and boosting foreign exchange earnings in the process.
