Indian conglomerate ITC, which is trying to broaden its business beyond its core cigarette division and further into FMCG, has reported slowing sales of consumer goods in the first quarter of its financial year.

ITC saw sales from its FMCG arm, which includes branded packaged food, as well as personal care and stationery lines, rise 10.9% to INR19.35bn (US$321.8m) in the three months to the end of June.

The company said sales were “healthy” despite “sluggish demand conditions and a marked deceleration in [the] industry growth rate”. In ITC’s 2013/14 financial year, it enjoyed a higher rate of sales growth from its FMCG business in each of the period’s four quarters.

The FMCG division made an EBIT loss of INR156m, down slightly from the INR189m operating loss the unit made in the first quarter of its previous financial year.

In its results statement, ITC cited “significant business development, brand-building and gestation costs of the branded packaged food businesses and personal care products businesses”.

ITC’s food portfolio includes Bingo snacks, Aashirvaad flour and Sunfeast Yippee noodles.

As a group, ITC reported higher quarterly adjusted net profit amid a 21.4% rise in EBIT from its cigarette business.

However, Prabhudas Lilladher analyst Amnish Aggarwal said the profit growth from ITC’s cigarette business would be “hard to sustain” amid an increase in excise duty.

In the first quarter, cigarettes accounted for 38.3% of ITC’s sales but still 85.8% of its EBIT.