The Indian economy continues to demonstrate macro-economic stability even as high frequency indicators such as automobile sales, bank credit & personal loan growth, credit card transaction volumes, GST collections, merchandise exports growth, manufacturing PMI etc. pointed to a deceleration in the pace of economic activity during the quarter. The quarter also witnessed excessive rains in August and September and a resurgence in food inflation which led to CPI hitting a 9-month high. The combination of these factors along with inflationary trends in commodity prices weighed on consumption expenditure and the FMCG sector.

Amidst a challenging operating environment as stated above, the Company delivered a resilient performance during the quarter. Gross Revenue stood at Rs. 20,360 crores representing a robust growth of 16.0% YoY. PBT (before exceptional items) and PAT stood at Rs. 6,755 crores and Rs. 5,078 crores respectively. Earnings Per Share for the quarter stood at Rs. 4.06.

Despite the near-term headwinds, the Indian economy continues to be extremely resilient amidst a sluggish global economy on the back of multi-dimensional and purposeful policy interventions by the Government and its thrust on creating physical, digital, agri and rural infrastructure. India continues to be acknowledged as one of the fastest growing major economies in the world with significant headroom for growth over the medium and long-term. A favourable demographic profile, increasing affluence, rapid urbanisation and accelerated digital adoption represent some of the key structural drivers of growth of the Indian economy. Expectations of a good crop output, anticipated moderation in inflation, improving agri terms of trade, and the Government's thrust on public infrastructure & the rural sector augur well for a pick-up in consumption demand.

FMCG - OTHERS

 The FMCG Businesses delivered resilient performance amidst muted demand conditions with Segment Revenue growing 5.4% YoY to Rs. 5578 crores; up 7% YoY ex-Notebooks

 Staples, Biscuits, Snacks, Frozen Snacks, Dairy, Premium Soaps, Homecare and Agarbatti drive growth

Incessant rains and flooding in certain parts of the country adversely impacted categories with higher salience of discretionary/out-of-home consumption

 Inflationary headwinds were witnessed across several key inputs (viz. edible oil, wheat, maida, potato etc.) during the quarter.- Competitive intensity continues to remain high (including from local players) in certain categories such as Noodles, Snacks, Biscuits and Popular Soaps

Emerging channels (viz. e-Commerce, Quick Commerce, Modern Trade) witnessed robust growth on the back of sharp execution of channel-specific business plans, collaborations, format-based assortments and category-specific sell-out strategies

 The Trade Marketing & Distribution vertical (TM&D) remains at the forefront of leveraging cutting- edge digital technologies and building a digital ecosystem to drive productivity, improve market servicing, draw actionable insights for sharp-focused interventions, augment sales force capability and deepen connect with retailers. The Company's digitally powered eB2B platform, UNNATI app (now also available in several vernacular languages) covers over 7 lakh outlets, facilitating sharp and direct engagement with retailers, superior analytics, personalised recommendations of hyperlocal baskets based on consumer purchase insights, and deeper brand engagement

Multi-pronged interventions continue to be made to accelerate growth across categories leveraging the Company's strong growth platforms. The portfolio continues to be further augmented with sharper focus on fortifying the core categories, addressing value-added adjacent opportunities leveraging mother brands and scaling up new growth vectors. Appreciable progress has been witnessed in these newer categories, which continue to be scaled up

 The Company's deep & wide multi-channel distribution network, with tailored channel-specific assortments, continues to sharp target opportunity areas through superior product availability and visibility. Focused investments continue to be made to enhance distribution infrastructure and drive penetration across markets. Significant capability augmentation also continues in emerging channels (Quick commerce, e-Commerce and Modern Trade) to enable portfolio premiumisation, and enhance market standing. Strategic cost management initiatives and supply chain optimisation continue to significantly mitigate the impact of inflationary headwinds.

 Branded Packaged Foods Businesses

 'Aashirvaad' Atta posted robust growth reinforcing its leadership position in the Branded Atta industry

 Value-added atta range sustained its high growth trajectory driven by superior value proposition and strong performance in emerging channels. Towards deepening consumer engagement, 'Aashirvaad Select Atta' launched its new ad-campaign 'Gehoon Ka Sartaj' with celebrity Chef Ranveer Brar as its brand ambassador. The association is aimed at communicating the core benefits of 'Select' Atta, a premium offering made from 100% Sharbati wheat, resulting in soft and great-tasting rotis

 In line with its strategy to address value-added adjacencies leveraging mother brands, the Business augmented its portfolio with the launch of Aashirvaad Soya Chunks and Roasted Short Vermicelli anchored on the value proposition of '100% Veg., Absorbs More Masala, Juicy and Tasty' and 'Made from wheat, non-sticky & non-lumpy' respectively. These products have received positive consumer feedback in their respective launch markets. 'Aashirvaad Besan' continues to witness strong traction and has been expanded to newer markets. Other value- added differentiated variants such as 'Gluten Free Flour', 'Ragi Flour', Rava ('Aashirvaad Samba Broken Wheat', 'Aashirvaad Bansi Rava' and 'Aashirvaad Double Roasted Suji Rava'), 'Aashirvaad Organic Dals' and 'Aashirvaad Vermicelli' continue to garner excellent consumer traction.

'Aashirvaad' Salt posted robust growth in focus markets during the quarter, supported by its distinctive positioning - 'Created by Sun and Sea - pure just like nature intended it to be'. The recently launched 'Aashirvaad Himalayan Pink Salt' continued to scale up, serving the needs of health-conscious consumers with the proposition of 'Purity which you can see and taste'.

 'Sunfeast' Biscuits and Cakes recorded resilient performance during the quarter on the back of differentiated products and powerful brand propositions anchored on strong consumer connect and local insights. Recent launches including 'Sunfeast Mom's Magic Cashew & Almond Ghee Roasted Nuts', 'Sunfeast Bounce Day & Night' and first-to-market 'Sunfeast Super Egg & Milk' continued to scale up. The 'Sunfeast Dark Fantasy' range of differentiated cookies continued to fortify its leadership position in the premium segment.

'YiPPee!' Noodles sustained its position as a strong No. 2 brand amidst heightened competitive intensity. The Business continued to strengthen its portfolio through a combination of product laddering across multiple price points, enhanced assortment to cater to diverse consumer cohorts and launch of differentiated offerings. The recently launched YiPPee! Korean Noodles, with two variants - 'Korean Fiery Hot Style noodles' and 'Korean Spicy Kimchi Style noodles', continue to scale up amidst excellent consumer feedback. The brand continued to invest in various high decibel campaigns to connect with regional culture codes to generate positive consumer buzz. In line with its purpose of creating 'A Better World', the brand continues to promote sustainability through plastic waste management and recycling.

 'Bingo!' Snacks delivered robust performance during the quarter and continued to strengthen its product portfolio with the launch of exciting variants of snacks/namkeens. The Business reinforced its leadership position in the Bridges segment and leveraged the 'Hot & Spicy' trend with the launch of 'Bingo! Tedhe Medhe Xtraa Teekha' and 'Bingo! Mad Angles Red Alert!'. The recently launched 'Bingo! 2X Hot and Spicy Korean-Style chips' variant continues to witness strong traction. The 'Tedhe Medhe' range of Bingo! Namkeens was augmented with the launch of Pudina Twist, Papdi Gathiya and Bhavnagari Gathiya which have received encouraging consumer response.

'Sunrise' spices delivered strong growth during the quarter and continued to strengthen its market standing in the core market of West Bengal while expanding in other adjacent markets including, North East, Bihar and Jharkhand. The brand continued its culture-centric marketing strategy across operating geographies towards deepening consumer connect. Large scale awareness campaigns underscoring the importance of quality, safety and hygiene of packaged spices were organised to enhance consumer awareness and drive penetration.

The 'ITC Master Chef' range of Frozen foods continued to deliver strong growth in both Retail and Food Service channels, powered by over 60 high quality, innovative and differentiated offerings in both vegetarian and non-vegetarian segments. The product portfolio was further augmented with the launch of no-onion-no-garlic 'ITC Master Chef Sabudana Tikki' made from 'sendha namak', suitable for fasting occasions.

 In the Dairy & Beverages category, 'Aashirvaad Svasti' fresh dairy portfolio comprising pouch milk, curd, lassi and paneer recorded strong growth on the back of best-in-class quality, differentiated products and superior taste profile. The fresh dairy portfolio was enriched with the launch of 'Aashirvaad Svasti Creamy Rich Milk' in select markets.

 In line with the Company's commitment to fostering nutrition, health and wellness, the Business has launched a range of nutrition dense products under the 'Right Shift' brand to address the nutritional needs of consumers over 40. The portfolio has been curated using natural and proprietary ingredients developed at the ITC Life Sciences & Technology Centre. Anchored on the vectors of strength and energy building, the range currently comprises Millet Oats, Jaggery Cookies, Multigrain Flour and Roasted Snacks, with other products in the pipeline.

The Personal Care Products Business registered robust growth across segments. 'Fiama' range of Personal Wash products, 'Engage' range of Fragrances and 'Nimyle' range of Homecare products recorded strong growth leveraging the rapidly growing emerging channels. Business continued to strengthen its product portfolio with launch of several differentiated offerings viz. 'Engage Exquisite Collection' a luxury grooming set for men, 'Vivel Pure Sandal oil' soap for soft & glowing skin etc. Further, the Business has been recognised for its sharp communication & consumer engagement with several prestigious awards including Silver at the London International Awards for 'Savlon Swasth India Mission'. Operations at the recently commissioned state-of-the-art manufacturing facility at Uluberia, West Bengal were scaled up during the quarter.

 The Education and Stationery Products Business continued to witness heightened competitive intensity especially from regional/local players on the back of sharp reduction in paper prices. Amidst such conditions, 'Classmate' Notebooks fortified its leadership position through relentless focus on portfolio premiumisation, innovation and leveraging institutional strengths. To build brand affinity with the college student cohort, Classmate Pulse Style Icon campaign was launched with on-ground activation comprising quizzes & competitions which garnered significant participation from target audience in 100 colleges across 17 cities.

'Mangaldeep' Agarbattis and Dhoop recorded strong growth during the quarter leveraging a range of differentiated products backed by execution of channel-led trade inputs & engagement programmes and retail distribution drives. The Business launched a new campaign, 'Dil se Karo Baat, Bhagwan Ke Saath' which celebrates one's divine connection with God. The campaign has garnered over 50 million engagements within a short span of time. In Safety Matches, the Business strengthened its market leadership position by driving its value-added product range and wider distribution.

FMCG - CIGARETTES

Net Segment Revenue up 7.3% YoY; Segment PBIT up 5.1% YoY

The Business continues to counter illicit trade and make strategic portfolio & market interventions with focus on competitive belts to reinforce market standing

 Differentiated variants and premium segment continue to perform well

 Product portfolio continues to be strengthened through the scale up of innovative and differentiated offerings as well as strategic laddering interventions, leveraging mainstream trademarks

 Agile last mile execution leveraging deep and wide distribution network.

 Sharp cost escalation in leaf tobacco, partly mitigated through improved mix, calibrated pricing and strategic cost management.

Trade marketing spends restructured for sharper last mile execution.

 As seen in the past, stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, enables volume recovery for the legal cigarette industry from illicit trade leading to higher demand for Indian tobaccos and bolstering revenue to the exchequer from the tobacco sector.

HOTELS

Segment Revenue up 12.1% YoY (2-yr CAGR 16.5%); Segment PBIT up 20.2% YoY (2-yr CAGR 34.2%)

Strong performance on a high base (LY includes G20 related business) driven by F&B, Retail and Wedding segments.

Segment EBITDA margin expanded by 70 bps YoY driven mainly by higher RevPAR, operating leverage and strategic cost management initiatives.

 The F&B portfolio was augmented with launch of 2 new outlets - 'Ottimo' at ITC Grand Goa and 'Avartana' at ITC Maurya.

 ITC Ratnadipa (opened in April 2024) at Colombo, Sri Lanka continues to garner excellent response and receive widespread appreciation from discerning customers; 250 rooms and 8 F&B outlets are currently operational.

In line with the 'asset right' strategy, nine managed properties were operationalised and management contracts for fifteen properties were signed-up during the first half of the year. The pipeline of managed properties continues to be strengthened across Welcomhotel, Mementos, Storii, Fortune and WelcomHeritage brands

 30 properties added to the portfolio in the last 24 months.

AGRI BUSINESS

Agri Business Segment Revenue up 47% YoY led by Leaf Tobacco & Value Added Agri products; Segment PBIT up 27.5% YoY

 The value-added agri portfolio (including Coffee, Fruits & Vegetables, Spices etc.) recorded robust growth during the quarter. The Business continues to leverage the multi-dimensional capabilities of its state-of-the-art value-added Spices processing facility in Guntur to scale up exports.

 Agility in operations, strong customer relationships and new business development enabled robust growth in leaf tobacco exports. Steep escalation in green leaf tobacco costs and surge in ocean freight weighed on margins; this was partially mitigated through strategic cost management initiatives. The AI/ML powered real-time buying platform continues to be scaled up to facilitate efficient leaf tobacco buying across auction platforms.

 The Business continues to scale up interventions to build crop resilience against extreme weather events across agri value chains (including wheat, tobacco etc.) thereby enhancing crop competitiveness and protecting farmer incomes.

 ITCMAARS (Metamarket for Advanced Agriculture and Rural Services) - a crop-agnostic 'phygital' full stack AgriTech platform has been scaled up across ten states. Over 1650 Farmer Producer Organisations (FPOs) encompassing more than 1.7 million farmers have been added to the Company's network.

The state-of-the-art facility to manufacture and export Nicotine & Nicotine derivative products conforming to US and EU pharmacopoeia standards, set up by the Company's wholly owned subsidiary, ITC IndiVision Limited, which was commissioned recently, has received EU REACH approvals. Product trials have been successfully completed on a pilot basis; trials at scale are underway. Export shipments are expected to be scaled up progressively.

PAPERBOARDS, PAPER & PACKAGING

The operating environment remained challenging with low-priced Chinese supplies in global markets including India, soft domestic demand, unprecedented surge in domestic wood costs and subdued realisations.

 Amidst a challenging environment, the segment registered a resilient performance

Segment Revenue up 2.1% YoY driven by strong growth in exports; up 7% QoQ.

The Business continued its sharp focus on portfolio augmentation, export customer/market development and structural cost management to mitigate near term challenges

Leadership position in VAP segment reinforced through anchor grades which continue to witness robust growth led by liquid packaging board and competitive offers.

 Domestic wood costs witnessed further increase during the quarter. Incessant rains in core plantation areas adversely impacted wood availability, quality and procurement prices. The Business continues to make strategic interventions in this area, including accelerating plantations in core areas, developing new areas, and implementing satellite-based plantation monitoring systems, among others.

 The Business continues to engage with policy makers to address key industry challenges including increasing wood availability through collaborative public-private plantation models to strengthen the competitiveness of domestic industry and arrest the rapid increase of low priced imports of paper & paperboard into the country.

 The Packaging and Printing Business witnessed subdued demand from end user industries with muted order books and soft realisations. Business continues to focus on accelerating new business development in domestic and export markets offering innovative and customised solutions.

 The sustainable paperboards/packaging solutions portfolio continues to witness strong growth leveraging cutting-edge innovation platforms. The recently commissioned state-of-the-art premium Moulded Fibre Products manufacturing facility2 in Badiyakhedi, Madhya Pradesh is being progressively scaled up.

Structural advantages of the integrated business model, Industry 4.0 initiatives, strategic investments in High Pressure Recovery Boiler and proactive capacity augmentation in Value Added Paperboards aided in partly mitigating pressure on margins.

CONTRIBUTION TO SUSTAINABLE DEVELOPMENT

ITC is a global exemplar in 'Triple Bottom Line' performance and is the only enterprise in the world of comparable dimensions to have achieved and sustained the three key global indices of environmental sustainability of being 'water positive' (for 22 years), 'carbon positive' (for 19 years), and 'solid waste recycling positive' (for 17 years). The Company sustained its 'AA' rating by MSCI-ESG for the 6th successive year - the highest amongst global tobacco companies. The Company has also been included in the Dow Jones Sustainability Emerging Markets Index for the fourth year in a row - a reflection of being a sustainability leader in the industry and a recognition of its continued commitment to people and planet.

The Company has entered the prestigious 'A List' for CDP Water by achieving the highest 'A' rating 'Leadership Level', which is higher than the Asia and Global average of 'C'. For CDP Climate, the Company retained 'Leadership Level' score of 'A -', which is higher than the Asia and Global average of 'C'.

The Company's infrastructure facilities continue to set new benchmarks of sustainability. All luxury collection hotels of the Company are now LEED Platinum certified with 12 ITC Hotels being certified as LEED Zero Carbon and 5 ITC Hotels being certified as LEED Zero Water. The Kapurthala unit of Foods Business and Bhadrachalam paper mill, recently achieved Platinum level certification, the highest recognition for water stewardship, under the Alliance for Water Stewardship Standard (AWS). With this, 9 units of the Company have achieved Platinum level certification under AWS.

The Sustainability Report 2024 is available on the Company's corporate website at
https://www.itcportal.com/sustainability/sustainability-integrated-report-2024/ITC-Sustainability-Integrated-Report-2024.pdf

Please refer link below for performance highlights of the quarter:
https://www.itcportal.com/investor/pdf/ITC-Quarterly-Result-Presentation-Q2-FY2025.pdf

The Board of Directors, at its meeting on 24th October 2024, approved the financial results for the quarter ended 30th September 2024, which are enclosed.