ITC’s post-tax profit for the Quarter ended 30th September, 2003 posted a healthy growth of 12.5% to Rs. 428 crores. Pre-tax profit also registered a growth of 12.5% to Rs.624 crores. Earnings per share for the Quarter stood at Rs. 17.29.

Underlying net turnover, after adjusting for the once-off opportunity of non-basmati rice exports last year of Rs.192 crores, grew substantially by 16.8%. Underlying Post-tax profits increased by an impressive 16.9% after excluding tax refunds and related interest income received last year.

FMCG

- Cigarettes

The Cigarettes industry continued to operate in a challenging environment. The Company’s focus on world class quality and continued investment in brands enabled it to sustain its leadership position in the industry. The current quarter saw the extension of market coverage in respect of the recently launched brands viz., Insignia, Wills Silk Cut and the Star variants of Scissors, Capstan and Bristol.

- Others

The Company’s new FMCG businesses continued to grow rapidly with the extension of existing products to target markets as well as the launch of new products/variants. As evident from the Segment Report, topline grew by nearly Rs. 60 crores in the second quarter and by Rs. 100 crores in the first half of the current year as compared to the same periods last year.

- Branded Packaged Foods

During the current quarter, the Company entered the Biscuits market with the launch of the ‘Sunfeast’ range of differentiated and innovative biscuits. These products have met with encouraging response from consumers and are being progressively rolled out to target markets.

In the confectionery segment, the ‘Candyman’ range was further expanded with the launch of Eclairs and pineapple and orange flavours, in addition to the banana and mango variants. ‘Minto’, the Company’s popular brand of compressed mint, now enjoys a market share of close to 40%.

The ‘Aashirvaad Ready Meals’ range is fast gaining consumer acceptance as a ‘value for money’ convenience product. The ‘Kitchens of India’ premium ready-to-eat product range was further expanded with the launch of "shahi jamun" and "khoya mutter".

- Lifestyle Retailing

The Company’s foray into the mid-priced segment with the ‘John Players’ range of menswear was further scaled up during the quarter with distribution now extending to nearly 2800 outlets. Consumer response has been encouraging and the brand is being rolled out rapidly to establish national presence.

The ‘Club Life’ and ‘Classic’ range for the party wear and work wear segments respectively are steadily growing in popularity, significantly enhancing the premium image of the ‘Wills Lifestyle’ portfolio.

- Greeting Cards & Gifts

The Greeting Cards business continued to make impressive progress with current market share estimated at 20%. Market coverage of the ‘Expressions Paperkraft’ range of stationery products and the ‘Classmates’ range of notebooks in the school stationery segment was further extended during the quarter. The business is gearing up to achieve national presence in the ensuing months to tap the full potential of the stationery segment.

- Safety Matches

‘Mangaldeep’ , ‘Delite’, and ‘i-kno’ have become synonymous with value-addition in an industry where movement up the value chain has not been witnessed in a long time.

‘AIM’ has become the single largest brand in the country within just one year of launch.

ITC continues to extend technical and management support to small-scale vendors to help them achieve superior product quality.

Hotels

Segment revenues at Rs. 57 crores grew by slightly more than 40% over the same period last year on the back of improved occupancies and room realisations following the recent upturn in the industry. However, segment results were impacted due to depreciation and other gestation costs in respect of the recently opened hotel ‘ITC Sonar Bangla’ at Kolkata.

Construction of the Company’s second hotel in Mumbai, ITC Grand Central, is progressing satisfactorily.

Paperboards and Specialty Paper

Spurred by the Company’s investments in pulp manufacturing, poly-extrusion and supercalendering facilities, sales of value added products continued to grow. They now constitute nearly 50% of the total paperboard sales. The Company’s Elemental Chlorine Free (ECF) pulp mill is the only one of its kind in the country, meeting world-class environmental standards. While ECF pulp-based board has internationally been the preferred packaging option, with increasing awareness of hygiene and safety among Indian consumers, industries like foods and pharmaceuticals in the country are increasingly switching to the Company’s ECF pulp-based paperboard.

Agri business

The Company continues to focus on building a robust IT-backed rural distribution infrastructure in support of its FMCG growth strategy. The e-choupal network was further ramped up to nearly 2600 installations, reaching out to more than 1.5 million farmers in close to 13000 villages in the states of Madhya Pradesh, Uttar Pradesh, Maharashtra, Karnataka and Andhra Pradesh.

Agribusiness revenues grew by 33% after adjusting for the once-off opportunity of non-basmati rice exports last year. Despite difficult trading conditions coupled with the continuing oversupply situation in the global leaf tobacco industry, the strengthening Indian Rupee and the steep currency devaluation in competing countries, the Company’s leaf tobacco exports grew in volume terms by 15%.

The Board of Directors, at its meeting held in Kolkata on 29th October 2003, approved the financial results for the quarter ended 30th September 2003, which are enclosed.

Notes :

(1) The Company's corporate strategy aims at creating multiple drivers of growth anchored on its core competencies.The Company is currently focused on four business groups : FMCG, Hotels, Paperboards, Paper & Packaging, and Agri Business. The Company's organisational structure and governance processes are designed to support effective management of multiple businesses while retaining focus on each one of them.

(3) Segment results of the new business activities namely 'FMCG : Others ' largely reflect start up and business development costs.

(4) In its Hotels business, the Company has been engaged in implementing its strategic investment plans to complete the ITC Welcomgroup chain. Capital employed of Rs. 967 Crores (30.09.2002- Rs. 870 Crores) includes Rs. 835 Crores (30.09.2002 - Rs. 764 Crores) relating to the recently opened hotels at Mumbai and Kolkata as well as capital work in progress in respect of the second hotel under construction in Mumbai.

The segment results for Hotels continue to reflect the depreciation charge and the gestation cost of the newly opened hotels, the impact of the global slump in international travel which persisted till the first quarter of this year, and the holding cost in respect of Hotel Searock which has been the subject matter of a prolonged legal dispute.

(5) The Company's Agri Business markets agri commodities in the export and domestic markets; supplies agri raw materials to the Branded Packaged Foods Business and sources leaf tobacco for the Cigarettes Business.

During the half year, the Agri Business revenues / results witnessed a degrowth over the same period last year due to :

(a) transporters' strike in April 2003;

(b) significant reduction in the size of export opportunity in non basmati rice which was available last year (Rs. 344 Crores in H1 - 2002 against Rs. 75 Crores in H1 - 2003); and

(c) significant appreciation of the Rupee against the US Dollar.

(6) As at 30th September 2003, the total capital employed of the Company of Rs. 6191 Crores (30.09.2002 - Rs. 5138 Crores) included Rs. 802 Crores (30.09.2002 - Rs. 874 Crores) being legacy assets acquired by the Company as part and parcel of the schemes facilitating exit from the Financial Services and Edible Oil Businesses in 1997.

(7) Figures for the previous year have been recast to conform to current presentation.