ITC’s post-tax profit for the Quarter ended 31st December, 2004 at Rs. 448.94 crores recorded a growth of 17.9% while pre-tax profit grew 12.7% to Rs. 638.70 crores. Earnings per share for the Quarter stood at Rs. 18.10.

The Company’s Net Turnover at Rs. 1795.19 crores registered a robust growth of 10.6% on the back of growth in Cigarette sales, ramp up of new FMCG businesses and improved performance of the Hotels and Paperboards, Paper & Packaging segments.

FMCG - Cigarettes

The Cigarette industry continued to operate in a challenging environment in the wake of the implementation of the ‘Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003’ (COTPA), imposition of 2 % education cess on excise duties and the continuing increase in state level taxes.

The Company’s continued focus on world class quality enabled it to sustain its leadership position in the industry. In keeping with its strategy of providing superior value for the consumer, the Company introduced a limited edition pack of ‘Scissors Filter’ in select markets of Kerala and festival packs of ‘Flake Filter’, ‘Bristol Filter’, ‘Berkeley Filter’ and ‘Scissors Filter’. Market coverage of select brands (in the Regular Filter category) in a new pack design was also extended during the quarter.

‘Insignia’, the Company’s super premium offering of world class quality continues to gain increasing consumer admiration.

FMCG - Others

Branded Packaged Foods

The Branded Packaged Foods business was scaled up rapidly during the quarter. In the Biscuits category, the ‘Sunfeast’ range continued to make impressive gains in launch markets. Product range was further augmented with the launch of ‘Sunfeast Milky Magic’ in select markets.The business is gearing up for the launch of a slew of differentiated products while simultaneously establishing outsourced & distributed manufacturing capacities to garner rapid volume growth in this category. ‘Aashirvaad Atta’ continued to gain increasing consumer acceptance, consolidating its position as the clear market leader amongst national branded players. In the Ready-to-Eat segment, the quarter saw the launch of 4 unique variants each of Conserves and Chutneys in the Mumbai market. Extension of this range to target markets is underway. Market/outlet coverage of ‘Aashirvaad Multipurpose Cooking paste’ and the ‘Aashirvaad ReadyMeals’ range was further expanded during the quarter. In the Confectionery category, the business launched ‘mint-o Fresh’ in 2 unique flavours – Clove and Eucalyptus, and is fast gaining consumer acceptance in the breath freshner segment. The business also launched ‘Candyman Eclairs’ in the 50 paise price point in select markets. The quarter also marked the launch of www.mycandymanclub.com, a highly innovative website offering a host of features for children.The site has witnessed very impressive hits and registrations within a short span of time.

Lifestyle Retailing

The vitality of the ‘Wills Lifestyle’ range was substantially enhanced with the introduction of over 900 style and colour options for the Winter 2004 season. The business continued to reformulate its retail presence in keeping with the emerging retailing landscape in the country by establishing/relocating stores in high traffic Malls. The ‘Wills’ range is now available in 29 large format retail stores and 94 multi-brand outlets apart from the 42 exclusive ‘Wills Lifestyle Stores’.

In the mid-market category, distribution of the ‘John Players’ brand was strengthened especially in identified high traffic locations through improved presence in key multi-brand outlets and exclusive franchisee stores.

Outsourced manufacturing at the ‘just in time’ facility continued to be scaled up with a view to servicing consumer preferences more effectively and to improve inventory management.

Greeting , Gifting & Stationery business

In the Greeting cards category, the ‘Expressions’ brand continued to make impressive gains especially in multi-brand outlets across all the 6 metros. Specialist distributor arrangements have also been established in several markets including Delhi and Mumbai. Consumer response to the launch of the premium ‘Regalia’ range of greeting cards for connoisseurs who value personalised greetings has been very encouraging. The Company’s ‘Classmate’ and ‘Expressions Paperkraft’ range of stationery products continued to gain consumer acceptance during the quarter. The Stationery distribution network is being rapidly expanded to meet the demands of the ensuing season.The ‘Classmate Young Author Contest 2004/05’ was flagged off in October ‘04 covering 12 cities & 3000 schools in the country.

Safety Matches

The business continues to make impressive gains in sales volumes and market standing with ‘AIM’ emerging as the world’s largest selling Safety Matches brand. In line with the strategy of growing the value-added segment and gaining a higher share thereof, the business is focussing its efforts in key markets through a combination of building brand awareness and introduction of customised products.

ITC continues to extend technical and management support to manufacturers in the small & medium scale sectors to help them achieve superior product quality and processes.

Agarbattis

ITC’s foray into the marketing of incense sticks is yet another manifestation of its philosophy of partnering with small and medium enterprises to help them raise their quality and process standards. The business’ products under the ‘Mangaldeep’ brand in a unique ‘fragrance locked’ packaging format is rapidly gaining consumer franchise across markets.

Hotels

Segment revenues grew by 36% over the same period last year on the back of improved room realisations and occupancies across locations. The Company’s second hotel in Mumbai, ITC Grand Central, was commercially launched in January 2005.A renovation and product upgradation programme at the ITC Maurya Sheraton, New Delhi was completed during the quarter, raising the already high quality standards of this hotel.

The Company’s commitment to the pursuit of the ‘triple bottomline’ received yet another recognition in the ‘ITC Centre, Gurgaon’ being awarded the Platinum Green Building rating by USGBC-LEED (US Green Building Council - Leadership in Energy and Environmental Design ), the highest rating in this category. ITC is the first corporate house in India to have achieved this unique international distinction.

Paperboards, Specialty Paper & Packaging

Sales of value added products grew 29% over the same period last year, further enriching the product mix. These products now comprise over 55% of paperboard sales. Significant progress was also made during the quarter towards capacity expansion in the recycled segment with the scaling up of production at the Kovai unit in Tamil Nadu. Trial runs are underway in the new 75,000 TPA line at Bhadrachalam, Andhra Pradesh and commercial operations are slated to commence shortly.

The Company’s Elemental Chlorine Free (ECF) pulp mill is the only one of its kind in the country meeting world-class environmental standards. With increasing awareness of hygiene and safety among Indian consumers, industries like foods and pharmaceuticals are progressively switching to ECF pulp-based paperboard.

Recent investments in state-of-the-art technology in the packaging business have begun delivering substantial savings to the ITC system through in-house manufacture of high-end packaging products.

Agri business

The e-choupal network was further ramped up to 5060 installations, reaching out to nearly 3 million farmers in the states of Madhya Pradesh, Uttar Pradesh, Maharashtra, Rajasthan, Karnataka and Andhra Pradesh.

The Company’s first rural mall, christened ‘Choupal Sagar’, inaugurated in August 2004 at Sehore, MP continued to attract high levels of footfalls and sales. Such malls, in synergistic combination with the e-choupal network would serve as the core infrastructure to support ITC’s rural distribution strategy.

The Company won the Certificate of Excellence from the Ministry of Commerce (Tobacco Board), for the ‘Best Export Performance in Unmanufactured Tobacco’ and the ‘Best Manufacturing Performance in Cigarettes’ for the year 2004.

Progress of Other Strategic Initiatives

In pursuit of its abiding commitment to create stakeholder value through service to society, ITC’s community projects made significant progress during the quarter. The social and farm forestry programme, which leverages the biotechnology research capability of the Company’s paperboards business, now covers 100 million saplings spread across 30,000 hectares, generating employment opportunities for nearly 300,000 people. The livestock development programme reaches out to 15,000 farmers in 800 villages. The ITC sponsored micro credit groups have spawned over 2000 women entrepreneurs in select rural areas. The integrated watershed development programme now extends to 550 water storages in the form of percolation tanks, check dams and farm ponds to support soil and moisture conservation in over 8000 hectares of land.

In the area of environment, health and safety, ITC continues to raise the bar for its operating units. Already a water-positive enterprise, the Company aims to become carbon-positive and achieve zero solid waste over time.

The Board of Directors, at its meeting held in Kolkata on 21st January, 2005 approved the financial results for the quarter ended 31st December 2004, which are enclosed.

Notes :

(i) The above results were reviewed by the Audit Committee and approved at the meeting of the Board of Directors of the Company held on 21st January, 2005.

(ii) Figures for the previous year have been re-arranged wherever necessary.  

(iii) Gross Income comprises Segment Revenue and Other Income. 

(iv) During the quarter, 12 Investor complaints were received, which were promptly attended to by the Company. No complaints were pending either at the beginning or at the end of the quarter.   

(v) During the quarter, 1,72,755 Ordinary Shares of Rs. 10/- each were issued and allotted under the ITC Employee Stock Option Scheme. Consequently, the issued and paid up share capital of the Company stands increased to Rs. 248,09,76,570/-.   

(vi) The Members of the Company at their meeting held on 19th November, 2004, approved the Scheme of Amalgamation of ITC Hotels Limited and Ansal Hotels Limited with the Company (Scheme), with effect from 1st April, 2004. The Hon'ble High Court of Calcutta has admitted the Company's petition for sanction of the Scheme. The results do not take into account the impact of the amalgamation, which will be appropriately reflected upon the Scheme becoming effective.

(vii) The shareholders of the Company have approved, by means of postal ballot, Special Resolutions for alteration of the Objects Clause of the Memorandum of Association for commencement of new businesses at an appropriate time, as covered in the Notice dated 29th October, 2004 to the shareholders; the results of postal ballot were declared on 22nd December, 2004.

(viii) On 20th January, 2005, pronouncing its judgement on the Company's petition/appeals challenging Luxury Tax on cigarettes, the Hon'ble Supreme Court of India accepted the Company's contention and held that the States do not possess legislative competence to impose luxury tax on goods. A copy of the judgement is awaited. The above results do not take into account the effect of this judgement.

(ix) The above is as per Clause 41 of the Listing Agreement and does not take into account the excise issues disputed by the Company.    

Limited Review

The Limited Review, as required under Clause 41 of the Listing Agreement has been completed and the related Report forwarded  to the Stock Exchanges. This Report does not have any impact on the above 'Results and Notes' for the Quarter and Nine Months ended 31st December, 2004 which needs to be explained.

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. 997 Crores (31.12.2003- Rs. 970 Crores) includes Rs. 788 Crores (31.12.2003 - Rs. 752 Crores) relating to investments in hotels which became operational in the last three years.
The segment results are net of the depreciation charge of the newly opened hotels 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. The segment results for this nine month period are after absorbing costs relating to the expansion of the strategic e-choupal initiative.
                   
(6) 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 stand significantly reduced to Rs. 498 Crores (as at 31.12.2004) from Rs. 802 Crores (as at 31.12.2003).
                   
(7) Figures for the previous year have been recast to conform to current presentation.