ITC’s post-tax profit for the Quarter ended 30^th June, 2003 posted an impressive growth of 15.5% to Rs. 397.22 crores while pre-tax profit registered a growth of 13.4% to Rs. 604.14 crores. Earnings per share for the Quarter stood at Rs. 16.05.

The Company’s topline growth was hindered by the 10-day transporters’ strike in April ’03 which disrupted shipments considerably, particularly in the Paperboards and Agri Business segments. Despite this constraint, underlying net turnover, after adjusting for once-off non-basmati rice exports last year (Rs.152 crores), grew by a significant 11% .

FMCG - Cigarettes

In line with the Company’s strategy of delivering world class products, the first quarter saw the launch of several superior and differentiated products targeted across market segments. ‘Insignia’, the Company’s offering in the super premium category, was extended to the 6 metros and Pune. It is rapidly creating a franchise in the consumers’ minds as the finest global standard in cigarette quality. The business also launched another version of Wills Navy Cut, namely Wills Silk Cut. The value-added Star variants of Scissors, Capstan and Bristol were launched in the Bingos segment.

FMCG - Others

Branded Packaged Foods

The Company’s Branded Packaged Foods business continued to expand rapidly. In the Ready to Eat segment, the product portfolio was further expanded with the introduction of ‘Aashirvaad ReadyMeals’ - a range of wholesome everyday dishes from the ‘Kitchens of India’ stable. In the Staples category, ‘Aashirvaad Pure Salt’ - launched in March 2003 - was progressively extended to target markets, while ‘Aashirvaad Atta’ continued to gain increasing consumer acceptance. The ‘Aashirvaad’ brand is rapidly gaining national presence. In the Confectionery segment, the national roll out of ‘minto’ and ‘Candyman’ was completed during the quarter.

The business plans to launch a slew of high quality products across categories, leveraging the capabilities of the Company’s Technology Centre at Bangalore.

Lifestyle Retailing

During the quarter, the ‘Wills Lifestyle’ product portfolio was further strengthened with the launch of the ‘Clublife’ and the ‘Classic’ range for the party wear and work wear segments respectively. Preparations are already under way to launch the limited edition ‘Couture’ range. These launches, together with the ‘Wills Sport’ range (the first to be launched by the Company), will complete the ‘Wills Lifestyle’ product portfolio, positioning it as a full wardrobe brand for men and women.

The business also launched a range of international quality eyewear from ‘Valentino’ and ladies handbags from ‘Furla’ in 14 of the exclusive ‘Wills Lifestyle’ stores across the country.

The Company’s foray into the mid-priced segment with the ‘John Players’ range was scaled up rapidly during the quarter with distribution now extending to nearly 1600 outlets. Consumer response has been encouraging and the brand is being progressively rolled out to establish national presence quickly. ‘John Players’ won the Business World sponsored National Institute of Design's award for design excellence in the FMCG packaging category.

Greeting Cards & Gifts

The Greeting cards business further strengthened its market standing by improving its market share to 20%. Apart from extending market coverage of the ‘Expressions Paperkraft’ range of stationery products, the business also launched the ‘Classmates’ range of notebooks in the school stationery segment, leveraging the competencies residing in the Paperboards and Specialty Paper business of the Company

Safety Matches

Quick roll out during the quarter enabled the business to achieve national coverage within 9 months of commencing activities to market safety matches produced by the small scale sector. The Company’s technical and management support has enabled the small scale vendors to attain superior product quality.

All 3 brands, namely ‘Spriha’, ‘Nivedan’ and ‘Ashageet’, have received encouraging consumer response. Distribution is being extended in a phased manner to progressively achieve national coverage. In addition to the sourcing support provided to the small scale sector, the Company has launched a programme, as part of its rural development initiative, to train rural women in agarbatti rolling, thereby providing them a regular source of income.

Hotels

Segment revenues at Rs. 50 crores grew by 21.8% over the same period last year on the back of revenues from the newly opened ITC Sonar Bangla, Kolkata, as well as improved occupancies and room realisations. However, segment results were depressed due to depreciation and other operating charges in respect of ITC Sonar Bangla.

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

Successful leveraging of the recent investments in pulp manufacturing, poly-extrusion and supercalendering facilities augmented sales growth of value added products, which now constitute nearly 50% of 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. Indian customers in environmentally sensitive industries like foods and pharmaceuticals are increasingly opting for the Company’s ECF pulp-based board, the internationally preferred packaging option. With growing demand for this product, the business is already drawing up plans for future expansion of pulp capacity.

Agri business

The e-choupal network was further ramped up to nearly 2150 installations, reaching out to more than 1.3 million farmers in close to 12000 villages in the states of Madhya Pradesh, Karnataka, Andhra Pradesh and Uttar Pradesh.

Total agri exports, after adjusting for once-off non-basmati rice exports last year, grew marginally. Exports were adversely affected by the transporters’ strike in April 03 and the strengthening Indian Rupee. Despite difficult trading conditions coupled with the continuing oversupply situation in the global leaf tobacco industry and the steep currency devaluation in competing countries, the Company’s leaf tobacco exports grew in volume terms by 10%.

The Board of Directors, at its meeting held in Kolkata on 25^th July, 2003, approved the financial results for the quarter ended 30^th June, 2003, which are enclosed.
  

Notes :

1. The above results were approved at the meeting of the Board of Directors of the Company held on 25th July, 2003.

2. Figures for the previous year have been re-arranged wherever necessary.

3. Gross Income comprises Segment Revenue and Other Income.

4. The Company's topline growth was hindered by the 10-day transporters' strike in
   April '03 which disrupted shipments considerably, particularly in the Paperboards and Agri Business segments.

5. During the quarter, the Company made a further investment of Rs. 15 Crores in the equity capital of ITC Infotech India Limited, a wholly owned subsidiary of the Company and Rs. 1.99 Crores in the equity capital of ITC Hotels Limited, a subsidiary of the Company.

6. During the quarter 227 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.

7. 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 ended 30th June, 2003 which need 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) Branded Garments, Greeting Cards, Stationery & Gifts, Packaged Foods, Agarbattis and Matches constitute new business activities. Accordingly segment results 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. 960 Crores (2002 - Rs. 819 Crores) includes Rs. 822 Crores (2002 - Rs. 715 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 gestation cost of the newly opened hotels, the impact of the global slump in international travel 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 quarter, 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. 152 Crores in Q1 2002 against Rs. 32 Crores in Q1 2003); and
(c) significant appreciation of the Rupee against the US Dollar.                    
                   
(6) As at 30th June 2003, the total capital employed of the Company stood at Rs. 5763 Crores (2002 - Rs. 4758 Crores) including Rs. 803 Crores (2002 - Rs. 881 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 the current presentation.