ITC’s Gross Turnover for the Quarter ended 30th September, 2002 grew by 15.7% to Rs.2779 crores on the back of all-round growth in all its business segments, with significant increase in agri exports and paperboards. Underlying Pre-tax profit for Q2 registered an impressive 17.2% growth to touch Rs.546.98 crores, while underlying Post-tax profit grew by 14.1% to Rs.362.52 crores. Earnings Per Share for the Quarter was Rs. 15.37.

FMCG

The domestic Cigarette industry continued to be impacted by burgeoning State level taxes. The Company leveraged its leadership position in the industry to record a revenue growth of 9.7% during the Quarter on the back of volume growth and better product mix. In line with its objective of providing world class products to the Indian consumer, the Company launched ‘Gold Flake Cool Mist’, a new variant of its premium brand, and extended the premium bevelled edge packaging format to ‘Classic Milds’ and ‘Classic Ultra Milds’ in select markets.

The Lifestyle Retailing business further scaled up operations by adding three more exclusive ‘Wills Lifestyle’ stores during the Quarter. Consequently, the international quality ‘Wills Sport’ range is now available in 48 stores across 39 cities in India.

The Greeting cards business continued to make progress with market share touching 10%. The Company launched the vernacular range of cards (‘Expressions Matrubhasha’) in eight languages and extended coverage of its paper-based products (‘Expressions Paperkraft’).

Following the introduction of the category-creating Gourmet products from the premium ‘Kitchens of India’ stable, the Branded Packaged Foods business is rapidly expanding its range of offers across categories. In the branded ‘atta’ segment, the ‘Aashirvaad’ range was rolled out progressively to 11 cities. The ‘Aashirvaad’ range now includes ‘Aashirvaad Select’, a premium variant for the discerning consumer. In the confectionery segment, ‘Mint-o’, has been extremely well received by consumers in 21 markets and is garnering impressive market share in an expanding market. The Company made an entry into the hard-boiled confectionery segment with the launch of ‘Candyman’ in two unique flavours in August 2002. Product development is under way to further expand the Company’s range of value-added products across segments.

During the Quarter, the Company also commenced marketing Safety Matches sourced from the small scale sector.

Almost all of ITC’s new initiatives in the FMCG sector are modelled on outsourcing production from Small and Medium Enterprises. The Company aims to enhance the competitiveness of the small and medium scale sectors through its complementary marketing strengths, especially the breadth and depth of the Company’s trade marketing and distribution.

Hotels

Early signs of recovery in September 2002, post the withdrawal of negative travel advisories by various national governments, augur well for the industry. This recovery is expected to accelerate with wider availability of travel insurance covers for inbound travellers.

‘ITC Sonar Bangla’ at Kolkata is fast nearing completion. Construction of the Company’s hotel at Upper Worli, Mumbai is progressing on schedule.

Paperboards, Paper and Packaging

While the overall segment revenue grew by 13%, sales of value-added paperboards grew by 36% during the Quarter. Consequently, the share of value-added paperboards in net sales increased to 43% during the half year (35% in the same period previous year). Operating profits from paperboards grew by 19% during the Quarter. The new pulp mill has already undergone successful trial runs. Commercial operations are expected to commence shortly. Besides supporting competitiveness in terms of input cost, the pulp mill will enhance capability for manufacture of a wider range of value-added products.

Agri Business

The Company continued to leverage the opportunity in non-basmati rice. Total agri commodity exports touched Rs. 300 crores during the Quarter (Rs.131 crores same period last year). The ‘e-Choupal’ initiative was further ramped up to 1200 installations covering 6500 villages. The ‘e-Choupal’ infrastructure is being extended to support efficient sourcing of wheat for the Branded Packaged Foods business.

The Board of Directors approved the enclosed results for the Quarter ended 30th September, 2002 at its meeting held on 24th October, 2002.

Notes :

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 & Gifts, Packaged Foods 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. 870 Crores (30.09.2001 - Rs. 710 Crores) includes Rs. 764 Crores (30.09.2001 - Rs. 611 Crores) relating to the recently opened hotels, namely ITC One at the Maurya Sheraton in New Delhi and ITC Grand Maratha in Mumbai, as well as capital work in progress in respect of hotels under construction.

The segment results reflect the gestation cost of the newly opened hotels, the impact of the global slump in international travel, the adverse effect of travel advisories and the holding cost in respect of Searock Sheraton which has been the subject matter of a prolonged legal dispute.

The segment results for the quarter and half year ended 30.09.2002 is net of a one time charge of Rs. 0.84 crore relating to an earlier period in respect of property taxes.

(5) The Company's Agri business markets agri commodities in the domestic and export markets; supplies agri raw materials to the Branded Packaged Foods business and sources leaf tobacco for the Cigarettes business. The segment results for the quarter and half year ended 30.09.2001 were adversely impacted by the tobacco crop holiday in 2001-02.

(6) Total capital employed of Rs. 5138 Crores includes 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.

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 six months ended 30th September, 2002 which need to be explained.