ITC’s results for the nine month period ending 31^st December 2001 reflect resilience in the face of the current difficult business environment, particularly for consumer goods and travel & tourism. The Company continued to maintain its topline growth during the third quarter, posting an increase of nearly 8% in Net Turnover. Nine-month post-tax profits registered a growth of 22.5%. Provision for taxation includes the impact of deferred taxation, both for the current and the previous year periods to facilitate comparison.

The expenditure profile in the third quarter reflects the Company’s continuing emphasis on strategic cost management. Staff cost for the quarter was higher consequent to the impact of voluntary retirement schemes. Interest cost for the quarter is lower by Rs.11 crores, reflecting the continuing impact of debt reduction. Effective cost control has helped absorb the impact of start-up costs of new businesses, namely Lifestyle Retailing, Greeting Cards and Packaged Foods.

Domestic cigarette volumes continue to remain under pressure due to the steep increase in excise duties imposed in the last Union Budget and the adverse impact of the growing contraband trade in cigarettes. As a result, the share of cigarettes in India’s tobacco consumption has further declined this year to about 14%, with increased share accruing to other forms of tobacco consumption. The Company’s sustained focus on investment in brands enabled a deceleration in the rate of de-growth of domestic cigarette volumes during the quarter. In continuation of the Company’s strategy to constantly upgrade its product range to cater to a variety of tastes and flavour options, the third quarter witnessed the launch of Wills Navy Cut Lights. Initial market response has been encouraging.

The scale-up of the Lifestyle Retailing business is on schedule, with seven new stores opening during the quarter. Currently, 29 ‘Wills Lifestyle’ stores are operational across the country, providing world-class products and shopping experience to discerning consumers. The recently launched ‘Kitchens of India’ range of premium, value-added packaged foods now includes ‘Dal Bukhara’, ‘Kundan Qaliya’ and ‘Chicken Chettinad’. The Greeting Cards SBU, which entered into a strategic alliance with the SOS Children’s Villages of India, achieved a significant growth in institutional sales during the quarter.

The steep worldwide decline in business and leisure travel, combined with the gestation of new properties considerably impacted the results of the Company’s Hotels business. Although the market is expected to remain depressed in the near term, the long term potential of this industry in India remains exciting. The projects at Kolkata and Upper Worli, Mumbai are progressing satisfactorily and are expected to open by end 2002.

The results of the Agri-business segment reflect the impact of the crop holiday declared by the Tobacco Board in Andhra Pradesh. While exports of agri commodities other than leaf tobacco grew by 24% in rupee terms during the quarter, segment results were adversely affected by the slump in the prices of marine products to their lowest levels in the last ten years.

The Tiruvottiyur factory of the Packaging business remained closed from 13^th November 2001 in the face of renewed industrial unrest. However, actioning of contingency plans is ensuring uninterrupted supplies of packaging to the cigarettes business.

The Board of Directors, at its meeting in New Delhi on 18^th January 2001, approved the financial results for the period ended 31^st December 2001, which are enclosed.

Notes :

1. The above results were approved at the meeting of the Board of Directors of the Company held on 18th January, 2002.
    
2. Figures for the previous year have been re-arranged wherever necessary.
    
3. Gross Income comprises of Segment Revenue and Other Income.
    
4. The Members of the Company at their meeting held on 7th December, 2001, approved the Scheme of Amalgamation ("the Scheme") of ITC Bhadrachalam Paperboards Limited with the Company with effect from 1st April, 2001. The Hon'ble Calcutta High Court has admitted the Company's petition for sanction of the Scheme.
    
5. The strike at the Tiruvottiyur factory of the Packaging business which commenced from 13th November, 2001, continues.
    
6. The Provision for Taxation includes the impact of deferred tax.
     
7. The Company has recorded a cumulative net deferred tax liability of Rs. 57.32 crores upto 31st March, 2001 as a reduction from General Reserves. This adjustment has not been reflected in the above shown "Twelve months ended 31.3.2001" column which remains as per the audited accounts.
    
8. The above is as per Stock Exchange Regulations and does not take into account the excise issues disputed by the Company.

Notes :