ITC Ltd has reported an underlying growth of 14.14% in net profit to Rs 362.52 crore in the second quarter (July-September) of 2002-03. Net income rose 20% to Rs 1,519.61 crore. For the half year ended September 30, 2002, ITC’s net profit was up 13.6% to Rs 724.42 crore while net income was up 20.6% to Rs 2,953.60 crore over the corresponding six months of the previous fiscal.

ITC’s second quarter gross income, including excise and sales tax, at Rs 2,827.84 crore notched up an increase of 14.8% while net sales income at Rs 1,470.3 crore grew 21.8%. Other income, at Rs 49.31 crore in the second quarter, was lower by 18.4% compared to the corresponding period last year- a factor, which pulled down the growth in net income to 19.9%.

The "underlying growth" in net profit at Rs 362.52 crore has been calculated after adjusting Rs 31.86 crore in respect of income tax refund for the quarter ended, September 2001, interest income of Rs 7.55 crore and income tax credit of Rs 13.07 crore in respect of earlier year but provided for in quarter ended September 2002, an ITC release said.

Without these adjustments ITC’s second quarter net profit at Rs 380.5 crore actually accounts for a 12% growth compared to the same period last year.

According to an ITC release, the domestic cigarette industry continued to be impacted by burgeoning state level taxes. ITC, however, managed to record a gross revenue growth of 9.7% in its cigarettes business. The company has managed to record higher volumes through a better product mix.

Variants of top existing brands also added to the rising interest among consumers in ITC products. During the quarter under review, ITC launched Gold Flake Cool Mist and extended the premium packaging format to Classic Milds and Classic Ultra Milds in select markets. The cigarette operations accounted for 79.4% of ITC’s total gross sales.

Gross sales from ITC’s agro-business, at Rs 463 crore during Q2, registered a 128% growth compared to the same period last year; income from hotels, at Rs 40.34 crore, increased by about 14% while that from paper, paperboards and packaging, at Rs 295.9 crore, increased 12.5%.

The hotels business was able to prune Q2 losses to Rs 32 lakh from Rs 3.45 crore during the corresponding period last year thanks to what ITC says were "early signs of recovery in September 2002, and after withdrawal of negative travel advisories by various national governments." This recovery is expected to accelerate with wider availability of travel insurance covers for inbound travellers, the ITC release said.

Though the Q2 revenues from ITC’s new businesses increased three-folds to Rs 16.2 crore, losses also increased nearly 82% to Rs 27.29 crore compared to the corresponding period last year. New businesses segmented under FMCG category by ITC include branded garments under Wills Sport, greetings cards and gifts under the Expressions range, packaged foods and outsourced match boxes.

ITC’s total expenditure for Q2, at Rs 898 crore, saw a sizeable 27.7% jump, while tax provisions at Rs 174 crore was also higher by 9.4%. Interest for Q2 at Rs 8.4 crore was lower compared to Rs 17.45 crore in same period last year, while depreciation increased to Rs 58.63 crore against Rs 48.16 crore.

For the six months ended September 30, gross and net sales rose to Rs 5,575.6 crore and Rs 2,878.3 crore, respectively, from Rs 4,833.6 crore and Rs 2,366.3 crore in the corresponding period in the previous year. The increase was largely attributed to smart increases in agri exports and further improvement in the operation of the company’s paperboards division. Pre and post-tax profit for the six month period ended September 2002, were Rs 1,087.1 crore and Rs 724.4 crore, respectively, against Rs 959.4 crore and Rs 637.7 crore, respectively, for the half year ended September 2001.