ITC Kolkata: Diversified giant ITC Ltd on Friday announced a 16.8% jump in Q1 net profit to Rs 652.28 crore and reaffirmed its commitment to spend Rs 15,000 crore over the next five years to expand its businesses. However, ITC - whose net turnover surged 25.7% to Rs 2,850 crore during April-June 2006 - said its underlying net profit was higher at 21.1% in the first quarter of the current fiscal after adjusting for the once-off income included in the financials for the quarter ended June 2005. ITC - which has envisioned an investment of Rs 5,000 crore to establish a network of Choupals and Choupal Saagars - said its earnings per share during April-June 2006 stood at Rs 1.74.

The company - which has been increasingly trying to reduce its dependence on cigarettes - said non-cigarette businesses grew 44% during April-June 2006, and currently accounted for 50.2% of the firm's net turnover. "We will have to spend money to build brands...for 6-10 years. You will have to be patient. We are entering into new areas which will become cash cows of tomorrow," ITC chairman Y C Deveshwar told shareholders at the company's AGM here on Friday, while underlining the firm's pledge to grow its newer FMCG businesses. Shareholders on Friday approved a 5-year extension of Deveshwar's term as ITC chairman.

ITC said its branded packaged foods business saw a sales increase of 62% over last year. The company now intends to spend Rs 600-700 crore in setting up a foods factory at Uttaranchal. ITC said its hotels business grew 35% in revenue terms to Rs 199 crore during April-June 2006 as occupancies and realisations improved across properties. The company said underlying growth was higher at 96% after adjusting for the once-off pre-tax income of Rs 26.77 crore included in the April-June 2005 financials.

"We are planning three hotels in Bangalore, one in Chennai, and also looking at Hyderabad and every state capital. We will spend Rs 400-500 crore to add another 300 rooms to the hotel in Kolkata," Deveshwar said at a press conference that followed the AGM. "The only thing acting as a constraint is land," he added. The company said overall agri business revenues in the first quarter of fiscal 2006-07 recorded a growth of 47% driven primarily by increased levels of soya trade and higher wheat sales to ITC's branded packaged foods business. "There are vast opportunities in the agri business and we do not see any threat from Reliance," Deveshwar said, pointing out that ITC did not rule out the prospect of extending the scope of its Choupal network to cover towns and cities. The company would start pilot projects of cash and carry distribution centres at Chandigarh, Hyderabad and Pune in the next six months, ITC director K Vaidyanath said. If successful, such a framework could be replicated in Kolkata, Vaidyanath added.

Deveshwar said ITC would choose between three states for its Rs 2,500 crore greenfield paperboard unit. The company aimed to diversify into paper and pump in Rs 1,000 crore over the next three years.

n cigarettes, ITC said the business continued to operate in a "challenging environment". On Bengal, Deveshwar said the company was willing to invest Rs 1,000 crore here in a range of projects. "We are even prepared to build a convention centre since Kolkata does not have too many facilities to hold AGMs of this size," he told shareholders.