This contributed to the significant increase in other income to Rs 27.65 crore in the first quarter from Rs 8.22 crore in the corresponding period of 1997-98.

The remaining part of the ITCs "other income" accrued from interest on deposits and advances made out of surplus funds. These included funds mainly received from its external borrowings programme aggregating about Rs 350 crore.

ITCs investments in the company, at cost, were worth Rs 3.16 crore on March 31, 1998. The joint venture had successfully developed hybrid, high-yielding seeds.

It has established market leadership in sunflower seeds with a market share of over 20 per cent and increased market shares in other crops like maize, forage and sorghum. The disinvestment is part of ITCs newcorporate plan to consolidate its operations in hotels, tobacco, speciality paper and packaging, and international trading.

Meanwhile, the companys expenses as a percentage of gross sales has increased to 32.60 per cent from 29.53 per cent in the corresponding quarter last year. The company has attributed this to a combination of factors like increase in materials cost, higher freight charges and advertisement costs. The adspend has increased following the launch of two international brands of BAT Plc -- Benson & Hedges and State Express 555.

In view of the large cash outflows in the last two financial years -- Rs 800 crore on account of ITC Classic Finance and Rs 350 crore excise pre-deposit -- the company's interest costs have gone up by about 45 per cent in the first quarter to Rs 39.72 crore.

In the current year, the company will pump in another Rs 150 crore against allotment of preference shares in ITC Bhadrachalam Paperboards Ltd (ITC-BPL). This will increase its stake to 51 per cent from about 34per cent, making it a subsidiary of ITC. As on March 31, 1998, the stake of ITC and its subsidiaries in ITC-BPL was about 37 per cent.

ITC will seek shareholder approval at the forthcoming annual general meeting for the injection of funds into ITC-BPL for preferential allotment of shares at a price of Rs 65 per share.

Ever since results for the year ended March 31, 1998 were declared, the ITC scrip has been in a bearish mode and the publication of the quarterly results has not made any visible change in sentiment. In fact, the immediate concerns of major investors relate to the declining profit margins and stagnating cigarette sales.

In the current year, financial institutions have been able to absorb only part of the delivery-based sales resorted to by the foreign institutional investors in the first two months.

Unit Trust of India's holding in ITC, which had slipped to below 14 per cent in August last year, picked up to about 14.5 per cent at the end of March 31, 1998.