Deveshwar said the company had planned Rs 375-crore investments for leaf-processing plants and modern storage facilities to "improve quality, reduce wastage and enhance productivity." The company has nurtured a pool of trained manpower for the purpose, he added.

In addition, ITC will modernise its cigarette plants by inducting "contemporary" technology, involving Rs 900 crore over the next five years. A new factory is being set up outside Bangalore to match "globally benchmarked standards".

Besides, the company will strengthen brands at the upper-end "in anticipation of consumer aspirations". "This is an important area of investment as it takes several years to build sustainable brand equity. We will shedvolumes at the lower and middle ends and concentrate on the upper-end for value creation. This is the segment where we anticipate tough competition from international majors," said Deveshwar.

The company's hotels business, where "about Rs 1200-crore investment has been planned, is expected to generate returns in the "medium-to-long-term", according to Deveshwar.

The company has got shareholders' approval to an enabling resolution allowing it to buy and sell hotels, wholly or partly, whenever opportunities arise. "This is being done to minimise delays in decision-making and derive benefits from available opportunities," he clarified. This will enable the company build a portfolio of contemporary hotel properties and assist "sustained competitiveness".

In fact, the enabling resolution is a sequel to the members' approval received on July 20,1994 at the company's AGM for licensing of Welcomgroup Maurya Sheraton Hotel & Towers, New Delhi, Welcomgroup Chola Sheraton, Chennai and Welcomgroup Mughal Sheraton,Agra to ITC Hotels, which is a 74 per cent subsidiary of ITC.

Justifying the company's exit from financial services and edible oils, Deveshwar said these businesses were a drain on available resources, "corporate energy and shareholder value". The company will complete its exit from financial services and edible oils over a period of time except "one or two areas which are of value".

The lessons learnt in the process, he said, were on "how not to conduct a business, and principles of trusteeship for which managements are accountable."

Deveshwar said that the company's operating performance was good, considering the 18 per cent growth in net profit in the first quarter of 1998-99, over and above the 67 per cent profit growth recorded in the first half of 1997-98.

"We hope to deliver sutainable growth through enhanced competitiveness in our core businesses. Some investments may be a drag in the short term but we hope to secure value in the long term," he maintained.

On investments in ITC BhadrachalamPaperboards, he said it was the largest and the most modern plant and the company believed that it would generate value. "The very scale of this project would serve as a major entry barrier for competitors," he noted.

The company will invest a maximum of Rs 150 crore in the company through a mix of equity and preference capital. As a result, its stake in ITC Bhadrachalam will go up from 37 per cent to 51 per cent.

On pending excise and Fera cases, the chairman reserved his comments but stated the judgment of a US district court against the Chitalias will not prejudice the Enforcement Directorate's investigation. "We maintain that there is no case of excise evasion and will exercise our right to appeal in case the Cegat ruling goes against the company," he stated.

The company, he added, was taking steps to present its case at the next hearing "to prove that goods were exported through the Chitalias against which value was still to be received."