Calcutta, May 25 :     ITC Ltd posted an 18.5 per cent gain in pre-tax profit and a 11.22 per cent increase in gross income as it unwrapped a sparkling annual performance for 1998-99 amid tough market conditions in a year dominated by tepid trading and fragile business confidence. Despite slow growth in most key businesses, the company recorded a gross income of Rs 7,700.96 crore and a profit-before-tax (PBT) of Rs 938.03 crore. Net profit stood at Rs 623.42 crore, up 18.5 per cent over Rs 526.20 crore in 1997-98. The results narrowly beat the expectations of financial analysts, who had predicted a gross income of over Rs 7,600 crore but presaged no change in the dividend over 1997-98. The PBT was only marginally lower than the forecast of Rs 950 crore. The board has recommended a 55 per cent dividend, 10 per cent more than the previous year?s payout of 45 per cent. The stock markets, which expected a bonus offer, were disappointed; the ITC scrip lost Rs 25.10 to close at Rs 1074.90 on the BSE while it was weaker by Rs 40 on the Calcutta Stock Exchange. Predictably, ITC?s foreign exchange earnings from leaf tobacco, other agri products, packaging, cigarettes, speciality and hotels slumped to Rs 756 crore from the previous year?s Rs 878 crore. However, the management said forex earnings were ?satisfactory in the context of the fiercely competitive trading environment?. Net sales income went up to Rs 3,515.38 crore from Rs 3,140.81 crore in 1997-98. Thanks to a sharp Rs 32.79-crore increase in other income to Rs 121.79 crore, total net income leap-frogged to Rs 3,637.17 crore. Gross sales turnover jumped 11.22 per cent to Rs 7,579.17 crore from Rs 6,834.75 per cent in 1997-98. However, the growth was 4.74 per cent less than the increase between 1997-98 and 1996-97. Profit before interest and tax increased 25 per cent to Rs 1,092 crore from Rs 872.50 crore in 1997-98. However, this bulge in bottomline was flattened somewhat by a near 90 per cent spurt in interest charges from Rs 81.02 crore to Rs 153.55 crore. The rise in interest costs was fuelled by the restructuring programme initiated in the company?s financial services business. Earlier, ITC had paid Rs 350 crore to acquire preferential shares in ITC Classic, prior to its takeover by ICICI. Although the amount is being treated as an investment, the company faces an interest-loss since the preference shares will virtually remain zero-interest instruments for 20 years. However, after the massive interest outgo, gross profit stood at Rs 1040.32 crore, 19 per cent more than Rs 877.33 crore in 1997-98. Total expenditure also went up 7.56 per cent over the previous year. With the transfer of Rs 60 crore into contingency fund last year, reserves in this account went up to Rs 360 crore.