1. We have audited the attached Balance Sheet of ITC Limited (the
Company) as at 31st March, 2011, and also the Profit and Loss Account
and the Cash Flow Statement of the Company for the year ended on that
date, both annexed thereto. These financial statements are the
responsibility of the Companys Management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 (CARO)
issued by the Central Government of India in terms of Section 227(4A)
of the Companies Act, 1956, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report as follows:
(a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
(b) in our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report are in compliance with the
Accounting Standards referred to in Section 211(3C) of the Companies
Act, 1956;
(e) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011;
ii) in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
5. On the basis of the written representations received from the
Directors as on 31st March, 2011 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March, 2011 from being appointed as a director in terms of Section
274(1)(g) of the Companies Act, 1956.
Annexure to the Auditors Report to the Members of ITC Limited
[Referred to in paragraph (3) thereof]
In our opinion and according to the information and explanations given
to us, the nature of the Companys business/activities during the year
are such that clauses (iii), (v), (x), (xii), (xiii), (xv), (xviii),
(xix) and (xx) of Companies (Auditors Report) Order 2003, are not
applicable to the Company. In respect of the other clauses, we report
as under :
(i) In respect of its fixed assets :
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.
(b) The fixed assets were physically verified during the year by the
Management in accordance with a regular programme of verification,
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable intervals. According to the information and
explanation given to us, no material discrepancies were noticed on such
verification.
(c) During the year, in our opinion, a substantial part of fixed assets
has not been disposed off by the Company.
(ii) In respect of its inventory :
(a) As explained to us, the inventories excepting material lying with
third parties (which have substantially been confirmed) were physically
verified during the year by the Management at reasonable intervals.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory
followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) On the basis of our examination of records of inventory, in our
opinion, the Company has maintained proper records of inventory and the
discrepancies noticed on physical verification between the physical
stocks and the book records were not material in relation to the
operations of the Company.
(iii) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business for the
purchase of inventory, fixed assets and for the sale of goods and
services. Further, on the basis of our examination and according to the
information and explanations given to us, we have neither come across
nor have we been informed of any instance of major weaknesses in the
aforesaid internal control systems.
(iv) In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
58A and 58AA or any other relevant provisions of the Companies Act,
1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard
to the deposits accepted from the public. According to the information
and explanations given to us, no Order has been passed by the Company
Law Board or the National Company Law Tribunal or the Reserve Bank of
India or any Court or any other Tribunal on the Company.
(v) In our opinion, the Company has an internal audit system
commensurate with the size of the Company and the nature of its
business.
(vi) To the best of our knowledge, the Central Government has not
prescribed the maintenance of cost records under Section 209 (1) (d) of
the Companies Act, 1956, for any of the products of the Company
excepting paper,
soaps & detergents, cosmetics & toiletries, for which, in our opinion,
prima facie, the prescribed accounts and records have been maintained
and are being made up. We are not required to and accordingly, have not
made a detailed examination of the records.
(vii) (a) According to the information and explanations given to us and
according to the books and records as produced and examined by us, in
our opinion, the Company is regular in depositing undisputed statutory
dues including provident fund, investor education and protection fund,
employees state insurance, income tax, sales tax, wealth tax, service
tax, customs duty, excise duty, cess and other material statutory dues
as applicable with the appropriate authorities.
(b) As at 31st March, 2011, according to the records of the Company and
the information and explanations given to us, the following are the
particulars of dues on account of income tax, sales tax, wealth tax,
service tax, customs duty, excise duty and cess matters that have not
been deposited on account of any dispute :
Name of Nature of Amount Period to which
the statute the dues (Rs. in the amount
Crores) relates
Various years
covering the period
Sales Tax Sales tax 7.52 1987-2010
and VAT and VAT
Laws
5.68 1994-2010
174.50 1997-2008
Customs Customs 0.22 2005-2006
Act, 1962 duty
1.27 2005-2007
Central Excise duty 13.68 1980-2010
Excise
Act, 1944
25.65 1973-2010
0.47 1991-1996
Finance Act, Service tax 2.65 2002-2010
1994
172.96 2003-2009
0.08 2007-2008
Income Tax Income 2.85 1999-2006
Act, 1961 tax
Name of the statute Forum where pending
Sales Tax and VAT Laws Appellate Authority upto
commisioners/ Revisional
authorities level
Appellate Authority Tribunal
level High Court
Customs Act, 1962 Appellate Authority - upto
Commissioners/ Revisional
authorities level
Appellate Authority Tribunal
Level
Central Excise Act, 1944 Appellate Authority upto
Commissioners/ Revisional
authorities level
Appellate Authority - Tribunal
level
Supreme Court
Finance Act, 1994 Appellate Authority - upto
Commissioners/ Revisional
authorities level
Appellate Authority - Tribunal level
High Court
Income Tax Act, 1961 Appellate Authoity - upto
Commissioners/ Revisional authorities
level
Out of the total disputed dues aggregating Rs. 407.53 Crores as above,
Rs. 374.07 Crores has been stayed for recovery by the relevant
authorities.
(viii) According to the information and explanations given to us, the
Company has not defaulted in repayment of dues to any financial
institution, bank or to debenture holders during the year.
(ix) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in securities. The
Company has maintained proper records of transactions and contracts in
respect of shares, securities, debentures and other investments and
timely entries have been made therein. All shares, securities,
debentures and other investments have been held by the Company in its
own name.
(x) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained.
(xi) In our opinion and according to the information and explanations
given to us and on an overall examination of the Balance Sheet, we
report that funds raised on short-term basis have not been used during
the year for long-term investment.
(xii) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no significant
fraud on the Company has been noticed or reported during the year.
For Deloitte Haskins & Sells
Chartered Accountants
(Registration No. 302009E)
P. R. Ramesh
Partner
(Membership No. 70928)
Kolkata
May 20, 2011
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