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Download Annual Report PDF Format 2015 | 2014 | 2013 | 2012 | 2011
Directors Report Year End : Mar '15    ซ Mar 14
The Directors submit their Report for the financial year ended 31st
 March, 2015.
 
 SOCIO-ECONOMIC ENVIRONMENT
 
 2014 marked yet another year of modest global economic growth.
 According to the International Monetary Fund's April 2015 World
 Economic Outlook, world output grew by 3.4% - at par with the growth
 recorded in 2013. While economic growth picked up in the Advanced
 Economies, the Emerging Market & Developing Economies witnessed further
 deceleration in growth. The US economy posted a strong performance
 during the year averaging an annualised growth of 4% in the last three
 quarters of 2014, driven by growth in consumption expenditure on the
 back of steady job creation and income growth, lower oil prices and
 improved consumer confidence. The Euro Area also displayed signs of
 recovery, growing by 0.9% during 2014 compared to a contraction of 0.5%
 in the previous year, aided by lower oil prices, higher net exports and
 supportive financial conditions. However, risks of prolonged
 deflationary conditions and low growth persist. The Emerging Market &
 Developing Economies slowed down further - from 5% in 2013 to 4.6% in
 2014 with China recording a decline in growth rate - from 7.8% in 2013
 to 7.4% in 2014. Other major constituent economies like Brazil, Russia,
 and South Africa also recorded deceleration in growth rates.
 
 Global growth prospects remain moderate in 2015. As per IMF estimates,
 world GDP is projected to grow modestly from 3.4% in 2014 to 3.5% in
 2015 and 3.8% in 2016 largely driven by the Advanced Economies, where
 growth is expected to increase from 1.8% in 2014 to 2.4% in 2015 and
 2016. Within Advanced Economies, growth is likely to be strongest in
 the US at 3.1% in 2015 driven by lower energy prices, benign inflation,
 reduced fiscal drag and improving household, corporate and bank balance
 sheets.  Building on the stronger growth momentum at the end of 2014,
 overall Euro Area growth is expected to increase to 1.5% in 2015, aided
 by lower oil prices, a weakening currency and the European Central
 Bank's massive asset purchase programme to unshackle the economy from
 its low growth and low inflation state. Emerging Market & Developing
 Economies are likely to see another year of deceleration in growth -
 from 4.6% in 2014 to 4.3% in 2015 - before recovering to 4.7% in 2016.
 GDP growth in China is projected to slow down further to 6.8% in 2015
 with decline in investment growth.
 
 Despite the improved prospects in certain sections of the world
 economy, global economic recovery remains fragile. Geopolitical
 tensions, stagnation and deflationary conditions in Advanced Economies,
 continued slowdown in growth rates in China and its consequent adverse
 impact on commodity exporting countries represent some of the key
 downside risks to global economic recovery.
 
 While domestic macro-economic variables improved over the previous
 year, aided by the collapse of global crude oil prices, the Indian
 economy witnessed yet another challenging year with only a marginal
 pick-up in economic growth. The weakness in the broader economy was
 manifest in your Company's operating segments – particularly in the
 FMCG and Hospitality space. While the new data, rebased to 2011-12,
 released by the Central Statistics Office (CSO) has pegged GDP growth
 at 7.4% for 2014-15 compared to 6.9% in 2013-14, there appears to be a
 significant divergence between the reported growth rates and on-ground
 economic activity. While growth in Private Final Consumption
 Expenditure (PFCE) has been estimated at 7.1% for 2014-15 (Vs. 6.2% in
 2013-14), leading indicators like rural demand headwinds, muted sales
 of tractors and two wheelers, depressed production of consumer goods
 and a marked deceleration in corporate sales growth point to a
 persistent weakness in private consumption demand. Similarly, while
 industrial growth based on the new data series is estimated at 5.9%,
 Index of Industrial Production (IIP) data reflects a relatively subdued
 performance. As stated by the RBI in its Monetary Policy Report of
 April 2015, while the new GDP data embodies better coverage and
 improved methodology as per international best practices, an accurate
 assessment of the state of the business cycle and forecasting is
 handicapped by the lack of sufficient historical data based on the new
 data series.
 
 There was good news on the inflation front, which declined
 significantly aided by low global crude oil and commodity prices. While
 Wholesale Price Index (WPI) for 2014-15 stood at 2% as against 6% in
 2013-14, Core CPI inflation also eased to 5.5% in 2014-15 as compared
 to 8.8% in 2013-14. The fall in inflation provided the much needed
 space for monetary accommodation, with the RBI reducing policy rates by
 a cumulative 50 bps in Q4 2014-15. Food inflation, however, has
 displayed an uptrend in recent months and remains a key monitorable
 given the adverse impact of unseasonal rains in March 2015 on the
 winter crop and early indications of the likelihood of El Nino weather
 conditions during the forthcoming south-west monsoon season.
 
 There was significant improvement on the 'twin deficit' front as well.
 Fiscal Deficit was contained within target at 4.0% of GDP in 2014-15
 driven by decline in oil subsidies, once-off proceeds from spectrum
 auctions and compression in Government expenditure. The Current Account
 Deficit narrowed further to an estimated 1.3% of GDP as compared to
 1.7% in the previous year, primarily aided by a lower import bill on
 account of the steep fall in crude oil prices. Healthy capital flows on
 the back of improved investor sentiment and favourable global liquidity
 conditions helped shore up foreign exchange reserves leading to a
 relatively stable Rupee and propelling the Sensex to record highs.
 
 The broad-based decline in retail inflation since September 2014,
 depressed commodity prices and the Government's plans to step up
 infrastructure investments and focus on improving the ease of doing
 business in India have improved the prospects for growth in 2015-16.
 
 However, the pace of growth is unlikely to witness significant
 acceleration in the short term given the inherent time lag involved for
 business confidence and reforms to translate into higher levels of
 capital investment and a significant pick-up in Private Consumption
 Expenditure.  As per median estimates, based on the Survey of
 Professional Forecasters conducted by RBI, the Indian economy is likely
 to grow by 7.9% in 2015-16 as compared to 7.4% in 2014-15 (based on
 2011-12 data series). A sharp reversal in crude oil and global
 commodity prices, heightened geopolitical risks, low agricultural
 output due to sub-normal monsoons, and protracted stagnation in the
 Euro Area represent some of the key downside risks going forward. An
 accelerated rollout of policy reforms and fast track clearances of
 large projects would go a long way in stimulating the private
 investment cycle and turn around the manufacturing sector.
 
 While India remains one of the fastest growing major economies in the
 world, the rate of economic growth in recent years has remained far
 below the desired levels and the country's potential. Given the low
 levels of per capita income and the fact that a significant proportion
 of our population lives below the poverty line, it is imperative that
 the economy reverts to a high growth trajectory sooner than later.
 
 Domestic consumption remains one of the key growth engines of the
 Indian economy. With a large and growing population, rising affluence
 and literacy, and increasing urbanisation - the structural drivers for
 rapid growth in consumption are in place. Even so, the subdued growth
 in private consumption over the last few years is a cause for concern.
 Equally, given the significant additions to the working age population,
 there is an urgent need to focus on new job creation and skill
 development to address the unsustainable levels of unemployment
 especially amongst the youth. Stagnation in the manufacturing sector
 needs to be reversed at the earliest towards the creation of
 sustainable livelihoods and absorption of the increasing working age
 population of the country. In this context, the Government's 'Make in
 India' initiative to turn India into a global manufacturing hub is a
 step in the right direction as it seeks to enhance transparency, speed
 up the approvals process, resolve policy issues by working in tandem
 with the States and foster greater levels of value addition within the
 country. Boosting agricultural productivity and value addition to
 international standards while simultaneously improving market linkages
 remain critical for the growth of the Agricultural sector. Supportive
 policies in the areas of food processing and agro-forestry can
 significantly contribute to job creation, enhance rural incomes, help
 manage food inflation and promote sustainable agriculture.
 
 For a country like India which has a disproportionately low share of
 global natural resources relative to its large population, where
 millions continue to live in abject poverty, and a young demographic
 profile which entails 12 million people entering the job market every
 year, the focus both at the national and corporate level should be on
 fashioning strategies that foster sustainable, equitable and inclusive
 growth. Policies and regulations must be aligned towards encouraging
 businesses to adopt a low-carbon growth path and support the creation
 of sustainable livelihoods and societal capital.  Differentiated and
 preferential incentives, in the form of fiscal or financial benefits to
 companies that adopt sustainable business practices would act as a
 force multiplier towards achieving this critical national goal.  It is
 your Company's belief that businesses can bring about transformational
 change by pursuing innovative business models that synergise the
 creation of sustainable livelihoods and the preservation of natural
 capital with enhancing shareholder value. This 'Triple Bottom Line'
 approach to creating larger 'stakeholder value', as opposed to merely
 ensuring uni-dimensional 'shareholder value', is the driving force that
 defines your Company's sustainability vision and its growth path into
 the future.
 
 Your Company is a global exemplar in 'Triple Bottom Line' performance
 and is the only enterprise in the world of comparable dimensions to
 have achieved and sustained the three key global indices of
 environmental sustainability of being 'water positive' (for 13 years),
 'carbon positive' (for 10 years), and 'solid waste recycling positive'
 (for 8 years).
 
 The following sections outline your Company's progress in pursuit of
 the 'Triple Bottom Line'.
 
 FINANCIAL PERFORMANCE
 
 Your Company delivered another year of steady performance in the
 backdrop of continuing sluggishness in the macro-economic environment,
 exacerbated by a steep increase in taxes/duties on cigarettes which led
 to unprecedented pressure on legal cigarette industry sales volumes.
 Your Company also had to contend with start-up costs relating to the
 launch of new products and categories in the non-cigarette FMCG
 segment, input cost pressures in the Paperboards, Paper & Packaging
 Businesses and a weak demand and pricing environment in the Hotels
 Business.
 
 Gross Revenue for the year grew by 7.0% to Rs. 49964.82 crores. Net
 Revenue at Rs. 36083.21 crores grew by 9.7% primarily driven by a 11.3%
 growth in the non-cigarette FMCG segment, 8.1% growth in the
 Agribusiness segment and 8.7% growth in the Cigarettes segment.  Profit
 Before Tax registered a growth of 10.6% to Rs. 13997.52 crores while Net
 Profit at Rs. 9607.73 crores increased by 9.4%. After adjusting for
 liability written back in Q2 FY14 (towards Rates and Taxes and Interest
 thereon pertaining to earlier years, aggregating Rs. 192.68 crores)
 underlying growth in Profit Before Tax and Net Profit for the year grew
 by 12.3% and 11.0% respectively. Earnings Per Share for the year stood
 at Rs. 12.05 (previous year Rs. 11.09). Cash flows from Operations
 aggregated Rs.13534.65 crores compared to Rs. 10759.50 crores in the
 previous year.
 
 Your Directors are pleased to recommend a Dividend of Rs. 6.25 per share
 (previous year Rs. 6.00 per share) for the year ended 31st March, 2015.
 Total cash outflow in this regard will be Rs. 6029.56 crores (previous
 year Rs. 5582.90 crores) including Dividend Distribution Tax of Rs. 1019.86
 crores (previous year Rs. 810.99 crores).
 
 Your Board further recommends a transfer to General Reserve of Rs. 970.00
 crores (previous year Rs. 880.00 crores). Consequently, the Surplus in
 Statement of Profit and Loss as at 31st March, 2015 would stand at Rs.
 8767.35 crores (previous year Rs. 6139.09 crores).
 
 FOREIGN EXCHANGE EARNINGS
 
 Your Company continues to view foreign exchange earnings as a priority.
 All Businesses in the ITC portfolio are mandated to engage with
 overseas markets with a view to testing and demonstrating international
 competitiveness and seeking profitable opportunities for growth. The
 ITC Group's contribution to foreign exchange earnings over the last ten
 years aggregated nearly US$ 6.6 billion, of which agri exports
 constituted 57%. Earnings from agri exports, which effectively link
 small farmers with international markets, are an indicator of your
 Company's contribution to the rural economy.
 
 During the financial year 2014-15, your Company and its subsidiaries
 earned Rs. 5901 crores in foreign exchange.  The direct foreign exchange
 earned by your Company amounted to Rs. 5096 crores, mainly on account of
 exports of agri-commodities. Your Company's expenditure in foreign
 currency amounted to Rs. 1969 crores, comprising purchase of raw
 materials, spares and other expenses of Rs. 1676 crores and import of
 capital goods at Rs. 293 crores. Details of foreign exchange earnings and
 outgo are provided in Note 31 to the Financial Statements.
 
 PROFITS, DIVIDENDS AND SURPLUS
 
                                         (Rs. in Crores)
  
 PROFITS                            2015            2014
 
 a) Profit Before Tax            13997.52        12659.11
 
 b) Tax Expense
 
 – Current Tax                    4020.99         3791.13
 
 – Deferred Tax                    368.80           82.77
 
 c) Profit for the year           9607.73         8785.21
 
 SURPLUS IN STATEMENT OF PROFIT AND LOSS
 
 a) At the beginning of the year  6139.09         3788.10
 
 b) Less: Loss for the period from 
 1st April, 2013 8.01 – to 31st March,
 2014 adjusted pursuant to the 
 Scheme of Arrangement 
 [Refer Note 31(x)]
 
 c) Add: Unrecognised Net 
 Deferred Tax                       45.84             – 
 assets as on 1st April,
 2013 adjusted pursuant to the 
 Scheme of Arrangement 
 [Refer Note 31(x)]
 
 d) Less: Depreciation on 
 transition to                      48.32             – 
 Schedule II of the Companies Act, 
 2013 on Tangible Fixed Assets 
 (Net of Deferred Tax Rs.24.88 crores) 
 [Refer Note 31(xi)]
 
 e) Add : Profit for the year     9607.73          8785.21
 
 f) Less:
 
 – Transfer to General Reserve     970.00           880.00
 
 – Proposed Dividend 
 [2015 Rs.6.25                    5009.70          4771.91
 (2014 - Rs. 6.00) per share]
 
 – Income Tax on Proposed Dividend
 
 - Current Year                   1019.86           810.99
 
 - Earlier year's provision no     (30.58)          (28.68) 
   longer required
 
 g) At the end of the year        8767.35          6139.09
 
 BUSINESS SEGMENTS
 
 A. FAST MOVING CONSUMER GOODS
 
 FMCG - Cigarettes
 
 The legal cigarette industry in India continues to be impacted by a
 punitive taxation and discriminatory regulatory regime. The operating
 environment for the legal cigarette industry in India was rendered even
 more challenging during the year, with two rounds of sharp increase in
 Excise Duty – in July 2014 and February 2015. This includes a
 cumulative increase of 115% on filter cigarettes of 'length not
 exceeding 65 mm', which has widened the price differential between
 legal and illegal cigarettes and made it extremely difficult for the
 legal cigarette industry to counter the unabated growth of illegal
 cigarettes in the country.
 
 Over the last 3 years, the incidence of Excise Duty and VAT on
 cigarettes, at a per unit level, has gone up cumulatively by 98% and
 104% respectively. It is pertinent to note that Kerala, Tamil Nadu and
 Assam, which together account for a significant portion of your
 Company's sales volumes, sharply increased VAT rate on cigarettes
 during the year.
 
 The combined impact of the sharp increase in Excise Duty and VAT as
 stated above, is exerting unprecedented pressure on legal industry
 sales volumes. Besides adversely impacting the performance of the legal
 cigarette industry, this has led to sub-optimisation of the revenue
 potential from the tobacco sector.
 
 High incidence of taxation and a discriminatory regulatory regime on
 cigarettes in India have over the years, led to a significant shift in
 tobacco consumption to lightly taxed or tax evaded tobacco products
 like bidi, khaini, chewing tobacco, gutkha and illegal cigarettes which
 presently constitute over 88% of total tobacco consumption in the
 country. Thus, the share of legal cigarettes in overall tobacco
 consumption has progressively declined from 21% in 1981-82 to below 12%
 in 2014-15 even as overall tobacco consumption has increased in India.
 
 As per a recent independent study1, it is estimated that products
 representing 68% of overall tobacco consumption in the country escape
 taxation as they are manufactured in the unorganised sector with little
 statutory oversight. While India accounts for around 17% of world
 population and constitutes over 84% of global consumption of smokeless
 tobacco, it has a miniscule share of only 1.8% of global cigarette
 consumption.  As a result, revenue collections from the tobacco sector
 are sub-optimised even as the overall tobacco control and health
 objectives remain substantially unfulfilled.  The requirement therefore
 is an India-centric tax and policy framework for tobacco that cognises
 for the unique tobacco consumption pattern in the country.
 
 The imposition of discriminatory and punitive VAT rates by some States
 provides an attractive tax arbitrage opportunity for illegal cigarette
 trade by criminal elements.  The consequential decline in legal
 cigarette volumes in such States has led to stagnation / decline in
 revenue collections, even as illegal cigarettes gained significant
 traction. On the other hand, the pragmatic decisions of several State
 Governments to rationalise VAT on cigarettes have facilitated
 improvement in revenue buoyancy and arresting the growth of illegal
 trade.
 
 According to an independent study conducted by Euromonitor
 International - a renowned global research organisation - India is now
 the 5th largest market for illegal cigarettes in the world. In fact,
 illegal trade comprising smuggled foreign and domestically manufactured
 tax-evaded cigarettes is estimated to constitute one-fifth of the
 overall cigarette industry in India resulting in a huge revenue loss of
 over Rs. 7000 crores per annum to the national exchequer.
 
 To combat this menace, your Company continues to make representations
 to policy makers recommending compulsory licensing of all cigarette
 manufacturing units irrespective of size, increase in customs duty on
 imported cigarettes to WTO bound rate levels with suitable safeguards
 built-in to prevent undervaluation, ban on manufacture of tobacco and
 tobacco products in EOU and SEZ units, ban on cigarettes from personal
 baggage allowance and duty-free trade and exclusion of tobacco and
 tobacco products from preferential treatment under Free Trade
 Agreements that India is party to.
 
 There is an urgent need for stability in tax rates on cigarettes to
 reverse the undesirable consequences of
 
 a punitive and discriminatory tobacco taxation policy.  It is also
 relevant to note that despite being one of the largest producers of
 tobacco in the world, India's share of global tobacco trade remains
 meagre at approx. 7%.  A stable, fair and equitable cigarette taxation
 policy would be imperative to provide a strong domestic demand base to
 the Indian farmer, insulating him from the volatilities typically
 associated with international markets.  Such a policy would be the key
 catalyst in realising the full economic potential of the tobacco sector
 in India and protect the interest of the Indian tobacco farmer.  This
 assumes critical significance especially in view of the fact that there
 are few economically viable alternative crops to farmers in the regions
 where tobacco is grown in India.
 
 Your Company continues to engage with the concerned authorities, both
 at the Central and State Government level, highlighting the need for
 moderation in tax rates on cigarettes to maximise the revenue potential
 from the tobacco sector and contain the growth of the illegal segment.
 
 As per the draft Constitution Amendment Bill 2014 on Goods and Services
 Tax (GST), cigarettes are likely to come under the purview of the
 proposed GST framework while continuing to be subjected to the levy of
 Central Excise Duty. It is imperative that revenue sensitive goods like
 cigarettes are subjected to uniform standard rates of tax applicable to
 general category of goods to ensure revenue buoyancy and rein in the
 growth of the illegal segment. Further, the combined incidence of
 Excise Duty and GST should be revenue neutral i.e. maintained at
 current levels and all existing State level taxes should be subsumed
 into GST. Your Company, along with industry bodies and other
 stakeholders, continues to make representations to the Government in
 this regard.
 
 A recent Government notification, originally proposed to be effective
 from 1st April 2015, mandates larger graphic health warnings covering
 85% of the surface area of both sides of the pack as compared to the
 current requirement of covering 40% of the area of one side of the
 pack. The proposed graphic health warnings are amongst the most
 stringent in the world and far larger than those in the top 5 cigarette
 markets viz. China, Russia, Indonesia, USA and Japan. It is apprehended
 that the introduction of the new graphic health warnings would inter
 alia lead to a spurt in the sale of illegal cigarettes which will not
 carry the new warnings. Besides the consequential loss of revenue to
 the exchequer, this will also adversely impact the livelihoods of
 Indian tobacco farmers as illegal cigarettes either do not use Indian
 tobacco at all or use domestically sourced tobacco of dubious and
 inferior quality.
 
 It is estimated that about 60% of the countries in the world which have
 ratified the WHO Framework Convention on Tobacco Control either do not
 have any health warnings on cigarette packets or prescribe a 'text
 only' warning (i.e. without any graphics). In fact, China, USA and
 Japan which together account for more than 51% of global cigarette
 sales volumes, prescribe 'text only' warnings.
 
 The Committee on Subordinate Legislation, which is examining the issue
 of introduction of larger graphic health warnings on cigarette packs in
 India, has in its report dated 16th March 2015 stated that a large
 number of representations have been received from Members of Parliament
 as well as various people / organisations and stakeholders involved in
 the tobacco industry against the introduction of the new warnings and
 serious apprehensions have been expressed about the adverse impact of
 the modified rules on the livelihoods of a large number of people
 directly or indirectly involved in tobacco trade. The Committee has
 sought more time to review the issues in detail and has recommended to
 the Government to defer the implementation of the notification, till
 such time it finalises the examination of the subject and arrive at
 appropriate conclusions.  The Government has accordingly deferred the
 implementation of the new graphic health warnings.
 
 The Tobacco industry in India supports the livelihoods of over 41
 million people including vulnerable sections of the society like
 farmers, farm labour, rural poor, women, tribals etc. and contributes
 around Rs. 28000 crores to the national exchequer apart from generating
 valuable foreign exchange earnings of around Rs. 6000 crores. It is
 pertinent to note that other tobacco producing countries have taken a
 balanced view keeping in mind their domestic interests and have not
 adopted over-sized and excessive health warnings.
 
 The proposed graphic health warnings would impede the ability to
 compete in the market by leaving insufficient space for your Company's
 distinctive trademarks and pack designs besides depriving consumers of
 their valuable right to be informed about a legitimate product they
 intend to purchase and consume.
 
 Notwithstanding the challenging regulatory and taxation environment,
 your Company strengthened its product portfolio across segments to
 reinforce its leadership position in the industry. During the year,
 specific emphasis was laid on developing and launching products with
 differentiated tobacco blends, special filters and flavour bouquets.
 Several innovative variants like 'Classic Blue Leaf with Jet Flo
 Filter', 'Gold Flake Gold with Quad Core Filter', 'Classic Ice Burst
 with Capsule Filter' and 'Classic Fine Taste with Triple Solid Filter'
 were launched during the year in line with your Company's philosophy to
 offer world-class products to the Indian consumer.
 
 During the year, your Company expanded the market presence of KwikNic
 nicotine chewing gum adding the pharmaceutical channel to the product's
 distribution footprint. The year also saw your Company's foray into the
 Electronic Vaping Device (EVD) category under the 'EON' brand. After
 its initial launch in Hyderabad and Kolkata, the brand was
 progressively extended to Bengaluru, Delhi and Goa. EON is also
 available in the e-commerce channel.
 
 Your Company's objective of providing consumers with a comprehensive
 range of world-class products has led to increasing complexity in
 manufacturing operations over the years. Towards this, your Company has
 focused on building flexibility and agility across the supply chain to
 ensure delivery of volume and variety in a timely and cost-effective
 manner.  Structural interventions in the area of manufacturing network
 planning, technology and people systems have helped enhance
 responsiveness.  During the year, the first phase of modernisation of
 the Kolkata factory was successfully completed. This involved induction
 of new technologies, automation of shop floor processes and
 introduction of new segments.
 
 During the year, the Bengaluru and Saharanpur factories won the
 'Platinum' and 'Gold' awards respectively in the prestigious 'India
 Manufacturing Excellence Awards' (IMEA) instituted by Frost & Sullivan
 and The Economic Times. These awards bear testimony to your Company's
 standing among India's best manufacturing organisations.
 
 Your Company's manufacturing facilities continue to receive recognition
 for excellence in sustainability.  During the year, the Bengaluru
 factory was awarded the 'Overall Leader Award' for Green Manufacturing
 Excellence by Frost & Sullivan, while the Munger, Ranjangaon and
 Bengaluru factories won the 'CII National Award for Excellence in
 Energy Management'.
 
 In recognition of excellence in safety management at its factories,
 your Company received several awards during the year. These include the
 'Suraksha Puraskar (Bronze)', under the manufacturing sector category
 from the National Safety Council of India for Ranjangaon Factory, first
 prize for Saharanpur factory from FICCI in the 'Safety Systems
 Excellence Awards for manufacturing sector – Large Scale' category and
 'Safety Innovative Award 2014' by Institute of Engineers (India) for
 Kolkata Factory.
 
 With steep increase in taxation, rising illegal trade and increasing
 regulatory pressures, the year ahead will indeed be challenging.
 Despite the severe pressures, your Company remains confident in
 sustaining its leadership position in the industry by leveraging its
 robust business strategies, a world-class product portfolio and
 superior execution capabilities.
 
 FMCG - Others
 
 The FMCG industry continued to grow at a muted pace during the year in
 the backdrop of a challenging macro-economic environment, with most of
 your Company's operating segments recording deceleration in growth
 rates. Categories involving discretionary spends or with relatively
 high penetration levels remained subdued during the year.
 
 While there are incipient signs of revival of demand, it is expected to
 take a few more quarters for the industry to revert to a higher growth
 trajectory. The FMCG industry in India, however, is poised to bounce
 back over the medium-term driven by increasing affluence, urbanisation,
 a young workforce, and relatively low levels of penetration and per
 capita usage.
 
 Your Company's FMCG-Others Businesses clocked Segment Revenue of Rs. 9038
 crores during the year, representing a growth of 11% over the previous
 year.  This was achieved in the backdrop of sluggish demand conditions
 as aforestated and intense competitive activity with industry players
 stepping up consumer and trade offers with a view to garnering volumes,
 offsetting the benefit accruing from benign inflation in input costs.
 Segment Results for the year stood at Rs. 34 crores after absorbing the
 start-up costs of two new categories viz., Juices and Gums, scale-up
 costs of Deodorants launched in 2013, besides a host of new launches in
 existing categories.
 
 Your Company continued to make investments during the year towards
 enhancing brand salience and consumer connect while simultaneously
 focusing on implementing strategic cost management measures across the
 value chain and adopting a judicious pricing approach. Several
 initiatives were also implemented during the year towards leveraging
 the rapidly growing e-commerce channel for enhanced reach of your
 Company's products and harnessing digital and social media platforms
 for deeper consumer engagement.
 
 Your Company continued to strengthen its formidable distribution
 highway comprising a large and diverse product portfolio, multiple
 brands, hundreds of SKUs covering over 1 lakh markets and directly
 servicing over 2 million retail outlets across trade channels. The
 Trade Marketing & Distribution vertical of your Company, based on
 customer and channel insight developed over the years, has crafted
 differentiated service packs customised for each type of retail outlet.
 Your Company remains a leader in the convenience channel and is rated
 as the benchmark supplier in premium grocery outlets. Extensive
 deployment of in-store merchandisers and consumer contact programmes to
 aid demand creation coupled with a relentless pursuit of execution
 excellence has resulted in your Company sustaining its position as one
 of the fastest growing FMCG companies in the Modern Trade channel. The
 scale and diversity of your Company's distribution network continues to
 be leveraged to enhance market presence and serve as a valuable source
 of consumer/trade insight, facilitating the seamless execution of new
 product and category launches.  Technology enablement in the form of
 customised mobility solutions and predictive analytics are being
 increasingly leveraged towards enabling quick and accurate data
 capture, informed decision making in real time, and scientific
 designing of geography-specific trade promotion schemes.  Supply chain
 optimisation and capability augmentation of customers (wholesale
 dealers) and their sales force remain key focus areas.
 
 In addition to scaling up outsourced manufacturing capacity across key
 categories during the year, your Company progressed the construction of
 state-of-the-art owned integrated consumer goods manufacturing and
 logistics facilities across regions in line with long-term demand
 forecasts. Currently, over 20 projects are underway and in various
 stages of development – from land acquisition / site development to
 construction of buildings and other infrastructure.
 
 The new FMCG Businesses comprising Branded Packaged Foods, Personal
 Care Products, Education and Stationery Products, Lifestyle Retailing,
 Incense Sticks (Agarbattis) and Safety Matches have grown at an
 impressive pace over the past several years, with Segment Revenue
 crossing the Rs. 9000 crores mark during the year.
 
 Your Company's vibrant portfolio of brands viz., 'Aashirvaad',
 'Sunfeast Dark Fantasy', 'Sunfeast Dream Cream', 'Sunfeast Delishus',
 'Sunfeast Bounce', 'Bingo!', 'Yumitos', 'YiPPee!', 'Candyman',
 'mint-o', 'GumOn', 'Kitchens of India' in the Branded Packaged Foods
 space; 'Classmate' and 'Paperkraft' in Education & Stationery products
 market; 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel', 'Superia' and
 'Engage' in the Personal Care products segment; 'Wills Lifestyle' and
 'John Players' in the Lifestyle Retailing Business; 'Mangaldeep' in
 Agarbattis, 'Aim' in Matches, amongst others continue to garner
 consumer franchise and enhance market standing. These brands, which
 represent an annual consumer spend of over Rs. 11000 crores in aggregate,
 have been built organically by your Company over a relatively short
 period of time - a feat perhaps unrivalled in the Indian FMCG industry.
 This includes 4 brands – Aashirvaad, Sunfeast, Classmate, Bingo! -
 which exceed Rs. 1000 crores each – and several brands that are more than
 Rs. 500 crores each in terms of annual consumer spend. These world-class
 Indian brands support the competitiveness of domestic value chains of
 which they are a part, ensuring creation and retention of value within
 the country.
 
 In line with the corporate strategy of creating multiple drivers of
 growth, your Company seeks to rapidly scale up the FMCG Businesses
 leveraging its institutional strengths viz. deep consumer insight,
 proven brand building capability, a deep and wide distribution network,
 strong rural linkages and agri-commodity sourcing expertise, packaging
 knowhow and cuisine knowledge.  In addition, your Company continues to
 make significant investments in Research & Development to develop and
 launch disruptive and breakthrough products in the market place.
 
 Highlights of progress in each category are set out below.
 
 Branded Packaged Foods
 
 Demand conditions in the Branded Packaged Foods industry remained
 subdued for the second year in succession with consumers seeking
 value-for-money offers and curbing discretionary spending. Against the
 backdrop of a sluggish demand environment, your Company sustained its
 position as one of the fastest growing branded packaged foods
 businesses in the country leveraging a robust portfolio of brands,
 differentiated range of products customised to regional tastes and
 preferences along with enhanced product visibility and availability in
 key markets.
 
 While input cost inflation remained moderate during the year, the high
 intensity of consumer promos and trade schemes resorted to by industry
 players in a bid to garner volumes exerted pressure on margins. Your
 Company's Branded Packaged Foods Businesses mitigated such margin
 pressure by focusing on product mix enrichment, value engineering
 initiatives, dynamic sourcing based on close monitoring of market
 trends, structural interventions in manufacturing technology and supply
 chain optimisation.
 
 The Branded Packaged Foods Businesses continue to invest in the areas
 of consumer insight discovery, R&D and product development and
 differentiated technology platforms to effectively address the diverse
 tastes and preferences of consumers across the country.  Investments
 continue to be made towards augmenting the manufacturing and sourcing
 footprint across categories with a view to improving market
 responsiveness and reducing the cost of servicing proximal markets.
 During the year, an integrated manufacturing and logistics facility was
 commissioned at Malur, Karnataka. Significant progress was also made
 during the year towards setting up an integrated manufacturing facility
 at Uluberia, West Bengal, a Dairy plant at Munger, Bihar and a biscuit
 manufacturing factory at Mangaldoi, Assam (through a joint venture
 company viz., North East Nutrients Pvt. Ltd.). These facilities are
 expected to become operational in the ensuing year.
 
 — In the Bakery and Confectionery Foods
 
 Business, your Company increased the scale of its operations and
 improved its market standing.  The Sunfeast range of biscuits was
 augmented during the year with the launch of 'Mom's Magic' in the
 premium cookies space in two variants - 'Rich Butter' and 'Cashew &
 Almond'. In addition to the several product development and brand
 enhancement initiatives undertaken during the year, the Business
 migrated the popular range of cream biscuits under a new sub-brand -
 'Bounce' - which emerged as the largest cream brand in the industry and
 helped sustain your Company's leadership position in the overall creams
 segment. The Business also forayed into the Cakes segment with the
 launch of 'Yumfills Whoopie Pie'- a premium chocolate-enrobed cake -
 which has seen good traction.
 
 In the Confectionery category, the Business continued to leverage the
 'Candyman' and 'mint-o' brands and focused on premiumising its product
 portfolio by enhancing the share of variants priced at 'Re. 1 & above'
 in the sales mix. The Business augmented manufacturing capability in
 the hard boiled candy and jelly segment, which will facilitate
 introduction of innovative and premium products going forward. The year
 also marked your Company's foray into the Gums segment with the launch
 of 'GumOn' brand, which has garnered impressive consumer franchise in
 launch markets. The product is being rolled out to target markets.
 
 — Your Company's Staples, Spices and Ready-to-Eat Foods Business posted
 a robust performance during the year, growing well ahead of the
 industry. In the Staples category, 'Aashirvaad' atta consolidated its
 leadership position in the industry and grew at a rapid pace driven by
 the value-added portfolio comprising the 'Multigrain', 'Select' and
 'Superior MP' variants.  The Business also augmented its product range
 during the year with the launch of 'Aashirvaad Atta with Methi' in the
 value-added segment.  Brand salience was strengthened further on the
 back of impactful communication and marketing investments.
 
 — In the Snack Foods Business, your Company recorded impressive gains
 in market standing in the Savoury Snacks, Noodles & Pasta categories.
 In the Noodles category, 'Sunfeast YiPPee!' clocked a healthy revenue
 growth far exceeding the industry growth rate. During the year,
 Sunfeast YiPPee! entered the league of Top 100 FMCG brands in India – a
 reflection of its growing stature in the fast growing Noodles category.
 With the commissioning of the new facility at Malur, Karnataka, the
 Business expanded its manufacturing footprint to all the four regions
 of the country which will facilitate more efficient servicing of demand
 going forward. Sunfeast YiPPee! Tricolor Pasta, a differentiated
 premium offering launched last year, continued to grow at a fast pace
 and gain consumer franchise.
 
 In the Savoury Snacks category, the Business registered significant
 growth in its Bingo! range of finger snacks driven by the 'Mad Angles'
 and 'Tedhe Medhe' sub-brands through sustained expansion of
 distribution, activation of passive channels in the North and East
 markets and measured brand investments. In the potato chips portfolio,
 'Bingo! Yumitos' also grew at a robust pace on the strength of
 region-specific interventions.
 
 — Your Company forayed into the fast-growing Juices category during the
 year with the launch of 7 exciting variants under the 'B Natural' brand
 in January 2015. These highly innovative and differentiated products,
 including the unique offering 'Jamun Joy', have received promising
 consumer response. Your Company seeks to leverage its agri-sourcing
 expertise and deep distribution reach and rapidly scale up the B
 Natural brand in the years ahead.
 
 Your Company is well positioned to establish itself as the 'most
 trusted provider of food products in the Indian market' leveraging a
 strong portfolio of world-class brands, deep understanding of the
 diverse tastes and preferences of Indian consumers, focus on
 best-in-class quality and operational excellence across the value
 chain. Your Company will continue to make investments towards
 establishing a distributed manufacturing footprint, structural
 interventions with a view to reducing operating costs and focus on
 supply chain optimisation to support the rapid and profitable growth of
 the Branded Packaged Foods Businesses. In line with this objective,
 your Company is in the process of implementing a new 'Strategy of
 Organisation' towards bringing about sharper focus, greater agility and
 responsiveness and facilitating the development of deeper specialisms
 in each operating category.
 
 Personal Care Products
 
 Your Company's Personal Care Products Business posted robust growth in
 revenue during the year driven by increasing consumer franchise for its
 products and a series of new launches and range extensions. During the
 year, the Business rolled out several differentiated product offerings
 in the Deodorants, Soaps, Shower Gel and Skin Care categories under the
 'Engage', 'Fiama Di Wills', 'Vivel', and 'Superia' brands, and improved
 in-store brand salience of offerings under the 'Essenza Di Wills'
 brand.
 
 In February 2015, your Company acquired the 'Savlon' and 'Shower to
 Shower' trademarks and other intellectual property rights for
 identified markets from the Johnson & Johnson group. Savlon is an
 established brand with a rich heritage and is associated with personal
 care products in the fast-growing antiseptic/anti-bacterial categories.
 Shower to Shower has a strong consumer franchise in the prickly heat
 talcum powder category.  Your Company intends to leverage these assets
 to strengthen its position in the personal care space by expanding its
 existing product portfolio and gaining access to newer consumer
 segments and markets.
 
 The year saw the successful introduction of a new range of soaps at the
 premium end under the 'Vivel' franchise with the launch of 'Vivel Love
 & Nourish' and 'Vivel Glycerin'. As part of a brand modernisation
 exercise, 'Superia Deluxe' and 'Superia Naturals' were launched to
 address the emerging needs of distinct consumer segments. The year also
 witnessed the launch of the next edition of the Signature series of
 'Fiama Di Wills Shower Gels - Shower Jewel' designed by celebrity
 designer, Masaba Gupta. In the fast-growing Deodorants category,
 'Engage' has emerged as the No.2 player in the country within a
 relatively short span of 2 years since launch. The year also saw the
 launch of '0% gas' variants of 'Engage Cologne Sprays' thereby
 providing consumers a wider repertoire of choice. These interventions
 have been well received by consumers strengthening your Company's
 presence in the Personal Care industry.
 
 As in previous years, the Business received accolades for its product
 quality and innovation initiatives. 'Fiama Di Wills Shower Gel' was
 voted the best shower gel at the Nykaa.com Femina Beauty Awards.
 'Vivel' won the Afaqs Buzziest Brand Award where it was ranked No.  1
 in the Personal Care category. 'Superia Silk' was ranked as the No. 1
 soap on quality and skin moisturising ability among Grade 1 toilet
 soaps by Consumer Voice, a Government of India recognised comparative
 product testing organisation. These awards, amongst others, bear
 testimony to your Company's relentless focus on quality and delivering
 world-class products to Indian consumers.
 
 Industry growth remained subdued during the year, with leading players
 passing on the benefit of softening input prices - primarily of crude
 palm oil - to consumers with a view to reviving demand. Your Company
 outperformed the market by launching several value-added products,
 focusing on a richer product mix, managing costs by developing
 alternative sources of supply and further improving supply chain
 responsiveness.
 
 The Indian Personal Care industry is poised for rapid growth given the
 relatively low levels of per capita consumption in the country as
 compared to other emerging economies, increasing urbanisation, rising
 disposable incomes and the increasing consumer preference for enhanced
 personal grooming.  Your Company is well positioned to seize the
 emerging opportunities in this rapidly evolving industry with its
 unrelenting focus on creating vibrant brands, world-class product
 quality, development of innovative and consumer-centric products based
 on deep consumer understanding leveraging dedicated R&D capabilities as
 well as partnerships with key institutions in the scientific community.
 
 Education & Stationery Products
 
 Your Company consolidated its leadership position in the Education and
 Stationery products industry in India.  In the Notebooks category, the
 Business fortified its market standing and expanded its product
 portfolio with the launch of several differentiated offerings under the
 'Classmate', 'Classmate Pulse', 'Paperkraft' and 'Saathi' brands. The
 Business launched a premium 'Signature' range of products under the
 Paperkraft brand exclusively in the e-commerce space. The Classmate
 portfolio of notebooks was enriched with refreshing designs, finishes
 and binding styles. Complementary categories comprising writing
 instruments, art stationery and scholastic products witnessed robust
 growth during the year leveraging the strong equity of Paperkraft and
 Classmate brands.
 
 The Business continued to focus on innovation and new product
 development with a dedicated product development cell working in tandem
 with your Company's Life Sciences & Technology Centre.
 
 On the distribution front, the Business expanded the availability of
 its products through a multi-pronged approach of channel proliferation,
 market penetration and outlet coverage increase. The Business also
 implemented a specific distribution network to cater to the Saathi
 brand in the value segment and expanded presence amongst leading
 e-tailers.
 
 In the area of supply chain, the focus was on strengthening the
 delivery, quality and cost competitiveness of outsourced manufacturers.
 During the year, the Business deployed state-of-the-art supply chain
 planning and optimiser tools that are expected to lower overall cost of
 servicing demand. Your Company continues to provide technical support
 and training to nearly 40 vendors in the small-scale sector,
 facilitating a majority of them being certified to ISO 9001:2008
 standards.
 
 The Classmate notebook is a manifestation of the environmental capital
 built by your Company in its paper business. While the notebook cover
 is made from recycled board sourced from your Company's Forest
 Stewardship Council (FSC) certified Kovai mill, the paper used in the
 notebooks leverages your Company's world-class fibre line at
 Bhadrachalam which is India's first ozone treated elemental chlorine
 free facility.
 
 Growing literacy, increasing scale of government spend and
 public-private initiatives in education and higher corporate spends in
 the education sector are expected to drive rapid growth of the Indian
 Education & Stationery Products industry. Your Company, with its
 collaborative linkages with small & medium enterprises, a robust
 product portfolio and unparalleled distribution network, is well poised
 to strengthen its leadership position in the rapidly globalising Indian
 stationery market.
 
 Lifestyle Retailing
 
 During the year, the performance of your Company's Lifestyle Retailing
 Business was impacted by the continuing slowdown in discretionary
 consumption expenditure. The rise of online apparel retail, aided by
 heavy discounting and consumer offers, also impacted performance.
 
 In the Premium segment, Wills Lifestyle with its high fashion imagery,
 increasing appeal and rich product mix, continues to enjoy strong
 market standing and consumer bonding. Brand equity was enhanced with
 heightened focus on premium product platforms. 'Wills Classic'
 'Luxuria' and 'Regalia' - a finely crafted range of super premium
 formals - and the Wills Classic 'Ecostyle' collection in natural-fibre
 products such as linens, sharpened the premium imagery of the brand and
 aided higher value capture. The Wills Classic 'Modernist' range, 'Wills
 Sport' and 'Wills Clublife' attracted newer and younger franchise
 leveraging high-fashion imagery and design language. The women's
 collection was strengthened by offering an enhanced range of exclusive
 designer wear, co-created with India's leading designers.  The Business
 also crafted a range of wardrobe essentials across categories to
 enhance sell through duly supported by robust replenishment
 infrastructure and processes.  The Wills Lifestyle brand continued to
 receive industry recognition, including the 'Superbrand' certification.
 During the year, sales of Wills Lifestyle products to 'Club ITC'
 members increased significantly, reflecting the brand's enhanced
 bonding with premium consumers.
 
 Retail presence of Wills Lifestyle was expanded during the year with
 the brand currently present in 104 exclusive stores in 44 cities and
 more than 500 'shop-in-shops' in leading departmental stores, regional
 chain stores and multi-brand outlets. The brand is also present in 6
 Wills Lifestyle boutique stores in select ITC Hotels enhancing its
 availability to high-end and leisure travellers.
 
 In the 'Youth fashion' segment, 'John Players' enhanced its market
 standing by driving fashion imagery anchored on bold and edgy fashion.
 John Players has emerged as a leading brand in this segment driven by
 youthful products such as denims, knits and jackets, earning the
 distinction of being featured amongst the top 5 brands in the apparel
 category in 'Brand Equity - The Most Exciting Brands' list published by
 The Economic Times.
 
 During the year, the Business reformulated its retail presence towards
 enhancing brand reach and acquiring new consumers. Business processes
 for creation of winning designs and enhancing supply chain efficiency
 were further strengthened during the year along with implementation of
 several initiatives towards improving retail and manufacturing
 productivity.
 
 Your Company's brands – Wills Lifestyle and John Players – continue to
 be driven on digital platforms to enhance reach, increase awareness and
 tap online sales potential including through social media and specific
 e-commerce portals.
 
 The Business will continue to focus on enhancing the premium and
 fashion quotient of its offerings based on deep consumer insight, and
 delivering products of world- class quality. Further investments are
 being made in building brand salience, enhancing product vitality,
 implementing contemporary information technology solutions, improving
 supply chain responsiveness and delivering a superior shopping
 experience.
 
 Safety Matches and Incense sticks (Agarbattis)
 
 Your Company recorded yet another year of impressive revenue growth in
 the Agarbatti category, growing well ahead of the industry. Growing
 franchise for the 'Mangaldeep' brand, superior consumer experience and
 enhanced distribution reach contributed to a robust performance during
 the year. Product portfolio was strengthened during the year with a
 series of new launches and range extensions such as 'Mangaldeep –
 Flora' and 'Mangaldeep - Dhoop Cones' in the premium segment.
 
 Mangaldeep continues to be the fastest growing agarbatti brand in the
 country driven by a well-crafted portfolio of offerings born out of
 deep consumer understanding and increasing brand salience. Your Company
 also consolidated its leadership position in the 'Dhoop' segment.
 Investments were made during the year to enhance quality, availability
 and improving supply chain responsiveness.
 
 The manufacture of agarbattis was reserved for the small-scale &
 cottage sector in India considering its importance in employment
 generation. However, import of raw battis (the principal raw material)
 is still being allowed at low Customs Duty rates. This is resulting in
 bulk of the raw batti consumption in India being of imported origin
 leading to a loss of livelihood creation opportunities. Suitable policy
 changes in arresting this trend would go a long way in creating
 sustainable livelihoods especially among rural Indian women and
 tribals.
 
 In the Safety Matches category, your Company sustained its market
 leadership leveraging a strong portfolio of offerings across market
 segments. However, sustained escalation in prices of raw materials on
 the one hand and proliferation of cheaper low quality products on the
 other, continued to exert severe pressure on sales volumes and margins.
 The Business implemented several measures such as value engineering,
 supply chain optimisation and developing alternate sources of supply to
 mitigate margin pressure. In this regard, the Business continues to
 focus on developing new products and growing the value-added segment
 towards enhancing the profitability of the business. Your Company's
 safety matches brand 'Aim' continues to be the largest selling brand in
 this industry.
 
 During the year, pursuant to the scheme of demerger of the
 Non-Engineering Business of Wimco Limited being effective on 27th June
 2014, the Safety Matches Business of Wimco Limited was seamlessly
 integrated with your Company's Safety Matches Business. The Business
 rationalised its manufacturing operations and implemented a Voluntary
 Separation Scheme at the Bareilly factory with all permanent workmen
 and trainees opting for the same. The Business scaled up sourcing from
 the small-scale sector to meet its requirements and progressively
 regionalised its sourcing footprint with the induction of units in the
 North and West towards more efficient servicing of the market.
 
 Technology induction in manufacturing is crucial for the long-term
 sustainability of the Safety Matches Industry.  A uniform taxation
 framework which provides a level playing field to all manufacturers is
 necessary to trigger the required investments for modernising this
 industry and creating a safer working environment for the workforce
 engaged in this industry. Introduction of GST is expected to create
 this supportive environment to enable the industry to become globally
 competitive.
 
 B. HOTELS
 
 The hospitality sector continues to be impacted by a weak pricing
 scenario in the backdrop of excessive room inventory in key domestic
 markets and sluggish macro-economic environment both in India and major
 source markets. While there was marginal improvement in occupancy rate,
 average room rates remained under pressure in the backdrop of the
 addition of 8000 rooms in the key markets of Delhi / National Capital
 Region, Mumbai, Bengaluru, and Chennai over the last 2 years.
 
 Consequently, Segment Revenues recorded a modest increase of 4.8%
 during the year. Segment Results were impacted mainly on account of the
 relatively weak pricing scenario, higher depreciation charge for the
 year due to revision in the useful life of fixed assets in accordance
 with the provisions of Schedule II to the Companies Act, 2013 and
 gestation costs of the newly opened properties - ITC Grand Bharat, near
 Gurgaon and My Fortune Bengaluru.
 
 Your Company's Hotels Business continues to be rated amongst the
 fastest growing hospitality chains in India, with over 100 properties
 across the country under 4 distinct brands - 'ITC Hotels' in the Luxury
 segment, 'WelcomHotel' in the upper-upscale segment, 'Fortune Hotels'
 in the upscale & mid-market space and 'WelcomHeritage' in the leisure &
 heritage segment.  In addition to these brands, the Business has
 licensing and franchising agreements for two brands - 'The Luxury
 Collection' and 'Sheraton' - with Starwood Hotels & Resorts.
 
 Your Company launched My Fortune Bengaluru, a flagship property under
 the Fortune banner in the 'upscale' segment, in May 2014 which has been
 well received by guests. In November 2014, the Business unveiled its
 latest offering in the super premium segment - ITC Grand Bharat near
 Gurgaon under a licensing arrangement from Landbase India Ltd. - a
 wholly-owned subsidiary of your Company. Uniquely
 
 positioned as an 'oasis of unhurried luxury', this sprawling 'Luxury
 Collection' resort is situated in an idyllic expanse amidst the Classic
 Golf Resort - a 27-hole Jack Nicklaus designed signature golf course -
 surrounded by the majestic Aravalis and dotted with pristine lakes. ITC
 Grand Bharat delivers the finest luxury experience to guests with 100
 Deluxe Suites and 4 Presidential Villas, a wide range of fine dining
 restaurants, signature spa 'Kaya Kalp - The Royal Spa', a host of
 recreational and cultural activities and a world-class meeting /
 banqueting venue. The resort has received glowing accolades in the
 domestic and international press including from CNN Travel which has
 rated the Classic Golf Resort among the Top 10 city golf clubs in the
 world, while ITC Grand Bharat received the Outlook Traveller Award for
 the 'Indian Hotel Debut of the year'.
 
 In line with its 'asset-right' growth strategy, the Business commenced
 providing operating services at WelcomHotel Jodhpur from August 2014,
 taking the total number of rooms under the management contract model in
 the 5 Star category to 1200.
 
 Your Company was declared the successful bidder for a 250-room luxury
 beach resort located in South Goa operating under the name Park Hyatt
 Goa Resort and Spa, following an auction held by IFCI Limited in
 February 2015 in terms of the Securitisation and Reconstruction of
 Financial Assets and Enforcement of Security Interest Act, 2002.
 Subsequent to your Company making full payment of the bid amount, IFCI
 issued the requisite Sale Certificates in favour of your Company on
 25th February, 2015. The erstwhile owners of the property have
 thereafter challenged the sale. The matter is pending before the
 Honourable Bombay High Court, and the hearing is in progress.
 
 The Food & Beverage segment continues to be a major strength of your
 Company with some of the most iconic brands in the country. Your
 Company's prestigious brand 'Bukhara' once again featured in the
 'S.Pellegrino Asia's Best 50' list while 'Dum Pukht' featured in the
 global selection of the 'World's 50 Best Restaurants Academy' list.
 During the year, the Business added
 
 'Tian' – an Asian cuisine studio offering innovative flavours from East
 Asia and beyond – to its international food & beverage brand portfolio
 comprising 'West View', 'Pan Asian', 'Edo', 'Shanghai Club' and
 'Ottimo'. 'The Royal Vega', a pan-Indian offering of delectable
 vegetarian food from the royal kitchens of India, continues to delight
 Indian and foreign travellers alike.
 
 In line with your Company's commitment to the 'Triple Bottom Line', the
 Hotels Business targets a continuous reduction in energy and water
 consumption. Further, the Business continues to enhance usage of
 renewable energy sources which now stands at 58% of total energy
 requirements of the Business. The bespoke 'WelcomAqua' water programme
 has been extended to all properties in the Luxury Collection. These
 interventions stand testimony to the 'Responsible Luxury' positioning
 of your Company's Hotels Business and reinforce ITC Hotels' position as
 the 'greenest luxury hotel chain' in the world.
 
 'Club ITC', your Company's pan-ITC consumer loyalty programme with a
 current membership base of 2.4 lakh premium consumers, continues to
 gain franchise amongst the premium clientele of ITC Hotels and Wills
 Lifestyle. A new dining loyalty programme – 'Club ITC Culinaire' – was
 launched during the year and is fast gaining popularity.
 
 In view of the positive long-term outlook for the Indian Hotel industry
 coupled with the prospect of sustained growth in both global and
 domestic economy, your Company remains committed to its investment-led
 growth strategy. Steady progress is being made on construction of new
 hotels at Kolkata, Hyderabad and Coimbatore.  Requisite clearances from
 the Sri Lankan authorities have been received by WelcomHotels Lanka
 (Private) Ltd., a wholly-owned subsidiary of the Company, to progress
 your Company's first overseas project in Colombo. Excavation and allied
 works commenced in November 2014.
 
 The 'Fortune' brand which caters to the 'mid-market to upscale' segment
 continued to lead this segment and expanded its presence with the
 addition of 5 new hotels during the year, taking the overall number of
 operational hotels to 46 hotels across 34 cities. Plans are on the
 anvil to extend the upscale My Fortune brand to 9 more cities in
 addition to Chennai and Bengaluru.  The 'WelcomHeritage' brand remains
 the country's most successful and largest chain of heritage hotels with
 34 operational hotels.
 
 Your Company's Hotels Business, with its world-class properties,
 globally benchmarked levels of service excellence and customer
 centricity, is well positioned to sustain its leadership status in the
 Industry and to emerge as the largest hotel chain in the country over
 the next few years.
 
 C. PAPERBOARDS, PAPER AND PACKAGING
 
 During the year, the Paperboards, Paper and Packaging segment was
 impacted by the continuing slowdown in the FMCG industry and input cost
 pressures.  Consequently, the Segment Revenue and Profits grew a muted
 2.2% and 3.3% respectively.
 
 Paperboards & Specialty Papers
 
 Global demand for Paper and Paperboard in 2014 remained stagnant at 401
 million tonnes. While demand for Paperboard grew by 1.5% during the
 year, the Writing & Printing paper (W&P) and Newsprint segments
 continued to decline. During the period 2008 to 2013, global Paper and
 Paperboard demand grew marginally by 0.5% CAGR on the back of subdued
 economic growth and structural decline in W&P demand in developed
 economies like North America and Western Europe with the increasing
 adoption of digital media. Emerging economies in Asia, the Middle-East
 and Africa continue to grow at a faster pace. Over the next 5 years,
 overall demand is estimated to grow at a slightly faster pace of 1.1%
 per annum driven mainly by Paperboard on the back of economic recovery
 in developed economies and lower rate of decline in the W&P segment. In
 view of the subdued demand conditions as aforestated and significant
 surplus capacity in China – as a result of huge capacity additions
 since 2012 and declining economic growth rate – the pricing scenario is
 expected to remain weak over the medium term.
 
 While India remains one of the fastest growing Paper and Paperboard
 markets in the world, overall industry demand was adversely impacted
 for a major part of the year in view of the weak economic environment
 prevailing in the country. Over the next 5 years, overall demand is
 expected to grow at 6.6% CAGR, with Paperboard (42% of the market) and
 W&P (31% of the market) estimated to grow at 7.5% CAGR and 6.2% CAGR
 respectively.
 
 — Within Paperboards, demand for Value Added Paperboards (VAP) is
 expected to grow at 10% CAGR during this period. The faster rate of
 growth in VAP grades is expected to be driven by the increasing demand
 for branded packaged products, growth in organised retail and the use
 of packaging as a key differentiator, especially in the FMCG sector.
 Food, pharmaceuticals, publishing & notebooks and beverages are
 expected to be the major end-use segments driving demand growth.
 
 — In the W&P paper segment, communication grades for notebooks, school
 stationery and publishing are likely to be the key drivers of growth
 fuelled by increasing investments in the education sector and rising
 literacy levels.
 
 The huge market potential and relatively high rates of growth in India
 is attracting new capacities despite the recent raw material shortages
 and pressure on industry profitability. This is evidenced by the
 significant investments in capacity addition and technology upgradation
 by industry players over the last 5 years.  In the VAP segment,
 capacity of about 3 Lakh tonnes per annum, representing 50% of the
 current market size of the segment, is expected to be commissioned over
 the next 12 to 18 months.
 
 Reduction of import duties under various regional Free Trade Agreements
 (FTA), especially with ASEAN which became effective from 1st January
 2014, continue to impact the profitability of the domestic Paper &
 Paperboard industry and the economic viability of small paper mills.
 
 The current import policy as aforementioned and extant regulations
 governing commercial and social forestry in the country, put the Indian
 Paper and Paperboard industry at a disadvantage vis-เ-vis imports. In
 order to provide a level playing field to the domestic industry and
 encourage farming of wood in India, there is clearly a need to review
 the current import duty structure on paper and paperboard and
 re-examine existing FTAs and the new ones under formulation. It is also
 recommended to open up commercial forestry on drylands and wastelands
 with appropriate environmental safeguards and put in place a suitable
 mechanism that incentivises environment-friendly operations and
 adoption of sustainable business practices.
 
 Despite a challenging operating environment and heightened competitive
 intensity, your Company continued to drive volume growth, improve
 realisations and sustain its market standing during the year. This was
 achieved by focusing on identified end-use segments, investments in
 quality systems and processes, and enhancing customer service levels.
 The Business consolidated its clear market leadership position in the
 VAP segment with the entire capacity of the recently commissioned
 paperboard machine (PM7) being dedicated to the manufacture of VAP
 grades since the beginning of the year.
 
 The Business expanded its presence in the hosiery, apparels and
 publishing segments during the year.  Product portfolio was
 strengthened with the launch of new products which were developed to
 address the specific needs of end-users. In line with its 'Green India'
 approach, the Business sustained its leadership position in sales of
 eco-labelled products, which are certified to be environmentally
 friendly. The Business also strengthened its distribution network
 during the year with the addition of new distributors and stockists.
 Service levels also improved on the back of strategically located
 'quick service centres'.
 
 The Business has emerged as a leading player in the W&P paper segment
 leveraging strong forward linkages with your Company's Education and
 Stationery
 
 Products SBU. In the Specialty Papers segment, your Company
 consolidated its leadership position in the Decor grades segment by
 focusing on product quality and mix enrichment.
 
 Your Company continues to pursue the strategy of promoting farm
 forestry with a view to improving the availability of pulpwood. Over
 the last 2 years, your Company has stepped up plantation coverage, well
 in excess of its own requirements, leading to improvement of pulpwood
 availability during this year in Andhra Pradesh and Telangana. This has
 also led to enhanced farmer incomes and increase in green cover.
 
 During the year, your Company sold / distributed high quality saplings
 and seeds to farmers that enabled planting of over 165 million saplings
 on 29,900 hectares of plantations. With this, your Company's
 bio-technology based research initiatives have cumulatively resulted in
 the planting of nearly a billion saplings leading to significant
 wasteland development, greening of over 195,000 hectares. This
 path-breaking initiative has generated nearly 90 million person days of
 employment for tribal and marginal farmers. The state-of-the-art clonal
 sapling production facility, which was commissioned recently towards
 accelerating the pace of plantation activity, is operating at full
 capacity. The facility is a critical enabler of your Company's
 objective to augment pulpwood availability and to meet the ever growing
 demand for high quality saplings from the farming community.
 
 Your Company's research on clonal development has resulted in the
 introduction of high yielding and disease resistant clones which are
 adaptable to a wide variety of agro-climatic conditions. Your Company's
 Life Sciences & Technology Centre is actively collaborating with
 several expert agencies to further leverage bio-technology and site
 specific nutrient management systems for enhancing farm productivity,
 wood yields and improved fibre and pulp properties. Systems are also
 being developed to ensure integrated pest and disease management across
 your Company's forestry initiatives.
 
 Your Company has the distinction of being the first in India to have
 obtained the Forest Stewardship
 
 Council - Forest Management (FSC-FM) certification which confirms
 compliance with the highest international benchmarks of plantation
 management in terms of being environmentally responsible, socially
 beneficial and economically viable. Till date, your Company has
 received FSC-FM certification for more than 22,000 hectares of
 plantations involving over 25,000 farmers with another 2,500 hectares
 in the pipeline. During the year, more than 25,000 tonnes of
 FSC-certified wood were procured from these certified plantations.
 Plans are on the anvil to steadily increase coverage under FSC-FM
 certification.  All four manufacturing units of your Company have
 obtained the FSC Chain of Custody certification. These certifications
 make your Company the leading supplier of FSC-certified paper and
 paperboard in India.
 
 Your Company continues to focus on recycling initiatives including
 solid waste recycling. While all manufacturing units have already
 achieved near 100% solid waste recycling by its usage for making
 products like lime, fly ash bricks, grey boards, egg trays etc., the
 procurement and recycling of about 1,05,000 tonnes of waste paper
 during the year has further consolidated the Business's overall
 positive solid waste recycling footprint.
 
 During the year, the Bhadrachalam and Kovai units received the
 'Excellent Energy Efficient Unit 2014' award from the Confederation of
 Indian Industry (CII). The Kovai unit has received 'Green Award 2013 -
 1st Place' from the Tamil Nadu Pollution Control Board. The Tribeni
 unit was awarded 'Certificate of merit in the Pulp & Paper Sector'
 (National Energy Conservation Award – 2014) by The Ministry of Power,
 Government of India.
 
 Your Company continues to focus on various safety initiatives including
 induction of safety stewards, strengthening systems, spreading
 awareness and integrating Environment, Health and Safety (EHS) as part
 of the overall Total Productive Maintenance (TPM) initiative. With
 regard to energy and water consumption, strategies to contain usage
 across units continue to be pursued with good results.
 
 In line with your Company's objective of meeting 50% of its energy
 requirements from renewable sources, the
 
 Business has implemented several initiatives including investment in a
 green boiler, soda recovery boilers and solar & wind energy. The 7.5 MW
 wind energy unit in Coimbatore, continues to operate at optimum levels
 providing clean energy to the Kovai unit. The new 12 MW Turbine
 Generator and 72 tonnes per hour (TPH) Boiler commissioned at the
 Tribeni unit in the previous year is fully operational, catering to
 energy requirements of the facility at a reduced cost.
 
 Your Company successfully commissioned a 46 MW wind energy project in
 Andhra Pradesh in July 2014, which has been generating wind power since
 then.  However, due to the bifurcation of the state of Andhra Pradesh
 and the resultant need for inter-state wheeling of power – permissions
 for which have not been granted, the majority of the intended benefits
 from this large investment have not fructified. Consequently, only a
 minor proportion of the power generated from this wind energy unit is
 being used currently by your Company's units in Andhra Pradesh with the
 balance output being sold to the State power grid at nominal rates,
 leading to sub-optimal returns. Your Company has made several
 representations to the concerned authorities on this issue and has also
 approached the Central Electricity Regulatory Commission to secure
 inter-state wheeling permission. Your Company remains hopeful of an
 expeditious resolution of the matter.
 
 The year under review witnessed severe cost pressures in major inputs
 such as wood, pulp and chemicals. Your Company, with its integrated
 operations and strategic cost management initiatives, was able to
 minimise the adverse impact of such cost escalations. The Business is
 in the process of setting up a Bleached Chemical Thermo Mechanical Pulp
 mill at its Bhadrachalam unit.  Once commissioned, the mill will
 further reduce the dependence on imports besides reducing your
 Company's carbon footprint.
 
 The integrated nature of the business model comprising access to
 high-quality fibre from the economic vicinity of the Bhadrachalam mill,
 in-house pulp mill and state-of-the-art manufacturing facilities
 coupled with robust forward linkage with the Education and Stationery
 
 Products Business and focus on Value Added Paperboards - strategically
 positions the Business to further consolidate and enhance its
 leadership status in the Indian Paperboard and Paper industry.
 
 Packaging and Printing
 
 Your Company's Packaging and Printing Business continues to be a
 leading supplier of value-added packaging in the carton and flexibles
 formats leveraging state-of-the-art technology and processes. The
 Business provides strategic support to your Company's FMCG Businesses
 by facilitating faster turnaround of new pack designs, ensuring
 security of supplies and delivering benchmarked international quality
 at competitive cost.
 
 Sales of flexibles and cartons packaging recorded healthy growth during
 the year, driven by increased offtake by existing customers and new
 business development.  Your Company's world-class facility at Haridwar
 is operating at benchmark standards and has strengthened the Business's
 ability to service demand in the northern markets more effectively.
 During the year, the Business augmented in-house printing cylinder
 manufacturing capacity at the Haridwar unit for speedier customer order
 fulfilment and enhanced competitiveness.
 
 As in previous years, the Business won several awards for operational
 excellence, innovation and creativity.  These include 4 'World Star
 Awards' from the World Packaging Organisation, 4 'Asia Star Awards'
 from the Asian Packaging Federation and 17 'India Star Awards' from the
 Indian Institute of Packaging for excellence in packaging solutions.
 
 The 14 MW wind energy farm in Tamil Nadu, set up in 2008, provides
 clean energy to your Company's packaging unit in Chennai, contributing
 towards reducing your Company's carbon footprint. Wind energy
 generation from this facility, however, continued to be affected during
 the year due to external infrastructural deficiencies impacting
 connectivity to the State power grid.
 
 The factories at Chennai, Haridwar and Munger continued to maintain the
 highest standards in Quality and
 
 Environment, Health & Safety (EHS). All the three units are certified
 as per the Integrated Management System, consisting of ISO 9001:2008,
 ISO 14001:2004, OHSAS 18001:2007. The Chennai and Haridwar units have
 also received Social Accountability certification (SA 8000:2008).
 During the year, the Haridwar unit received the 'Gold' rating from
 Indian Green Building Council for its sustainability features. Both the
 Chennai and Haridwar units received the highest 'Grade A' BRC / IOP
 certification (British Retail Consortium Institute of Packaging), for
 global standards in packaging and packaging materials - a key enabler
 for supplies to the packaged foods industry. The Business continues to
 be acknowledged as a key associate by several large FMCG companies in
 the country for providing packaging solutions.
 
 With investments in world-class technology, best-in-class quality
 management systems, multiple locations and a wide packaging solutions
 portfolio, the Packaging and Printing Business has established itself
 as a one-stop shop offering superior packaging solutions. The Business
 is well positioned to rapidly grow its external business while
 continuing to service the requirements of your Company's FMCG
 Businesses.
 
 D. AGRI BUSINESS
 
 Leaf Tobacco
 
 The global legal cigarette industry continues to be under pressure with
 cigarette consumption declining in most geographies. Production of
 global Flue Cured Tobacco varieties (excluding China), on the other
 hand, registered a growth of around 10% in 2014 with Zimbabwe, USA,
 India and Tanzania recording higher crop output. Driven by remunerative
 farm gate prices during 2013, Indian Flue Cured production grew by 14%
 to touch 317 Million Kgs. - the second highest crop output ever.
 
 In the backdrop of a declining trend in cigarette consumption and
 record crop output, and high levels of uncommitted stocks globally and
 in India, leaf tobacco export from India is estimated to have degrown
 by 11% during 2014-15 to around 210 Million Kgs.
 
 Despite the challenging business environment, your Company sustained
 its pre-eminent position as the leading exporter of unmanufactured
 tobacco from India through focused strategies aimed at strengthening
 trade with existing customers and robust new business development.
 
 The Business continued to provide strategic sourcing support to your
 Company's Cigarette Business meeting all requirements at competitive
 prices. Large scale deployment of farm yield enhancing measures,
 extensive farmer training campaigns on agricultural best practices and
 sustainable agriculture, and customised growing programmes for non-Flue
 cured varieties were some of the key initiatives undertaken during the
 year.  These interventions also contributed towards improving the
 competitive positioning of Indian leaf tobacco in international
 markets.
 
 Your Company has built an enduring partnership with the farming
 community in the tobacco growing areas in India. Over several decades
 now, your Company has been actively engaging with growers and
 collaborating with key public institutions towards deployment of high
 yielding varieties, upgrading crop growing and curing practices and
 post-harvest product management technologies. Your Company continues to
 play a lead role in driving Research and Development in the areas of
 productivity enhancement, quality improvement, input cost reduction,
 process and product development.
 
 Your Company is the single largest integrated source of quality Indian
 tobaccos, co-creating and delivering value at every stage of the leaf
 tobacco value chain.  The Business continues to be at the forefront of
 facilitating the long-term sustainability of farming through focused
 interventions in sustainable agriculture, quality and productivity
 enhancement and community empowerment.  These initiatives are anchored
 around the 6 dimensions of sustainability encompassing soil, water,
 labour, fuel, bio-diversity and community development with a specific
 focus on soil fertility management, soil moisture conservation,
 seedling production, micro irrigation, farm mechanisation, energy
 conservation and bio-diversity protection.
 
 During the year, the Business designed and administered customised
 Sustainable Agricultural Practices (SAP) Certification Training
 programmes, aimed at progressive growers in Flue Cured and non-Flue
 Cured tobacco growing regions. The Business plans to scale up these
 training programmes in the years ahead.
 
 The Business also launched Project Safal, an innovative web and mobile
 based platform, which seeks to enhance traceability and visibility of
 farm operations and provides customised crop advisory and farm
 extension support.  The initiative won the prestigious 'Manthan Award'
 (runner-up) in the Agriculture & Ecology category at the 11th Manthan
 Awards for South Asia held in New Delhi.
 
 The Business continues to focus on enhancing supply chain efficiency
 through structural interventions in the areas of network planning,
 warehousing and transportation. These initiatives continue to generate
 substantial savings in costs apart from enhancing the agility and
 responsiveness of the supply chain.
 
 The Business continues to set benchmarks in leaf threshing operations
 through focused initiatives and innovative technological solutions.
 Investments continue to be made in your Company's Green Leaf Threshing
 plants (GLT) at Anaparti, Chirala and Mysuru towards delivering
 world-class quality and upgrading processing technology. In line with
 your Company's strategy to adopt a low-carbon growth path, the Chirala
 and Anaparti units commenced using energy generated by the wind energy
 farm set up in Anantapur, Andhra Pradesh from October 2014. With this,
 all three GLTs meet a significant portion of their energy needs from
 renewable sources.
 
 Your Company's GLTs remain committed to the highest standards of
 Environment, Health & Safety and Quality and continue to win
 recognition in these areas. During the year, the Chirala unit won the
 'Shreshtha Suraksha Puraskar' from the National Safety Council of India
 while the Anaparti unit won 'Gold' and 'Silver' awards from the Quality
 Circle Forum of India and the 'Gold' award at the International
 Convention for Quality Control Circles held in Sri Lanka.
 
 The Anaparti unit also won the 1st prize at the 'National Productivity
 Competition' held by the Indian Institution of Industrial Engineering,
 Visakhapatnam. During the year, the Mysuru unit was assessed and
 accredited in accordance with the ISO / IEC17025:2005 standard by the
 National Accreditation Board for Testing and Calibration Laboratories
 (NABL) for moisture testing and chemical analysis. The Mysuru unit also
 received the 'Gold' rating from the Indian Green Building Council.
 
 The Business has been awarded a 'Certificate of Compliance' for its
 Risk Management Framework as per the requirements of ISO 31000 - a
 global standard in risk management principles and procedures.  The
 certificate has been issued based on an independent assessment by an
 external agency and covers the entire value chain covering crop
 development, procurement, processing and sales.
 
 With its unmatched R&D capability, state-of-the-art facilities, crop
 development & extension expertise and a deep understanding of customer
 and farmer needs, your Company is well poised to leverage the emerging
 opportunities for Indian leaf tobacco and sustain its position as a
 world-class leaf tobacco organisation. The Business will continue to
 extend strategic support to your Company's Cigarette Business while
 sustaining its leadership position as the leading exporter of quality
 Indian tobacco, thereby catalysing the multiplier impact of increased
 farmer incomes to benefit the rural economy.
 
 Other Agri Commodities
 
 Food grain production in India is estimated to have declined by 3.2% in
 2014-15 to 257 million tonnes. While wheat output at 96 million tonnes
 remained at previous year's level, rice output at 103 million tonnes
 was lower by 3.4% primarily due to the delayed onset of monsoons.
 Oilseeds production recorded a significant drop of 8.9% to 30 million
 tonnes mainly due to lower groundnut output. Soya production dipped by
 1.9% to 11.6 million tonnes due to delayed monsoons.
 
 During 2014-15, world wheat production increased by 9 million tonnes to
 about 725 million tonnes mainly due
 
 to higher production in Russia and Canada. Increased production and
 surplus inventory in the global markets impacted wheat exports from
 India, which dropped to 1.8 million tonnes from 3.5 million tonnes in
 the previous year. Despite fewer opportunities for international
 trading, your Company's wheat exports grew strongly to 7 lakh tonnes as
 against 5 lakh tonnes in the previous year.  This was achieved through
 competitive sourcing of premium varieties for key customers and by
 garnering volumes from new customers. On the domestic front, the
 Business continued to expand its presence amongst brand owners, private
 labels, food processors and millers.
 
 Your Company's deep rural linkages and expertise in agri-commodity
 sourcing is a critical source of competitive advantage for the Branded
 Packaged Foods Businesses.  Given the volatile market conditions caused
 by climatic variations, changes in Government policies and global
 demand-supply dynamics, your Company has invested significantly in
 building competitively superior agri-commodity sourcing expertise
 comprising multiple business models, wide geographical spread and
 customised infrastructure. These capabilities and infrastructure have
 created structural advantages that facilitate competitive sourcing of
 agri raw materials for your Company's Branded Packaged Foods
 Businesses.  The Business continues to focus on increasing the
 efficiency of procurement and logistics operations by consistently
 pursuing cost optimisation initiatives including reducing distance
 travelled and eliminating non value-adding activities.
 
 Towards scaling up wheat sourcing from areas that are in close
 proximity of atta manufacturing plants, the Business is collaborating
 with research organisations such as the Indian Agricultural Research
 Institute, Directorate of Wheat Research, Punjab Agricultural
 University and Agharkar Research Institute. As part of its wheat crop
 development programme, your Company has introduced location-specific
 new and improved seed varieties along with appropriate package of
 practices in over 50,000 acres across Rajasthan, Uttar Pradesh, Bihar,
 West Bengal, Madhya Pradesh, Maharashtra and Karnataka. With a view to
 supporting the future requirements of your Company, the Business
 continues to focus on building deeper capabilities in proprietary crop
 intelligence, sourcing & delivery network and crafting multiple
 customer-centric blends through cost-quality optimisation.
 
 In the area of potato sourcing, the Business continued to source
 highest quality chip stock potato at competitive prices for your
 Company's Bingo! Yumitos brand. In addition, the Business is working
 closely with farmers towards improving quality and yield and
 introducing chip stock in newer geographies proximal to manufacturing
 centres.
 
 Your Company recently forayed into the Juices category with the launch
 of 7 exciting variants under the 'B Natural' brand. The Business
 leveraged its widespread sourcing network, associated infrastructure in
 key growing areas and well-entrenched farmer linkages to source quality
 fruit pulp. The processed fruits business continued to focus on
 building its portfolio of organic and certified mango products,
 sustaining its leadership position in 'Fairtrade' mango pulp exports
 from India. The Business is working closely with small and marginal
 farmers across 5 States in building scale and sourcing options.
 
 Your Company's Spices Business endeavours to provide food safe spices
 through quality differentiation across the value chain and leverage
 export opportunities in the US, EU and South-East Asian countries. The
 Business also provides sourcing support to your Company's Aashirvaad
 range of spices. Over the last few years, the Business has developed
 robust Chilli crop development programmes, designed to 'produce the
 buy' along with IT driven traceability systems. Your Company's world-
 class processing unit in Guntur is certified to the highest grade of
 global food safety standards under the BRC (British Retail Consortium)
 Food certification regime while the quality lab is certified to the ISO
 17025 standard.
 
 Your Company believes that it is imperative to take an integrated and
 holistic view of the agricultural value chain towards stimulating
 agricultural growth in the country. This requires a participatory
 approach from all stakeholders such as farmers, input vendors, traders,
 processors and the government agencies. More than a decade ago, your
 Company conceptualised and rolled out the e-Choupal network as a
 platform towards empowering the farming community by dis-intermediating
 the value chain, making available accurate weather related information,
 enabling price discovery in a transparent manner and disseminating best
 practices relating to farming. Your Company continues to focus on
 providing various services in rural areas towards enhancing the
 competitiveness of Indian agriculture and plays a critical enabling
 role in integrating farmers, input vendors and government agencies
 besides facilitating the necessary market linkages.
 
 The unique 'Choupal Haat' platform seeks to create awareness and
 improve access of the rural community to a broad range of areas -
 ranging from financial services and pharmaceuticals to commercial
 vehicles and white goods. Along with Choupal Saagars (integrated rural
 services hubs), this platform fosters round-the-year and large scale
 engagement with the rural community thereby enhancing the vitality of
 your Company's e-Choupal network.
 
 The Business will continue to leverage its deep rural linkages and
 agri-commodity sourcing expertise towards providing your Company's
 Branded Packaged Foods Businesses a distinct competitive advantage. The
 e-Choupal platform will also be increasingly leveraged to provide rural
 marketing and agri services and serve as a unique delivery mechanism
 towards enhancing agricultural growth and productivity, and fostering
 sustainable rural development.
 
 NOTES ON SUBSIDIARIES
 
 The following may be read in conjunction with the Consolidated
 Financial Statements prepared in accordance with Accounting Standard
 21. Shareholders desirous of obtaining the report and accounts of your
 Company's subsidiaries may obtain the same upon request. Further, the
 report and accounts of the subsidiary companies will also be available
 under the 'Shareholder Value' section of your Company's website,
 www.itcportal.com, in a downloadable format.
 
 During the year, no company became or ceased to be your Company's
 subsidiary, joint venture or associate company.
 
 ITC Global Holdings Pte. Limited, Singapore ('Global'), a subsidiary of
 your Company, is under winding up in terms of the Order of the High
 Court of the Republic of Singapore dated 30th November, 2007.
 Consequently, your Company is not in a position to consolidate the
 accounts of Global for the financial year ended 31st December, 2014.
 
 The Policy for determining Material Subsidiaries, adopted by your
 Board, in conformity with Clause 49 of the Listing
 
 Agreement with Stock Exchanges, can be accessed on the Company's
 corporate website at
 http://www.itcportal.com/about-itc/policies/policy-on-
 material-subdidiaries.aspx. Presently, the Company does not have any
 material subsidiary.
 
 Surya Nepal Private Limited
 
 Nepal's GDP growth accelerated to 5.2% during the fiscal year ended
 July 2014 compared to 3.5% a year earlier, primarily on the strength of
 a favourable monsoon that boosted agricultural output and a marked
 increase in inward remittances that fuelled increased spending in the
 Services sector. Growth in Agriculture and Services stood at 4.7% and
 6.1% respectively – the highest in the last 6 years. The Industry
 sector, however, grew only marginally by 2.7% as long hours of power
 outages and other supply side constraints weighed on domestic
 manufacturing, leading to higher import-led consumer spending in the
 economy.
 
 Overall economic progress of the country is likely to be halted over
 the short to medium term, in the aftermath of the severe earthquakes in
 April and May 2015 which have affected 8 million people including the
 loss of over 8000 precious lives. Initial estimates peg the economic
 loss to the country at US$ 20 billion - equivalent to the country's
 annual GDP - with reconstruction costs of around US$ 5 billion over the
 next 5 years.
 
 The employees and other assets of the company have remained largely
 protected from the extreme effects of the disaster. Minor damages to
 the company's properties have been reported to insurance companies for
 survey.  Technical assessment of post-earthquake structural stability
 of company's owned/leased buildings is being conducted to take
 corrective measures, if required.
 
 While the Government of Nepal along with its relief partners are
 focusing on rescue operations, public safety and health, economic
 activity in the country is gradually returning to normalcy. The company
 and its employees are committed to work closely with the Government of
 Nepal and its relief partners in this hour of crisis in order to
 overcome the effects of this large scale disaster.
 
 During the year under review, the legal cigarette industry in Nepal
 continued to be adversely impacted by increased tax incidence and
 regulatory pressures, and the unabated rise in illegal trade. While
 Excise Duty on cigarettes was increased by 10% during the year, the
 regulatory environment turned harsher for the legal cigarette industry
 with the implementation of Tobacco Products (Control & Regulation) Act,
 Rules & Directives. This has led to a decline in legal cigarette
 industry volumes with consumption shifting to tax-evaded tobacco
 products from the unorganised sector including illegal cigarettes,
 which do not carry the mandatory graphic health warnings on packs.
 Consequently, the tobacco industry's contribution to the Government
 exchequer declined during the year.
 
 Punitive taxation combined with excessive tobacco regulations focused
 on cigarettes, have led to livelihood related concerns and anxieties
 for tobacco farmers, farm labour, retailers and other stakeholders who
 are dependent on the tobacco industry. Further, the Ministry of Health
 and Population, Government of Nepal, has proposed to revise the
 existing tobacco legislation and introduce further measures in the near
 future which, due to their arbitrary, unreasonable and impractical
 nature, are likely to disrupt more than 4 lakh livelihoods
 directly/indirectly dependent on the industry.  All stakeholders of the
 industry have been representing to the Government for reconsideration
 or withdrawal of the new measures. The company supports effective,
 evidence based regulations that meet public health objectives, which
 enable differentiation of its products vis-เ-vis competition, recognise
 its legal rights and do not lead to unintended consequences such as
 increased illegal trade.
 
 Amidst this challenging business environment, the company recorded
 Gross Revenue of Nepalese Rupees (NRs.) 2033 crores (previous year –
 NRs. 1957 crores) and Profit After Tax (PAT) of NRs. 451 crores
 (previous year – NRs. 425 crores) representing a growth of 3.9% and
 6.1% respectively. The company improved its market standing in all
 major operating segments viz. Cigarettes, Branded Apparel, Safety
 Matches and the recently launched Agarbatti business.
 
 The company continues to be one of the largest contributors to the
 national exchequer, accounting for about 14% of excise collections and
 approximately 3% of the total revenues of the Government of Nepal.  The
 company constitutes approximately 17% of manufacturing GDP of the
 country, making it the largest private sector manufacturing company in
 Nepal.
 
 In the Cigarettes business, the company consolidated its market
 standing by focusing on delivering world-class quality and
 strengthening its product portfolio.
 
 The new state-of-the-art cigarette factory near Pokhara commenced
 operations in May 2014. The design of the factory incorporates
 best-in-class features in ergonomics, energy efficiency, usage of
 natural light and management of ambient conditions. Machines based on
 leading-edge technology are being leveraged through contemporary
 manufacturing practices, systems and people processes.  The factory is
 being developed as a benchmark facility in terms of productivity,
 quality and sustainability. The new leaf redrying plant, which was
 commissioned at Simara during the year, will strengthen the company's
 domestic leaf operations by improving productivity and quality of
 processed leaf. The plant's environmentally sustainable design enables
 it to harness green energy sources for ventilation, lighting and waste
 treatment processes. The company successfully commissioned a 20 kWp
 solar roof top project at the Simara cigarette factory, thereby
 expanding its green footprint.
 
 In line with Company's proactive approach to employee relations
 management, the company successfully concluded a Long Term Agreement
 with the workmen at the Simara cigarette factory, thus ensuring
 harmonious and efficient operations.
 
 In the Branded Apparel business, the company's brands 'John Players'
 and 'Springwood' sustained their position as the preferred choice of
 consumers in the premium and economy segments. In the Safety Matches
 business, the company's brand 'Tir' sustained its market leadership
 position in the wax matches segment. The year also marked the company's
 entry into the Agarbatti market, with the launch of the 'Mangaldeep'
 brand – licensed from ITC Ltd. - in the premium and popular segments.
 The company leveraged its marketing and distribution infrastructure to
 make the brand available across the country in a relatively short span
 of time. The products have been well received by consumers and plans
 are on the anvil to scale up the business in the forthcoming years.
 
 The company is focusing on further strengthening processes and
 improving productivity in all areas of its operations to reduce costs
 and improve profitability. As part of this initiative, the company has
 rolled out an Enterprise Resource Planning system during the year.
 
 The company continues to support and invest in initiatives that enhance
 the social and economic capital of the nation. These initiatives are
 aligned with the stated priorities of the Government of Nepal and are
 based on identified societal needs. Accordingly, the company continues
 to:
 
 - partner tobacco farmers in Nepal to enhance productivity and improve
 quality at the farm level through the induction of agricultural best
 practices.  The adoption of such practices and other inputs provided by
 the company has led to consistent improvement in quality of domestic
 grades of tobacco thereby improving marketability of the crop and
 enhancing farmer returns.
 
 - assist farmers in cultivating high quality Poplar saplings in the
 vicinity of the Simara factory.  Under the 'Grow Wood, Grow Food'
 programme that this initiative promotes, farmers are encouraged to
 adopt agro-forestry while simultaneously inter-cropping with
 traditional crops.
 
 - support the animal husbandry extension services initiative with a
 view to driving yield improvement and enhancing returns of
 underprivileged farmers.
 
 - partner the Nepal Tourism Board in hosting Nepal's premier
 professional golf tournament - the 'Surya Nepal Private Limited
 Masters' with the objective of promoting Nepal as an attractive tourism
 destination.
 
 - focus on building local supply chain capability towards sourcing its
 agarbatti requirements from domestic small and medium enterprises,
 thereby providing employment and skill building opportunities to the
 economically deprived sections of society, especially women.
 
 The company declared a dividend of NRs. 200.00 per equity share of NRs.
 100/- each for the year ended 16th July 2014 (32nd Ashad 2071).
 
 ITC Infotech India Limited and its subsidiaries
 
 2014-15 witnessed the beginnings of major shifts in how businesses use
 and deploy technology to better understand and service their customers,
 and use the growing volume, variety and velocity of data flow to gain
 competitive advantage. With corporates increasingly crafting newer
 digital business models, business users are replacing the Chief
 Information Officer (CIO) as the key decision-maker for purchase of
 information technology products and services. Similarly, the
 traditional software licensing model is being challenged by
 'subscription-based' and 'as-a-service' revenue models.
 
 Against this backdrop, the global IT industry grew by 4.6% in 2014 –
 significantly higher than the preceding two years.
 
 During the year, the company's Consolidated Total Revenue grew by 15%
 to Rs. 1476.40 crores, while Net Profit grew by 23% to Rs. 106.30 crores.
 The company's strategies and operating approach are anchored on the
 following key elements: (i) focusing sharply on domain expertise,
 delivery excellence, digital and data towards achieving meaningful,
 differentiated and specialised scale (ii) building solutions and
 capabilities around products of global software vendors and partnering
 with them to take these products to market (iii) focusing on
 geographical expansion to develop new markets and acquire customers,
 (iv) driving cost management and resource optimisation while balancing
 growth-led investment imperatives and (v) creating future-ready
 business verticals while improving overall profitability.
 
 For the year under review:
 
 a) ITC Infotech India Limited recorded Total Revenue of Rs. 1006 crores
 (previous year Rs. 926 crores) and Net Profit of Rs. 122 crores (previous
 year Rs. 101 crores). For the year under review, the company paid a
 dividend of Rs. 9.00 per Equity Share of Rs. 10/- each aggregating Rs. 76.68
 crores (previous year: Nil);
 
 b) ITC Infotech Limited, UK, (ITC Infotech UK), a wholly-owned
 subsidiary of the company, recorded Total Revenue of GBP 28.69 million
 (previous year GBP 25.29 million) and Net Profit of GBP 0.68 million
 (previous year GBP 1.18 million).  For the year under review, ITC
 Infotech UK declared a dividend of GBP 4.25 (previous year GBP 3.00)
 per Ordinary Share of GBP 1/- each on 685,815 shares, amounting to GBP
 2,914,714 (previous year GBP 2,057,445);
 
 c) ITC Infotech (USA), Inc., (ITC Infotech USA), a wholly-owned
 subsidiary of the company, together with its wholly-owned subsidiary
 Pyxis Solutions LLC, recorded Total Revenue of US$ 81.62 million
 (previous year US$ 70.61 million) and Net Profit of US$ 0.82 million
 (previous year US$ 0.17 million).
 
 During the year, the company implemented a new organisation structure
 for better alignment with the company's strategic direction. A new
 Independent
 
 Business Unit (IBU) focused on Product Engineering Services and Data
 Analytics was also set up during the year. The IBU has seen significant
 growth within a short span of time with a healthy pipeline of
 customers.
 
 During the year, the company witnessed robust growth in the
 Asia-Pacific region aided by a combination of partner-driven
 initiatives as well as a direct sales approach. The company also gained
 traction in the Middle-East region during the year and generated
 significant interest amongst prospective clients in that region.
 
 The company continues to expand its service lines, sales channels and
 presence in Europe and USA. Robust business traction in the USA over
 the past few years has made that region the highest contributor to the
 consolidated revenues of the group.
 
 The company's superior service delivery capability continued to earn
 global recognition. The company featured for the 9th consecutive year
 in the 'Leaders Category' in the '2015 Global Outsourcing 100' list
 compiled by the International Association of Outsourcing Professionals
 (IAOP). The company won the 2014 European Outsourcing award (under the
 category 'Delivering Business Value in European Outsourcing') from the
 European Outsourcing Association in recognition of its long-term
 engagement with the Banking sector.
 
 With enhanced focus on encompassing newer technologies and driven by
 domain knowledge and delivery excellence, the company is poised to
 garner a higher share of India-based IT exports and sustain its growth
 trajectory. Towards attracting high quality human resources, the
 company has broadened its channels for sourcing quality talent and has
 strengthened its capability building processes through college
 affiliations, technology incubation cells and employee ideation panels,
 thereby ensuring seamless and scalable business operations.
 
 The outlook for the Indian IT industry remains buoyant with NASSCOM
 forecasting a growth of 12% to 14% in 2015-16. The company is poised to
 leverage its leadership in knowledge-centric IT services and increasing
 global presence in attaining its strategic and financial objectives.
 
 Technico Pty Limited and its subsidiaries
 
 The company continues to focus on upgradation and commercialisation of
 TECHNITUBERฎ seed technology and customising its application across
 various geographies. Besides, the company is engaged in the marketing
 of TECHNITUBERฎ seeds to global customers from the production
 facilities of its subsidiaries in India and China. The Indian and
 Canadian subsidiaries of the Company are also engaged in field
 multiplication of seeds.
 
 Technico's leadership in production of early generation seed potatoes
 and strength in agronomy continue to be leveraged for sourcing chip
 stock for the 'Bingo! Yumitos' range of potato chips and servicing the
 seed potato requirements of the farmer base of your Company's Agri
 Business.
 
 For the year under review:
 
 a) Technico Pty Limited, Australia registered Turnover of Australian
 Dollar (A$) 2.2 million (previous year A$ 2.2 million) and Net Profit
 of A$ 0.78 million (previous year A$ 0.44 million).
 
 b) Technico Agri Sciences Limited, India registered Net Revenue of Rs.
 105.08 crores (previous year Rs. 73.24 crores) and Net Profit of Rs. 45.25
 crores (previous year Rs. 14.09 crores). During the year, potato prices
 rose sharply primarily due to lower crop output. Consequently, demand
 for good quality seed potato increased significantly.  This coupled
 with the strength of its brand, superior product quality, better
 on-field performance and strong trade and customer relationships
 enabled the company to realise better prices during the year.
 
 c) Technico Asia Holdings Pty Limited, Australia, Technico Technologies
 Inc., Canada and Technico Horticultural (Kunming) Co. Limited, China –
 There were no significant events to report with respect to the above
 companies.
 
 Srinivasa Resorts Limited
 
 The company's hotel ITC Kakatiya in Hyderabad continued to be impacted
 by a challenging economic environment exacerbated by sluggish demand
 conditions in the city pursuant to the bifurcation of the State of
 Andhra Pradesh.
 
 The company recorded Total Revenue of Rs. 52.74 crores (previous year Rs.
 53.28 crores) during the year ended 31st March, 2015 and Net Loss of Rs.
 0.72 crores (previous year Net Profit of Rs. 3.33 crores). Included in
 the Net Loss for the year is an incremental depreciation charge of Rs.
 2.74 crores on account of revision in the useful lives of fixed assets
 in accordance with the provisions of Schedule II to the Companies Act,
 2013.
 
 During the Year, ITC Kakatiya received the 'Times Food Guide' awards
 for 'Dakshin' (Best South Indian Fine Dining), Kebabs & Kurries (Best
 Indian Barbeque), and Marco Polo (Best Bar). TripAdvisor, a renowned
 hotel review site, also recognised Dakshin and Kebabs & Kurries as the
 best restaurants in Hyderabad, ranking them No.1 and No.2 respectively.
 During the year, the hotel was also awarded the '3 Star Rating for
 Appreciation in EHS Practices' by CII.
 
 Last year, a land parcel measuring about 4.27 acres in Amritsar was
 assigned to the company by ITC Ltd.  towards the development and
 operation of a full service hotel. During the year, the company
 obtained the necessary approvals from various authorities and has
 commenced civil works at the site. Excavation of the site to construct
 a 100-key full service hotel was completed during the year.
 
 Fortune Park Hotels Limited
 
 During the year ended 31st March, 2015, the company recorded Total
 Revenue of Rs. 27.19 crores (previous year Rs. 24.85 crores) and earned Net
 Profit of Rs. 5.74 crores (previous year Rs. 6.25 crores).
 
 The company, which caters to the 'mid-market to upscale' segment
 through a chain of Fortune hotels, continues to forge new alliances and
 expand its footprint.  Currently, the company has an aggregate
 inventory of nearly 6,000 rooms spread over 76 properties of which 46
 are operating hotels. Of the balance 30 properties,
 
 5 hotels are slated to be commissioned in the ensuing year and 25 hotel
 projects are under various stages of development.
 
 Two hotels have already been operationalised under the flagship 'My
 Fortune' brand at Chennai and Bengaluru. Plans are on the anvil to
 launch 9 more hotels under the My Fortune brand over the next few
 years.
 
 During the year, the company bagged the Travel
 
 6 Hospitality Award 2014 for the 'Most Outstanding Mid- Market Hotel
 Chain', Today's Traveller Award
 
 2014 for the 'Best First Class Business Hotel Chain',
 
 Safari India Award 2014 for the 'Best First Class Business Hotel
 Chain', Hotel Build India Award 2014 in the 'Best Mid-Market Hotel'
 category by Hotelier India and ITP Publishing Group India and
 Hospitality India Award 2014 for the 'Best First Class Hotel Chain'.
 
 The company has established 'Fortune' as the premier 'value' brand in
 the Indian hospitality sector. The brand remains a frontrunner in its
 operating segment and is well positioned to sustain its leadership
 position in the industry.
 
 The Board of Directors of the company has recommended a dividend of Rs.
 12.50 per equity share of Rs. 10/- each for the year ended 31st March,
 2015.
 
 WelcomHotels Lanka (Private) Limited
 
 WelcomHotels Lanka (Private) Limited (WLPL), a wholly-owned subsidiary
 of your Company, was incorporated in Sri Lanka with the objective of
 developing and operating a mixed-use development project ('Project')
 including a luxury hotel on 5.86 acres of prime sea-facing land in
 Colombo, which was allotted by the Board of Investment of Sri Lanka on
 a 99-year lease to the company for this purpose.
 
 The Project has been accorded 'Strategic Development Project' status
 entitling the company to various fiscal benefits in Sri Lanka. Further,
 the Project is also exempt from Sri Lankan foreign exchange
 regulations.
 
 During the year, the company obtained necessary approvals to commence
 construction activity and all major consultants and architects have
 been appointed.  The ground breaking ceremony for the Project was held
 on 19th November, 2014 and excavation and allied works, which were
 commenced immediately thereafter, are progressing satisfactorily.
 
 Your Company's investment in WLPL stood at US$ 82.8 million as at 31st
 March, 2015.
 
 Bay Islands Hotels Limited
 
 Fortune Resort Bay Island, the company's hotel in Port Blair, with its
 great location, excellent architectural design and superior service
 quality, continues to offer a unique gateway to the Andamans. The
 company has commenced a comprehensive renovation and expansion
 programme with a view to enhancing the market standing of the hotel.
 
 During the year ended 31st March, 2015, the company recorded Total
 Revenue of Rs. 1.58 crores (previous year Rs. 1.62 crores) and Net Profit
 of Rs. 0.99 crores (previous year Rs. 1.03 crores).
 
 The Board of Directors of the company has recommended a dividend of Rs.
 70.00 per equity share of Rs. 100/- each for year ended 31st March, 2015.
 
 Landbase India Limited
 
 During the year, the company completed the construction of a 104-key
 luxury hotel, the 'ITC Grand Bharat', at the Classic Golf Resort.
 
 The hotel, which has been licensed to ITC Ltd., commenced operations in
 November 2014. The company also owns and operates the Classic Golf &
 Country Club, a 27-hole Jack Nicklaus Signature Course.
 
 During the year ended 31st March 2015, the company recorded Total
 Revenue of Rs. 17.40 crores (previous year Rs. 12.85 crores) and Net Profit
 of Rs. 1.07 crores (previous year Net Loss Rs. 2.76 crores). During the
 year, the company issued and allotted to ITC Ltd., 2,80,00,000 Equity
 Shares of Rs. 10/- each for cash at par, aggregating Rs. 28 crores. The
 proceeds from the share issue were utilised by the company for the
 construction of the destination luxury resort hotel.
 
 King Maker Marketing, Inc.
 
 King Maker Marketing, Inc. (KMM) is a wholly-owned subsidiary of your
 Company registered in the State of New Jersey, USA. Its main business
 is to import and distribute tobacco products to licensed wholesalers
 and retailers throughout the USA. Your Company is KMM's sole supplier
 of tobacco products.
 
 Despite the continuing decline in consumption in the US market, the
 company's Net Sales grew by 9% during the year, driven by robust growth
 in volumes on the back of focused market interventions. The company
 recorded Net Sales of US$ 29.3 million (previous year US$ 26.9 million)
 and earned a Net Income of US$ 0.14 million (previous year US$ 0.07
 million) during the financial year ended 31st March, 2015. During the
 year, KMM also paid a dividend of US$ 2.0 million to your Company.
 
 Increasing presence of major cigarette manufacturers in the discount
 segment – in direct competition with KMM, illicit trade driven by tax
 differentials between various States in USA, non-compliant cigarette
 imports and Native American manufacture continue to pose significant
 challenges for the company.
 
 Wimco Limited
 
 The scheme of arrangement involving the demerger of the company's
 Non-Engineering Business into ITC Ltd. with effect from 1st April 2013,
 became effective from 27th June 2014.
 
 Pursuant to the demerger as aforestated, the company's business
 activities are mainly focused on fabrication and assembly of machinery
 for tube filling, cartoning, wrapping, material handling and conveyor
 solutions for the FMCG and Pharmaceutical industry.
 
 The company's order book remained subdued during the year with
 customers holding back capital expenditure in view of the sluggish
 demand conditions prevailing in the FMCG and Pharmaceutical industry in
 India.
 
 Consequently, the company's Net Revenue for the year declined to Rs.
 12.90 crores (previous year Rs. 17.17 crores on a comparable basis) and
 reported a Net Loss of Rs. 0.48 crores (previous year Net Profit Rs. 1.67
 crores on a comparable basis).
 
 The company is focusing on building a robust business model, widening
 its customer base and developing superior solutions towards addressing
 customer requirements.
 
 North East Nutrients Private Limited
 
 Your Company holds 76% of the equity stake in North East Nutrients
 Private Limited (NENPL), a company formed with the objective of setting
 up a food processing facility in Mangaldoi, Assam to cater to the
 fast-growing biscuits market in Assam and other north-eastern States.
 Construction work on the manufacturing facility is currently in
 progress and commercial production is expected to start in the ensuing
 year.
 
 Your Company's investment in NENPL stood at Rs. 48.13 crores as at 31st
 March 2015.
 
 Russell Credit Limited
 
 During the year, the company registered Total Revenue of Rs. 70.81 crores
 (previous year Rs. 65.52 crores) and Net
 
 Profit of Rs. 56.38 crores (previous year Rs. 34.57 crores).  The company
 paid a dividend of Rs. 1.40 per equity share aggregating Rs. 90.51 crores
 for the year ended 31st March, 2015.
 
 Temporary surplus liquidity of the company is mainly deployed in debt
 mutual funds and bank fixed deposits.  The company continues to explore
 opportunities to make strategic investments for the ITC group.
 
 Gold Flake Corporation Limited
 
 The company registered Total Revenue of Rs. 4.20 crores during the year
 under review (previous year Rs. 4.37 crores). The company paid a dividend
 of Rs. 9.00 per equity share aggregating Rs. 14.40 crores for the year
 ended 31st March, 2015.
 
 The company holds 50% equity stake in ITC Essentra Ltd. – a joint
 venture with Essentra group, UK.
 
 Wills Corporation Limited
 
 The company recorded Total Revenue of Rs. 0.89 crore during the year
 (previous year Rs. 0.93 crore). The company paid a dividend of Rs. 7.00 per
 equity share aggregating Rs. 3.42 crores for the year ended 31st March,
 2015.
 
 Greenacre Holdings Limited
 
 During the year, the company recorded Total Revenue of Rs. 3.51 crores
 (previous year Rs. 3.31 crores) and Net Profit of Rs. 1.04 crores (previous
 year Rs. 0.87 crore).  The company continues to provide maintenance
 services for commercial office buildings.
 
 ITC Investments & Holdings Limited
 
 The company, a Core Investment Company within the meaning of the Core
 Investment Companies (Reserve Bank) Directions, 2011, recorded Total
 Revenue of Rs. 0.48 crore during the year (previous year Rs. 0.32 crore)
 and Net Profit of Rs. 0.33 crore (previous year Rs. 0.31 crore).
 
 During the year, the company purchased the entire shareholding (50,000
 equity shares) of MRR Trading & Investment Company Limited from BFIL
 Finance Limited, a fellow subsidiary, at an aggregate consideration of
 Rs. 4.52 crores. Consequently, MRR Trading & Investment Company Limited
 became a wholly-owned subsidiary of the company with effect from 30th
 March, 2015.
 
 BFIL Finance Limited
 
 The company registered Total Revenue of Rs. 0.34 crore during the year
 (previous year Rs. 0.81 crore). Net Loss for the year stood at Rs. 4.37
 crores (previous year Net Profit Rs. 0.61 crore) mainly on account of
 payment of interest on loan from the parent entity. The company is
 actively pursuing various legal cases initiated against defaulting
 clients for recoveries.
 
 MRR Trading & Investment Company Limited
 
 The company holds tenancy rights in a commercial building located in
 Mumbai and also provides estate maintenance services. During the year,
 the company recorded Total Revenue of Rs. 0.07 crore (previous year Rs.
 Nil).
 
 Pavan Poplar Limited
 
 The scheme of arrangement involving the demerger of Wimco Limited's
 Non-Engineering Business into ITC Ltd. with effect from 1st April 2013,
 became effective from 27th June 2014. As a result, the company, which
 was earlier a wholly-owned subsidiary of Wimco Ltd., became a direct
 wholly-owned subsidiary of ITC Ltd.  with effect from 27th June 2014.
 
 The operations of the company remained impacted during the current year
 pursuant to the order of the Uttarakhand High Court in February 2014
 dismissing the writ petition filed by the company against the order of
 the District Magistrate authorising State authorities to take
 possession of the land leased to the company. The appeal filed by the
 company against the aforestated order was admitted in April 2014 and
 the matter is pending before the Honourable High Court.
 
 Consequently, the company's Total Revenue declined from Rs. 0.96 crore in
 the previous year to Rs. 0.02 crore in the current year. The company
 reported a Net Loss of Rs. 0.47 crore during the year (previous year Net
 Loss of Rs. 4.47 crores after considering an aggregate provision of Rs.
 4.55 crores made towards inventory and fixed assets).
 
 Prag Agro Farm Limited
 
 The scheme of arrangement involving the demerger of Wimco Limited's
 Non-Engineering Business into ITC Ltd. with effect from 1st April 2013,
 became effective from 27th June 2014. As a result, the company, which
 was earlier a wholly-owned subsidiary of Wimco Ltd., became a direct
 wholly-owned subsidiary of ITC Ltd.  with effect from 27th June 2014.
 
 The operations of the company remained impacted during the current year
 pursuant to the order of the Uttarakhand High Court in February 2014
 dismissing the writ petition filed by the company against the order of
 the District Magistrate authorising State authorities to take
 possession of the land leased to the company. The appeal filed by the
 company against the aforestated order was admitted in April 2014 and
 the matter is pending before the Honourable High Court.
 
 Consequently, the company's Total Revenue declined from Rs. 0.70 crore in
 the previous year to Rs. 0.04 crore during the current year. The company
 reported a Net Loss of Rs. 0.08 crore during the year (previous year: Net
 Loss of Rs. 4.05 crores after considering an aggregate provision of Rs.
 4.00 crores made towards inventory and fixed assets).
 
 ITC Global Holdings Pte. Limited
 
 As has been stated in the previous years' reports, the Judicial
 Managers had been conducting the affairs of ITC Global Holdings Pte.
 Limited ('Global') since 8th November, 1996, under the authority of the
 High Court of Singapore.
 
 Pursuant to the application of the Judicial Managers, the Singapore
 High Court on 30th November, 2007 ordered the winding up of Global,
 appointed a Liquidator and discharged the Judicial Managers.
 
 The Judicial Managers commenced proceedings against your Company in
 November 2002 before the Singapore High Court claiming approximately
 US$ 18.10 million.  Pursuant to legal advice, your Company has filed
 its defence in the proceedings.
 
 On 22nd July, 2013, the Liquidator filed an application, to amend the
 Statement of Claim filed in the proceedings to include an additional
 claim of US$ 1.03 million against your Company, which was dismissed by
 the Assistant Registrar. The Liquidator's appeal against the said
 dismissal was also dismissed on 29th May, 2014, by the Singapore High
 Court.
 
 Your Company is contesting the claims contending that the same are not
 sustainable and your Company does not accept any liability in this
 regard. The proceedings are pending.
 
 NOTES ON JOINT VENTURES
 
 ITC Essentra Limited
 
 The company recorded Gross Revenue of Rs. 328.60 crores (previous year
 Rs. 292.74 crores) and Net Profit of Rs. 12.22 crores (previous year
 Rs. 13.77 crores) for the financial year ended 31st December, 2014.
 During the year, the company consolidated its leadership position in
 the backdrop of a challenging operating environment which saw
 increasing taxation and regulatory pressures on the cigarette industry.
 The company countered the challenges posed by these difficult market
 conditions by focusing on innovation, superior execution, consistent
 delivery and world-class quality. Although the company garnered
 additional volumes, adverse sales mix and higher interest cost impacted
 the performance for the year. During the year, the company fully
 operationalised its new state-of-the-art manufacturing line at
 Doddaballapur, Karnataka.
 
 Given that a significant portion of the company's sales are to
 customers in the domestic cigarette industry which is facing
 unprecedented pressure on volumes due to steep increase in
 taxes/duties, the year ahead will indeed be challenging. In this
 context, the company is also focusing on growing exports with
 best-in-class delivery of high quality products to customers at
 competitive prices. Besides, the company continues to diversify the
 sourcing base for its principal raw material - acetate tow - towards
 ensuring security of supplies and optimising costs.
 
 A sustained drive to develop contemporary and value added cigarette
 filter solutions coupled with integrated online quality control systems
 have enabled the company to consolidate its position as the preferred
 supply chain partner for several well-known national and international
 brands. The company remains focused on sustaining its position as the
 innovation and quality benchmark in the cigarette filter market.
 
 The Board of Directors of the company has recommended a dividend of Rs.
 9.00 per Ordinary Share of Rs. 10/- each for the year ended 31st
 December, 2014.
 
 Maharaja Heritage Resorts Limited
 
 Maharaja Heritage Resorts Limited, a joint venture of your Company with
 Jodhana Heritage Resorts Private Limited, currently operates 34
 heritage properties across 13 States in India. The company, with its
 WelcomHeritage brand portfolio comprising 'Legend Hotels', 'Heritage
 Hotels' and 'Nature Resorts', provides uniquely differentiated
 offerings to guests in the cultural, heritage and adventure tourism
 segments respectively.
 
 During the year ended 31st March, 2015, the company recorded Total
 Revenue of Rs. 3.80 crores (previous year Rs. 3.46 crores) and Net Profit
 of Rs. 0.24 crores (previous year Rs. 0.10 crores).
 
 The 'WelcomHeritage Hotels' brand was awarded the 'Best Heritage Hotel
 Chain' by Today's Traveller Awards 2014.
 
 Espirit Hotels Private Limited
 
 Espirit Hotels Private Limited (EHPL) is a joint venture between your
 Company and the Ambience Group, Hyderabad for developing a luxury hotel
 complex at Begumpet, Hyderabad. Under the terms of the Joint Venture
 Agreement, your Company acquired 26% equity stake in EHPL and will,
 inter alia, provide hotel operating services under an Operating
 Services Agreement, upon commissioning of the hotel.
 
 The Ambience Group has expressed its desire to review the timing of
 further investments in EHPL, citing concerns about the viability of the
 project in view of the challenging economic environment and the
 sluggish demand conditions currently prevailing in Hyderabad pursuant
 to the bifurcation of the State of Andhra Pradesh. In this regard, your
 Company is examining the way forward under the Joint Venture Agreement.
 
 Your Company's investment in EHPL stood at Rs. 46.51 crores as at 31st
 March, 2015.
 
 Logix Developers Private Limited
 
 Logix Developers Private Limited (LDPL) is a joint venture between your
 Company and Logix Estates Private Ltd., NOIDA for developing a luxury
 hotel-cum-service apartment complex at Sector 105 in NOIDA. Under the
 terms of the Joint Venture Agreement, your Company acquired 26% equity
 stake in LDPL and will, inter alia, provide hotel operating services
 under an Operating Services Agreement, upon commissioning of the hotel.
 
 Pursuant to an equity cash call aggregating Rs. 14.87 crores made by LDPL
 during the year, your Company invested Rs. 3.87 crores in LDPL. However,
 the JV partner did not subscribe to its share of the cash call.
 Consequently, your Company's total investment in LDPL increased to Rs.
 41.95 crores as at 31st March 2015, taking its equity stake to 27.9% in
 the company.
 
 Logix Estates Private Ltd., the JV partner, has communicated to your
 Company that it would like to explore alternative project development
 plans, failing which, it proposes to exit the joint venture by selling
 its shareholding in LDPL to your Company. Your Company is exploring its
 options in this regard.
 
 NOTES ON ASSOCIATES
 
 International Travel House Limited
 
 During the financial year ended 31st March, 2015, the company recorded
 Total Revenue of Rs. 183.48 crores (previous year Rs. 176.44 crores) and
 Net Profit of Rs. 18.38 crores (previous year Rs. 18.11 crores).
 
 The Company offers a full range of travel services including air
 ticketing, car rentals, inbound and outbound tourism, domestic
 holidays, conferences, events and exhibition management and foreign
 exchange services to travellers.
 
 The Board of Directors of the company has recommended a dividend of Rs.
 4.25 per equity share of Rs. 10/- each for the year ended 31st March,
 2015.
 
 Gujarat Hotels Limited
 
 During the financial year ended 31st March, 2015, the company recorded
 Total Revenue of Rs. 4.31 crores (previous year Rs. 4.51 crores) and Net
 Profit of Rs. 2.73 crores (previous year Rs. 3.27 crores).
 
 The company's hotel, 'WelcomHotel Vadodara' at Vadodara is operated by
 ITC Ltd. under an Operating License Agreement.
 
 The Board of Directors of the company has recommended a dividend of Rs.
 3.50 per equity share of Rs. 10/- each for the year ended 31st March,
 2015.
 
 ATC Limited (an associate of Gold Flake Corporation Limited)
 
 The company is a contract manufacturer of cigarettes.  During the year,
 the company recorded Total Revenue of Rs. 23.16 crores (previous year Rs.
 21.95 crores) and Net Profit of Rs. 0.91 crore (previous year Rs. 0.84
 crore).
 
 During the year, the company exhibited robust operational performance
 with benchmark scores in product quality
 
 and material utilisation. The company won the 'Platinum Award' from The
 Economic Times for manufacturing excellence, a 'Certificate of
 Appreciation' from FICCI for excellence in quality systems and various
 safety awards for outstanding track record in safety.
 
 Associates of Russell Credit Limited
 
 Classic Infrastructure & Development Limited
 
 The company recorded Total Revenue of Rs. 0.45 crore during the year
 (previous year Rs. 0.41 crore) and Net Profit of Rs. 0.20 crore (previous
 year Rs. 0.35 crore).
 
 The company continues to explore growth opportunities.
 
 Russell Investments Limited
 
 During the year, the company recorded Total Revenue of Rs. 5.66 crores
 (previous year Rs. 2.42 crores) and Net Profit of Rs. 5.42 crores (previous
 year Net Loss Rs. 0.20 crore).
 
 The company continues to explore opportunities to make investments.
 
 Divya Management Limited
 
 During the year, the company recorded Total Revenue of Rs. 0.24 crore
 (previous year Rs. 0.23 crore) and Net Profit of Rs. 0.08 crore (previous
 year Rs. 0.10 crore).
 
 The company continues to explore opportunities to make investments.
 
 Antrang Finance Limited
 
 During the year, the company recorded Total Revenue of Rs. 0.30 crore
 (previous year Rs. 0.28 crore) and Net Profit of Rs. 0.20 crore (previous
 year Rs. 0.20 crore).
 
 The company continues to explore opportunities to make investments.
 
 INTERNAL FINANCIAL CONTROLS
 
 The Corporate Governance Policy guides the conduct of affairs of your
 Company and clearly delineates the roles, responsibilities and
 authorities at each level of its three-tiered governance structure and
 key functionaries involved in governance. The ITC Code of Conduct
 commits management to financial and accounting policies, systems and
 processes. The Corporate Governance Policy and the ITC Code of Conduct
 stand widely communicated across the enterprise at all times, and,
 together with the 'Strategy of Organisation', Planning & Review
 Processes and the Risk Management Framework provide the foundation for
 Internal Financial Controls with reference to your Company's Financial
 Statements.
 
 Such Financial Statements are prepared on the basis of the Significant
 Accounting Policies that are carefully selected by management and
 approved by the Audit Committee and the Board. These Policies are
 supported by the Corporate Accounting and Systems Policies that apply
 to the entity as a whole to implement the tenets of Corporate
 Governance and the Significant Accounting Policies uniformly across the
 Company. The Accounting Policies are reviewed and updated from time to
 time.  These, in turn are supported by a set of divisional policies and
 Standard Operating Procedures (SOPs) that have been established for
 individual businesses.
 
 Your Company uses ERP Systems as a business enabler and also to
 maintain its Books of Account. The SOPs in tandem with transactional
 controls built into the ERP Systems ensure appropriate segregation of
 duties, tiered approval mechanisms and maintenance of supporting
 records. The Information Management Policy reinforces the control
 environment. The systems, SOPs and controls are reviewed by divisional
 management and audited by Internal Audit whose findings and
 recommendations are reviewed by the Audit Committee and tracked through
 to implementation.
 
 Your Company has in place adequate internal financial controls with
 reference to the Financial Statements.  Such controls have been tested
 during the year and no reportable material weakness in the design or
 operation was observed. Nonetheless your Company recognises that any
 internal financial control framework, no matter how well designed, has
 inherent limitations and accordingly, regular audit and review
 processes ensure that such systems are reinforced on an ongoing basis.
 
 RISK MANAGEMENT
 
 As a diversified enterprise, your Company continues to focus on a
 system-based approach to business risk management. The management of
 risk is embedded in the corporate strategies of developing a portfolio
 of world-class businesses that best match organisational capability
 with market opportunities, focusing on building distributed leadership
 and succession planning processes, nurturing specialism and enhancing
 organisational capabilities through timely developmental inputs.
 Accordingly, management of risk has always been an integral part of the
 Company's 'Strategy of Organisation' and straddles its planning,
 execution and reporting processes and systems. Backed by strong
 internal control systems, the current Risk Management Framework
 consists of the following key elements:
 
 — The Corporate Governance Policy approved by the Board, clearly lays
 down the roles and responsibilities of the various entities in relation
 to risk management covering a range of responsibilities, from the
 strategic to the operational. These role definitions, inter alia,
 provide the foundation for your Company's Risk Management Policy and
 Framework that is endorsed by the Board and is aimed at ensuring
 formulation of appropriate risk management procedures, their effective
 implementation across your Company and independent monitoring and
 reporting by Internal Audit.
 
 — The Corporate Risk Management Cell, through focused interactions with
 businesses, facilitates the identification and prioritisation of
 strategic and operational risks, development of appropriate mitigation
 strategies and conducts periodic reviews of the progress on the
 management of identified risks.
 
 — A combination of centrally issued policies and divisionally-evolved
 procedures brings robustness to the process of ensuring that business
 risks are effectively addressed.
 
 — Appropriate structures are in place to proactively monitor and manage
 the inherent risks in businesses with unique / relatively high risk
 profiles.
 
 — A strong and independent Internal Audit function at the Corporate
 level carries out risk focused audits across all businesses, enabling
 identification of areas where risk management processes may need to be
 strengthened. The Audit Committee of the Board reviews Internal Audit
 findings, and provides strategic guidance on internal controls.  The
 Audit Compliance Review Committee closely monitors the internal control
 environment within your Company including implementation of the action
 plans emerging out of internal audit findings.
 
 — At the Business level, Divisional Auditors continuously verify
 compliance with laid down policies and procedures, and help plug
 control gaps by assisting operating management in the formulation of
 control procedures for new areas of operation.
 
 — A robust and comprehensive framework of strategic planning and
 performance management ensures realisation of business objectives based
 on effective strategy implementation. The annual planning exercise
 requires all businesses to clearly identify their top risks and set out
 a mitigation plan with agreed timelines and accountability.  Businesses
 are required to confirm periodically that all relevant risks have been
 identified, assessed, evaluated and that appropriate mitigation systems
 have been implemented.
 
 The combination of policies and processes as outlined above adequately
 addresses the various risks associated with your Company's businesses.
 
 The Company during the year has also constituted a Risk Management
 Committee, as required by revised Clause 49 of the Listing Agreement.
 
 AUDIT AND SYSTEMS
 
 Your Company believes that internal control is a necessary concomitant
 of the principle of governance that freedom of management should be
 exercised within a framework of appropriate checks and balances.  Your
 Company remains committed to ensuring an effective internal control
 environment that inter alia provides assurance on orderly and efficient
 conduct of operations, security of assets, prevention and detection of
 frauds/errors, accuracy and completeness of accounting records and the
 timely preparation of reliable financial information.
 
 Your Company's independent and robust Internal Audit processes, both at
 the Business and Corporate levels, provide assurance on the adequacy
 and effectiveness of internal controls, compliance with operating
 systems, internal policies and regulatory requirements.
 
 The Internal Audit function consisting of professionally qualified
 accountants, engineers and IT Specialists is adequately skilled and
 resourced to deliver audit assurances at highest levels. In the context
 of the IT environment of your Company, systems and policies relating to
 Information Management are periodically reviewed and benchmarked for
 contemporariness.  Compliance with the Information Management policies
 receive focused attention of the Internal Audit team.  Qualified
 engineers in the Internal Audit function review the quality of planning
 and execution of all ongoing projects involving significant expenditure
 to ensure that project management controls are adequate and yield
 'value for money'.
 
 Processes in the Internal Audit function have been continuously
 improved for enhanced effectiveness and productivity including the
 deployment of best-in-class tools for analytics in the Audit domain,
 certification as complying with ISO 9001:2008 Quality Standards in its
 processes, ongoing knowledge improvement programmes for staff, etc.
 
 The Audit Committee of your Board met eight times during the year. The
 Terms of Reference of the Audit Committee inter alia included reviewing
 the adequacy and effectiveness of the internal control environment,
 monitoring implementation of the action plans emerging out of Internal
 Audit findings including those relating to strengthening of your
 Company's risk management systems and discharge of statutory mandates.
 
 HUMAN RESOURCE DEVELOPMENT
 
 Your Company believes that it is the quality and dynamism of its human
 resource that enables it to make a significant contribution to
 enhancing stakeholder value.  In order to sustain its position as one
 of India's most valuable corporations, your Company works relentlessly
 towards being customer-focused, competitively-superior,
 performance-driven and future-ready.
 
 The talent management strategy of your Company strives to deliver its
 unique talent promise - 'Building Winning Businesses. Building Business
 Leaders. Creating Value for India.' Your Company is guided by a
 holistic approach to talent management - focusing on synchronising the
 multiple elements of talent sourcing, work design, performance
 management, remuneration, individual growth and development – to
 deliver breakthrough outcomes. Human Resource Development practices in
 your Company are guided by the principles of relevance, consistency and
 fairness based on the premise that 'what' is done is as critical as
 'how' it is done.  Taken together, these initiatives and processes have
 made a significant impact on talent attraction, retention and
 commitment.
 
 Your Company has assiduously built a culture of continuous learning,
 innovation and collaboration across the organisation by judiciously
 leveraging cutting-edge learning and development practices with
 coaching, mentoring and on-the-job training. Based on the premise that
 action learning is a more effective approach to development of human
 resources, learning and development interventions stress less on
 classroom learning and more on workplace projects. These interventions
 are therefore fashioned along the lines of longer term journeys rather
 than short term events.
 
 Your Company's strategic Learning and Development agenda is geared to
 building front-line managerial capability, middle-management functional
 leadership and strategic leadership capability of senior management.
 Apart from this, your Company's 'Strategy of Organisation' serves as an
 excellent platform to build distributed leadership. This two-pronged
 approach to leadership development has ensured that each of your
 Company's businesses is managed by a team of competent, passionate and
 inspiring leaders, capable of building a high-performance and
 future-ready organisation.
 
 Your Company continues to invest in the time-tested approach of
 progressive employee relations based on the core principles of
 trusteeship, fairness, equity, industrial democracy and partnership
 with enlightened trade unions. This has enabled your Company
 consistently set a fine record of industrial harmony, highlighted not
 merely by the absence of strife, but by the more positive outcome of
 high productivity and superior quality. A productive and innovative
 workplace is a key requirement of successful business performance.
 Hence the push for embracing commitment-enhancing people processes that
 seek and nurture employee participation and involvement in managing the
 shop floor. Your Company's belief in the mutuality of interests of key
 stakeholders, aligns all employees to a shared purpose and vision, thus
 providing it with the vital force to win in the market and enhance
 value creation.
 
 Your Company has been able to galvanise its human resource to become
 more agile, leverage change, stay ahead of competition and win in the
 market.  Your Company's employees relentlessly strive to deliver
 world-class performance and discharge their role as 'trustees' of all
 stakeholders with true faith and in the spirit of allegiance. Over
 25,000 of your Company's employees have collectively envisioned the
 future with commitment to realising your Company's vision of creating
 enduring value - for the nation and for the institution that is ITC.
 
 WHISTLEBLOWER POLICY
 
 The Company's Whistleblower Policy encourages Directors and employees
 to bring to the Company's attention, instances of unethical behaviour,
 actual or suspected incidents of fraud or violation of the ITC Code of
 Conduct that could adversely impact the Company's operations, business
 performance and / or reputation.  The Policy provides that the Company
 investigates such incidents, when reported, in an impartial manner and
 takes appropriate action to ensure that the requisite standards of
 professional and ethical conduct are always upheld. It is the Company's
 Policy to ensure that no employee is victimised or harassed for
 bringing such incidents to the attention of the Company.  The practice
 of the Whistleblower Policy is overseen by the Audit Committee of the
 Board and no employee has been denied access to the Committee. The
 Whistleblower Policy is available on the Company's corporate website
 www.itcportal.com.
 
 SUSTAINABILITY – CONTRIBUTION TO THE 'TRIPLE BOTTOM LINE'
 
 Your Company's vision to sub-serve larger national priorities and
 create enduring societal value is the inspiration behind its
 multi-dimensional sustainability initiatives that are today
 acknowledged as global exemplars. Your Company's sustainability
 strategy aims to significantly enhance value creation for the nation
 through superior 'Triple Bottom Line' performance that builds and
 enriches the country's economic, environmental and societal capital.
 The sustainability strategy is premised on the belief that the
 transformational capacity of business can be very effectively leveraged
 to create significant societal value through a spirit of innovation and
 enterprise.
 
 It is a matter of immense satisfaction that your Company's models of
 sustainable development and value chains designed to promote
 livelihoods, have supported the creation of around 6 million
 sustainable livelihoods, largely among the marginalised sections of
 society. Your Company has sustained its position of being the only
 Company in the world of comparable dimensions to have achieved the
 global environmental distinction of being carbon positive (for 10
 consecutive years), water positive (for 13 years in a row) and solid
 waste recycling positive (for 8 years in succession).
 
 Your Company's renewable energy portfolio ensures that over 43% of its
 total energy requirements are met from renewable energy sources - a
 remarkable achievement given the large manufacturing base of your
 Company. Further, premium luxury hotels, several office complexes and
 factories of your Company are LEEDฎ (Leadership in Energy &
 Environmental Design) certified at the highest level by the US Green
 Building Council/Indian Green Building Council and the Bureau of Energy
 Efficiency (BEE) under its star rating scheme.
 
 Your Company has adopted a comprehensive set of sustainability policies
 that are being implemented across the organisation in pursuit of its
 'Triple Bottom Line' agenda. The broad objectives with which your
 Company has rolled out these policies include strengthening the
 mechanisms of engagement with key stakeholders, the identification of
 material sustainability issues and the efforts towards monitoring and
 mitigating the impacts along the value chain of each Business, wherever
 relevant.
 
 Your Company's 11th Sustainability Report, published during the year
 detailed the progress made across all dimensions of the 'Triple Bottom
 Line' for the year 2013-14. Your Company's Sustainability Report in
 conformance with the new Global Reporting Initiative (GRI) G4
 Guidelines was amongst the first in India under In Accordance -
 Comprehensive category with Materiality Matters confirmation from
 GRI and also the first in India that has been third party assured at
 the highest criteria of reasonable assurance as per International
 Standard on Assurance Engagements (ISAE) 3000. The 12th Sustainability
 Report, covering the sustainability performance of your Company for the
 year 2014-15, is being prepared in accordance with the GRI guidelines –
 G4 and will be available to you shortly.
 
 In addition, the Business Responsibility Report (BRR), as mandated by
 the Securities & Exchange Board of India (SEBI), was brought out as an
 annexure to the Report and Accounts 2014, mapping the sustainability
 performance of your Company against the reporting framework suggested
 by SEBI. The BRR for the year under review is annexed to this Report
 and Accounts.
 
 Corporate Social Responsibility (CSR)
 
 Your Company's overarching aspiration to create significant and
 sustainable societal value, inspired by a vision to sub-serve a larger
 national purpose and abide by the strong value of trusteeship, is
 manifest in its CSR initiatives that embrace the most disadvantaged
 sections of society, especially in rural India, through economic
 empowerment based on grassroots capacity building. Towards this end,
 the Company adopted a comprehensive CSR policy in 2014-15 that defines
 the framework for your Company's Social Investments Programme.
 
 Your Company's Social Investments Programme has identified three
 important stakeholder groups: (a) Rural communities in the Company's
 operational areas who seek viable solutions to some of the major
 challenges that threaten the sustainability of their farming systems;
 (b) Communities residing in close proximity to our production units who
 expect help in the creation of the necessary socio-economic
 infrastructure for the emergence of a healthy, educated and skilled
 work force and the promotion of entrepreneurship, especially amongst
 women, to generate additional income streams; and (c) Central and State
 governments, which encourage Public Private Partnerships to demonstrate
 scalable and replicable models of development. Your Company's
 stakeholders are confronted with multiple, but inter-related, issues at
 the core of which is the challenge of securing sustainable livelihoods.
 Interventions therefore are appropriately designed to respond to their
 unique multi-dimensional development challenges in order to accomplish
 the goal of empowering stakeholder communities to promote sustainable
 livelihoods.
 
 The footprint of your Company's CSR projects promoted under the Social
 Investments Programme is spread over 14 states covering 71 districts.
 The interventions reach out to over 6,70,000 households in more than
 10,600 villages.
 
 Social Forestry
 
 Your Company's pioneering initiative of wasteland development through
 the Social Forestry Programme cumulatively covers 67,536 hectares in
 3,720 villages, impacting over 70,000 poor households. This is part of
 the Social and Farm Forestry initiative that has together greened
 nearly 200,000 hectares to date and generated nearly 90 million person
 days of employment for rural households, including poor tribal and
 marginal farmers.  The agro-forestry initiative, that ensures food,
 fodder and wood security, cumulatively covered about 9,800 hectares
 during the year and 17,600 hectares till date.
 
 Soil and Moisture Conservation
 
 The coverage of your Company's Soil and Moisture Conservation
 programme, designed to assist farmers in identified moisture-stressed
 areas, increased by an additional 51,397 hectares taking the total area
 covered under the watershed programme to 200,186 hectares.  1,490
 water-bodies were built during the year, taking the total number of
 water harvesting structures to 6,464.
 
 Bio Diversity
 
 In the catchments of your Company's agri-business operations, your
 Company scaled up bio-diversity conservation in 57 plots covering 504
 hectares with the objective of protecting native flora and fauna and
 providing other eco-system services. Cumulatively, the area under
 bio-diversity now stands at 3,191 hectares. Reports of some of the
 bio-diversity conservation initiatives were published in the
 International Journal of Biodiversity & Endangered Species – Spain 2014
 and also featured as a case study in the India Business & Biodiversity
 Initiative (IBBI) report published by the CII-ITC Centre of Excellence
 for Sustainable Development and the Ministry of Environment, Forests &
 Climate Change.  Your Company has promoted bio-diversity conservation
 on 22 hectares in Telangana and Andhra Pradesh. Your Company has also
 collaborated with the Telangana Government to strengthen and benchmark
 bio-diversity conservation in the KBR National Park in Hyderabad
 covering an area of 140 hectares, thereby enabling FSC certification of
 the said park.
 
 Sustainable Agriculture
 
 Your Company's sustainable agriculture programme aims to introduce
 advanced knowledge and technology through different packages of farm
 practices and increase awareness of farmers on optimum use of natural
 resources in order to increase farm productivity and minimise cost of
 cultivation. During the year, 521 farmer field schools disseminated
 advanced agri-practices to over 21,000 farmers through 7,736
 demonstration plots covering over 18,000 hectares under different
 crops.
 
 In pursuit of your Company's long term sustainable objective of
 increasing soil organic carbon, a total of 3,668 compost units were
 constructed during the year taking the total number till date to 23,554
 units.  In addition, the 'Choupal Pradarshan Khet' promoted field
 demonstrations of seed varieties and production practices for improved
 yield and quality in soybean, wheat, rice, summer pulses and
 horticultural crops in more than 1,200 villages covering around 21,000
 hectares and more than 60,000 farmers with focus on sustainable farm
 practices like moisture conservation, promotion of bio-fertilisers,
 zero-tillage, prophylactic pest management, etc.
 
 Livestock Development
 
 Livestock development remains a key focus area of your Company's CSR
 initiatives. The programme for genetic improvement of cattle through
 artificial insemination to produce high-yielding crossbred progenies is
 implemented through 256 Cattle Development Centres (CDCs) covering over
 10,000 villages. These CDCs facilitated 2,24,000 artificial
 inseminations during the year, taking the total to 15,61,000 artificial
 inseminations performed till date.  Your Company's CSR initiatives
 aimed at enhancing milk production, increasing dairy farm productivity
 and ensuring remunerative prices to farmers in multiple locations
 continued to make good progress. The Dairy Development programme is
 currently sourcing an average of 32,000 litres per day (lpd) of milk,
 with a peak of 57,000 lpd, in Munger and Saharanpur from 6,470 farmers.
 As part of this initiative, an end-to-end mobile enabled farm
 automation and IT solution for productivity enhancement, real-time
 management of cattle herds' health, fertility, milk quality,
 productivity and providing farm management inputs to farmers was
 piloted during the year and currently covers 1,000 animals.
 
 Women Empowerment
 
 The women's micro-enterprise programme was specifically designed for
 women from economically weaker sections to provide a range of gainful
 employment opportunities and support with financial assistance by way
 of loans and grants. Over 23,000 women have been covered through 2,057
 Self-Help Groups (SHG) with total savings of over Rs. 4 crores. A major
 thrust was given to financial inclusion of women members by opening
 bank accounts for 1,335 women this year. Cumulatively, over 40,000
 women were gainfully employed either through micro-enterprises or
 assisted with loans to pursue income generating activities.
 
 Education
 
 The Primary Education programme is designed to provide children from
 weaker sections, access to education with focus on quality and
 retention. During the year, 36,000 children were covered by the 'Read
 India Programme' and another 34,000 children were covered by
 Supplementary Learning Centres, taking the cumulative total of children
 covered to 4,06,000. A total of 147 government primary schools
 (including Anganwadis) were provided infrastructure support comprising
 boundary walls, additional classrooms, sanitation units, furniture and
 electrical fittings, thus taking the total number of government primary
 schools covered till date to 1,158.
 
 Skilling & Vocational Training
 
 Given the inadequate availability of skilled manpower and the
 Government's efforts to promote vocational education and training, your
 Company's Vocational Training programme played an active role in
 building and upgrading skills of marginalised youth to better meet the
 emerging needs of the job market. 13,180 youth were enrolled for
 training under different courses during the year. Of the total students
 enrolled, 10,378 (79% of enrolled) completed training and 3,280 (32% of
 trained) students were provided placement. The students trained
 included a healthy mix of women and SC/ST candidates.
 
 To cater to the ever growing need for professionally trained human
 resources in the hospitality industry, your Company continues to work
 with the Welcomgroup Graduate School of Hotel Administration together
 with Dr. TMA Pai Foundation. This institution continues to be ranked
 among the top educational institutions in the sector. Graduates of the
 institution are today part of several leading hotel chains of the
 world. In addition, your Company also opened a Culinary Institute at
 Chhindwara in 2014, where cooking skills are imparted to youth from
 disadvantaged sections of society.
 
 Leveraging its core competencies in the FMCG sector, your Company
 launched an employability programme to skill unemployed youth in FMCG
 sales and distribution across various locations of the country.
 Candidates who successfully completed the programme were certified by
 the National Skill Development Corporation and have been gainfully
 employed in the FMCG sector.
 
 A programme to promote entrepreneurship for self-help groups from
 economically weaker sections of society was launched in select
 districts of Odisha.  This initiative targeted to equip unemployed
 rural youth to become entrepreneurs and small businessmen capable of
 generating independent earnings by selling products on a direct-to-home
 sale model. This initiative has resulted in generating a sustained
 supplementary income for economically disadvantaged youth and will be
 further scaled up in the future.
 
 Health & Sanitation
 
 Your Company invested in impacting public health through multiple
 routes. To promote a hygienic environment through prevention of open
 defecation and reduce incidence of water-borne diseases, 3,578
 individual household toilets were constructed during the year. With
 this, a total of 8,254 low-cost sanitary units have been constructed so
 far in your Company's factory catchment areas. In areas with water
 quality problems, 19 plants providing safe drinking water to about
 28000 rural households have been installed in the state of Andhra
 Pradesh. 'Swasthya Choupal', your Company's e-Choupal Rural Health
 initiative was consolidated in 7 districts of Uttar Pradesh and
 expanded to 3 new districts in Madhya Pradesh with a coverage of over
 450 villages.
 
 Solid Waste Management
 
 Your Company's Solid Waste Management programme, christened 'WOW –
 Wellbeing Out of Waste' inculcates the habit of source segregation and
 recycling among school children, housewives and general public as well
 as industries and business enterprises.  The WOW movement today extends
 to Hyderabad, Chennai, Bengaluru, Coimbatore and some towns of
 Telangana, enjoying the support of over 3 million citizens, 500,000
 school children, 350 corporates, more than 1,000 commercial
 establishments and around 200 industrial plants.
 
 On the occasion of the 3rd anniversary of National Recycling Day, your
 Company launched a novel pilot programme in 12 selected wards of
 Bengaluru with the support of the Bruhat Bengaluru Mahanagara Palike
 (BBMP) and a similar programme in 30 wards of
 
 Coimbatore to create sustainable livelihoods for rag pickers and waste
 collectors by propagating source segregation at each household and
 facilitating effective collection mechanisms in collaboration with
 Municipal corporations.
 
 ITC Sangeet Research Academy
 
 The ITC Sangeet Research Academy (ITC SRA), which was established in
 1977, is a true embodiment of your Company's sustained commitment to a
 priceless national heritage. Your Company's pledge towards ensuring
 enduring excellence in Classical Music education has helped ITC SRA
 adhere to the age-old 'Guru-Shishya Parampara' – a model that has
 otherwise begun fading away owing to lack of patronage.  Although
 methods of music education are now changing with the advent of
 digitisation, exceptionally gifted students, carefully handpicked
 across India receive full scholarships to reside and pursue their music
 education at the Academy's campus. This has helped young talent who
 have limited access to the newer modes of music education, to train
 under the tutelage of the country's most distinguished stalwarts who
 are helping create the next generation of musical masters.
 
 Forging Partnerships with NGOs
 
 The substantial progress made by your Company's Social Investments
 Programme in contributing to address some of the country's development
 challenges, has been possible in significant measure, to your Company's
 partnerships with globally renowned NGOs like BAIF, DB Tech, DSC, FES,
 MYRADA, Pratham, LabourNet, SEWA, SRIJAN and Outreach, amongst others.
 These partnerships, which bring together the best-in-class management
 practices of your Company and the development experience and
 mobilisation skills of NGOs, will continue to provide innovative
 grassroots solutions to some of India's most challenging problems of
 development in the years to come.
 
 CSR Expenditure
 
 The annual report on Corporate Social Responsibility activities as
 required under Sections 134 and 135 of the Companies Act, 2013 read
 with Rule 8 of the Companies (Corporate Social Responsibility Policy)
 Rules, 2014 and Rule 9 of the Companies (Accounts) Rules, 2014 is
 provided in the Annexure forming part of this Report.
 
 Environment, Health & Safety
 
 Your Company's Environment, Health & Safety (EHS) strategies are
 directed towards achieving the greenest and safest operations across
 all your Company's units by optimising natural resource usage and
 providing a safe and healthy workplace. Systemic and structured efforts
 continue to be made towards natural resource conservation by
 continuously improving resource-use efficiencies and enhancing the
 positive environmental footprint following a life-cycle based approach.
 
 Your Company's focus on inculcating a green and safe culture is
 supported through the adoption of EHS standards that incorporate best
 international codes and practices and verifying compliance through
 regular audits.
 
 Your Company has addressed the critical area of climate change
 mitigation through several innovative and pioneering initiatives. These
 include continuous improvement in energy efficiency, enhancing the
 renewable energy portfolio, integrating green attributes into the built
 environment, better efficiency in material utilisation, maximising
 water use efficiencies and rain water harvesting, maximising reuse and
 recycling of waste and increasing use of post-consumer waste as raw
 material.
 
 Energy Conservation and Renewable Energy
 
 Your Company is well positioned to benefit from India-specific energy
 conservation and renewable energy promotion schemes such as Perform,
 Achieve and Trade (PAT) and Renewable Energy Certificates (RECs)
 promoted by the Government of India. As a responsible corporate
 citizen, your Company has made a commitment to reduce dependence on
 energy from fossil fuels. Substantial progress has been made in
 enhancing the renewable energy portfolio and during 2014-15 over 43% of
 your Company's total energy requirements was met from carbon neutral
 fuels such as biomass, and wind and solar.  Your Company has developed
 a strategic approach and drawn up action plans based on a feasible
 balance of energy conservation and renewable energy investments to
 progressively move towards meeting at least 50% of its total energy
 requirements from renewable sources by 2020.
 
 Water Conservation
 
 With water scarcity increasingly becoming an area of serious concern,
 your Company continues to focus on integrated water management
 including water conservation and harvesting initiatives at its units –
 while also working towards meeting the water security needs of all
 stakeholders at the local watershed level. These include adopting
 latest technologies to reduce fresh water intake and increase reuse and
 recycling practices, best practices to achieve zero effluent
 discharges, rainwater harvesting, etc. These initiatives, along with
 your Company's CSR interventions in the area of integrated watershed
 management, have resulted in the creation of rainwater harvesting
 potential that is over twice the net water consumption of your
 Company's operations.
 
 Greenhouse Gases and Carbon Sequestration
 
 During the year, your Company improved its 'disclosure score' in the
 Climate Disclosure Leadership Index 2014 published under the aegis of
 the Carbon Disclosure Project from 85% in 2013-14 to 94% in 2014-15,
 placing it amongst the top 10 Indian organisations who have been so
 evaluated. The greenhouse gas (GHG) inventory of your Company for the
 year 2014-15 compiled as per the ISO 14064 standard, has been assured
 at the highest 'Reasonable Level' by an independent 3rd party assurance
 provider, a significant achievement considering the scale and spread of
 your Company's operations.  This is also evidence of the importance
 accorded to GHG management by your Company.
 
 Reaffirming your Company's commitment to the ethos of 'Responsible
 Luxury', all luxury hotels of your Company are LEEDฎ Platinum certified
 (certification in progress for ITC Grand Bharat which was opened
 recently) making it the 'greenest luxury hotel chain' in the world. In
 order to continually reduce your Company's energy footprint, green
 features are integrated in all new constructions and are also being
 incorporated in existing hotels, manufacturing units, warehouses and
 office complexes during retrofits.
 
 Your Company's Social & Farm Forestry initiatives enable sequestration
 of over twice the amount of Carbon Dioxide emitted by its operations.
 Besides mitigating the impact of increasing levels of GHG emissions in
 the atmosphere, these initiatives help greening degraded wasteland,
 prevent soil erosion, enhance organic matter content in soil and enable
 ground water recharge.
 
 Waste Recycling
 
 Your Company has made significant progress in reducing specific waste
 generation through constant monitoring and improvement of efficiencies
 in material utilisation and also in achieving almost total recycling of
 waste generated in operations.  In this way, your Company has prevented
 waste reaching landfills and associated problems such as soil and
 groundwater contamination and GHG emissions, all of which can impact
 public health. In the current year, your Company has achieved over 99%
 waste- recycling, with the Paperboards and Specialty Papers Business,
 which accounts for 91.2% of the total waste generated in your Company,
 recycling 99.8% of the total waste generated by its operations.  During
 the year, this Business also recycled around 114,563 tonnes of
 externally sourced post-consumer waste paper, thereby creating yet
 another positive environmental footprint.
 
 Safety
 
 Your Company's commitment to provide a safe and healthy workplace to
 all has been reaffirmed by the significant reduction in the number of
 accidents and several national and international awards and
 certifications received by various units. Your Company's approach is to
 institutionalise safety as a value-led concept with focus on
 inculcating a sense of ownership at all levels and driving behavioural
 change leading to the creation of a safety culture. In line with this
 approach, several behavioural based safety initiatives and custom-made
 risk based training programmes were rolled out at your Company's
 operating units, resulting in a noticeable improvement in safety
 performance. Your Company incorporates established engineering
 standards in the design and project execution phase itself for all
 investments in the built environment, with a view to ensuring the
 highest levels of safety besides optimising costs.  Environment, Health
 & Safety audits before commissioning and during the operation of units
 are carried out to verify compliance with standards.  2014-15 was a
 zero fatal accident year and there was also a 56% drop in Loss Time
 Accidents, over the previous year. These statistics cover all
 categories of employees working on-site at ITC premises, including
 employees of service providers.
 
 Promoting Thought Leadership in Sustainability
 
 The 'CII–ITC Centre of Excellence for Sustainable Development' (the
 Centre), established by your Company in 2006 in collaboration with the
 Confederation of Indian Industry (CII), continues to focus on its
 endeavours to promote sustainable business practices amongst Indian
 enterprises. The major highlights during the year include the annual
 Sustainability Summit, held on 16th & 17th September 2014 in New Delhi,
 which was inaugurated by Shri Prakash Javadekar, Minister of
 Environment, Forests and Climate Change (MoEFCC), and chaired by Shri Y
 C Deveshwar. The Summit was attended by over 300 participants.
 
 On 19th December 2014, the 9th CII-ITC Sustainability Awards were
 handed over by Shri Prakash Javadekar to the 27 winning companies as
 India's Most Sustainable.
 
 On the invitation of the MoEFCC, the Centre is hosting the India
 Business & Biodiversity Initiative (IBBI) with the support of German
 International Cooperation.  Launched on the occasion of International
 Day for Biological Diversity on 22nd May 2014 in New Delhi, the IBBI
 serves as a national platform for business and its stakeholders for
 dialogue, sharing and learning, ultimately leading to mainstreaming
 sustainable management of biological diversity into businesses. On the
 sidelines of the 12th meeting of the Conference of the Parties (COP) to
 the Convention on Biological Diversity (CBD), the IBBI launched the
 publication Business and Biodiversity in India: 20 Illustrations in
 Pyeongchang, Republic of Korea. The report features initiatives of 20
 companies across diverse sectors in biodiversity management.
 
 The Centre has introduced integrated reporting to India by setting up a
 business network called  Lab India with mentorship of International
 Integrated Reporting Council. The objective of  Lab is to build
 capacities of companies in India on integrated reporting and to
 represent concerns of Indian business to the International Integrated
 Reporting Council (IIRC).
 
 The Centre has been building capacities of companies on the new CSR
 legislation as per the Companies Act, 2013. In 2014, the Centre
 conducted 7 open workshops in New Delhi, Mumbai, Lucknow, Bhubaneswar,
 Chennai, Visakhapatnam and Goa. The Centre is also offering services to
 companies in baseline studies, measurement of human development
 indicators, and social return on investments.
 
 R&D, QUALITY AND PRODUCT DEVELOPMENT
 
 The ITC Life Sciences & Technology Centre (LSTC) has a mandate to
 develop unique sources of competitive advantage and build
 future-readiness by harnessing contemporary advances in several
 relevant areas of science and technology, and blending the same with
 classical concepts of product development and leveraging cross-business
 synergies. This challenging task of driving science-led product
 innovation has been carefully addressed by appropriately identifying
 the required set of core competency areas of science. Presently, the
 LSTC team has evolved with over 350 world-class scientists augmented by
 world-class experimental and measurement system capabilities. During
 the year, LSTC's capability was further enhanced with the
 operationalisation of state-of-the-art facilities for performing
 experimental research. In addition to the several Centres of Excellence
 that have been created over past few years, a number of areas centred
 around these capabilities have secured global quality certifications of
 the highest order.
 
 The Agrisciences R&D team has continued its efforts in evaluating and
 introducing several germplasm lines of identified crops including
 Casuarina and Eucalyptus to increase the genetic and trait diversities
 in these species, towards developing new varieties with higher yields,
 better quality and other relevant traits for your Company's businesses.
 LSTC continues to evaluate and build research collaborations with
 globally recognised centres of excellence to remain contemporary and
 fast-track its journey towards demonstrating multiple 'proofs of
 concept'. These collaborations, covering identified species, are
 designed in a manner that enables your Company in gaining fundamental
 insights into several technical aspects of plant breeding and genetics
 and the influence of agro-climatic conditions on the growth of these
 species. Such interventions will accelerate LSTC's efforts in creating
 future generations of these crops with greater genetic and trait
 diversities leading to significant benefits for your Company's
 businesses.  Further, these outcomes have a strong potential to
 contribute towards augmenting the nation's ecological capital and
 biodiversity as well. Several proof of concept studies have been
 accomplished at the laboratory scale and which are being advanced to
 large scale field trials in multiple locations.
 
 Recognising the unique construct of your Company in terms of its strong
 presence in agriculture, Branded Packaged Foods and Personal Care
 Products Businesses, a convergence of R&D capabilities is being
 leveraged to deliver future products aimed at nutrition, health and
 well-being. Advances in biosciences are creating a 'convergence' of
 these areas and it is likely that several future developments in these
 businesses and their products are heavily influenced by this trend. In
 this context, LSTC has created a Biosciences R&D team to design and
 develop several long-term research platforms evolving multi-generation
 product concepts and associated claims that are fully backed by
 scientific evidence for the Branded Packaged Foods and Personal Care
 Products Businesses. Multiple value propositions have been identified
 in the area of functional foods, which are being progressed to products
 of the future with strong scientifically validated claims via clinical
 trials.  Similar advances have been made in the area of personal care
 products. In addition, LSTC has evolved a strategy in building a new
 value chain called, 'Nutrition' with a special focus on 'Indianness'
 and 'health and well-being' founded on the basis of Value Added
 Agriculture (VAA) and Medicinal and Aromatic Plants. The initial
 activities related to VAA have already commenced with a focus on soya.
 
 LSTC has a clear vision and a road map for long-term R&D, to ensure an
 outstanding journey backed by a well-crafted Intellectual Property
 strategy. With scale, speed, science and sustainability considerations,
 LSTC is poised to deliver long-term competitive advantage and play a
 lead role in creating significant business impact for your Company.
 
 Pursuing your Company's relentless commitment to quality, each Business
 is mandated to continuously innovate on processes and systems to
 enhance their competitive position. During the year, your Company's
 Hotels Business leveraged its 'Lean' and 'Six Sigma' programmes to
 improve business process efficiencies. This will further enhance
 capability to create superior customer value through a service
 excellence framework. The Paperboards, Paper & Packaging Businesses
 continued to pursue 'Total Productive Maintenance' (TPM) programmes in
 all units, resulting in substantial cost savings and productivity
 improvements.
 
 All manufacturing units of your Company have ISO quality certification.
 All manufacturing units of the Branded Packaged Foods Businesses
 (including contract manufacturing units) and hotels operate in
 compliance to stringent food safety and quality standards.  Almost all
 Company owned units/hotels and contract manufacturing units of the
 Branded Packaged Foods Businesses are certified by an accredited 'third
 party' in accordance with 'Hazard Analysis Critical Control Points'
 (HACCP) / ISO 22000 standards. Additionally, the quality of all FMCG
 products of your Company is regularly monitored through 'Product
 Quality Ratings Systems' (PQRS).
 
 RECOVERY OF DUES FROM THE CHITALIAS AND PROCEEDINGS INITIATED BY THE
 ENFORCEMENT DIRECTORATE
 
 As mentioned in the previous years' Reports of the Directors, your
 Company had secured from the District Court of New Jersey, USA, a
 decree for US$ 12.19 million together with interest and costs against
 Suresh and Devang Chitalia of USA and their companies, and the
 Chitalias had filed Bankruptcy Petitions before the Bankruptcy Court,
 Orlando, Florida, which are yet to be determined. Last year, the US
 Trustee of EST Fibers Inc., USA, a Chitalia group entity, made a small
 interim distribution of estate funds to your Company.
 
 Though your Company has written off the export dues in foreign exchange
 from the Chitalias with the approval of the Reserve Bank of India, your
 Company continues with its recovery efforts by a suit filed in India
 against some associates of the Chitalias. The suit is in progress.
 
 In the proceedings initiated by the Enforcement Directorate, in respect
 of some of the show cause memoranda issued by the Directorate, after
 hearing arguments on behalf of your Company, the appropriate authority
 has passed orders in favour of your Company, and dropped those
 memoranda. Meanwhile, some of the prosecutions launched by the
 Enforcement Directorate have been quashed by the Honourable Calcutta
 High Court while others are pending.
 
 TREASURY OPERATIONS
 
 During the year, your Company's treasury operations continued to focus
 on deployment of temporary surplus liquidity and management of foreign
 exchange exposures within a well-defined risk management framework.
 
 The year under review was characterised by falling interest rates on
 the back of improvement in the domestic macro-economic environment.
 Easing inflation and improvement on the Fiscal and Current Account
 deficit front, enabled the Reserve Bank of India to reduce policy rates
 by a cumulative 50 basis points in Q4 2014-15. However, muted growth in
 bank deposits and intermittent tightness in banking liquidity brought
 about spikes in market interest rates.
 
 All investment decisions in deployment of temporary surplus liquidity
 continued to be guided by the tenets of Safety, Liquidity and Return.
 Proactive management of portfolio duration helped improve treasury
 performance. During the year, investment portfolio mix was continuously
 rebalanced in line with the evolving interest rate environment.
 Further, the quantum of investment in Bank Fixed Deposits was increased
 towards the year end, taking advantage of spikes in market interest
 rates and in line with expectations of lower interest rates going
 forward.  Your Company's risk management processes ensured that all
 deployments were made with proper evaluation of underlying risk while
 remaining focused on capturing market opportunities.
 
 In the foreign exchange market, the US Dollar witnessed unprecedented
 strength against all major global currencies during the year on the
 back of strengthening US economic recovery amidst persistent weakness
 in the other major economies like the Euro Area, Japan and China.
 Divergence in monetary policy stance between the US and rest of the
 developed economies coupled with rising geopolitical tensions in
 Ukraine/Russia and the Middle-East added to US Dollar strength. Against
 this backdrop, the Indian Rupee remained relatively range bound, with a
 depreciating bias. In this scenario, your Company adopted an
 appropriate forex management strategy, which included the use of
 foreign exchange forward contracts and plain vanilla options, to
 protect business margins and reduce risks / costs.
 
 As in earlier years, commensurate with the large size of temporary
 surplus liquidity under management, treasury operations continue to be
 supported by appropriate control mechanisms, including an independent
 check of 100% of transactions, by your Company's Internal Audit
 department.
 
 DEPOSITS
 
 Your Company's erstwhile Public Deposit Scheme closed in the year 2000.
 As at 31st March, 2015, there were no deposits due for repayment except
 in respect of 2 deposit holders totalling Rs. 20,000 which have been
 withheld on the directives received from government agencies.
 
 There was no failure to make repayments of Fixed Deposits on maturity
 and the interest due thereon in terms of the conditions of your
 Company's erstwhile Schemes.
 
 Your Company has not accepted any deposit from the public/members under
 Section 73 of the Companies Act, 2013 read with the Companies
 (Acceptance of Deposits) Rules, 2014 during the year.
 
 DIRECTORS
 
 Changes in Directors
 
 Mr. Anthony Ruys [representing Tobacco Manufacturers (India) Limited, a
 subsidiary of British American Tobacco p.l.c., the ultimate holding
 company] ceased to be Non-Executive Director of your Company with
 effect from 24th July, 2014, on completion of his term. Your Directors
 would like to record their appreciation of the services rendered by Mr.
 Ruys.
 
 Messrs. Anil Baijal, Arun Duggal, Serajul Haq Khan, Sunil Behari
 Mathur, Pillappakkam Bahukutumbi Ramanujam and Sahibzada Syed
 Habib-ur-Rehman and Ms. Meera Shankar were appointed by the Members
 with effect from 15th September, 2014 as Independent Directors of the
 Company under Section 149 of the Companies Act, 2013 ('the Act').
 
 Retirement by Rotation
 
 In accordance with the provisions of Section 152 of the Act read with
 Article 91 of the Articles of Association of the Company, Mr. Kurush
 Noshir Grant and Mr.  Krishnamoorthy Vaidyanath will retire by rotation
 at the ensuing Annual General Meeting ('AGM') of your Company and being
 eligible, offer themselves for re-election. The Board of Directors of
 your Company ('the Board') has recommended their re-election.
 
 Number of Board Meetings
 
 During the year ended 31st March, 2015, seven meetings of the Board
 were held.
 
 Attributes, Qualifications & Independence of Directors and their
 Appointment
 
 The Nomination & Compensation Committee of the Board approved the
 criteria for determining qualifications, positive attributes and
 independence of Directors in terms of the Act and the Rules thereunder,
 both in respect of Independent Directors and other Directors as
 applicable. The Governance Policy of the Company also inter alia
 requires that Non-Executive Directors, including Independent Directors,
 be drawn from amongst eminent professionals with experience in business
 / finance / law / public administration & enterprises. The Board
 Diversity Policy of the Company requires the Board to have balance of
 skills, experience and diversity of perspectives appropriate to the
 Company. The Articles of Association of the Company provide that the
 strength of the Board shall not be fewer than five nor more than
 eighteen.
 
 Directors are appointed / re-appointed with the approval of the members
 for a period of three to five years or a shorter duration, in
 accordance with retirement guidelines as determined by the Board from
 time to time. The initial appointment of Executive Directors is
 normally for a period of three years. All Directors, other than
 Independent Directors, are liable to retire by rotation, unless
 otherwise approved by the members or provided under any statute.
 One-third of the Directors who are liable to retire by rotation, retire
 every year and are eligible for re-election.
 
 The Independent Directors of your Company have confirmed that they meet
 the criteria of independence as prescribed under Section 149(6) of the
 Act and the Listing Agreement with Stock Exchanges.
 
 The Company's Policy relating to remuneration of Directors, Key
 Managerial Personnel and other employees is provided under the section
 'Report on Corporate Governance' in the Report and Accounts.
 
 Board evaluation
 
 The Nomination & Compensation Committee has approved the Policy on
 Board evaluation, evaluation of Board Committees' functioning and
 individual Director evaluation. In keeping with ITC's belief that it is
 the collective effectiveness of the Board that impacts Company
 performance, the primary evaluation platform is that of collective
 performance of the Board as a whole.  Board performance is assessed
 against the role and responsibilities of the Board as provided in the
 Act and the Listing Agreement read with the Company's Governance
 Policy. The parameters for Board performance evaluation have been
 derived from the Board's core role of trusteeship to protect and
 enhance shareholder value as well as fulfil expectations of other
 stakeholders through strategic supervision of the Company. Evaluation
 of functioning of Board Committees is based on discussions amongst
 Committee members and shared by each Committee Chairman with the Board.
 Individual Directors are evaluated in the context of the role played by
 each Director as a member of the Board at its meetings, in assisting
 the Board in realising its role of strategic supervision of the
 functioning of the Company in pursuit of its purpose and goals.
 
 While the Board evaluated its performance against the parameters laid
 down by the Nomination & Compensation Committee, the evaluation of
 individual Directors was carried out anonymously in order to ensure
 objectivity. Reports on functioning of Committees were placed by the
 respective Committee Chairman before the Board.
 
 Key Managerial Personnel
 
 During the year there was no change in the Key Managerial Personnel of
 your Company.
 
 AUDIT COMMITTEE & AUDITORS
 
 The composition of the Audit Committee is provided under the section
 'Board of Directors and Committees' in the Report and Accounts.
 
 Statutory Auditors
 
 The Auditors, Messrs. Deloitte Haskins & Sells, Chartered Accountants
 (DHS), were appointed with your approval at the 103rd AGM to hold such
 office till the conclusion of the 108th AGM. The Board, in terms of
 Section 139 of the Act, on the recommendation of the Audit Committee,
 has recommended for the ratification of the Members the appointment of
 DHS from the conclusion of the ensuing AGM till the conclusion of the
 105th AGM.  The Board, in terms of Section 142 of the Act, on the
 recommendation of the Audit Committee, has also recommended for the
 approval of the Members the remuneration of DHS for the financial year
 2015-16.  Appropriate resolution in respect of the above is appearing
 in the Notice convening the 104th AGM of the Company.
 
 Cost Auditors
 
 Your Board, on the recommendation of the Audit Committee, appointed -
 
 (i) Messrs. Shome & Banerjee, Cost Accountants, for audit of cost
 records maintained by the Company
 
 – in respect of 'Soyabean Oil' and 'Face wash' for the financial year
 2014-15, and
 
 – in respect of all applicable products of the Company, other than
 'Paper and Paperboard' for the financial year 2015-16.
 
 (ii) Mr. P. Raju Iyer, Cost Accountant, for audit of cost records
 maintained by the Company in respect of 'Paper and Paperboard' for the
 financial year 2015-16.
 
 In terms of Section 148 of the Act read with the Companies (Audit and
 Auditors) Rules, 2014, appropriate resolution seeking your ratification
 of the remuneration of Messrs. Shome & Banerjee and Mr. P. Raju Iyer is
 appearing in the Notice convening the 104th AGM of the Company.
 
 Secretarial Auditors
 
 Your Board, during the year, appointed Messrs. S. M.  Gupta & Co.,
 Company Secretaries, to conduct secretarial audit of the Company for
 the financial year ended 31st March, 2015. The Report of Messrs. S. M.
 Gupta & Co. in terms of Section 204 of the Act is provided in the
 Annexure forming part of this Report.
 
 CHANGES IN SHARE CAPITAL
 
 During the year the following changes were effected in the Share
 Capital of your Company:- a) Issue of Shares under the ITC Employee
 Stock Option Schemes:
 
 6,22,48,830 Ordinary Shares of Rs. 1/- each, fully paid-up, were issued
 and allotted during the year upon exercise of 62,24,883 Options under
 your Company's Employee Stock Option Schemes.
 
 b) Issue of Shares upon Demerger of the Non- Engineering Business of
 Wimco Limited into the Company:
 
 87,761 Ordinary Shares of Rs. 1/- each, fully paid- up, were issued and
 allotted on 29th August, 2014
 
 pursuant to the Scheme of Arrangement for demerger of the
 Non-Engineering Business of Wimco into the Company.
 
 Consequently, the Issued and Subscribed Share Capital of your Company,
 as on 31st March, 2015, stands increased to Rs. 801,55,19,541/- divided
 into 801,55,19,541 Ordinary Shares of Rs. 1/- each.
 
 The Ordinary Shares issued during the year rank pari passu with the
 existing Ordinary Shares of your Company.
 
 EMPLOYEE STOCK OPTION SCHEMES
 
 Your Company's Auditors, Messrs. Deloitte Haskins & Sells, have
 certified that the Company's Employee Stock Option Schemes have been
 implemented in accordance with the erstwhile SEBI (Employee Stock
 Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 as
 replaced by the SEBI (Share Based Employee Benefits) Regulations, 2014
 and the resolutions passed by the Members in this regard.
 
 INVESTOR SERVICE CENTRE
 
 The Investor Service Centre (ISC) of your Company, backed by
 state-of-the-art infrastructure and experienced team of professionals,
 caters to the increasing expectations of investors by keeping its
 services contemporary and efficient.
 
 ISC achieved the highest 'Level 5' rating for the sixth consecutive
 year, accorded by Messrs. Det Norske Veritas – a testimony to the
 excellence achieved by ISC in providing quality investor services.
 
 RELATED PARTY TRANSACTIONS
 
 All contracts or arrangements with related parties, entered into or
 modified during the financial year, were on an arm's length basis and
 in the ordinary course of business.  All such contracts or arrangements
 have been approved by the Audit Committee. No material contracts or
 arrangements with related parties were entered into during the year
 under review. Accordingly, no transactions are being reported in Form
 No. AOC-2 in terms of Section 134 of the Act read with Rule 8 of the
 Companies (Accounts) Rules, 2014.
 
 Your Company's Policy on Related Party Transactions, as adopted by your
 Board, can be accessed on the corporate website at
 http://www.itcportal.com/about- itc/policies/policy-on-rpt.aspx.
 
 DIRECTORS' RESPONSIBILITY STATEMENT
 
 As required under Section 134 of the Companies Act, 2013, your
 Directors confirm having:
 
 a) followed in the preparation of the Annual Accounts, the applicable
 accounting standards with proper explanation relating to material
 departures if any;
 
 b) selected such accounting policies and applied them consistently and
 made judgements and estimates that are reasonable and prudent so as to
 give a true and fair view of the state of affairs of your Company at
 the end of the financial year and of the profit of your Company for
 that period;
 
 c) taken proper and sufficient care for the maintenance of adequate
 accounting records in accordance with the provisions of the Companies
 Act, 2013 for safeguarding the assets of your Company and for
 preventing and detecting fraud and other irregularities;
 
 d) prepared the Annual Accounts on a going concern basis;
 
 e) laid down internal financial controls to be followed by your Company
 and that such internal financial controls are adequate and were
 operating effectively; and
 
 f) devised proper systems to ensure compliance with the provisions of
 all applicable laws and that such systems were adequate and operating
 effectively.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 Your Company's Board of Directors is responsible for the preparation of
 the consolidated financial statements of your Company, its
 Subsidiaries, Associates and Joint Venture entities ('the Group'), in
 terms of the requirements of the Companies Act, 2013 and in accordance
 with the accounting principles generally accepted in India, including
 the Accounting Standards specified under Section 133 of the Act, read
 with Rule 7 of the Companies (Accounts) Rules, 2014.
 
 The respective Board of Directors of the companies included in the
 Group and of its associates and joint venture entities are responsible
 for maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Group and for
 preventing and detecting frauds and other irregularities; the selection
 and application of appropriate accounting policies; making judgments
 and estimates that are reasonable and prudent; and the design,
 implementation and maintenance of adequate internal financial controls,
 that were operating effectively for ensuring the accuracy and
 completeness of the accounting records, relevant to the preparation and
 presentation of the financial statements that give a true and fair view
 and are free from material misstatement, whether due to fraud or error,
 which have been used for the purpose of preparation of the consolidated
 financial statements by the Directors of your Company, as aforestated.
 
 OTHER INFORMATION
 
 Compliance with Clause 49 of the Listing Agreement - Corporate
 Governance
 
 The certificate of the Auditors, Messrs. Deloitte Haskins & Sells,
 confirming compliance of conditions of Corporate Governance as
 stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchanges in India, is annexed.
 
 Compliance with requirements relating to downstream investments
 
 Your Company's Auditors, Messrs. Deloitte Haskins & Sells, have
 certified that the Company and its subsidiaries are in compliance with
 the requirements relating to downstream investment as laid down in the
 Foreign Exchange Management (Transfer or Issue of Security by a Person
 Resident outside India) (Ninth Amendment) Regulations, 2013 and other
 applicable FEMA Regulations.
 
 Going concern status
 
 There is no significant or material order passed during the year by any
 regulator, court or tribunal impacting the going concern status of the
 Company or its future operations.
 
 Extracts of Annual Return
 
 The information required under Section 134 of the Act read with Rule 12
 of the Companies (Management and Administration) Rules, 2014, is
 annexed.
 
 Particulars of loans, guarantees or investments
 
 Details of Loans, Guarantees and Investments covered under the
 provisions of Section 186 of the Companies Act, 2013 are provided in
 Notes 11, 12, 13, 17 and 31 (iv) (a) (ii) to the Financial Statements.
 
 Particulars relating to Conservation of Energy and Technology
 Absorption
 
 Particulars as required under Section 134 of the Companies Act, 2013
 relating to Conservation of Energy and Technology Absorption are also
 provided in the Annexure to this Report.
 
 Employees
 
 The total number of employees as on 31st March, 2015 stood at 25787.
 
 There were 143 employees, who were employed throughout the year and
 were in receipt of remuneration aggregating Rs. 60 lakhs or more or were
 employed for part of the year and were in receipt of remuneration
 aggregating Rs. 5 lakhs per month or more during the financial year ended
 31st March, 2015. The information required under Section 197(12) of the
 Companies Act, 2013 and the Companies (Appointment and Remuneration of
 Managerial Personnel) Rules, 2014 is provided in the Annexure forming
 part of this Report.
 
 FORWARD-LOOKING STATEMENTS
 
 This Report contains forward-looking statements that involve risks and
 uncertainties. When used in this Report, the words 'anticipate',
 'believe', 'estimate', 'expect', 'intend', 'will' and other similar
 expressions as they relate to the Company and/or its businesses are
 intended to identify such forward-looking statements. The Company
 undertakes no obligation to publicly update or revise any
 forward-looking statements, whether as a result of new information,
 future events, or otherwise. Actual results, performances or
 achievements could differ materially from those expressed or implied in
 such forward-looking statements. Readers are cautioned not to place
 undue reliance on these forward-looking statements that speak only as
 of their dates. This Report should be read in conjunction with the
 financial statements included herein and the notes thereto.
 
 CONCLUSION
 
 Your Company's Board and employees are inspired by the Vision of
 sustaining ITC's position as one of India's most admired and valuable
 companies, creating enduring value for all stakeholders, including the
 shareholders and the Indian society. The vision of enlarging your
 Company's contribution to the Indian economy is inspired by its 'Let's
 Put India First' credo as well as the core values of Trusteeship,
 Transparency, Empowerment, Accountability and Ethical Citizenship,
 which are the cornerstones of ITC's Corporate Governance philosophy.
 
 The Directors and employees look forward to the future with confidence,
 powered by your Company's world- class brands, spirit of innovation,
 focus on game changing R&D, strong rural linkages that have earned the
 trust of millions of farmers, unique strengths in trade marketing &
 distribution, world-class manufacturing, superior service delivery and
 its track record as a global exemplar in sustainable business
 practices.
 
 
                                       On behalf of the Board
 
 22nd May, 2015                               Y. C. DEVESHWAR 
                                                     Chairman
 
 Kolkata
 
 India                                            K. N. GRANT  
                                                     Director
Source : Dion Global Solutions Limited
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