To The Members
The Company posted another year of strong performance across all
financial parameters, leveraging its corporate strategy of creating
multiple drivers of growth. This performance is even more encouraging
when viewed against the backdrop of the extremely challenging business
context in which it was achieved, namely, the continued economic
slowdown, steep increase in taxes /duties on Cigarettes, gestation
costs relating to the new FMCG businesses and recent investments in the
Paperboards, Paper and Packaging and Hotels businesses.
Gross Revenue for the year grew by 19.9% to Rs. 41809.82 crores. Net
Revenue at Rs. 29605.58 crores grew by 19.4% primarily driven by a
26.4% growth in the non-cigarette FMCG segment, 26.4% growth in Agri
business segment and 13.4% growth in the Cigarettes segment. Profit
before tax increased by 20.1% to Rs. 10684.18 crores while Net Profits
at Rs. 7418.39 crores registered a growth of 20.4%. Earnings Per Share
for the year stands at Rs. 9.45 (previous year Rs. 7.93). Cash flows
from Operations aggregated Rs. 9596.24 crores compared to Rs. 8333.56
crores in the previous year.
Continuing with your Companys chosen strategy of creating multiple
drivers of growth, your Company is today, the leading FMCG marketer in
India, a trailblazer in green hoteliering and the second largest
Hotel chain in India, the clear market leader in the Indian Paperboard
and Packaging industry and the countrys foremost Agri business
player. Your Companys wholly-owned subsidiary, ITC Infotech India
Limited, is one of Indias fast growing Information Technology
companies in the mid-tier segment. Your Company is one of Indias
most admired and valuable corporations with a current market
capitalisation of over Rs. 260000 crores and has consistently featured
amongst the top 10 private sector companies in terms of market
capitalisation and profits.
Additionally, over the last 17 years, your Companys Net Revenue and
Net Profit recorded an impressive compound growth of 15.6% and 21.8%
per annum respectively. During this period, Return on Capital Employed
improved substantially from 28.4% to 45.7% while Total Shareholder
Returns, measured in terms of increase in market capitalisation and
dividends, grew at a compound annual growth rate of over 26%, placing
your Company amongst the foremost in the country in terms of efficiency
of servicing financial capital.
Such an impressive performance track record, delivered consistently
over a long period of time, won global recognition during the year with
the Harvard Business Review ranking your Companys Chairman Mr.
Y.C.Deveshwar - under whose stewardship this was achieved - as the 7th
best performing CEO in the world.
Your Directors are pleased to recommend a Dividend of Rs. 5.25 per
share (previous year Rs. 4.50 per share) for the year ended 31st March,
2013. Total cash outflow in this regard will be Rs. 4853.49 crores
(previous year Rs. 4089.04 crores) including Dividend Distribution Tax
of Rs. 705.03 crores (previous year Rs. 570.75 crores).
Your Board further recommends a transfer to General Reserve of Rs.
750.00 crores (previous year Rs. 650.00 crores). Consequently, your
Board recommends leaving a surplus in Statement of Profit and Loss of
Rs. 3788.10 crores (previous year Rs. 1972.59 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 groups contribution to foreign exchange earnings over the last
ten years amounted to nearly US$ 5.4 billion, of which agri exports
constituted 56%. Earnings from agri exports, which effectively link
small farmers with international markets, are an indicator of your
Companys contribution to the rural economy.
During the financial year 2012-13, your Company and its subsidiaries
earned Rs. 4388 crores in foreign exchange. The direct foreign
exchange earned by your Company amounted to Rs. 3807 crores, mainly on
account of exports of agri-commodities. Your Companys expenditure in
foreign currency amounted to Rs. 1966 crores, comprising purchase of
raw materials, spares and other expenses of Rs. 1345 crores and import
of capital goods at Rs. 621 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 2013 2012
a) Profit Before Tax 10684.18 8897.53
b) Tax Expense
- Current Tax 2934.79 2664.29
- Deferred Tax 331.00 70.87
c) Profit for the year 7418.39 6162.37
SURPLUS IN STATEMENT OF PROFIT AND LOSS
a) At the beginning of the year 1972.59 548.67
b) Add : Profit for the year 7418.39 6162.37
-Transfer to General Reserve 750.00 650.00
- Proposed Dividend for the financial
- Ordinary Dividend of Rs. 5.25 per
ordinary share of Rs. 1/- each
(previous year Rs. 4.50 per share) 4148.46 3518.29
- Income Tax on Proposed Dividends
- Current Year 705.03 570.75
- Earlier years provision no (0.61) (0.59)
d) At the end of the year 3788.10 1972.59
BUSINESS SEGMENTS A. FAST MOVING CONSUMER GOODS FMCG - Cigarettes
Discriminatory and punitive taxation coupled with a growing incidence
of smuggling and illegal manufacture are the biggest challenges
confronted by the domestic cigarette industry. These challenges were
further compounded during the year by the steep increase of 22% in
cigarette Excise Duty rates announced in the Union Budget 2012 and the
arbitrary increases in Value Added Tax (VAT) on cigarettes by some
States. Such increases not only undermine the legal domestic cigarette
industry and sub-optimise revenue potential from this sector but also
fail to achieve the objective of tobacco control in the country.
The pattern of tobacco consumption in India is unique and is dominated
by non-cigarette products which are not only cheaper but also revenue
inefficient. With over 17% of the world population, India has a
miniscule share of only 1.8% of global cigarette consumption but
accounts for about 90% of the global consumption of smokeless tobacco.
According to the Global Adult Tobacco Survey, 2010 conducted by
Ministry of Health and Family Welfare, Government of India, while 34.6%
of all adults in India use tobacco in some form, only 5.7% of the adult
population consume cigarettes. It is also pertinent to note that while
cigarettes account for less than 15% of the overall tobacco consumption
(by weight) in the country, they contribute about 75% of the total tax
revenue from the tobacco sector accruing to the exchequer. In contrast,
other forms of tobacco are lightly taxed in India, and in some cases
are even tax exempt, leading to a high degree of potential tax loss.
According to various independent reports, there is a high degree of
dual consumption with an estimated 60% of cigarette consumers in India
also consuming other forms of tobacco. The high incidence of taxation
on cigarettes coupled with a large differential in Excise Duty rates
between cigarettes and other tobacco products has rendered the demand
for cigarettes highly price elastic and are driving consumers to shift
to cheaper and revenue-inefficient forms of tobacco leading to
sub-optimal revenue collections. The fact that cigarette consumption is
price elastic, while consumption of tobacco per se is not, is borne out
by the fact that the total tobacco consumption in the country increased
from 406 million kg in 1981-82 to 475 million kg in 2010-11 even as the
tobacco consumption in the form of cigarettes declined from 86 million
kg to 72 million kg during the same period. Thus, while overall tobacco
consumption is increasing in India, the share of cigarettes in overall
tobacco consumption has declined from 21% to 15%.
In fact, Indias annual per capita consumption of cigarettes is amongst
the lowest in the world.
The requirement therefore is an India-centric tax and policy framework
for tobacco that cognises for the unique consumption pattern in the
A cross-country study of cigarette prices and affordability based on
evidence from the Global Adult Tobacco Survey, and published in Tobacco
Control (British Medical Journal), found that the price of cigarettes
was the highest in India relative to its income (in terms of Purchasing
Interestingly, the Study also established the fact that bidis in India
were extremely affordable with a large price differential of more than
8 times as compared to cigarettes on account of the high levels of
taxation on cigarettes. At 2.25% of per capita GDP, cigarette taxes
(per 1000 cigarettes in most popular price category) in India are the
highest in the world. In comparison, tax incidence on cigarettes (per
1000 cigarettes in most popular price category) as a percentage of per
capita GDP in other countries such as Japan (0.37%), Germany (0.62%),
China (0.81%), Pakistan (0.85%), Thailand (1.20%) is much lower. Such
high taxes make cigarettes unaffordable to a large number of consumers.
The policy of high taxation narrowly focused on cigarettes has also led
to the rapid growth of the illegal cigarettes segment. This segment has
grown exponentially from 11 billion sticks in 2004 to 22 billion sticks
in 2012, of which, 2 billion sticks have been added in the last one
year alone. The illegal segment now accounts for 18% of cigarette trade
and India is now the 5th largest market in the world for illegal
cigarettes comprising smuggled foreign as well as domestic duty-evaded
cigarettes. Most of these illegal regular sized filter cigarettes are
offered to consumers at a convenient and low price of Rs. 1 per stick.
Such low consumer prices are feasible only if taxes are evaded, as the
Excise Duty component alone on a regular size filter cigarette is
significantly higher than the price point.
Increasing volumes of smuggled foreign cigarettes also result in the
decline in demand for Indian tobaccos since these cigarettes do not use
any tobacco grown by Indian farmers. On the other hand, illegal
cigarettes produced in India, use tobacco of dubious and inferior
quality. Consequently, the proliferation of duty-evaded cigarettes
leads to a drop in demand for high quality Indian tobaccos thereby
adversely impacting the incomes of farmers engaged in the cultivation
of tobacco in the country.
In addition, various media reports have highlighted the link between
cigarette smuggling and organised criminal syndicates as well as
terrorist organisations, which utilise the funds for anti-social and
unlawful activities. If not reined in quickly, illegal cigarette trade
has the potential of destroying the countrys social fabric.
The introduction of a new segment of filter cigarettes of length not
exceeding 65 mm announced in the Union Budget 2012, was a positive step
towards arresting the growth of illegal cigarette trade. The industry
has responded swiftly making significant investments and launched
several offerings in the new segment. While initial response from the
market has been encouraging, the high central Excise Duty rate of Rs.
689 per thousand cigarettes applicable to this segment coupled with a
steep increase in the rate and incidence of VAT, have made it difficult
for the legitimate industry to fully counter the menace of illegal
An appropriate policy framework will enable the domestic legal
cigarette industry to offer viable products at competitive price points
to consumers. It is a well-established principle of fiscal policy that
moderate taxes enable widening of the tax base and higher compliance
leading to enhanced buoyancy in tax collection. Your Company along with
other stakeholders and industry bodies will continue to engage with
relevant authorities to ensure the implementation of a pragmatic and
equitable tax policy for the tobacco industry.
The imposition of discriminatory and punitive VAT rates by some States
provides an attractive tax arbitrage opportunity resulting in illegal
inter-State diversion of stocks by criminal elements thus depriving the
State Governments of their legitimate revenue share. Punitive tax rates
on cigarettes have proved detrimental to revenue collection and have
led to multi-fold increase in illegal trade of cigarettes without any
visible decrease in overall tobacco consumption.
Till the introduction of VAT in 2007, cigarettes were subject to single
point taxation by the Central Government. As per the provisions of
Additional Excise Duty (Goods of Special Importance) Act, 1957, apart
from Basic Excise Duty, tobacco products were subject to an Additional
Excise Duty (AED) in lieu of State level taxation. The proceeds from
this component were exclusively distributed among States.
For a revenue sensitive product like cigarettes, a revenue efficient
single point taxation system would provide the highest levels of
certainty in tax collection. In addition, it would help in removing
inter-State trade distortions and barriers and is aligned to the
principles of the proposed National Competition Policy which seeks to
create a single unified national market. Several expert committees such
as the Taxation Reform Committee headed by Dr. Raja Chelliah and
Indirect Tax Reform Committee headed by Dr. Vijay Kelkar have
recommended the single point taxation model for cigarettes.
If State level taxation of cigarettes needs to continue, it would be
appropriate to implement and adhere to the original principle
enunciated by the Empowered Committee of State Finance Ministers on VAT
where all goods (other than goods that were exempt or subjected to
concessional rate) were to be taxed at a common Revenue Neutral Rate.
Going forward, the implementation of the proposed Goods and Service Tax
(GST) should ensure that revenue sensitive goods like cigarettes are
subjected to uniform standard rate of tax applicable to general
category of goods. The combined incidence of Excise Duty and GST should
be revenue neutral i.e. maintained at current levels.
Despite such a challenging business scenario, your Company has
successfully enhanced its market standing through robust strategies and
excellence in execution. Your Company will continue to invest in
development of products that are best-in-class and offer superior
and differentiated value propositions to consumers.
As part of its efforts to continuously ensure product integrity and
consistently deliver superior quality, your Company has deployed
advanced tools like Six Sigma and template based quality
predictor systems. Modernisation of the factory in Kolkata is also at
an advanced stage and is expected to be completed during 2013-14.
With the long-term objective of enhancing skill availability, your
Company has established an in-house technical training centre in
collaboration with experts in the field of technical education. The
first batch of trainees has commenced training at the centre during the
This intervention is expected to create a ready pool of technical
talent for your Companys operations in the years to come.
In line with your Companys pursuit of proactive employee relations
management, Long Term Agreements were successfully concluded at the
Bengaluru and Kolkata factories during the year. Systemic improvements
were made in the areas such as grievance resolution and better work
practices were introduced in the factories to ensure harmonious and
Your Companys relentless focus on Safety, Health and Sustainability in
its operations led to several recognitions during the year. Your
Companys Bengaluru, Saharanpur, Kolkata and Ranjangaon factories have
received the British Safety Councils Sword of Honour award.
The Munger factory received the Shreshta Suraksha Puraskar from the
National Safety Council of India, Mumbai. The Bengaluru factory was
conferred the award for Industrial Water Efficiency at the
prestigious Federation of Indian Chambers of Commerce and Industry
(FICCI) Water Awards. The Munger factory also received the Energy
Efficient Unit award for excellence in energy management from the
Confederation of Indian Industry (CII).
Your Company is committed to the socio-economic upliftment of the
farming community through various Social Investments / Corporate Social
Responsibility programmes primarily in the economic vicinity of its
operations towards making a meaningful contribution to sustainable and
inclusive growth. Fragmented land holding, poor infrastructure,
restricted access to scientific knowledge and endemic inefficiencies of
the market have engulfed the farmers in a vicious cycle of low risk
taking ability, low productivity and low margins. To address some of
these challenges confronted by the farming community, your Company has
been involved in the creation of on and off-farm sustainable livelihood
opportunities which empower stakeholder communities to conserve and
manage their resources. A recent initiative in this direction has been
the dairy development programme in Munger, Bihar. This initiative
focuses on enhancing milk production in the area, increasing
productivity by adopting scientific techniques and ensuring
remunerative prices to farmers by creating marketing opportunities for
milk and milk products. A total of 87 Milk Producer Groups (MPGs) with
over 2,800 members were involved in the initiative during the year. The
dairy development programme also delivers a comprehensive package of
extension services such as veterinary care, breeding, supply of quality
cattle feed and feed supplement, fodder propagation and training to
The pilot has been well received by the community in Munger. In order
to scale-up the Dairy initiative, your Company is in the process of
setting up a state-of-the- art Milk Processing Plant at Munger with a
capacity to handle upto 2 lakh litres of milk per day.
With steep Excise Duty hikes, discriminatory VAT taxes by various
States, rising illegal trade and heightened competitive intensity, the
year ahead will indeed be challenging. To serve the interests of all
stakeholders, your Company, will continue to engage with policy makers
for a balanced regulatory and fiscal framework for tobacco, equitable
and harmonious VAT rates across States and implementation of a uniform
Your Company remains confident that despite the severe pressures, its
robust product portfolio, world-class quality, innovation in processes
and investments in cutting-edge technology and superior execution of
competitive strategies will enable it to sustain and reinforce its
market standing in the years to come.
FMCG - Others
The size of the Indian FMCG industry is estimated at around Rs. 250000
crores representing nearly 2.5% of the countrys GDP. The industry has
tripled in size over the last 10 years and has grown at approximately
17% CAGR in the last 5 years driven by rising income levels, increasing
urbanisation, strong rural demand and favourable demographic trends.
These growth drivers, coupled with the low levels of penetration and
per capita usage in India, are expected to result in robust industry
growth in excess of 15% per annum over the medium-term.
Your Company continues to rapidly scale up its new FMCG businesses
leveraging its institutional strengths viz. deep consumer insight,
proven brand building capability, a deep & wide distribution network,
strong rural & agri-sourcing linkages, paper and packaging expertise
and cuisine knowledge.
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, crossing Rs. 7000 crores
mark during the year. Your Companys new FMCG businesses have been
rated to be the fastest growing among top consumer goods companies
operating in India as per a recent Nielsen report.
Within a relatively short span of time, your Company has established
several vibrant consumer brands such as Aashirvaad,
Sunfeast, Bingo!, Yippee!, Candyman,
mint-o, Kitchens of India in the Branded Packaged Foods
space; Essenza Di Wills, Fiama Di Wills, Vivel and
Superia in the Personal Care products segment; Classmate
and Paperkraft in Education & Stationery products market;
Wills Lifestyle and John Players in the Lifestyle Retailing
business; Mangaldeep in Agarbattis, Aim in Matches and so
on. In terms of annualised consumer spend, Aashirvaad and Sunfeast are
today over Rs. 2000 crores each, Classmate at around Rs. 1000 crores
while Bingo!, Candyman and Vivel are more than Rs. 500 crores each.
These world-class Indian brands, which continue to gain increasing
consumer franchise, support the competitiveness of domestic value
chains of which they are a part and create and retain value within the
The year under review saw a 26.5% growth in Segment Revenues and a
significant improvement in profitability as reflected by the positive
swing of Rs. 114 crores at the PBIT level. Segment Results reflect the
gestation costs of these businesses largely comprising costs associated
with brand building, product development, R&D and infrastructure
Your Companys relentless focus on quality, innovation and
differentiation backed by deep consumer insights, world-class R&D and
an efficient and responsive supply chain will further strengthen its
leadership position in the Indian FMCG industry.
Highlights of progress in each category are set out below.
Branded Packaged Foods Businesses
Your Companys Branded Packaged Foods businesses continued on a high
growth trajectory recording impressive growth in market shares and
enhanced market standing across segments. The businesses accelerated
investments in distributed capacities and capabilities to meet
anticipated growth and develop a differentiated and distinctive range
of products. Significant investments in R&D and product development
coupled with deep consumer insight have enabled launch of successful
innovative products catering to the varied regional tastes and
preferences of consumers across the country. Your Companys products
continue to be best-in-class in terms of product quality.
During the year, the Branded Packaged Foods businesses had to contend
with high levels of input costs. Global demand-supply dynamics, policy
uncertainties and adverse currency movement led to steep hike in prices
of key commodities such as wheat, maida, edible oils, packaging
material and industrial fuels particularly during the first half of the
These cost pressures were however mitigated through a combination of
improvements in product and process efficiencies, smart sourcing and
supply chain initiatives.
In the Bakery and Confectionery Foods business, the Biscuits and
Confectionery categories gained significant scale and market standing
during the year. Sunfeast biscuits sustained its robust growth
trajectory, especially at the value-added and premium end. Product
range stood significantly augmented with the launch of several
first-to-market variants including Dark Fantasy Choco Fills -
Coffee, Dark Fantasy Choco Meltz, Butterscotch Zing,
Kaju Badam Cookies. During the year, the brand emerged as the
clear market leader in the highly competitive premium cream biscuits
segment. In the Confectionery category, Candyman and
mint-o continued to register strong growth during the year. The
business launched Creme Lacto and mint-o Ultramintz - a
sugar-free extra-strong mint in select markets. These products have met
with encouraging consumer response.
In the Snack Foods business, your Company continued to enhance market
standing and expand scale in the fast growing Savoury Snacks, Noodles
and Pasta categories. In the Savoury Snacks category, the market
standing of your Companys Bingo! brand has significantly
improved, leveraging an innovative product range, enhanced brand
building efforts, use of digital media to spur word-of-mouth and
clutter-breaking advertising campaigns. Your Companys
new-to-market format of Snacks, Bingo! Tangles, has been
well received in target markets and is gaining impressive consumer
traction. In the Instant Noodles and Pasta category, your Companys
brand Sunfeast Yippee! has been well received by consumers and is
the second largest brand in the market. Focused market research, deep
consumer insights and innovative product formats under the Sunfeast
Yippee! brand are expected to further strengthen consumer franchise
in this fast growing and highly competitive category.
In the Staples, Spices and Ready to Eat Foods business, your
Companys Staples and Ready to Eat categories continued to grow
rapidly. In the Staples category, Aashirvaad atta consolidated
its leadership position aided by the strong performance of Aashirvaad
Multi-grain atta. The premium Multi-grain and Select
variants continued to grow rapidly with an increasing proportion of
consumers shifting to these value-added offerings.
The Branded Packaged Foods businesses continue to invest in
manufacturing and distribution infrastructure to support larger scale
in view of the growing demand for their products and maximise the
benefits of distributed manufacture for efficient servicing of proximal
Buoyed by increasing consumer franchise for your Companys brands, it
is expected that the accelerated growth of the Branded Packaged Foods
businesses will be sustained in the years ahead. Your Company will
continue to rapidly scale-up the Branded Packaged Foods businesses
drawing upon the agri-sourcing strength of the e-Choupals, in-house
cuisine knowledge, product development capabilities, packaging
expertise and branding, sales & distribution competencies to establish
itself as the most trusted provider of food products in the Indian
Personal Care Products
Your Companys Personal Care Products business continued to gain
consumer franchise during the year aided by a slew of new product
launches in the Personal Wash, Skin Care, Face Wash and Deodorants
categories. The business continues to leverage the umbrella brands,
namely, Essenza Di Wills, Fiama Di Wills, Vivel and
Superia and is focused on addressing various consumer benefits
with the introduction of new variants.
The launch of the Couture Spa range of soaps under the Fiama
Di Wills brand was one of the key interventions during the year. The
signature series, created in alliance with fashion guru Wendell
Rodricks, provides consumers an invigorating bathing experience. The
business also launched a Collectors Edition soap series in
association with the Lonely Planet Magazine under the Fiama Di Wills
Mens range. The six exciting Collectors Edition packs are
inspired by various water sports and destinations renowned for
rejuvenating and revitalizing experiences, in line with the brands
value proposition of rejuvenation. The year also marked your
Companys foray into the high growth Deodorants market with the
launch of Aqua Pulse Deodorant Spray under the Fiama Di Wills
Men franchise. The Skin Care range was also expanded during the year
with the launch of Vivel Cell Renew Body Lotion, Hand Creme /
Moisturizer and Vivel Perfect Glow Skin Toner in target markets.
The new product launches have received encouraging consumer response.
The business continues to increasingly leverage Laboratoire
Naturel - the state-of-the-art consumer and product interaction
centre located in Bengaluru - to connect the R&D and brand teams to the
Indian consumer with a view to launching products with unique and
differentiated benefits. As in previous years, in recognition of
excellence in product quality and innovation, two of your Companys
products - Fiama Di Wills Men Aqua Pulse De-Stressing & Brightening
Face Wash, and Vivel Cell Renew Fortify & Repair Moisturiser -
were voted Product of the Year in their respective categories.
Innovative consumer engagement continues to be at the centre of your
Companys personal care strategy. Several new initiatives such as
launch of the Couture Spa gel bathing bar, and a unique consumer
engagement programme - christened The Fabulous Hair Show - were
undertaken during the year. Your Company is at the forefront of
leveraging new age media for enhanced consumer engagement pioneering
campaigns such as Fiama Di Wills Men website launch via Google+
Hangout and Fiama Di Wills Men - Face of the Year campaign, to
name a few. A greater presence of your Companys brands on
traditional as well as digital media, direct consumer interaction
initiatives, and improved market presence contributed to your
Companys products being tried by over 7 crore households during the
year (as per IMRB Household Panel survey - January 2013). In addition,
Vivel was voted as one of the Top 5 Most Exciting Brands in
Personal Care in India by Brand Equity and Nielsens Annual Survey
for Most Exciting Brands.
Your Companys Personal Care Products business continued to grow at a
fast clip, distinctly ahead of industry despite competitive pressures
from entrenched players. This was achieved through a combination of
innovative and differentiated offers and by leveraging the distribution
network of your Company to reach target consumers.
Input materials, especially palm oil, witnessed significant levels of
price volatility during the year. The depreciation of the Indian Rupee
against the US Dollar added to inflationary pressure on other input
materials for a major part of the year. The business managed its raw
material costs effectively by adopting a proactive sourcing strategy
based on deep understanding of market trends, developing alternate
sources of supply, leveraging enhanced scale of operations and prudent
The Personal Care industry in India continues to be on a long-term
growth path driven by rising disposable incomes and changing consumer
preference for enhanced personal grooming. Your Company is well poised
to seize the emerging opportunities in this rapidly evolving industry
and continues to invest in creation of vibrant brands, cutting-edge
products, flexible and responsive manufacturing and supply chain
operations, and development of high quality human capital to build
sustainable competitive advantage.
Education & Stationery Products
The Stationery business recorded robust growth in revenues during the
year, consolidating your Companys position as the leading and
fastest growing player in the Indian Stationery market. Your
Companys flagship brands - Classmate for the student community
and Paperkraft for office and executive requirements - continue
to gain increasing consumer franchise.
Continuing investments in a superior product range, effective consumer
engagement and an efficient and responsive supply chain network has
enabled Classmate gain significant market share. During the year, brand
Classmate was strengthened through a series of interventions resulting
in improvement in brand health and market standing. A new television
commercial backed by on-ground activation and social media inputs,
repositioned Classmate as a brand that celebrates the uniqueness in
every child. The business also made good progress during the year in
the non-paper categories comprising pens, wood-cased & mechanical pens,
mathematical instruments, art stationery & scholastic products. Such
complementary products are helping position Classmate as a complete
student stationery brand.
Your Companys Social Investments Programme in primary education,
that has cumulatively benefited over 300,000 children, is showcased on
the back cover of every Classmate notebook. The Classmate notebook is
itself an embodiment of the environmental capital built by your Company
in its paper business. While the cover is made from recycled board
sourced from your Companys Forest Stewardship Council (FSC)
certified Kovai mill, the inner pages are made from virgin pulp sourced
from your Companys social & farm forestry programme that has greened
over 142,000 hectares - including substantial tracts of private waste
lands belonging to poor tribals and marginal farmers - and provided 64
million person days of employment. Further, used notebooks are
collected from schools in the catchment areas of your Companys paper
mill under the Wealth Out of Waste (WOW) programme where they are
converted to recycled board. This sets in motion a virtuous cycle that
continuously re-generates environmental capital. Additionally, the
collaborative supply chain established by the business comprising 800
customers and 30 outsourced manufacturers provides indirect employment
to over 5,000 people. The small-scale manufacturers, with support from
your Company, have built impressive quality and delivery capability,
resulting in a majority of them being certified to ISO 9001:2008
The education & stationery products industry is poised for exponential
growth driven by large investments in the education sector, growing
literacy and the increasing scale of government initiatives in
education. Your Company with its collaborative linkages with small &
medium enterprises and a strong product portfolio of notebooks &
writing instruments, is well poised to strengthen its leadership
position in the Indian stationery market.
During the year, your Companys Lifestyle Retailing business posted
high growth in revenues and continued to strengthen its position in the
branded apparel market. While revenue growth was impacted in the
initial part of the year due to weak consumer sentiment, there was a
marked improvement as the year progressed. The restoration of
exemption of excise duty on branded readymade garments as announced in
the Union Budget 2013, is expected to provide the much needed impetus
for the industry.
In the Premium segment, Wills Lifestyle further strengthened its
consumer franchise on the back of significant improvements in product
variety, enhanced availability and impactful visibility. The retail
footprint of the brand was expanded to 90 Exclusive stores across 40
cities and more than 500 shop-in-shops in leading departmental
stores and multi-brand outlets. During the year, the premium imagery of
the brand was reinforced through the association with Wills
Lifestyle India Fashion Week, the countrys most prestigious fashion &
With the addition of a boutique store at the ITC Grand Chola, the brand
is now available in five ITC Hotels, thereby enhancing brand
availability to high-end business and leisure travellers. The Club
ITC loyalty program, with over 1 lakh members, leveraged synergies
between Wills Lifestyle and ITC Hotels to target and strengthen bonding
with the premium consumer.
Product appeal was enhanced through the introduction of differentiated
offerings across several premium product platforms. The Wills Classic
formal range now offers Wonderpress wrinkle-free shirts,
Regalia superfine fabrics, premium Ecostyle organic collection
and Creme de Cotton supersoft cottons. The Luxuria range of
high-end formals with luxurious fabrics and superior craftsmanship
continued to receive positive consumer response. The Wills Sport range,
with its vibrant and fashionable portfolio, strengthened its appeal
amongst the youth segment, widening the consumer franchise. The
Womens offering witnessed strong growth energised by an extensive
high-end range, stylised formals, trendy silhouettes and premium
accessories. The exclusive designer-wear offering, Wills Signature,
co-created with Indias leading designers, was strengthened with the
launch of Ritu Kumar creations, adding to the product equity.
In the Youth segment, John Players has established a strong
pan-India presence with availability in over 350 stores and 1,400
multi-brand outlets and departmental stores. Brand reach was further
augmented during the year with the launch of nearly 100 stores,
penetrating more markets and acquiring new franchise. The casual
portfolio registered strong growth as a result of an enhanced range,
premium differentiated washes and contemporary fits. The John Players
Jeans brand strengthened its positioning as a vibrant and fashionable
denim offering with impactful communication and the launch of exclusive
John Players Jeans stores and improved availability through
shop-in-shops. Social media and e-commerce platforms were activated to
engage with the youth and expand reach to new consumers seeking
Product portfolio was strengthened with new designs in the core range
and region-specific collections, robust replenishment infrastructure
and processes. During the year, the business operationalised its new
state-of-the-art product development facility in Manesar, Haryana.
Initiatives were undertaken to enhance range vitality, supply chain
responsiveness and superior customer service for a delightful shopping
The business continued to receive industry recognition during the year.
While Wills Lifestyle was accorded
Superbrand status, John Players was rated amongst the top 10
Most Trusted Apparel Brands 2012 by The Economic Times.
The business continues to focus on enhancing the premium quotient of
its offerings and strengthen processes for creation of winning designs
and enhancing supply chain responsiveness on the basis of a deep
understanding of consumer preferences.
Safety Matches and Incense sticks (Agarbattis)
The Agarbatti category recorded an impressive growth in revenues well
ahead of the industry, driven by increasing consumer franchise for the
Mangaldeep brand and enhanced distribution reach. Product
portfolio was augmented during the year with the launch of variants
such as Fragrance of Temple series and Dhoop 4-in-1, under
the umbrella brand Mangaldeep.
The business maintained its market leadership in the Safety Matches
category aided by continued consumer preference for its strong brand
portfolio across all market segments.
The Matches & Agarbatti business continues to contribute to your
Companys commitment to the Triple Bottom Line supporting over
18,000 livelihoods, mainly amongst rural women. The business sources
its products from over 50 small-scale and cottage sector units as well
as womens self-help groups. It continues to provide support to such
units through the introduction of scientific methods to enhance
productivity and product quality. Business initiatives of introducing
enabling tools and technology in the rural communities continue to
enhance product quality and increase the earning potential of agarbatti
rollers. These initiatives, along with the continuing association with
various State Governments for setting up sourcing centres, are creating
sustainable livelihood opportunities for rural women through agarbatti
rolling. Your Company continues to partner the small-scale sector by
sourcing a significant portion of its Safety Matches requirement from
multiple units in this sector. Your Company is helping improve the
competitive ability of these units by providing technical inputs
towards strengthening systems and processes.
While the manufacture of Agarbattis is reserved for the small-scale &
cottage sector in India considering its importance in employment
generation, imports of raw battis (the principal raw material) are
freely 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
The domestic tourism industry remained sluggish during the year in the
backdrop of a weak global and domestic economic environment. While
growth in foreign tourist arrivals slowed down to 2.8% during the year
versus 9.9% in 2011-12, domestic air travel recorded de-growth.
Industry performance was also affected due to the significant increase
in room inventory in some of the key domestic markets.
Such a challenging business environment adversely impacted business
performance leading to a muted growth in Segment Revenues during the
year. While your Companys Hotels business maintained its leadership
position in terms of operating margins, Segment Results were adversely
impacted largely by the relatively weak pricing scenario and the
gestation costs relating to ITC Grand Chola, which commenced operations
in September 2012.
Your Companys Hotels business continues to be rated amongst the
fastest growing hospitality chains with 93 properties at 64 locations
in India operating under 4 brands - ITC Hotel at the luxury end,
WelcomHotel in the 5 star segment, Fortune in the mid
market to upscale segment and WelcomHeritage in the heritage
leisure segment. In addition, the business has licensing and
franchising agreements for two brands - The Luxury Collection and
Sheraton with the Starwood Hotels & Resorts.
During the year, your Company unveiled its latest offering in the super
premium segment - ITC Grand Chola in Chennai. The hotel is part of the
ITC Hotel brand and has 522 plush hotel rooms and suites, 78
service apartments, 60,000 sq. ft. of conference & banqueting
facilities, 10 Food & Beverage outlets and the award winning spa
Kaya Kalp. The hotel has achieved the distinction of being the
worlds largest Leadership in Energy and Environmental Design
(LEED) Platinum rated hotel under the New Construction category and
Indias first 5 Star Green Rating for Integrated Habitat Assessment
(GRIHA) rated luxury hotel by the Ministry of New and Renewable Energy,
thereby bolstering the unique positioning of ITC Hotels as the
greenest luxury hotel chain in the world. The Food & Beverage segment
remains a major strength of your Company and its iconic brands
Bukhara, Dum Pukht and Dakshin continue to garner coveted
international awards and accolades. Other signature F&B brands viz.
West View, Kebabs & Kurries, Edo and Pan Asian have
firmly established themselves and continue to sustain leadership
position in their respective cities. During the year, the business
launched 2 new signature F&B offerings - Ottimo and Royal Vega
- focusing on exquisite Italian cuisine and delectable vegetarian food
from the magnificent royal kitchens of India, respectively.
In line with your Companys commitment to the Triple Bottom Line,
investments have been made in renewable energy to provide clean power
to your Companys hotels in Bengaluru (ITC Windsor and ITC Gardenia),
Chennai (ITC Grand Chola), Mumbai (ITC Maratha) and Jaipur (ITC
Rajputana). With these investments, your Companys Hotels business met
over half of its energy requirements from clean and renewable sources.
During the year, the business leveraged the recently launched pan-ITC
consumer loyalty programme - Club ITC to enhance revenues. The
business seeks to position Club ITC - targeted at the premium
clientele of Wills Lifestyle and ITC Hotels - as the greenest
and most admired customer loyalty programme over the next few years.
In view of the positive long-term outlook for the Indian Hotel
industry, your Company continues to sustain its investment-led growth
strategy. Construction activity of two new luxury properties at Kolkata
and at Classic Golf Resort near Gurgaon is progressing satisfactorily.
During the year, your Company invested in a newly formed wholly-owned
subsidiary incorporated in Sri Lanka which acquired a prime plot of
land in Colombo on a 99-year lease from the Government of Sri Lanka,
for developing a mixed-use project including a 5-star luxury hotel.
Further, several new projects, including joint ventures and management
contracts, are on the anvil to rapidly scale up the business across all
The Fortune brand which caters to the mid-market to upscale
segment continued its expansion by forging new alliances, taking the
total number of hotels in its fold to 69 with an aggregate inventory of
over 5,000 rooms. Of these, 30 properties are under various stages of
development with 3 hotels slated for commissioning in the coming year.
The WelcomHeritage brand continues to be the countrys most
successful and largest chain of heritage hotels with 39 operating
properties, spread across 13 States in India.
Your Companys Hotels business, with its globally benchmarked levels of
product and service excellence and customer centricity, is well
positioned not only to sustain its leadership status in the industry,
but also emerge as the largest hotel chain in the country over the next
C. PAPERBOARDS, PAPER AND PACKAGING
During the year, the Paperboards, Paper and Packaging segment recorded
a growth of 9% in revenues aided by higher volumes and product mix
enrichment. The relatively lower growth in Segment Results during the
year, reflects the steep hike in input prices particularly of wood,
coal and chemicals.
Paperboards & Specialty Papers
Global demand for paper & paperboard de-grew by 0.5% in 2012 primarily
due to the continuing weak economic environment prevailing in Western
Europe and the US. The domestic market also recorded a slowdown with
demand decelerating to around 5.9% during 2012-13 against 6.1% in the
The global paper market continues to witness a structural shift with
emerging economies, particularly in Asia such as China and India,
driving the demand growth. While such structural shift in demand and
the relatively low levels of per capita consumption in India offers
attractive opportunities going forward, the Indian market is also
getting increasingly competitive drawing large investments especially
from global players. Though growth in demand is expected to absorb the
additional capacity, increasing market share and sustaining margins
will be a challenge in the short-term.
Further, reduction of import duties under various Regional Free Trade
Agreements especially with ASEAN is impacting the profitability of the
domestic paper industry and the economic viability of the small paper
mills. With the US and EU imposing anti-dumping duties against import
of paper / paperboards from China / Indonesia to protect their domestic
industries, the additional capacities created in these countries are
increasingly finding their way into India given the lower levels of
import duty. Clearly, there is a need to ensure that the current duty
structures are, at the very least, kept unchanged.
The domestic paperboard industry is expected to grow at around 7.5% per
annum over the medium-term. During the year, your Company consolidated
its pre-eminent position in the industry through new product launches
like Carte Lumina with best-in-class whiteness suited for
high-end FMCG and over-the-counter products and Nanobev for the
small paper cups segment. Paperboards developed for high-end cigarette
packaging needs are running seamlessly on the high speed packaging
machines at your Companys cigarette factories. The business also
strengthened its distribution network with the addition of new
distributors, authorised stockists and market development partners for
improved market servicing.
Your Company continues to focus on the value-added product segment in
which it is a clear market leader. The market for value-added
paperboard is expected to grow faster at a compound annual growth rate
of 12% driven by higher demand for branded packaged products in the
FMCG and Pharma sectors, increasing number of product categories
catering to aspirational lifestyles, higher rural demand, higher
penetration of organized retail and increasing salience of packaging in
driving brand awareness. Towards this end, your Company successfully
commissioned a state-of-the-art and highly energy efficient paper
machine with an installed capacity of over 1 lakh tonnes per annum at
the Bhadrachalam plant during the year. With this, the total capacity
of the Bhadrachalam plant stands at over 5.5 lakh tonnes per annum,
thereby sustaining its position as the single largest integrated pulp
and paperboard/paper unit in the Indian industry. Your Company has also
invested in a new 25 MW Turbine Generator and 130 tonnes per hour (TPH)
Boiler to meet the energy requirements of this expansion.
The Writing and Printing paper segment, currently estimated at
3.8 million tonnes per annum, is projected to grow at a compound annual
growth rate of around 7% over the medium term. Growth in the
value-added writing and printing paper segment will continue to be
fuelled by initiatives like Sarva Shiksha Abhiyan and Right of Children
to Free and Compulsory Education as well as by rising literacy levels,
changing demographic profiles and GDP growth. The business, with its
strong forward linkages with your Companys Education and Stationery
Products, has emerged as a leading player in this segment.
Your Company continues with its strategy of promoting social forestry
plantations for pulpwood as access to adequate supplies of pulpwood at
competitive prices remains a major challenge for the paper industry.
The industry is currently facing an acute shortage of pulpwood
especially in Andhra Pradesh, which is largely attributable to the
enhanced demand from new pulp capacities that have been set up without
adequate investments in pulpwood plantations and diversion of supplies
for alternative usage such as commercial poles, bio-fuel etc. With
demand far exceeding supplies, pulpwood procurement prices witnessed
steep hikes during the year, adversely impacting industry margins.
Your Company expects the current demand-supply skew to be corrected
over the next couple of years on the back of additional plantations by
farmers due to the prevailing remunerative price levels and renewed
efforts by pulp mills in promoting plantations in their core areas. In
the short to medium term, the business is exploring several options
including procurement of wood from other states, use of bamboo in a
limited scale etc. with a view to mitigating the cost pressure.
Your Company remains focused on promoting pulpwood plantations in its
core area of operations. During the year, the business sold /
distributed high quality saplings/seeds to farmers that enabled
planting of over 110 million saplings in 17500 hectares of plantations.
With this, your Companys bio-technology based research initiatives
have cumulatively resulted in the planting of about 656 million
saplings leading to significant wasteland development and greening of
over 142,000 hectares and generation of over 64 million person days of
employment for poor tribals and marginal farmers. With a view to
accelerating the pace of plantation activity, the business commissioned
a state-of-the-art clonal sapling production facility during the year.
The facility has a capacity to produce 25 million saplings with
improved survival rates and higher productivity and will go a long way
in supporting your Companys endeavour to augment pulpwood
Your Companys 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. Besides
securing the long-term supply of fibre at competitive costs, this
initiative also assists in generating farm incomes by utilisation of
marginal wastelands. Your Companys continued focus on clonal
plantations in core areas is expected to yield significant competitive
advantage in the years to come. Your Companys Life Sciences &
Technology team is actively collaborating with several expert agencies
to further leverage bio-technology for enhancing farm productivity,
wood yields and improving fibre and pulp properties.
Your Company continues to promote agro-forestry in pulpwood plantations
on wasteland as well as on land where mono-cropping is practised. In
Andhra Pradesh, mono-cropping is currently practised in cultivation of
cotton, tobacco, maize and pulses in more than 30 lakh hectares. During
the year under review, your Company facilitated the introduction of
agro-forestry models, in about 1,800 hectares, incorporating
inter-cropping practices where eucalyptus trees are grown adjacent to
agricultural crops. By integrating tree growing with crop production,
the problems of poor agricultural production, worsening wood shortages
and environmental degradation can be simultaneously addressed.
Furthermore, inter-cropping technologies / practices also help in
reducing the pressure on the remaining natural forests and increases
the diversity of vegetation on existing farms. Your Companys
initiatives under this model currently extend to nearly 2,500 hectares
assuring wood and food security to the farmer from the same unit of
land addressing long-term sustainability. The area covered under this
model is proposed to be substantially increased in the years to come.
Hitherto, in India, the subject domain of Biodiversity has remained
with the Ministry of Environment and Forests. For the first time in
the Indian paper industry, your Company has proactively attempted a
biodiversity conservation project on private lands. On a pilot basis,
11.52 hectares of farmer lands in Andhra Pradesh were selected and
afforestation, reforestation, reclamation, rehabilitation, protection
and conservation of biological resources were attempted. Further, your
Company promoted natural regeneration, enrichment planting with native
species and conserved threatened and endemic species. In order to
sustain these efforts, your Company is promoting local stewardship for
biodiversity through awareness programmes which will go a long way in
reversing the impact created by anthropogenic pressures, integrating it
with agriculture, pulpwood plantations, fishery, apiculture, medicinal
plants and creating sustainable livelihood to the tribal farmers. As a
responsible Corporate Citizen, your Company is willing to participate
in initiatives of this nature towards preserving biodiversity on an
In India only 25% of the paper consumed is recovered for recycling as
against about 70% in the western countries. Your Companys
collaborative initiative, christened Wealth Out of Waste (WOW),
continues to promote and facilitate waste paper recycling, with a view
to conserving scarce natural resources. The waste paper industry is
largely unorganised and a lot of effort has gone into establishing
processes and systems in the operational areas of collection, sorting
and grading of waste paper as well as on accounting, compliances and
controls. It is expected that such efforts would assist in the
availability of quality fibre on a sustainable basis at competitive
prices. About 48,000 tonnes of waste paper were collected during the
year and with continued focus on building capability it is expected
that the entire waste paper requirements of the business would be
sourced through this initiative within the next few years. In this
context, the second anniversary of National Recycling Day was
celebrated in Chennai on 1st July 2012 with widespread participation of
the general public and 14,000 school children. This initiative won
CIIs Best environmental project of the year 2012 and Most
Useful Environmental Project awards.
Your Company has the distinction of being the first paper company in
India to have obtained the Forest Stewardship Council - Forest
Management (FSC-FM) certification covering 8,000 hectares of social
forestry plantations involving about 9,000 farmers with another 14,000
hectares awaiting certification. FSC-FM certifies that the plantation
activities of an organisation are economically, socially and
To the extent of pulp produced from such certified plantations, your
Company will be able to commit to its customers, FSC certified paper &
paperboard. Environmentally conscious customers are already beginning
to show keenness to source such green products which in turn will
further increase the competitiveness of the business. Plans are afoot
to steadily increase coverage over the next few years.
All four manufacturing units of your Company have obtained the FSC
Chain of Custody certification.
Your Company has made significant investments in contemporary
technologies including environment-friendly Elemental Chlorine-Free
(ECF) and Ozone bleaching for pulp thereby improving the environmental
standards of its manufacturing operations. Such investments are
expected to provide customers with sophisticated products, way ahead of
legislation, thereby creating new benchmarks in environmental
stewardship. The Industry would welcome policies that lay down
environmental benchmarks in tune with other industries such as
automotives etc. and suitably reward those who achieve or exceed such
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 120,000 tonnes of waste paper during
the year has further consolidated the businesss overall positive
solid waste recycling footprint. The Bhadrachalam unit is the first in
India to have been awarded the GreenCo Gold certificate by CII in
June 2012. The unit also won the Excellent Energy Efficient,
Excellent Water Efficient and Appreciation prize - State
Energy Conservation awards. The Bollaram unit won Silver for
FICCI Safety System Excellence award in manufacturing while the
Kovai unit won Best Water Efficient award at 9th National Water
Management meet. The business also won IPMA Environmental award
for Cleaner Technologies.
The above have been made possible as a result of continuous 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 consumption,
strategies to contain usage across units continue to be pursued.
Further, the business is also investing in a new high pressure fuel
efficient boiler in its Tribeni unit, which will enable significant
reduction in coal consumption and usage of lower grades of coal.
The 7.5 MW wind energy farm in Coimbatore, continues to operate at
optimum levels providing clean energy to the Kovai unit. It is expected
that energy efficiency coupled with greater use of renewable sources of
energy will enable your Company to derive benefits from sale of
Renewable Energy Certificates (RECs) under the Electricity Act 2003 as
well as obtain benefits from newer initiatives like Perform, Achieve
and Trade (PAT) under the Energy Conservation Act 2001.
The year under review witnessed steep hikes in the cost of chemicals
and coal as well as curtailment in supplies of coal by the Government
through the reduction of allocations, forcing the industry to buy high
cost coal in the open market. These factors, together with the sharp
depreciation of the Indian Rupee, adversely impacted the industry.
However, your Company with its integrated operations and strategic cost
management actions was able to minimise the adverse impact of such cost
The integrated nature of the business model - access to high-quality
fibre from the economic vicinity of the Bhadrachalam mill, in-house
pulp mill and state-of-the-art manufacturing facilities, focus on
value-added paperboards and a robust forward linkage with the Education
and Stationery Products business - strategically positions your Company
to further consolidate and enhance its leadership status in the Indian
paperboard and paper industry.
Packaging and Printing
Your Companys Packaging and Printing business continues to provide
contemporary and superior packaging solutions facilitated by its
state-of-the-art technology and processes. The business provides
strategic support to your Companys FMCG businesses through
innovative packaging solutions, faster speed-to-market for new launches
and security of supplies in addition to delivering benchmarked
international quality at competitive costs.
The business continued to leverage its multiple packaging platforms to
offer a wide range of packaging solutions and expand business both in
domestic and export markets. Your Company continues to be a leading
supplier of value-added packaging in cartons and flexibles.
During the year, the business augmented the capacity and capability of
its Haridwar plant with the successful commissioning of a new
state-of-the-art line for cigarette packaging, expansion of carton line
capacity and other downstream conversion facilities towards meeting the
growing demand from the northern markets. The business also made
investments in backward integration for key raw materials in the
flexibles segment, thereby enhancing competitiveness. These in-house
capabilities have enabled quicker turnaround of designs, pack changes
and reduced product launch timelines for your Companys FMCG
businesses, thereby providing a source of competitive advantage in the
The business won several awards during the year for operational
excellence, innovation and creativity. These include three World
Star Awards from the World Packaging Organisation, several India
Star Awards from the Indian Institute of Packaging and Golden
Peacock Award instituted by Institute of Directors for innovative
product / services.
The 14.1 MW wind energy farm in Tamil Nadu, set up in 2008, continues
to operate at optimum levels providing clean energy to the Chennai
unit. This initiative is a certified project under the Clean
Development Mechanism of the Kyoto Protocol and is in line with your
Companys commitment to reduce the carbon footprint of its operations.
The factories at Chennai, Haridwar and Munger continued to maintain the
highest standards in Environment, Health and Safety (EHS). The Chennai
unit was certified for BRC IoP (British Retail Consortium, Institute of
Packaging, global food packaging standard), SA 8000 (Social
Accountability Certification), and FSC (Forest Stewardship Council
Certification - Sustainable Forestry Practices). The Haridwar unit was
accredited with ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007 for the
new plant within six months of commissioning and also received the
13th Annual Greentech Environment Award in the Silver category. The
Munger unit won the Suraksha Puraskar at the National level from
National Safety Council and International Safety Award with Merit
from British Safety Council.
With substantial investments in world-class technology & quality
systems, and distributed & diversified manufacturing capability, the
business is well poised to sustain its position as one of the foremost
packaging houses in the country.
D. AGRI BUSINESS Leaf Tobacco
While overall global leaf tobacco crop output saw a decline in 2012,
the prevalent high levels of uncommitted inventory continued to limit
demand for the fresh crop. Global cigarette demand remained muted due
to the weak global economic scenario, regulatory pressures, enhanced
levels of taxation and growth in illegal trade. Cigarette-type tobacco
crop production in India was lower during 2012 mainly on account of the
severe drought that adversely impacted Mysore crop output and quality.
Your Companys focused crop development efforts at the farm level
towards ensuring adequate availability of seedlings, educating the
farmers on crop management and post harvest product management
techniques helped revive the crop substantially thereby improving
livelihoods particularly in the drought affected areas in rural
Notwithstanding a sluggish global demand scenario, your Company
recorded robust growth in export volumes and revenues by servicing
customers based on their specific needs and leveraging strengths in
crop development, superior sourcing and processing capabilities. The
business not only strengthened its presence in existing markets but
also accessed customers in new markets. The business also made progress
during the year in growing the smokeless tobacco segment through
The business continued to provide strategic sourcing support to your
Companys cigarette business.
Achieving enhanced productivity continues to be a focus area of
research and crop development initiatives of the business. Substantial
progress has been made in strengthening the pipeline of new hybrid
combinations for deployment in growth zones.
Your Company continues to engage in a pioneering role in promoting
sustainable agriculture practices in the tobacco growing regions in
Andhra Pradesh and Karnataka. Key interventions such as farm
mechanisation, soil health management, water conservation and seedling
production technologies through well researched dissemination models
continue to support the farmer towards enhancing quality of produce and
optimising costs. Your Companys efforts in this area have been
recognised in a number of international forums. The approach on
dissemination models of farm mechanisation has been published in the
International Journal of Sustainability Japan, while the float seedling
production initiative has been recognised by the World Academy of
Science, Engineering & Technology (WASET), Amsterdam for its
sustainability features & economic suitability to the farming
community. These efforts are not only helping secure global demand for
Indian leaf tobacco by providing enhanced value to global customers but
also in improving the socio-economic status of the small / tribal
farmer. Capitalising on your Companys R&D efforts on varietal
improvement, the area under coverage of flue-cured virginia hybrids was
substantially increased in collaboration with the Central Tobacco
Research Institute and the Tobacco Board of India.
Your Companys newly commissioned Green Leaf Threshing plant in
Mysore has stabilized and exceeded benchmarks on all operating
parameters of throughput, processing yield and quality. This investment
has enhanced the processing capability of the business and reduced
transportation costs given the factorys proximity to the tobacco
growing areas in Karnataka. The business is also actively engaged in
augmenting its warehousing capacities and re-engineering its supply
chain towards driving operational efficiencies and reducing costs.
Further, in line with your Companys commitment to sustainable
business practices, the business is investing in wind energy in
Karnataka to increase usage of renewable sources of energy. With this,
100% of the energy requirements of the newly commissioned plant at
Mysore will be met through renewable energy sources.
Your Company with its unmatched R&D capability, state-of-the-art
facilities, unique crop development and extension expertise, deep
understanding of customer and farmer needs, is well poised to leverage
emerging opportunities for Indian leaf tobacco and sustain its position
as a world-class leaf tobacco organisation.
Other Agri Commodities
Food grain production in India is estimated to have declined by around
1.5% to about 255 million tonnes during 2012-13 as compared to the
record 259 million tonnes in 2011-12. Output of major food grain items
such as rice and wheat are expected to be lower in 2012-13. While wheat
output is estimated to be lower by 1% at 94 million tonnes, rice output
at about 104 million tonnes represents a decline of 1% over the
previous year. While overall oilseed production during 2012-13 is
expected to remain at about 31 million tonnes, soya production is
expected to be higher at 14 million tonnes vis-a-vis 12 million tonnes
Adverse weather conditions in the major global wheat producing regions
of Black Sea (Ukraine, Russia), South America (Brazil, Argentina) and
Australia led to a dip in world production by about 40 million tonnes
to about 656 million tonnes. Given the shortage in global markets as
aforementioned, the business successfully leveraged the wheat export
opportunity recording robust growth in revenues and asset turns. On the
domestic front, the business continued to expand its presence with
brand owners, private labels, food processors and millers.
Global soya bean production, estimated at 270 million tonnes during the
current season, represents an increase of 12.5% over the previous
season. The increase is mainly attributable to higher output in South
American origins offset by a reduction in output in the United States.
Such a global oversupply situation coupled with higher domestic crop
production led to a steep correction in domestic soya prices.
Consequently, market arrivals of the domestic crop remained weak with
farmers holding back sale of soya bean in anticipation of improved
Your Companys uniquely structured commodity sourcing business model
with strong competencies in multi-location sourcing, logistics and
supply chain management enabled achieving enhanced scale and value
capture in the wheat and soya market.
The business continued to source identity preserved and special
varieties of wheat through its e-Choupal network for your Companys
Branded Packaged Foods businesses. The continuous focus on cost-quality
optimisation through varietal and geographical arbitrage and driving
supply chain and logistics efficiencies provided a competitive
advantage to your Companys Aashirvaad Atta brand.
In the area of potato sourcing, the business continued to support your
Companys Bingo! brand of potato chips by procuring the highest quality
chip stock potatoes at competitive prices. The endeavour of partnering
with farmers to source locally grown potatoes in close proximity to
manufacturing units helped minimise logistics costs. The business
continued to engage with the farming community towards enhancing the
quality and variety of chip stock seed usage, adoption of best farming
practices and improving yields.
India is the worlds largest producer, consumer and exporter of spices.
The growing concerns around food safety and product integrity have
resulted in the increased demand for suppliers with end-to-end
capabilities having complete custody of the supply chain, supported by
appropriate technology, quality assurance and traceability management
systems. Your Company is well poised to garner an increasing share of
the fast growing domestic and export spices market leveraging its
processing unit which is certified to the highest grade of global food
safety standards under the BRC (British Retail Consortium) Food
certification regime and an embedded IT enabled farm to fork
traceability system. The business continues to provide support to your
Companys Aashirvaad range of spices.
An integrated and holistic view of the agricultural value chain is
essential towards providing the necessary fillip to stagnating
agricultural growth in the country. This requires a joint participatory
approach from all stakeholders such as farmers, input vendors, traders,
processors and the government agencies. Your Company plays a critical
role as a catalyst in integrating farmers, input vendors and government
agencies besides facilitating the necessary market linkages. Through
its Choupal Pradarshan Khet initiative, the business works with
various government and private bodies to promote new seed varieties,
adoption of farm technologies and practices among farmers towards
improving productivity of crops (food grains, oilseeds, cereals etc.)
while deepening relationship with the farming community. During the
year, new soya seed varieties with high yield, high protein and high
oleic acid were identified by your Companys Life Sciences & Technology
Centre in association with the Directorate of Soybean Research, India.
A number of farmer training programmes along with farm field
demonstration of new technology (seed varieties and process) were
conducted in more than 730 villages covering over 22,000 farmers
towards yield enhancement in soybean, barley and wheat. Promotion of
sustainability practices through the use of bio-fertilizers in paddy
and bajra in western UP were also taken up.
Your Company will continue to leverage the unique e-Choupal platform
towards achieving the superordinate goal of enhancing agricultural
growth and productivity in the country enmeshed with a strong
socio-economic model for rural development and sustainability even as
it provides structural and sustainable competitive advantage to the
Branded Packaged Foods businesses.
NOTES ON SUBSIDIARIES
The following may be read in conjunction with the Consolidated
Financial Statements enclosed with the Accounts, prepared in accordance
with Accounting Standard 21. In view of the general exemption granted
by the Ministry of Corporate Affairs, the report and accounts of
subsidiary companies are not required to be attached to your Companys
Accounts. Shareholders desirous of obtaining the report and accounts of
your Companys subsidiaries may obtain the same upon request. The
report and accounts of the subsidiary companies will be kept for
inspection at your Companys registered office and those of the
subsidiary companies. Further, the report and accounts of the
subsidiary companies will also be available under the Shareholder
Value section of your Companys website, www.itcportal.com, in a
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, 2012 or
to make available copy of the same for inspection by shareholders.
Surya Nepal Private Limited
During the year the operating environment in Nepal continued to remain
uncertain with the Constituent Assembly being dissolved in May 2012.
The caretaker Government has since made way for a new Council of
Ministers headed by the Chief Justice of Nepal, entrusted with the
mandate of conducting the Constituent Assembly elections.
On the economic front, the GDP for the year ended 15th July 12 grew
by 4.6% against 3.8% in the previous year on the strength of increased
agricultural production and growth in the services sector. However,
there was a marked slowdown in industrial production which decelerated
to 1.6% from 2.9% in the previous year. The company continues to
engage with policy makers for a pragmatic and purposeful policy and
regulatory framework that will fuel long-term investment and growth in
the countrys industrial sector including the operating segments of
Despite these challenging circumstances, the company continued to make
good progress and deliver superior performance. In the twelve-month
period ended 13th March 2013 (30th Falgun 2069), the company recorded a
15% growth in sales with Gross Turnover (net of VAT) increasing to
Nepalese Rupees (NRs.) 1665 crores from NRs. 1443 crores in the
previous year. Profit after Tax at NRs 370 crores increased by 29%
over the previous year. The company continues to be one of the largest
contributors to the exchequer accounting for about 16% of excise
collections and 3.3% of the total revenues of the Government of Nepal.
The company further consolidated its leadership position in the
cigarette market through continued investment in product quality and
value addition to its product portfolio. Its focus on remaining
contemporary through the induction of new generation technology
platforms and the enhancement of internal capabilities has strengthened
the competitiveness of the business and reinforced market standing. A
Long Term Agreement with employees of the Simara factory, premised on
the companys philosophy of harmonious employee relations management,
was concluded during the year. The second cigarette factory near
Pokhara is in an advanced stage of construction and will improve market
servicing in the long-term.
In the branded apparels business, the company focused on enhancing its
market standing, distribution infrastructure and supply chain of
John Players and Springwood. In the safety matches
business, the companys brand Tir continued to gain consumer
The company remains committed to supporting and investing in endeavours
that augment social and economic capital in alignment with the stated
priorities of the Government of Nepal. Consistent with such commitment,
several initiatives that are expected to provide long-term multiplier
benefits have been initiated and sustained during the year.
Accordingly, the company:
(a) Continued to partner with Tobacco farmers in Nepal to ensure higher
productivity and quality enhancement 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 a
consistent improvement in quality of domestic grades of tobacco thereby
improving marketability of the crop and farmer returns.
(b) Initiated a programme to assist village farmers, proximate to the
Simara factory, in the plantation of high quality Poplar saplings to
improve farmer earnings.
(c) Supported an initiative in the animal husbandry sector by providing
extension services that will drive yield improvement and higher returns
for underprivileged farmers.
(d) Partnered with Nepal Tourism Board in hosting Nepals premier
professional golf tournament - the Surya Nepal Private Limited
Masters, with the objective of promoting Nepal as an attractive
(e) Continued to sponsor the Surya Nepal Private Limited Asha Social
Entrepreneurship Awards, to recognize entrepreneurs who have created
employment opportunities amongst local communities.
The company declared a dividend of NRs. 139/- per equity share of NRs.
100/- each for the year ended 15th July 2012 (31st Ashad 2069).
ITC Infotech India Limited
A weak global economic scenario, particularly in the US and Europe,
continued to impact technology spends during the year. Although growth
of the Indian IT industry has slowed down in recent years given the
economic uncertainties, favourable exchange rates and market share
gains during the year enabled it to grow ahead of earlier estimates.
The companys consolidated Total Revenue grew well above the industry
average, clocking a growth of 23% to Rs. 1017.80 crores while its Net
Profit grew by 33% to Rs. 66.93 crores. This robust performance is an
outcome of the successful strategies adopted by the company in
(i) building world-class capabilities in each of its service lines,
(ii) investing in new technologies, (iii) building solutions and
capabilities around the products of global software vendors and
partnering with them to take the products to the market, and (iv)
rapidly growing the high potential accounts by putting in place
geographical and technological expansion plans.
For the year under review:
(a) ITC Infotech India Limited registered a Total Revenue of Rs. 706.65
crores (previous year Rs. 566.23 crores) and a Net Profit of Rs. 68.73
crores (previous year Rs. 28.69 crores);
(b) ITC Infotech Limited, UK, (I2B) a wholly owned subsidiary of the
company, registered a Total Revenue of GBP 25.03 million (previous year
GBP 24.35 million) and a Net Profit of GBP 1.86 million (previous year
GBP 2.13 million). During the year, I2B paid an Interim Dividend of GBP
3 (previous year : Nil) per Ordinary Share of GBP 1 each on 685,815
shares, amounting to GBP 2,057,445 (previous year: Nil) to the company;
(c) ITC Infotech (USA), Inc., (I2A) a wholly owned subsidiary of the
company, together with its wholly owned subsidiary Pyxis Solutions LLC,
registered Total Revenues of US$ 63.20 million (previous year US$ 49.85
million) and a Net Profit of US$ 0.91 million (previous year US$ 0.30
During the year, the company achieved an all-time high and
best-in-class Customer Satisfaction Score based on a survey
conducted by a reputed external agency. Such a rating validates the
companys world-class quality of service and stands testimony to its
commitment to continuously raise the levels of service to meet growing
Apart from expanding the companys existing in-house domain solution
capabilities, specific development programmes were implemented to
embrace disruptive technologies such as cloud computing, social media
and mobile computing.
The company continued to enhance and strengthen its partnerships with
leading Independent Software Vendors (ISVs) by building niche solutions
to address white spaces and joint go-to-market initiatives. In this
regard, a number of initiatives were progressed during the year
including the launch of operations in new geographies, offering of
turnkey services - from licence sales to implementation, becoming
Authorised Training Partner in India and a consortium partner in
Customer Experience and Comprehensive Trade Management area.
During the year the companys renewed focus on Middle- East, Africa,
India and the larger Asia-Pacific region resulted in significant
traction in new customer acquisition, particularly in India and
Middle-East. The company has set up a branch office in Dubai to
increase market penetration in the region. The company is also
extending its service lines to specific markets in Western Europe.
In addition, as an important milestone in the evolution of its delivery
capability, the company commissioned a new Development Centre at
Trivandrum during the year.
The service delivery capability of the company continued to earn global
recognition. The company has featured for the 7th consecutive year
amongst the Leaders Category in the 2012 Global Outsourcing Top
100 by the International Association of Outsourcing Professionals
(IAOP). The company also featured for the 8th consecutive year in the
Global Services 100 survey, conducted by Global Services and Neo
The company achieved ISO 9001:2008 re-certification for all its
locations with its Pune centre getting certified within six months of
On the talent management front, the approach and strategy were
continuously refined, realigned and revitalised in line with changing
business dynamics and the enhanced global operating footprint of the
company. Employee engagement, in particular, continues to receive the
necessary thrust and impetus to enable an interactive and knowledge
pooling environment. The company also embarked on development of new
centres in the country with a view to accessing specific skills and
talent and driving efficiencies in service delivery.
Going forward, the company will continue to review and reinforce its
strategies and action plans to rapidly scale up its global footprint.
Building additional technology niches remains a key focus area, and
SMAC (Social media, Mobility, Analytics and Cloud computing) is
currently at the forefront of this technology ecosystem. The company,
accordingly, continues to invest in SMAC technologies and in a new
industry leading Testing Framework.
While the outlook for the IT industry remains soft in the near term,
the company is poised for significantly superior growth in the coming
years aided by its strategies to expand to new markets, offer a
portfolio of differentiated solutions, provide superior customer
experience and deliver through strong project management capabilities,
knowledge management, solution accelerators and a robust quality
Russell Credit Limited
During the year, the company registered a Total Revenue of Rs. 69.66
crores (previous year Rs. 40.58 crores) and a Net Profit of Rs. 58.96
crores (previous year Rs. 31.43 crores).
As stated in the Report of the Directors of the previous years, a
petition was filed by an individual in the High Court at Calcutta,
seeking an injunction against the companys counter offer to the
shareholders of VST Industries Limited, made in accordance with the
Securities and Exchange Board of India (Substantial Acquisition of
Shares & Takeovers) Regulations, 1997, as a competitive bid to a Public
Offer made by an Acquirer in 2001.
During the year, the High Court at Calcutta, vide Order dated 22nd
June, 2012, dismissed the aforesaid petition. Similar petitions filed
in the High Court of Delhi at New Delhi and High Court of Judicature of
Andhra Pradesh at Hyderabad had earlier been dismissed by the
respective High Courts.
The company, post dismissal of the aforesaid petition by the High Court
at Calcutta, sold its entire holding in VST Industries Limited to your
The company achieved a Net Revenue of Rs. 165.62 crores during the year
(previous year Rs. 169.70 crores) and posted a Net Profit for the year
of Rs. 1.90 crores against Rs. 45.99 crores loss in the previous year
which included a one-time cost of Rs. 36.87 crores primarily towards
restructuring its operations. During the year, the company allotted to
Russell Credit Limited the unsubscribed portion of the Rights Issue of
shares made in the previous year, thereby raising Rs. 1.69 crores.
Margins in the Safety Matches business continued to remain under
pressure mainly due to escalation in prices of raw materials like wood,
splints, paperboard, key chemicals and the continuing high tax
differential between the mechanised and non-mechanised sector. The
company continues to focus on cost rationalisation and margin
During the year, the Agri (Forestry) business revenues grew by around
25%. Availability of critical raw materials like wood at competitive
prices remain crucial for the success of the Safety Matches business.
Towards this end, the Agri (Forestry) business supplied high quality
poplar ETPs (Entire Transplants) and eucalyptus saplings to farmers in
northern India to enhance availability at competitive prices. Apart
from creating a long-term sustainable supply of a critical raw
material, the companys initiative is helping create employment and
livelihood opportunities while improving the green cover in the region.
The Engineering business revenues grew by 6% during the year driven
mainly by improved value capture through continuous product development
in packaging machinery. The company plans to leverage new and improved
product design to offer superior packaging solutions to its customers.
The initiatives taken by the company during the past few years to
restructure its operations are expected to enhance operating
performance in the years to come.
Srinivasa Resorts Limited
During the financial year ended 31st March, 2013, the company recorded
a Total Revenue of Rs. 50.62 crores (previous year Rs. 57.66 crores)
and a Profit Before Tax of Rs. 5.54 crores (previous year Rs. 11.89
crores). Net Profit for the year stood at Rs. 4.44 crores (previous
year Rs. 9.40 crores).
The challenging environment in the State of Andhra Pradesh continues to
have an adverse impact on the performance of the companys hotel ITC
Kakatiya, Hyderabad. The hotel continued to focus on superior guest
experience and strategic cost management to sustain market standing and
For the fourth time in a row, the hotel received the Times Food
Guide awards for Kebabs & Kurries (Best North Indian) and
Dakshin (Best South Indian) - with both being rated as the best
restaurants in their respective categories. During the year, the hotel
also received the Best Landscaping Management Award from the
Department of Horticulture, Andhra Pradesh.
The Board of Directors of the company has recommended a dividend of Rs.
1.00 per equity share of Rs. 10/- each for the year ended 31st March,
Fortune Park Hotels Limited
During the financial year ended 31st March, 2013, the company recorded
a Total Revenue of Rs. 23.22 crores (previous year Rs. 20.78 crores)
and earned a Net Profit of Rs. 5.97 crores (previous year Rs. 4.96
The companys Fortune hotel chain that caters to the mid-market to
upscale segment continued its expansion by forging new alliances,
taking the total number of hotels in its fold to 69 with an aggregate
room inventory of over 5,000. The Fortune brand now has 39
operating hotels and another 3 hotels are slated to be commissioned in
the next financial year. The remaining 27 hotel projects are under
various stages of development. The brand remains a frontrunner in its
operating segment and is well positioned to sustain its leadership
position in the industry.
The company is well known for providing quality products and services
which have helped position Fortune as the premier value
brand in the Indian hospitality sector. The My Fortune brand,
representing a stylish lifestyle with efficient personalised
service, is the latest addition to the bouquet of brands offered by
During the year, the company bagged the Best First Class Business
Hotel Chain award at the Todays Traveller Awards 2012, SATTE
Award for leading Mid Market Hotel Chain and Best First Class
Full Service Business Hotel Chain in India by PATWA, ITB Berlin.
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,
Bay Islands Hotels Limited
During the financial year ended 31st March, 2013, the company recorded
a Total Revenue of Rs. 1.52 crores (previous year Rs. 1.37 crores) and
Net Profit of Rs. 0.97 crores (previous year Rs. 0.92 crores).
The companys hotel, Fortune Resort Bay Island in Port Blair,
commands patronage in the city primarily due to its fabulous location,
excellent architectural design and superior service quality. The
company is in the process of undertaking a comprehensive renovation and
expansion programme with a view to enhancing the market standing of the
The Board of Directors of the company has recommended a dividend of Rs.
70.00 per equity share of Rs. 100/- each for the year ended 31st March,
Landbase India Limited
The company owns and operates the Classic Golf Resort, a Jack Nicklaus
Signature Course, near Gurgaon. As reported in the previous years, golf
based resorts present attractive long-term prospects in view of their
growing popularity all over the world. The work towards creating a
destination luxury resort hotel at the Classic Golf Resort is now
underway and the project is progressing satisfactorily.
During the financial year ended 31st March, 2013, the company recorded
a Total Revenue of Rs. 11.82 crores (previous year Rs. 10.57 crores)
and Net Loss of Rs. 3.81 crores (previous year Rs. 3.22 crores). During
the year, the company issued and allotted to your Company, 30,00,000
Redeemable Preference Shares of Rs. 100/- each for cash at par,
aggregating Rs. 30 crores. The proceeds from the Preference Share issue
are being utilised by the company for the construction of the
destination luxury resort.
WelcomHotels Lanka (Private) Limited
During the year, WelcomHotels Lanka (Private) Limited (WLPL) was
incorporated in Sri Lanka as a wholly-owned subsidiary of your Company
with the objective of constructing, building and operating a mixed-use
development project (Project) including a luxury hotel at
Colombo. The Board of Investment of Sri Lanka provided about 5.86 acres
of prime sea facing land in Colombo to the company on a 99-year lease
for this purpose. The Project has been declared as a Strategic
Development Project under the Strategic Development Projects Act No. 14
of 2008 of Sri Lanka.
Your Company has invested about US$ 75 million in WLPL by way of equity
and loan and WLPL is in the process of finalizing the design and
product configuration of the proposed Project.
Technico Pty Limited
The company continued to focus on upgradation and commercialisation of
TECHNITUBER® Technology and field multiplication through its wholly
owned subsidiaries in different geographies. The company is also
engaged in the marketing of TECHNITUBER® seeds to global customers
from the production facilities of its subsidiaries in India, China and
The companys leadership in the production of early generation seed
potatoes and strength in agronomy continue to be leveraged by your
Company not only for sourcing chip stock for the Bingo! brand of
your Companys Branded Packaged Foods businesses but also for
servicing the seed potato requirements of the farmer base of your
Companys Other Agri Commodities business.
For the year under review:
a) Technico Pty Limited, Australia registered a Turnover of Australian
Dollar (A$) 1.39 million (previous year A$ 1.13 million) and a Net
Profit of A$ 0.14 million (previous year A$ 0.11 million). Turnover
and Net Profit have improved due to higher TECHNITUBER® seed volumes
and better price realization.
b) Technico Agri Sciences Limited, India registered a Net Revenue of
Rs. 64.04 crores (previous year Rs. 48.20 crores) and a Net Profit of
Rs. 17.48 crores (previous year Rs. 7.83 crores). Strong demand and
firm prices coupled with the strength of the companys brand, product
quality, on field performance and trade and customer relationships
drove a 33% increase in Net Revenue and 75% improvement in Profit
Before Tax. The company has taken credit for deferred tax assets of Rs.
3.80 crores in the year under review (previous year : Nil).
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
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. It is engaged in
the distribution of your Companys tobacco products in the US market.
During the year, the cigarette industry in the US continued to witness
persistent volume decline compounded by tax increases and the
continuing growth of Other Tobacco Products, several of which are as
yet unregulated by the US Food and Drug Administration (FDA). A larger
thrust by major cigarette manufacturers into the value segment coupled
with increase in illicit sales driven by tax differentials between the
States, contributed further to an extremely challenging business
environment for the company. During the year, the company maintained
steady volumes through enhanced sales and marketing inputs while
Revenue declined by 2% due to pricing pressure. The resultant higher
costs of sales and marketing were offset by lower contributions under
the Master Settlement Agreement (MSA). Further, a favourable Arbitral
Award, memorializing a Partial Settlement between certain states and
the Participating Manufacturers to the MSA, on payments disputed in
previous years, increased the companys earnings during this year.
As a result, the company recorded Net Sales of US$ 26.37 million
(previous year US$ 26.95 million) and earned a Net Income of US$ 1.20
million (previous year US$ 0.48 million) during the financial year
ended 31st March 2013. During the year, KMM paid a Dividend of US$ 1.0
million to your Company.
Government regulations in the tobacco sector continue to take shape and
it is expected that the industry will consolidate further as US Food
and Drug Administration regulations evolve, including in the Other
Tobacco Product categories like Pipe Tobaccos and Cigars.
The company will continue to customise its strategies based on emerging
regulations in the market.
ITC Global Holdings Pte. Limited
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 Court on 30th November, 2007
ordered the winding up of Global, appointed a Liquidator and discharged
the Judicial Managers.
As stated in the previous years Reports, the Judicial Managers of
Global had filed a Writ against your Company in November 2002 before
the Singapore High Court claiming approximately US$ 18.10 million.
Based on legal advice, your Company filed an appropriate application
for setting aside the said Writ. On 2nd March, 2006 the Assistant
Registrar of the Singapore High Court set aside the service of Writ of
Summons on your Company and some individuals. Subsequently in November
2006, your Company received a set of papers purportedly sent by Global
including what appeared to be a copy of the earlier Writ of Summons.
Your Company filed a fresh Motion in the Singapore High Court praying
for setting aside the said Writ of Summons, which was upheld by the
Assistant Registrar of the Singapore Court on 13th August, 2007.
Global filed an Appeal against this Order before the High Court of
Singapore, which on 30th January, 2009, set aside the order giving
leave to Global to serve the Writ out of Singapore against your Company
and also dismissed the said appeal. Thereafter on 14th December, 2009,
your Company received a binder purportedly sent by Global including
what appeared to be a copy of the same old Writ of Summons. Based on
legal advice, your Company again filed a Motion in the Singapore High
Court praying for setting aside the said Writ of Summons. On 18th
November, 2010, the Assistant Registrar of the Singapore High Court
passed an order dismissing your Companys motion to set aside the
Writ of Summons. Your Company filed an appeal against the Assistant
Registrars decision which appeal was dismissed by the Singapore High
Court. Pursuant to legal advice, your Company has since filed its
defence in the trial proceedings.
BFIL Finance Limited
The company continues to focus its efforts on recoveries through
negotiated settlements including property settlements and pursuit of
legal cases against various defaulters. The company has no external
liabilities outside the ITC group. The company will examine options for
further business opportunities at the appropriate time.
Gold Flake Corporation Limited, Wills Corporation Limited, Greenacre
Holdings Limited, ITC Investments & Holdings Limited and MRR Trading &
Investment Company Limited
There were no major events to report with respect to the above
NOTES ON JOINT VENTURES ITC Filtrona Limited
For the year ended 31st December 2012, ITC Filtrona Limited recorded a
Gross Revenue of Rs. 229.40 crores (Rs. 180.99 crores in 2011) and
Pre-tax profits of Rs. 19.39 crores (Rs. 15.63 crores in 2011). While
the Cigarette Filter industry had to contend with a steep hike in raw
material prices and adverse foreign exchange rates, the company saw an
overall improvement in sales volume along with a better product mix.
Continuous investment in filter making technology has enabled the
company maintain its leadership position, enhance its technological
edge over competition and cater to growth both in terms of product mix
In continuation with its philosophy of balancing the need to scale up
capacity and capability to service the growing demand and the return
expectation of shareholders, the Directors of the company have
recommended a dividend of Rs. 9.00 per ordinary share of Rs. 10/- each
for the year ended 31st December, 2012.
The company strives to be the quality benchmark in cigarette filters,
offer superior filter solutions to its customers and be the most
preferred supplier to its customers. With excellent product and market
development support from its joint venture partners, the company is
well positioned for the future.
Maharaja Heritage Resorts Limited
Maharaja Heritage Resorts Limited, a joint venture of your Company with
Jodhana Heritage Resorts Private Limited, currently operates 39
heritage properties across 13 States in India. The companys brand
portfolio comprising Legend, WelcomHeritage Hotels and
Nature Resorts, provides uniquely differentiated propositions to
guests in the cultural, heritage and adventure tourism segments
During the financial year ended 31st March, 2013, the company recorded
a Total Revenue of Rs. 3.86 crores (previous year Rs. 3.36 crores) and
Net Profit of Rs. 0.44 crores (previous year Net Loss Rs. 0.26 crores).
The company has 9 properties under the upmarket Legend brand
which has carved a niche for itself on the basis of superior service
delivery and brand standards. The company also has 11 properties under
the Nature Resorts brand and 19 properties under the
WelcomHeritage Hotels brand which was recently awarded the
Best Heritage Hotel Chain by Todays Traveller Awards 2012.
Espirit Hotels Private Limited
In July 2010, your Company had entered into a joint venture for
developing a luxury hotel complex at Begumpet, Hyderabad. Under the
terms of the Joint Venture Agreement, your Company acquired 26% equity
stake in the joint venture company, Espirit Hotels Private Ltd. (EHPL)
and will, inter-alia, provide hotel operating services to EHPL under an
Operating Services Agreement upon commissioning of the hotel. Your
Companys investment in EHPL stood at Rs. 46.51 crores as at 31st
While the site preparatory activity is underway, the company is in the
process of finalising the design and product configuration of the
Logix Developers Private Limited
In September 2011, your Company entered into a joint venture 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 the joint venture company, Logix
Developers Private Ltd. (LDPL) at an initial investment of Rs. 36.84
crores. Your Company will, inter-alia, provide hotel operating services
to LDPL under an Operating Services Agreement, upon commissioning of
The company is in the process of finalising the design and product
configuration of the proposed development.
As a diversified enterprise, your Company has always had a system-based
approach to business risk management. Backed by strong internal control
systems, the current risk management framework consists of the
- The Corporate Governance Policy clearly lays down the roles and
responsibilities of the various entities in relation to risk
management. A range of responsibilities, from the strategic to the
operational, is specified in the Governance Policy. These role
definitions, inter-alia, are aimed at ensuring formulation of
appropriate risk management policies and procedures, their effective
implementation and independent monitoring and reporting by Internal
- The Corporate Risk Management Cell works with the businesses to
establish and monitor the specific profiles including both strategic
risks and operational risks. The process includes the prioritisation of
risks, selection of appropriate mitigation strategies and periodic
reviews of the progress on the management of risks.
- A combination of centrally issued policies and divisionally-evolved
procedures brings robustness to the process of ensuring business risks
are effectively addressed.
- Appropriate structures have been put 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
improved. The Audit Committee of the Board reviews Internal Audit
findings, and provides strategic guidance on internal controls. The
Audit Compliance and Review Committee closely monitors the internal
control environment within your Company and ensures that Internal Audit
recommendations are effectively implemented.
- 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 operations.
- 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 Companys businesses.
The senior management of your Company periodically reviews the risk
management framework to maintain its contemporariness so as to
effectively address the emerging challenges in a dynamic business
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 provides assurance on the efficiency of operations and
security of assets.
Well established and robust internal audit processes, both at business
and corporate levels, continuously monitor the adequacy and
effectiveness of the internal control environment across your Company
and the status of compliance with operating systems, internal policies
and regulatory requirements. In the networked IT environment of your
Company, validation of IT security continues to receive focused
attention of the internal audit team which includes IT specialists.
The Internal Audit function consisting of professionally qualified
accountants, engineers and IT specialists reviews the quality of
planning and execution of all ongoing projects involving significant
expenditure to ensure that project management controls are adequate to
yield value for money.
Your Companys Internal Audit function is certified as complying with
ISO 9001:2008 quality standards in its processes.
The Audit Committee of your Board met nine times during the year. It
reviewed, inter-alia, the adequacy and effectiveness of the internal
control environment and monitored implementation of internal audit
recommendations including those relating to strengthening of your
Companys risk management policies and systems. It also engaged in
overseeing financial disclosures.
HUMAN RESOURCE DEVELOPMENT
Your Companys unique talent brand - Building Winning Businesses.
Building Business Leaders. Creating Value for India - backed by its
strong corporate equity, has enabled the attraction and retention of
high quality talent. This talent pool and its strong alignment with
your Companys Vision, has contributed to enhancing your Companys
standing as one of Indias most valuable corporations. The innovative
engagement initiatives with premier campuses and effective use of
social media has enabled your Company showcase the career and
leadership opportunities available and has attracted both high quality
entry-level talent from premier technology and management institutes as
well as talent from the market for middle and senior-level
opportunities. Your Companys unique Management Trainee programme has
over the years, developed a robust talent and leadership pipeline that
has enabled rapid growth of existing businesses and entry into new
businesses as well. In addition, your Companys comprehensive talent
development strategy has enabled the enhancement of the competitive
capability of each business.
Your Company believes that the achievement of its growth objectives
will depend largely on the ability to innovate continuously, connect
closely with the customer, and create and deliver superior and
unmatched customer value. Towards this end, your Company has
assiduously built a culture of continuous learning, innovation and
collaboration across the organisation by providing cutting-edge
learning and development inputs to its employees, along with a
judicious blend of coaching, mentoring and on the job training. Your
Company has been able to galvanise its human resource to become more
agile, leverage change, stay ahead of competition and win in the
Your Companys human resource management systems and processes are
designed to empower employees and enable them adopt innovative
approaches to creating enduring value. These processes aim to create a
responsive, customer-centric and market-focused culture that enhances
organisational capability and vitality, so that each business is
internationally competitive and equipped to exploit emerging market
The strategy of organisation lays great emphasis on developing and
supporting distributed leadership and this has ensured that each of
your Companys businesses is managed by a team of competent,
passionate and inspiring leaders, capable of building an organisation
anchored in a culture of learning, innovation and world-class
execution. Your Companys performance management system has been
instrumental in creating a strong performance culture.
Your Company firmly believes that alignment of all employees to a
shared vision and purpose is vital to win in the market. Your Company
also recognizes the mutuality of interests of key stakeholders and is
committed to building harmonious employee relations. During the year
under review, your Company successfully concluded long-term agreements
at several of its manufacturing units and hotel properties and also
ensured smooth commencement of operations at greenfield locations. The
collaborative spirit across all sections of employees has resulted in
significant enhancement in quality and productivity, further bolstered
by continuous investment in contemporary management practices and
Your Companys human resource believes that the drive for progress is
in being never satisfied with the status quo. Your Company is confident
that every one of its over 25,900 employees will relentlessly strive to
deliver world-class performance, innovate newer and better ways of
doing things, uphold human dignity and foster team spirit and discharge
their role as trustees of all stakeholders with true faith and
allegiance. Your Company is committed to perpetuate this vitality of
ITC - its growth in physical terms and also its growth as a great
institution - so that your Company will continue to grow and succeed in
its never-ending pursuit of value creation.
SUSTAINABILITY - CONTRIBUTION TO THE TRIPLE BOTTOM LINE
Your Companys Vision to subserve larger national priorities and
create enduring societal value is the inspiration for its
multi-dimensional sustainability initiatives that are today
acknowledged as global exemplars. Your Companys sustainability
strategy aims to significantly enhance national wealth through superior
Triple Bottom Line performance that builds and enriches the
countrys economic, environmental and societal capital. It 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. Your Companys
Triple Bottom Line contribution is manifest in the creation of
innovative business models that not only generate new sources of
competitive advantage for its businesses, but also in the process
enables the replenishment of natural capital and augmentation of
It is a matter of humble pride that your Companys sustainable
business models and value chains have supported the creation of 5
million sustainable livelihoods, a majority of them for the weakest in
society. It has sustained its position as the only company in the world
to have achieved the global environmental distinctions of being carbon
positive (for 8 consecutive years), water positive (for 11 years in a
row) and solid waste recycling positive (for 6 years successively).
Your Companys renewable energy portfolio enables over 41% of its
power requirements to be met from such clean sources - a significant
achievement given the large manufacturing base of your Company.
Further, all the premium luxury hotels and several factories of your
Company are LEED (Leadership in Energy & Environmental Design)
certified at the highest Platinum level by the US Green Building
Council / Indian Green Building Council.
Your Company published its 9th consecutive Sustainability Report during
the year that detailed the progress made across all dimensions of the
Triple Bottom Line for the year 2011-12. The report which is
independently assured by Ernst & Young, is in accordance with the G3
Guidelines of the Global Reporting Initiative (GRI) and is validated by
GRI at the highest A+ level. The 10th Sustainability Report
covering the sustainability performance of your Company for the year
2012-13 is in an advanced stage of finalisation and will be available
to you shortly. This report also supports your Companys first
Securities Exchange Board of India (SEBI) mandated Business
Responsibility Report, which forms part of this Report and Accounts.
Social Investments/Corporate Social Responsibility (CSR)
Your Company believes that Corporate Social Responsibility delivered in
the context of its businesses makes it more effective, impactful,
scalable and sustainable. Your Companys overarching aspiration to
create meaningful societal value is manifest in your Companys
strategy to enhance the competitiveness of value chains of which it is
a part. It is therefore a conscious strategy to design and implement
Social Investments / CSR programmes in the context of your Companys
businesses, by enriching value chains that encompass the most
disadvantaged sections of society, especially those residing in rural
India, through economic empowerment based on grass-roots capacity
It is your Companys policy:
- To pursue a corporate strategy that enables realisation of the twin
goals of shareholder value enhancement and societal value creation in a
mutually reinforcing and synergistic manner.
- To align and integrate Social Investments / CSR programmes with the
business value chains of your Company and make them outcome oriented.
To support creation of on and off-farm sustainable livelihood sources
thereby empowering stakeholder communities to conserve and manage their
- To implement Social Investments / CSR programmes primarily in the
economic vicinity of your Companys operations with a view to
ensuring the long-term sustainability of such interventions.
- To contribute to sustainable development in areas of strategic
interest through initiatives designed in a manner that addresses the
challenges faced by the Indian society especially in rural India.
- To collaborate with communities and institutions to contribute to the
national mission of eradicating poverty and hunger, especially in rural
areas, through agricultural research and knowledge sharing, superior
farm and agri-extension practices, soil and moisture conservation and
watershed management, conservation and development of forest resources,
empowering women economically, supplementing primary education and
participating in rural capacity building programmes and such other
- To align your Companys operations with the national objective of
inclusive growth and employment generation by leveraging your
Companys diversified portfolio, manufacturing bases, supply chains
and distribution channels, to infuse an appropriate mix of capital and
technology to further social business initiatives such as e-Choupal,
animal husbandry, agarbatti rolling etc. and support organisations /
institutions engaged in building linkages with local, regional and
urban communities and markets.
- To sustain and continuously improve standards of Environment, Health
and Safety through the collective endeavour of your Company and its
employees at all levels towards attaining world-class standards and
support other programmes and initiatives, internal or external, for the
prevention of illness and combating of diseases as may be considered
appropriate from time to time.
- To encourage the development of human capital of the Nation by
expanding human capabilities through skills development, vocational
training etc. and by promoting excellence in identified cultural
In the social sector, the two most important stakeholders for your
Company are: (a) the rural communities with whom your Companys
agri-businesses have forged a long and enduring partnership through
their crop development and procurement activities. These households
operate in rain-fed conditions in some of the most moisture-stressed
regions of the country; and
(b) the communities residing in close proximity of your Companys
production units, who are unable to realise their full potential due to
poor social infrastructure in the areas of education and health.
In line with the stakeholder needs, the thrust of your Companys social
sector investment is on the following:
(a) Diversification of farming systems of the rural communities by
broad-basing the farm and off-farm based livelihoods portfolio of the
poor through an integrated approach that includes the development of
wastelands, watersheds, agriculture and animal husbandry, and
(b) In the catchment habitations of manufacturing units, the focus is
on the economic empowerment of women and developing social capital to
prepare the beneficiaries for relevant and contemporary skills.
The footprints of your Companys Social Investments Programme now
extends to 60 districts in the States of Andhra Pradesh, Bihar,
Karnataka, Kerala, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu,
Uttar Pradesh and West Bengal.
Your Companys pioneering initiative of wasteland development through
the Social Forestry Programme currently covers 33,448 hectares in 1,717
villages, impacting nearly 40,000 poor households. This is an integral
part of your Companys overall Social & Farm Forestry initiative that
covers a total of over 142,000 hectares today. This initiative is
aligned to the pulpwood supply chain to create a sustainable source of
raw material for your Company and also to meet the energy requirements
of rural households. The highlight of this year was the incorporation
of bio-diversity conservation as an integral part of the Social
Forestry programme, which aims for in situ conservation of the local
flora and fauna by protecting and improving production conditions in
the selected plots.
The coverage of your Companys Soil and Moisture Conservation
programme, designed to assist farmers in identified moisture-stressed
districts, increased by an additional 26,637 hectares. 470 water-bodies
were created during the year. The total area covered under the
watershed programme cumulatively stands at 116,127 hectares. Your
Company signed three new MOUs with the Government of Rajasthan for
promoting sustainable livelihoods through watershed development in the
districts of Bundi, Jhalawar and Pratapgarh under the governments
Integrated Watershed Management Programme. With this, the total area to
be brought under soil and moisture conservation through
public-private-partnership projects has increased to over 144,000
With the objective of providing a major thrust to creating a
sustainable agricultural base, the year saw significant increases in
all major interventions in this area. The number of Farmer Field
Schools increased from 37 to 162. There was an almost three-fold
increase in the number of farmers (5,129) and the demonstration plots
(4,733) covered. The number of compost units increased nearly four-fold
(503 in 2012-13) during the year.
18 new Agri Business Centres were formed during the year, taking the
total to 51, to provide extension services to farmers. These centres
provided agri-inputs worth Rs. 85.61 lakhs to nearly 3,211 farmers
during the year.
Your Company gave equal emphasis to milch animals, the other important
asset of rural households. The programme for genetic improvements of
cattle through artificial insemination to produce high-yielding
crossbred progenies is implemented through 303 Cattle Development
Centres (CDCs) covering nearly 5,000 villages. These CDCs provided 2.75
lakh artificial inseminations during the year, thus taking the total to
10.82 lakh artificial inseminations performed till date.
Taking the next step in the development of a viable livestock economy,
Dairy Development in Munger was a major focus area this year. Project
Gomukh was launched in Munger to cater to the needs of veterinary
services and to provide comprehensive techno- management support to
dairy farmers. The overarching objectives of the Project are to achieve
significant improvement in milk productivity and quality, thereby
raising farm incomes. The milk procurement network was increased to 87
Milk Producer Groups (MPGs) with over 2,800 members. The average
procurement in Munger was nearly 10,000 litres per day (lpd) with a
peak of over 17,000 lpd. Dairy development in Saharanpur was initiated
in two hubs. Comprehensive milk mapping studies have been completed at
two other locations to enable planning for expansion of the dairy-led
CSR in other locations.
The Womens Empowerment Programme covered over 18,791 women through
1,557 self-help groups (SHG) with total savings of Rs. 340 lakhs.
Cumulatively, over 40,000 women were gainfully employed either through
micro-enterprises or assisted with loans to pursue income generating
activities. Agarbatti production received further impetus during the
year with the introduction of 1,326 pedal machines in the states of
Bihar, Uttar Pradesh, Tamil Nadu, Rajasthan, Andhra Pradesh, Madhya
Pradesh and Maharashtra. This has led to high productivity gains,
translating into significant increase in incomes for poor rural women.
As a result, raw agarbatti production more than doubled from the
previous year to 834 tonnes during 2012-13, and helped create
livelihoods for more than 3,300 women. The agarbatti scenting unit
located at Munger, owned and managed by women, also saw a significant
increase in dispatches - up from 235 million sticks in 2011-12 to 367
million sticks in 2012-13 - thus enabling women to capture even greater
value from this micro-enterprise.
Over 40,000 new students were covered through Supplementary Learning
Centres and Anganwadis. Of these, 264 first generation learners were
enrolled into formal schools for the first time in their lives. 964
government primary schools have so far been provided infrastructure
support, which includes benches, classrooms, toilets, electrical
fixtures, compound walls and gates. 627 youths were covered this year
by the skills development initiative. In the area of sanitation, a
total of 3,847 low cost sanitary units have been constructed
cumulatively by the end of 2012-13.
The advances made towards contributing to Indias sustainable
development goals have been possible, in large measure, due to your
Companys partnerships with some globally renowned NGOs like BAIF,
Dhan, FES, MYRADA, Pratham, SEWA, SRIJAN, DSC and WOTR 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 Indias most challenging problems of
development in the years to come.
Environment, Health & Safety
The strategic objective of your Companys Environment, Health &
Safety programmes is to move towards greenest and safest operations
across all ITC Units, optimisation of natural resource usage,
sustainability measurement and monitoring as well as safety of all its
people and assets. Towards this, significant efforts are targeted
towards ensuring resource security through optimisation of resource-use
and replenishment of natural resources, aligning strategy with the
National Action Plan on Climate Change to help create sustainable
livelihoods, enable adaptation and mitigation in agriculture whilst
safeguarding operations and assets. Your Companys proactive
processes for inculcating a safe and green culture are supported by
regular audits based on EHS Audit guidelines that incorporate the
latest standards and regulatory requirements.
Your Company is committed to ensuring a safe and healthy workplace for
all employees, guests and visitors, by maintaining the highest levels
of safety and occupational health standards. All units of your Company
have best-in-class infrastructure, competent resources,
management systems based on international standards as well as
state-of-the-art fire and life safety measures, which are regularly
monitored through rigorous audits. Your Companys approach entails
consideration of safety as a value-led concept which drives behaviour
change and supports the creation of a safety culture fully integrated
with business improvement processes. In line with this philosophy,
Behavioural Safety Culture Programs have been initiated in several of
your Companys units which have already brought about tangible change
in behaviour and perceptions on safety. Accordingly, this initiative
will be rolled out across other business units in a progressive manner.
The progress and commitment made by your Company in this vital area to
protect its valued human resources have been reaffirmed by numerous
national and international safety awards and certifications.
Your Company has addressed the critical area of climate change
mitigation and adaptation through several innovative and pioneering
initiatives. These include continuous improvement in energy
conservation and efficiency, enhanced usage of renewable energy,
creating a green built environment, waste reduction, maximising its
reuse and recycling and increasing use of post consumer waste as raw
material. Extensive integrated watershed development programmes,
promotion of sustainable agricultural practices, and carbon
sequestration through large-scale forestry initiatives extend these
efforts down the value chain.
Several projects of your Company earn carbon credits leveraging the
market-based mechanism for mitigating climate change, namely, the Clean
Development Mechanism developed by United Nations Framework Convention
on Climate Change (UNFCCC). Your Company is also well positioned to
benefit from India specific schemes such as Perform, Achieve and Trade
(PAT) and Renewable Energy Certificates (RECs) promoted by the
Government of India.
In line with your Companys commitment to reduce dependence on fossil
fuel based energy, significant progress has been made in enhancing the
renewable energy portfolio. Improved utilisation of biomass and
additional wind mills have led to over 41% of your Companys total
energy requirements being met from renewable sources, compared to 38.5%
during the year 2011-12. A systemic approach is being developed to
ensure that your Company progressively moves towards a benchmark of
utilising at least 50% of its total energy requirements from renewable
sources in the near future.
Recognising that water resources will increasingly become an area of
serious concern, your Company has made significant investments in water
conservation and harvesting initiatives to enhance its positive water
footprint. These include adopting best available technologies and
benchmarked practices to achieve zero effluent discharges, providing
treated wastewater for irrigation as an alternative for farmers in
water stressed areas and enhancing rainwater harvesting both within
units and across watershed catchment areas. All these initiatives have
resulted in the creation of rainwater harvesting potential that is over
two times the net water consumption of your Companys operations.
Sustained efforts are made to ensure that your Company achieves the
best international practices in this critical area as well as aligns
itself with the National Water Policy that is presently under
Reaffirming your Companys commitment to the ethos of Responsible
Luxury, all luxury Hotels of your Company are LEED Platinum
certified making it the greenest luxury hotel chain in the world.
ITC Grand Chola, the newly launched premium luxury hotel in Chennai,
has secured a 5 Star Green Rating for Integrated Habitat Assessment
(GRIHA) - the highest national rating for Green Buildings in India. The
ITC Grand Chola is also the worlds largest LEED Platinum certified
(Indian Green Building Council) green Hotel. All new constructions by
your Company incorporate green / sustainability standards and existing
buildings are also progressively implementing validated green
The Bombay Stock Exchange recently instituted 2 indices titled
GREENEX & CARBONEX evaluating several green operational
parameters as well as carbon performance. It is a matter of immense
pride that your Company has been assigned the highest weightage in both
the indices. Further, during the year, a detailed computation of
greenhouse gas (GHG) inventory was carried out as per ISO 14064
standards, which was then assured at the highest Reasonable Level
by Lloyds Register Quality Assurance Ltd. - a unique achievement
considering the scale and spread of your Companys operations.
All units of your Company have made significant progress in achieving
total recycling of waste generated by their operations, making your
Company attain over 99.8% of waste recycling in 2012-13. The
Paperboards and Specialty Papers business, which accounts for nearly
91% of the total waste generated in your Company, recycled 99.9% of the
total waste generated by its operations. This business also recycled an
additional 118,462 tonnes of externally sourced post-consumer waste
paper, thereby creating yet another positive environmental footprint.
Your Companys Wealth Out of Waste (WOW) programme continues to
create significant awareness amongst the public on the benefits of the
Reduce- Reuse-Recycle paradigm. This initiative, which also
contributes to the protection of environment, improvement in civic
amenities, public health and hygiene, has received rich accolades from
the Government, NGOs, commercial institutions and the public at large.
Your Company thereby supports the generation of sustainable raw
material inputs for its processes, whilst generating considerable
livelihood opportunities for the underprivileged.
During the year, an Integrated Sustainability Data Management System
was implemented for effective monitoring & review of business specific
Key Performance Indicators whilst providing a single platform
across your Company for all reporting requirements such as Global
Reporting Initiative, SEBI Business Responsibility Report and Carbon
Disclosure Project. This System will improve management of
sustainability issues and drive increasing efficiencies across your
Companys business units.
Creating Thought Leadership in Sustainability
The CII - ITC Centre of Excellence for Sustainable Development,
set up by your Company jointly with the apex national chamber
Confederation of Indian Industry (CII) in 2006, continues its
endeavours to promote sustainable business practices amongst corporates
across the country. During the year, the Centre trained and raised
awareness of over 2,000 business managers on various sustainability
issues. It has expanded its gamut of activities to meet the core
objectives of creating awareness, promoting thought leadership and
building capacity amongst Indian enterprises in their quest for
sustainable growth and business solutions. The 7th Sustainability
Summit, held in October 2012, continued its legacy of bringing together
thought provoking leaders to share the challenges, long-term strategies
and best practices for sustainable and inclusive development.
It featured senior politicians, bureaucrats, best brains of Indian
industry and MNCs around the globe. The Summit and Exhibition were
attended by over 300 participants. The CII - ITC Sustainability
Awards, instituted to recognise excellence in sustainability
performance, have honoured a large number of leading Indian companies
and provided encouragement to many others. The winners of the
Sustainability Awards 2012 were announced at an imposing function in
Vigyan Bhawan, New Delhi on January 14, 2013 amongst an audience of
1,500 people. The occasion was graced by the Honble President of
India Shri Pranab Mukherjee as the Chief Guest.
The Centre is today playing a major role in engaging with policy makers
to create an environment that encourages the adoption of sustainable
business practices. The Centre has been engaged with various
stakeholders for advocacy on Clause 135 of the new Companies Bill 2012,
which refers to the CSR activities of a company. The Centre is a
consulting partner in several policy interventions such as Green
Guidelines for Public Procurement, Low Carbon Expert Group of the
Planning Commission, National Innovation Council, Ministry of Corporate
Affairs on CSR Policy, National Awards for Prevention of Pollution,
Rajiv Gandhi Environment Awards for Clean Technology and Technology and
Finance Committee under the Montreal Protocol. It is also represented
on the Board of the Central Pollution Control Board and other bodies.
Societal Capacity Enhancement
In line with its core value of trusteeship, your Company supports
various initiatives that build the capability of Indias rich human
resource pool thereby empowering the nations fast growing working-age
population. It also helps preserve Indias rich cultural heritage,
enhancing the spirit embodied in its credo of Lets Put India
To cater to the need for professionally trained human resources in the
fast growing hospitality industry, your Company contributed to setting
up the Welcomgroup Graduate School of Hotel Administration (WGSHA)
together with the Dr. TMA Pai Foundation in 1987. WGSHAs training and
development activities are recognised by the International Hotel
Association, Paris. The college has been ranked amongst the top
educational institutions in the sector over the years. Graduates of the
college are today part of several leading hotel chains of the world.
WGSHAs mission is to mould young men and women into competent and
responsible professionals with the potential to emerge as future
leaders in the hospitality industry. As part of its efforts to remain
contemporary, WGSHA faculty members are positioned in ITC Hotels to
understand Best Practices employed at the hotels. A significant
number of WGSHA students are sent for 6-month internships to various
ITC Hotels. The college started with an annual intake of 30 students
which has increased to 100 students over the years.
The ITC Sangeet Research Academy (ITC SRA) is a true embodiment of
sustained corporate commitment to a priceless national heritage. It is
a unique institution recognised for being the finest repository of
Hindustani classical music. With a commitment that has remained
consistent for over 35 years, ITC SRA is the worlds first and only
professionally managed modern Gurukul, blending modern day research
methods with the purity of the age old Guru-Shishya tradition.
ITC SRA has as its mission the preservation and propagation of
Hindustani Classical Music. With a galaxy of 9 pre- eminent Gurus and
50 scholars, the Academy is presently engaged in carrying the message
of Hindustani Classical Music across our country from the metros to
rural India. Recent forays into neighbouring Bangladesh have brought
home another dimension of the shared sub- continental heritage.
Your Company also supports a number of initiatives for vocational
training within the catchment areas of its operations that have proven
to be effective in empowering youth with requisite skills to increase
their employability in the market. Employment opportunities have also
been created for differently-abled people suited to their capabilities.
R&D, QUALITY AND PRODUCT DEVELOPMENT
Your Company continues to invest in a comprehensive Research &
Development programme leveraging its world-class infrastructure,
benchmarked processes, state-of-the-art technology and a
business-focused R&D strategy.
As your Company moves into its second century, your Company seeks not
only to create world-class products but also improve the quality of
life and deliver care and wellness to consumers. In order to reflect
this change your Companys erstwhile ITC R&D Centre has been
transformed into ITC Life Sciences & Technology Centre.
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 such as Plant Breeding and Genetics,
Agronomy, Microbiology, Cell Biology, Genomics, Proteomics,
Silviculture and several disciplines of Chemistry. Presently, the LSTC
team has evolved with over 250 world-class scientists and is creating
Centres of Excellence in these areas. LSTC is carrying out research and
securing proprietary technologies for your Companys businesses.
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 Companys
businesses. LSTC has initiated several research collaborations with
globally recognized 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 LSTCs efforts in
creating future generations of these crops with greater genetic and
trait diversities and leading to significant benefits for your
Companys businesses. Further, these outcomes have a strong potential
to contribute towards augmenting the nations ecological capital as
Recognising the unique construct of your Company in terms of its strong
presence in agriculture, food and personal care 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 convergence. 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 Foods and Personal Care businesses. 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). 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 in to the next century 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 Companys relentless commitment to quality, each
business is mandated to continuously innovate on processes and systems
to deliver superior competitive capabilities. During the year, your
Companys 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 business 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 have stringent food
safety and quality systems. All Company owned units / hotels and almost
all 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)
methodology. Additionally, the quality of all FMCG products of your
Company is regularly monitored through Product Quality Ratings
As mentioned in the previous years Report of the Directors, a demand
for Rs. 27.58 crores made by Central Excise Department, Bengaluru, in
respect of a period prior to March 1983, was set aside by the
Commissioner (Appeals), Bengaluru, by his Order dated 22nd November,
1999, which order was confirmed by the CEGAT, Chennai vide its order
dated 18th December, 2003. The Department has filed an appeal before
Supreme Court, which is pending.
With respect to the Munger factory, proceedings for finalisation of
assessments for the period prior to March 1983 resulted in the Deputy
Commissioners Orders dated 29th August, 2002 and 8th October, 2002
demanding Rs. 13.09 crores and Rs. 1.73 crores for clearances of
cigarettes and smoking mixtures respectively. These were confirmed by
the Commissioner (Appeals), Patna vide his orders dated 22nd December,
2004, against which your Company has preferred appeals before CESTAT,
Kolkata, which are pending. Your Company had made pre-deposits of Rs. 2
crores and Rs. 0.55 crores against the aforesaid demands at the stage
when its appeals were pending before Commissioner (Appeals), Patna.
Although your Company, in a spirit of settlement, paid the differential
Excise Duty that arose out of an Order of the Director General dated
10th April, 1986, as early as in March, 1987, and although the Excise
Departments aforesaid Demands had either been quashed or stayed, the
Collectorates in Meerut, Patna and Bengaluru, during the year 1995,
filed criminal complaints in the Special Court for Economic Offences at
Kanpur, Patna and Bengaluru, charging your Company and some of its
Directors and employees who were employed with your Company during the
period 1975 to 1983 with offences under the Central Excises & Salt Act,
1944, purportedly on the basis of the Order of the Director General
dated 10th April, 1986. Your Directors are advised that no prosecution
would lie on the basis of the aforesaid Order of the Director General
dated 10th April, 1986. As earlier reported, the criminal case in
respect of the Bengaluru factory was quashed by the Court. In the
proceedings relating to Saharanpur and Munger factories, the
individuals concerned have been discharged.
In all the above instances, your Directors are of the view that your
Company has a strong case and the Demands and the Complaints are not
Since your Company is contesting the above cases and contending that
the Show Cause, the Demand Notices and the Complaints are not
sustainable, it does not accept any liability in this behalf. Your
attention is drawn to the Note 31(iv) in the Notes to the Financial
Statements and Note 28(iv) in the Notes to the Consolidated Financial
As mentioned in earlier years, the Honble Supreme Court declared the
various State luxury tax levies on cigarettes and other goods as
unconstitutional. The Court further directed that if any party, after
obtaining a stay order from the Court, had collected any amount towards
luxury tax from its customers / consumers, such amounts should be paid
to the respective State governments. Since your Company had not charged
or collected any amounts towards luxury tax during the relevant period,
there is no liability on your Company in this regard. However, the
State of Andhra Pradesh has filed a contempt petition in the Supreme
Court claiming a sum of about Rs. 323.25 crores towards luxury tax, and
a further sum of about Rs. 261.97 crores towards interest, on the
allegation that your Company had charged and collected luxury tax from
its customers, but in view of a stay order passed by the Court on 1st
April, 1999, did not pay the tax to the government. The States
contention is baseless, contrary to facts and is also contrary to the
assessment orders passed by the State luxury tax authorities
consistently holding that your Company, right from 1st March, 1997, did
not charge or collect any amount towards luxury tax from its customers.
Accordingly, the States petition is being contested.
RECOVERY OF DUES FROM THE CHITALIAS AND PROCEEDINGS INITIATED BY THE
You are aware that your Company had secured from the District Court of
New Jersey, U.S.A, a decree for US$ 12.19 million together with
interest and costs against Suresh and Devang Chitalia of U.S.A and
their companies, and that the Chitalias had filed Bankruptcy Petitions
before the Bankruptcy Court, Orlando, Florida, which are yet to be
As explained in the previous reports of the Directors, 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 in the Indian suit against the
Chitalia associates. 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
Meanwhile, some of the prosecutions launched by the Enforcement
Directorate have been quashed by the Calcutta High Court while others
During the year, your Companys treasury operations continued to
focus on deployment of temporary surplus liquidity and manage the
foreign exchange exposures within a well-defined risk management
The year under review was characterized by falling interest rates with
the Reserve Bank of India reducing Policy rates by a cumulative 100
basis points. However, tight liquidity conditions in the Banking system
brought about intermittent spikes in money market interest rates. In
this environment your Company, by appropriately managing portfolio
duration continued to improve its treasury performance.
All investment decisions in deployment of temporary surplus liquidity
continued to be guided by the tenets of Safety, Liquidity and Return.
The portfolio mix during the year was constantly rebalanced in line
with changing interest rate scenario which helped enhance yields.
Further, by the year end, in line with expectations of lower interest
rates, the portfolio was rebalanced with exposures in long-dated Fixed
Maturity Plans and Bank Fixed Deposits. Your Companys risk management
processes ensured that all deployments were made with proper evaluation
of underlying risk while remaining focused on capturing market
In the foreign exchange market, the Indian Rupee depreciated during the
year and was witness to bouts of high volatility. In a scenario where
Rupee was under continuous pressure, your Company adopted an
appropriate forex management strategy, which included 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 the 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 Companys Internal Audit
As mentioned in the Report of the Directors of earlier years, your
Company had obtained Stay Orders from the Honble Calcutta High Court
in respect of the Income Tax notices for re-opening the past
assessments for the period 1st July, 1983 to 30th June, 1986. This
status remains unchanged.
As stated in the Report of the Directors of earlier years, in respect
of similar Income Tax notices for re-opening the past assessments for
the period 1st April, 1990 to 31st March, 1993, the Honble Calcutta
High Court had admitted the Writ Petitions and ordered that no final
assessment orders be passed without the leave of the Court. This status
also remains unchanged.
Your Companys Public Deposit Scheme closed in the year 2000. As at
31st March, 2013, 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
Companys erstwhile Schemes.
INVESTOR SERVICE CENTRE
The Investor Service Centre (ISC) of your Company, accredited with ISO
9001:2008 certification, provides best-in-class investor services
through an experienced team of professionals. ISC continues to upgrade
its infrastructure, systems and processes to provide exemplary services
to the shareholders and investors of the Company. The level 5 rating,
the highest possible rating, accorded by Messrs. Det Norske Veritas for
the fourth consecutive year, stands testimony to the excellence
achieved by ISC in providing quality investor services.
ISC, in its constant endeavour to further improve its services,
requests feedback on your experience as a shareholder or investor. The
Shareholder Satisfaction Survey questionnaire for this purpose is being
sent to the Members. This questionnaire can also be accessed from the
Companys corporate website www.itcportal.com under the section
Investor Relations and can be submitted online.
Mr. Kurush Noshir Grant, a Wholetime Director of your Company since
20th March, 2010, completed his term on 19th March, 2013. The Board of
Directors of your Company (the Board) at its meeting held on 18th
January, 2013, appointed Mr. Grant as Additional Director with effect
from 20th March, 2013, and subject to the approval of the Members, also
as Wholetime Director for a period of five years from 20th March, 2013.
Ms. Meera Shankar and Mr. Sahibzada Syed Habib-ur- Rehman were
appointed by the Board at its meeting held on 27th July, 2012 as
Additional Non-Executive Directors of your Company with effect from 6th
September, 2012 and 27th July, 2012, respectively.
By virtue of the provisions of Article 96 of the Articles of
Association of your Company and Section 260 of the Companies Act, 1956,
Ms. Shankar and Mr. Rehman will vacate office at the ensuing Annual
General Meeting (AGM) of your Company.
Your Board at its meeting held on 17th May, 2013, recommended for the
approval of the Members the appointment of Ms. Shankar and Mr. Rehman
as Non- Executive Directors of the Company, liable to retire by
rotation, with effect from the date of the ensuing AGM of your Company.
Mr. Dinesh Kumar Mehrotra, Mr. Sunil Behari Mathur and Mr. Pillappakkam
Bahukutumbi Ramanujam were appointed as Non-Executive Directors of your
Company with effect from 30th July, 2008 and their present term will
expire on 29th July, 2013. Your Board at its meeting held on 17th May,
2013 recommended for the approval of the Members the re-appointment of
Messrs. Mehrotra, Mathur and Ramanujam as Non-Executive Directors of
the Company, liable to retire by rotation, with effect from 30th July,
Notices, under Section 257 of the Companies Act, 1956, have been
received from Members of the Company for the appointment /
re-appointment of Ms. Shankar, Messrs. Grant, Rehman, Mehrotra, Mathur
and Ramanujam, who have filed their consents to act as Directors of the
Company, if appointed.
Appropriate resolutions seeking your approval to the aforesaid
appointments / re-appointments are appearing in the Notice convening
the 102nd AGM of your Company.
In accordance with the provisions of Article 91 of the Articles of
Association of the Company, Mr. Shilabhadra Banerjee, Mr. Angara
Venkata Girija Kumar, Mr. Hugo Geoffrey Powell, Dr. Basudeb Sen and Mr.
Balakrishnan Vijayaraghavan will retire by rotation at the ensuing AGM
of your Company and being eligible, offer themselves for re-election.
The Board has recommended their re-election.
Your Companys Auditors, Messrs. Deloitte Haskins & Sells, retire at
the ensuing AGM and, being eligible, offer themselves for
re-appointment. Since not less than 25% of the Subscribed Share Capital
of your Company is held collectively by Public Financial Institutions,
the re-appointment of Auditors is being proposed as a Special
Resolution in accordance with Section 224A of the Companies Act, 1956.
Your Company had appointed (i) Mr. P. Raju Iyer, Cost Accountant,
Chennai, as Cost Auditor for audit of cost records maintained by the
Paperboards and Specialty Papers business and (ii) Messrs. Shome &
Banerjee, Cost Accountants, Kolkata, for cost records in respect of
Paper products other than the cost records maintained by the
Paperboards and Specialty Papers business for the financial year ended
31st March, 2012. The Cost Audit Report was filed by the Cost Auditor
on 23rd January 2013 within the due date of 28th February 2013.
In respect of the financial year ended 31st March, 2013, your Company,
has appointed (i) Mr. P. Raju Iyer, Cost Accountant, Chennai, as Cost
Auditor for audit of cost records maintained by the Paperboards and
Specialty Papers business (ii) Messrs. Shome & Banerjee, Cost
Accountants, Kolkata, for cost records in respect of Paper
products other than the cost records maintained by the Paperboards and
Specialty Papers business. They were also appointed as the Cost
Auditors in respect of Plastics & Polymers, Apparel, Edible Oil Seeds &
Oil, and Plantation products. (iii) Messrs.
S.Mahadevan & Co., Cost Accountants, Chennai, were appointed as the
Cost Auditors for Packaged Food products. The due date for filing the
Cost Audit Reports is 27th September, 2013.
EMPLOYEE STOCK OPTION SCHEME
Under your Companys Employee Stock Option Schemes, 8,34,08,810
Ordinary Shares of Rs. 1/- each, were issued and allotted during the
year upon exercise of 83,40,881 Options; such shares rank pari passu
with the existing Ordinary Shares of your Company. Consequently, the
Issued and Subscribed Share Capital of your Company as at 31st March,
2013 stands increased to Rs. 790,18,33,110/- divided into 790,18,33,110
Ordinary Shares of Rs. 1/- each.
Details of the Options granted up to 31st March, 2013 and other
disclosures as required under Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 (the SEBI Guidelines) are set
out in the Annexure to this Report.
Your Companys Auditors, Messrs. Deloitte Haskins & Sells, have
certified that your Companys Employee Stock Option Schemes have been
implemented in accordance with the SEBI Guidelines and the resolutions
passed by the Members in this regard.
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, 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
c) taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies
Act, 1956 for safeguarding the assets of your Company and for
preventing and detecting fraud and other irregularities; and
d) prepared the Annual Accounts on a going concern basis.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Accounting Standard 21 - Consolidated Financial
Statements, ITC Group Accounts form part of this Report & Accounts.
These Group Accounts also incorporate the Accounting Standard 23 -
Accounting for Investments in Associates in Consolidated Financial
Statements and Accounting Standard 27 - Financial Reporting of
Interests in Joint Ventures as notified under the Companies (Accounting
Standards) Rules, 2006. These Group accounts have been prepared on the
basis of audited financial statements received from Subsidiary,
Associate and Joint Venture Companies, as approved by their respective
The total number of employees as on 31st March, 2013 stood at 25,959.
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.
Particulars as required under Section 217(1)(e) of the Companies Act,
1956 relating to Conservation of Energy and Technology Absorption are
also provided in the Annexure to this Report.
There were 83 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, 2013. The information required under Section 217(2A)
of the Companies Act, 1956 and the Rules thereunder, in respect of the
aforesaid employees, is provided in the Annexure forming part of this
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.
Your Companys Board and employees are inspired by the Vision of
sustaining ITCs position as one of Indias most admired and
valuable companies, creating enduring value for all stakeholders,
including the shareholders and the Indian society. Your Company has
created multiple drivers of growth by developing a portfolio of
world-class businesses which have synergised to deliver Total
Shareholder Returns at a compound annual growth rate of over 26%
during the 17 year period from 1996 to 2013. Each business within the
portfolio is continuously engaged in upgrading strategic capability to
effectively address the challenge of growth in an increasingly
competitive market scenario. Effective management of diversity enhances
your Companys adaptive capability and provides the intrinsic ability
to effectively manage business risk. The vision of enlarging your
Companys contribution to the Indian economy is manifest in the
creation of unique business models that foster international
competitiveness of not only its businesses but also the entire value
chain of which they are a part.
Inspired by this Vision, driven by Values and powered by internal
Vitality, your Directors and employees look forward to the future with
confidence and stand committed to creating an even brighter future for
17th May, 2013 On behalf of the Board
37 J L Nehru Road
Kolkata 700071 Y. C. DEVESHWAR Chairman
India P. V. DHOBALE Director