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