SENSEX NIFTY
ITC Directors Report, ITC Reports by Directors
YOU ARE HERE > MONEYCONTROL > MARKETS > CIGARETTES > DIRECTORS REPORT - ITC
ITC
BSE: 500875|NSE: ITC|ISIN: INE154A01025|SECTOR: Cigarettes
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Nov 25, 14:47
351.95
-22.45 (-6%)
VOLUME 796,422
LIVE
NSE
Nov 25, 14:47
351.60
-23.35 (-6.23%)
VOLUME 11,125,070
Download Annual Report PDF Format 2014 | 2013 | 2012 | 2011
Directors Report Year End : Mar '14    « Mar 13
The Directors submit their Report for the financial year ended 31st
 March, 2014.
 
 FINANCIAL PERFORMANCE
 
 Your Company continued to deliver strong financial performance with
 healthy growth in revenues and high quality earnings. This performance
 is particularly commendable when viewed against the backdrop of the
 extremely challenging business context in which it was achieved,
 namely, a sluggish macro-economic environment which saw GDP growth
 remaining below 5% for the second year in succession, high inflation
 and a marked deceleration in the rate of growth of Private Final
 Consumption Expenditure; steep increase in taxes/duties on Cigarettes
 for two years in a row; weak demand conditions in the FMCG industry;
 gestation costs relating to the new FMCG businesses; sharp escalation
 in input costs in the Paperboards, Paper & Packaging Businesses and a
 weak demand & pricing environment in the Hotels business.
 
 Gross Revenue for the year grew by 11.7% to Rs. 46712.62 crores. Net
 Revenue at Rs. 32882.56 crores grew by 11.1% primarily driven by a 16.0%
 growth in the non-cigarette FMCG segment, 14.7% growth in Paperboards,
 Paper and Packaging segment and 10.6% growth in the Cigarettes segment.
 Profit Before Tax registered a growth of 18.5% to Rs. 12659.11 crores
 while Net Profit at Rs. 8785.21 crores increased by 18.4%.  Earnings Per
 Share for the year stood at Rs. 11.09 (previous year Rs. 9.45). Cash flows
 from Operations aggregated Rs. 10759.50 crores compared to Rs. 9596.24
 crores in the previous year.
 
 Your Company is one of India''s most admired and valuable corporations
 with a current market capitalisation of over Rs. 270000 crores and has
 consistently featured amongst the top 10 private sector companies in
 terms of market capitalisation and profits. Over the last 18 years,
 your Company''s Net Revenue and Profit After Tax recorded an impressive
 compound annual growth rate of 15.3% and 21.6% respectively. During
 this period, Return on Capital Employed improved substantially from
 28.4% to 45.8% while Total Shareholder Returns, measured in terms of
 increase in market capitalisation and dividends, grew at a compound
 annual rate of 25.9%, placing your Company amongst the foremost in the
 country in terms of efficiency of servicing financial capital.
 
 Your Directors are pleased to recommend a Dividend of Rs. 6.00 per share
 (previous year Rs. 5.25 per share) for the year ended 31st March, 2014.
 Total cash outflow in this regard will be Rs. 5582.90 crores (previous
 year Rs. 4853.49 crores) including Dividend Distribution Tax of Rs. 810.99
 crores (previous year Rs. 705.03 crores).
 
 Your Board further recommends a transfer to General Reserve of Rs. 880.00
 crores (previous year Rs. 750.00 crores). Consequently, the Surplus in
 Statement of Profit and Loss as at 31st March, 2014 would stand at Rs.
 6139.09 crores (previous year Rs. 3788.10 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 amounted to nearly US$ 6.0 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 2013-14, your Company and its subsidiaries
 earned Rs. 5068 crores in foreign exchange.  The direct foreign exchange
 earned by your Company amounted to Rs. 4290 crores, mainly on account of
 exports of agri-commodities. Your Company''s expenditure in foreign
 currency amounted to Rs. 2073 crores, comprising purchase of raw
 materials, spares and other expenses of Rs. 1343 crores and import of
 capital goods at Rs. 730 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                                   2014              2013
 
 a) Profit Before Tax                     12659.11         10684.18
 
 b) Tax Expense
 
   - Current Tax                           3791.13          2934.79
 
   - Deferred Tax                            82.77           331.00
 
 c) Profit for the year                    8785.21          7418.39
 
 SURPLUS IN STATEMENT OF PROFIT AND LOSS
 
 a) At the beginning of the year           3788.10          1972.59
 
 b) Add : Profit for the year              8785.21          7418.39
 
 c) Less:
 
   - Transfer to General Reserve            880.00           750.00
 
   - Proposed Dividend                     4771.91          4148.46
     [Rs. 6.00 (2013 - Rs. 5.25) per share]
 
   - Income Tax on Proposed Dividend
 
   - Current Year                           810.99           705.03
 
   - Earlier year''s provision no            (28.68)           (0.61) 
     longer required
 
 d) At the end of the year                 6139.09          3788.10
 
 TAXATION
 
 As mentioned in the Report of the Directors of earlier years, your
 Company had obtained Stay Orders from the Honourable Calcutta High
 Court against re-opening of past assessments for the period 1st July,
 1983 to 30th June, 1986. The Honourable Calcutta High Court has now
 held in your Company''s favour by allowing the concerned Writ Petitions
 and the impugned notices & the proceedings thereunder have been
 quashed.
 
 Also, as stated in the Report of the Directors of earlier years, in
 respect of similar Income Tax notices for re-opening the past
 assessments for the period 1st April, 1990 to 31st March, 1993, the
 Honourable Calcutta High Court had admitted the Writ Petitions and
 ordered that no final assessment orders be passed without the leave of
 the Court. This status remains unchanged.
 
 PUBLIC DEPOSITS
 
 Your Company''s Public Deposit Scheme closed in the year 2000. As at
 31st March, 2014, 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.
 
 INVESTOR SERVICE CENTRE
 
 The Investor Service Centre (ISC) of your Company maintains its
 position as an exemplar in investor servicing.
 
 During the year, SEBI granted your Company a Certificate of Permanent
 Registration to act as Category II Share Transfer Agent for providing
 in-house share registration and related services.
 
 The ISO 9001:2008 Quality Management System Certification for investor
 servicing by ISC was renewed during the year by Messrs. Det Norske
 Veritas (DNV) for a further period of three years. ISC achieved the
 highest ''Level 5'' rating for the fifth consecutive year – a testimony
 to the excellence achieved by ISC in providing quality investor
 services.
 
 During the year, a Shareholder Satisfaction Survey was conducted by
 your Company. An overwhelming number of Members who participated in the
 Survey responded that they were extremely satisfied with the services
 provided by ISC.
 
 DIRECTORS
 
 Mr. Hugo Geoffrey Powell [representing Tobacco Manufacturers (India)
 Limited, a subsidiary of British American Tobacco p.l.c., the ultimate
 holding company], Dr. Basudeb Sen, Mr. Balakrishnan Vijayaraghavan and
 Mr. Dinesh Kumar Mehrotra (representing the Life Insurance Corporation
 of India) ceased to be Non-Executive Directors of your Company with
 effect from 30th July, 2013, 27th August, 2013, 27th August, 2013 and
 27th October, 2013, respectively, on completion of their terms. Mr.
 Shilabhadra Banerjee (representing the Specified Undertaking of the
 Unit Trust of India) resigned as Non-Executive Director of your Company
 with effect from 26th March, 2014. Your Directors would like to record
 their appreciation of the services rendered by Mr. Powell, Dr. Sen, Mr.
 Vijayaraghavan, Mr. Mehrotra and Mr. Banerjee.
 
 Mr. Nakul Anand and Mr. Pradeep Vasant Dhobale, Wholetime Directors of
 your Company since 3rd January, 2011, completed their terms on 2nd
 January, 2014.  Mr. Anand and Mr. Dhobale, on the recommendations of
 the erstwhile Nominations Committee and the Compensation Committee,
 were appointed by the Board of Directors of your Company (the ''Board'')
 as Additional Directors with effect from 3rd January, 2014, and subject
 to the approval of the Members, also as Wholetime Directors, liable to
 retire by rotation, for a period of five years from 3rd January, 2014.
 
 Mr. Robert Earl Lerwill [representing Tobacco Manufacturers (India)
 Limited, a subsidiary of British American Tobacco p.l.c., the ultimate
 holding company], on the recommendation of the erstwhile Nominations
 Committee, was appointed by the Board as Additional Non-Executive
 Director of your Company with effect from 18th November, 2013. Mr.
 Suryakant Balkrishna Mainak (representing the Life Insurance
 Corporation of India), on the recommendation of the Nomination &
 Compensation Committee, was appointed by the Board as Additional
 Non-Executive Director of your Company with effect from 25th April,
 2014. Mr.  Shilabhadra Banerjee, on the recommendation of the
 Nomination & Compensation Committee, was also appointed by the Board as
 Additional Non-Executive Director of your Company with effect from 24th
 July, 2014. By virtue of the provisions of Article 96 of the Articles
 of Association of your Company and Section 161 of the Companies Act,
 2013, Messrs. Lerwill, Mainak and Banerjee will vacate office at the
 ensuing Annual General Meeting (''AGM'') of your Company.
 
 Your Board at its meeting held on 23rd May, 2014, on the recommendation
 of the Nomination & Compensation Committee, has recommended for the
 approval of the Members the appointment of Mr. Banerjee as an
 Independent Director in terms of Section 149 of the Companies Act,
 2013, with effect from the date of the ensuing AGM of your Company.
 Your Board at the said meeting, on the recommendation of the Nomination
 & Compensation Committee also recommended for the approval of the
 Members the appointment of Mr. Lerwill and Mr. Mainak as Non-Executive
 Directors of the Company, liable to retire by rotation, with effect
 from the date of the ensuing AGM of your Company.
 
 Notices under Section 160 of the Companies Act, 2013, have been
 received for the appointment of Messrs. Anand, Dhobale, Banerjee,
 Lerwill and Mainak who have filed their consents to act as Directors of
 the Company, if appointed.
 
 Appropriate resolutions seeking your approval to the aforesaid
 appointments are appearing in the Notice convening the 103rd AGM of the
 Company.
 
 In accordance with the provisions of Article 91 of the Articles of
 Association of the Company, Mr. Krishnamoorthy Vaidyanath will retire
 by rotation at the ensuing AGM of your Company and being eligible,
 offers himself for re-election. The Board has recommended his
 re-election.
 
 Messrs. Anil Baijal, Serajul Haq Khan, Sunil Behari Mathur,
 Pillappakkam Bahukutumbi Ramanujam, Sahibzada Syed Habib-ur-Rehman and
 Ms. Meera Shankar, by virtue of being Independent Directors of your
 Company in terms of the provisions of the Companies Act, 2013, will not
 be liable to retire by rotation for the residual period of their
 respective terms of appointment approved by the Members of the Company.
 
 AUDITORS
 
 Statutory Auditors
 
 Your Company''s Auditors, Messrs. Deloitte Haskins & Sells, retire at
 the ensuing AGM and, being eligible, have offered themselves for
 re-appointment. The Board, on the recommendation of the Audit
 Committee, has recommended the re-appointment of Messrs. Deloitte
 Haskins & Sells for a period of five years in accordance with Section
 139 of the Companies Act, 2013.  Appropriate resolution seeking your
 approval to the said re-appointment is appearing in the Notice
 convening the 103rd AGM of the Company.
 
 Cost Auditors
 
 Your Company had appointed (i) Messrs. Shome & Banerjee, Cost
 Accountants, Kolkata, for audit of cost records in respect of ''Paper''
 products other than the cost records maintained by the Paperboards and
 Specialty Papers Business. They were also appointed as the Cost
 Auditors in respect of Plastics & Polymers, Apparel, Edible Oil Seeds &
 Oil and Plantation products; (ii) Messrs. S. Mahadevan & Co., Cost
 Accountants, Chennai, as Cost Auditor for audit of cost records
 maintained in respect of Packaged Food Products; and (iii) Mr. P. Raju
 Iyer, Cost Accountant, Chennai, as Cost Auditor for audit of cost
 records maintained by the Paperboards and Specialty Papers business for
 the financial year ended 31st March, 2013. The Cost Audit Report was
 filed by the Cost Auditor on 20th September, 2013 within the due date
 of 27th September, 2013.
 
 In respect of the financial year ended 31st March, 2014, your Company
 has appointed (i) Messrs. Shome & Banerjee, Cost Accountants, Kolkata,
 for audit of cost records in respect of ''Paper'' products other than the
 cost records maintained by the Paperboards and Specialty Papers
 business. They are also appointed as the Cost Auditors in respect of
 Plastics & Polymers, Apparel, Edible Oil Seeds & Oil, Plantation
 products and Personal Care products including Soap; (ii) Messrs.  S.
 Mahadevan & Co., Cost Accountants, Chennai, as Cost Auditor for audit
 of cost records maintained in respect of Packaged Food Products; and
 (iii) Mr. P. Raju Iyer, Cost Accountant, Chennai, as Cost Auditor for
 audit of cost records maintained by the Paperboards and Specialty
 Papers business and for all other additional applicable product groups.
 The due date for filing the Cost Audit Reports is 27th September, 2014.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 Under your Company''s Employee Stock Option Schemes, 5,13,49,840
 Ordinary Shares of Rs. 1/- each, were issued and allotted during the year
 upon exercise of 51,34,984 Options; such shares rank pari passu with
 the existing Ordinary Shares of your Company.  Consequently, the Issued
 and Subscribed Share Capital of your Company as at 31st March, 2014
 stands increased to Rs. 795,31,82,950/- divided into 795,31,82,950
 Ordinary Shares of Rs. 1/- each.
 
 Details of the Options granted up to 31st March, 2014 and other
 disclosures as required under Clause 12 of the Securities and Exchange
 Board of India (Employee Stock Option Scheme and Employee Stock
 Purchase Scheme) Guidelines, 1999 (the ''SEBI Guidelines'') are set out
 in the Annexure to this Report.
 
 Your Company''s Auditors, Messrs. Deloitte Haskins & Sells, have
 certified that the Company''s Employee Stock Option Schemes have been
 implemented in accordance with the SEBI Guidelines and the resolutions
 passed by the Members in this regard.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 As required under Section 217 (2AA) of the Companies Act, 1956, your
 Directors confirm having:
 
 a) followed in the preparation of the Annual Accounts, the applicable
 accounting standards with proper explanation relating to material
 departures if any;
 
 b) selected such accounting policies and applied them consistently and
 made judgements and estimates that are reasonable and prudent so as to
 give a true and fair view of the state of affairs of your Company at
 the end of the financial year and of the profit of your Company for
 that period;
 
 c) taken proper and sufficient care for the maintenance of adequate
 accounting records in accordance with the provisions of the Companies
 Act, 1956 for safeguarding the assets of your Company and for
 preventing and detecting fraud and other irregularities; and
 
 d) prepared the Annual Accounts on a going concern basis.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 In accordance with Accounting Standard 21 - Consolidated Financial
 Statements, ITC Group
 
 Accounts form part of this Report & Accounts. These Group Accounts also
 incorporate the Accounting Standard 23 - Accounting for Investments in
 Associates in Consolidated Financial Statements and Accounting Standard
 27 - Financial Reporting of Interests in Joint Ventures as notified
 under the Companies (Accounting Standards) Rules, 2006. These Group
 accounts have been prepared on the basis of audited financial
 statements received from Subsidiary, Associate and Joint Venture
 Companies, as approved by their respective Boards.
 
 OTHER INFORMATION
 
 The total number of employees as on 31st March, 2014 stood at 25917.
 
 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.
 
 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.
 
 Particulars as required under Section 217(1)(e) of the Companies Act,
 1956 relating to Conservation of Energy and Technology Absorption are
 also provided in the Annexure to this Report.
 
 There were 135 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, 2014. The information required under Section 217(2A) of the
 Companies Act, 1956 and the Rules thereunder, in respect of the
 aforesaid employees, is provided in the Annexure forming part of this
 Report.
 
 CONCLUSION
 
 Your Company is today, the leading FMCG marketer in India, a
 trailblazer in ''green hoteliering'' and the second largest Hotel chain
 in India, the clear market leader in the Indian Paperboard and
 Packaging industry, the country''s foremost Agri business player and a
 global exemplar in sustainable business practices. Your Company''s
 wholly-owned subsidiary, ITC Infotech India Limited, is one of India''s
 fast-growing Information Technology companies in the mid-tier segment.
 
 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 manifest in the
 creation of unique business models that foster international
 competitiveness not only of its businesses but also the entire value
 chain of which they are a part.
 
 Inspired by this Vision, driven by Values and powered by internal
 Vitality, your Directors and employees look forward to the future with
 confidence and stand committed to creating an even brighter future for
 all stakeholders.
 
                                  On behalf of the Board
 
 23rd May, 2014                          Y. C. DEVESHWAR   
                                                Chairman
 New Delhi
 India                                     P. V. DHOBALE    
                                                Director
Source : Dion Global Solutions Limited
Quick Links for itc
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.