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ITC Limited or ITC is an Indian conglomerate headquartered in Kolkata, West Bengal.

Its
diversified business includes five segments: Fast-Moving Consumer Goods (FMCG), Hotels,
Paperboards & Packaging, Agri Business & Information Technology.

Established in 1910 as the Imperial Tobacco Company of India Limited, the company was
renamed as the Indian Tobacco Company Limited in 1970 and further to I.T.C. Limited in
1974. The periods in the name were removed in September 2001 for the company to be
renamed as ITC Ltd. The company completed 100 years in 2010 and as of 2012-13, had an
annual turnover of US$8.31 billion and a market capitalization of US$45 billion. It employs
over 25,000 people at more than 60 locations across India and is part of Forbes 2000 list.

Balance Sheet of ITC in Rs. Crore:

Mar '16 Mar '15


12 mths 12 mths
Sources of Funds
Total Share Capital 804.72 801.55
Equity Share Capital 804.72 801.55
Reserves 32,071.87 29,881.73
Networth 32,876.59 30,683.28
Secured Loans 3.6 0.02
Unsecured Loans 25.83 38.69
Total Debt 29.43 38.71
Total Liabilities 32,906.02 30,721.99
Mar '16 Mar '15
12 mths 12 mths
Application of Funds
Gross Block 22,256.11 21,392.12
Less: Revaluation Reserves 52.41 52.41
Less: Accum. Depreciation 8,051.58 7,213.63
Net Block 14,152.12 14,126.08
Capital Work in Progress 2,500.83 2,114.14
Investments 12,854.24 8,405.46
Inventories 8,519.82 7,836.76
Sundry Debtors 1,686.35 1,722.40
Cash and Bank Balance 6,563.95 7,588.61
Total Current Assets 16,770.12 17,147.77
Loans and Advances 3,188.71 2,349.80
Total CA, Loans & Advances 19,958.83 19,497.57
Current Liabilities 8,129.22 7,214.45
Provisions 8,430.78 6,206.81
Total CL & Provisions 16,560.00 13,421.26
Net Current Assets 3,398.83 6,076.31
Total Assets 32,906.02 30,721.99
Contingent Liabilities 2,648.78 1,864.99
Book Value (Rs) 40.85 38.28

ITC Profit and loss statement:

Mar '16 Mar '15


12 mths 12 mths

Income
Sales Turnover 51,944.57 50,389.01
Excise Duty 15,107.18 13,881.61
Net Sales 36,837.39 36,507.40
Other Income 1,803.74 1,543.13
Stock Adjustments -58.17 214.53
Total Income 38,582.96 38,265.06
Expenditure
Raw Materials 13,893.28 15,117.82
Power & Fuel Cost 541.57 581.65
Employee Cost 1,883.51 1,780.04
Miscellaneous Expenses 6,222.63 5,768.87
Total Expenses 22,540.99 23,248.38
Mar '16 Mar '15
12 mths 12 mths
Operating Profit 14,238.23 13,473.55
PBDIT 16,041.97 15,016.68
Interest 49.13 57.42
PBDT 15,992.84 14,959.26
Depreciation 1,034.45 961.74
Profit Before Tax 14,958.39 13,997.52
PBT (Post Extra-ord Items) 14,958.39 13,997.52
Tax 5,113.68 4,389.79
Reported Net Profit 9,844.71 9,607.73
Total Value Addition 8,647.71 8,130.56
Equity Dividend 6,840.12 5,009.70
Corporate Dividend Tax 1,392.48 1,019.86
Per share data (annualised)
Shares in issue (lakhs) 80,472.07 80,155.20
Earning Per Share (Rs) 12.23 11.99
Equity Dividend (%) 850 625
Book Value (Rs) 40.85 38.28

ITC investment valuation ratios:

Mar '16 Mar '15


Investment Valuation Ratios
Face Value 1 1
Dividend Per Share -- --
Operating Profit Per Share (Rs) 18.7 17.72
Net Operating Profit Per Share (Rs) 48.99 48.45
Free Reserves Per Share (Rs) -- --
Bonus in Equity Capital 88.28 88.63
Profitability Ratios
Operating Profit Margin(%) 38.17 36.56
Profit Before Interest And Tax Margin(%) 34.01 32.85
Gross Profit Margin(%) 35.35 33.92
Cash Profit Margin(%) 27.27 26.92
Adjusted Cash Margin(%) 27.27 26.92
Net Profit Margin(%) 25.13 24.88
Adjusted Net Profit Margin(%) 24.18 24.1
Return On Capital Employed(%) 45.62 45.27
Return On Net Worth(%) 29.26 30.53
Adjusted Return on Net Worth(%) 29.7 30.86

Return on Assets Excluding Revaluations 42.09 39.48

Return on Assets Including Revaluations 42.16 39.55


Return on Long Term Funds(%) 45.68 45.54
Liquidity And Solvency Ratios
Current Ratio 1.27 1.49
Quick Ratio 0.73 0.9
Debt Equity Ratio -- 0.01
Long Term Debt Equity Ratio -- --
Debt Coverage Ratios
Interest Cover 288.93 213.83
Total Debt to Owners Fund 0 0.01
Financial Charges Coverage Ratio 309.71 229.07

Financial Charges Coverage Ratio Post Tax 206.69 159.43


Management Efficiency Ratios
Inventory Turnover Ratio 6.03 6.21
Debtors Turnover Ratio 20.24 17.61
Investments Turnover Ratio 6.03 6.21
Fixed Assets Turnover Ratio 1.7 1.75
Total Assets Turnover Ratio 1.18 1.24
Asset Turnover Ratio 1.19 1.3
Average Raw Material Holding -- --
Average Finished Goods Held -- --
Number of Days In Working Capital 54.35 79.35
Profit & Loss Account Ratios
Material Cost Composition 35.52 39.26

Imported Composition of Raw Materials Consumed -- --

Selling Distribution Cost Composition -- --

Expenses as Composition of Total Sales -- --


Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 83.3 62.72

Dividend Payout Ratio Cash Profit 74.89 56.69


Earning Retention Ratio 17.94 37.94
Cash Earning Retention Ratio 26.12 43.85
AdjustedCash Flow Times 0.01 0.02

Accounting Policy

Basis of Preparation

The financial statements are prepared in accordance with the historical cost convention,
except for certain items that are measured at fair values, as explained in the accounting
policies. Fair Value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date,
regardless of whether that price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a liability, the Company takes into
account the characteristics of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the measurement date. Fair
value for measurement and/or disclosure purposes in these financial statements is determined
on such a basis, except for share-based payment transactions that are within the scope of Ind
AS 102 -Share-based Payment, leasing transactions that are within the scope of Ind AS 17 -
Leases, and measurements that have some similarities to fair value but are not fair value, such
as net realizable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of
Assets. The preparation of financial statements in conformity with Ind AS requires
management to make judgments, estimates and assumptions that affect the application of the
accounting policies and the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the year. Actual results could differ from those
estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the estimate is
revised if the revision affects only that period; they are recognized in the period of the
revision and future periods if the revision affects both current and future periods.

Tangible Assets, Fixed Asset Valuation and Depreciation Method

Property, plant and equipment are stated at cost of acquisition or construction less
accumulated depreciation and impairment, if any. For this purpose, cost includes deemed cost
which represents the carrying value of property, plant and equipment recognized as at 1st
April, 2015 measured as per the previous GAAP Cost is inclusive of inward freight, duties
and taxes and incidental expenses related to acquisition. In respect of major projects
involving construction, related pre-operational expenses form part of the value of assets
capitalized. Expenses capitalized also include applicable borrowing costs for qualifying
assets, if any. All up gradation / enhancements are charged off as revenue expenditure unless
they bring similar significant additional benefits.

An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected to arise from the continued use of asset. Any gain or loss
arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset
and is recognized in the Statement of Profit and Loss.

Depreciation of these assets commences when the assets are ready for their intended use
which is generally on commissioning. Items of property, plant and equipment are depreciated
in a manner that amortizes the cost (or other amount substituted for cost) of the assets after
commissioning, less its residual value, over their useful lives as specified in Schedule II of
the Companies Act, 2013 on a straight line basis. Land is not depreciated.

The estimated useful lives of property, plant and equipment of the Company are as follows:
Buildings: 30 - 60 Years
Leasehold Improvements Shorter of lease period or estimated useful lives
Plant and Equipment: 7 - 25 Years
Furniture and Fixtures: 8 - 10 Years
Vehicles: 8 - 10 Years
Office Equipment: 5 Years

Assets held under finance leases are depreciated over their expected useful lives on the same
basis as owned assets or, where shorter, the term of the relevant lease.

Property, plant and equipments residual values and useful lives are reviewed at each Balance
Sheet date and changes, if any, are treated as changes in accounting estimate.

Intangible Assets and Depreciation Method

Intangible Assets that the Company controls and from which it expects future economic
benefits are capitalized upon acquisition and measured initially:

a. for assets acquired in a business combination or by way of a government grant, at


fair value on the date of acquisition/grant

b. for separately acquired assets, at cost comprising the purchase price (including
import duties and non-refundable taxes) and directly attributable costs to prepare
the asset for its intended use.

Internally generated assets for which the cost is clearly identifiable are capitalized at cost.
Research expenditure is recognized as an expense when it is incurred. Development costs are
capitalized only after the technical and commercial feasibility of the asset for sale or use has
been established. Thereafter, all directly attributable expenditure incurred to prepare the asset
for its intended use are recognized as the cost of such assets. Internally generated brands,
websites and customer lists are not recognized as intangible assets.

The carrying value of intangible assets includes deemed cost which represents the carrying
value of intangible assets recognized as at 1st April, 2015 measured as per the previous
GAAP.

The useful life of an intangible asset is considered finite where the rights to such assets are
limited to a specified period of time by contract or law (e.g., patents, licenses, trademarks,
franchise and servicing rights) or the likelihood of technical, technological obsolescence
(e.g., computer software, design, prototypes) or commercial obsolescence (e.g., lesser known
brands are those to which adequate marketing support may not be provided). If, there are no
such limitations, the useful life is taken to be indefinite.

Intangible assets that have finite lives are amortized over their estimated useful lives by the
straight line method unless it is practical to reliably determine the pattern of benefits arising
from the asset. An intangible asset with an indefinite useful life is not amortized.

All intangible assets are tested for impairment. Amortization expenses and impairment losses
and reversal of impairment losses are taken to the Statement of Profit and Loss. Thus, after
initial recognition, an intangible asset is carried at its cost less accumulated amortization
and/or impairment losses.

The useful lives of intangible assets are reviewed annually to determine if a reset of such
useful life is required for assets with finite lives and to confirm that business circumstances
continue to support an indefinite useful life assessment for assets so classified. Based on such
review, the useful life may change or the useful life assessment may change from indefinite
to finite. The impact of such changes is accounted for as a change in accounting estimate.
Inventory Valuation

Inventories are stated at lower of cost and net realizable value. The cost is calculated on
weighted average method. Cost comprises expenditure incurred in the normal course of
business in bringing such inventories to its present location and condition and includes, where
applicable, appropriate overheads based on normal level of activity. Net realizable value is
the estimated selling price less estimated costs for completion and sale.

Obsolete, slow moving and defective inventories are identified from time to time and, where
necessary, a provision is made for such inventories.

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable for goods
supplied and services rendered, net of returns and discounts to customers. Revenue from the
sale of goods includes excise and other duties which the Company pays as a principal but
excludes amounts collected on behalf of third parties, such as sales tax and value added tax.

Revenue from the sale of goods is recognized when significant risks and rewards of
ownership have been transferred to the customer, which is mainly upon delivery, the amount
of revenue can be measured reliably and recovery of the consideration is probable. Revenue
from services is recognized in the periods in which the services are rendered.

Investments

ITC states Current Investments at lower of cost and fair value; and Long Term Investments,
including in Joint Ventures and Associates, at cost. Where applicable, provision is made to
recognise a decline, other than temporary, in valuation of Long Term Investments.