Annual Report

of

ITC Ltd.
www.itc.com

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ITC Limited One of Indias Most Admired Companies

ITC Annual Report 2010

PRESENTED BY,

MR. MR. MR. MR. MR.

ASIF DHALAIT SUDHIR MORE MAHESH DESHMUKH RAMESH KHATUA IMRAN SHAIKH

ITC Annual Report 2010

Board of Directors Chairman Yogesh Chander Deveshwar Executive Directors Anup Singh Krishnamoorthy Vaidyanath Kurush Noshir Grant

Board Committees Audit Committee: S B Mathur Chairman A Baijal Member A V Girija Kumar Member (Director responsible for the Finance Function) S Basu Invitee (Head of Internal Audit) Representative of the Invitee Statutory Auditors B B Chatterjee Secretary

ITC Annual Report 2010

Corporate Management Committee Directors: Y C Deveshwar Chairman A Singh Member K Vaidyanath Member K N Grant Member Executives: N Anand A Nayak T V Ramaswamy S Sivakumar K S Suresh R Tandon B B Chatterjee Non-Executive Directors Anil Baijal Shilabhadra Banerjee Angara Venkata Girija Kumar

Member Member Member Member Member Member Member & Secretary

ITC Annual Report 2010

Serajul Haq Khan Sunil Behari Mathur Dinesh Kumar Mehrotra Hugo Geoffrey Powell Pillappakkam Bahukutumbi Ramanujam Anthony Ruys Basudeb Sen Balakrishnan Vijayaraghavan

Compensation Committee
S H Khan A Baijal S B Mathur H G Powell B Sen Chairman Member Member Member Member

ITC Annual Report 2010

Investor Services Committee: A V Girija Kumar P B Ramanujam B Sen K Vaidyanath B Vijayaraghavan B B Chatterjee Chairman Member Member Member Member Secretary

Nominations Committee: Y C Deveshwar Chairman A Baijal Member S Banerjee Member A V Girija Kumar Member S H Khan Member S B Mathur Member D K Mehrotra Member P B Ramanujam Member

ITC Annual Report 2010

Sustainability Committee: Y C Deveshwar S Banerjee H G Powell A Ruys B Sen B Vijayaraghavan B B Chatterjee Chairman Member Member Member Member Member Secretary

Executive Vice President & Company Secretary: Biswa Behari Chatterjee

General Counsel: Kannadiputhur Sundararaman Suresh

Investor Service Centre: 37 Jawaharlal Nehru Road, Kolkata 700 071, India Phone : 033-2288 6426/2288 0034 Fax : 033-2288 2358 e-mail : isc@itc.in

ITC Annual Report 2010

Auditors
Deloitte Haskins & Sells Chartered Accountants, Kolkata

Registered Office
Virginia House 37 Jawaharlal Nehru Road, Kolkata 700 071, India Phone : 033-2288 9371 ITC corporate website : www.itcportal.com

ITC Annual Report 2010

History: ITC Limited is an Indian conglomerate with a turnover of US $ 6 billion and a market capitalization of over US $ 22 Billion. The company has its registered office in Kolkata. The company is currently headed by Yogesh Chander Deveshwar. It employs over 26,000 people at more than 60 locations across India and is listed on Forbes 2000. ITC Limited completes 100 years on 24th August, 2010. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery.

ITC Annual Report 2010

One of Indias most valuable and admired companies

One of the 8 Indian Companies to feature in Forbes A-list for 2004

Featuring 400 of the Worlds best big companies with M-cap. > USD 5 bln. & are rated as the most attractive companies for investors

Only Indian FMCG Company to feature in Forbes 2000 List

A comprehensive ranking of worlds biggest companies measured by a composite

of sales, profits, assets & market value

One of the foremost in the private sector in terms of :

Sustained value creation (BT-Stern Stewart survey) Operating profits Cash Profits No. 1 in FMCG Sector

Ranks No. 4 among Indian listed Private Sector Companies by market cap.
Rated as one of Indias Most Respected Companies (IMRB-Business world Survey 2006)

ITC Annual Report 2010

ITC received the FICCI Outstanding Vision Corporate Triple Impact Award 2007 for invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation. Global Leadership Award conferred on Chairman Y C Deveshwar by the US India Business Council of the US Chamber of Commerce Sustainability Leadership Award 2007 conferred on Chairman Y C Deveshwar by the Sustainability Forum, Zurich and SAM/SPG at the International Sustainability Leadership Symposium Business Today Award for the Best Managed Company Retail and Consumer Products, has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment. Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum In the first of its kind S&P Environmental, Social and Corporate Governance (ESG) ratings released recently, ITC ranked second among top Indian companies.

The Company has won the Corporate Social Responsibility Crown Award for Water Practices from UNESCO and Water Digest for its distinguished work carried out in the water sector in India.
ITC Limited won the top UNIDO award at the International Conference on Sharing Innovative Agribusiness Solutions 2008 at Cairo in recognition for its initiatives in agri business. ITC has been conferred the ICAI Award for Excellence in Financial Reporting with its Annual Report and Accounts, adjudged as a commendable entry under the Manufacturing and Trading Enterprises category.

The Best Corporate Social Responsibility Practice Award 2008 jointly instituted by the Bombay Stock Exchange, Times Foundation and the NASSCOM Foundation.

ITC Annual Report 2010

e-Choupal initiative wins global recognition: Stockholm Challenge Award 2006 in the Economic Development category which recognizes initiatives that leverage Information Technology to improve living conditions and foster economic growth in all parts of the world. First Indian Company to win the Development Gateway Award 2005 for the most exemplary contribution in the field of Information & Communication Technologies (ICT) for development during the last 10 years World Business Award 2004: International Chamber of Commerce & the HRH Prince of Wales & International Business forum Harvard University case study Recognized in World Development Report 2008 published by World Bank Applauded by President of India Dr APJ Kalam in his special address during the national symposium to commemorate 60th year of independence

ITC Annual Report 2010

Report of the Directors & Management Discussion and Analysis For the Financial Year Ended 31st March, 2010 SOCIO-ECONOMIC ENVIRONMENT: The Indian economy staged a remarkable recovery to grow at 7.2% during the year, facilitated by policy stimulus and increased government spending. A faster pace of growth in investments, the sharp pick up in capital inflows and a resurgent stock market are some of the key positives that augur well for the economy. ITCs path-breaking Choupal Pradarshan Khet (CPK) aims to enhance farm productivity by emphasizing agricultural best practices, and is an example of how private sector initiatives can complement State interventions to create significant value for the Indian farmer.

COMPANY PERFORMANCE (FOREIGN EXCHANGE EARNINGS): Net Turnover grew by 16.3% primarily driven by a 20.9% growth in the non-cigarette FMCG businesses, a 19.8% growth in the Cigarettes business and a 17.4% growth in the Paperboards, Paper & Packaging segment.

ITC Annual Report 2010

Cigarettes Foods Personal Care Lifestyle Retailing

Education & Stationery Education & Stationery

Matches Matches

Incense Sticks Incense Sticks

Hotels Hotels

Paper & Packaging

Agri Agri Business Business

Information Technology

ITC Annual Report 2010

ITC Products FMCG Cigarettes: A punitive and discriminatory approach has resulted in the share of cigarettes in total tobacco consumption in India progressively declining from 23% in 1971/72 to about 15% currently. Despite having only a 15% share of consumption, cigarettes contribute more than 85% of the tax revenues from the tobacco sector. Taxes realized from every kilogram of tobacco consumed in the cigarette format are 35 times higher than those from other forms of tobacco products. Fast Moving Consumer Goods Others: Company has rapidly scaled up presence in its newer FMCG businesses. Segment revenues in FMCG (Others) clocked a Compound Annual Growth Rate of 38% in the last 5 years. Branded Packaged Foods: The Branded Packaged Foods Business will continue to leverage Research & Development to launch innovative and differentiated products across various platforms of taste, energy, health and wellness. Lifestyle Retailing: Wills Lifestyle is now available at 56 exclusive stores in 30 cities and in more than 150 shop-in-shops in leading departmental stores.

ITC Annual Report 2010

Education & Stationery Products: The Education & Stationery Products business has enlarged its distribution footprint to cover 2,800 markets, over 1,000 wholesale dealers and 72,000 stationery retail outlets. Incense sticks (Agarbattis): In line with the Companys commitment to the Triple Bottom Line, the Agarbatti business provides livelihood opportunities to more than 8000 under-privileged women across India. Personal Care Products: The Personal Care Products business continued to roll out its product portfolio under the Essenza Di Wills, Fiama Di Wills, Vivel Di Wills, Vivel and Superia brands across new geographies. Fiama Di Wills Gel Bathing Bar was voted Product of the Year in the soaps category based on a survey of over 30,000 households by AC Nielsen. HOTELS: ITC Royal Gardenia, Bengaluru achieved the distinction of being the worlds largest hotel and the first in Asia to receive the LEED Platinum Rating for green buildings yet another expression of Responsible Luxury. PAPERBOARDS, PAPER AND PACKAGING: The state-of-the-art paper machine commissioned in 2008 operated to full capacity during the year, enabling your Company to make a significant entry into the Paper segment. ITC is the market leader in the Paperboards segment with a value market share of around 26%. Your Company became a member of the WWF Global Forest and Trade Network, the first Indian Company to have been so invited. ITC has also won the Forest Stewardship Councils Chain of Custody certification, a global industry benchmark for sustainable development, for its units at Bhadrachalam and Kovai.

ITC Annual Report 2010

Packaging and Printing: ITCs Packaging and Printing business won several national awards for excellence in printing, as well as the World Star award for excellence in packaging. The Munger unit has been certified at Level 8 of the International Quality Rating System. Cigarette Leaf Tobacco: Your Company strengthened its position as the foremost supplier of quality Indian tobaccos in the global market, achieving a record export growth of 86% over last year. Agri Commodities: ITC continues to train farmers to deploy organic farming techniques, Good Agriculture Practices and product traceability systems through demonstration plots and extension services designed to help them obtain international organic certification. Your Companys neem-based organic manures such as Wellgro Soil, Wellgro Grains and Wellgro Crops continue to gain wide acceptance. These products were endorsed by the European Agency Control Union as organic inputs under stringent quality specifications of the National Program on Organic Production.

ITC Annual Report 2010

ITC Subsidiaries.
Surya Nepal Pvt. Ltd:- Notwithstanding the challenging socio-political environment, the
companys growth and performance continued on an upward trajectory. In the twelve-monthperiod ended 13th March 2010, the companys sales grew by 30%.

ITC Infotech India Limited:- Despite the severe challenges resulting from such adverse
market conditions, the company grew total income for the year by 8% and significantly improved its profitability. New customer acquisitions and renewed.

Russell Credit Ltd:-During the year, the company registered an income ofRs. 51.81 crores and
a Profit After Tax of Rs. 41.93 crores.

Wimco Limited:- Inspite of the growth in sales and realizations, the company posted a net loss
for the year of Rs. 16.24 crores against a net profit of Rs. 1.12 crores in the previous year, primarily as a result of steep increases in input costs.

Srinivasa Resorts Limited:- The financial performance of the companys hotel at Hyderabad,
ITC Kakatiya, was adversely impacted by the continuing economic slowdown and the political instability in the State.

Fortune Park Hotels Ltd:- During the financial year ended 31st March, 2010, the company
recorded an income of Rs. 1492 lakhs.

Bay Islands Hotels Limited:- During the year 2009-10, the company earned an income of Rs.
101.08 lakhs.

Landbase India Limited:

ITC Annual Report 2010

Technico Pty Limited: King Maker Marketing Inc: ITC Global Holdings Pte. Ltd: BFIL Finance Limited: Joint Ventures of ITC ITC Filtrona Limited ITC Filtrona Limited delivered another year of robust business growth with Gross Sales at Rs. 135 crores growing by 19% over the previous year. However, pricing. Maharaja Heritage Resorts Limited: Welcom Heritage brand and continues to grow with another 13 properties under development. Risk Management Government Policies, Sustainability Contribution to the Triplebottom Line, R&D, Quality and Product Development, Luxury Tax, Recovery of dues from the Chitalias and Directorate, Treasury Operations. CONCLUSION Companys Board and employees are inspired by their Vision of sustaining ITCsposition as one of Indias most admired and valuable companies throughworld-class performance, creating enduring value for all stakeholders, including the shareholders and the Indian society.

ITC Annual Report 2010

ITC Annual Report 2010

ITC Annual Report 2010

Notes
Capital:- Issued & Subscribed 3,81,81,76,790 Ordinary Shares of Re.1.00 each, fully paid (2009 - 3,77,43,99,560 Ordinary Shares of Re.1.00 each, fully paid).
Loans to Subsidiaries comprise of : ITC Infotech India Limited Rs.110.88 Crores (2009 Rs.162.04 Crores)BFIL Finance Limited Rs. 32.55 Crores (2009 - Rs. 32.99 Crores) Landbase India Limited Rs. Nil (2009 - Rs. 40.00 Crores) Russell Credit Limited Rs. Nil (2009 - Rs. 4.10 Crores). Liabilities :- There is no amount due and outstanding to be credited to Investor Education and Protection Fund. For this purpose an amount of Rs. 0.30 Crore (2009 - Rs. 0.30 Crore) maintained with a bank has not been considered on account of a pending legal dispute for which the Company has filed a suit. Includes amounts due to Subsidiary Companies Rs. 54.63 Crores (2009 - Rs. 22.16 Crores). (The maximum outstanding during the year was Rs. 396.90 Crores; 2009 - Rs. 31.04 Crores). Includes Loans to Directors and to Company Secretary - Rs. 0.39 Crore (2009 - Rs. 0.46 Crore). (The maximum indebtedness during the year was Rs. 0.46 Crore; 2009 Rs.0.87 Crore). Includes Capital Advances of Rs. 264.69 Crores (2009 - Rs. 439.89 Crores). Other Incomes:- The Income from Investments and Interest are stated Gross, the amount of Income Tax deducted is Rs. 16.80 Crores (2009 - Rs. 14. Depreciation :- for 2010= For 2010=3825.46 and for 2009=3286.74. Provision for Taxation:- for 2010=For 2010=4549.94 and For 2009=1729.51.

ITC Annual Report 2010

ITC Annual Report 2010

ITC Annual Report 2010

ITC Annual Report 2010

ITC Annual Report 2010

ITC Annual Report 2010

ITC Annual Report 2010

ITC Annual Report 2010

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