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ITC Ltd Cigarettes
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The global economy remained on a decelerating trend in 2016 growing by 3.1% compared to 3.4% in 2015 (as per latest IMF estimates). This marks the slowest pace of expansion since the global financial crisis in 2009 and the fifth successive year that the global economy has grown at a rate lower than its long-term average of 3.6% p.a. The anticipated pick-up in global growth (3.4%) at the beginning of the year did not fructify mainly due to slower growth in the Advanced Economies which grew by 1.7% in 2016 against 2.1% in 2015. Within the Advanced Economies, the US posted a muted growth of 1.6% led by downward adjustments in inventories and contraction in Private Investments, particularly during the first half of the year. The Euro Area also recorded tepid growth, expanding by 1.7% during the year compared to 2.0% in 2015. Emerging Market & Developing Economies witnessed a growth of 4.1% in 2016 against 4.2% in 2015, with Brazil and Russia recording a reduced pace of contraction which was offset by slower growth in the emerging European economies and further slowdown in the Chinese economy from 6.9% in 2015 to 6.7% in 2016.

In spite of the lacklustre performance during the year as aforestated, green shoots of economic recovery became visible in the latter half of the year. It is anticipated that the global economy will perform better and grow by 3.5% in 2017 and improve further to 3.6% in 2018, on the back of synchronised growth momentum in Advanced as well as Emerging Economies. Within the Advanced Economies, the US economy is projected to grow at 2.3% in 2017 driven by expectations of a liberal fiscal policy and continued momentum in the manufacturing-led cyclical recovery. The outlook for Euro Area has also improved, though socio-political risks remain a potential downside. The Emerging Market & Developing Economies are also likely to witness improvement in growth at 4.5% in 2017, aided by recovery in commodity prices and Brazil and Russia emerging out of deep recession. Growth in China, however, is projected to slow down further to 6.6% in 2017, reflecting the ongoing rebalancing of the economy towards a more sustainable and broad-based consumption and services led growth. After years of persistently low inflation (even deflation), 2017 is expected to be a year of reflation. Stronger growth momentum, better prospects for oil and other commodities, and the US Dollar's appreciation against other major currencies could cause inflation to return in most major economies. A strong US Dollar, increase in US interest rates, progressive tapering of quantitative easing in the EU and the looming threat of protectionism in the developed world could weigh on the nascent recovery in emerging markets including commodity-exporting emerging economies.

The Indian economy witnessed another challenging year, with Real GDP growth pegged at 7.1% representing a sharp slowdown over 2015-16 (7.9%). The Industry and Services sectors decelerated further during the year, recording the slowest growth in three years. Further, looking beyond the reported numbers, a wide range of economic indicators suggest tepid performance across private investments, consumption and manufacturing activity which have contracted significantly. The anticipated pick-up in Consumption and Private Investment remained elusive.

Private Investment is estimated to have grown by a mere 0.6% in 2016-17 - a 5-year low. Indian industry continues to be adversely impacted by low capacity utilisation and stretched balance sheets. Growth in Private Final Consumption Expenditure (PFCE) is estimated at 7.2% for 2016-17 (compared to 7.3% in 2015-16) aided by a rebound in Agriculture on the back of a good monsoon after two consecutive years of sub-par rainfall, partial implementation of recommendations of 7th Pay Commission and ‘One Rank One Pension' (OROP) scheme. However, proxy indicators such as subdued performance of two-wheeler sales, marked deceleration in corporate sales growth, weak power demand, decline in cement and oil volumes, point to persistent weakness in Private Consumption and the broader economy.

On the positive side, India remains the fastest growing major economy in the world. During the year, there was significant improvement on the ‘twin deficit' front. Fiscal Deficit is estimated to be contained within target at 3.5% of GDP in 2016-17 (against 3.9% in 2015-16) aided by buoyant tax collections and decline in oil subsidies. The Current Account Deficit was also contained within 1.0% of GDP in spite of an increase in oil prices during the year.

Inflation remained largely within the comfort zone of the RBI during the year. While growth in Wholesale Price Index (WPI) for 2016-17 stood at 1.7% compared to a decline of 3.7% in 2015-16, this was mainly attributable to the base effect of low fuel and commodity prices. Consumer Price Index (CPI) for 2016-17 declined to

4.5% against 4.9% in 2015-16 with Core CPI remaining stable at 4.7% in 2016-17 (4.6% in 2015-16). This prompted the RBI to reduce policy interest rates by 50 bps during the year. However, with commodity prices expected to firm up in the ensuing year and Core CPI remaining sticky at around 5% for the past several months, the scope for further reduction in interest rates seems limited.

Foreign capital flows into the country, in the form of Foreign Institutional Investments and Foreign Direct Investment, grew significantly during the year. It was a good year for the capital markets as well, with the Sensex advancing by 17% during the year (after declining by 9% in 2015-16), reflecting the optimism on improvement in the business environment, expected progress on the reforms agenda and anticipated acceleration in corporate earnings going forward.

As per median estimates, based on the Survey of Professional Forecasters conducted by RBI, the Gross Value Added (GVA) of the Indian economy is likely to grow by 7.3% in 2017-18 (6.7% in 2016-17). Timely and smooth implementation of key reforms, low inflation and expectations of a normal monsoon in the ensuing year represent some of the key factors that are likely to positively influence Private Consumption going forward. The pace of growth is expected to gather momentum in the medium-term on the back of favourable global economic tailwinds, pick-up in Private Investment and implementation of key policy reforms such as the Goods and Services Tax (GST).

The proposed implementation of the Goods and Services Tax (GST), with effect from 1st July 2017, is expected to transform the indirect tax landscape in the country and accelerate economic growth in the long run by simplifying the tax structure, enhancing tax compliance and facilitating the ease of doing business in a unified common market. This augurs well for your Company and each Business is gearing up to ensure a smooth transition to the new indirect tax regime and harness the supply chain and logistics efficiencies that are expected to accrue post implementation of GST. In the near-term, however, the preparedness of your Company's suppliers and service providers, customers, trade channels etc. - especially the small and medium scale enterprises - remains a key factor to ensure a seamless transition to the GST regime with minimal disruption to operations.

While India remains one of the fastest growing major economies in the world, the pace of economic growth in recent years has remained below the desired levels and the country's potential. Stagnation in the manufacturing sector needs to be reversed at the earliest towards the creation of sustainable livelihoods and absorption of millions of Indians entering the job market every year. In this context, the Government's ‘Make in India' initiative to turn the country into a global manufacturing hub coupled with focus on skill development are steps in the right direction. The successful implementation of structural initiatives identified by the Government towards improving the ease of doing business in the country by enhancing transparency, speeding up the approvals process, resolving policy issues by working in tandem with the States and fostering greater levels of value addition within the country would be critical to boost the performance of the Indian economy and realise its true potential. Enhancing agricultural productivity and value addition to international standards while simultaneously improving market linkages remain critical for the growth of the Agricultural sector. In this context, it is pertinent to note that anywhere between 5% and 40% of food is wasted along the chain in India, depending on the inherent perishability of the crop and the season. India processes only 8% of its total food production as compared to 23% in China, 65% in USA and 78% in Philippines. A big thrust on India's Food Processing sector can lead to significant job creation, enhance rural incomes and help manage food inflation. Similarly, supportive policies in the area of agro-forestry would go a long way in creating sustainable livelihoods while simultaneously augmenting the nation's environmental capital.

Given India's disproportionately low share of global natural resources relative to its large population and where millions continue to live in abject poverty, the focus both at the national and corporate level should be on fashioning strategies that foster sustainable, equitable and inclusive growth. 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 in 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 the future.

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 15 years),

‘carbon positive' (for 12 years), and ‘solid waste recycling positive' (for 10 years). The focus on creating unique business models that generate substantial livelihoods across the value chains has led to your Company's Businesses supporting six million sustainable livelihoods, many of whom belong to the weakest in society.

The following sections outline your Company's progress in pursuit of the ‘Triple Bottom Line'.


Your Company delivered a steady performance during the year in the backdrop of a persistently sluggish demand environment, continuing pressure on the legal cigarette industry due to the cumulative impact of steep increase in taxation and regulatory pressures, sharp hike in input costs and gestation costs relating to new products/categories especially in the non-cigarette FMCG segment. The operating environment was rendered particularly challenging in the second half of the year with the currency crunch impacting the incipient recovery in demand. The business environment in the Hotels industry also remained subdued, with only a marginal improvement in room rates reflecting the overhang of excess room inventory in key markets. The Paperboards, Paper and Packaging segment also had to contend with a weak demand and pricing environment.

Despite the challenging business environment as aforestated, Gross Revenue at Rs 55001.69 crores grew by 6.6% primarily driven by an 8.0% growth in the non-cigarette FMCG segment, 10.8% growth in Agri Business and 5.1% growth in the Cigarettes segment. Profit Before Tax registered a growth of 7.4% to Rs 15502.96 crores while Profit After Tax at

Rs 10200.90 crores increased by 9.4%. Total Comprehensive Income for the year stood at Rs 10277.90 crores (previous year Rs 9261.79 crores). Earnings Per Share for the year stood at Rs 8.43 (previous year Rs 7.74). Cash flows from Operations aggregated Rs 15214.98 crores, compared to Rs 14039.64 crores in the previous year.

Your Directors are pleased to recommend an Ordinary Dividend of Rs 4.75 per share (previous year Ordinary Dividend of Rs 4.33 per share and Special Dividend of Rs 1.33 per share; adjusted for Bonus Issue) for the year ended 31st March, 2017. Total cash outflow in this regard will be Rs 6944.65 crores including Dividend Distribution Tax of Rs 1174.64 crores.

Your Directors approved a transfer of Rs 1030.00 crores (previous year Rs 990.00 crores) to General Reserve. Consequently, Retained Earnings as at 31st March, 2017 stands at Rs 17576.81 crores (previous year Rs 16589.89 crores).


Over the last five years, the Value-Added by your Company, i.e. the value created by the economic activities of your Company and its employees, aggregated Rs 188384 crores and grew at a compound annual rate (CAGR) of 11.8%. During this period, your Company's Contribution to the Exchequer aggregated Rs 138375 crores growing at 12.2% CAGR. It is pertinent to note that 75% of the incremental Value-Added during this period accrued to the Exchequer.

Including the share of dividends paid and retained earnings attributable to government owned institutions, your Company's contribution to the Central and State Governments represents 80% of its Value-Added during the year.

Your Company remains amongst the Top three Indian corporates in the private sector in terms of Contribution to Exchequer.


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. Foreign exchange earnings of the ITC Group over the last ten years aggregated nearly US$ 7.0 billion, of which agri exports constituted 56%. 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 2016-17, your Company and its subsidiaries earned Rs 4609 crores in foreign exchange. The direct foreign exchange earned by your Company amounted to Rs 3961 crores, mainly on account of exports of agri-commodities. Your

Company's expenditure in foreign currency amounted to Rs 1828 crores, comprising purchase of raw materials, spares and other expenses of Rs 1301 crores and import of capital goods at Rs 527 crores.


Rs in Crores)
PROFITS 2017 2016
a) Profit Before Tax 15502.96 14434.07
b) Tax Expense
– Current Tax 5285.65 4896.06
– Deferred Tax 16.41 209.64
c) Profit for the year 10200.90 9328.37
d) Other Comprehensive Income 77.00 (66.58)
e) Total Comprehensive Income 10277.90 9261.79
a) At the beginning of the year 16589.89 14257.63
b) Add: Profit for the year 10200.90 9328.37
c) Add: Other Comprehensive Income (net of tax) (24.92) (35.21)
d) Add: Transfer from share option on exercise and lapse 14.58 7.64
e) Less: Dividends
– Ordinary Dividend of Rs 6.50 (2016: 5230.68 5009.70
Rs 6.25) per share. [Adjusted for Bonus
Issue, Ordinary Dividend of Rs 4.33
(2016 - Rs 4.17) per share]
– Special Dividend of Rs 2.00 (2016: Rs Nil) per share. [Adjusted for Bonus Issue, Special Dividend of Rs 1.33 (2016 - Rs Nil) per share] 1609.44
– Income tax on Dividend paid 1333.52 968.84
f) Less: Transfer to General Reserve 1030.00 990.00
g) At the end of the year 17576.81 16589.89

FMCG Cigarettes

The legal cigarette industry continues to be severely impacted due to the cumulative impact of steep increase in taxation, intense regulatory pressures and the tight liquidity conditions - especially in the wholesale channel - prevailing in the market during the latter half of the year. While legal cigarette industry volumes remain under pressure, illegal trade continues to grow unabated resulting in significant revenue loss to the Exchequer.

Over the last five years, the incidence of Excise Duty and VAT on cigarettes, at a per unit level, has gone up cumulatively by 131% and 157% respectively, thereby exerting severe pressure on legal industry volumes. Due to the steep hike in taxation over the past several years, at levels well above the rate of inflation, duty-paid cigarettes have become less affordable in the country, leading to a drop in volumes.

Research indicates that a significant number of cigarette consumers in India are dual consumers, in that they also consume some other tobacco product. The high incidence of taxation and a discriminatory regulatory regime on cigarettes in India have over the years only served to divert consumption of tobacco to lightly taxed or tax-evaded tobacco products like bidis, chewing tobacco, guthka and illegal cigarettes. In fact, India's per capita cigarette consumption is amongst the lowest in the world and is significantly lower in comparison to Russia, Japan, China, United States, and even neighbouring countries like Pakistan and Bangladesh.

Thus, while tobacco consumption has been growing steadily in the country over the years, the share of legal cigarettes in total tobacco consumption has been on the decline as would be apparent from the figures given in the table below.

Year Total Domestic Consumption including Illegal Cigarettes (Million Kgs) Legal Cigarette Consumption (Million Kgs) % Share of Legal Cigarettes in Total Tobacco Consumption
1981/82 406 86 21%
2009/10 499 73 15%
2014/15 562 62 11%

Source: USDA and Industry Estimates

Although legal cigarettes account for only about 11% of total tobacco consumption in the country, they contribute more than 87% of tax revenue from the tobacco sector. The other types of tobacco products contribute barely 13% of tax revenue from the tobacco sector despite accounting for 89% of total tobacco consumption. Since these products are predominantly manufactured in a fragmented manner in the unorganised sector, there is rampant tax evasion. Moreover, most of these products escape regulatory oversight as well and tend to be manufactured in unhygienic conditions with ingredients of questionable quality. Consequently, most of these products are of inferior quality and their growing volumes undermine the health objectives of tobacco control.

Further, the high rates of tax on cigarettes also provide attractive tax arbitrage opportunities to unscrupulous players. Consequently, the illegal cigarette market, consisting of duty-evaded cigarettes manufactured within the country and offered to consumers at Rs 1 / Rs 2 per stick and the contraband international brands of cigarettes have been growing rapidly over the years. The illegal cigarette segment is the only segment that has been growing year on year and currently accounts for one-fifth of the market. According to an independent study conducted by Euromonitor International, India is today the 4th largest market for illegal cigarettes in the world. It is estimated that almost 68% of the tobacco consumed in the country remains outside the tax net on account of evasion1. The proliferation of these tax-evaded products have resulted in significant losses to the Exchequer, in excess of Rs 9000 crores per annum according to an independent study conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI). Seizures of large quantum of smuggled cigarettes by enforcement agencies across the country over the past couple of years confirm the growing menace of illegal cigarette trade in the country. A conducive policy framework, which effectively reduces the huge tax arbitrage opportunity enjoyed by unscrupulous players presently, is critical to arrest the unabated growth of illegal cigarette trade in the country.

As reported last year, the significant decline in legal cigarette volumes and the consequent reduction in the utilisation of Indian Flue-cured Virginia (FCV) tobacco has adversely impacted the livelihoods of over 45 million tobacco farmers, farm workers and others dependent on the tobacco sector. Besides, the soft demand for Indian FCV tobacco has prompted consecutive reductions in the authorised tobacco crop size in 2015-16 and 2016-17. This, in turn, has also led to lower exports of tobacco. Consequently, the acute distress of the tobacco farming community continues unabated, particularly in Andhra Pradesh with an estimated drop of over Rs 900 crores in earnings in 2016-17. This distress is expected to be aggravated by the unprecedented drought in Andhra Pradesh during the year.

Unfortunately, the taxation policy of the country is largely cigarette centric and based on western models of tobacco taxation. This policy is not suitable for India since duty-paid cigarettes account for only about 11% of tobacco consumption in the country as compared to the global average of more than 90%. Your Company continues to engage with policy makers for a tobacco taxation policy that is non-discriminatory, helps combat the problem of illegal cigarettes and addresses the issues of all stakeholders, particularly tobacco farmers, Exchequer and consumers. Such a policy will not only help maximisation of the revenue potential of tobacco even in a shrinking basket of tobacco consumption but also address the tobacco control and health objectives of the Government.

The Goods and Services Tax (GST) is expected to be implemented with effect from 1st July 2017. The Government has enunciated the principle of revenue neutrality for all products including cigarettes while transitioning to the GST regime. In this context, as per the schedule of rates published pursuant to the GST Council's meeting on 18th May 2017, cigarettes are likely to be taxed at the peak rate of 28%. Additionally, a GST Compensation Cess, comprising a 5% ad-valorem component and a specific component based on cigarette length, is likely to be imposed.

It may be noted that the GST Council is yet to finalise the GST rate applicable for bidis. It would be imperative to implement an appropriate taxation structure for bidis under the GST framework, rectifying the discriminatory treatment meted out to the legal cigarette industry under the present tax regime. A level playing field for the legal cigarette industry would go a long way in realising the revenue potential of the tobacco sector and supporting the millions of livelihoods that are dependent on it.

In addition to the punitive taxation landscape, the legal cigarette industry in India continues to grapple with an increasingly stringent regulatory framework. As reported last year, the proposal for increasing the size of the Graphic Health Warnings (GHW) from 40% of the surface area on one side of the cigarette package to 85% of the surface area of both sides of the cigarette package with effect from 1st April 2015 was kept in abeyance pending the recommendations of the Parliamentary Committee on Subordinate Legislation (PCOSL), which had been entrusted with the responsibility of examining the issues consequent to introduction of a larger GHW. However, even before the PCOSL submitted their final report on the matter, the larger health warnings were notified for implementation with effect from 1st April 2016. In the interim, on 15th March, 2016 the PCOSL, in its final report recommended that the size of the GHW should be restricted to 50% on both sides of the cigarette package and not 85% as proposed by the Government. Pursuant to the order of the Honourable Supreme Court, the Honourable High Court of Karnataka has heard your

Company's and other writ petitions challenging the revised GHW and has reserved its judgement.

The 85% GHW is excessively large, extremely gruesome and unreasonable. There is no evidence that cigarette smoking would cause the diseases depicted in the pictures or that large GHW will lead to reduction in consumption. As reported last year, this inadequacy of evidence prompted an appeals court in USA to hold the US FDA's proposal for introduction of similar GHW in that country as unconstitutional. It is pertinent to note that the global average size of GHW is only about 30% coverage of the principal display area. Further, over 100 countries representing 60% of the signatories to the Framework Convention on Tobacco Control (FCTC) have not adopted GHW2 . In fact, the three countries that account for about 51% of the world's cigarette consumption viz. USA, Japan and China, have not adopted pictorial / graphic warnings and have prescribed only text-based warnings on cigarette packages. Moreover, several major tobacco producing countries, including the USA, are either not parties to the FCTC or are very recent signatories. These countries have taken into consideration the interests of their tobacco farmers in deciding whether or not to adopt large or excessive pictorial warnings.

The excessively large GHWs prevent consumers from making an informed choice in a competitive market, since they are denied adequate information about the brand on the cigarette packages. Your Company believes that such GHW also devalues the Intellectual Property Rights of brand owners and sub-optimises the large investments made over the years in creating and nurturing the brands. Additionally, studies by independent market research agencies show that consumers tend to prefer the smuggled brands of international cigarettes which do not carry the GHWs mandated by Indian Laws. The absence of GHWs on packages of such contraband cigarettes makes consumers perceive them to be a ‘safer alternative' notwithstanding the fact that the origins and age of such contraband stocks are not determinable. The absence of GHWs along with the significantly lower cost of these contraband cigarettes, due to reasons of tax evasion, only serve to accelerate the growth of the illegal cigarette segment.

The unintended consequences of the extant tobacco taxation and regulatory framework may be summarised as follows:

– Progressive decline in legal cigarette volumes in favour of lightly taxed and tax-evaded tobacco products resulting in sub-optimisation of the revenue potential of the tobacco sector and significant loss to the Exchequer.

– About 68% of the tobacco consumption in the country remaining outside the tax net.

– Availability of illegal cigarettes and other tobacco products of dubious quality and hygiene to consumers at extremely affordable prices.

– Adverse impact on the livelihood of tobacco farmers and others dependent on tobacco for their livelihood.

– Fillip to the growth of illegal cigarettes in the absence of statutory GHW on smuggled international brands.

Your Company continues to represent to the Government for the implementation of an equitable, evidence based and pragmatic tobacco taxation and regulatory framework that cognises for the economic imperatives of the country whilst, simultaneously, supporting the tobacco control objectives of the Government.

Despite the extremely challenging operating environment, your Company retained its leadership position in the industry and improved its standing in key competitive markets across the country. This demonstrates the resilience of your Company's strong portfolio of brands, superior execution of competitive strategies, relentless focus on value creation through innovation and deep consumer insights. Some of the strategic initiatives during the year include the launch of Gold Flake Kings Blue Tropical Switch, Classic Citric Burst, Classic Tangy Burst, Classic Fine Taste Plus Low Smell, American Club, Players Fruity Cool Flavour, Flake Mint Capsule, Silk Cut Mint Capsule and Navy Cut Mint Capsule.

The Business continued to make investments in manufacturing facilities towards sustaining its competitive advantage. State-of-the-art, on-line quality oversight systems and cutting-edge technology for innovative packaging were inducted during the year. Long Term Agreements with the unionised workforce were concluded successfully for the Kidderpore and Munger cigarette factories during the year. In addition to grant of patents in previous years, the ongoing initiatives in research and development have resulted in your Company being granted two more international patents during the year in respect of cigarettes.

It is a matter of deep satisfaction that the Business won several awards during the year for its focus on manufacturing excellence, commitment to sustainability and superior standards in Environment, Health and Safety (EHS) in line with your Company's commitment to the ‘Triple Bottom Line'. The Ranjangaon cigarette factory was awarded ‘Platinum Rating' at the India Manufacturing Excellence Awards 2016 (IMEA) by Frost & Sullivan, a global consulting firm. This highly acclaimed award acknowledges Indian manufacturing capability and its global competitiveness. The Munger cigarette factory was awarded ‘Eminent Supply Chain and Logistics Unit' at CII National Supply Chain and Logistics Excellence Awards 2016 in recognition of its consistent achievement of benchmark performances in supply chain and logistics. The Business received industry recognition and several accolades for its commitment towards excellence in sustainability. With the Kidderpore cigarette factory receiving the Indian Green Building Council (IGBC) Platinum Rating under Green Factory Building certification during the year, all cigarette factories of your Company are today IGBC Green Platinum rated. The Bengaluru and Munger factories also received the ‘Excellent Energy Efficiency Unit' award under the CII National Awards for Excellence in Energy Management 2016 whilst the Saharanpur cigarette factory received the first prize in FICCI Water Awards under ‘Industrial Water Use Efficiency' category.

In recognition of the growing trend of consumers seeking alternative sources of nicotine like Electronic Vaping Devices (EVD), your Company expanded its EON brand of EVDs to several new markets during the year. The rechargeable variant, ‘EON Charge', launched in the previous year was extended to several new markets and a disposable variant, ‘EON ZIP', was launched during the year. Initial consumer response to this variant has been positive. The market for this category is, however, at an embryonic stage globally and, as reported last year, the regulatory oversight is still evolving. Accordingly, your Company remains engaged with policy makers for an apposite regulatory framework for this emerging category.

In the Nicotine Gum category, the Business extended the KwikNic brand to several new markets and has received encouraging response from consumers.

The operating environment for the legal cigarette industry, marked by a punitive taxation and discriminatory & increasingly stringent regulatory regime, will undoubtedly test the resilience of all legitimate players in the industry. Your Company is, however, confident that the trust reposed on it by consumers together with its strong brand portfolio and robust strategic initiatives - based on excellence in product quality and innovation in manufacturing and operations - will enable it to sustain its leadership position in the market.

FMCG - Others

The FMCG industry witnessed further deceleration in growth rate during the year with demand conditions remaining subdued for the fourth successive year. The much anticipated pick-up in consumption expenditure on the back of good monsoons in 2016, low inflation and implementation of the recommendations of the 7th Pay Commission did not play out fully. The incipient recovery in demand witnessed during the middle of the year was adversely impacted by the cash crunch especially during the third quarter. Further, the industry had to contend with sharp escalation in the cost of major commodities in the midst of heightened competitive intensity, leading to compression in margins.

Subdued demand conditions and high commodity prices are expected to weigh on the FMCG industry in the near-term. The prospects of the FMCG industry over the long run, however, remain attractive in view of the favourable demographics of the country, increasing affluence and consumer aspirations, and rapid urbanisation amongst others.

Your Company's FMCG-Others Businesses Segment Revenue growth during the year was relatively subdued due to reasons as aforestated. While most categories recovered progressively after severe disruption in operations in the initial period of the cash crunch, the impact on the Lifestyle Retailing and Education & Stationery Products Businesses was more amplified and prolonged. This, inter alia, led to heavy discounting, earlier ‘end of season sales' and rebalancing of inventory pipelines by trade in these Businesses. Consequently, Segment Revenue at Rs 10511.83 crores grew by 8.0% over the previous year. Segment Results also reflect the impact of sustained investment in brand building and gestation costs of new categories viz. Juices, Dairy, Chocolates and Coffee, sharp increase in input cost (particularly of Wheat, Maida, Sugar, Cashew, Soap Noodles) besides disruption in sales momentum due to the cash crunch.

Your Company continued to make investments during the year towards enhancing brand salience and consumer connect while simultaneously implementing strategic cost management measures across the value chain. Several initiatives were also implemented during the year towards leveraging the rapidly growing e-commerce channel with a view to enhancing the reach of your Company's products and harnessing digital and social media platforms for deeper consumer engagement.

During the year, three Company-owned units were commissioned to cater to the requirements of the Branded Packaged Foods and Personal Care Products Businesses. Significant progress was also made during the year in constructing several state-of-the-art owned Integrated Consumer Goods Manufacturing and Logistics facilities across regions to secure capacity and enable the FMCG businesses to rapidly scale up in line with long-term demand forecast. 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 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.

Today, your Company's vibrant portfolio of brands represents an annual consumer spend of nearly Rs14000 crores in aggregate. These brands have been built organically by your Company over a relatively short period of time - a feat unparalleled in the Indian FMCG industry. In terms of annual consumer spend, Aashirvaad and Sunfeast are today over Rs 3500 crores and Rs 3000 crores respectively; Classmate, YiPPee! & Bingo! are over Rs 1000 crores each and Vivel, Mangaldeep & Candyman are over Rs 500 crores each. 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 the country.

Your Company's FMCG brands have achieved impressive market standing in a relatively short span of time. Today, Aashirvaad is No. 1 in Branded Atta, Classmate is No. 1 in Notebooks, Sunfeast is No. 1 in the Cream Biscuits segment, YiPPee! is No. 2 in Noodles, Bingo! is No. 2 in Snack foods, Engage is No. 2 in Deodorants and Mangaldeep is No. 2 in Agarbattis.

The Indian FMCG market is at an inflection point and your Company continues to remain extremely agile and responsive to the emerging trends shaping the future of the industry. Some of the noteworthy consumer trends include the emergence of health and wellness products as a key consumer need; increasing preference for products rooted to ‘Indianness' and with regional/cultural connects; rising importance of high quality, hygienic and environmentally sustainable products; increasing need for customised products and bespoke experiences; growth in demand for ‘on-the-go' consumption formats and rising influence of social media and digitalisation on consumer preferences and shopping behaviour. Similarly, the FMCG market construct is likely to undergo rapid change driven by exponential growth in middle and rural India and the emergence of relatively new channels such as Modern Trade and e-commerce.

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 know-how and cuisine knowledge. In addition, your Company continues to make significant investments in Research & Development and focus on consumer insight discovery 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 sluggish during the year, with consumers curbing discretionary spending and rural demand remaining tepid. While signs of recovery were visible in the first half of the year, the second half reflected significant deceleration in growth rates across most categories largely due to the cash crunch. Industry players intensified consumer promotions and trade schemes in a bid to garner volumes. The year also witnessed a sharp rise in the prices of major raw materials such as wheat, sugar, maida, gram meal and cashew, the impact of which was partially offset through a calibrated pricing approach adopted by most players.

Despite such a challenging operating 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, a range of differentiated products customised to address regional tastes and preferences along with an efficient supply chain and distribution network that ensures benchmark levels of visibility, availability and freshness of products in the market. The Business implemented several initiatives encompassing cost management, supply chain optimisation, smart procurement and recipe optimisation, which helped in partially mitigating the impact of higher raw material costs.

Your Company's Branded Packaged Foods Businesses continued to make significant investments towards brand building and supporting the launch of new variants apart from absorbing the gestation costs of new categories viz. Dairy, Juices, Chocolates and Coffee.

Relentless focus on delivering superior quality products to consumers remains a key source of competitive advantage for the Branded Packaged Foods Businesses. In this context, the Businesses continue to leverage your Company's agri-commodity sourcing expertise to procure high quality raw materials thereby ensuring the highest level of quality and safety of its products. In addition, each of your Company's branded packaged food products is manufactured in state-of-the-art, world-class facilities complying with strict quality and hygiene norms.

Several innovative, differentiated and first-to-market products were launched during the year leveraging the robust product development processes of the Business along with Life Sciences and Technology Centre, Bengaluru and the cuisine expertise resident in your Company's Hotels Business.

During the year, the Business launched a luxury range of chocolates under the ‘Fabelle' brand at exclusive ‘Fabelle Chocolate Boutiques' set up in seven ITC Hotels across the country. Fabelle offers a range of exquisite chocolate creations such as ‘Fabelle Elements' - intricately crafted pralines inspired by the elements of nature; ‘Fabelle Ganache' - velvety soft cubes of exotic cocoas delicately churned with butter & fresh cream; ‘Fabelle As You Like It' - personalised chocolate cup creations offering myriad possibilities of fillings and toppings; ‘Fabelle Gianduja' – an Italian delicacy made with fine Ghana cocoas and Turkish hazelnuts; ‘Fabelle Single Origin Cacaos' – assortment of six dark chocolate bars each made from cocoa sourced from a different country and Fabelle Gift Hampers – a special collection of delectable chocolates. In addition, the chocolate boutiques offer a range of exquisitely crafted desserts and cocoa beverages, created live by Fabelle Master Chocolatiers. Made from impeccable cocoas sourced from the best growing regions in Africa & South America and combined with unique ingredients, Fabelle is set to redefine the luxury chocolate segment in India. Within a short span of time, Fabelle Chocolate Boutiques have won several accolades including the Times Food Award for the ‘Best Dessert destination'.

The Business also launched two exquisitely crafted blends of gourmet coffee during the year, under the ‘Sunbean' brand. The brand is currently available at all ITC Hotels. While ‘Sunbean Nicamalai' - a blend of the choicest coffee beans from Nicaragua and Anamalai in

Tamil Nadu - is a fruity-sweet aromatic coffee with a creamy expression, ‘Sunbean Panagiri' - a blend of select coffee varietals from Panama and Baba Budangiri in Chikkamagaluru, Karnataka - is an intensely fragrant coffee with a pleasant roasted nutty taste and a hint of chocolate. The products have met with excellent response from discerning consumers and plans are on the anvil to scale up presence in the ensuing year.

Several manufacturing units of your Company's Branded Packaged Foods Businesses, competing with both the best within and outside the industry, received several awards and accolades during the year bearing testimony to your Company's focus on manufacturing excellence, safety and quality.

Your Company continues to make investments 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, three new own manufacturing facilities - Uluberia in West Bengal, Mysuru in Karnataka and Guwahati in Assam - were commissioned. The manufacturing units at Kapurthala (Punjab) and Panchla (West Bengal) are at an advanced stage of completion and are expected to be commissioned in the ensuing year.

– The Staples Business posted robust performance during the year, growing well ahead of the industry. In the Staples category, ‘Aashirvaad' atta further consolidated its position as India's No. 1 Atta brand while maintaining its price leadership position in the market. The value-added product portfolio, comprising Multigrains, Select and Sugar Release Control atta, continued to record robust growth. Aashirvaad Salt grew at a steady pace during the year, supported by a new positioning, ‘Created by Sun and Sea - pure just like nature intended it to be' and new pack design. In the branded spices category, your Company launched ITC Master Chef ‘Super Safe Spices', which are tested for over 470 pesticide residues in accordance with European standards as compared to only nine required under Indian regulations. The recently launched range of blended spices under the ‘ITC Master Chef' brand garnered good traction amongst target consumers.

– In the Snacks and Meals Business, the ‘Bingo!' range of finger snacks recorded robust growth during the year driven by the Tedhe Medhe and Mad Angles sub-brands. Yumitos Original Style potato chips was extended to target markets during the year, posting impressive growth in sales. The finger snacks portfolio was augmented with the launch of Tedhe Medhe Achaari Masti and Tangles Cheese variants while the Yumitos potato chips portfolio was revamped with an improved product and a new vibrant pack.

The Instant Noodles industry saw a steady recovery during the year after significant disruption caused by regulatory issues in the previous year largely pertaining to a competitor's product. The recovery was largely led by metro cities and large towns while rural demand remained sluggish. YiPPee! noodles, which had garnered significant volumes in the previous year on the strength of superior quality and safety, sustained its robust growth momentum during the year despite the entry of several regional discount players and relaunch of products by the lead competitor. The year also saw the launch of ‘Power Up Atta Noodles' - a differentiated product with vegetable additions – which received good consumer response.

– The Confections Business scaled up operations and improved its market standing during the year. In the

Biscuits category, the Business continued to focus on premiumising its product portfolio. The ‘Sunfeast Mom's Magic' range of premium cookies sustained its strong growth momentum driven by superior product attributes and investment in brand building. The recently launched ‘Sunfeast Farmlite All Good Digestive' – ‘No maida & No added sugar' cookie made from Aashirvaad whole-wheat atta – was well received by target consumers. ‘Sunfeast Marie Light' biscuit doubled its sales in focus geographies, while Bounce strengthened its market leadership position in the creams segment. Your Company leveraged its recently commissioned biscuits manufacturing unit owned by North East Nutrients Private Limited, a joint venture company, to record impressive gains in market standing in the Northeast markets.

The Confectionery category continued with its portfolio premiumisation strategy by increasing the salience of ‘Re. 1 & above' products in the sales mix. During the year the Business launched ‘Candyman Jellicious Jelimals' – a soft fruit bear shaped jelly, ‘Candyman Jellicious DubbleZ' – an innovative twin flavoured jelly and ‘Candyman Tadka' in the hard boiled candy segment. These products have received encouraging consumer response.

– In the Dairy & Beverages Business, the B Natural range of juices continue to gain traction amongst its target consumers aided by a clutter-breaking media campaign, on-ground trial generation initiatives and visibility & availability enhancement drives. During the year, your Company launched another unique and first-to-market offer – ‘B Natural 100% Pomegranate Juice; Not from Concentrate'. Unlike most other packaged fruit juices available in the market which are made from fruit concentrates, B Natural 100% Pomegranate Juice is made directly from the fruit pulp and has no added sugar, colour, preservatives or flavour. The year also witnessed the launch of ‘Punjab Da Kinnow' variant catering to the taste and preference of the North markets. These products have been well received by consumers. Aashirvaad Svasti Ghee was extended to other focus markets during the year, gaining consumer franchise.

Your Company is well positioned to establish itself as the ‘most trusted provider of food products in the Indian market' with continued focus on product quality and innovation, consumer insight discovery, R&D and operational excellence across the value chain. Your Company will continue to make investments towards establishing a distributed manufacturing footprint, structural interventions towards reducing operating costs and focus on supply chain optimisation to support the rapid and profitable growth of the Branded Packaged Foods Businesses in the years ahead.

Personal Care Products

Your Company's Personal Care Products Business delivered a resilient performance during the year against a backdrop of sluggish demand conditions, consumers curbing discretionary spending and seeking value-for-money offers and sharp uptick in input costs. Most industry players adopted a calibrated pricing strategy despite sharp escalation in input costs towards supporting volume growth, thereby impacting margins. Your Company's Personal Care Products Business responded proactively to these challenges by pursuing a balanced approach to deliver steady growth and improvement in market standing. This was driven largely by enriching the product portfolio, expanding distribution, proactive cost management and enhancing supply chain responsiveness.

The Business launched several differentiated products during the year in the Soaps, Shower Gel, Skin Care and Fragrance categories under the ‘Fiama', ‘Vivel', ‘Engage' and ‘Superia' brands. The Business also strengthened its presence in the Health & Hygiene space leveraging the ‘Savlon' and ‘Shower to Shower' brands. Within a short span of time, Savlon has strengthened its equity around the core value proposition of germ protection. During the year, the Business launched new variants in the Hand Wash and Antiseptic Liquid categories under the Savlon brand thereby expanding its product portfolio and gaining access to new consumer segments and markets. Engage Perfume Sprays continued to gain consumer franchise in the ‘No Gas' segment with the launch of several new variants both for men and women. The Business also augmented its skin care portfolio with the launch of ‘Vivel Cell Renew – Aqua Quench Cleansing Mousse'.

Innovation has been the bedrock of your Company's Personal Care Products Business. Affordability and convenience were the two key vectors of innovation during the year which marked the introduction of ‘Engage ON Pocket Perfume' in six exciting variants and two differentiated variants of Savlon Hand Wash in 10 ml. multi-use sachets. These first-to-market offers are available in select markets and have received encouraging consumer response.

The Business also deployed several innovative brand campaigns and leveraged social media platforms with a view to deepening consumer engagement. Fiama broke the category clutter with its new ‘Dil Ko De Lift' campaign by highlighting product benefits anchored around destressing and rejuvenation benefits. For the Vivel brand, the Business rolled out a highly innovative and original creative communication - ‘Ab Samjhauta Nahin' - in collaboration with content partner Blush with

Bollywood actor Mr. Amitabh Bachchan playing the voice of society. The ‘Ab Samjhauta Nahin' campaign has expanded Vivel's appeal beyond its functional attributes to addressing the larger issues of gender-typecasting and attitudes towards women. By provoking discussion around age-old prejudices, the brand has inspired young women to question the idea of compromise. The campaign has received excellent response and has enhanced consumer connect with Vivel's new brand purpose of Women Empowerment.

Your Company's brands viz. Essenza Di Wills, Fiama, Vivel, Superia, Engage, Savlon and Shower To Shower continue to garner consumer franchise and win industry recognition. During the year, in a survey conducted by afaqs! - a leading media portal - Vivel, Engage and Fiama were ranked amongst the Top five brands in the personal care segment while Savlon was ranked second in the OTC category. Vivel also featured amongst the Top 10 ‘Buzziest brands' across categories in this survey. Savlon's advertising campaign featuring brand ambassador Ms. Saina Nehwal, seeking to inspire parents to encourage their children to push their limits and realise their true potential, was rated as the Top Ad of 2016 by Brand Equity readers. The Advertising Age rated Vivel's Ab Samjhauta Nahin campaign and the Savlon Healthy Hands Chalk Sticks creative as the top ads.

On the supply chain front, the Business commissioned a state-of-the-art facility at Guwahati, Assam for in-house manufacture of soaps. This facility, which was commissioned in March 2017, will enable servicing of proximal markets in a highly responsive and efficient manner.

The year saw a sharp increase in commodity prices, particularly of crude and vegetable oils. The Business mitigated the impact of such cost escalation through selective price increases in the midst of intense competitive pressures and cost management interventions including proactive sourcing, alternative vendor development and recipe optimisation to partly mitigate the steep hike in input costs.

With per capita consumption at relatively low levels when compared to other emerging economies, the Indian Personal Care industry is poised for rapid growth driven by increasing urbanisation, rising disposable incomes and increasing consumer preference for enhanced personal grooming. Your Company is well positioned to seize the emerging opportunities in this rapidly evolving industry and continues to invest in creation of vibrant brands, innovative consumer-centric products and a robust supply chain to emerge as a significant player in this space.

Education and Stationery Products

During the year, the Education & Stationery Products Business had to contend with a very challenging operating environment marked by subdued demand and tight liquidity conditions exacerbated by the cash crunch in the latter half. This led to significant disruption in the wholesale channel. Consequently, the trade channel maintained leaner inventory pipelines and shifted the timing of purchase closer to the consumer buying cycle thereby impacting revenue growth during the year. Despite these challenging conditions, the Business sustained its leadership position in the Indian Education and Stationery Products industry by leveraging a portfolio of world-class products and brands.

The Business continued to focus on delivering innovative and superior products through its dedicated product development cell working along with your Company's Life Sciences & Technology Centre. During the year, the Business further enriched its product portfolio by launching several new products including educative board games (puzzles), innovative products in the notebook category under the Classmate brand, premium Paperkraft notebooks with paper having 100 years archival life, pens with enhanced writing experience and several premium offerings in the scholastics category.

The Business continued to focus on enhancing brand affinity by leveraging the ‘Classmate Spellbee' and ‘Classmate Handwriting Olympiad' platforms besides other interventions across mass and digital media. These events collectively reach out to nearly a million school children across 1000 schools in 30 cities.

On the supply chain front, several technology initiatives were implemented during the year towards delivering superior product quality and enhancing operational efficiency. The supply chain network was further optimised by leveraging demand and production planning tools, thereby reducing the total cost of servicing demand. During the year, the Business continued to expand its distribution reach through a multi-pronged approach of channel proliferation, market penetration and increase in outlet coverage.

The Classmate notebook is a manifestation of the environmental capital built by your Company in its paper business. Classmate notebook leverages your Company's world-class fibre line at Bhadrachalam which is India's first ozone treated elemental chlorine free facility. In order to provide Indian consumers with world-class products, the Business launched the Paperkraft range of notebooks using Forest Stewardship Council (FSC) certified paper, made at your Company's paper mill, which match the best quality paper in the world.

The Indian Education and Stationery Products industry is poised for exponential growth driven by growing literacy, enhanced scale of government & public-private initiatives in the education sector and a favourable demographic profile of the country's population. Your Company, with its strong brands and robust product portfolio, and collaborative linkages with small & medium enterprises is well poised to strengthen its leadership position in the Indian stationery market.

Lifestyle Retailing Business

The Branded Apparel industry witnessed severe pressure during the year in the wake of consumers cutting back on discretionary spends, heavy discounting by industry players and emergence of value retailing by e-commerce majors. Squeeze in liquidity during the third quarter further impacted consumer spending in the apparel category. While sales recovered progressively after significant disruption in the immediate aftermath of the currency shortage, the industry had to contend with a significantly shorter window for the Autumn – Winter season leading to build-up of unsold inventory. In addition, industry players resorted to early rollout of ‘End of Season Sales' besides offering additional special discounts. The performance of your Company's Lifestyle Retailing Business was significantly impacted by the challenging environment as aforestated.

During the year, the Business initiated several structural interventions across channels and processes including restructuring the retail foot print and modifying the design language of its offerings with a view to enhancing consumer experience and garnering larger consumer franchise.

Positioned at the premium end of the market, the Wills Lifestyle brand continues to fulfil lifestyle aspirations by offering elegant designs in high quality premium fabrics and styles. The premium imagery of the ‘Wills Lifestyle' range stood sharpened during the year with the introduction of several differentiated and first-to-market offers across men's and women's collections. Sales of Wills Lifestyle products to Club ITC members sustained its strong growth momentum during the year, reaffirming the salience of the brand amongst discerning consumers. The Wills Lifestyle brand is currently available in 400 outlets across 56 cities including six exclusive boutique stores across ITC Hotels.

In the ‘Youth fashion' segment, John Players enhanced its market standing by driving fashion imagery anchored on bold and edgy fashion. The brand is available in over 350 exclusive stores and 750 outlets in leading national and regional department stores and multi-brand outlets. During the year, the John Players range was made more youthful and trendy by widening the offerings in casual fashion knits and introduction of linen & linen blends. John Players Jeans continued to gain consumer franchise with the standardisation of washes across shirts and bottoms for a consistent consumer experience and the introduction of a more fashionable denim range incorporating latest trends such as ‘Do-It-Yourself', laser printing and premium stretch knit fabrics.

The brands continued to win industry recognition during the year - Wills Lifestyle was recognised at the 2016 DMAi CREATEFFECT Awards for creativity in ‘Interactive Experiential Marketing' for the ‘Mannequins on a break' campaign while John Players won top awards at Goa Fest 2016 (Creative ABBY Awards) for innovative use of image/design and social media content.

The Business will continue to drive brand engagement and advocacy amongst the target customers while continuously enhancing shopping experience, sharpening design focus, increasing market representation and improving supply chain responsiveness.

Incense Sticks (Agarbattis) and Safety Matches

The Agarbatti category sustained its growth momentum during the year anchored on a robust product portfolio and enhanced distribution reach. Mangaldeep fortified its market standing in the Agarbatti and Dhoop segment during the year. Investments in media coupled with on-ground activation activities were made during the year towards enhancing Mangaldeep's salience as the most preferred brand in the devotional space.

Towards playing a deeper role in the devotional life of consumers, the Business launched a unique and highly innovative mobile app with an extensive collection of devotional content. Currently available in seven languages, the app's content caters to the everyday devotional needs of consumers by providing detailed information and guidelines on how to perform various pujas and innovative features such as a collection of popular devotional songs, a panchang (Hindu calendar and almanac), an innovative chant counter and temple locator amongst others. Launched in September 2016 on both Android & iOS platforms, the app has been developed by the Business in partnership with several subject matter experts and carefully curated to cater to regional nuances. In a relatively short span of time, the app has received excellent response with over 1,00,000 installations with more than 50% of the users belonging to the age group ‘below 35 years'.

The agarbatti industry continues to import raw battis primarily from Vietnam and China, although bamboo and charcoal – the principal raw materials – are available in India in plenty. This is resulting in loss of livelihood creation opportunities for women and tribals in rural areas, particularly in the North-East. In this regard, the Business has implemented several measures including facilitating the mechanisation of agarbatti manufacturing at vendor locations and backward integration by vendors into raw batti manufacturing using indigenous inputs in line with your Company's commitment to enhancing the competitiveness of Indian value chains linked to its operations. Suitable changes in fiscal policy are required to encourage indigenous raw batti manufacturing and facilitate the creation of sustainable livelihood opportunities for the weakest sections of society.

In the Safety Matches category, your Company sustained its market leadership position by leveraging a robust portfolio of offerings across market segments. ‘AIM' continues to be the largest selling brand in the industry. The Business continues to focus on enriching product mix by expanding the share of value-added products in the portfolio.

Technology induction in manufacturing is crucial for the long-term sustainability of the Safety Matches Industry. A uniform taxation framework that provides a level playing field to all manufacturers remains a key imperative to trigger the required investments for modernising and enhancing the competitiveness of this industry.

Trade Marketing & Distribution

Your Company's Trade Marketing & Distribution (TM&D) vertical has over the years developed critical insights into customer behaviour and channel-specific trends in the FMCG industry. Given the diverse needs of your Company's FMCG businesses, the TM&D vertical has crafted a differentiated and comprehensive market / outlet specific strategy to address the opportunities in the FMCG industry.

During the year the TM&D vertical strengthened its formidable distribution network covering over 1 lakh markets and over four million retail outlets (directly and indirectly) across various trade channels. This further enhanced the reach and availability of your Company's large and diverse FMCG product portfolio comprising several world-class brands and hundreds of SKUs. In urban markets, your Company rolled out customised servicing / engagement programmes for the top outlets through dedicated infrastructure. This resulted in enhancing trade relationships and improving the market standing of your Company's FMCG products. In rural markets, while demand pick-up was dampened by the cash crunch especially in the wholesale channel, your Company continued to roll out market specific interventions including augmentation of supervision structure and increase in direct coverage, to achieve higher growth rates and support enhanced scale of operations going forward.

During the year, your Company sustained its clear leadership position in the convenience channel while consolidating its market standing as the benchmark supplier in premium grocery outlets. TM&D's trade loyalty programmes – ‘First Club' for retail outlets and ‘Shubh Laabh' for the wholesale channel – continued to gain traction with these outlets contributing significantly to the growth of the FMCG portfolio. Sales of your Company's FMCG products in the Modern Trade channel recorded robust growth on the strength of extensive deployment of in-store merchandisers, consumer connect programmes coupled with joint business planning during large-scale customer activation drives, channel specific SKUs, extensive sampling initiatives etc. Significant progress was made during the year in scaling up presence of your Company's FMCG portfolio in the Chemist channel. Your Company also strengthened its presence in the fast growing e-Commerce channel by enhancing engagement with major e-tailers.

The scale and diversity of your Company's distribution network continues to be a critical lever to enhance market presence, gain valuable consumer/trade insights and facilitate seamless execution of new product/category launches. During the year, TM&D executed nearly 50 product launches across geographies apart from extending distribution reach of several existing products in the portfolio. Technology enablement in the form of customised mobility solutions, data analytics comprising insightful visualisation tools & predictive analysis are being leveraged increasingly towards enabling quick and accurate data capture, informed decision making in real time and scientifically designing trade promotion schemes.

TM&D's supply chain and logistics function continues to play a vital role in enabling superior market servicing while continuously reducing cost of market servicing. During the year, several initiatives were undertaken to enhance supply chain responsiveness and cost competitiveness. These include reducing distance to market, enhancing flexibility to cater to new launches and contingencies, and reconfiguring market servicing infrastructure. In addition, innovative distribution models were implemented to optimise inventory holding and improve distribution efficiency of trade channel partners, and reduce transit time by increasing direct market servicing. Your Company is also in the process of setting up several state-of-the-art warehouses co-located with the Integrated Consumer Goods Manufacturing facilities. These modern warehouses are expected to provide long-term benefits by improving operating efficiency and enhancing product freshness in the market.

The TM&D vertical continues to invest in augmenting the depth and width of your Company's distribution network while adopting a differentiated approach to address the unique needs of your Company's diverse FMCG product portfolio, market segments and trade channels. With its best-in-class systems and processes, agile and responsive supply chain and synergistic relationship with trade, TM&D's distribution highway is a source of sustainable competitive advantage for your Company's FMCG Businesses and is well poised to support the rapid scale up of operations in the ensuing years.


The operating environment in the hospitality sector remained challenging during the year. While second half initially indicated signs of pick-up in the Hotels industry, collateral impact on the economy on account of currency crunch limited the recovery. Segment Revenue recorded a growth of 4.3% during the year driven by improvement in average room rates and higher Food & Beverage sales. While Segment Results improved significantly as compared to the previous year, profitability remained relatively muted due to the challenging business context as aforestated and gestation costs of the recently commissioned ITC Grand Bharat, Gurugram.

Your Company's Hotels business remains amongst the fastest growing Indian hospitality chains with around 100 properties across the country under four distinct brands – ‘ITC Hotel' in the Luxury segment, ‘WelcomHotel' in the Upper-Upscale segment, ‘Fortune' in the Mid-market to Upscale space and ‘WelcomHeritage' in the Leisure & Heritage segment. The Business continues to focus on strengthening the equity and differentiation of the ITC Hotels brand anchored on unique and path-breaking ‘Responsible Luxury' initiatives, culinary excellence and personalisation of guest services.

The Business also extended several ‘Responsible Luxury' themed culinary initiatives and promotions under the ‘Kitchens of India' banner.

‘Club ITC', your Company's pan-ITC consumer loyalty programme with a current membership base of around 3.5 lakh premium consumers, continues to gain franchise amongst the premium clientele of ITC hotels Business and Wills Lifestyle. During the year, the Business entered into a strategic partnership for integration of Club ITC with Starwood Preferred Guest (SPG), global loyalty programme of Starwood, enabling members to redeem points at over 1200 hotels worldwide. The ‘Club ITC Culinaire' dining loyalty programme is also gaining popularity.

During the year, the Business augmented its digital presence towards enriching online experience of users along with superior e-commerce capabilities. This resulted in enhancing customer engagement, increasing traffic and improving the share of direct conversions. Towards strengthening the online presence of ITC Hotels, the Business hosted the ‘IndiaInstameet' in collaboration with ‘Beautiful Destinations' - the world's largest online social community for luxury travel. The event registered over 100 million online global impressions.

The world-class ambience of your Company's luxury hotels was leveraged effectively during the year for the launch of gourmet luxury chocolates under the ‘Fabelle' brand at select ITC Hotels across India. In addition to selling premium packaged chocolates from the Branded Packaged Foods Business, the Fabelle chocolate boutiques offer a range of exquisitely crafted desserts and cocoa beverages, created live by Fabelle Master Chocolatiers. The initiative has received encouraging response and will go a long way in establishing the Fabelle brand at the luxury end of the market.

The year also marked the launch of ‘Sunbean' gourmet coffee across all ITC Hotels. Meticulously crafted by master blenders and served by expert baristas, this intervention encompassed all customer touch points including sale of coffee beans at custom designed retail counters, in-room sachets and a la carte services in all restaurants.

Your Company's Hotels Business continues to receive accolades for its world-class properties and service excellence. ITC Grand Bharat was recognised as #1 amongst the ‘Top Resorts in Asia' on the coveted Conde Nast Traveler U.S. Readers' Choice Awards for the second consecutive year, while ITC Grand Chola was the winner in the ‘Sustainable Operations' category at the HICAP Sustainable Awards.

The Food & Beverage segment continues to be a major strength of your Company with some of the most iconic brands in the country. The ‘Bukhara' restaurant at the ITC Maurya, New Delhi continues to receive international recognition and remains a favourite in India. Bukhara was recognised amongst the ‘Greatest Restaurants around the Globe' by Conde Nast Traveler U.S., ‘Favourite Restaurant in an Indian Hotel' by Conde Nast Traveller Readers' Travel Awards India, and the ‘Best Culinary Heritage Delhi in Fine Dining' at the Times Food Awards. ‘Ottimo', ‘EDO', ‘Tian' and ‘Pan Asian' continued to win accolades at the Times Food Awards. Your Company's internationally acclaimed spa brand, ‘Kaya Kalp', won several accolades. The spa at ITC Grand Bharat was adjudged the ‘Most Luxurious Spa' in the Resort category at the ‘GeoSpa asiaSpa India Awards', while the one at ITC Mughal was listed in the ‘Hall of Fame'.

Your Company's Hotels Business continuously strives to reduce water and energy consumption and enhance the usage of renewable energy to meet its overall energy requirements. Such commitment to the Triple Bottom Line is manifest in the Business's ‘Responsible Luxury' ethos and has enabled it to position itself as the greenest luxury hotel chain in the world. It is pertinent to note that over 50% of the total electrical energy consumption of the Business is currently met through renewable sources.

Your Company remains committed to building world-class hotel properties in view of the long-term potential of the Indian hospitality sector. The Business made steady progress during the year in the construction of luxury hotels at Hyderabad, Kolkata, Ahmedabad and Srinagar. In addition, your Company's wholly-owned subsidiary in Sri Lanka made good progress towards setting up a luxury hotel christened ‘ITC One' and a super-premium residential apartment complex, ‘Colombo One – Private Residences', situated at a strategic location in Colombo. Excavation and allied works have been completed and the main construction activity is underway.

The Business is progressing growth plans towards enhancing its presence in the Upper-Upscale segment under the WelcomHotel brand. Construction of WelcomHotel Coimbatore is nearing completion with the hotel expected to be commissioned in the first quarter of 2017-18. During the year, the Business also commenced construction of WelcomHotels at Guntur and Bhubaneswar and entered into a management contract with ‘WelcomHotel Kences Palm Beach' Mamallapuram. With this, nearly a 1000 rooms are under management contract and plans are on the anvil to expand presence through this route.

The ‘Fortune' brand strengthened its leadership position and expanded its presence with the addition of two new hotels during the year. The number of operational hotels under the Fortune brand presently stands at 46 across 34 cities. The ‘WelcomHeritage' brand remains the country's most successful and largest chain of heritage hotels with 35 operational hotels.

As reported last year, 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. However, based on an appeal by the erstwhile owners, the sale has been struck down by the Honourable Bombay High Court. Your Company and IFCI have filed a Special Leave Petition before the Honourable Supreme Court and the matter is sub judice.

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.


The domestic Paperboards, Paper and Packaging industry continued to be impacted by sluggish demand conditions prevailing in the FMCG and legal Cigarette industry. This, coupled with zero duty imports under ASEAN Free Trade Agreement, cheap imports from China and capacity ramp up by other industry players adversely impacted Segment Revenue during the year. Segment Results, however, improved on the back of benign input costs and product mix enrichment. Consequently, while Segment Revenue grew by 0.7%, Segment Profits grew at a faster pace of 6.4% during the year.

Paperboards & Specialty Papers

Global demand for Paper & Paperboard in 2016 remained muted at appx. 406 million MT. During the period 2011-2016, global demand has grown marginally at 0.4% CAGR primarily driven by moderate growth of appx. 1.5% CAGR in the paperboard segment. Going forward, global demand for Paper & Paperboard is projected to grow at 1% CAGR driven by Asia - particularly China and India. The Writing & Printing and Newsprint segments, on the other hand, are expected to witness relatively muted growth, largely due to increasing adoption of digital media and proliferation of smartphones usage.

Domestic demand for Paperboards remained impacted during the year due to slowdown in the FMCG industry and severe pressure on legal Cigarette industry volumes as highlighted earlier in this Report. Pricing power of industry players was also impacted with significant capacity addition by industry players in recent years. The Writing & Printing paper segment witnessed supply disruptions during the year primarily on account of shut down of capacity by a major player, leading to higher prices and increase in imports.

Over the next five years, overall domestic demand is projected to grow at 6% CAGR with the Paperboard (46% of the market) and Writing & Printing paper (30% of the market) segments estimated to grow at 7% CAGR and 4% CAGR respectively. Within Paperboards, demand for Value-Added Paperboards (VAP) in India is projected to grow at a healthy rate of appx. 12% CAGR driven by increasing requirements of the FMCG, Pharma, Publishing, and Food & Beverages industries. In the Writing & Printing paper segment, demand for copier papers is expected to grow faster at appx. 10% CAGR on the back of traditional consumption segments (offices, schools / colleges) and higher corporate spending especially in the service industry.

Imports from ASEAN countries have been growing at a rapid pace since the implementation of zero duty on such imports, w.e.f. 1st January, 2014, under various trade agreements. Disruption in domestic supplies, as aforestated, provided further impetus to imports during the year. Consequently, 2016-17 witnessed a marked acceleration in imports of coated & uncoated papers, which grew by appx. 30% over last year.

The current import policy and extant regulations governing commercial and social forestry in the country have put the Indian Paper and Paperboard industry at a disadvantage vis--vis imports. The economic viability of domestic manufacturers has been severely impacted leading to the closure of several paper mills in the recent past. There is clearly a need to review the current import duty structure and re-examine the existing Free Trade Agreements (FTAs) and the new ones under formulation towards providing a level playing field to the domestic industry and encourage commercial farming of wood in India. Legislative changes along with appropriate environmental safeguards need to be implemented to enable private sector participation in commercial forestry on drylands and wastelands.

During the year, your Company sustained its leadership position in the VAP segment and consolidated its preferred supplier status amongst leading end-use customers and brands. The Business fortified its product portfolio by upgrading select variants and introducing value-added offers such as moisture resistant, grease resistant, medical grade peel-clean paper etc., thereby maintaining its lead over competition. The Specialty Papers portfolio was also expanded with the launch of new grades to service the needs of customers. The

Business sustained its leadership position in the sale of eco-labelled products, volumes of which grew by appx. 8% during the year.

The Business continues to be a leading quality player in Writing & Printing paper segment, leveraging strong forward linkages with your Company's Education and Stationery Products Business. In the Specialty Papers segment, your Company sustained its leadership position in the pharma leaflets and thin printing segments.

During the year, the Business clocked its highest ever saleable production of appx. seven lakh tonnes – a reflection of its relentless focus on operational excellence and quality. The Business continues to make investments in capacity augmentation, quality and efficiency enhancement, wastage reduction and productivity improvement, benchmarked with international standards.

Your Company continues to source its wood requirements from sustainable sources. Your Company's research on clonal development has resulted in the introduction of high yielding and disease resistant clones that are adaptable to a wide variety of agro-climatic conditions. In this context, your Company's Life Sciences & Technology Centre is engaged in developing higher yielding second generation clones with enhanced pest & disease resistance attributes.

The Ministry of Road Transport and Highways, Government of India has promulgated the Green Highways (Plantation, Transplantation, Beautification and Maintenance) Policy – 2015, to develop green corridors along national highways through plantation and allied activity on median, avenue and other available nearby land patches. During the year, your Company was chosen as the knowledge and implementation partner of National Green Highways Mission under

National Highway Authority of India (NHAI), which has been entrusted with the task of planning, implementing and monitoring roadside plantations along one lakh kilometres of national highways. In this regard, during the year your Company signed an agreement with the NHAI to green around 200 hectares of land along NH-44 and NH-40 on a pilot basis. Plans are on the anvil to expand this commendable initiative, which would go a long way in enhancing the green cover of the nation and generate employment opportunities for rural communities.

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 across the dimensions of environmental responsibility, social benefit and economic viability. Till date, your Company has received FSC-FM certification for 33,500 hectares of plantations involving over 30,000 farmers. During the year, nearly 55,000 tonnes of FSC-certified wood were procured from these certified plantations. All four manufacturing units of the Business have obtained the FSC Chain of Custody certification and have complied with all requirements during the year, thereby sustaining your Company's position as the leading supplier of FSC-certified paper and paperboard in India.

All manufacturing units of the Business continue to recycle nearly 100% of the solid waste generated during operations by converting the same into lime, fly ash bricks, grey boards, egg trays etc. In addition, the Business procured and recycled close to 1,24,000 tonnes of waste paper during the year, thereby sustaining your Company's overall positive solid waste recycling footprint.

The manufacturing facilities at Bhadrachalam and Kovai continue to receive industry recognition for their green credentials and safety standards in line with your Company's focus on sustainable business practices. During the year, the Bhadrachalam unit became the first integrated pulp & paperboard mill to receive the ‘GreenCo Platinum' certification from Confederation of Indian Industry, Green Business Centre (CII GBC). The Bhadrachalam unit also received the Excellent Energy Efficiency Unit 2016 award from CII GBC. The Kovai unit received National Safety Award (2nd prize) from National Safety Council of India (NSCI) Mumbai and Green Award (2nd Prize) from Tamil Nadu Pollution Control Board.

The Business successfully commissioned a 46 MW wind energy project in Andhra Pradesh in July 2014, which has been generating wind power since then. As reported in previous years, permission for inter-state wheeling of power was not granted by the authorities post bifurcation of the State of Andhra Pradesh. Consequently, the majority of the intended benefits from this large investment did not fructify with only a minor portion of the wind power generated by the project being used by your Company's units in Andhra Pradesh and the balance being sold to the state power grid at nominal rates. After several representations and discussions with the concerned authorities on the matter, your Company received permission during the year for wheeling of power from Andhra Pradesh to Telangana, thereby enabling the Bhadrachalam mill to utilise wind energy to meet its energy requirements. While clearances required for inter-state wheeling of power are now in place, the regulatory framework for levy of charges, banking of power and deviation settlement are still evolving. Consequently, your Company continues to bear charges/levies at multiple points which have adversely impacted the attractiveness of the investment.

Your Company continues to engage with State and Central regulatory authorities towards seeking relief from such additional levies/charges and remains hopeful of an expeditious resolution of the matter.

In line with your Company's objective of meeting 50% of its energy requirements from renewable sources, the Business has implemented several initiatives including investments in a green boiler, soda recovery boilers, high pressure & efficiency circulating fluidised bed boiler, solar & wind energy and increased usage of bio-fuel. With these initiatives, renewable sources presently account for over 50% of total energy consumed at the Bhadrachalam and Kovai units.

The Business continues to make structural interventions in the areas of strategic cost management and import substitution. Some of the key interventions in this regard include augmentation of in-house pulp manufacturing capacity and developing alternative sources of supply for key inputs on an ongoing basis. In line with this approach, the Business has commissioned India's first Bleached Chemical Thermo Mechanical Pulp (BCTMP) mill at the Bhadrachalam unit, which will reduce dependence on imports and reduce cost. The Business has also commissioned a 36 MW high pressure energy efficient power plant at the Bhadrachalam unit which will reduce coal consumption and consequently, 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 along with clear market leadership in value-added paperboards and a robust forward linkage with the Education and Stationery Products Business strategically positions your Company to further consolidate and enhance its leadership status in the Indian Paperboard and Paper industry.

Packaging and Printing

Your Company's Packaging and Printing Business is a leading provider of superior value-added packaging for the consumer packaged goods industry. The Business also provides strategic support to your Company's FMCG Businesses by facilitating faster turnaround for new launches, design changes, ensuring security of supplies and delivering benchmarked international quality at competitive cost.

The Business caters to the packaging requirements of leading players across several industry segments viz. Food & Beverage, Personal Care, Home care, Apparel, Consumer Electronics, Pharma, Liquor and Tobacco. With its comprehensive capability-set across multiple platforms, coupled with in-house cylinder making and blown film manufacturing lines, the Business continues to provide innovative solutions to several key customers in India and overseas.

In line with its strategy of consolidating its position as a ‘one-stop shop for packaging solutions', during the year the Business invested in new product lines viz. rigid boxes and flexo corrugated packaging, and augmented capacity in the carton and flexibles packaging segments with the addition of state-of-the-art lines at its facility at Tiruvottiyur.

As in previous years, the Business won several awards for operational excellence and creative packaging. The Business continues to be acknowledged as a key associate by several large FMCG companies in the country for providing superior packaging solutions.

The 14 MW wind energy farm in Tamil Nadu, set up in 2008, continues to provide clean energy to the Tiruvottiyur facility, contributing towards reducing your Company's carbon footprint.

The manufacturing facilities at Tiruvottiyur, 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 and have also received Social Accountability Certification (SA 8000:2008). Both the Tiruvottiyur 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. During the year, the Haridwar unit received the CII North Zone award for ‘5S excellence' while the Munger unit won the Suraksha Puraskar from the National Safety Council of India. The Risk Management Framework of the Business was re-certified under ISO 31000:2009 during the year.

The Packaging and Printing Business has established itself as a one-stop shop offering a wide range of superior and innovative packaging solutions. With world-class technology across a diverse range of packaging platforms, best-in-class quality management systems and a distributed manufacturing footprint, the Business is well positioned to rapidly grow its external business while continuing to service the requirements of your Company's FMCG Businesses.


Leaf Tobacco

Global production of Flue Cured Virginia (FCV) tobacco registered a decline of 8.5% in 2016, with crop output in Brazil degrowing by nearly 20%. Indian FCV crop production declined for the second successive year, dropping by nearly 20% during 2016 to 217 million Kgs., mainly due to lower Andhra crop consequent to the Tobacco Board's decision to reduce the authorised crop size by 50 million Kgs. over 2015. Consequently, FCV farm prices recorded a sharp increase during the year.

Whilst the reduction in global FCV output as aforestated resulted in bringing down uncommitted inventory levels, Indian leaf tobacco exports were impacted by contraction in global demand, lower domestic crop production and significant currency depreciation in competing origins. Consequently, Indian leaf tobacco exports fell to an eight-year low of 200 million Kgs. thereby adversely impacting the earnings of the tobacco farming community.

Despite such challenging market conditions, your Company reinforced its leadership position as the largest Indian exporter of unmanufactured tobacco with further improvement in market standing. This was achieved through new business development and enhanced value delivery to existing customers by leveraging the Business's expertise in crop development, superior leaf procurement processes and world-class processing facilities. The Business continued to provide strategic sourcing support to your Company's Cigarette Business meeting all requirements at competitive prices.

Your Company's leadership in sustainability was reinforced by the first ever Global Sustainability Audit (Sustainable Tobacco Programme - STP) conducted by AB Sustain – an independent third party on behalf of international manufacturers. In STP, a leaf tobacco supplier's operation is measured for sustainability performance covering areas such as governance, processing units, agronomy, natural resource and farm labour management. The Division has been placed amongst the best leaf tobacco suppliers in the world in the first ever STP Audit conducted in 2016.

Cost management across the value chain continues to be a key for the Business. Accordingly, the Business implemented several initiatives during the year including improvement in yield, enhancement of manufacturing efficiencies, reduction in specific consumption of power and logistics optimisation to continuously drive down costs. Several Lean and Six Sigma projects covering various facets of business operations - from processing, waste reduction, manpower rationalisation to data analytics - were successfully concluded resulting in improved process efficiencies and cost savings.

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, all three units at Chirala, Anaparti and Mysuru are meeting a significant portion of their energy needs from renewable sources.

The Business remains committed to the highest standards of EHS and quality and continues to win recognition in these areas. During the year, the Chirala and Anaparti units received the ‘Best Management Award – 2016' from the Labour Department, Government of Andhra Pradesh, the Anaparti GLT received the ‘National Energy Management Award 2016' from CII in the 17th National Energy Management Award and the ‘Par Excellence' award in the National Convention on Quality Concepts 2016 competition organised by Quality Circle Forum of India.

The Business will continue to extend strategic sourcing support to your Company's Cigarette Business even as it sustains its leadership position as a major exporter of quality Indian tobacco thereby catalysing the multiplier impact of increased farmer incomes to benefit the rural economy. With its strong R&D capability, modern processing facilities, crop development and extension expertise, and deep understanding of customer and farmer needs, your Company is well poised to sustain its position as a world-class leaf tobacco organisation.

Other Agri Commodities

Domestic food grain production for 2016 crop year stood at 252 million tonnes, representing a marginal growth over the previous year. While wheat production grew by 6.7% to 92.3 million tonnes, rice production was lower by 1% at 104.4 million tonnes and coarse cereals production dropped by 10.1% at 38.5 million tonnes. Oilseed production increased by 33% to 33.6 million tonnes mainly due to higher soybean output, which increased by 65% to 14.1 million tonnes due to good monsoon. Based on current expectations of a normal monsoon in 2017 year, food grain production is projected to increase by 8% to 272 million tonnes.

During 2016-17, world wheat production increased by 16 million tonnes to about 751 million tonnes mainly due to higher production in Australia and Russia. While higher global production led to surplus inventory in the international markets, India had to contend with lower wheat crop availability during the year as the 2015 crop output (marketed in 2016) was adversely impacted due to unfavourable weather conditions. In order to alleviate the shortage of supplies and rising prices in the domestic market, the Food Corporation of India scaled down procurement levels and released higher quantum of wheat from its buffer stocks. In addition, the Government reduced Customs Duty on wheat leading to the import of over five million tonnes from Ukraine and Australia during the year. The Business leveraged its wide geographical sourcing network, multiple sourcing models including imports, to secure supplies of critical grades with benchmark quality towards meeting the growing requirements for Aashirvaad atta. The Business delivered substantial savings to your Company through efficient logistics management and other cost-optimisation initiatives. The Business also leveraged its strong network comprising suppliers, millers and customers to supply significant quantities of imported wheat in the domestic market.

The Business continues to collaborate with reputed research organisations such as Indian Agricultural Research Institute, Directorate of Wheat Research, Punjab Agricultural University and Agarkhar Research Institute towards scaling up wheat sourcing from areas that are in close proximity of atta manufacturing plants and increasing crop production in non-traditional areas. As part of its wheat crop development programme, the Business has facilitated the introduction of location-specific new and improved seed varieties along with appropriate package of practices in over 1,47,000 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 deepening capabilities in proprietary crop intelligence, scaling up the sourcing & delivery network and developing blends based on customer requirements.

Your Company's deep rural linkages and expertise in agri-commodity sourcing, coupled with differentiation through value-added services of identity & traceability and certification 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 developing capabilities and vectors of differentiation for potential foray into branded consumer and institutional segments while increasing the overall efficiency of procurement and logistics operations by consistently pursuing cost optimisation initiatives and eliminating non value-adding activities.

Towards meeting the requirements of your Company's Yumitos range of potato chips, the Business is working closely with farmers towards improving quality, yield and introducing chip stock in newer geographies proximal to manufacturing centres. Further, the Business continues to focus on identifying suitable varieties, sourcing locations and establishing strict protocols for storage, handling & dispatch with a view to enhancing potato conversion efficiency in manufacturing operations.

The Business also leveraged its extensive sourcing network and associated infrastructure in key growing areas coupled with well entrenched farmer linkages to source high quality fruit pulp for your Company's ‘B Natural' brand. The key interventions in this area include strategic plantation development for key fruits, varietal segregation at source for improved colour and taste, customised fruit collection systems for identified fruits, establishing suitable processing protocols and product standardisation. In the processed fruits category, the Business sustained its leadership position in ‘Fairtrade' mango pulp exports from India anchored on a comprehensive portfolio of organic and certified mango products. The Business is working closely with small and marginal farmers across five states in building scale and sourcing options.

Your Company's Spices Business continued its expansion in Food Safe Markets viz. US, EU and Japan, leveraging its strong backward integration and customer focused strategies. All major industry players witnessed a substantial drop in food safe chilli exports due to sharp escalation in domestic chilli prices which touched a historical high during the year. However, your Company's chilli exports grew at a healthy pace driven by the addition of new customers and foray into new markets such as Brazil and Mexico. It is pertinent to note that over the last two years there has been a significant increase in rejection of Indian chilli exports to the EU due to issues relating to product quality and safety. However, your Company's Spices Business has maintained an unblemished track record on food safety parameters leveraging its superior processes and custody of supply chain, thereby consolidating its position as a preferred supplier for food safe customers. In the domestic market, the Business provided strategic sourcing support to the Branded Packaged Foods Business for the launch of ITC Master Chef range of blended and ‘Super Safe' spices. Your Company's range of ‘Super Safe' spices adhere to stringent EU standards, which require the products to be tested for over 470 pesticide residues as compared to nine under Indian regulations.

During the year, the Business scaled up its ‘Integrated Pest Management' crop development programme for chilli and cumin. Leveraging its crop development capabilities, the Business continues to partner with the Government of Andhra Pradesh for food safe chilli production covering 400 farmers across 1000 acres. The processing unit in Guntur is certified to ‘AA' grade – the highest level of global food safety standards under the British Retail Consortium Food certification regime.

Your Company believes that it is imperative to take an integrated and holistic view of the agricultural value chain. This requires a joint participatory approach from all the stakeholders such as farmers, input vendors, traders, processors and government agencies. In this regard, the Government's initiative to develop a uniform and suitable legal framework to undertake reforms in marketing of agricultural produce through a Central Agricultural Produce Market Committee (APMC) Act as well as introduction of e-auctions to facilitate transparency of transactions and superior price discovery at the Mandis are welcome steps towards stimulating agricultural growth in the country.

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 a range of value-added services in rural areas towards enhancing the competitiveness of Indian agriculture and playing 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 wide 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.


The following may be read in conjunction with the Consolidated Financial Statements prepared in accordance with Indian Accounting Standard 110. 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,, in a downloadable format.

During the year, your Company divested the entire equity shareholding in King Maker Marketing, Inc., (KMM), New Jersey, USA. Consequently, effective 16th November 2016, KMM ceased to be a subsidiary of your Company. Pursuant to Pyxis Inc., merger with ITC Infotech (USA), Inc., with effect from 1st April, 2016, Pyxis has ceased to be a subsidiary of ITC Infotech India Limited and that of ITC Limited with effect from that date. During the year ITC Infotech (USA), Inc., a wholly-owned subsidiary of ITC Infotech India Limited, subscribed to the entire share capital of Indivate Inc. a company incorporated in USA.

Consequently, Indivate Inc., became a wholly-owned subsidiary of ITC Infotech Inc., USA with effect from 18th November 2016.

ITC Global Holdings Pte. Limited, Singapore (‘Global'), a subsidiary of your Company, is in liquidation 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, 2016.

The Policy for determining Material Subsidiaries, adopted by your Board, in conformity with Regulation 16, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015, can be accessed on the Company's corporate website at Presently, the Company does not have any material subsidiary.

Surya Nepal Private Limited

During the year under review, the economic environment in Nepal remained weak due to slowdown in inward remittances, subdued government expenditure, political unrest and the continuing impact of the catastrophic earthquakes in April 2015 and May 2015. At the same time, inflation ruled high in the backdrop of supply disruptions, tight liquidity position and higher interest rates. Consequently, GDP grew at record low of 0.8% (previous year 2.3%) with the Industry sector degrowing by 6.3%.

The newly constituted government in Nepal has been making concerted efforts to get the economy back on a growth path. Several significant and enabling policies have been implemented to boost economic activity in the country. Prospects of a favourable monsoon, growth in Services sector and pick-up in expenditure on reconstruction activities are expected to provide a fillip to economic growth in the near-term.

The legal cigarette industry in Nepal faced severe pressure during the year due to the dramatic slowdown in the economy as aforestated. Besides, the industry continues to be adversely impacted by a harsh regulatory regime and discriminatory tobacco taxation policy. The rapid growth of illegal cigarette trade is not only adversely impacting Government revenues but also compromising the tobacco related health objectives of the Government since illegal cigarettes are of undeterminable origin & age and of questionable quality credentials. It is pertinent to note that while the legal cigarette industry contributes 81% of Government's revenue from tobacco products, its share in the country's tobacco consumption is merely 16%.

During the year, the company's Revenue from Operations at Nepalese Rupees (NRs.) 2873 crores (Previous Year – NRs. 2483 crores) and Profit After Tax at NRs. 736 crores (Previous Year – NRs. 624 crores) recorded a growth of 16% and 18% respectively. The company continues to be one of the largest contributors to the Government Exchequer, accounting for about 3% of the total revenues of the Government of Nepal. The company was recognised as the largest tax payer during the year by the Inland Revenue Department of Nepal.

During the year, the company's Cigarette business consolidated its leadership position in the country by leveraging a portfolio of world-class products anchored on innovation and benchmarked quality backed by robust distribution network. Investments in best-in-class manufacturing technologies along with adoption of benchmarked practices ensured delivery of products of international quality. The new factory in Seratar, Nepal delivered an impressive performance across all parameters and has been fully stabilised in terms of induction of new technologies, building skill levels of the team and operational efficiencies. During the year, a long-term agreement valid for a period of two years, has been signed with the workmen of the company's cigarette factory in Simara.

In the Branded Apparel business, ‘John Players' has established itself as a leading brand in the premium segment of the branded menswear segment, and has a significant presence across markets through exclusive branded outlets, departmental chains and multi-brand outlets. In the Safety Matches business, the company's brand ‘Tir' strengthened its market leadership in the industry, leveraging its superior trade marketing & distribution reach. The company is now the largest domestic player in the wooden matches segment. In the Agarbatti business, the company significantly improved its market standing through a strategy of deploying a diverse portfolio of offerings targeting all consumer segments.

The company continues to support and invest in initiatives aimed at enhancing the social and economic capital of the nation. All the initiatives are woven around and are in alignment with the sustainable development goals of the Government of Nepal. Accordingly, the company continues to:

• assist farmers, proximate to the Simara factory, in agro forestry through high quality Poplar plantation promoting ‘Grow Wood Grow Food' concept through inter cropping;

• support animal husbandry extension services covering animal breeding, health and nutrition that will drive milk yield improvement and higher returns for underprivileged farmers;

• focus on providing community health services through various programmes such as periodic health camps and awareness programmes in the vicinity of the manufacturing units;

• focus on building local supply chain 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. 298/- per equity share of NRs. 100/- each for the year ended 16th July, 2016 (31st Ashad, 2073) amounting to NRs. 600.77 crores.

ITC Infotech India Limited and its subsidiaries

The IT Services industry is undergoing rapid change driven by technological shifts, emergence of new models of customer value delivery, enhanced focus on experience journeys and automation. As per a recent NASSCOM report, the Indian IT industry is feeling the impact of the slowdown in global economic activity and political uncertainties as clients go slow on their decision-making and investment processes. It is pertinent to note that the Banking, Financial services and Insurance (BFSI) segments, which constitute a major share of global IT spends, is yet to witness any revival of discretionary spending by clients.

The challenging operating environment for the Indian IT industry is manifest in the marked deceleration in growth rates reported during the year by a majority of the Indian IT majors. The Indian IT industry is also facing headwinds on account of protectionist measures announced by governments in key markets. The outlook for the Indian IT industry remains relatively muted with NASSCOM, for the first time in 25 years, deferring its revenue growth guidance for 2017-18 in the wake of various global uncertainties, especially the proposed regulatory changes in USA.

Technology spending is witnessing a clear shift in favour of digital technologies, which are estimated to account for 80% of incremental IT spends. With traditional lines of businesses and business models coming under increasing pressure, the fragmented IT services market is gearing up to meet these challenges by strengthening alternative delivery models and accelerating investments in digital capabilities.

In this context, ITC Infotech continues on its journey to become a specialised, global scale, full service provider led by business and technology consulting. During the year, the company strengthened its offerings in the digital space by incubating a new service line ‘Interactive Marketing' in addition to existing service lines of ‘Digital supply chain' and ‘Internet of Things (IOT)'. Recognising the need to differentiate and establish unique competitive positioning in the fast changing technology landscape, the company also introduced the concept of ‘Digitaligence@work' to enhance customer experience and serve as a disruptor to existing business processes.

The company's ‘Innoruption Lab', established last year, has built several ‘proofs of concept' in emerging areas such as Augmented Reality, Virtual Reality, Internet of

Things, Artificial Intelligence, BOTs etc. These have generated additional leads from target customers for the company.

During the year, the company's consolidated Total Income at Rs 1554.38 crores (previous year Rs 1550.36 crores), while Net Profit stood at Rs 37.95 crores (previous year Rs 36.16 crores). As stated in the previous year, the company's financial performance reflects, inter alia, the impact of restructuring a contract with a key client, which set up its own captive centre in India. Excluding the impact of restructuring as aforestated, the company posted steady growth in revenue, driven by new client additions in USA and Europe and sustained growth momentum in the India, Asia-Pacific, Middle East and Africa regions.

On 18th November 2016, ITC Infotech (USA), Inc., a wholly-owned subsidiary of the company, subscribed to the entire share capital of M/s. Indivate Inc., a company incorporated in the USA, to provide business development, consulting and other advisory services. Consequently, Indivate Inc. became a wholly-owned subsidiary of ITC Infotech (USA), Inc. and that of ITC Infotech India Limited and your Company with effect from 18th November, 2016.

For the year under review:

a) ITC Infotech India Limited recorded Revenue from Operations of Rs 911.99 crores (previous year Rs 932.44 crores) and Net Profit of Rs 17.89 crores (previous year Rs 54.94 crores);

b) ITC Infotech Limited, UK, (ITC Infotech UK), a wholly-owned subsidiary of the company, recorded Revenues of GBP 37.00 million (previous year GBP 31.19 million) and Net Profit of GBP 1.17 million (previous year GBP 0.39 million). For the year under review, ITC Infotech UK declared a dividend of GBP 2.50 (previous year GBP 2.20) per Ordinary Share of GBP 1/- each on 685,815 shares, amounting to GBP 1,714,538 (previous year GBP 1,508,793);

c) ITC Infotech (USA), Inc., (ITC Infotech USA), a wholly-owned subsidiary of the company, together with its wholly-owned subsidiary Indivate Inc., recorded Revenue of US$ 91.44 million (previous year US$ 86.44 million) and Net Profit of

US$ 1.21 million (previous year US$ (-) 0.31 million).

Pursuant to its merger with ITC Infotech USA with effect from 1st April, 2016, Pyxis has ceased to be a subsidiary of ITC Infotech India Limited and that of ITC Limited with effect from that date.

The company's superior service delivery capability continues to earn global recognition. During the year, the company was recognised by Information Services Group (ISG) as a ‘Leader' in the archetype ‘Enabling Digital' in the ISG Insights Index for Application Development & Maintenance. The company also featured in the leader's category of ‘2017 Global Outsourcing 100' by the International Association of Outsourcing Professionals (IAOP) for the 11th consecutive year. The company won the Aecus Innovation Awards 2016 for providing an innovative customer experience solution to a leading health retailer in UK. Besides those relating to service delivery, a notable recognition was in winning the Asia Pacific HRM Congress Awards 2016 aimed at recognising the best talent and HR practices across industries.

With enhanced focus on newer technologies and innovation backed by deep domain expertise & delivery excellence, the company is confident of establishing itself as a differentiated and specialised player focused on services and supply chain based industries.

Technico Pty Limited and its subsidiaries

The company continues to focus on upgradation and commercialisation of TECHNITUBER seed technology and customising its application across various geographies. Besides, the company is engaged in the marketing of TECHNITUBER seed to global customers produced at the facilities of its subsidiaries in China and Canada and Technico Agri Sciences Limited, India (TASL), a wholly-owned subsidiary of your Company. The Canadian subsidiary of the company is also engaged in field multiplication of seeds.

For the year under review:

a. Technico Pty Limited, Australia registered a turnover of Australian Dollar (A$) 2.46 million (previous year A$ 2.31 million) and a Net Profit of A$ 1.36 million (previous year A$ 10.95 million).

On 22nd March, 2016, the company sold its entire shareholding in Technico Agri Sciences Limited (TASL) to your Company for a consideration of A$ 23.84 million. Consequently, Net Profit for the previous year included a net gain of about A$ 10 million on sale of investment in TASL.

During the year, the company aligned its capital structure with its business requirements by reducing its share capital by A$ 24.5 million (from A$ 43.99 million to A$ 19.49 million) and returned the said amount to your Company, its sole shareholder.

b. 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 aforestated companies.

Technico Agri Sciences Limited

The company's leadership in the production of early generation seed potatoes and strength in agronomy continues to support the ‘Yumitos' range of potato chips of your Company and in servicing the seed potato requirements of the farmer base of your Company's Agri Business.

Potato prices ruled firm in the domestic market in first half of 2016-17 on the back of lower crop output. While this had all the settings for a promising year for seed potato sales, currency crunch at the time of the peak season for seed potato sales adversely impacted demand. The situation was exacerbated by high unsold potato inventory levels, built up as a result of lower offtake during the year due to firm prices and lack of potato export opportunities on account of imposition of Minimum Export Price of potato.

Despite such difficult circumstances, the company leveraged the strength of its brand, superior product quality, better on-field performance and strong trade and customer relationship to register a Revenue from Operations of Rs 108.35 crores (previous year Rs 95.27 crores) and Profit After Tax of Rs 14.52 crores (previous year Rs 16.89 crores) for the financial year ended 31st March, 2017. Total Comprehensive Income for the year stood at Rs 14.48 crores (previous year Rs 16.91 crores).

During the year, the company declared a dividend of Rs 31.98 crores (including Dividend Distribution Tax of Rs 5.41 crores).

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') comprising a luxury hotel christened ‘ITC One' and a super-premium residential apartment complex, ‘Colombo One – Private Residences', situated on 5.86 acres of prime sea-facing land in Colombo.

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 regulations.

During the year, the company made good progress on construction of the Project. The excavation and allied works were completed and the construction activity for the main complex was commenced during the year. Design development work by major consultants was also completed during the year.

Your Company's investment in WLPL stood at US$ 115 million as at 31st March, 2017.

Landbase India Limited

The company owns ‘ITC Grand Bharat' – a 104 key all suite luxury hotel at Gurugram, which has been licenced to your Company. ITC Grand Bharat, an ultimate expression of unhurried luxury, is co-located with the company's prestigious Classic Golf & Country Club, a 27-hole Jack Nicklaus Signature Golf Course.

ITC Grand Bharat received several accolades and awards, establishing itself amongst the top luxury resort destination hotels in the world. During the year, the hotel was recognised as #1 amongst the ‘Top Resorts in Asia' on the coveted Conde Nast Traveler U.S. Readers' Choice Awards for the second consecutive year.

During the year, the Classic Golf & Country Club hosted various tournaments and events and garnered the highest market share in the corporate tournament segment. The Club enjoys strong brand equity with its members, guests and the golfing fraternity and continues to receive the patronage of professional and amateur golfers in the country.

During the year ended 31st March, 2017, the company recorded Total Income of Rs 21.75 crores (previous year Rs18.86 crores) and Net Profit of Rs 2.10 crores (previous year Rs 0.92 crores). Total Comprehensive Income for the year stood at Rs 2.10 crores (previous year Rs 0.82 crores).

Srinivasa Resorts Limited

The company's hotel ‘ITC Kakatiya' in Hyderabad continued to face sluggish demand conditions during the year. While room occupancy rates and average room rates remained under pressure, Food and Beverages recorded robust growth.

The company recorded Total Income of Rs 54.43 crores (previous year Rs 54.32 crores) for the year ended 31st March, 2017 with Net Loss of Rs 1.52 crores (previous year Rs 1.93 crores). Total Comprehensive Income for the year stood at (-) Rs 1.50 crores (previous year (-) Rs 1.92 crores).

During the year, ITC Kakatiya received the Times Food Guide awards for ‘Dakshin' (Best South Indian Fine Dining), ‘Kebabs & Kurries' (Best Barbeque & Grills), and ‘Marco Polo' (Best Resto Bar). TripAdvisor, a renowned hotel review website, continues to rate Dakshin and Kebabs & Kurries as the best restaurants in Hyderabad, ranking them No.1 and No.2 respectively.

The company's 100-key full service hotel in Amritsar, located on a land parcel assigned to the company by ITC Limited, is under development. While civil and structural works are nearing completion, other works including interiors are progressing according to schedule.

Fortune Park Hotels Limited

During the year ended 31st March, 2017, the company recorded Total Income of Rs 29.53 crores (previous year Rs 28.77 crores), Net Profit of Rs 2.44 crores (previous year Rs 2.15 crores). Total Comprehensive Income for the year stood at Rs 2.39 crores (previous year Rs 1.86 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 5,000 rooms spread over 64 properties of which 46 are operating hotels. Of the balance 18 properties, six hotels are slated to be commissioned in the ensuing year and 12 hotel projects are in various stages of development.

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.

During the year, the company bagged Today's Traveller Award 2016 for the ‘Best First Class Business Hotel Chain', and Hospitality India & Explore The World Annual International Travel Award 2016 for ‘Best First Class Business Hotel Chain'.

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, 2017.

Bay Islands Hotels Limited

Fortune Resort Bay Island, the company's hotel in Port Blair, with its strategic location, excellent architectural design and superior service quality, continues to offer a unique gateway to the Andamans. A comprehensive renovation and expansion programme towards enhancing the market standing of the hotel is currently underway.

During the year ended 31st March, 2017, the company recorded Total Income of Rs 1.98 crores (previous year Rs 1.75 crores), Net Profit of Rs 0.76 crore (previous year Rs 1.10 crores). Total Comprehensive Income for the year was Rs 0.76 crore (previous year Rs 1.10 crores).

The Board of Directors of the company has recommended a dividend of Rs 70/- per Equity Share of Rs 100/- each for the year ended 31st March, 2017.

King Maker Marketing, Inc.

During the year, your Company divested the entire equity shareholding (100% of paid-up capital) in King Maker Marketing, Inc. (KMM), New Jersey, USA, along with assignment of certain trademarks owned by the company. Consequently, effective 16th November 2016, KMM ceased to be a subsidiary of your Company.

Wimco Limited

The company's business activities are mainly focused on fabrication and assembly of filling and cartoning machinery for the FMCG and Pharmaceutical industry.

The company's order book was impacted during the year due to the sluggish demand conditions prevailing in the FMCG and Pharmaceutical industry. The company's Revenue from Operations for the year stood at Rs 16.15 crores (previous year Rs 14.85 crores) with a Net Loss of Rs 0.07 crore (previous year Rs 0.35 crore). Total Comprehensive Income for the year stood at (-) Rs 0.09 crore (previous year (-) Rs 0.41 crore).

The company is focussing on building a robust business model, widening its customer base and developing superior solutions towards addressing customer requirements.

North East Nutrients Private Limited

Your Company holds 76% 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. The company commissioned a state-of-the-art facility comprising three biscuit manufacturing lines in August 2015.

In the first full year of its commercial operations, the company recorded Revenue from Operations of Rs 138.05 crores (previous year Rs 28.84 crores) and Net Loss of Rs 1.81 crores (previous year Rs 11.98 crores). The performance for the year reflects gestation costs associated with the initial phase of operations.

Russell Credit Limited

During the year, the company registered Total Revenue of Rs 59.67 crores (previous year Rs 70.64 crores) and Net Profit of Rs 34.22 crores (previous year Rs 45.01 crores).

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

During the year, the company registered Total Income of Rs 3.46 crores (previous year Rs 3.42 crores) and Net Profit of Rs 2.55 crores (previous year Rs 2.64 crores).

The company holds 50% equity stake in ITC Essentra Limited – a joint venture with Essentra Group, UK.

Greenacre Holdings Limited

During the year, the company recorded Total Income of Rs 6.34 crores (previous year Rs 4.90 crores) and Net Profit of Rs 2.25 crores (previous year Rs 1.63 crores). 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 0.07 crore during the year (previous year Rs 0.07 crore) and Net Profit of Rs 0.05 crore (previous year Rs 0.04 crore).

MRR Trading & Investment Company Limited

The company, a wholly-owned subsidiary of ITC Investments & Holdings Limited, holds tenancy rights in a commercial building located in Mumbai and also provides estate maintenance services. During the year, the company recorded Total Income of Rs 0.07 crore (previous year Rs 0.07 crore).

Pavan Poplar Limited

The operations of the company continue to be adversely impacted pursuant to the Order of the Honourable High Court of Uttarakhand at Nainital in February 2014 dismissing the writ petition filed by the company against the Order of the District Magistrate authorising the 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.

During the year, the company recorded Total Revenue of Rs 0.20 crore (previous year Rs 0.07 crore) and Net Loss of Rs 0.32 crore (previous year Rs 0.44 crore).

Prag Agro Farm Limited

The operations of the company continue to be adversely impacted pursuant to the Order of the Honourable High Court of Uttarakhand at Nainital in February 2014 dismissing the writ petition filed by the company against the Order of the District Magistrate authorising the 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.

During the year, the company recorded Total Income of Rs 0.05 crore (previous year Rs 0.07 crore) and Net Loss of Rs 0.06 crore (previous year Rs 0.17 crore). During the year, the company reduced its Share Capital from Rs 12.80 crores comprising 1.28 crore equity shares of Rs 10 each to Rs 1.28 crores comprising 1.28 crore equity shares of Rs 1 each.

ITC Global Holdings Pte. Limited

As has been stated in the previous years' reports, the Judicial Managers were conducting the affairs of ITC Global Holdings Pte. Limited, Singapore (‘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.

Your Company is contesting that the said claims are not sustainable and that your Company does not accept any liability in this regard. The proceedings are pending.


ITC Essentra Limited

The relentless pressure on volumes of the legal cigarette industry on account of the harsh taxation and regulatory burden continue to adversely impact the demand for cigarette filters. However, the company retained its leadership position of being the preferred supply chain partner for several well-known national and international brands leveraging its core strengths – strong customer relationships, access to world-class innovation, superior execution, consistent delivery and best-in-class quality.

In line with the provisions of the Companies Act, 2013 requiring companies to adopt a uniform financial year, the company had changed its financial year last year from January – December to April – March. Consequently, the financial statements of the company for the year under review for the 12 months ended 31st March, 2017 are not strictly comparable with the previous 15-month period ended 31st March, 2016.

During the year ended 31st March, 2017, the company recorded Revenue from Operations of Rs 270.07 crores (Previous 15-month period ended 31st March, 2016 – Rs 404.31 crores) and Net Profit after tax of Rs 9.94 crore (Previous 15-month period ended 31st March, 2016 – Rs 14.53 crore).

The company continues to focus on scaling up exports by leveraging a portfolio of high quality products. Investments continue to be made in technology and capability towards sustaining the company's position as the innovation and quality benchmark in the Indian cigarette filter industry.

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 March, 2017.

Maharaja Heritage Resorts Limited

Maharaja Heritage Resorts Limited, a joint venture of your Company with Jodhana Heritage Resorts Private

Limited, currently operates 35 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 segments respectively.

During the year ended 31st March, 2017, the company recorded Total Income of Rs 3.49 crores (previous year Rs 3.73 crores) and Net Loss of Rs 0.77 crore (previous year Rs 0.45 crore). Total Comprehensive Income for the year was a Loss of Rs 0.78 crore (previous year Loss at Total Comprehensive Income level was Rs 0.45 crore).

The ‘WelcomHeritage Hotels' brand was awarded the ‘Best Heritage Hotel Chain' by Today's Traveller Awards 2016.

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, 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.

Your Company is exploring its options in this regard.

Your Company's investment in EHPL stood at Rs 46.51 crores as at 31st March, 2017.

Logix Developers Private Limited

Logix Developers Private Limited (LDPL) is a joint venture between your Company and Logix Estates Private Limited for developing a luxury hotel-cum-service apartment complex at the company's site located 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, upon commissioning of the hotel by LDPL.

Your Company's total investment in LDPL stood at Rs 41.95 crores as at 31st March, 2017 and it currently owns 27.91% of the equity capital of the company.

As reported in the previous year, your Company reiterated its position with the JV partner that it was committed to developing a luxury hotel-cum-service apartment complex as envisaged under the JV Agreement and that it was not interested in progressing with any alternative project plans proposed by the JV partner. However, the JV partner refused to progress the project and instead expressed its intent to exit from the JV by selling its stake to your Company.

Subsequently the JV partner proposed that both parties should find a third party to sell the entire shareholding in LDPL. In view of these developments, your Company had filed a petition before the Company Law Board (CLB) submitting that the affairs of the JV entity were being conducted in a manner that was prejudicial to the interest of your Company and the JV entity. The matter is currently before the National Company Law Tribunal (which replaced the erstwhile CLB). The JV partner had also filed a petition before the Honourable Delhi High Court for winding up the JV company. The National Company Law Tribunal, while hearing the matter, was of the view that your Company's petition should be heard before the winding up petition was heard by the Honourable High Court.

Notwithstanding the above, both the venturers have confirmed that necessary measures would be undertaken to meet the liabilities of the company (as and when required) so as to protect the leasehold rights over the land.

During the year ended 31st March, 2017, the company recorded a Net Loss of Rs 22.75 crores (previous year Rs 19.60 crores).


International Travel House Limited

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.

During the year ended 31st March, 2017, the company recorded Total Income of Rs 205.74 crores (previous year Rs 200.04 crores) and Net Profit of Rs 11.17 crores (previous year Rs 9.61 crores). Total Comprehensive Income for the year stood at Rs 10.46 crores (previous year Rs 9.48 crores).

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, 2017.

Gujarat Hotels Limited

The company's hotel, ‘WelcomHotel Vadodara' at Vadodara is operated by your Company under an Operating License Agreement.

During the year ended 31st March, 2017, the company recorded Total Income of Rs 5.12 crores (previous year Rs 5.29 crores), Net Profit and Total Comprehensive Income of Rs 3.86 crores (previous year Rs 3.25 crores).

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, 2017.

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 21.03 crores (previous year Rs 22.85 crores) and Net Profit of Rs 0.22 crore (previous year Rs 0.32 crore).

The company continued to maintain high levels of operational responsiveness, benchmark quality and cost efficiency during the year. The company was conferred ‘Quality Systems Excellence Award - Certificate of Appreciation' by FICCI for excellence in quality systems.

Associates of Russell Credit Limited

Russell Investments Limited

During the year, the company recorded Total Revenue of Rs 3.72 crores (previous year Rs 3.22 crores) and Net Profit of Rs 2.78 crores (previous year Rs 2.25 crores).

The company continues to explore opportunities to make investments.

Divya Management Limited

During the year, the company recorded Total Revenue of Rs 0.52 crore (previous year Rs 0.42 crore) and Net Profit of Rs 0.20 crore (previous year Rs 0.15 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 0.31 crore) and Net Profit of Rs 0.09 crore (previous year Rs 0.10 crore).

The company continues to explore opportunities to make investments.


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 Statements.

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 individual businesses.

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 to implementation.

Your Company has in place adequate internal financial controls with reference to the Financial Statements. Such controls have been assessed during the year taking into consideration the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by The Institute of Chartered Accountants of India. Based on the results of such assessment carried out by management, no reportable material weakness or significant deficiencies in the design or operation of internal financial controls was observed. Nonetheless your Company recognises that any internal 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 and the Risk Management Policy approved by the Board, clearly lay 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 appropriate risk management procedures, their effective implementation across your Company and independent monitoring and reporting by Internal Audit.

– The Risk Management Committee, constituted by the Board, monitors and reviews the strategic risk management plans of the Company as a whole and provides necessary directions on the same.

– 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 profiles.

– A strong and independent Internal Audit function at the Corporate level carries out risk focused audits across all businesses, enabling identification of areas where risk management processes may need to be 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 the 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 plans with agreed timelines and accountabilities. Businesses are required to confirm periodically that all relevant risks have been identified, assessed, evaluated and that appropriate mitigation systems have been implemented.

During the year, the Risk Management Committee was updated on the status and effectiveness of the risk management plans. The Audit Committee was also updated on the effectiveness of your Company's risk management systems and policies.

Your Company sources several commodities for use as inputs in its businesses and also engages in agri-commodity trading as part of its Agri Business. Your Company has a comprehensive risk assessment framework and well laid out policy to manage the risks arising out of the inherent price volatility associated with such commodities. This includes robust mechanisms for monitoring market dynamics on an ongoing basis towards making informed sourcing decisions, continuous tracking of net open positions & ‘value at risk' against approved limits, use of futures contracts to hedge commodity price risk as applicable, hedging associated foreign exchange risk through appropriate instruments, assessment of country risk and counter-party exposure for suitable mitigation plans. Additionally, your Company's strategy of backward integration in areas such as sourcing of agri-commodities e.g. wheat, potato, fruit pulp and leaf tobacco, in-house manufacturing of paperboards, paper and packaging (including pulp production and print cylinder making facilities) facilitates access to critical inputs at benchmark quality and competitive cost besides ensuring security of supplies. Further, each of your Company's businesses continuously focuses on product mix enrichment towards protecting margins and insulating operations from spikes in input price. The combination of policies and processes as outlined above adequately addresses the various risks associated with your Company's businesses.


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 design, 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 strengthened for enhanced effectiveness and productivity including the deployment of best-in-class tools for analytics in the Audit domain, certification as complying with ISO 9001:2015 Quality Standards in its processes, ongoing knowledge improvement programmes for staff, etc. The Audit methodology is also designed to validate effectiveness of critical IT controls that are embedded in the business systems, leading to greater alignment with the business process environment.

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 effectiveness of the internal control environment, evaluation of the Company's internal financial control and risk management systems, 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 discharging of statutory mandates.


Human Resource Development practices in your Company are guided by the principles of relevance, consistency and fairness. Several initiatives are being implemented across Businesses to strengthen talent management, capability development and performance management processes. Taken together, these interventions are making a positive impact on talent attraction, retention and commitment.

The Human Resources function of your Company continues to align its strategic interventions and processes with your Company's Vision of sustaining its position as one of India's most admired and valuable corporations, creating and growing value for the Indian economy and the Company's stakeholders. Towards this end, five capability platforms relevant to making Businesses future-ready have been identified – Strategic, Value Chain, Leadership, Innovation and Human Resources Development. Your Company's capability development agenda is geared to make organisational learning one of the key levers for improved business performance. These capability platforms are also designed to strengthen organisational systems to facilitate quick and competitively superior responses to market opportunities.

Your Company's talent management promise of ‘Building Winning Businesses. Building Business Leaders. Creating Value for India.' backed by its strong corporate equity continues to play a key role in attracting and retaining best-in-class talent. The Performance Management System in your Company encompasses all activities undertaken to identify, measure, and enhance the performance of individuals, teams and the businesses. It also serves to align individual and team performance with the strategic goals of the organisation. Your Company's Performance Management System and processes contribute immensely towards enhancing the level of Business performance as well as that of consistency and fairness that employees perceive, which in turn result in improved employee contribution and retention. Your Company continues to define sharp performance criteria along with commensurate reward mechanisms.

Your Company launched a companywide engagement survey, iEngage, in 2016. The survey provides a framework for capturing the pulse of the employees on a comprehensive set of parameters – Employee Engagement, Performance Enablement, Managerial Effectiveness, Trust, Growth & Development, Compensation & Benefits and Work Life Balance. The findings of the survey indicate a very high degree of pride and affinity amongst the employees with your Company's Vision, Mission and Core Values. Insights gained from the survey are being leveraged to further strengthen employee engagement and enhance performance levels.

Dedicated to nurturing sustainable Employee Relations, your Company continues to leverage the ‘Good Employee Relations' approach in ensuring responsive manufacturing, flexible work systems and, at the same time, maintaining a cost and environment conscious ecosystem in all units. The Employee Relations philosophy of your Company, anchored in the tenets of Scientific Management, Industrial Democracy, Human Relations and Employee Well-being, has contributed to building a robust platform which has aided the conclusion of several Long Term Agreements at multiple locations during the year and ensured the smooth execution of large-scale change management initiatives and adoption of contemporary management practices. To meet employee expectations, all Businesses appropriately acknowledge the demographic diversity of their factories and adopt a commitment based segmented approach. Adopting a progressive Employee Relations approach has enabled a harmonious atmosphere to be maintained across all units. This in turn has been a vital element in ensuring that HR systems and practices remain world-class.

Your Company has been able to galvanize its human resource to become more agile, leverage change, stay ahead of competition and win in the market. Your Company's interventions in the area of Talent Management and Employee Relations continue to receive accolades and industry recognition. Over 25,000 employees of your Company 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. Your Company's employees have collectively envisioned the future with commitment to realise your Company's vision of creating enduring value – for the nation and for the institution that is ITC.


Your 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 your 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 requisite standards of professional and ethical conduct are always upheld. It is your 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 and no employee has been denied access to the Committee. The Whistleblower Policy is available on your Company's corporate website ‘'.


Inspired by the opportunity to sub-serve larger national priorities, your Company redefined its Vision to not only reposition the organisation for extreme competitiveness but also make societal value creation the bedrock of its corporate strategy. This super-ordinate Vision spurred innovative strategies to address some of the most challenging societal issues including widespread poverty, unemployment and environmental degradation.

Your Company's sustainability strategy aims at creating significant value for the nation through superior ‘Triple Bottom Line' performance that builds and enriches the country's economic, environmental and social 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 enterprise.

Your Company is today a global exemplar in sustainability. It is a matter of immense satisfaction that your Company's models of sustainable development have led to the creation of sustainable livelihoods for around six million people, many of whom belong to the marginalised sections of society. Your Company has also 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 12 consecutive years), water positive (for 15 years in a row) and solid waste recycling positive (for 10 years in succession).

To contribute to the nation's efforts in combating climate change, your Company's strategy of adopting a low-carbon growth path is manifest in its growing renewable energy portfolio, establishment of green buildings, large-scale afforestation programme and achievement of international benchmarks in energy & water consumption. Today, over 48% of your Company total energy requirements are met from renewable energy sources - an outstanding performance given its large manufacturing base. Further, premium luxury hotels, several office complexes and factories of your Company are certified at the highest level by the US Green Building Council / Indian Green Building Council and the Bureau of Energy Efficiency (BEE).

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. These policies are aimed at strengthening the mechanisms of engagement with key stakeholders, identification of material sustainability issues and progressively monitoring and mitigating the impacts along the value chain of each Business.

Your Company's 13th Sustainability Report, published during the year detailed the progress made across all dimensions of the ‘Triple Bottom Line' for the year 2015-16. This report is in conformance with the latest Global Reporting Initiative (GRI) Guidelines - G4 under ‘In Accordance – Comprehensive' category and is third-party assured at the highest criteria of ‘reasonable assurance' as per International Standard on Assurance Engagements (ISAE) 3000. The 14th Sustainability Report, covering the sustainability performance of your Company for the year 2016-17, is being prepared in accordance with the GRI-G4 guidelines and will be made available shortly.

In addition, the Business Responsibility Report (BRR), as mandated by the Securities and Exchange Board of India, was brought out as an annexure to the Report and Accounts 2016, mapping the sustainability performance of your Company against the reporting framework suggested by Securities and Exchange Board of India. The BRR for the year under review is annexed to this Report and Accounts.

Corporate Social Responsibility (CSR)

Your Company's overarching aspiration to create significant and sustainable societal value 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, your Company adopted a comprehensive CSR policy in 2014-15 outlining programmes, projects and activities that your Company plans to undertake to create a significant positive impact on identified stakeholders. All these programmes fall within the purview of Schedule VII of the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The key elements of your Company's CSR interventions are to:

– Deepen engagement in identified core operational geographies to promote holistic development, designed to respond to the most prominent development challenges of your Company's stakeholder groups.

– Strengthen capabilities of Non-Government Organisations (NGOs) / Community Based Organisations (CBOs) in all the project catchments for participatory planning, ownership and sustainability of interventions.

– Drive the Development agenda in a manner that benefits the poor and marginalised communities in our factory and agri-catchments thereby significantly improving Human Development Indices (HDI).

– Move beyond mere asset creation to behaviour change through focus on demand generation for all interventions thereby enabling participation, contribution and asset creation for the community.

– Continue to strive for scale by leveraging government partnerships and accessing the most contemporary knowledge / technical know-how.

Your Company's stakeholders are confronted with multi-dimensional and inter-related issues, at the core of which is the challenge of securing sustainable livelihoods. Accordingly, interventions under your Company's Social Investments Programme (SIP) are appropriately designed to build their capacities and promote sustainable livelihoods.

The footprint of your Company's projects is spread over 26 States / Union Territories covering 182 districts.

Social Forestry

Your Company's pioneering afforestation initiative through the Social Forestry programme is currently spread across 19 districts in six States covering 2.55 lakh acres in 4,809 villages, impacting over 96,500 poor households. Together with your Company's Farm Forestry programme, this initiative has greened over 6.20 lakh acres till date, and generated over 113 million person days of employment for rural households, including poor tribal and marginal farmers. Integral to the Social Forestry programme is the Agro-Forestry initiative, which currently extends to over 82,255 acres and ensures food, fodder and wood security. .

Besides enhancing farm level employment, generating incomes and increasing green cover, the Social and Farm Forestry initiative of your Company, through a multiplier effect, has led to improvement in pulpwood availability in Andhra Pradesh and Telangana. This initiative is also contributing meaningfully towards the nation's endeavour in creating additional carbon sinks for tackling climate change.

During the year, your Company's Social Forestry programme was extended to West Tripura district and Malkangiri district (Odisha). In Tripura, your Company plans to promote bamboo plantations covering an area of 5,000 acres over the next five years, which would benefit around 2,000 families. In addition, your Company aims to promote 10,000 acres under Agro-Forestry in Malkangiri district of Odisha in order to provide livelihood opportunities to small and marginal farmers.

Soil and Moisture Conservation

The Soil and Moisture Conservation programme promotes the development and management of local water resources in moisture-stressed areas by facilitating village-based participation in planning and implementing such measures as well as building, reviving and maintaining water-harvesting structures. The coverage of this programme currently extends to 45 districts across 12 States. During the year, the area under watershed increased by 1.36 lakh acres taking the cumulative coverage area till 2016-17 to over 7.76 lakh acres. 2,101 water harvesting structures were built during the year, taking the total number of water harvesting structures to 10,099.


The focus of the programme is on reviving ecosystem services provided to agriculture by nature, comprising natural regulation of pests, pollination, nutrient cycling, soil retention and genetic diversity, which have witnessed considerable erosion in recent decades. During the year, your Company's biodiversity conservation initiative covered 2,060 acres, in seven States and 15 districts, taking the cumulative area under biodiversity conservation to 11,803 acres. While the conservation work is being carried out in select plots of village commons, this intervention significantly benefits agricultural activity in the vicinity of these plots through soil moisture retention, carbon sequestration and by acting as hosts to insects and birds.

Sustainable Agriculture

The Sustainable Agriculture programme attempts to de-risk farmers from erratic weather events through the promotion of climate smart agriculture premised on dissemination of relevant package of practices, adoption of appropriate mechanisation and provision of institutional services. Spread in 60 districts across 16 States, 1,280 Farmer Field Schools (FFS) disseminated advanced agri-practices covering over 1.50 lakh acres under different crops. 326 Agri Business Centres (ABCs) delivered extension services, arranged agri-credit linkages and established collective input procurement and agricultural equipment on hire. In pursuit of your Company's long-term sustainability objective of increasing soil organic carbon, a total of 3,931 compost units were constructed during the year taking the total number till date to 34,799 units. In addition, the ‘Choupal Pradarshan Khet' programme promoted field demonstrations of improved seed varieties and effective production practices covering around 1.5 lakh acres and directly benefitting more than 69,000 farmers with a multiplier effect of 10X in terms of adoption by the farming community.

With the addition of 23 model villages during the year, the ‘Village Adoption Programme' pioneered by your Company's Leaf Tobacco Business presently covers 108 model villages. This initiative comprises several focused farm level interventions towards enhancing quality and productivity, promoting sustainable agriculture practices and community empowerment. The programme has resulted in generating significant economic surplus for the farming community including creating sustainable rural livelihoods.

Livestock Development

The programme provides an opportunity for farmers to convert an existing asset into a substantial supplementary income with the potential of growing into a sustainable source of livelihood. The programme provided extension services, including breeding, fodder propagation and training of farmers in order to increase their incomes through enhanced productivity of milch animals across 25 districts in seven States. During the year, 2.28 lakh Artificial Inseminations (AIs) were carried out which led to the birth of 1.01 lakh cross-bred progeny. Cumulatively, the figures for AI and calving stand at 20.19 lakh and 6.72 lakh respectively.

In addition, pilot projects on indigenous breed promotion were initiated during the year in Madhya Pradesh in partnership with 13 existing gaushalas. Your Company has also implemented a project in Punjab to demonstrate to dairy farmers the commercial viability of having cattle farms with indigenous breeds with the intent of encouraging them to preserve indigenous cattle varieties.

Women Empowerment

This initiative is designed to provide a range of gainful entrepreneurial opportunities to poor women supported with financial assistance by way of loans and grants. Strong market linkages are attempted to ensure long-term sustainability.

Currently spread across eight districts in six States, the programme covers over 10,200 ultra-poor women who have been trained in entrepreneurial skills and provided with assets for income generation, taking the cumulative number of women impacted to 13,800. In addition, during the year 496 Self-Help Groups (SHGs) with 6,398 members were formed, in 11 states and 28 districts. Over 46,000 women were linked to individual bank accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) and life insurance schemes under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY).


The Primary Education Programme aims to provide children from weaker sections of society access to education with focus on learning outcomes and retention in your Company's factory catchment areas in 19 districts across 11 States. Over 49,000 children were covered during the year under this initiative comprising ‘Read India Plus' programme and 210 Supplementary Learning Centres to mainstream out-of-school children into regular schools. Till date, these programmes have reached out to over 5.14 lakh children in aggregate. In addition, 160 government primary schools were provided infrastructure support comprising boundary walls, additional classrooms, sanitation units, and furniture, taking the total number of government primary schools covered till date to 1,482. To ensure sustainable operations and maintenance of infrastructure provided, School Management Committees were strengthened in 276 schools and 215 Child Cabinets and Water and Sanitation (WATSAN) Committees were formed in various schools with the active involvement of students and teachers.

Skilling & Vocational Training

The Skilling & Vocational Training Programme focuses on providing market-linked skills to young people to make potential job-seekers industry-ready and employable in the services and manufacturing sectors. During the year, 12,338 youth were enrolled for training under different courses like Hospitality, Bedside Assistance, Electricals, Industrial Sewing Machines etc., offered as part of this programme. Of the total students enrolled, 11,344 (92% of enrolled) completed training and 8,084 (71% of trained) students were provided placement. The students trained included a healthy mix of women and SC/ST candidates. The initiative is spread across 29 districts covering 17 States and has enrolled over 43,700 youth cumulatively.

Your Company continues to work with the Welcomgroup Graduate School of Hotel Administration (WGSHA) together with Dr. TMA Pai Foundation to cater to the ever growing need for professionally trained human resources in the hospitality industry. WGSHA has been recently rated by CEO World Magazine amongst the top 50 hospitality schools in the world. In addition, since the inception of ITC Culinary Skills Training Centre, Chhindwara in 2014, 63 trainee chefs in five batches have successfully completed the 6-months programme wherein cooking skills are imparted to youth from the disadvantaged sections of society.

Health & Sanitation

Your Company continues to adopt a multi-pronged approach to improve public health. To promote a hygienic environment through prevention of open defecation and reduce incidence of water-borne diseases, 8,550 household toilets were constructed during the year in collaboration with the Government's Swachh Bharat

Abhiyan. With this, a total of 23,979 low-cost sanitary units have been constructed so far in your Company's catchment areas covering 22 districts in 14 States. In areas with water quality problems, 85 Reverse Osmosis plants have been installed providing safe drinking water to nearly 1 lakh rural households in Andhra Pradesh.

Efforts to enhance awareness on various health issues continued through ‘Swasthya Choupal', your Company's e-Choupal Rural Health initiative. A network of 300 women Village Health Champions (VHCs) across seven Districts in Uttar Pradesh and three in Madhya Pradesh reached out to nearly two lakh women, adolescent girls and school children during the year. The VHCs conducted over 5,000 village meetings and participated in over 2,000 group events apart from making door-to-door visits focusing on aspects like sanitation, menstrual and personal hygiene, family planning, diarrhoea prevention and nutrition.

Through your Company's ‘Savlon Swasth India Mission', a mix of audio-visual aids, games and practical training was leveraged to encourage healthy hygiene habits. More than nine lakh children from around 1,900 schools in 23 cities were covered during the year. Under the ‘First Cry Programme', 60,000 mothers were made aware of hygienic practices in 1,500 hospitals.

Solid Waste Management

Your Company's solid waste recycling programme, ‘WOW – Well Being Out of Waste', helps in the creation of a clean and green environment through awareness and education of citizens on source segregation and recycling of dry waste. It also promotes sustainable livelihoods for ragpickers and waste collectors. During the year, in addition to Hyderabad, Coimbatore, Chennai and Bengaluru, the programme was expanded to Delhi, Tirupati and Muzaffarpur. The quantum of dry waste collected aggregated 33,982 MT from 417 wards. The programme covers over 64 lakh citizens, 25 lakh school children and 2,000 Corporates and creates sustainable livelihoods for 13,500 ragpickers and waste collectors by propagating source segregation and facilitating effective collection in collaboration with municipal corporations. Besides, the intervention has also created over 60 social entrepreneurs who are involved in maximising value capture from the dry waste collected.

In addition, another programme on solid waste management under the Mission Sunehra Kal initiative has spread to 10 districts of seven states covering 61,200 households and collected 6,033 MT of waste during the year. This programme focuses on home composting in addition to recycling of dry waste. Under this programme, 4,161 MT wet waste was composted and 459 MT of dry waste recycled in 2016-17.

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 uphold 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 key development challenges, has been possible in significant measure, due to your Company's partnerships with globally renowned NGOs such as BAIF, DB Tech, DSC, FES, MYRADA, Pratham, SEWA Bharat, Outreach, WASH Institute and Water for People 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.

CSR Expenditure

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 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 standards, codes and practices and verified through regular audits.

Your Company is addressing 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 utilising post-consumer waste as raw material.

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 and to achieve 50% of its total energy requirements from renewable sources by 2020.

Significant progress has been made in enhancing the renewable energy portfolio and during 2016-17 over 48% of your Company's total energy requirements was met from carbon neutral fuels such as biomass, and wind and solar. Your Company has drawn up action plans based on a feasible balance of energy conservation and renewable energy investments to progressively move towards meeting the aforestated target.

Water Security

With water scarcity increasingly becoming an area of serious concern, your Company continues to focus on an integrated water management approach that includes 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 interventions to improve water use efficiencies by adopting latest technologies and increasing reuse and recycling practices within the fence while also working with farmers and other community members towards improving agricultural water use efficiencies. The supply side interventions include enhanced capture and storage of rainwater (in soil and storage ponds) and recharging aquifers. These initiatives, have resulted in the creation of rainwater harvesting potential that is over three times the net water consumption of your Company's operations.

Greenhouse Gases and Carbon Sequestration

The greenhouse gas (GHG) inventory of your Company for the year 2016-17 compiled as per the ISO 14064 standard, has been assured, as in the earlier years, at the highest ‘Reasonable Level' by a third party assurance provider. During the year, your Company was determined as having achieved ‘Leadership' position in the Climate Change disclosure of CDP. The CDP Global Climate Change Report ‘Out of the Starting Blocks', has commended your Company for decoupling emission growth with financial growth (having reduced 10% or more GHG emission over five years while simultaneously growing revenue by 10%).

Reaffirming your Company's commitment to the ethos of ‘Responsible Luxury', all luxury hotels of your Company are LEED Platinum certified, making it the ‘greenest luxury hotel chain' in the world. In order to continually reduce your Company's energy footprint, green features are integrated in all new constructions and also incorporated in existing hotels, manufacturing units, warehouses and office complexes.

Your Company's Social and Farm Forestry initiatives enabled 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.

Waste Recycling

Your Company continues to make 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 the associated problems of 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 90% of the total waste generated in your Company, recycling 99.9% of the total waste generated by its operations. During the year, this Business also recycled around 1,15,074 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 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 to drive behavioural change. In line with this approach, several of your Company's operating units are progressively implementing behavioural-based safety initiatives and customised risk assessment programmes to strengthen their safety culture. Your Company continuously strives to improve on safety performance by incorporating best-in-class engineering standards in the design and project execution phase itself for all investments in the built environment, besides optimising costs. During the year, the total number of on-site lost time accidents (LTA) reduced by 11.1% over the last year. Environment, Health & Safety audits before commissioning and during the operation of units are carried out to verify compliance with standards.

Promoting Thought Leadership in Sustainability

The ‘CII–ITC Centre of Excellence for Sustainable Development', established by your Company in 2006 in collaboration with the Confederation of Indian Industry (CII), continues to focus on its endeavour to promote sustainable business practices amongst Indian enterprises. The major highlights during the year include the 11th Sustainability Summit held on 14th-15th September 2016 in New Delhi. Some eminent personalities who addressed the delegates included Late Mr. Anil Madhav Dave, Minister for Environment, Forests and Climate Change, Mr. Piyush Goyal, Minister for Power, New & Renewable Energy, Coal and Mines, Mr. Amitabh Kant, CEO, NITI Aayog, Mr. Yuri Afanasiev, UN Resident Coordinator & UNDP Resident Representative in India.

The 11th CII-ITC Sustainability Awards were handed over by Mr. Prakash Javadekar, Union Minister of Human Resources to 23 winning companies for excellence in sustainable business in different categories. Your Company participated in the Business and Biodiversity Forum organised by Convention on Biological Diversity (CBD) COP 13, Mexico on 2nd – 3rd December 2016. The India Business & Biodiversity Initiative (IBBI) also released a case study publication ‘Reimagining Business for Biodiversity Enhancement: Case Studies from Indian Industry' which featured your Company.


Your Company continues to invest in a comprehensive Research & Development programme leveraging its world-class infrastructure, benchmarked processes, state-of-the-art technology and a business-focused R&D strategy.

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. LSTC has evolved over the years and is presently resourced with nearly 350 highly qualified scientists, world-class measurement systems and state-of-the-art facilities to conduct experimental research, rapid prototyping and process development. Several Centres of Excellence have been established over the past few years in these areas in LSTC. In addition, a number of areas centred around these capabilities have secured global quality certifications of the highest order.

The Agrisciences R&D team continues to engage in evaluating and introducing several germplasm lines of identified crops including Casuarina and Eucalyptus to increase the genetic and trait diversities in these species. This intervention would facilitate the development of new varieties with higher yields, better quality and other traits relevant 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 laboratory scale which are being advanced to large scale field trials in multiple locations. These initiatives are expected to produce significant business impact in the years to come. The Agrisciences team continues to focus on delivering world-class solutions using contemporary technologies in crops such as wheat, soya, potato and rice.

Recognising the unique construct of your Company in terms of its strong presence in Agri, Branded Packaged Foods and Personal Care Product 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 skin care and hair care.

LSTC has a clear vision and road map for long-term R&D, backed by a well-crafted Intellectual Property strategy. With scale, speed, science and sustainability considerations, LSTC is poised to deliver long-term competitive advantage for your Company.

In line with your Company's relentless focus on operational excellence and 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 improvements.

All manufacturing units of your Company have ISO quality certification. All manufacturing units of the

Branded Packaged Foods Businesses (including contract manufacturing units) and hotels operate in compliance with 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).


In the proceedings initiated by the Enforcement Directorate in 1997, 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. In respect of some of the remaining memoranda, your Company, has filed writ petitions before the Honourable Calcutta High Court challenging their validity. These petitions are pending. 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 surplus liquidity and management of foreign exchange exposures within a well-defined risk management framework.

During the year, Reserve Bank of India (RBI), reduced policy interest rates by 50bps. This coupled with the surplus banking system liquidity, post demonetisation of Specified Bank Notes, led to decline in market interest rates. Consolidation in Fiscal / Current Account Deficits and persistent decline in headline inflation during the year also contributed to the positive sentiment in Debt Markets.

All investment decisions relating to deployment of surplus liquidity continued to be guided by the tenets of Safety, Liquidity and Return. Proactive rebalancing of portfolio mix during the year in line with the evolving interest rate environment helped improve treasury performance. 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.

The foreign exchange market remained stable for most part of the year barring periods of heightened volatility induced by global / domestic events such as the surprise outcome of UK referendum to exit the European Union, escalation of geo-political tensions with Pakistan, US Presidential elections and demonetisation of Specified Bank Notes. These events led to depreciation of the Indian Rupee (INR) to a lifetime low of Rs 68.86 per US$ in November 2016. However, the INR recovered significantly in February and March 2017 to close the year at Rs 64.84 per US$. During the year, INR outperformed most of its emerging market peers and appreciated by 2.1% vs. the US Dollar on the back of stability in domestic macro-economic and political environment and sharp increase in capital inflows mainly from foreign institutional investors. In this scenario, your Company adopted a proactive forex exposure 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 the temporary surplus liquidity under management, treasury operations continue to be supported by appropriate control mechanisms, including independent check of 100% of transactions, by your Company's Internal Audit department.


Your Company's erstwhile Public Deposit Scheme closed in the year 2000. As at 31st March, 2017, there were no deposits due for repayment except in respect of two deposit holders totalling to Rs 20,000/- which have been withheld on the directives received from the 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. Yogesh Chander Deveshwar shed his executive role on completion of term as Chairman and Wholetime Director on 4th February, 2017. Mr. Deveshwar's period of Executive Chairmanship witnessed transformation of your Company into one of India's most admired and valuable corporations. His vision to make your Company an engine of growth for the Indian economy, keeping societal value creation as an integral part of business purpose, has led to the creation of multiple drivers of growth, world-class Indian Brands and recognition of your Company as a global exemplar in Sustainability. Your Directors would like to place on record their deep appreciation for Mr. Deveshwar's invaluable contribution in the transformation of your Company under his leadership as Executive Chairman.

It may be recalled that Mr. Deveshwar, at the request of the Nomination & Compensation Committee and the Board of Directors of your Company (‘the Board'), recognising the need for orderly transition in a company of ITC's size and complexity, agreed to continue as Chairman in non-executive capacity and also play the role of Mentor to the new executive management. Mr. Deveshwar was appointed Non-Executive Director, not liable to retire by rotation, and Chairman of the Company for a period of three years with effect from 5th February, 2017, as approved by the Members at the 105th Annual General Meeting (‘AGM') held on 22nd July, 2016.

On the recommendation of the Nomination & Compensation Committee, the Board at the meeting held on 27th January, 2017 appointed Mr. Sanjiv Puri, Wholetime Director, also as Chief Executive Officer of the Company with effect from 5th February, 2017 to take independent charge of the executive leadership of your Company.

Mr. Robert Earl Lerwill [representing Tobacco Manufacturers (India) Limited (‘TMI'), a subsidiary of British American Tobacco p.l.c.] resigned from the Board on medical grounds with effect from 22nd June, 2016. Mr. Angara Venkata Girija Kumar [representing General Insurers' (Public Sector) Association of India (‘GIPSA')], on completion of his term, ceased to be Non-Executive Director of your Company on conclusion of the 105th AGM. Mr. Krishnamoorthy Vaidyanath, on completion of his term, also ceased to be Non-Executive Director of your Company with effect from close of business on 28th July, 2016. Mr. Anil Baijal ceased to be an Independent Director of your Company with effect from 30th December, 2016, consequent to his appointment as Lt. Governor of Delhi. Your Directors would like to record their appreciation for the services rendered by Messrs. Lerwill, Girija Kumar, Vaidyanath and Baijal.

On the recommendation of the Nomination &

Compensation Committee, Mr. Zafir Alam (representing GIPSA), Mr. David Robert Simpson (representing TMI), and Mr. Ashok Malik (representing Specified Undertaking of the Unit Trust of India), were appointed by the Board as Additional Non-Executive Directors with effect from 26th October, 2016, 27th January, 2017 and 11th April, 2017, respectively.

By virtue of the provisions of Article 96 of the Articles of Association of your Company and Section 161 of the Companies Act, 2013 (‘the Act'), Messrs. Alam, Simpson and Malik will vacate office at the ensuing AGM of your Company.

On the recommendation of the Nomination &

Compensation Committee, your Board at the meeting held on 26th May, 2017 recommended for the approval of the Members, the appointment of Messrs. Alam, Simpson and Malik as Non-Executive Directors of your Company, liable to retire by rotation.

Requisite Notices under Section 160 of the Act have been received for the appointment of Messrs. Alam, Simpson and Malik, 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 106th AGM of your Company.

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. Suryakant Balkrishna Mainak will retire by rotation at the ensuing AGM and being eligible, offers himself for re-election. Your Board has recommended his re-election.

Number of Board Meetings

Six meetings of the Board were held during the year ended 31st March, 2017.

Attributes, Qualifications & Independence of Directors and their Appointment

As reported in earlier years, criteria for determining qualifications, positive attributes and independence of Directors were approved by the Nomination & Compensation Committee pursuant to the Act and the Rules thereunder, in respect of Directors, including Independent Directors. The Corporate Governance Policy also, inter alia, requires that Non-Executive 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 eighteen.

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 and as may be determined by the Board from time to time. All Directors, other than Independent Directors, are liable to retire by rotation, unless otherwise approved by the Members. 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 of the Act and Regulation 16 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Company's Policy on remuneration of Directors, Key Managerial Personnel and other employees is provided under the section ‘Report on Corporate Governance' in the Report and Accounts.

Board Evaluation

As reported in earlier years, the Policy on Board evaluation, evaluation of Board Committees' functioning and individual Director evaluation was approved by the Nomination & Compensation Committee. 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 Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 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 the respective 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 before the Board by the Committee Chairmen.


The composition of the Audit Committee is provided under the section ‘Board of Directors and Committees' in the Report and Accounts.

Statutory Auditors

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. On the recommendation of the Audit Committee and pursuant to Section 139 of the Act, the Board recommended for the ratification of the Members, the appointment of DHS from the conclusion of the ensuing AGM till the conclusion of the 107th AGM. On the recommendation of the Audit Committee and pursuant to Section 142 of the Act, the Board also recommended for the approval of the Members, the remuneration of DHS for the financial year 2017-18. Appropriate resolution for the purpose is appearing in the Notice convening the 106th AGM of the Company.

Cost Auditors

Your Board, as recommended by the Audit Committee, appointed for the financial year 2017-18:

(i) Mr. P. Raju Iyer, Cost Accountant, for audit of Cost Records maintained by the Company in respect of ‘Paper and Paperboard' and ‘Nicotine Gum' products.

(ii) Messrs. Shome & Banerjee, Cost Accountants, for audit of Cost Records maintained in respect of all applicable products of the Company, other than ‘Paper and Paperboard' and ‘Nicotine Gum' products.

Pursuant to Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, appropriate resolutions seeking your ratification to the remuneration of the said Cost Auditors are appearing in the Notice convening the 106th AGM of the Company.

Secretarial Auditor

Your Board appointed Messrs. S. M. Gupta & Co., Company Secretaries, to conduct secretarial audit of the Company for the financial year ended 31st March, 2017. The report of Messrs. S. M. Gupta & Co. is provided in the Annexure forming part of this Report, pursuant to Section 204 of the Act.


During the year, the following changes were effected in the Share Capital of your Company:-

a) Increase in Authorised Share Capital

The Authorised Share Capital of your Company was increased from Rs 1000 crores to Rs 2000 crores divided into 2000,00,00,000 Ordinary Shares of Rs 1/- each, with effect from 27th June, 2016. b) Issue of Bonus Shares 402,66,57,100 Ordinary Shares of Rs 1/- each, fully paid-up, were issued and allotted as Bonus Shares, in the proportion of 1 (One) Bonus Share of Rs 1/-each for every existing 2 (Two) fully paid-up Ordinary Shares of Rs 1/- each held on 4th July, 2016, being the Record Date determined by the Board for the purpose. The Bonus Shares were allotted on 7th July, 2016.

c) Issue of Shares under ITC Employee Stock Option Schemes 7,35,18,980 Ordinary Shares of Rs 1/- each, fully paid-up, were issued and allotted during the year upon exercise of 73,51,898 Options under the Company's Employee Stock Option Schemes.

Consequently, the Issued and Subscribed Share Capital of your Company, as on 31st March, 2017, stands increased to Rs 1214,73,83,071/- divided into 1214,73,83,071 Ordinary Shares of Rs 1/- each.

The Ordinary Shares issued during the year rank pari passu with the existing Ordinary Shares of your Company.


Disclosures with respect to Stock Options, as required under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (‘the Regulations'), are available in the Notes to the Financial Statements and can also be accessed on the Company's corporate website ‘' under the section ‘Shareholder Value'. During the year, there has not been any material change in the Company's Employee Stock Option Schemes.

Your Company's Auditors, Messrs. Deloitte Haskins & Sells, have certified that the Employee Stock Option Schemes of the Company have been implemented in accordance with the Regulations and the resolutions passed by the Members in this regard.


The Investor Service Centre of your Company (‘ISC'), registered with Securities and Exchange Board of India as Category II Share Transfer Agent for providing in-house share registration and related services, maintains its position as an exemplar in investor servicing. ISC with its experienced team of professionals, supported by contemporary infrastructure, continues to provide best-in-class services to the investors.

During the year, the ISO 9001:2008 Quality Management System certification for investor servicing by ISC was renewed by Messrs. Det Norske Veritas, accredited agency for ISO certification, up to 15th September, 2018. ISC achieved the highest ‘Level 5' rating for the eighth consecutive year - a testimony to the excellence achieved by ISC in providing quality investor services.


All contracts or arrangements entered into by the Company with its related parties during the financial year were in accordance with the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. 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. Further, the prescribed details of related party transactions of the Company in Form No. AOC-2, in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in the Annexure to this Report.


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 that period; 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 were adequate and 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 effectively.


Your Company's Board of Directors is responsible for the preparation of the consolidated financial statements of your Company & its Subsidiaries (‘the Group'), Associates and Joint Venture entities, in terms of the requirements of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section 133 of the Act.

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 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 conditions of Corporate Governance

The certificate from your Company's Auditors, Messrs. Deloitte Haskins & Sells, confirming compliance of the conditions of Corporate Governance as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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.

Extract 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 provided in the Annexure forming part of this Report.

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 4, 5, 6, 9 and 27 (v) (a) (ii) to the Financial Statements.

Particulars relating to Conservation of Energy and Technology Absorption

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, 2017 stood at 25,883.

There were 59 employees, who were employed throughout the year and were in receipt of remuneration aggregating Rs 102 lakhs or more or were employed for part of the year and were in receipt of remuneration aggregating Rs 8.5 lakhs per month or more during the financial year ended 31st March, 2017. 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.

Dividend Distribution Policy

The Dividend Distribution Policy of the Company, adopted by your Board pursuant to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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.


Inspired by the superordinate purpose to serve national priorities, your Company redefined its Vision two decades ago to transform itself into a vibrant engine of growth that would make a substantial contribution to the Indian economy, whilst rewarding shareholders by creating growing value for the Indian society.

Over the last 21 years, your Company has created multiple drivers of growth by developing a portfolio of world-class businesses across all sectors of the national economy spanning agriculture, manufacturing and services. Your Company ranks amongst the top three in the private sector in terms of Contribution to the Exchequer. Over the last 21 years, your Company's Value Addition aggregated Rs 3.6 lakh crores of which nearly 75% accrued to the Exchequer at the Central and State levels. During this period, your Company's Gross Revenue and Post-tax profit have recorded an impressive compound annual growth of 12.0% and 19.1% respectively. Total Shareholder Returns, measured in terms of increase in market capitalisation and dividends, have grown at a compound rate of 23.6% per annum during this period, placing your Company amongst the foremost in the country in terms of efficiency of servicing financial capital.

Your Company's non-cigarette businesses have grown over 18-fold since 1996 and presently constitute 58% of net segment revenue. In aggregate, the non-cigarette businesses account for nearly 80% of your Company's operating capital employed, about 90% of the employee base and over 80% of annual investments.

Your Company today, is the leading FMCG marketer in India, a pre-eminent hotel chain and a globally acclaimed icon in green hoteliering, the clear market leader in the Indian Paperboard and Packaging industry, a pioneering trailblazer in farmer and rural empowerment through its Agribusiness and a global exemplar in sustainable business practices. Additionally, its wholly-owned subsidiary, ITC Infotech India Limited, is a player of promise in the field of Information Technology.

Aligned with the Government's Make in India Vision, your Company is building national assets in the manufacturing and tourism sector. As stated earlier in this Report, around 20 world-class Integrated Consumer Manufacturing & Logistics facilities are being built to deliver sustainable competitive advantage to your Company's FMCG businesses. In total, 65 projects with an outlay of Rs 25,000 crores are in various stages of implementation / planning across the length and breadth of the country facilitating regional and national economic development. Recognising that tomorrow's world will belong to those who create, own and nurture intellectual capital, your Company continues to invest in augmenting the capability of its globally benchmarked Life Sciences and Technology Centre to ensure that its Businesses are future-ready and contribute to building intellectual property assets for the nation.

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 driven by its ‘Let's Put India First' credo anchored on the core values of Trusteeship, Transparency, Empowerment, Accountability and Ethical Citizenship, which are the cornerstones of ITC's Corporate Governance philosophy.

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
26th May, 2017 Y. C. DEVESHWAR Chairman
Kolkata S. PURI Chief Executive Officer & Director
India R. TANDON Director & Chief Financial Officer



The Members

ITC Limited

Virginia House 37, J. L. Nehru Road Kolkata 700 071

Our Report of even date is to be read alongwith this letter.

1. Maintenance of secretarial records is the responsibility of the management of the Company. Our responsibility is to express an opinion on such secretarial records based on our audit.

2. We have followed the audit practices and processes as we considered appropriate to obtain reasonable assurance on the correctness and completeness of the secretarial records. Our verification was conducted on a test basis to ensure that all entries have been made as per statutory requirements. We believe that the processes and practices we followed for this purpose provided a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of the financial records and Books of Account of the Company.

4. Wherever required, we have obtained Management representation with respect to compliance of Laws, Rules and Regulations and of significant events during the year.

5. The compliance of the provisions of corporate and other applicable Laws, Rules and Regulations is the responsibility of the management. Our examination was limited to the verification of secretarial records on test basis to the extent applicable to the Company.

(S. M. Gupta)
S. M. Gupta & Co.
Company Secretaries
Firm Registration No.: P1993WB046600
Place: Kolkata FCS No.: 896
Date: 26.05.2017 CP No.: 2053

Form No. AOC-2

[Pursuant to Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014]

Form for disclosure of particulars of contracts / arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arm's length basis

(a) Name(s) of the related party and nature of relationship Technico Pty Limited, Australia, a wholly-owned subsidiary
(b) Nature of contracts / arrangements / transactions Return of capital by Technico Pty Limited to its sole shareholder, ITC Limited
(c) Duration of the contracts / arrangements / transactions N.A.
(d) Salient terms of the contracts or arrangements or transactions including the value, if any Return of capital of Australian Dollar (AUD) 24.50 million by Technico Pty Limited by reduction of its share capital from AUD 43.99 million to AUD 19.49 million and consequent cancellation of 1,25,90,563 shares.
(e) Justification for entering into such contracts Technico Pty Limited returned capital to its sole shareholder,
or arrangements or transactions ITC Limited, in order to align its capital employed with the business requirements.
The transaction has been carried out under the ‘average capital per share' method as applicable under Australian laws.
Further, since the transaction is between the Company and its wholly-owned subsidiary, there is no potential conflict with the interests of the Company and its shareholders.
(f) Date(s) of approval by the Board 21st July, 2016
(g) Amount paid as advances, if any N.A.
(h) Date on which the special resolution was passed in general meeting as required under first proviso to Section 188 N.A.

2. Details of material contracts or arrangements or transactions at arm's length basis

(a) Name(s) of the related party and nature of relationship
(b) Nature of contracts / arrangements / transactions
(c) Duration of the contracts / arrangements / transactions
(d) Salient terms of the contracts or arrangements or transactions including the value, if any
(e) Date(s) of approval by the Board, if any
(f) Amount paid as advances, if any


On behalf of the Board
Y. C. DEVESHWAR Chairman
Kolkata S. PURI Chief Executive Officer & Director
26th May, 2017 R. TANDON Director & Chief Financial Officer



All business units continued their efforts to improve energy usage efficiencies and increase the share of renewable energy. Various key performance indicators like specific energy consumption (energy consumed per unit of production), specific energy costs and renewable energy contributions were continuously tracked to monitor alignment with the Company's overall sustainability approach. The Company has a process to identify and evaluate energy risks and opportunities, taking into account future expansion plans, evolving regulatory frameworks, techno-commercial feasibility and socio-political aspects. Accordingly, phased implementation of energy conservation and renewable energy generation projects are carried out and innovative ways and new technologies are constantly explored to bring about alignment between organisational interests and the larger social purpose.

a) Steps taken or impact on conservation of energy:

Some of the energy conservation measures adopted across the Company are outlined below: I. Improvement in energy usage efficiency in lighting systems by changing over to efficient lighting solutions such as Light Emitting Diodes.

II. Replacement of existing boilers and turbines with a higher efficiency boiler and turbine to reduce fuel consumption.

III. Recovery of waste heat from Heating, Ventilation and Air Conditioning (HVAC) system to improve energy efficiency.

IV. Automation of tube cleaning system in HVAC chiller resulting in improved efficiency.

V. Installation of automated controls at cogeneration units to improve energy efficiency.

VI. Replacement of existing motors, pumps, agitators with more energy efficient equipment.

VII. Process improvements to enhance productivity and reduce specific energy consumption.

b) Steps taken for utilising alternate sources of energy:

As part of its strategy to adopt a low-carbon growth path, the Company intends to progressively move towards meeting at least 50% of its total energy requirements from renewable sources by 2020. Some of the renewable energy initiatives undertaken during the year are as follows: I. Increased use of wind energy to meet production requirements.

II. Installation of additional solar photovoltaic based lighting system.

III. Increased use of biomass-based fuels for steam generation to reduce dependency on fossil fuels.

c) Capital investment on energy conservation equipment:

Rs 22,234.05 lakhs


a) Efforts made towards technology absorption:

I. Induction of Bleached Chemical Thermo Mechanical Pulp line.

II. Induction of Rigid Boxes manufacturing and Flexo Printing lines.

III. Automation in the manufacturing process using SCADA

(Supervisory Control and Data Acquisition) systems. IV. New process and product technologies with a focus on personal wash, skin care, and fragrances, developed through in-house Research & Development.

V. Automation and integration of sandwiching and packaging systems in biscuits manufacturing units.

VI. Induction of contemporary technologies and continuous improvements across businesses, towards reducing process variability, cycle time and wastages while enhancing manufacturing flexibility and productivity.

b) Benefits derived:

I. Cycle time reduction and productivity enhancement. II. World-class quality and differentiated products. III. Addressing market specific end-use applications. IV. Conservation of resources and improved efficiencies.

c) The expenditure incurred on Research and Development:

For the year ended 31st March, 2017
Expenditure on R&D : (Rs in Lakhs)
i) Capital 2,141.95
ii) Revenue 13,483.48
Total 15,625.43
Total R&D Expenditure as a % of Gross Revenue 0.28%


On behalf of the Board
Y. C. DEVESHWAR Chairman
Kolkata S. PURI Chief Executive Officer & Director
26th May, 2017 R. TANDON Director & Chief Financial Officer