Board of Directors
Chairman Non-Executive Directors Yogesh Chander Deveshwar Anil Baijal Hugo Geoffrey Powell John Patrick Daly Pillappakkam Bahukutumbi Ramanujam Executive Directors Ravinder Kumar Kaul Basudeb Sen Serajul Haq Khan Ram S Tarneja Sahibzada Syed Habib-ur-Rehman Sunil Behari Mathur Balakrishnan Vijayaraghavan Anup Singh Dinesh Kumar Mehrotra Krishnamoorthy Vaidyanath
Board Committees
Audit Committee Compensation Committee Nominations Committee P B Ramanujam Chairman B Sen Chairman Y C Deveshwar Chairman S B Mathur Member J P Daly Member A Baijal Member B Vijayaraghavan Member S B Mathur Member J P Daly Member K Vaidyanath Invitee Ram S Tarneja Member R K Kaul Member (Director responsible for the Finance Function) S H Khan Member S Basu Invitee S B Mathur Member (Head of Internal Audit) Investor Services Committee D K Mehrotra Member Representative of the Invitee H G Powell Member Statutory Auditors B Sen Chairman B B Chatterjee Secretary P B Ramanujam Member P B Ramanujam Member A Singh Member B Sen Member B B Chatterjee Secretary Ram S Tarneja Member B Vijayaraghavan Member
Corporate Management Executive Vice President & Company Secretary Committee Biswa Behari Chatterjee General Counsel Directors Kannadiputhur Sundararaman Suresh Y C Deveshwar Chairman S S H Rehman Member Investor Service Centre A Singh Member 37 Jawaharlal Nehru Road, Kolkata 700 071, India Phone : 033-2288 6426/2288 0034 K Vaidyanath Member Fax : 033-2288 2358 Executives e-mail : [email protected] R G Jacob Invitee Auditors A Nayak Invitee A F Ferguson & Co. Chartered Accountants, Kolkata R Srinivasan Invitee B B Chatterjee Secretary Registered Office Virginia House 37 Jawaharlal Nehru Road, Kolkata 700 071, India Phone : 033-2288 9371 ITC corporate website : www.itcportal.com
ITC Report and Accounts 2008 1 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Your Directors
Y. C. Deveshwar S. S. H. Rehman Y. C. Deveshwar, an engineering graduate from the Indian S. S. H. Rehman was appointed a Director on the Board Institute of Technology, Delhi joined ITC Limited in 1968. of ITC on November 21, 1997. He began his career with He was appointed a Director on the Board of the Company the Indian Army, moving over to the hospitality industry in in 1984 and became the Chief Executive and Chairman of 1975 and joining ITC in 1979. Since then Rehman has the Board on January 1, 1996. Between 1991 and 1994, he been General Manager of Welcomgroup's premier hotels led Air India as Chairman and Managing Director. across India as also its Regional Director, Vice President - Operations and President. Rehman was appointed Under his leadership, ITC’s Sustainability efforts were given Managing Director of the erstwhile ITC Hotels Limited in shape through unique business models. ITC became the 1994 and continued in that position till July 2003. He is first Indian company to publish its Sustainability Report, currently in charge of the Hotels, Travel & Tourism and 2004 in accordance with the guidelines of the Global Foods businesses of the Company. Reporting Initiative. For the efforts at creating sustainable Other Directorships livelihood opportunities, ITC also won the inaugural World Business Award instituted jointly by the United Nations Name of the Company Position Development Programme, International Chamber of International Travel Chairman & Director Commerce and the HRH Prince of Wales International House Limited Business Leaders Forum. ITC’s ‘e-Choupal’, a digital Landbase India Limited Chairman & Director infrastructure initiative to empower marginal farmers in Fortune Park Hotels Limited Chairman & Director India, is taught as a case study at the Harvard Business Gujarat Hotels Limited Chairman & Director School. This initiative won the Development Gateway Award Srinivasa Resorts Limited Vice Chairman & at Beijing in September 2005 and the Stockholm Challenge Director Award in May 2006. Maharaja Heritage Director Deveshwar is the Past President of the Confederation of Resorts Limited Indian Industry. He is also a member of the Board of Tourism Finance Corporation Director Governors of the Indian School of Business and the former of India Limited Chairman of the Society and Board of Governors of the Mumbai International Director Indian Institute of Management, Calcutta. He also serves Convention & Exhibition on the National Executive Committees of some of India’s Centre Limited premier trade and industry bodies. Committee Membership of other Companies: Nil Amongst several awards and recognitions during his distinguished career, Deveshwar has been honoured with the SAM/SPG Sustainability Leadership Award 2007 Anup Singh conferred at the International Sustainability Leadership Symposium, the Business Person of the Year Award 2006 Anup Singh was appointed a Director on the Board of ITC by the UK Trade & Investment by His Royal Highness on November 21, 1997. He joined ITC in 1968 after Prince Andrew, the Duke of York. In January 2006, he was receiving a Bachelor's Degree in Electrical Engineering inducted to the prestigious Hall of Pride at the Indian Science from IIT, Kharagpur. He was a key participant in the Congress. He was also named Manager Entrepreneur of Company’s major strategic initiative in the mid-seventies the Year 2001 by Ernst & Young. to implement the concept of ‘Management by Objectives (MBO)’. Singh has had a long stint in ITC’s Cigarette Other Directorships business, including heading it as the Chief Executive. Name of the Company Position He has also been the Chief Executive of the erstwhile Surya Nepal Private Limited* Chairman & Director Specialty Papers Division. He is currently in charge of the HT Media Limited Director Cigarettes, Information Technology and Lifestyle Retailing businesses of the Company. His Directorships include that West Bengal Industrial Director of the Tobacco Institute of India. He has been President Development Corporation of the Indian Chamber of Commerce. He is currently Limited Senior Vice President of The Bengal Chamber of Committee Membership of other Companies: Nil Commerce and Industry.
2 ITC Report and Accounts 2008 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Your Directors
Other Directorships Anil Baijal Name of the Company Position Anil Baijal joined the ITC Board as a representative of the ITC Infotech India Limited Chairman & Director Specified Undertaking of the Unit Trust of India on July 27, ITC Infotech Limited, U.K.* Chairman & Director 2007. Baijal started off in the Indian Administrative ITC Infotech (USA), Inc.* Chairman & Director Service in 1969 from the Union Territories Cadre and Asia Tobacco Company Chairman & Director superannuated in October 2006 as Secretary, Ministry of Urban Development, Government of India. He piloted Limited the flagship programme of the Jawaharlal Nehru Urban Surya Nepal Private Limited* Director Renewal Mission for improving infrastructure and basic Committee Membership of other Companies: Nil services in the urban areas of the country. In his long career spanning over 37 years, he has held several eminent positions including that of Chairman and Managing K. Vaidyanath Director of Indian Airlines, Chief Executive of Prasar Bharti Corporation, Union Home Secretary, Additional Secretary, K. Vaidyanath was inducted into the ITC Board on Ministry of Information & Broadcasting and Joint Secretary January 17, 2001. He holds responsibility for the in the Ministry of Civil Aviation, Government of India. Company's Finance, IT and Corporate Communications functions, its investment subsidiary and Agri Business. He was posted as the Counsellor in-charge of the Indian Before his elevation to the Board, he was the Company's Aid Programme in Nepal, Embassy of India, Kathmandu. Chief Financial Officer. He also had a brief stint as Vice Chairman of Delhi Development Authority. An MBA from XLRI, Jamshedpur, Vaidyanath has been with ITC for the past 32 years. He has held various Other Directorships positions in the Company's Finance function including Name of the Company Position that of Head of Finance of ITC's Packaging, Hotels and Bangalore Metro Rail Director Agri Businesses. He has also been Head of Corporate Corporation Limited Planning & Treasury, as well as Internal Audit. Committee Membership of other Companies: Nil Vaidyanath is a Committee member of The Bengal Chamber of Commerce and Industry. He was adjudged one of the best CFOs in the country in a survey conducted J. P. Daly by Business Today magazine in 2005. J. P. Daly joined the ITC Board as a representative of BAT Other Directorships on January 21, 2005. His academic qualifications include Name of the Company Position a Master of Business Administration from the University Russell Credit Limited Chairman & Director College Dublin and a Diploma in Marketing from the Institute Gold Flake Corporation Chairman & Director of Marketing, UK. Daly was appointed Director - Asia Pacific, Limited BAT in October 2004. He has occupied senior positions for nearly 20 years in the tobacco and pharmaceutical industries. Wills Corporation Limited Chairman & Director Prior to the merger of British American Tobacco and Greenacre Holdings Limited Chairman & Director Rothmans International in 1999, Daly was the Strategic ITC Infotech India Limited Director Planning Director - EU in Rothmans Europe and the Classic Infrastructure & Director Managing Director - Japan and Korea in Rothmans Asia. Development Limited After the completion of the merger, he was appointed Committee Membership of other Companies Regional Manager - Middle East, South & Central Asia and Name of the Company Committee Position then as Area Director - Middle East. Russell Credit Limited Audit Committee Chairman Other Directorships Gold Flake Audit Committee Chairman Name of the Company Position Corporation Limited British-American Tobacco Director Greenacre Holdings Audit Committee Chairman Middle East FZ-LLC* Limited British American Tobacco Director ITC Infotech India Audit Committee Member (Australasia Holdings) Pty. Limited* Limited Committee Membership of other Companies: Nil
ITC Report and Accounts 2008 3 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Your Directors
R. K. Kaul Other Directorships R. K. Kaul joined the ITC Board on August 7, 2007 as a Name of the Company Position representative of the General Insurers’ (Public Sector) Bajaj Auto Limited Director Association of India. Kaul commenced his career as an Infrastructure Development Director Officer with the General Insurance Corporation of India Finance Company Limited in 1977. After a year, he was assigned to the National Great Eastern Energy Director Insurance Company Limited (NICL), where he handled Corporation Limited several responsibilities. Bajaj Allianz Life Insurance Director In 1993, Kaul was seconded to Kenindia Assurance Company Limited Company Limited, Nairobi as Deputy General Manager, Bajaj Holdings & Investment Director Operations. He returned to NICL in 1999 as Manager Limited of Delhi Regional Office II. From 2000 to 2002, he was Bajaj Finserv Limited Director in charge of operations of NICL in Gujarat. In 2002, Apollo Health Street Limited Director he became the Assistant General Manager for Delhi Committee Membership of other Companies Regional Office I. In 2006, he took over as General Name of the Company Committee Position Manager, NICL, Kolkata. He does not hold directorship or committee membership of any other company. Infrastructure Audit Committee Chairman Development Investors’ Chairman Finance Company Grievance Limited Committee Bajaj Auto Limited Audit Committee Chairman S. H. Khan Shareholders’ / Member S. H. Khan joined the ITC Board as a Non-Executive Investors’ Independent Director on October 30, 2006. Khan is the Grievance Committee former Chairman and Managing Director of Industrial Apollo Health Street Audit Committee Chairman Development Bank of India (IDBI). He holds a Master’s Limited Degree in Commerce and is a university Gold Medalist. Bajaj Finserv Limited Shareholders’ / Chairman He is an alumnus of International Management Development Investors’ Institute, Lausanne. Grievance Committee He started his professional career with RBI and after Audit Committee Member serving it for a few years moved over to IDBI in 1966. Bajaj Holdings & Audit Committee Member He served IDBI in various capacities for over three decades Investment Limited Shareholders’ / Member and retired as its Chairman and Managing Director in Investors’ 1998. During his tenure as Chairman, IDBI made Grievance Committee impressive growth in its operations and profits. He was Great Eastern Energy Audit Committee Member instrumental in expanding its activities to several new Corporation Limited areas like commercial banking, asset management and stock broking. He played an important role in the promotion of two premier capital market institutions viz., NSE and NSDL and guided their operations for 5 years as their first Chairman. He was also involved in the promotion S. B. Mathur of the rating agency, CARE and served as its Chairman S. B. Mathur has been on the ITC Board since July 29, for 10 years. 2005, first as a representative of the Life Insurance Khan in his capacity as IDBI Chairman has served on the Corporation of India (LIC) and then in his individual capacity Boards of a number of important institutions such as UTI, as a Non-Executive Independent Director. LIC, GIC, IFCI, Exim Bank, Deposit Insurance Corporation, A qualified Chartered Accountant, Mathur retired from LIC Indian Airlines and Air India. Currently he serves as an in October 2004 as its Chairman. Subsequently, the Independent Director on the Boards of several companies. Government of India appointed him the Administrator of He is also a member of the Governing Board of Indian the Specified Undertaking of the Unit Trust of India in Institute of Management, Indore. December 2004, up to December 2007.
4 ITC Report and Accounts 2008 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Your Directors
Mathur took over as Chairman of LIC at a time when the D. K. Mehrotra insurance sector had just opened up. Under his leadership, D. K. Mehrotra has been on the ITC Board since May 26, LIC successfully rose to the challenges of a competitive 2006, first as a representative of the Specified Undertaking environment by enhancing product offerings. of the Unit Trust of India (SUUTI) and then as a He joined LIC in 1967 as a Direct Recruit Officer and rose representative of the Life Insurance Corporation of India to the rank of Chairman. He held various positions in LIC (LIC). He is currently the Managing Director of LIC. including Senior Divisional Manager of Gwalior Division, He joined LIC as a Direct Recruit Officer in 1977. Chief of Corporate Planning, General Manager of LIC Born in 1953, Mehrotra is an Honours Graduate in Science (International) E.C., Zonal Manager in charge of Western from the Patna University. In an illustrious career spanning Zone and Executive Director. 29 years, Mehrotra has held various important positions Other Directorships spanning three Zones and the Corporate Office of LIC. Name of the Company Position He was Executive Director (International Operations) before being appointed Managing Director. National Stock Exchange of Non-Executive India Limited Chairman Mehrotra has attended several important knowledge forums Subhiksha Trading Services Chairman & Director in India and abroad. He is associated with the apex training institutes of insurance in India, like the National Insurance Limited Academy and the Insurance Institute of India. He is also IDFC Trustee Company Limited Chairman & Director a member of the Supervisory Board of India Advantage Orbis Financial Corporation Chairman & Director Funds I & II of the ICICI Venture Funds Management Limited Company Limited. National Collateral Management Director Other Directorships Services Limited Name of the Company Position EID Parry (India) Limited Director LIC (International) B.S.C.(C)* Deputy Chairman & Havell’s India Limited Director Director DCM Shriram Industries Limited Director ACC Limited Director Infrastructure Leasing & Director Infrastructure Leasing & Director Financial Services Limited Financial Services Limited Indian Railway Catering and Director Tourism Corporation Limited Committee Membership of other Companies: Nil Housing Development & Director Infrastructure India Limited Universal Sompo General Director H. G. Powell Insurance Co. Limited H. G. Powell joined the ITC Board as a representative of The Bank of Rajasthan Limited Director BAT on May 7, 2008. Powell's career, spanning almost 40 Committee Membership of other Companies years, began in 1963 when he joined Unilever in its Name of the Company Committee Position Management Development Scheme. He trained with Lever Brothers for 5 years in the Marketing and Sales functions. Havell’s India Limited Audit Committee Chairman Indian Railway Catering Audit Committee Chairman In 1968, he joined Warner-Lambert Inc. as Brand Manager and Tourism Corporation and became General Manager, Consumer Products, in 1975. Limited A year later, he moved over to Standard Brands in Canada and assumed charge as President of Lowney's Confectionery. Universal Sompo Audit Committee Chairman Two years later, Powell joined Jacobs Suchard as President General Insurance Co. of Nabob Foods. He later shifted to Germany to head Jacobs Limited Suchard's coffee and chocolate unit. The Bank of Rajasthan Audit Committee Chairman Limited In 1984, he joined John Labatt Limited in Canada, and was President of a number of its businesses, including Subhiksha Trading Audit Committee Member McGavin's Bakeries, Everfresh Juice Company in Chicago, Services Limited Ontario Breweries and Labatt Brewing Company. In 1995, he took over as Chief Executive Officer of
ITC Report and Accounts 2008 5 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Your Directors
Interbrew Americas and then of Interbrew SA in 1999. Sen is on the Academic Advisory Committee of the Calcutta Powell retired from Interbrew SA in 2002. Business School as also on its faculty of Economics, Other Directorships Banking and Finance. He has contributed several articles in academic / professional journals and financial papers on Name of the Company Position a wide range of issues related to management, economics, Reynolds American Inc.* Director banking, financial markets and energy. Committee Membership of other Companies: Nil He has served as Chairman and Managing Director of the Industrial Investment Bank of India Limited and Executive Director of UTI. He has managed critical business P. B. Ramanujam responsibilities in various areas including strategic planning, risk management system, investment portfolio management P. B. Ramanujam has been on the Board of ITC since and fund marketing & credit / project appraisal. October 30, 1998, first as a representative of the General Insurance Corporation of India (GIC) and its erstwhile Sen has served as Chairman and / or Member of various subsidiaries and then in his individual capacity as a working groups / committees set up by SEBI, RBI, Indian Non-Executive Independent Director. A qualified Chartered financial institutions and industry associations on such Accountant, Ramanujam has held several responsibilities issues as consortium lending, corporate governance, in GIC covering finance, accounts / investments, reinsurance, institutional disinvestment, overseas investment by mutual information technology etc. He was General Manager and funds, money markets and corporate debt restructuring. Director with the National Insurance Company Limited and He has also served on the Boards of several companies the Managing Director of GIC till July 31, 2004. in sectors like infrastructure, engineering, petrochemicals, electronics and financial services. Ramanujam has served as a faculty member at the National Insurance Academy, Pune. He is a guest faculty at the Other Directorships Institute of Financial & Management Research, Chennai Name of the Company Position in the area of risk management & insurance. He was also South Asian Petrochem Limited Director the Chairman of the committee appointed by the interim Srei Venture Capital Limited Director Insurance Regulatory Authority (IRA) for prescribing norms, Gujarat NRE Coke Limited Director rules and regulations in the area of finance. He has also Sumedha Fiscal Services Limited Director been a member of two other IRA committees on technical Mahanagar Gas Limited Director issues and investment matters, and Insurance Regulatory Information System. He was a member of FICCI's Committee Membership of other Companies Reinsurance Sub-Committee as also of the Insurance Tariff Name of the Company Committee Position Advisory Committee of Insurance Regulatory and Mahanagar Gas Limited Audit Committee Chairman Development Authority (IRDA). He is currently a member Gujarat NRE Coke Audit Committee Member of the Advisory Committee on finance of Insurance Limited Regulatory Authority of India and a member of the South Asian Petrochem Shareholders’ Member Educational Advisory Council of the School of Management, Limited Grievance SRM University, Tamil Nadu. He does not hold directorship Committee or committee membership of any other company. Audit Committee Member
Basudeb Sen Ram S. Tarneja Basudeb Sen has been on the Board of ITC since March 23,1995, first as a nominee and then as a representative Ram S. Tarneja joined the ITC Board as a Non-Executive of the Unit Trust of India (UTI), and from July 28, 2000 in Independent Director on November 25, 1996. His present his individual capacity as a Non-Executive Independent Chairmanships include, among others, that of Jolly Board Director. Sen has over 32 years of management experience Limited, Nissin ABC Logistics Private Limited and the Pan in different areas of commercial banking, coal mining, Asian Management & Rural Research Organisation. development banking and investment management. He is Tarneja was Managing Director - Bennett, Coleman & Co. an M.A. in Economics from the University of Calcutta and Limited until May 1991 and continues to be on the Board a Ph.D. from Indian Statistical Institute, besides being an of that company. Tarneja is past President of Indian alumnus of the Harvard Business School. Merchants Chamber, All India Management Association,
6 ITC Report and Accounts 2008 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Your Directors
Indian Newspaper Society, Indian Institute of Personnel B. Vijayaraghavan Management, United News of India and others. He is B. Vijayaraghavan joined the ITC Board as a currently on the Boards of National Bank for Agriculture Non-Executive Independent Director on November 25, and Rural Development and Engineering Projects (India) 1996. Vijayaraghavan was in the Indian Administrative Limited (a public sector undertaking) as also a member of the Board of Trustees of the Employees Provident Service from 1957 to 1993, when he retired in the rank Fund Organisation. of Chief Secretary to the Government of Tamil Nadu. He has served as Secretary to the Tamil Nadu Government Other Directorships in the Public Works, Forests & Fisheries, Prohibition & Name of the Company Position Excise and Home departments. He has been the Jolly Board Limited Chairman & Director Chairman of the Tamil Nadu Electricity Board, Transcorp International Limited Director Member - Board of Revenue and Commissioner of Nesco Limited Director Commercial Taxes, Tamil Nadu, Chairman and Otis Elevator Company (India) Director President - Tuticorin Alkali Chemicals and Fertilisers Limited Limited, Chairman and Managing Director - State Industries Promotion Corporation of Tamil Nadu and Bharat Gears Limited Director Vigilance Commissioner & Commissioner for Housing Development Finance Director Administrative Reforms, Tamil Nadu. During this period, Corporation Limited he had also chaired various government committees Phillips Carbon Black Limited Director concerning forests, wildlife, environment and reform of Bennett, Coleman & Co. Limited Director sales tax laws and administration. Gati Limited Director After his retirement from Government service, Phoenix Township Limited Director Vijayaraghavan was a Member of the Syndicates of SOWiL Limited Director Alagappa University and Bharathidasan University, GIVO Limited Director Member of the Governing Council, Salim Ali Centre for Committee Membership of other Companies Ornithology and Natural History, Chairman, Madras Name of the Company Committee Position Naturalists’ Society, Member of the Committee for Housing Development Shareholders’ / Chairman Economic Reforms, Jammu and Kashmir, Member of the Finance Corporation Investors’ Board of Trustees of the Indian Bank Mutual Fund and Limited Grievance arbitrator for disputes between the public sector coal Committee companies and the State Electricity Boards of Maharashtra, Gujarat, Madhya Pradesh and Chattisgarh. Vijayaraghavan Bennett, Coleman & Audit Committee Chairman Co. Limited is currently Chairman, Chennai Snake Park Trust. He does not hold directorship or committee membership Transcorp International Audit Committee Member of any other company. Limited Nesco Limited Audit Committee Member Otis Elevator Company Audit Committee Member (India) Limited Bharat Gears Limited Audit Committee Member Gati Limited Audit Committee Member
Notes: 1. Other Directorships and Committee Memberships of Directors are as on 23rd May, 2008. 2. Other Directorships exclude Directorship in Indian Private Limited Companies, Membership of Managing Committees of Chambers of Commerce / Professional Bodies and Alternate Directorship. 3. Committee Memberships are in respect of Audit Committee and Investors Grievance Committee of Indian Public Limited Companies. * Denotes Foreign Company
ITC Report and Accounts 2008 7 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Report on Corporate Governance
The Directors present the Company’s Report on Trusteeship recognises that large corporations, which Corporate Governance. represent a coalition of interests, namely those of the shareholders, other providers of capital, business ITC Limited has been one of the frontrunners in India to associates and employees, have both an economic and have put in place a formalised system of Corporate a social purpose, thereby casting the responsibility on the Governance. Board of Directors to protect and enhance shareholder value, as well as fulfil obligations to other stakeholders. THE COMPANY’S GOVERNANCE PHILOSOPHY Inherent in the concept of trusteeship is the responsibility ITC defines Corporate Governance as a systemic process to ensure equity, namely, that the rights of all shareholders, by which companies are directed and controlled to enhance large or small, are protected. their wealth-generating capacity. Since large corporations Transparency means explaining the Company’s policies employ a vast quantum of societal resources, ITC believes and actions to those to whom it has responsibilities. that the governance process should ensure that these Externally, this means maximum appropriate disclosures resources are utilised in a manner that meets stakeholders’ without jeopardising the Company’s strategic interests aspirations and societal expectations. This belief is reflected and internally, this means openness in the Company’s in the Company’s deep commitment to contribute to the relationship with its employees and in the conduct of its “triple bottom line”, namely the development, nurture and business. ITC believes transparency enhances regeneration of the nation’s economic, social and accountability. environmental capital. Empowerment is a process of unleashing creativity and ITC's Corporate Governance structure, systems and innovation throughout the organisation by truly vesting processes are based on two core principles: decision-making powers at the most appropriate levels (i) Management must have the executive freedom to drive and as close to the scene of action as feasible, thereby the enterprise forward without undue restraints, and helping actualise the potential of its employees. Empowerment is an essential concomitant of ITC's first (ii) This freedom of management should be exercised core principle of governance that management must have within a framework of effective accountability. the freedom to drive the enterprise forward. ITC believes ITC believes that any meaningful policy on Corporate that empowerment combined with accountability provides Governance must empower the executive management an impetus to performance and improves effectiveness, of the Company. At the same time, Governance must thereby enhancing shareholder value. create a mechanism of checks and balances to ensure Control ensures that freedom of management is exercised that the decision-making powers vested in the executive within a framework of checks and balances and is designed management are used with care and responsibility to to prevent misuse of power, facilitate timely management meet stakeholders’ aspirations and societal expectations. of change and ensure effective management of risks. From this definition and core principles of Corporate ITC believes that control is a necessary concomitant of its second core principle of governance that the freedom Governance emerge the cornerstones of ITC's governance of management should be exercised within a framework philosophy, namely trusteeship, transparency, of appropriate checks and balances. empowerment and accountability, control and ethical corporate citizenship. ITC believes that the practice of Ethical Corporate Citizenship means setting exemplary each of these creates the right corporate culture that fulfils standards of ethical behaviour, both internally within the the true purpose of Corporate Governance. organisation, as well as in external relationships. ITC
ITC believes that large corporations which employ a vast quantum of societal resources should ensure that these resources are utilised in a manner that meets stakeholders’ aspirations and societal expectations.
8 ITC Report and Accounts 2008 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Report on Corporate Governance believes that unethical behaviour corrupts organisational shareholder value through strategic supervision of ITC, culture and undermines stakeholder value. Governance its wholly owned subsidiaries and their wholly owned processes in ITC continuously reinforce and help realise subsidiaries. As trustees, the Board ensures that the the Company’s belief in ethical corporate citizenship. Company has clear goals relating to shareholder value and its growth. The Board sets strategic goals and seeks THE GOVERNANCE STRUCTURE accountability for their fulfilment. The Board also provides direction and exercises appropriate control to ensure that The practice of Corporate Governance in ITC is at three the Company is managed in a manner that fulfils interlinked levels: stakeholders’ aspirations and societal expectations. Strategic supervision by the Board of Directors The Board, as part and parcel of its functioning, also periodically reviews its role. Strategic management by the Corporate Management Committee Corporate Management Committee (CMC): The primary role of the CMC is strategic management of the Company's Executive management by the Divisional / Strategic businesses within Board approved direction / framework. Business Unit (SBU) Chief The CMC operates under the strategic supervision and Executive assisted by the control of the Board. respective Divisional / SBU Management Committee. Chairman: The Chairman of ITC is the Chief Executive of the Company. He is the Chairman of the Board and the The three-tier governance structure ensures that: CMC. His primary role is to provide leadership to the Board and the CMC for realising Company goals in (a) Strategic supervision (on behalf of the shareholders), accordance with the charter approved by the Board. being free from involvement in the task of strategic He is responsible, inter alia, for the working of the Board management of the Company, can be conducted by and the CMC, for ensuring that all relevant issues are on the Board with objectivity, thereby sharpening the agenda and for ensuring that all Directors and CMC accountability of management; members are enabled and encouraged to play a full part (b) Strategic management of the Company, uncluttered in the activities of the Board and the CMC. He keeps the by the day-to-day tasks of executive management, Board informed on all matters of importance. He is also remains focused and energised; and responsible for the balance of membership of the Board, subject to Board and Shareholder approvals. He presides (c) Executive management of a Division or Business, free over General Meetings of Shareholders. from collective strategic responsibilities for ITC as a whole, focuses on enhancing the quality, efficiency Divisional Management Committee (DMC) / SBU and effectiveness of the business. Management Committee (SBU MC): The primary role of the DMC / SBU MC is executive management of the The core roles of the key entities flow from this structure. Divisional / SBU business to realise tactical and strategic The core roles, in turn, determine the core responsibilities objectives in accordance with Board approved plan. of each entity. In order to discharge such responsibilities, each entity is empowered formally with requisite powers. Executive Director: The Executive Directors, as members of the CMC, contribute to the strategic The structure, processes and practices of governance management of the Company's businesses within Board enable focus on the Corporate purpose while approved direction / framework. As Directors accountable simultaneously facilitating effective management of the to the Board for a business / corporate function, they wider portfolio of businesses. assume overall responsibility for its strategic management, The Governance Document that sets out the structure, including its governance processes and top management policies and practices of governance within the organisation effectiveness. As Directors accountable to the Board for is available on the Company’s corporate website a wholly owned subsidiary or its wholly owned subsidiary, www.itcportal.com for general information. they act as the custodians of ITC's interests and are responsible for their governance in accordance with the ROLES OF VARIOUS ENTITIES charter approved by the Board. Board of Directors (Board): The primary role of the Non-Executive Director: Non-Executive Directors, Board is that of trusteeship to protect and enhance including Independent Directors, play a critical role in
ITC Report and Accounts 2008 9 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Report on Corporate Governance imparting balance to the Board processes by bringing an Director Category No. of No. of independent judgement on issues of strategy, performance, other Membership(s)/ resources, standards of Company conduct etc. Directorship(s) Chairmanship(s) (*) of Board Divisional / SBU CEO: The Divisional / SBU CEO is the Committees Chief Operating Officer for a business with executive of other responsibility for its day-to-day operations and provides companies (**) leadership to the DMC / SBU MC in its task of executive Executive Directors management of the business. Y. C. Deveshwar Chairman 3 Nil S. S. H. Rehman 8 Nil BOARD OF DIRECTORS A. Singh 2 Nil In terms of the Company’s Corporate Governance Policy, K. Vaidyanath 6 4 (including 3 all statutory and other significant and material information as Chairman) are placed before the Board to enable it to discharge its Non-Executive Directors responsibility of strategic supervision of the Company as S. H. Khan Independent Director 7 10 trustees of the Shareholders. (including 5 Composition as Chairman) S. B. Mathur Independent Director 13 5 The ITC Board is a balanced Board, comprising Executive (including 4 and Non-Executive Directors. The Non-Executive Directors as Chairman) include independent professionals. Executive Directors, P. B. Ramanujam Independent Director Nil Nil including the Chairman, do not generally exceed one-third B. Sen Independent Director 5 4 of the total strength of the Board. (including 1 as Chairman) The Governance Policy requires that the Non-Executive Ram S. Tarneja Independent Director 12 7 Directors be drawn from amongst eminent professionals (including 2 with experience in business / finance / law / public as Chairman) enterprises. Directors are appointed / re-appointed with B. Vijayaraghavan Independent Director Nil Nil the approval of the Shareholders for a period of three to A. Baijal # Independent Director - 1 Nil five years or a shorter duration in accordance with Representative of retirement guidelines as determined by the Board from Specified Undertaking time to time. All Directors are liable to retire by rotation of the Unit Trust of India unless otherwise approved by the Shareholders. as Investor One-third of the Directors who are liable to retire by rotation, R. K. Kaul ^ Independent Director - Nil Nil retire every year and are eligible for re-election. In terms Representative of General Insurers’ of the Articles of Association of the Company, the strength (Public Sector) of the Board shall not be fewer than five nor more than Association of India eighteen. The present strength of the Board is fifteen, of as Investor which four are Executive Directors. D. K. Mehrotra Independent Director - 2 Nil Representative of Life The following is the composition of the Board as on Insurance Corporation 31st March, 2008: of India as Investor J. P. Daly Nil Nil Category No. of Percentage to C. R. Green @ Nil Nil Directors total no. of Directors * Excludes Directorship in Indian Private Limited Companies & Foreign Companies, Executive Directors 4 27 Membership of Managing Committees of Chambers of Commerce / Professional Bodies and Alternate Directorship. Non-Executive ** Represents Membership / Chairmanship of Audit Committee and Investors Grievance Independent Directors 9 60 Committee of Indian Public Limited Companies. # Other Non-Executive Appointed a Director w.e.f. 27th July, 2007. ^ Appointed a Director w.e.f. 7th August, 2007. Directors 2 13 @ Ceased to be a Director w.e.f. close of business on 31st March, 2008. Total 15 100 Note: H. G. Powell was appointed by the Board at its meeting held on 31st March, 2008, as a Non-Executive Director of the Company w.e.f. 7th May, 2008.
10 ITC Report and Accounts 2008 WorldReginfo - 99e97241-1003-4ca0-bea9-5a249b647c6f Report on Corporate Governance
Meetings and Attendance Default, if any, in payment of dues to any major creditor. The Company’s Governance Policy requires the Board to meet at least six times in a year. The intervening period Product liability claims of a substantial nature, if any. between two Board meetings was well within the maximum Information on strikes, lockouts, retrenchment, fatal gap of four months prescribed under Clause 49 of the accidents etc., if any. Listing Agreement. The annual calendar of meetings is broadly determined at the beginning of each year. Significant court judgement or order passing strictures, Board Agenda if any, on the conduct of the Company or a subsidiary of the Company or any employee, which could Meetings are governed by a structured agenda. The Board negatively impact the Company's image. members, in consultation with the Chairman, may bring up any matter for the consideration of the Board. All major Terms of reference of Board Committees. agenda items are backed by comprehensive background Policy on Shareholder Disclosures. information to enable the Board to take informed decisions. Agenda papers are generally circulated seven working Incident of theft / fraud / dishonesty of a significant days prior to the Board meeting. nature, if any.
Information placed before the Board Write-offs / disposals (fixed assets, inventories, receivables, advances etc.) on a half-yearly basis. Apart from the items that are required to be placed before the Board for its approval, both under the statutes and Post-meeting follow-up system the Governance Policy, the following are also tabled for the Board's periodic review / information: The Governance processes in the Company include an effective post-meeting follow-up, review and reporting Quarterly performance against plan, including process for action taken / pending on decisions of the business-wise financials in respect of revenue, profits, Board, the Board Committees, the Corporate cash flow, balance sheet, investments and capex. Management Committee and the Divisional / SBU Half-Yearly summary of all long-term borrowings made, Management Committees. bank guarantees issued and investments made. Details of Board Meetings during the financial year Treasury Policy, both domestic & forex, as and when changes take place. During the financial year ended 31st March, 2008, seven meetings of the Board were held, as follows: Internal Audit findings and External Audit Management Reports (through the Audit Committee). Sl. Date Board No. of Status of safety, security and legal compliance. No. Strength Directors present Status of business risk exposures, its management and related action plans. 1 4th April, 2007 13 9