REPORT AND ACCOUNTS 2018 CONTENTS ITC: Creating Enduring Value Focus: ITC’s World-class Indian brands Board of Directors and Committees 01 Report on Corporate Governance 12 Shareholder Information 28 Report of the Board of Directors & 38 Management Discussion and Analysis Certificate of Compliance from Auditors with 122 respect to Corporate Governance CEO and CFO Compliance Certificate 123 Standalone Financial Statements Balance Sheet 124 Statement of Profit and Loss 125 Statement of changes in equity 126 Cash Flow Statement 128 Notes to the Financial Statements 130 Auditor’s Report 191 Guide to Subsidiaries, Joint Ventures & Associates 197 Salient Features of the Financial Statements of 200 Subsidiaries, Joint Ventures & Associates (AOC-1) Consolidated Financial Statements 205 Ten Years at a Glance 288 Financial Highlights Business Responsibility Report I-XVI Business Update : lTC lnfotech Creating Enduring Institutions Awards & Accolades ITC: Creating Enduring Value for India As a Company deeply rooted in India’s soil, intimate rural linkages, superior agri-sourcing, ITC is inspired by its vision to serve larger cutting-edge Research & Development, national priorities. ITC’s pursuit of global world-class manufacturing, brand building competitiveness in economic value creation, skills, culinary insights of ITC Hotel’s master whilst simultaneously creating larger societal chefs, innovative consumer packaging, focus value, spurred innovation in business models to on digital technologies and an extensive trade synergise the building of economic, ecological marketing, distribution and logistics network. and social capital as a unified strategy. This These unique enterprise strengths enable ITC to commitment to create enduring value for create multiple drivers of growth across all the its stakeholders and the nation is manifest in three sectors – agriculture, manufacturing and its credo of ‘Putting India First’ – an abiding services, whilst making a significant and holistic philosophy that seeks to put Country before contribution to society, environment and the Corporation and the Institution before the economy. Individual. Contribution to the Exchequer Creating Multiple Drivers of ITC is amongst the top three corporates in the Growth: Leveraging Enterprise private sector in terms of Contribution to the Strengths Exchequer. Over the last five years, the Value- Over the years, ITC’s multiple drivers of growth Added by ITC, i.e. the value created by the have been carefully crafted to match internal economic activities of the Company and its competencies with the emerging opportunities employees, aggregated over H2,00,000 crores, of a growing Indian market. A robust portfolio of which nearly H1,50,000 crores accrued to the of businesses leverage ITC’s unique enterprise Exchequer. Including the share of dividends strengths in terms of its deep consumer insight, paid and retained-earnings attributable to government-owned institutions, ITC’s Building World-Class Assets Health and Sanitation and Solid Waste contribution to the Central and State for India Management have had a transformational Governments represents about 80% of ITC’s commitment to create enduring impact on rural India. Many of ITC’s social its Value-Added during the year. Since value for India is also manifest in its investment interventions are aligned 1996, ITC’s Total Shareholder Returns, investments in the development of to the United Nation’s Sustainable measured in terms of increase in market world-class manufacturing and hospitality Development Goals. In the field of waste capitalisation and dividends, grew assets. These investments that contribute management, ITC has spearheaded rapidly at a compound rate of 22.4% per to the Company’s competitiveness a 360-degree solutions framework, annum, placing the Company amongst and in building assets to serve the which includes packaging optimisation, the foremost in the country in terms of nation are in the form of state-of-the- resource conservation, over 99% of waste efficiency of servicing financial capital. art manufacturing facilities, iconic generated in operations being recycled, luxury hotels, logistics hubs and the enabling source segregation of municipal Creating World-Class Indian globally benchmarked Life Sciences and solid waste, facilitating collection, re-use Brands Technology Centre. Contributing to the and re-cycling, thereby moving towards a It is ITC’s belief that tomorrow’s world will Make in India vision, ITC is investing in circular economy. Over the next decade, belong to those who create, own and creating 20 Integrated Consumer Goods ITC pledges to ensure that, going beyond nurture intellectual capital for the country. Manufacturing & Logistics facilities for Extended Producer Responsibility Successful brands and trademarks, its FMCG businesses, which promise to requirements, the Company will deploy which represent such intellectual capital, lend significant competitive edge to ITC’s superior solutions so that 100% of all are a badge of honour for the country businesses in the future. An investment packaging of the Company will be they belong to. ITC’s world-class Indian outlay of H25,000 crore has been recyclable, reusable or compostable. brands anchor competitive and inclusive envisaged to support the Company’s value chains that create, capture and projects in manufacturing, hospitality, Creating an Exemplary retain larger value within the country distribution and agri-backend. Several National Enterprise as opposed to brands owned overseas of these projects are already on stream. ITC’s super-ordinate vision to create that rely on global supply chains besides Commercial production commenced this enduring value for the nation is today necessitating payments in the form of year at ITC’s integrated facilities in Uluberia manifest in the foundation of multiple royalties, etc. ITC has built 25 world-class and Panchla in West Bengal, Guwahati in drivers of growth across businesses mother brands within a short span of Assam and Kapurthala in Punjab. of tomorrow, which have achieved time. ITC’s new FMCG brands currently significant market standing and represent nearly H16,000 crores in terms of Building a Sustainable Future leadership. Today, ITC is the leading FMCG annualised consumer spend, and several for all Stakeholders marketer in India, a pre-eminent hotel of the Company’s brands have assumed ITC’s quest is to attain extreme chain and a globally acclaimed icon in market leadership in a short period of competitiveness in each of its businesses, green hoteliering, the clear market leader time. whilst at the same time ensuring the in the Indian Paperboard and Packaging replenishment of environmental resources industry, a pioneering trailblazer in Creating Value for Indian and creation of large-scale sustainable farmer and rural empowerment through Consumers livelihoods. Today, ITC’s businesses create its Agri Business and a global exemplar ITC is committed to delivering superior sustainable livelihoods for over 60 lakh in sustainable business practices. This and differentiated products that create people, many of whom represent the transformation of the Company has value for the Indian consumer. Some of weakest in the society. The philosophy of also enabled ITC to be a growing and the differentiated products include ITC ‘Responsible Competitiveness’ makes ITC significant contributor to the national Master Chef Super Safe spices that are the only company in the world to attain economy. In the coming years, ITC’s tested for over 470 pesticide residues and the global environmental distinction of world-class manufacturing facilities will the ITC Master Chef Super Safe prawns being carbon positive, water positive and expand the nation’s industrial capital, that are Individually Quick Frozen and solid waste recycling positive for over whilst the Company’s iconic hotel undergo over 240 tests to conform to a decade. Over 43% of the total energy properties will contribute to the country’s the best international standards offering requirement of the Company is met tourism landscape. ITC’s investments and consumers and future generations a safer from renewable sources, a testimony to multipronged initiatives in supporting and better product. ITC’s differentiated its commitment to a low carbon growth agricultural and rural development products focused on health and wellness path. ITC’s sustainability initiatives and will further contribute to doubling of include the Aashirvaad Sugar Release social investments programmes, such as farmers’ income. ITC’s commitment Control Atta – a low Glycaemic Index the celebrated e-Choupal, Social & Farm towards a paradigm of growth that is atta, Sunfeast Farmlite biscuits, Farmland Forestry, Watershed Development, Animal sustainable and inclusive will continue to Naturally Low Sugar potatoes, among Husbandry, Women Empowerment, shape a better and secure future for its others. Vocational Training, Primary Education, stakeholders and the nation. ITC’s Businesses Spanning all three sectors of the economy – Agriculture, Manufacturing and Services FMCG Businesses India’s leading FMCG marketer ITC Foods is the 3rd largest in India Hotels Agri Business ITC Kohenur, Hyderabad One of India’s fastest growing hospitality chains Pioneer in rural transformation through ITC’s super premium luxury hotels are ITC e-Choupal LEED Platinum-certified Largest private sector procurer of wheat in India Paperboards & Packaging Information Technology Clear market leader in the segment Digital