Classmate

Classmate is the lead provider of all student stationery needs. ITC launched its Classmate brand in 2003 with the notebooks category. Subsequently, Classmate added new products to its portfolio which now consists of pens, pencils, mechanical pencils and geometry boxes, erasers and sharpeners. Classmate aspires to partner young minds in discovering, nurturing & believing in ideas that reside inside each one of us. Have fun exploring, creating & believing in your ideas, in classrooms & beyond. Ideas that defy & change beliefs; ideas that allow you to lead rather be led; ideas that are inside each one of us but only await self recognition & belief. Your belief makes your ideas work for you & become big; allowing you to be all that you can. Classmate is For the BIG ideas in you.

Classmate Notebooks:

Classmate is India's No. 1 Notebook brand. Its range of more than 300 variants is custom made to take care of varying needs in notebooks, long books, practical books, drawing books & reminder pads segments. These notebooks reach more than 65,000 outlets across the country. The Classmate Notebook range builds in regional preferences and caters to the requirements of All India & State Education Boards. Every Classmate notebook carries ITC's Corporate Social Responsibility message on its back. For every four Classmate Notebooks purchased, ITC contributes Re. 1 to its social development initiative that supports, among other projects, primary education. Classmate recently launched the Classmate Composition notebooks which are 60GSM notebooks with magenta ruling and with increased spacing for superior writing experience.

ITC forayed into the pen industry with the launch of Classmate pens across markets offering the consumer stylish and attractive designs. Classmate pens deliver unmatched comfort & neat writing experience. Classmate pens are attractive in design and superior in quality. The pens offer ergonomical grip, precision engineered tips & controlled ink flow mechanisms to keep the writing smudge free and the writing experience a pleasure! Exciting range of pens from Classmate include B Qwick, B Neat, B Fine, B Positive, Volt,

Classmate Pens:

UVO, Radeon and Genghis under the Ball point pens and Gelofun, Octane, Crypton, Attila and Trojan under the Gel pens.
Classmate Pencils

:Classmate pencils are designed to write dark and smooth, and provide the user a pleasing and effortless writing experience. Classmate pencils have the strong advantage of lesser lead wear out, hence these pencils Stay Sharp Longer. There is minimal need for sharpening thus, giving fine writing for longer. Classmate Carbon black is a Super Dark pencil offering the dual benefit of lesser lead wear out and darker writing. Classmate has recently launched the Classmate 2B Trilobe pencils that are specially designed with a tri-grip for a comfortable and firm hold.

Classmate Mechanical Pencils:

Classmate Mechanical Pencils are high quality pencils intended for sharp, precise writing and drawing. They are smart and offer a steady and comfortable writing and drawing experience. These are especially used by those who need to make precise drawings in subjects like maths, engineering etc. Classmate Da Vinci mechanical pencils are well designed pencils with a 0.7mm tip. It has a high gloss translucent body fitted with a firm rubber grip for steady comfortable writing. The 0.7mm HB lead is designed so as to have increased strength and lower breakage. An eraser with cap is integrated for added convenience. These pencils are available in 2 colours blue and green. Classmate Fine Script Pencils are designed with a 0.7 mm tip and a self gripper which enables comfortable writing experience. Available in 5 attractive colours of Blue, Green, Red, Orange and Purple, these pencils also come with an integrated eraser.

Precision instruments: Classmate Invento & Classmate Victor are part of the range of Geometry Boxes. Both products offer unmatched precision through their die-cast metallic instruments hence ensuring great accuracy. While "Invento" is a more

premium product carrying interesting trivia and other useful information about the subject, "Victor" provides tinted plastic instruments that make it easier for beginners. Classmate math instrument portfolio also offers Invento compass and the Invento Exam Kit which includes all essential high precision instruments.

Classmate offers a range of erasers and sharpeners in its portfolio. Classmate sharpeners come in various attractive designs namely, Whistle, Aeroplane, Shuttle and Snail shapes. The Whistle sharpener has an attractive design with an inbuilt eraser while the Aeroplane sharpener has an adjustable switch to vary the pointedness of the pencil lead. It also has the regular and long-point sharpeners which provide a comfortable grip and have long lasting nickel-plated blades. Erasers from Classmate are nontoxic and phthalate-free making it completely safe for use by children.

Erasers & Sharpeners:

Classmate Stationery
From Wikipedia, the free encyclopedia

Classmate Stationery

Industry

Consumer goods

Key people

Chand Das, CEO, ITC's education and stationery products business (ESPB)

Products

Variety of Consumer goods -Notebooks, Pens, Pencils, Math Instruments, Erasers & Sharpeners

Website

Classmate

Classmate is an Indian brand of student stationery products. ITC Limited launched its Classmate brand in 2003 with the notebooks category. Subsequently, Classmate added new products to its portfolio which consists of pens, pencils, mechanical pencils and geometry boxes. [1] Classmate has 900 distributors who make the products available in over 70,000 outlets in India.[2] Classmate, brought in earnings of Rs 40 crore (Rs 400 million) in 2005-06.[3]
Contents
[hide]

1 Products

o o o o o

1.1 Notebooks 1.2 Pens 1.3 Pencils 1.4 Mechanical Pencils 1.5 Math Instruments

2 Initiatives

o o o o o

2.1 Classmate Ideas for India challenge 2.2 Brand Ambassadors: Yuvraj Singh, Soha Ali Khan 2.3 Discussions 2.4 Corporate Social Responsibility 2.5 Classmate Young Authors Contest

3 References 4 External links

[edit]Products
Classmate manufactures notebooks, pens, pencils, mechanical pencils and Geometry Boxes.

[edit]Notebooks
Classmate Notebook brand has a product range of more than 300 variants is custom made to take care of varying needs in notebooks, long books, practical books, drawing books & reminder pads segments. [2] ITC focused on the design elements of notebooks: each Classmate notebook has a theme on the cover and related information inside.[4] The Classmate Notebook range builds in regional preferences and caters to the requirements of All India & State Education Boards.

[edit]Pens
ITC forayed into the pen industry with the launch of Classmate pens across markets offering the consumer stylish and attractive designs.[2]

[edit]Pencils
Classmate HB Jet Black Pencils mark the entry of Classmate into the pencils category.[2]

[edit]Mechanical

Pencils

Classmate Mechanical Pencils are pencils intended for sharp, precise writing and drawing, specially used for precise drawings in subjects like maths and engineering.

[edit]Math

Instruments

Classmate Invento & Classmate Victor are part of the range of Geometry Boxes.[5] "Invento" is positioned as a more premium product carrying interesting trivia and other useful information about the subject, "Victor" provides tinted plastic instruments that make it easier for beginners.

[edit]Initiatives [edit]Classmate

Ideas for India challenge

Classmate, has launched a programme called Classmate Ideas for India challenge. The programme would be a part of the company's centenary initiative.[6] The nation-wide programme would invite ideas of the youth, who have the potential to transform India. Classmate Ideas for India challenge plans to reach out to 25 lakh students across 30 cities, 500 schools and 200 colleges across the country. [7] The CII-ITC Centre of Excellence for Sustainable Development, WWF-India, the Tony Blair Faith Foundation, Janaagraha and the Akshaya Patra Foundation among others are the programme partners for the event.[8] The programme would encourage the finalists with an internship with relevant programme partners, besides cash prizes and other rewards. Additionally, the top five winners would be sent to a one week international study tour. [9][10]

[edit]Brand

Ambassadors: Yuvraj Singh, Soha Ali Khan

Classmate, ITC's education and stationery products brand, has signed Yuvraj Singh and Soha Ali Khan as brand ambassadors for its range of products.[11]

[edit]Discussions
ITC Classmate, hosted a discussion on the subject titled Principal, Parents and Children: Building a Relationship of Mutuality.[12] The panelists agreed on the need for greater student involvement, in the choice of what they are taught, as well as the method of imparting education.

[edit]Corporate

Social Responsibility

Every Classmate notebook carries ITC's Corporate Social Responsibility message on its back. For every four Classmate Notebooks purchased, ITC contributes Re. 1 to its social development initiative that supports, among other projects, primary education.[3]

[edit]Classmate

Young Authors Contest

The Classmate Young Author Contest 2004 (CYAC 2004) was initiated by ITC Ltd to provide a platform for budding writers among students to showcase their talent and an opportunity to develop it through interaction with some of the country's leading literary icons.[13]

[edit]References

1. 2. 3.

^ "ITC, 100 years old and still adding muscles". Financial Chronicle. 2010-04-21. ^ ^
a b c d a b

"ITC targets the schoolbag". Business Standard. 2010-01-18.

"How ITC's filling up schoolbags". rediff.com. 2006-04-12.

4. 5. 6. 7. 8. 9.

^ "ITC to grow office stationery business on green plank". sify.com. 2009-08-07. ^ "Yuvraj Singh and Soha Ali Khan come together to promote ITC's Classmate". afaqs. 2010-01-13. ^ "ITC: Leading Multi-business conglomerate turns 100". The Economic Times. 2010-08-24. ^ "ITC launches Classmate Ideas challenge". Business Line. 2010-08-23. ^ "ITC announces Classmate Ideas for India Challenge". afaqs. 2010-09-15. ^ "ITCs Classmate announces Classmate Ideas for India Challenge". India Infoline. 2010-08-23.

10. ^ "Ideas for India". Deccan Chronicle. 2010-09-07. 11. ^ "Yuvraj Singh, Soha Ali Khan ambassadors for ITC's stationery brand". Business Line. 2010-01-12. 12. ^ "Bridging the gap". The Telegraph. 2007-03-13. 13. ^ "Eventus Integrated wins business worth Rs 10 crore". afaqs. 2004-10-25.

[edit]External

links

Corporate Management Committee Executive Directors Y C Deveshwar Chairman N Anand Member P V Dhobale Member K N Grant Member Executives A Nayak Member T V Ramaswamy Member S Sivakumar Member K S Suresh Member R Tandon Member B B Chatterjee Member & Secretary Chief Financial Officer Rajiv Tandon Executive Vice President & Company Secretary Biswa Behari Chatterjee General Counsel

Kannadiputhur Sundararaman Suresh Investor Service Centre 37 Jawaharlal Nehru Road, Kolkata 700 071, India Phone : 033-2288 6426/2288 0034 Fax : 033-2288 2358 e-mail : isc@itc.in Auditors Deloitte Haskins & Sells Chartered Accountants, Kolkata Registered Office Virginia House 37 Jawaharlal Nehru Road, Kolkata 700 071, India Phone : 033-2288 9371 ITC corporate website : www.itcportal.com Investor Services Committee A V Girija Kumar Chairman K N Grant Member P B Ramanujam Member B Sen Member B Vijayaraghavan Member B B Chatterjee Secretary Audit Committee S B Mathur Chairman A Baijal Member A V Girija Kumar Member P B Ramanujam Member K Vaidyanath Member

B Vijayaraghavan Member P V Dhobale Invitee R Tandon Invitee S Basu Invitee (Head of Internal Audit) Representative of the Invitee Statutory Auditors B B Chatterjee Secretary Board Committees Compensation Committee S H Khan Chairman A Baijal Member S B Mathur Member H G Powell Member B Sen Member Nominations Committee Y C Deveshwar Chairman A Baijal Member S Banerjee Member A V Girija Kumar Member S H Khan Member S B Mathur Member D K Mehrotra Member P B Ramanujam Member K Vaidyanath Member Sustainability Committee Y C Deveshwar Chairman

S Banerjee Member H G Powell Member A Ruys Member B Sen Member B Vijayaraghavan Member B B Chatterjee Secretary Chairman Yogesh Chander Deveshwar Board of Directors Nakul Anand Pradeep Vasant Dhobale Kurush Noshir Grant Executive Directors Anil Baijal Shilabhadra Banerjee Angara Venkata Girija Kumar Serajul Haq Khan Sunil Behari Mathur Dinesh Kumar Mehrotra Hugo Geoffrey Powell Pillappakkam Bahukutumbi Ramanujam Anthony Ruys Basudeb Sen Krishnamoorthy Vaidyanath Balakrishnan Vijayaraghavan Non-Executive Directors ITC Report and Accounts 2011 1Y. C. Deveshwar

Y. C. Deveshwar (64), an engineering graduate from the Indian Institute of Technology, Delhi joined ITC Limited in 1968. He was appointed as a Director on the Board of the Company in 1984 and became the Chief Executive and Chairman of the Board on January 1, 1996. Between 1991 and 1994, he led Air India as Chairman and Managing Director. Under his leadership, ITCs Sustainability efforts were given shape through unique business models. ITC became the first Indian company to publish its Sustainability Report, 2004 in accordance with the guidelines of the Global Reporting Initiative. For the efforts at creating sustainable livelihood opportunities, ITC also won the inaugural World Business Award instituted jointly by the United Nations Development Programme, International Chamber of Commerce and the HRH Prince of Wales International Business Leaders Forum. ITCs e-Choupal, a digital infrastructure initiative to empower marginal farmers in India, is taught as a case study at the Harvard Business School. This initiative won the Development Gateway Award at Beijing in September 2005 and the Stockholm Challenge Award in May 2006. Deveshwar is the past President of the Confederation of Indian Industry. He is a member of the India-UK CEOs Forum, nominated by the Government of India. He is also a member of the Board of Governors of the Indian School of Business and the former Chairman of the Society

and Board of Governors of the Indian Institute of Management, Calcutta. He also serves on the National Executive Committees of some of Indias premier trade and industry bodies. In 2011, Deveshwar was conferred the Padma Bhushan, one of the highest civilian awards in the country, by the Government of India in recognition of his distinguished service of a high order to the Nation. Amongst several other awards and recognitions during his distinguished career, Deveshwar has been honoured with the Global Leadership Award 2010 by the U.S.- India Business Council of the US Chamber of Commerce, the SAM/SPG Sustainability Leadership Award 2007 conferred at the Your Directors 2 ITC Report and Accounts 2011 International Sustainability Leadership Symposium, and the Business Person of the Year Award 2006 by the UK Trade & Investment by His Royal Highness Prince Andrew, the Duke of York. In January 2006, he was inducted to the prestigious Hall of Pride at the Indian Science Congress. He was also named the Manager Entrepreneur of the Year 2001 by Ernst & Young. Other Directorships Name of the Company Position ITC Infotech India Limited Chairman & Non-Executive Director ITC Infotech Limited, UK* Chairman &

Non-Executive Director ITC Infotech (USA), Inc.* Chairman & Non-Executive Director Surya Nepal Private Limited* Chairman & Non-Executive Director HT Media Limited Non-Executive Director Committee Membership of other Companies: Nil N. Anand Nakul Anand (54) was appointed a Director on the Board of ITC effective January 3, 2011. He holds responsibility of the Hospitality, Travel & Tourism businesses of ITC. An Economics Honours graduate from Delhi University with an AMP degree from Bond University, Australia, he joined ITC Hotels' Management Training Programme in 1978 and also served as the Managing Director of erstwhile ITC Hotels Limited during the period 2003-05. In a career that spans over three decades, he has been acknowledged for his vision and commitment. Anand is widely recognised for excellent people management and team building abilities besides infusing the spirit of action and a result oriented work culture. He is a firm believer in value based strategies and has created a unique quality control model of Operational Excellence and also introduced Six Sigma quality standards.Managing Director in 2000. Following the amalgamation of ITC Bhadrachalam with ITC in March 2002, and subsequent merger of Bhadrachalam Paperboards Division with Tribeni Tissues Division, Dhobale took charge of the

Paperboards & Specialty Papers Business as its Divisional Chief Executive. Dhobale is credited with the successful turnaround of ITC Bhadrachalam in 2001, and exponential growth thereafter. He spearheaded the growth involving capital infusion of over US$ 500 million through brownfield organic growth as well as acquisitions. Under his leadership, ITCs Bhadrachalam Mill has emerged as the largest single-location paper mill in the country producing more than 400,000 tonnes of papers & boards. Under his stewardship, and in line with ITCs sustainability strategy, 110,000 hectares of plantations were developed, the pioneering ECF and Ozone Bleaching Technology were introduced, ITC became a member of the Global Forest and Trade Network and successfully implemented a number of Clean Development Mechanism Projects. Dhobale is an active member of several industry bodies. He is the past President of Indian Paper Manufacturers Association, past Chairman of the Andhra Pradesh State Council of Confederation of Indian Industry (CII), and Chairman, Energy Efficiency Council of CII - Sohrabji Godrej Green Business Centre, Hyderabad. Dhobale is also the Founder President of Indian School of Business Centre for Executive Education Alumni Association, Hyderabad Chapter. Amongst others, he is a Member of the Development Council for Pulp, Paper & Allied Industries, the Council of Association of Central Pulp &

Paper Research Institute, and the World Wide Fund for Nature (India) - A.P. State Committee. Other Directorships Name of the Company Position BFIL Finance Limited Non-Executive Director Committee Membership of other Companies Name of the Company Committee Position BFIL Finance Limited Audit Committee Chairman Anand has initiated some very innovative concepts in hoteliering making ITC's hotel business synonymous with the best in the world. Anand is the Chairman of the National Council of Tourism of the Confederation of Indian Industry. Other Directorships Name of the Company Position International Travel Chairman & House Limited Non-Executive Director Gujarat Hotels Limited Chairman & Non-Executive Director Landbase India Limited Chairman & Non-Executive Director Fortune Park Hotels Limited Chairman & Non-Executive Director Srinivasa Resorts Limited Vice-Chairman & Non-Executive Director Adayar Gate Hotel Limited Non-Executive Director Bay Islands Hotels Limited Non-Executive Director

Maharaja Heritage Resorts Non-Executive Director Limited Committee Membership of other Companies Name of the Company Committee Position Gujarat Hotels Limited Investor Member Services Committee Landbase India Limited Audit Committee Member P. V. Dhobale P. V. Dhobale (55) was appointed a Director on the Board of ITC effective January 3, 2011. He holds responsibility for Paperboards & Specialty Papers and Packaging businesses of ITC and also represents the Finance and IT functions on the Board. A Chemical Engineer from IIT, Mumbai, he joined the erstwhile ITC Bhadrachalam Paperboards Limited (ITC Bhadrachalam) as a Management Trainee in 1977 and became its Your Directors ITC Report and Accounts 2011 3K. N. Grant Kurush N. Grant (53) was appointed a Director on the Board of ITC effective March 20, 2010. He oversees ITC's FMCG businesses - Cigarettes, Foods, Personal Care, Lifestyle Retailing, Education and Stationery Products, Matches and Agarbattis. After completing his MBA in 1979, he worked with DCM as a Management Trainee before joining ITC in 1980 in the Marketing function. During his tenure in the Company, he has

handled a wide range of responsibilities in Sales, Brand Management and Product Development. He was Executive Vice President - Marketing of the Tobacco Division before becoming Divisional Chief Executive in 1999. Grant has been involved in the incubation and development of ITCs new initiatives in the FMCG sector. He is the immediate past Chairman, CII - Eastern Region, and is also a Member of the Executive Committee of the Indian Chamber of Commerce Calcutta. He is the Vice-Chairman of the Indian Society of Advertisers. He is also the Chairman of FICCIs National FMCG Committee. He has been a past Chairman of the National Readership Studies Council as well as the Audit Bureau of Circulations, India. Other Directorships Name of the Company Position Wimco Limited Chairman & Non-Executive Director Surya Nepal Private Limited* Non-Executive Director King Maker Marketing, Inc.,USA* Non-Executive Director Committee Membership of other Companies Name of the Company Committee Position Wimco Limited Audit Committee Member Anil Baijal Anil Baijal (64) joined the ITC Board as a Non-Executive Independent Director on January 22, 2010. Prior to this,

he represented the Specified Undertaking of the Unit Trust of India on the ITC Board from July 2007 to August 2009. Baijal joined the Indian Administrative Service in 1969 from the Union Territories Cadre. In a career spanning over 37 years, he held various important responsibilities including that of the Union Home Secretary, Chairman & Managing Director - Indian Airlines, Chief Executive Officer - Prasar Bharti Corporation, Vice-Chairman - Delhi Development Authority, Development Commissioner, Goa, and Counsellor in-charge of the Indian Aid Programme in Nepal. He retired in October 2006 as Secretary, Ministry of Urban Development. He piloted the flagship programme - Jawaharlal Nehru Urban Renewal Mission - for improving infrastructure and basic services in the country. Currently, he is a Senior Advisor to the Infrastructure Development & Finance Company Limited (IDFC) and Chairman of IDFC Foundation. In addition, he is the Secretary General of the Federation of Indian Airlines. Other Directorships Name of the Company Position International Travel Director House Limited DLF Pramerica Life Insurance Director Company Limited IDFC PPP Trusteeship Director Company Limited

MMTC Limited Director Agre Developers Limited Director Committee Membership of other Companies Name of the Company Committee Position DLF Pramerica Life Audit & Chairman Insurance Company Compliance Limited Committee MMTC Limited Audit Committee Chairman Agre Developers Limited Audit Committee Member Your Directors 4 ITC Report and Accounts 2011S. Banerjee Shilabhadra Banerjee (62) joined the ITC Board as a representative of the Specified Undertaking of the Unit Trust of India on February 4, 2010. Banerjee, a Masters in History from St. Stephens College, Delhi, began his career in the Indian Administrative Service in 1971 from the Andhra Pradesh Cadre. In a career spanning over 37 years, he has held several eminent positions including that of Joint Secretary in the Ministries of Petroleum & Natural Gas and Urban Development. Banerjee was Director General (Acquisition) in the Ministry of Defence and retired as Secretary, Ministry of Tourism in October 2008. Banerjee spearheaded the infrastructure upgradation at important tourist destinations in India and played a key role in articulating India's response to climate change issues relating to the tourism sector. He received a Post Graduate Diploma in Public Administration

from the Indian Institute of Public Administration, New Delhi in 1992 and an M. Phil degree in Social Sciences from the University of Panjab the same year. Banerjee has been a Visiting Fellow at the Queen Elizabeth House, University of Oxford, UK and the National Institute of Urban Affairs, New Delhi. Other Directorships Name of the Company Position IFCI Limited Director Committee Membership of other Companies Name of the Company Committee Position IFCI Limited Audit Committee Member Investors Member Grievance Committee A. V. Girija Kumar A. V. Girija Kumar (51) joined the ITC Board as a representative of the General Insurers (Public Sector) Association of India on March 19, 2010. He holds a Your Directors ITC Report and Accounts 2011 5 Masters Degree in Business Administration from Jawaharlal Nehru Technological University. In a career spanning over 29 years, Girija Kumar was with The New India Assurance Company Limited (New India). In New India, he worked at many centres across India, holding various positions including that of Divisional

Manager, Senior Divisional Manager and Regional Chief before moving to the Corporate Office in Mumbai as Deputy General Manager overseeing Techno-marketing, Foreign Business Development and Investments. On secondment, he was posted as General Manager (Non-Life) - Saudi Indian Company for Cooperative Insurance in Saudi Arabia. His responsibilities included facilitating an IPO to raise capital and completing the legal formation of the company in the Kingdom of Saudi Arabia. He joined National Insurance Company Limited (NIC) as a General Manager in 2009 and is currently an Executive Director of NIC. He does not hold committee membership of any other company. S. H. Khan S. H. Khan (72) joined the ITC Board as a Non-Executive Independent Director on October 30, 2006. Khan is the former Chairman and Managing Director of Industrial Development Bank of India (IDBI). He holds a Masters Degree in Commerce and is a university Gold Medalist. He is an alumnus of International Management Development Institute, Lausanne. He started his professional career with the RBI and after serving it for a few years moved over to IDBI in 1966. He served IDBI in various capacities for over three decades and retired as its Chairman and Managing Director in 1998. During his tenure as Chairman, IDBI made impressive growth in its operations and profits. He was

instrumental in expanding its activities to several new areas like commercial banking, asset management and stock broking. He played an important role in the promotion of three premier capital market institutions by IDBIS. B. Mathur S. B. Mathur (66) has been on the ITC Board since July 29, 2005, first as a representative of LIC and then in his individual capacity as a Non-Executive Independent Director. A qualified Chartered Accountant, Mathur retired from LIC in October 2004 as its Chairman. Subsequently, the Government of India appointed him the Administrator of the Specified Undertaking of the Unit Trust of India in December 2004, up to December 2007. Mathur took over as Chairman of LIC at a time when the insurance sector had just opened up. Under his leadership, LIC successfully rose to the challenges of a competitive environment by enhancing product offerings. He joined LIC in 1967 as a Direct Recruit Officer and rose to the rank of Chairman. He held various positions in LIC including Senior Divisional Manager of Gwalior Division, Chief of Corporate Planning, General Manager of LIC (International) E.C., Zonal Manager in charge of Western Zone and Executive Director. Other Directorships Name of the Company Position IDFC Trustee Company Limited Chairman & Director Orbis Financial Corporation Chairman & Director Limited

Cholamandalam MS General Chairman & Director Insurance Company Limited National Stock Exchange of Director India Limited Havells India Limited Director Axis Bank Limited Director UltraTech Cement Limited Director Hindustan Oil Exploration Director Company Limited National Collateral Director Management Services Limited DCM Shriram Industries Limited Director Infrastructure Leasing & Director Financial Services Limited Housing Development and Director Infrastructure Limited General Insurance Corporation Ex-Officio Director of India viz., NSE, NSDL and CARE and guided their operations in the initial years as the Chairman of Board of Directors. Khan in his capacity as IDBI Chairman has served on the Boards of a number of important institutions such as UTI, LIC, GIC, IFCI, Exim Bank, Deposit Insurance Corporation, Indian Airlines and Air India. Currently he serves as an Independent Director on the Boards of several companies. Other Directorships Name of the Company Position

Infrastructure Development Director Finance Company Limited Apollo Health Street Limited Director Bajaj Allianz Life Insurance Director Company Limited Bajaj Allianz General Insurance Director Company Limited Bajaj Auto Limited Director Bajaj Finserv Limited Director Bajaj Holdings & Investment Director Limited Committee Membership of other Companies Name of the Company Committee Position Infrastructure Audit Committee Chairman Development Finance Investors Chairman Company Limited Grievance Committee Apollo Health Street Audit Committee Chairman Limited Bajaj Allianz Life Audit Committee Chairman Insurance Company Limited Bajaj Allianz General Audit Committee Chairman Insurance Company Limited Bajaj Auto Limited Audit Committee Member

Shareholders / Member Investors Grievance Committee Bajaj Finserv Limited Audit Committee Member Bajaj Holdings & Audit Committee Member Investment Limited Shareholders / Member Investors Grievance Committee Your Directors 6 ITC Report and Accounts 2011Other Directorships Name of the Company Position LICHFL Care Homes Limited Chairman LIC Housing Finance Limited Managing Director ACC Limited Director Infrastructure Leasing & Director Financial Services Limited LIC (Lanka) Limited* Director Committee Membership of other Companies: Nil H. G. Powell H. G. Powell (66) joined the ITC Board as a representative of BAT on May 7, 2008. Powell's career spanning almost 40 years began in 1963 when he joined Unilever in its Management Development Scheme. He trained with Lever Brothers for 5 years in the Marketing and Sales functions. In 1968, he joined Warner-Lambert Inc. as Brand Manager and became General Manager, Consumer Products, in 1975. A year later, he moved over to Standard Brands in

Canada and assumed charge as President of Lowneys Confectionery. Two years later, Powell joined Jacobs Suchard as President of Nabob Foods. He later shifted to Germany to head Jacobs Suchards coffee and chocolate unit. In 1984, he joined John Labatt Limited in Canada, and was President of a number of its businesses, including McGavins Bakeries, Everfresh Juice Company in Chicago, Ontario Breweries and Labatt Brewing Company. In 1995, he took over as Chief Executive Officer of Interbrew Americas and then of Interbrew SA in 1999. Powell retired from Interbrew SA in 2002. Other Directorships Name of the Company Position Reynolds American Inc.* Director Committee Membership of other Companies: Nil Committee Membership of other Companies Name of the Company Committee Position Havells India Limited Audit Committee Chairman General Insurance Audit Committee Chairman Corporation of India Axis Bank Limited Audit Committee Chairman Investor Grievance Member Committee Cholamandalam MS Audit Committee Member General Insurance Company Limited

Orbis Financial Audit Committee Member Corporation Limited Hindustan Oil Audit Committee Member Exploration Company Limited DCM Shriram Audit Committee Member Industries Limited D. K. Mehrotra D. K. Mehrotra (58) has been on the ITC Board since May 26, 2006, first as a representative of the Specified Undertaking of the Unit Trust of India and then as a representative of LIC. He is currently the Managing Director of LIC. He joined LIC as a Direct Recruit Officer in 1977. Mehrotra is an Honours Graduate in Science from the Patna University. In an illustrious career spanning over 33 years, Mehrotra has held various important positions spanning three Zones and the Corporate Office of LIC. He was Executive Director (International Operations) before being appointed Managing Director of LIC. Mehrotra has attended several important knowledge forums in India and abroad. He is associated with the apex training institutes of insurance in India, like the National Insurance Academy and the Insurance Institute of India. He is also a member of the Supervisory Board of India Advantage Funds I & II of the ICICI Venture Funds Management Company Limited. Your Directors

ITC Report and Accounts 2011 7P. B. Ramanujam P. B. Ramanujam (66) has been on the Board of ITC since October 30, 1998, first as a representative of the General Insurance Corporation of India (GIC) and its erstwhile subsidiaries and then in his individual capacity as a Non-Executive Independent Director. A qualified Chartered Accountant, Ramanujam has held several responsibilities in GIC covering finance, accounts, investments, reinsurance, information technology etc. He was General Manager and Director with the National Insurance Company Limited, and the Managing Director of GIC till July 31, 2004. Ramanujam has served as a faculty member at the National Insurance Academy, Pune. He was also the Chairman of the Committee appointed by the interim Insurance Regulatory Authority (IRA) for prescribing norms, rules and regulations in the area of finance. He has also been a member of three other IRA Committees on technical issues, investment matters and insurance regulatory information system. He was a member of FICCIs Reinsurance Sub-Committee, the Insurance Tariff Advisory Committee and the Advisory Committee on Finance of the Insurance Regulatory and Development Authority (IRDA). Currently he is a member of IRDAs Reinsurance Advisory Committee and the Committee to suggest regulatory changes with regard to capital structure, IPOs, mergers & acquisitions etc. of insurance companies. He is also a member of the Educational Advisory Council of the School

of Management, SRM University, Tamil Nadu. He does not hold directorship or committee membership of any other company. Anthony Ruys Anthony Ruys (63) joined the ITC Board as a representative of BAT on January 20, 2009. He holds a degree in commercial law from the University of Utrecht and a Master's degree from the Harvard Business School. Ruys commenced his career with Unilever in 1974. During his long tenure with Unilever, he served at various senior positions, including that of marketing director and chairman of various subsidiary companies in the Netherlands, Colombia and Italy. In 1993, he joined Heineken as a member of its Executive Board, became Vice-Chairman in 1996 & Chairman in 2002 and remained in that position till 2005. In March 2006, he was appointed to the Board of BAT as a Non-Executive Director. Currently, Ruys also serves as Chairman on the Board of Trustees of Rijksmuseum, Aids Foundation and Madurodam (Miniature City). Other Directorships Name of the Company Position Schiphol Group NV, NL Chairman (Int. Airport)* British American Tobacco p.l.c., UK* Director Lottomatica SpA, Italy* Director Janivo Holdings BV, NL* Director

Committee Membership of other Companies: Nil Basudeb Sen Basudeb Sen (62) has been on the Board of ITC since March 23,1995, first as a nominee and then as a representative of UTI, and from July 28, 2000 in his individual capacity as a Non-Executive Independent Director. Sen has over 32 years of management experience in different areas of commercial banking, coal mining, development banking and investment management. He is an M.A. in Economics from the University of Calcutta and a Ph.D. from the Indian Statistical Institute, besides being an alumnus of the Harvard Business School. Sen has been associated with management education as director / visiting faculty of various business schools and as course director in executive development programmes. He has contributed several articles in academic / professional journals and financial papers on a wide range of issues related to management, economics, banking, financial markets and energy. Sen has served as Chairman and Managing Director of the Industrial Investment Bank of India Limited and Executive Director of UTI. His special interest / expertise areas include corporate governance, sustainability, strategic planning, risk management system, investment portfolio management and fund marketing & credit / project appraisal. He has also served as Chairman and / or Member of various working groups / committees set up by SEBI, the

RBI and Indian financial institutions and industry associations on issues such as consortium lending, corporate governance, institutional disinvestment, overseas Your Directors 8 ITC Report and Accounts 2011investment by mutual funds, money markets and corporate debt restructuring. He has been / is on the Boards of several companies in sectors like infrastructure, engineering, petrochemicals, electronics and financial services. Other Directorships Name of the Company Position Mahanagar Gas Limited Director Gujarat NRE Coke Limited Director Srei Venture Capital Limited Director Sumedha Fiscal Director Services Limited Himadri Chemicals & Director Industries Limited Dhunseri Petrochem & Director Tea Limited Committee Membership of other Companies Name of the Company Committee Position Mahanagar Gas Limited Audit Committee Chairman Gujarat NRE Coke Audit Committee Member Limited Investor Grievance Member Committee Dhunseri Petrochem & Audit Committee Member

Tea Limited Shareholders Member Grievance Committee K. Vaidyanath K. Vaidyanath (61) was appointed as a Non-Executive Director on the Board of ITC effective January 3, 2011. Prior to this appointment, he was an Executive Director on the ITC Board for 10 years from January 2001, responsible for the Company's Finance, IT, Internal Audit and Corporate Communication functions, its investment subsidiary, its Paperboards & Specialty Papers, Packaging and Information Technology businesses. Before his elevation to the Board as an Executive Director, he was the Company's Chief Financial Officer. An MBA from XLRI, Jamshedpur, in his 35-year tenure with ITC, Vaidyanath held various positions in the Companys Finance function. He has been a recipient of the Best CFO Award from Business Today and the Best CFO in the FMCG category Award from CNBC-TV18. He does not hold directorship or committee membership of any other company. B. Vijayaraghavan B. Vijayaraghavan (76) joined the ITC Board as a Non-Executive Independent Director on November 25, 1996. Vijayaraghavan was in the Indian Administrative Service from 1957 to 1993, when he retired in the rank of Chief Secretary to the Government of Tamil Nadu. He has

served as Secretary to the Tamil Nadu Government in the Public Works, Forests & Fisheries, Prohibition & Excise and Home departments. He has been the Chairman of the Tamil Nadu Electricity Board, Member - Board of Revenue and Commissioner of Commercial Taxes, Tamil Nadu, Chairman and President - Tuticorin Alkali Chemicals and Fertilisers Limited, Chairman & Managing Director - State Industries Promotion Corporation of Tamil Nadu and Vigilance Commissioner & Commissioner for Administrative Reforms, Tamil Nadu. During this period, he had also chaired various government committees concerning forests, wildlife, environment and reform of sales tax laws and administration. After his retirement from Government service, Vijayaraghavan was a Member of the Syndicates of Alagappa University and Bharathidasan University, Member of the Governing Council, Salim Ali Centre for Ornithology and Natural History, Chairman, Madras Naturalists Society, Member of the Committee for Economic Reforms, Jammu and Kashmir, Member of the Board of Trustees of the Indian Bank Mutual Fund and arbitrator for disputes between the public sector coal companies and the State Electricity Boards of Maharashtra, Gujarat, Madhya Pradesh and Chattisgarh. Vijayaraghavan is currently Chairman, Chennai Snake Park Trust. He does not hold directorship or committee membership of any other company.

Notes: 1. Other Directorships and Committee Memberships of Directors are as on 31st March, 2011. 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 / or Investors Grievance Committee of Indian Public Limited Companies. * Denotes Foreign Company Your Directors ITC Report and Accounts 2011 9Report on Corporate Governance The Directors present the Companys Report on Corporate Governance. ITC Limited has been one of the frontrunners in India to have put in place a formalised system of Corporate Governance. Its governance framework enjoins the highest standards of ethical and responsible conduct of business to create value for all stakeholders. THE COMPANYS GOVERNANCE PHILOSOPHY ITC defines Corporate Governance as a systemic process by which companies are directed and controlled to enhance their wealth-generating capacity. Since large corporations employ a vast quantum of societal resources, ITC believes that the governance process should ensure that these resources are utilised in a manner that meets stakeholders aspirations and societal expectations. This belief is reflected in the Companys deep commitment to contribute to the triple bottom line,

namely the conservation and development of the nations economic, social and environmental capital. ITCs Corporate Governance structure, systems and processes are based on two core principles: (i) Management must have the executive freedom to drive the enterprise forward without undue restraints, and (ii) This freedom of management should be exercised within a framework of effective accountability. ITC believes that any meaningful policy on Corporate Governance must empower the executive management of the Company. At the same time, Governance must create a mechanism of checks and balances to ensure that the decision-making powers vested in the executive management are used with care and responsibility to meet stakeholders aspirations and societal expectations. From this definition and core principles of Corporate Governance emerge the cornerstones of ITCs governance philosophy, namely trusteeship, transparency, empowerment & accountability, control and ethical corporate citizenship. ITC believes that the practice of each of these creates the right corporate culture that fulfils the true purpose of Corporate Governance. Trusteeship recognises that large corporations, which represent a coalition of interests, namely those of the shareholders, other providers of capital, business

associates and employees, have both an economic and a social purpose, thereby casting the responsibility on the Board of Directors to protect and enhance shareholder value, as well as fulfil obligations to other stakeholders. Inherent in the concept of trusteeship is the responsibility to ensure equity, namely, that the rights of all shareholders, large or small, are protected. Transparency means explaining the Companys policies and actions to those to whom it has responsibilities. Externally, this means maximum appropriate disclosures without jeopardising the Companys strategic interests and internally, this means openness in the Companys relationship with its employees and in the conduct of its business. ITC believes transparency enhances accountability. Empowerment is a process of unleashing creativity and innovation throughout the organisation by truly vesting decision-making powers at the most appropriate levels and as close to the scene of action as feasible, thereby helping actualise the potential of its employees. Empowerment is an essential concomitant of ITCs first core principle of governance that management must have the freedom to drive the enterprise forward. ITC believes that empowerment combined with accountability provides an impetus to performance and improves effectiveness, thereby enhancing shareholder value. Control ensures that freedom of management is exercised

within a framework of checks and balances and is designed to prevent misuse of power, facilitate timely management of change and ensure effective management of risks. ITC believes that control is a necessary concomitant of its second core principle of governance that the freedom of management should be exercised within a framework of appropriate checks and balances. Ethical Corporate Citizenship means setting exemplary standards of ethical behaviour, both internally within the organisation, as well as in external relationships. ITC 10 ITC Report and Accounts 2011 The cornerstones of ITC's governance philosophy are trusteeship, transparency, empowerment and accountability, control and ethical corporate citizenship.believes that unethical behaviour corrupts organisational culture and undermines stakeholder value. Governance processes in ITC continuously reinforce and help realise the Companys belief in ethical corporate citizenship. THE GOVERNANCE STRUCTURE The practice of Corporate Governance in ITC is at three interlinked levels: Strategic supervision by the Board of Directors Strategic management by the Corporate Management Committee Executive management by the Divisional / Strategic Business Unit (SBU) Chief Executive assisted by the respective Divisional / SBU

Management Committee The three-tier governance structure ensures that: (a) Strategic supervision (on behalf of the shareholders), being free from involvement in the task of strategic management of the Company, can be conducted by the Board with objectivity, thereby sharpening accountability of management; (b) Strategic management of the Company, uncluttered by the day-to-day tasks of executive management, remains focused and energised; and (c) Executive management of a Division or Business, free from collective strategic responsibilities for ITC as a whole, focuses on enhancing the quality, efficiency and effectiveness of the business. The core roles of the key entities flow from this structure. The core roles, in turn, determine the core responsibilities of each entity. In order to discharge such responsibilities, each entity is empowered formally with requisite powers. The structure, processes and practices of governance enable focus on the Corporate purpose while simultaneously facilitating effective management of the wider portfolio of businesses. The Governance Document that sets out the structure, policies and practices of governance within the organisation is available on the Companys corporate website www.itcportal.com for general information. ROLES OF VARIOUS ENTITIES

Board of Directors (Board): The primary role of the Board is that of trusteeship to protect and enhance shareholder value through strategic supervision of ITC, its wholly owned subsidiaries and their wholly owned subsidiaries. As trustees, the Board ensures that the Company has clear goals relating to shareholder value and its growth. The Board sets strategic goals and seeks accountability for their fulfilment. The Board also provides direction and exercises appropriate control to ensure that the Company is managed in a manner that fulfils stakeholders aspirations and societal expectations. The Board, as part and parcel of its functioning, also periodically reviews its role. Corporate Management Committee (CMC): The primary role of the CMC is strategic management of the Companys businesses within Board approved direction / framework. The CMC operates under the strategic supervision and control of the Board. Chairman: The Chairman of ITC is the Chief Executive of the Company. He is the Chairman of the Board and the CMC. His primary role is to provide leadership to the Board and the CMC for realising Company goals in accordance with the charter approved by the Board. He is responsible, inter alia, for the working of the Board and the CMC, for ensuring that all relevant issues are on the agenda and for ensuring that all Directors and CMC members are enabled and encouraged to play a

full part in the activities of the Board and the CMC, respectively. He keeps the Board informed on all matters of importance. He is also responsible for the balance of membership of the Board, subject to Board and Shareholder approvals. He presides over General Meetings of Shareholders. Divisional Management Committee (DMC) / SBU Management Committee (SBU MC): The primary role of the DMC / SBU MC is executive management of the Divisional / SBU business to realise tactical and strategic objectives in accordance with Board approved plan. Executive Director: The Executive Directors, as members of the CMC, contribute to the strategic management of the Companys businesses within Board approved direction / framework. Executive Directors assume overall responsibility for the strategic management including governance processes and top management effectiveness for businesses / functions reporting to them. In the context of the multi-business character of the Company, an Executive Director is in the nature of a Managing Director for those businesses and functions reporting to him. As an Executive Director accountable to the Board for a wholly owned subsidiary or its wholly owned subsidiary, he acts as the custodian of ITCs interests and is responsible for its governance in accordance with the charter approved by the Board. Report on Corporate Governance

ITC Report and Accounts 2011 11Non-Executive Director: Non-Executive Directors, including Independent Directors, play a critical role in imparting balance to the Board processes by bringing an independent judgement on issues of strategy, performance, resources, standards of Company conduct etc. Divisional / SBU Chief Executive Officer (CEO): The Divisional / SBU CEO for a business has the overall executive responsibility for its day-to-day operations and provides leadership to the DMC / SBU MC in its task of executive management of the business. BOARD OF DIRECTORS In terms of the Companys Corporate Governance Policy, all statutory and other significant and material information are placed before the Board to enable it to discharge its responsibility of strategic supervision of the Company as trustees of the Shareholders. Composition The ITC Board is a balanced Board, comprising Executive and Non-Executive Directors. The Non-Executive Directors include independent professionals. Executive Directors, including the Chairman, do not generally exceed one-third of the total strength of the Board. The Governance Policy requires that the Non-Executive Directors, including Independent Directors, be drawn from amongst eminent professionals with experience in business / finance / law / public enterprises. Directors are appointed / re-appointed with the approval of the

Shareholders for a period of three to five years or a shorter duration in accordance with retirement guidelines as determined by the Board from time to time. The initial appointment of Executive Directors is normally for a period of three years. All Directors are liable to retire by rotation unless otherwise approved by the Shareholders. One-third of the Directors who are liable to retire by rotation, retire every year and are eligible for re-election. In terms of the Articles of Association of the Company, the strength of the Board shall not be fewer than five nor more than eighteen. The present strength of the Board is sixteen, of which four are Executive Directors. Composition of the Board as on 31st March, 2011: Report on Corporate Governance 12 ITC Report and Accounts 2011 Category No. of Percentage to Directors total no. of Directors Executive Directors 4 25 Non-Executive Independent Directors 9 56 Other Non-Executive Directors 3 19 Total 16 100 1. Excludes Directorship in Indian Private Limited Companies & Foreign Companies, Membership of Managing Committees of Chambers of Commerce / Professional Bodies and Alternate Directorship. 2. Denotes Membership / Chairmanship of Audit Committee and / or Investors Grievance Committee of Indian Public Limited Companies. 3. Appointed Executive Director w.e.f. 3rd January, 2011.

4. Appointed Non-Executive Director w.e.f. 3rd January, 2011 on completion of his term as Executive Director on 2nd January, 2011. Director Category No. of No. of other Membership(s) Directorship(s) 1 [including Chairmanship(s)] of Board Committees of other companies 2 Executive Directors Y. C. Deveshwar Chairman 2 Nil N. Anand 3 82 P. V. Dhobale 3 11 [as Chairman] K. N. Grant 1 1 Non-Executive Directors A. Baijal Independent Director 5 3 [including 2 as Chairman] S. H. Khan Independent Director 7 10

[including 5 as Chairman] S. B. Mathur Independent Director 13 8 [including 3 as Chairman] P. B. Ramanujam Independent Director Nil Nil B. Sen Independent Director 6 5 [including 1 as Chairman] B. Vijayaraghavan Independent Director Nil Nil S. Banerjee Independent Director - 1 2 Representative of Specified Undertaking of the Unit Trust of India as Investor A. V. Girija Kumar Independent Director - 1 Nil Representative of General Insurers (Public Sector) Association of India as Investor D. K. Mehrotra Independent Director - 4 Nil Representative of Life Insurance Corporation of India as Investor H. G. Powell Nil Nil A. Ruys Nil Nil

K. Vaidyanath 4 Nil Nil Meetings and Attendance The Companys Governance Policy requires the Board to meet at least six times in a year. The intervening period between two Board meetings was well within the maximum gap of four months prescribed under Clause 49 of the Listing Agreement with Stock Exchanges. The annual calendar of meetings is broadly determined at the beginning of each year. Board Agenda Meetings are governed by a structured agenda. The Board members, in consultation with the Chairman, may bring up any matter for the consideration of the Board. All major agenda items are backed by comprehensive background information to enable the Board to take informed decisions. Agenda papers are circulated at least seven working days prior to the Board meeting. Information placed before the Board The following are tabled for the Boards periodic review / information / approval: Internal Audit findings and External Audit Management Reports (through the Audit Committee). Status of safety and legal compliance. Risk management processes. Succession of senior management (through the

Nominations Committee). Show Cause, demand, prosecution and adjudication notices, if any, from revenue authorities which are considered materially important, including any exposure that exceeds 1% of the Companys networth, and their outcome. Significant court judgement or order passing strictures, if any, on the conduct of the Company or a subsidiary of the Company or any employee, which could negatively impact the Companys image. Product liability claims of a substantial nature, if any. Default, if any, in payment of dues to any major creditor. Write-offs / disposals (fixed assets, inventories, receivables, advances etc.) on a half-yearly basis. Half-Yearly summary of bank guarantees issued. All other matters required to be placed before the Board for its review / information / approval under the statutes, including Clause 49 of the Listing Agreement with Stock Exchanges. Post-meeting follow-up system The Governance processes in the Company include an effective post-meeting follow-up, review and reporting process for action taken / pending on decisions of the Board, the Board Committees, the CMC and the Divisional / SBU Management Committees. Details of Board Meetings during the financial year

During the financial year ended 31st March, 2011, seven meetings of the Board were held, as follows: Report on Corporate Governance ITC Report and Accounts 2011 13 Sl. Date Board No. of No. Strength Directors present 1 21st May, 2010 15 15 2 18th June, 2010 15 10 3 22nd July, 2010 15 12 4 23rd July, 2010 14 13 5 29th October, 2010 14 13 6 22nd December, 2010 14 11 7 21st January, 2011 16 15 Inherent in the concept of trusteeship is the responsibility to ensure equity, namely, that the rights of all shareholders, large or small, are protected.form of notes to the Board from the respective Committee Chairman. The role and composition of these Committees, including the number of meetings held during the financial year and the related attendance, are provided below. I. AUDIT COMMITTEE The Audit Committee of the Board, inter alia, provides reassurance to the Board on the existence of an effective internal control environment that ensures: efficiency and effectiveness of operations, both domestic and overseas;

safeguarding of assets and adequacy of provisions for all liabilities; reliability of financial and other management information and adequacy of disclosures; compliance with all relevant statutes. The Audit Committee is empowered, pursuant to its terms of reference, inter alia, to: investigate any activity within its terms of reference and to seek any information it requires from any employee; obtain legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise, when considered necessary. The role of the Committee includes the following: (a) Overseeing the Companys financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible; (b) Recommending the appointment and removal of external auditors, fixation of audit fee and approval of payment of fees for any other services rendered by the auditors; (c) Reviewing with the management the financial statements before submission to the Board, focusing primarily on: Any changes in accounting policies and practices

 The going concern assumption Major accounting entries based on exercise of judgement by management 1. Appointed Executive Director w.e.f. 3rd January, 2011. 2. Appointed Non-Executive Director w.e.f. 3rd January, 2011 on completion of his term as Executive Director on 2nd January, 2011. 3. Executive Director till 23rd July, 2010. COMMITTEES OF THE BOARD Currently, there are five Board Committees the Audit Committee, the Compensation Committee, the Investor Services Committee, the Nominations Committee and the Sustainability Committee. The terms of reference of the Board Committees are determined by the Board from time to time. Meetings of each Board Committee are convened by the respective Committee Chairman. Signed minutes of Board Committee meetings are placed for the information of the Board. Matters requiring the Boards attention / approval are generally placed in the Report on Corporate Governance 14 ITC Report and Accounts 2011 Attendance at Board Meetings and at Annual General Meeting (AGM) during the financial year Director No. of Board Attendance at last meetings attended AGM Y. C. Deveshwar 7 Yes N. Anand 1

1 NA P. V. Dhobale 1 1 NA K. N. Grant 7 Yes A. Baijal 7 Yes S. Banerjee 5 Yes A. V. Girija Kumar 6 Yes S. H. Khan 6 Yes S. B. Mathur 7 Yes D. K. Mehrotra 4 Yes H. G. Powell 5 Yes P. B. Ramanujam 7 Yes A. Ruys 3 No B. Sen 6 Yes K. Vaidyanath 2 7 Yes B. Vijayaraghavan 7 Yes A. Singh 3 3 Yes Significant adjustments, if any, arising out of audit Compliance with Accounting Standards Compliance with Stock Exchange and legal requirements concerning financial statements Related party transactions Qualifications, if any, in draft audit report

 Report of the Directors & Management Discussion and Analysis; (d) Reviewing with the management, external and internal auditors, the adequacy of internal control systems and the Companys statement on the same prior to endorsement by the Board; (e) Reviewing the adequacy of the internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit; (f) Reviewing reports of internal audit, including that of wholly owned subsidiaries, and discussion with internal auditors on any significant findings and follow-up thereon; (g) Reviewing the findings of any internal investigations by the internal auditors and the executive managements response on matters where there is suspected fraud or irregularity or failure of internal control systems of a material nature and reporting the matter to the Board; (h) Discussion with the external auditors, before the audit commences, on nature and scope of audit, as well as after conclusion of the audit, to ascertain any areas of concern and review the comments contained in their management letter; (i) Reviewing the Companys financial and risk

management policies; (j) Looking into the reasons for substantial defaults, if any, in payment to shareholders (in case of non-payment of declared dividends) and creditors; (k) Considering such other matters as may be required by the Board; (l) Reviewing any other areas which may be specified as role of the Audit Committee under the Listing Agreement, Companies Act and other statutes, as amended from time to time. Report on Corporate Governance ITC Report and Accounts 2011 15 Composition The Audit Committee presently comprises six Non-Executive Directors, five of whom are Independent Directors. The Chairman of the Committee is an Independent Director. The Executive Director representing the Finance function, the Chief Financial Officer, the Head of Internal Audit and the representative of the Statutory Auditors are Invitees to the Audit Committee. The Head of Internal Audit is the Co-ordinator and the Company Secretary is the Secretary to the Committee. The representative of the Cost Auditors is invited to meetings of the Audit Committee whenever matters relating to cost audit are considered. All members of the Committee are financially literate; three members, including the

Chairman of the Committee, have accounting and financial management expertise. The names of the members of the Audit Committee, including its Chairman, are provided under the section Board of Directors & Committees in the Report and Accounts. Meetings and Attendance Details of Audit Committee Meetings during the financial year During the financial year ended 31st March, 2011, nine meetings of the Audit Committee were held, as follows: Sl. Date Committee No. of No. Strength Members present 1 5th April, 2010 5 5 2 13th May, 2010 5 5 3 21st May, 2010 5 5 4 18th June, 2010 5 5 5 22nd July, 2010 5 5 6 23rd September, 2010 5 5 7 29th October, 2010 5 4 8 22nd December, 2010 5 5 9 21st January, 2011 6 616 ITC Report and Accounts 2011 Report on Corporate Governance Attendance at Audit Committee Meetings during the financial year Director No. of meetings attended

S. B. Mathur 9 A. Baijal 9 A. V. Girija Kumar 8 P. B. Ramanujam 9 K. Vaidyanath* 1 B. Vijayaraghavan 9 * Appointed Member w.e.f. 3rd January, 2011. II. REMUNERATION COMMITTEE The Remuneration Committee of the Board, under the nomenclature Compensation Committee, inter alia, recommends to the Board the compensation terms of Executive Directors and the seniormost level of management immediately below the Executive Directors. This Committee also has the responsibility for administering the Employee Stock Option Schemes of the Company. Composition The Compensation Committee presently comprises five Non-Executive Directors, four of whom are Independent Directors. The Chairman of the Committee is an Independent Director. The names of the members of the Compensation Committee, including its Chairman, are provided under the section Board of Directors & Committees in the Report and Accounts. Meetings and Attendance Details of Compensation Committee Meetings

during the financial year During the financial year ended 31st March, 2011, five meetings of the Compensation Committee were held, as follows: Sl. Date Committee No. of No. Strength Members present 1 20th May, 2010 5 4 2 19th July, 2010 5 3 3 22nd July, 2010 5 4 4 28th October, 2010 5 4 5 22nd December, 2010 5 4 Attendance at Compensation Committee Meetings during the financial year Director No. of meetings attended S. H. Khan 4 A. Baijal 3 S. B. Mathur 4 H. G. Powell 3 B. Sen 5 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. This belief is reflected in the Companys deep commitment to contribute to the triple bottom line, namely the development, nurture and regeneration of the nations economic,

social and environmental capital.Remuneration Policy ITCs remuneration strategy aims at attracting and retaining high calibre talent. The remuneration policy, therefore, is market-led and takes into account the competitive circumstance of each business so as to attract and retain quality talent and leverage performance significantly. Remuneration of Directors Remuneration of Chairman and other Executive Directors is determined by the Compensation Committee comprising only Non-Executive Directors. The recommendations of the Compensation Committee are considered and approved by the Board subject to the approval of the Shareholders. The Chairman and Executive Directors are entitled to Performance Bonus for each financial year up to a maximum of 200% and 150% of their consolidated salary, respectively, and as may be determined by the Board on the recommendation of the Compensation Committee, based on qualitative and quantitative assessment of Company performance. Non-Executive Directors are entitled to remuneration by way of commission for each financial year, up to a maximum of ` 6,00,000/- individually, as approved by the Shareholders. Non-Executive Directors commission is determined by the Board based, inter alia, on Company performance and regulatory

provisions and is payable on a uniform basis to reinforce the principle of collective responsibility. Non-Executive Directors are also entitled to sitting fees for attending meetings of the Board and Committees thereof, the quantum of which is determined by the Board, within the limit approved by the Shareholders. The sitting fees, as determined by the Board, are presently ` 20,000/- for attending each meeting of the Board, Audit Committee, Compensation Committee, Nominations Committee and Sustainability Committee and ` 5,000/- for each meeting of the Investor Services Committee. Non-Executive Directors are also entitled to coverage under Personal Accident Insurance. ITC Report and Accounts 2011 17 Report on Corporate Governance Details of Remuneration paid to the Directors during the financial year ended 31st March, 2011 (` in Lakhs) Director Consolidated Perquisites Performance Sitting Total Salary and other Bonus / Fees Benefits Commission Y. C. Deveshwar 312.00 47.44 480.00 - 839.44 N. Anand 1 15.26 9.14 - - 24.40 P. V. Dhobale 1

15.26 3.97 - - 19.23 K. N. Grant 2 62.40 16.86 2.32 - 81.58 A. Baijal 3 - - 3.57 # 4.80 8.37 S. Banerjee 4 - - 0.92* 2.20 3.12 A. V. Girija Kumar 5 - - 0.21* 5.00* 5.21 S. H. Khan - - 6.00 3.00 9.00 S. B. Mathur - - 6.00 5.00 11.00 D. K. Mehrotra - - 6.00* 1.20* 7.20 H. G. Powell - - 6.00 2.00 8.00 P. B. Ramanujam - - 6.00 4.75 10.75 A. Ruys - - 6.00 1.00 7.00 B. Sen - - 6.00 4.30 10.30 K. Vaidyanath 6 91.55 18.59 139.50 0.60 250.24 B. Vijayaraghavan - - 6.00 4.05 10.05 R. K. Kaul

7 - - 5.79* - 5.79 A. Singh 8 43.78 8.73 162.00 - 214.51 * Paid to the Institution the Director represents. # Includes ` 2.43 lakhs paid to the Institution the Director represented. 1. Appointed Executive Director w.e.f. 3rd January, 2011. 2. Appointed Executive Director w.e.f. 20th March, 2010. 3. Appointed Non-Executive Director w.e.f. 22nd January, 2010; earlier representing Specified Undertaking of the Unit Trust of India till 26th August, 2009. 4. Appointed Non-Executive Director w.e.f. 4th February, 2010. 5. Appointed Non-Executive Director w.e.f. 19th March, 2010. 6. Appointed Non-Executive Director w.e.f. 3rd January, 2011 on completion of his term as Executive Director on 2nd January, 2011. 7. Non-Executive Director till 18th March, 2010. 8. Executive Director till 23rd July, 2010. Note: Disclosure with respect to Non-Executive Directors - Pecuniary relationship: None. Employee Stock Option Schemes The Company granted 42,30,600 Options during the financial year to the eligible employees of the Company and some of its subsidiary companies. Pursuant to the Shareholders approval on 23rd July, 2010 to the Bonus share issue, in the ratio of 1 Bonus share for every existing 1 Ordinary share, adjustment was made to the outstanding Options with respect to the number of OptionsService Contracts, Severance Fee and Notice Period The appointment of the Executive Directors is governed

by resolutions passed by the Board and the Shareholders of the Company, which cover the terms and conditions of such appointment read with the service rules of the Company. A separate Service Contract is not entered into by the Company with those elevated to the Board from the management cadre, since they already have a Service Contract with the Company. There is no separate provision for payment of severance fee under the resolutions governing the appointment of Executive Directors who have all been drawn from amongst the management cadre. The statutory provisions will however apply. In terms of the Articles of Association of the Company, a notice of one month is required to be given by a Director seeking to vacate office and the resignation takes effect upon the expiration of such notice or its earlier acceptance by the Board. III. INVESTORS GRIEVANCE COMMITTEE The Investors Grievance Committee of the Board, under the nomenclature Investor Services Committee, oversees redressal of shareholder and investor grievances, and, inter alia, approves sub-division / consolidation / transmission of shares, issue of duplicate share certificates and issue & allotment of shares upon exercise of Options by employees under the Companys Employee Stock Option Schemes. Composition The Investor Services Committee presently comprises

five Directors, four of whom are Independent Directors. The Chairman of the Committee is an Independent Director. The names of the members of the Investor Services Committee, including its Chairman, are provided under the section Board of Directors & Committees in the Report and Accounts. Meetings and Attendance Details of Investor Services Committee Meetings during the financial year During the financial year ended 31st March, 2011, forty meetings of the Investor Services Committee Report on Corporate Governance 18 ITC Report and Accounts 2011 and the exercise price, in accordance with the Employee Stock Option Schemes of the Company read with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, consequent to which 1,92,80,432 Bonus Options were allocated during the year. Each Option entitles the holder thereof to apply for and be allotted ten Ordinary shares of the Company of ` 1/each upon payment of the exercise price during the exercise period. The exercise period commences from the date of vesting of the Options and expires at the end of five years from the date of such vesting. The vesting period for conversion of Options is as follows:

On completion of 12 months from the date of grant of the Options : 30% vests On completion of 24 months from the date of grant of the Options : 30% vests On completion of 36 months from the date of grant of the Options : 40% vests Shares and Options of Directors Director No. of Ordinary shares No. of Options granted of ` 1/- each held during the (singly / jointly) financial year * as on 31st March, 2011 Y. C. Deveshwar 54,51,000 1,35,000 N. Anand 4,85,000 20,000** P. V. Dhobale 2,84,860 20,000** K. N. Grant 5,14,450 67,500 A. Baijal Nil 10,000 S. Banerjee Nil Nil A. V. Girija Kumar Nil Nil S. H. Khan 1,18,000 10,000 S. B. Mathur 1,31,000 10,000 D. K. Mehrotra Nil Nil H. G. Powell Nil 10,000 P. B. Ramanujam 99,000 10,000 A. Ruys Nil 10,000 B. Sen 5,00,540 Nil K. Vaidyanath 22,06,480 67,500 #

B. Vijayaraghavan 4,68,120 Nil * Bonus Options were also allocated consequent to the Bonus share issue, as stated above. ** Options granted prior to appointment as Executive Director w.e.f. 3rd January, 2011. # Options granted when he was Executive Director. Note : The Options were granted at the market price as defined under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. Report on Corporate Governance ITC Report and Accounts 2011 19 were held, as follows: Sl. Date Committee No. of No. Strength Members present 1 5th April, 2010 5 5 2 19th April, 2010 5 3 3 4th May, 2010 5 3 4 14th May, 2010 5 3 5 20th May, 2010 5 5 6 3rd June, 2010 5 3 7 11th June, 2010 5 2 8 18th June, 2010 5 4 9 23rd June, 2010 5 2 10 1st July, 2010 5 2 11 9th July, 2010 5 2 12 16th July, 2010 5 2 13 23rd July, 2010 5 5 14 29th July, 2010 5 3

15 6th August, 2010 5 3 16 19th August, 2010 5 2 17 30th August, 2010 5 3 18 16th September, 2010 5 3 19 23rd September, 2010 5 5 20 8th October, 2010 5 3 21 13th October, 2010 5 3 22 21st October, 2010 5 2 23 29th October, 2010 5 4 24 15th November, 2010 5 3 25 19th November, 2010 5 3 26 29th November, 2010 5 2 27 6th December, 2010 5 3 28 15th December, 2010 5 3 29 22nd December, 2010 5 5 30 6th January, 2011 5 3 31 13th January, 2011 5 2 32 21st January, 2011 5 5 33 28th January, 2011 5 3 34 11th February, 2011 5 4 35 17th February, 2011 5 3 36 28th February, 2011 5 2 37 10th March, 2011 5 3 38 15th March, 2011 5 2 39 22nd March, 2011 5 2 40 31st March, 2011 5 5 Attendance at Investor Services Committee Meetings

during the financial year Director No. of meetings attended A. V. Girija Kumar 32 K. N. Grant 1 11 P. B. Ramanujam 11 B. Sen 34 K. Vaidyanath 2 28 B. Vijayaraghavan 9 1. Appointed Member w.e.f. 3rd January, 2011. 2. Member till 2nd January, 2011. IV. NOMINATIONS COMMITTEE The primary role of the Nominations Committee of the Board is to make recommendations on Executive Directors appointment to the Board, appointment to the Corporate Management Committee and the seniormost level of executive management below the Executive Directors. Composition The Nominations Committee presently comprises the Chairman of the Company and eight Non-Executive Directors, seven of whom are Independent Directors. The Chairman of the Company is the Chairman of the Committee.

The names of the members of the Nominations Committee, including its Chairman, are provided under the section Board of Directors & Committees in the Report and Accounts. Meetings and Attendance Details of Nominations Committee Meetings during the financial year During the financial year ended 31st March, 2011, five meetings of the Nominations Committee were held, as follows: Sl. Date Committee No. of No. Strength Members present 1 23rd July, 2010 8 8 2 29th October, 2010 8 7 3 19th November, 2010 8 6 4 22nd December, 2010 8 7 5 11th February, 2011 9 7Attendance at Sustainability Committee Meetings during the financial year Director No. of meetings attended Y. C. Deveshwar 2 S. Banerjee 2 H. G. Powell 2 A. Ruys 2 B. Sen 2 B. Vijayaraghavan 2 CORPORATE MANAGEMENT COMMITTEE

The primary role of the Corporate Management Committee is strategic management of the Companys businesses within Board approved direction / framework. Composition The Corporate Management Committee presently comprises all the Executive Directors and six senior members of management. The Chairman of the Company is the Chairman of the Committee. The composition of the Corporate Management Committee is determined by the Board based on the recommendation of the Nominations Committee. The names of the members of the Corporate Management Committee, including its Chairman, are provided under the section Board of Directors & Committees in the Report and Accounts. Meetings and Attendance The meetings of the Corporate Management Committee are chaired by the Chairman of the Company. Minutes of Corporate Management Committee meetings are placed before the Board for its information. Moreover, matters requiring the Boards attention / approval are placed in the form of notes from the relevant Executive Director / Corporate Management Committee Member, backed by comprehensive background information, alongwith Divisional / SBU Management Committees recommendation / approval, where applicable. Agenda papers are generally circulated at least three days prior

to the meeting. Details of Corporate Management Committee Meetings during the financial year During the financial year ended 31st March, 2011, thirty-nine meetings of the Corporate Management Report on Corporate Governance 20 ITC Report and Accounts 2011 Attendance at Nominations Committee Meetings during the financial year Director No. of meetings attended Y. C. Deveshwar 5 A. Baijal 5 S. Banerjee 4 A. V. Girija Kumar 3 S. H. Khan 5 S. B. Mathur 5 D. K. Mehrotra 2 P. B. Ramanujam 5 K. Vaidyanath* 1 * Appointed Member w.e.f. 21st January, 2011. V. SUSTAINABILITY COMMITTEE The role of the Sustainability Committee is to review, monitor and provide strategic direction to the Companys sustainability practices towards fulfilling its triple bottom line objectives. The Committee seeks to guide the Company in integrating its social and environmental objectives with its business strategies.

Composition The Sustainability Committee comprises the Chairman of the Company and five Non-Executive Directors, three of whom are Independent Directors. The Chairman of the Company is the Chairman of the Committee. The names of the members of the Sustainability Committee, including its Chairman, are provided under the section Board of Directors & Committees in the Report and Accounts. Meetings and Attendance Details of Sustainability Committee Meetings during the financial year During the financial year ended 31st March, 2011, two meetings of the Sustainability Committee were held, as follows: Sl. Date Committee No. of No. Strength Members present 1 20th May, 2010 6 6 2 31st March, 2011 6 6Attendance at Corporate Management Committee Meetings during the financial year Member No. of meetings attended Y. C. Deveshwar 39 N. Anand 39 P. V. Dhobale 1 35

K. N. Grant 38 B. B. Chatterjee 39 A. Nayak 39 T. V. Ramaswamy 38 S. Sivakumar 37 K. S. Suresh 39 R. Tandon 39 A. Singh 2 4 K. Vaidyanath 3 9 1. Appointed Member w.e.f. 26th July, 2010. 2. Member till 23rd July, 2010. 3. Member till 2nd January, 2011. DISCLOSURES Materially significant related party transactions which may have potential conflict with the interests of the Company at large: None Details of non-compliances, penalties, strictures by Stock Exchanges / SEBI / Statutory Authorities on any matter related to capital markets during the last three years: None Material non-listed subsidiary companies as defined

in Clause 49 of the Listing Agreement with Stock Exchanges: None Inter-se relationships between Directors of the Company: None Material financial and commercial transactions of senior management, where they may have had personal interest, and which had potential conflict with the interest of the Company at large: None The Independent Directors have confirmed that they meet the criteria of Independence as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges. Report on Corporate Governance ITC Report and Accounts 2011 21 Committee were held, as follows: Sl. Date Committee No. of No. Strength Members present 1 19th & 20th April, 2010 11 11 2 5th & 6th May, 2010 11 10 3 16th & 17th June, 2010 11 11 4 12th July, 2010 11 10 5 12th, 13th & 14th August, 2010 11 10 6 14th & 15th September, 2010 11 11

7 11th October, 2010 11 10 8 23rd & 24th November, 2010 11 11 9 15th & 16th December, 2010 11 11 10 10th January, 2011 10 10 11 7th February, 2011 10 10 12 9th February, 2011 10 10 13 10th February, 2011 10 10 14 10th February, 2011 10 10 15 10th February, 2011 10 10 16 14th February, 2011 10 10 17 14th February, 2011 10 10 18 14th February, 2011 10 10 19 16th February, 2011 10 10 20 16th February, 2011 10 10 21 18th February, 2011 10 10 22 18th February, 2011 10 10 23 21st February, 2011 10 10 24 23rd February, 2011 10 10 25 25th February, 2011 10 10 26 25th February, 2011 10 10 27 1st March, 2011 10 10 28 1st March, 2011 10 10 29 1st March, 2011 10 10 30 3rd March, 2011 10 10 31 7th March, 2011 10 10 32 7th March, 2011 10 10 33 8th March, 2011 10 10

34 8th March, 2011 10 10 35 10th March, 2011 10 10 36 10th March, 2011 10 10 37 16th March, 2011 10 10 38 16th March, 2011 10 10 39 16th March, 2011 10 10MEANS OF COMMUNICATION Timely disclosure of consistent, comparable, relevant and reliable information on corporate financial performance is at the core of good governance. Towards this end The quarterly results of the Company were announced within a month of completion of the quarter. Audited annual results alongwith the results for the fourth quarter were announced within two months of the end of the financial year; such results were published, inter alia, in The Times of India and Aajkal from Kolkata, and on an all India basis in major newspapers, and also in Luxemburger Wort, Luxembourg. All these results were posted on the Corporate Filing and Dissemination System (CFDS) website (www.corpfiling.co.in). As in the past, the Company will publish its quarterly, half-yearly and annual financial results. Information relating to shareholding pattern, compliance with corporate governance norms etc. is also posted on the CFDS website. The Companys corporate website www.itcportal.com

provides comprehensive information on ITCs portfolio of businesses, including sustainability initiatives comprising CSR activities, EHS performance, shareholding pattern, information on compliance with corporate governance norms and contact details of Companys employees responsible for assisting & handling investor grievances. The website has entire sections dedicated to ITCs profile, history and evolution, its core values, corporate governance and leadership. An exclusive section on Shareholder Value serves to inform and service Shareholders, enabling them to access information at their convenience. The entire Report and Accounts as well as quarterly and half-yearly financial results are available in downloadable formats under the section Shareholder Value on the Companys website as a measure of added convenience to investors. The Newsroom section includes all major media releases from the Company and relevant media reports. Clarifications as and when provided to institutional investors and analysts, including presentations made to them, are also posted on the Companys website. The Report of the Directors, forming part of the Report and Accounts, includes all aspects of the Management Discussion and Analysis Report. ITC CODE OF CONDUCT The ITC Code of Conduct, as adopted by the Board of

Directors, is applicable to Directors, senior management and employees of the Company. The Code is derived from three interlinked fundamental principles, viz. good corporate governance, good corporate citizenship and exemplary personal conduct. The Code covers ITCs commitment to sustainable development, concern for occupational health, safety and environment, a gender friendly workplace, transparency and auditability, legal compliance and the philosophy of leading by personal example. The Code is available on the Companys corporate website. Declaration as required under Clause 49 of the Listing Agreement All Directors and senior management of the Company have affirmed compliance with The ITC Code of Conduct for the financial year ended 31st March, 2011. Y. C. Deveshwar Kolkata, 20th May, 2011. Chairman ITC CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING ITC Code of Conduct for Prevention of Insider Trading, as approved by the Board of Directors, inter alia, prohibits purchase / sale of securities of the Company by Directors and employees while in possession of unpublished price sensitive information in relation to the Company. The said Code is available on the Companys corporate

website. NON - MANDATORY RECOMMENDATIONS UNDER CLAUSE 49 OF THE LISTING AGREEMENT The status of compliance with the non-mandatory recommendations of Clause 49 of the Listing Agreement with Stock Exchanges is provided below: 1. Non-Executive Chairmans Office: The Chairman of the Company is the Executive Chairman and hence this provision is not applicable. 2. Tenure of Independent Directors: In terms of the Governance Policy of the Company, all Directors, including Independent Directors, are appointed / Report on Corporate Governance 22 ITC Report and Accounts 2011re-appointed for a period of three to five years or a shorter duration in accordance with retirement guidelines as determined by the Board from time to time. No maximum tenure for Independent Directors has been specifically determined by the Board. 3. Remuneration Committee: The Company has a Remuneration Committee under the nomenclature Compensation Committee, the details of which are provided in this Report under the section Committees of the Board - Remuneration Committee. 4. Shareholder Rights: The quarterly, half-yearly and annual financial results of the Company are published in newspapers on an all India basis and are also

posted on the Companys corporate website www.itcportal.com. Significant events are also posted on this website under the Newsroom section. The complete Annual Report is sent to every Shareholder of the Company. 5. Audit Qualifications: It is always the Companys endeavour to present unqualified financial statements. There are no audit qualifications in the Companys financial statements for the year ended 31st March, 2011. 6. Training of Board members: The Board is equipped to perform its role of business assessment through inputs from time to time. Directors are fully briefed on all business related matters, risk assessment & minimisation procedures, and new initiatives proposed by the Company. Directors are also updated on changes / developments in the domestic / global corporate and industry scenario including those pertaining to statutes / legislation and economic environment. 7. Mechanism for evaluation of Non-Executive Directors: The role of the Board of Directors is to provide direction and exercise overall supervision to ensure that the Company is managed in a manner that fulfils stakeholders aspirations and societal expectations. The Board has so far evaluated Non-Executive Directors collectively to reinforce the

principle of collective responsibility. 8. Whistle-Blower Policy: The Company encourages an open door policy where employees have access to the Head of the Business / Function. In terms of The ITC Code of Conduct, any instance of non-adherence to the Code / any other observed unethical behaviour is to be brought to the attention of the immediate reporting authority, who is required to report the same to the Head of Corporate Human Resources. CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009 As a frontrunner in Corporate Governance in India, the Companys polices and practices embrace most of the elements of the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs. GENERAL SHAREHOLDER INFORMATION Provided in the Shareholder Information section of the Report and Accounts. COMPLIANCE CERTIFICATE OF THE AUDITORS In terms of Clause 49 of the Listing Agreement with Stock Exchanges, the Statutory Auditors Certificate that the Company has complied with the conditions of Corporate Governance is annexed to the Report of the Directors & Management Discussion and Analysis. This Certificate will be forwarded to the Stock Exchanges

alongwith the Annual Report of the Company. Report on Corporate Governance ITC Report and Accounts 2011 23 Ethical Corporate Citizenship means setting exemplary standards of ethical behaviour, both internally within the organisation, as well as in external relationships.Shareholder Information Shareholder / Investor Complaints The Company attends to Shareholder / Investor complaints, queries and other correspondence generally within a period of five working days except where constrained by disputes or legal impediments. There are some pending cases relating to disputes over title to shares in which the Company has been made a party. These cases however are not material in nature. In terms of the Complaint Identification Policy approved by the Investor Services Committee of the Board, the Company did not receive any complaint during the financial year ended 31st March, 2011. National Stock Exchange, Bombay Stock Exchange and Calcutta Stock Exchange have provided confirmations that there were no investor complaints against the Company at the end of each quarter, as also on 31st March, 2011. The e-mail ID earmarked for investor complaints : isc@itc.in Dematerialisation of Shares and Liquidity The shares of the Company are available for trading in the dematerialised form under both the Depository Systems in India NSDL and CDSL. The International Securities

Identification Number (ISIN) allotted to the Companys shares under the Depository System is INE154A01025. The annual custody fee for the financial year 2011-12 has been paid to NSDL and CDSL, the Depositories. During the year, 1,35,69,574 shares of the Company, covered in 3,860 requests and constituting 0.18% of the issued and subscribed Share Capital of the Company, were dematerialised. As on 31st March, 2011, 5,10,55,87,401 shares of the Company constituting 65.98% of the issued and subscribed share Capital stand dematerialised. The processing activities with respect to requests received for dematerialisation are generally completed within one working day. The Companys shares are among the most liquid and actively traded shares on the Indian Stock Exchanges and consistently rank among the top frequently traded shares, both in terms of number of shares traded as well as in terms of value. The Companys market capitalisation stood at ` 1,40,912 crores (US$ 31.6 billion) on 31st March, 2011. AGM Details Date Friday, 29th July, 2011 Venue Science City Main Auditorium JBS Haldane Avenue Kolkata 700 046 Time 10.30 a.m.

Book Closure Dates Tuesday, 14th June, 2011 to Tuesday, 21st June, 2011 (both days inclusive) Dividend Payment Date Monday, 1st August, 2011 Registrar & Share Transfer Agents The in-house Investor Service Centre of the Company (ISC), accredited with ISO 9001 : 2008 certification for investor servicing, provides share registration and other related s e r v i c e s . T h e Comp a n y i s r e g i s t e r e d wi t h S E B I a s Category II Share Transfer Agent. Share and Debenture Transfer Committee The Share and Debenture Transfer Committee of the Company generally approves share transfers on a weekly basis. The processing activities with respect to requests received for share transfers are generally completed within three working days from the date of receipt of request. There were no share transfers pending as on 31st March, 2011. The Committee met forty-six times during the financial year. The Committee comprises the following: K.N. Grant, Executive Director - Chairman B.B. Chatterjee, Executive Vice President & - Member Company Secretary K.S. Suresh, General Counsel - Member A. Bose, Deputy Secretary and Head of ISC, is the Secretary to the Committee and is also the Compliance Officer under the Securities and Exchange Board of India

(Registrars to an Issue and Share Transfer Agents) Regulations, 1993. 24 ITC Report and Accounts 2011No. of Shares Slab Shareholding Pattern as on 31st March, 2011 Distribution of Shareholding as on 31st March, 2011 No. of Shareholders No. of Shares Physical Demat Total % Physical % Demat % Total % 1 5000 33,485 3,38,881 3,72,366 90.42 3,87,09,388 0.50 15,70,69,122 2.03 19,57,78,510 2.53 5001 10000 5,918 13,402 19,320 4.69 4,12,21,988 0.53 9,54,94,518 1.24 13,67,16,506 1.77 10001 20000 2,624 7,788 10,412 2.53 3,83,88,905 0.50 11,31,70,176 1.46 15,15,59,081 1.96 20001 30000 729 2,800 3,529 0.86 1,76,07,408 0.23 6,90,25,527 0.89 8,66,32,935 1.12 30001 40000 345 1,355 1,700 0.41 1,19,70,935 0.16 4,73,28,089 0.61 5,92,99,024 0.77 40001 50000 295 868 1,163 0.28 1,36,29,460 0.17 3,93,20,768 0.51 5,29,50,228 0.68 50001 100000 334 1,478 1,812 0.44 2,30,82,835 0.30 10,29,68,153 1.33 12,60,50,988 1.63 100001 and above 119 1,391 1,510 0.37 2,44,79,45,960 31.63 4,48,12,11,048 57.91 6,92,91,57,008 89.54 Total 43,849 3,67,963 4,11,812 100.00 2,63,25,56,879 34.02 5,10,55,87,401 65.98 7,73,81,44,280 100.00 Shares held in Physical and Dematerialised Categories of Shareholders as on 31st March, 2011 form as on 31st March, 2011 Shares held in dematerialised form : CDSL Shares held in dematerialised form : NSDL Shares held in physical form 64.98% 34.02% 1.00% Shareholder Information

ITC Report and Accounts 2011 25 Category No. of % Shares held (A) Institutional Shareholding Banks, Financial Institutions, Insurance 2,77,68,68,257 35.89 Companies and Mutual Funds Foreign Institutional Investors 1,08,66,05,534 14.04 Sub-Total (A) 3,86,34,73,791 49.93 (B) Non-Institutional Shareholding Foreign Companies 2,41,39,52,310 31.19 NRIs and Foreign Nationals 4,35,67,373 0.56 Bodies Corporate 49,81,35,921 6.44 Public and Others 89,34,83,461 11.55 Sub-Total (B) 3,84,91,39,065 49.74 Public Shareholding (A+ B) 7,71,26,12,856 99.67 Shares underlying Global Depository Receipts 2,55,31,424 0.33 Total 7,73,81,44,280 100.00 0 5 10 15 20 25 30 35 40 Foreign Companies Banks, Financial Institutions, Insurance Companies and Mutual Funds Foreign Institutional Investors Public and Others NRIs and Foreign Nationals 0.56% Shares underlying Global Depository Receipts 0.33% Bodies Corporate 6.44% 35.89% 31.19%

14.04% 11.55%Global Depository Receipts Pursuant to the offer of Global Depository Receipts (GDRs) made by the Company in 1993, 2,55,31,424 GDRs*, representing 2,55,31,424 underlying shares of the Company i.e. 0.33% of the issued and subscribed Share Capital, were outstanding as on 31st March, 2011. The Companys GDRs are listed on the Luxembourg Stock Exchange (Code: 004660919) at Societe de la Bourse de Luxembourg, 11, av de la Porte-Neuve, L-2227 Luxembourg. The Listing Fee for the calendar year 2011 has been paid to the said Exchange. Top Ten Shareholders as on 31st March, 2011 Sl. No. Name of the Shareholder No. of Shares held % 1 Tobacco Manufacturers (India) Limited 1,98,55,64,880 25.66 2 Life Insurance Corporation of India 1,00,01,60,528 12.92 3 Specified Undertaking of the Unit Trust of India 89,67,21,090 11.59 4 Myddleton Investment Company Limited 32,42,07,960 4.19 5 The New India Assurance Company Limited 16,68,54,545 2.16 6 General Insurance Corporation of India 14,56,90,158 1.88 7 ICICI Prudential Life Insurance Company Limited 14,12,83,403 1.83 8 The Oriental Insurance Company Limited 13,22,76,560 1.71 9 National Insurance Company Limited 13,08,22,220 1.69 10 Rothmans International Enterprises Limited 10,33,03,260 1.33 Stock Exchange Reuters Code Bloomberg National Stock Exchange of India Ltd. ITC.NS ITC IS Bombay Stock Exchange Ltd. ITC.BO ITC IB Listing of Shares on Stock Exchanges with Stock Code Stock Exchange Stock Code National Stock Exchange of India Ltd. ITC

Exchange Plaza, Bandra-Kurla Complex, Bandra (E) Mumbai 400 051 Telephone nos. : 022-2659 8100 /14 Facsimile no. : 022-2659 8120 e-mail : ignse@nse.co.in website : www.nseindia.com Bombay Stock Exchange Ltd. 500875 Phiroze Jeejeebhoy Towers, Dalal Street Mumbai 400 001 Telephone nos. : 022-2272 1233 /34 Facsimile no. : 022-2272 1919 e-mail : is@bseindia.com website : www.bseindia.com The Calcutta Stock Exchange Ltd. 10000018 7, Lyons Range Kolkata 700 001 Telephone nos. : 033-2210 4470 /77 Facsimile no. : 033-2210 4500 e-mail : cseisc@cse-india.com website : www.cse-india.com Shareholder Information 26 ITC Report and Accounts 2011 * The numbers increased as compared to the last year consequent upon Bonus shares issued in 2010-11. The Listing Fees for the financial year 2011-12 have been paid to the aforesaid Stock Exchanges.Shareholder Information ITC Report and Accounts 2011 27 Monthly High and Low Quotes and Volume of Shares traded on National Stock Exchange (NSE), Bombay

Stock Exchange (BSE), Calcutta Stock Exchange (CSE) and GDRs on Luxembourg Stock Exchange (LSE) NSE BSE CSE LSE Year & Month High Low Volume High Low Volume High Low Volume High Low Volume in 000s in 000s in 000s in 000s (`) (`) (Nos.) (`) (`) (Nos.) (`) (`) (Nos.) (US$) (US$) (Nos.) 2010 APRIL 136.90 130.05 105461 136.30 130.30 10475 132.30 132.20 28 3.05 2.73 79 MAY 143.85 122.50 168456 142.95 126.93 21543 137.05 131.75 52 3.06 2.74 86 JUNE 153.95 137.60 150984 153.90 138.05 21634 145.75 140.03 79 3.75 2.96 100 JULY 155.95 133.20 135686 155.85 144.95 14771 152.50 149.98 13 3.33 3.08 Nil AUGUST 166.30 151.55 119387 165.95 151.50 13435 156.00 155.85 4 3.56 3.27 41 SEPTEMBER 180.85 161.40 157183 181.50 161.25 17229 Nil Nil Nil 3.96 3.49 121 OCTOBER 181.80 165.00 167244 184.70 165.50 16630 Nil Nil Nil 4.03 3.76 27 NOVEMBER 179.40 164.00 139354 178.90 163.70 9512 Nil Nil Nil 4.03 3.66 5 DECEMBER 176.35 164.15 131798 176.25 164.40 10647 Nil Nil Nil 3.90 3.67 6 2011 JANUARY 181.00 160.95 150586 181.00 161.40 14649 Nil Nil Nil 3.96 3.51 54 FEBRUARY 170.00 149.00 166706 170.00 150.00 17674 Nil Nil Nil 3.73 3.35 27 MARCH 184.00 165.60 171137 183.00 165.50 21036 Nil Nil Nil 4.07 3.72 25 ITC Share Price vis--vis S&P CNX Nifty Notes: Indicates monthly closing positions. Share Price adjusted to reflect Bonus shares issued in 2010-11. Notes: Share Price & Volume adjusted to reflect Bonus shares issued in 2010-11. ITC Share Price & Volume traded on NSE Notes: Indicates monthly high & low price and monthly volume. Share Price & Volume adjusted to reflect Bonus shares issued in 2010-11. Highest Lowest Volume Traded ITC Share Price (`) Volume Traded (000 Shares)

100000 120000 140000 160000 180000 200000 100 120 140 160 180 200 Apr - 10 May - 10 Jun - 10 Jul-10 Aug - 10 Sep - 10 Oct - 10 Nov - 10 Dec - 10 Jan - 11 Feb - 11 Mar - 11 ITC Share Price (`) S&P CNX Nifty ITC Share Price S&P CNX Nifty

4000 5000 6000 7000 100 120 140 160 180 200 Apr - 10 May - 10 Jun - 10 Jul-10 Aug - 10 Sep - 10 Oct - 10 Nov - 10 Dec - 10 Jan - 11 Feb - 11 Mar - 11Shareholder Information 28 ITC Report and Accounts 2011 Postal Ballot No special resolution requiring a postal ballot was proposed last year. No special resolution requiring a postal ballot is being proposed for the ensuing AGM. Financial Calendar

1 First Quarter Results July 2011 2 Second Quarter and Half-Year Results October 2011 3 Third Quarter Results January 2012 4 Fourth Quarter and Annual Results May 2012 Financial Year 2011-12 Dividend History (Last 10 Years) As one of Indias foremost private sector companies, the Company has performed consistently for a century now and has rewarded Shareholders since inception with uninterrupted dividends. * On expanded Share Capital arising out of Bonus shares issued in the ratio of 1:1; such dividend is subject to approval of Shareholders and includes special dividend of ` 1.65 per share. ** Includes special Centenary dividend of ` 5.50 per share. *** On expanded Share Capital arising out of Bonus shares issued in the ratio of 1:2. # Adjusted to reflect Sub-Division of shares from ` 10/- to ` 1/- per share in 2005-06. Financial Year Dividend per Share (`) Total Dividend (` in Crores) 2010-11 4.45 * 3443.47 * 2009-10 10.00 ** 3818.18 ** 2008-09 3.70 1396.53 2007-08 3.50 1319.02 2006-07 3.10 1166.29 2005-06 2.65 *** 995.12 *** 2004-05 3.10 # 773.25 2003-04 2.00 # 495.36 2002-03 1.50 # 371.27 2001-02 1.35 # 334.14 Particulars of past three AGMs

Science City Main Auditorium JBS Haldane Avenue Kolkata 700 046 10.30 a.m. AGM Financial Year Venue Date Time Special Resolutions passed 99th 2009-10 23/07/2010 Appointment of Auditors. Amendment of Articles of Association to reflect increase in the Authorised Share Capital. Issue of shares under new Employee Stock Option Scheme. 98th 2008-09 24/07/2009 Appointment of Auditors. 97th 2007-08 30/07/2008 Appointment of Auditors. Payment of commission to Non-Executive Directors.Plant Locations CIGARETTE FACTORIES Bengaluru 1. Meenakunte Village Jallahobli Bengaluru Karnataka 562 157 Kolkata 2. 93/1 Karl Marx Sarani Kolkata West Bengal 700 043

Munger 3. Basdeopur P.O. District Munger Bihar 811 202 Ranjangaon 4. Plot No. B-27, MIDC Ranjangaon, Taluka Shirur District Pune Maharashtra 412 220 Saharanpur 5. Sardar Patel Marg Saharanpur Uttar Pradesh 247 001 HOTELS Owned Hotels Agra 1. ITC Mughal* Taj Ganj Agra 282 001 Bengaluru 2. ITC Gardenia* 1, Residency Road Bengaluru 560 025 3. ITC Windsor* 25, Windsor Square Golf Course Road Bengaluru 560 052

Chennai 4. Sheraton Chola Hotel Cathedral Road Chennai 600 086 Jaipur 5. Sheraton Rajputana Hotel Palace Road Jaipur 302 006 Kolkata 6. ITC Sonar* 1, JBS Haldane Avenue Kolkata 700 046 Mumbai 7. ITC Maratha* Sahar Mumbai 400 099 8. ITC Grand Central* 287, Dr. B. Ambedkar Road Parel Mumbai 400 012 New Delhi 9. ITC Maurya* Sardar Patel Marg Diplomatic Enclave New Delhi 110 021 Shareholder Information ITC Report and Accounts 2011 29

10. Sheraton New Delhi Hotel District Centre, Saket New Delhi 110 017 Licenced Hotels Kota 11. WelcomHeritage Umed Bhawan Palace Palace Road Kota 324 001 Port Blair 12. Fortune Resort Bay Island Marine Hill Port Blair 744 101 Vadodara 13. WelcomHotel Vadodara R. C. Dutt Road, Alkapuri Vadodara 390 007 Hotels Under Operating Services Aurangabad 14. WelcomHotel Rama International R-3, Chikalthana Aurangabad 431 210 Chennai 15. Sheraton Park Hotel & Towers 132, T. T. K. Road Chennai 600 018 Hyderabad

16. ITC Kakatiya* 6-3-1187, Begumpet Hyderabad 500 016 Visakhapatnam 17. WelcomHotel Grand Bay Beach Road Visakhapatnam 530 002 GREEN LEAF THRESHING PLANTS Anaparti 1. Anaparti East Godavari District Andhra Pradesh 533 342 Chirala 2. Chirala Prakasam District Andhra Pradesh 523 157 PACKAGING & PRINTING FACTORIES Chennai 1. Tiruvottiyur Chennai Tamil Nadu 600 019 Haridwar 2. Plot No. 1, Sector 11 Integrated Industrial Estate Haridwar Uttarakhand 249 403 Munger

3. Basdeopur P.O. District Munger Bihar 811 202 PAPER & PAPERBOARD MILLS Bollaram 1. Anrich Industrial Estate Village Bollaram Medak District Andhra Pradesh 502 325 Sarapaka 2. Sarapaka Village Khammam District Andhra Pradesh 507 128 Thekkampatty 3. Thekkampatty Village Vivekanandapuram Post Mettupalayam Taluk Coimbatore District Tamil Nadu 641 113 Tribeni 4. P.O. Chandrahati Hooghly District West Bengal 712 504 FOODS FACTORIES Haridwar 1. Plot No. 1, Sector 11 Integrated Industrial Estate

Haridwar Uttarakhand 249 403 Ranjangaon 2. Plot No. D-1, MIDC Ranjangaon Taluka Shirur District Pune Maharashtra 412 220 PERSONAL CARE PRODUCTS FACTORIES Haridwar 1. Plot No. 1, Sector 11 Integrated Industrial Estate Haridwar Uttarakhand 249 403 Manpura 2. Village Manpura Tehsil Baddi District Solan Himachal Pradesh 174 101 CHOUPAL SAAGARS - RURAL SERVICES CENTRES Amravati 1. Old Survey No. 12/5-12/7 Patwari Halka No. 48 Mouza Degaon Pargana Nandgaon Peth

Tehsil & District Amravati Maharashtra 444 901 Badaun 2. Khasra No. 10 & 12/3 (Part) Village Khunak Tehsil, Pargana & District Badaun Uttar Pradesh 243 601 * Operating under The Luxury Collection brand under Licence from Sheraton International, Inc.Shareholder Information Bahraich 3. Khasra No. 475-477, 496-Kha, 497-498, 500-Mi, 501-507 & 509 Village Mohammad Nagar Tehsil, Pargana & District Bahraich Uttar Pradesh 271 801 Chandouli 4. Khasra No. 57- 62 & 641 Muhabatpur Village Ganj Khwaja Pargana Dhoos Tehsil Sakaldeeha District Chandouli Uttar Pradesh 232 104 Chindwara 5. Khasra No. 16/1, 16/4, 16/5 Patwari Halka No. 34 Village Imaliya Bohata District Chindwara

Madhya Pradesh 480 001 Dewas 6. Survey No. 295 & 294/2 Patwari Halka No. 26 Village Lohar Pipliya Tehsil & District Dewas Madhya Pradesh 455 001 Dhar 7. Plot No. 438, Halka No. 13 Village Jaitpura Ahmedabad - Indore Road Dhar Madhya Pradesh 454 001 Gonda 8. Khasra No. 421-424, 427-428, 431, 433-434, 442-446, 451-454, 420 (Part), 447 (Part), 448 (Part) & 457 (Part) Village Haripur Tehsil, Pargana & District Gonda Uttar Pradesh 271 001 Hardoi 9. Khasra No. 658 & 659 Village Korriyan Pargana Gopamau Shahjahanpur Road Tehsil & District Hardoi

Uttar Pradesh 241 001 Hathras 10. Khasra No. 21, Village Srinagar Pargana & Tehsil Sasni District Hathras Uttar Pradesh 204 216 Itarsi 11. Survey No. 309/5, 310/2 & 310/3 Halka No. 11 Village Raisalpur Tehsil Itarsi District Hoshangabad Madhya Pradesh 461 111 Jagdishpur 12. Khasra No. 2377-2380 Village Kathura Pargana Jagdishpur Tehsil Musafirkhana District Sultanpur Uttar Pradesh 227 817 Mandsaur 13. Patwari Halka No. 14 Village Azizkhedi Survey No. 30, 31, 32, 33 Tehsil & District Mandsaur Madhya Pradesh 458 001 Mhow

14. Village Gawli Palasia Patwari Halka No. 20 Tehsil Ambedkar Nagar, Mhow District Indore Madhya Pradesh 453 441 Nagda 15. Khasra No. 1393-1394, 1396-1397 Village Padliya Kala, Nagda Junction Tehsil Nagda District Ujjain Madhya Pradesh 456 335 Parbhani 16. Vasmat Road Gate No. 803 Near Water Filter Plant (Assola) Parbhani Maharashtra 431 401 Pilibhit 17. Khasra No. 261 Village Sandiya Mustakil Tehsil, Pargana & District Pilibhit Uttar Pradesh 262 001 Ratlam 18. Survey No.107/1-107/3 Village Kharakhedi Tehsil & District Ratlam Madhya Pradesh 457 001

Sehore 19. Khasra No. 208-209 Village Rafiqganj Tehsil & District Sehore Madhya Pradesh 466 001 Ujjain 20. Survey No. 433/3, 456 & 458 Patwari Halka No. 19 Village Kamed Tehsil Ghattia, District Ujjain Madhya Pradesh 456 001 Vidisha 21. Survey No. 18 Patwari Halka No. 35 Village Bais Tehsil & District Vidisha Madhya Pradesh 464 001 Wardha 22. Survey No. 151/1 & 151/4 Mouza No. 17, Mouza Inzapur Tehsil & District Wardha Maharashtra 442 001 Washim 23. Survey No. 104 Patwari Halka No. 10 Mouza Zakalwadi, Akola Road Taluka & District Washim

Maharashtra 444 505 Yavatmal 24. Bhumapan No. 15/2-H Village Parwa Taluka & District Yavatmal Maharashtra 445 001 30 ITC Report and Accounts 2011 LIFESTYLE RETAILING Design & Technology Centre Gurgaon 86, Industrial Estate, Phase I Udyog Vihar Gurgaon Haryana 122 016 Wills Lifestyle Stores Agra 1. ITC Mughal Taj Ganj Agra 282 001 Tel No: 0562-4021700 Ahmedabad 2. Shop No. 3, Time Square Building C. G. Road, Navrangpura Ahmedabad 380 006 Tel No: 079-26402303 3. Shop No. 231-232 Iscon Mega Mall

Near Iscon Temple Sarkhej National Highway Ahmedabad 380 054 Tel No: 079-40026304 Amritsar 4. Unit No. GF-07, Ground Floor The Celebration Mall Batala Road Amritsar 143 001 Tel No: 0183-5095820 Aurangabad 5. Unit No. F-50, Plot No. P/80 API Compound, Airport Road MIDC, Chikalthana Aurangabad 431 005 Tel No: 0240-6618187 Bengaluru 6. No. 6, Brigade Road Bengaluru 560 001 Tel No: 080-41123662 7. 664, Binnamangala First Stage, 100 Ft. Road Indira Nagar Bengaluru 560 038 Tel No: 080-41715665 8. ITC Gardenia No.1, Residency Road

Bengaluru 560 025 Tel No: 080-43455301 9. 11th Main, Sri Arcade No.16 (Old No.17) III Block East, Jayanagar Bengaluru 560 011 Tel No: 080-41211435 Bhopal 10. GF-41, DB City M. P. Nagar Bhopal 462 011 Tel No: 0755-6644244 Bhubaneshwar 11. No. 794, Shaheed Nagar Janpath Bhubaneshwar 751 007 Tel No: 0674-2544386Shareholder Information Guwahati 25. Shop No. A,B,C,E,P Adams Plaza GS Road Christian Basti Guwahati 781 005 Tel No: 0361-2349922 Hyderabad 26. Shop No. G 4 & 5 G. S. Chambers

Nagarjuna Circle Hyderabad 500 082 Tel No: 040-66364700 27. Shop No. 1 & 2 H. No. 3-6-108/2 Kuchkulla House Himayat Nagar Hyderabad 500 029 Tel No: 040-64255160 28. Shop No. 11 & 12 Lower Ground Floor Road No. 1, GVK Mall Banjara Hills Hyderabad 500 034 Tel No: 040-44767660 Indore 29. Shop No. 11, Ground Floor C-21 Mall Plot No. 94-104 & 300-303 Scheme No. 54 A. B. Road Indore 452 010 Tel No: 0731-4095717 Jaipur 30. Gulab Niwas M. I. Road Jaipur 302 001

Tel No: 0141-2365017 31. Shop No. G23-25 Triton The Mega Mall Jhotwara Road Near Chomu Pulia Jaipur 302 012 Tel No: 0141-5156731 Jalandhar 32. GF-18, Viva Collage Mall G. T. Road Jalandhar 144 005 Tel No: 0181-3053222 Jammu 33. 5 & 6 Residency Road Jammu 180 001 Tel No: 0191-2573153 Kolkata 34. 19B, Shakespeare Sarani Kolkata 700 071 Tel No: 033-22826102 35. C-008 & C-010, City Centre Block-DC, Sector 1 Salt Lake City Kolkata 700 064 Tel No: 033-23589152 36. Shop No. S026 South City Mall

375, Prince Anwar Shah Road Kolkata 700 068 Tel No: 033-40072206 37. Tollygunge Club 120, Deshapran Sasmal Road Kolkata 700 033 Tel No: 033-24732316 Kanpur 38. Shop No. 8, 1st Floor Zsquare Mall 16/113, M. G. Marg Bada Choraha Kanpur 208 001 Tel No: 0512-2302975 Lucknow 39. Shop No. 2108 B-1, First Floor Fun Republic Mall Gomti Nagar Lucknow 226 010 Tel No: 0522-4060666 40. Shop No. 25, Sahara Ganj Hazrat Ganj, Shah Nazaf Road Lucknow 226 001 Tel No: 0522-3062555 41. F-08, First Floor Phoenix United Mall

Alambagh Lucknow 226 005 Tel No: 0522-3295388 Ludhiana 42. 85/4A, The Mall Ludhiana 141 001 Tel No: 0161-2441423 43. Shop No. 44-45, 50-51 First Floor, The Westend Mall Ferozpur Road Ludhiana 141 001 Tel No: 0161-4644436 Mumbai / Thane 44. Shop No. 2, 3 & 32 Ruki Mahal Co-operative Housing Society Ltd. Colaba Mumbai 400 005 Tel No: 022-22818261 45. G-24, Inorbit Mall Plot No. 39/1, Sector 30 A Vashi Navi Mumbai 400 705 Tel No: 022-65251162 46. F-8 & 9, Inorbit Mall Mindspace, Malad Link Road Malad (West)

Mumbai 400 064 Tel No: 022-40032086 47. Unit No. 10, SSP Building Nirmal Lifestyle LBS Marg, Mulund (West) Mumbai 400 080 Tel No: 022-66490407 48. Unit No. 4 & 5 Skyzone Level 1, Block 2 Phoenix Mills Compound 462, Senapati Bapat Marg Lower Parel Mumbai 400 013 Tel No: 022-40040604 ITC Report and Accounts 2011 31 12. Shop No. 202, Second Floor Pal Height, Jaidev Vihar Bhubaneshwar 751 006 Tel No: 0674-2361043 Chandigarh 13. SCO 14, Sector 17E Chandigarh 160 017 Tel No: 0172-6549856 Chennai 14. 19, Ground Floor, Quaiser Tower Khader Nawaz Khan Road Nungambakkam

Chennai 600 034 Tel No: 044-28332515 15. Shop No. 6, Ground Floor Chennai Citi Centre 10 & 11, Dr. Radhakrishna Salai Chennai 600 004 Tel No: 044-43536214 16. Shop No. 23, Ampa Skyline Mall N. M. Road, Aminjikarai Chennai 600 029 Tel No: 044-42082522 17. Shop No. 109, Express Avenue 49, 50L, Whites Road Royapettah Chennai 600 014 Tel No: 044-28464431 18. Shop No. 114, Express Avenue 49, 50L, Whites Road Royapettah Chennai 600 014 Tel No: 044-28464236 Coimbatore 19. G-24, Brooke Fields Mall 67-71, Krishnasamy Road Coimbatore 641 001 Tel No: 0422-2255544 Dehradun

20. 52/A, Rajpur Road Dehradun 248 001 Tel No: 0135-2749941 Ernakulam 21. Ground Floor, No. 40/7182 M. G. Road Ernakulam 682 035 Tel No: 0484-3918800 Ghaziabad 22. Shop No. G-37, Mahagun Metro Mall, Plot No. VC-3, Vaishali Ghaziabad 201 010 Tel No: 0120-6492890 Gurgaon 23. Shop No. 17-20 The Metropolitan Mehrauli - Gurgaon Road Gurgaon 122 002 Tel No: 0124-4104444 24. Shop No. G 64 & 65 Ambi Mall, Ambience Island National Highway No. 8 Gurgaon 122 001 Tel No: 0124-6460667Shareholder Information 49. Shop No. G11, Mega Mall Malad Linking Road Oshiwara, Andheri (West)

Mumbai 400 104 Tel No: 022-40167330 50. F21 & 22, Korum Mall Mangal Pandey Road Eastern Express Highway District Thane (West) 400 606 Tel No: 022-25417474 51. Shop No. F 34 Oberoi Mall, Goregaon (East) Mumbai 400 063 Tel No: 022-28432127 Nagpur 52. Jagat Millennium Amravati Road Dharampeth Nagpur 440 014 Tel No: 0712-6647192 Nashik 53. UG-Shop No. 7, City Centre Mall Lawate Nagar, Untwadi Nashik 422 002 Tel No: 0253-2232172 New Delhi 54. F-41, South Extension - I New Delhi 110 049 Tel No: 011-41648524 55. Plot No. 1B3, Citi Centre Mall

Sector 10, Twin District Centre 1 Rohini New Delhi 110 085 Tel No: 011-64640766 56. Shop No. 033, First Floor Pacific Mall Subhash Nagar New Delhi 110 018 Tel No: 011-64707472 57. E-2, Inner Circle Connaught Place New Delhi 110 001 Tel No: 011-64717773 58. M-12, Greater Kailash - I New Delhi 110 048 Tel No: 011-29232555 59. ITC Maurya Sardar Patel Marg Diplomatic Enclave New Delhi 110 021 Tel No: 011-42099200 60. Shop No. GF 10 & 11 TDI Mall, Plot No.11 Shivaji Place Rajouri Garden New Delhi 110 027 Tel No: 011-25105150

61. Select Citywalk, G 3 & 4 Ground Floor Plot No. A3 District Centre Saket New Delhi 110 017 Tel No: 011-42658267 Noida 62. Shop No. G 32, Unitech Mall Noida Amusement Park Sector 38A, Great India Place Noida 201 301 Tel No: 0120-2458992 63. F-14, Sector 18 Noida 201 301 Tel No: 0120-6491802 Panjim 64. 3293, M. G. Road Panjim 403 001 Tel No: 0832-6641222 Pune 65. 1204/22, Ground Floor Shivaji Nagar Junglee Maharaj Road Pune 411 004 Tel No: 020-66019401 66. 11, Moledina Road Pune 411 001

Tel No: 020-26121222 Raipur 67. Unit No. 12, City Mall 36 G. E. Road, NH 06 Raipur 492 001 Tel No: 0771-6454545 Ranchi 68. Shop No.1 Eastern Block of Second Floor GEL Church-Commercial Complex Main Building, Main Road Ranchi 834 001 Tel No: 0651-2330909 Siliguri 69. Shop No. 20 & 21 Lower Ground Floor Cosmos Mall, Sevoke Road Siliguri 734 001 Tel No: 0353-2545254 Surat 70. Shop No. 312 & 313 Second Floor Iscon Prozone Mall Domas Road Surat 395 007 Tel No: 0261-6454599 Vadodara

71. Shop No. 42-44 Siddharth Complex R. C. Dutt Road, Alkapuri Vadodara 390 005 Tel No: 0265-2325756 72. Centre Square Mall Near Genda Circle Sarabhai Road, Wadi-Wadi Vadodara 390 007 Tel No: 0265-6453740 Visakhapatnam 73. Shop No.1, Rednam Manor Dwarka Nagar, Near Diamond Park Visakhapatnam 530 016 Tel No: 0891-2702881 74. The Landmark, Shop No. G-4 Block No. 9, Waltair Road Waltair Uplands Visakhapatnam 530 019 Tel No: 0891-6645672 John Players Stores* Bengaluru 75. No. 12/29, Gentry Plaza 11th Main, 4th Block Jayanagar Bengaluru 560 011 Tel No: 080-41103337

76. Shop No. 8-9, Total Mall Madiwala Bengaluru 560 068 Tel No: 080-41730902 77. 174, Brigade Road Bengaluru 560 001 Tel No: 080-41512823 78. Shop No. 383, 2nd Main Road Sampige Road Malleswaram Bengaluru 560 003 Tel No: 080-42199528 79. Shop No.1, Total Mall Sarjapur Road Bengaluru 560 037 Tel No: 080-41486573 Chennai 80. Shop No. 68 (Old No. 89) Sir Thygaraya Road Pondy Bazaar, T. Nagar Chennai 600 017 Tel No: 044-43502651 81. Shop No. 129A Spencer Plaza, Phase III First Floor, 769, Anna Salai Chennai 600 002 Tel No: 044-28492449

82. Shop No. 145, AA Block Third Avenue, Anna Nagar Chennai 600 040 Tel No: 044-42170007 83. No. 3/109, 100 Feet Road Velacherry Chennai 600 042 Tel No: 044-22447565 84. PC 5, Bazaar Road Collector Nagar, Mogapair East Chennai 600 037 Tel No: 044-43550425 85. Shop No. 141, Plot No. 616 LB Road, Thiruvamyur Chennai 600 020 Tel No: 044-42117806 Hyderabad 86. Shop No. 211, Second Floor City Centre Banjara Hills Hyderabad 500 034 Tel No: 040-66662221 87. Shop No. 16-11-704/5/A/9 & 10 Opp. Kala Niketan Dilsukhnagar Hyderabad 500 060 Tel No: 040-66562102

88. Shop No. 1, MIG No. 329 Main Road, Dr. A. S. Rao Nagar Hyderabad 500 062 Tel No: 09247070250 32 ITC Report and Accounts 201189. D.No. 3-6-138/5 & 6 Papalal Chambers, Main Road Himayat Nagar Hyderabad 500 029 Tel No: 040-42203175 Kolkata 90. 25B, Camac Street Kolkata 700 016 Tel No: 033-22896244 91. 6/1, Lindsay Street Kolkata 700 087 Tel No: 033-22497887 92. 200/2C, Rashbehari Avenue Gariahat Kolkata 700 029 Tel No: 033-24664928 93. 8, Brahmo Samaj Road Behala Kolkata 700 034 Tel No: 033-24989752 94. 97, K. N. C. Road Barasat Kolkata 700 124

Tel No: 09830055468 95. 138/1, Bidhan Sarani Shyam Bazaar Kolkata 700 004 Tel No: 033-65267891 96. P-12, New Howrah Bridge Approach Road Kolkata 700 001 Tel No: 033-22343779 97. P/157/1, CIT Road Scheme-VII-M, Ultadanga Crossing Kolkata 700 054 Tel No: 033-65295719 Mumbai / Thane 98. 20, Cusrow Bagh Colaba Mumbai 400 005 Tel No: 022-22876454 99. Nakshatra Mall Unit No. 21, 22, 23 & 24 Gokhle Road, Dadar Mumbai 400 028 Tel No: 022-24360794 100. Shop No. 2 & 2A, First Floor Akshay Plaza Co-operative Society Chembur Mumbai 400 071

Tel No: 022-25290004 101. Shop No. 1- 4 Nadiadwala Chawl SV Road, Opp. Paaneri Andheri (West) Mumbai 400 058 Tel No: 022-26203990 102. Shop No. F-23, Centre One Sector No. 30-A Near Vashi Railway Station Navi Mumbai 400 705 Tel No: 022-64481500 103. 107 / 108, First Floor Little World Mall, Sector 2 Khargar Mumbai 410 210 Tel No: 09022949391 104. Shop No. 1, Chandarvakar Lane Borivali West Mumbai 400 092 Tel No: 022-28946880 105. Shop No. 4, Ground Floor Eternity Mall Near Eastern Expressway Tin Hath Naka District Thane (West) 400 601 Tel No: 022-25801526

106. Shop No. 1 Martuvaibhav Naughar Vasai District Thane (West) 401 202 Tel No: 0250-2335477 107. Shop No. 9, Pratik Avenue Nehru Road Vile Parle (East) Mumbai 400 057 Tel No: 022-26136111 108. Shop No. 21 & 25 GF Kasturi Plaza Shopping Centre Manpada Road Dombivli (East) Mumbai 421 201 Tel No: 0251-2863932 New Delhi / NCR 109. D-35, Lajpat Nagar Central Market - II New Delhi 110 024 Tel No: 011-29830440 110. E-149, Kamla Nagar New Delhi 110 007 Tel No: 011-47036020 111. Shop No. 7/2, West Patel Nagar New Delhi 110 008 Tel No: 011-25889043

112. F-16, District Centre Janak Place, Janakpuri New Delhi 110 058 Tel No: 011-25618031 113. G-54, Laxmi Nagar Vikas Marg New Delhi 110 092 Tel No: 011-22542495 114. Shop No. FF 101 & 102 Plot No. 12, V3S, Laxmi Nagar District Centre New Delhi 110 092 Tel No: 011-22446327 115. 13/29-30, Rachna Building Ajmal Khan Road Karol Bagh New Delhi 110 005 Tel No: 011-25810440 116. Shop No. 188 Sarojini Nagar Market New Delhi 110 023 Tel No: 011-24676188 117. G-4, Bhagwati Plaza Plot No.12, Sector 5 Dwarka New Delhi 110 075 Tel No: 011-45700997

118. Shop No. FF-12, 2nd Floor MGF City Square Rajouri Garden New Delhi 110 027 Tel No: 011-47131809 119. E-2/5, Ground Floor Malviya Nagar, Main Road New Delhi 110 017 Tel No: 011-46108386 120. D-12/201, Sector - 8 Rohini New Delhi 110 085 Tel No: 011-27941274 121. FF-33, First Floor, MGF Mall The Metropolitan Mehrauli - Gurgaon Road Gurgaon 122 002 Tel No: 0124-4379101 122. Shop No. 4-6, Arjun Plaza Jagat Farm, Gamma - 1 Greater Noida 201 301 Tel No: 0120-2322563 123. Shop No. F-6, First Floor Ansal Crown Plaza Sector 15A Faridabad 121 001 Tel No: 0129-4014077

124. P-16, Pandav Nagar Mayur Vihar Phase - 1 New Delhi 110 091 Tel No: 011-22759456 125. SRS Multiplex Sector 12, Main Mathura Road Faridabad 121 007 Tel No: 0129-4090100 126. 24, Gyan Deep Building Chaudhary More Ghaziabad 201 002 Tel No: 0120-4112376 127. Shop No. 30 Mahagun Metro Mall Vaishali Ghaziabad 201 305 Tel No: 0120-4287684 128. 17, New Gandhi Nagar Ghaziabad 201 001 Tel No: 0120-4316713 129. Shop No. AG-84, Etan Floor Ansal Plaza Greater Noida 201 308 Tel No: 0120-4205024 Shareholder Information ITC Report and Accounts 2011 33 * In addition to the above, there are over 225 John Players Stores spread across the country in other cities / towns.Shareholder Referencer

34 ITC Report and Accounts 2011 Bank Details Shareholders holding shares in the physical form are requested to notify / send the following to ISC to facilitate better servicing: i) any change in their address / mandate / bank details / email address, and ii) particulars of the bank account in which they wish their dividend to be credited, in case the same have not been furnished earlier. Shareholders are advised that respective bank details as furnished by them or by NSDL / CDSL to the Company, for shares held in the physical form and in the dematerialised form respectively, will be printed on the dividend warrants as a measure of protection against fraudulent encashment. In the event Shareholders wish to receive dividend in a bank account other than the one specified by them while opening their Depository Account, they may advise the same to their Depository Participants. ITC Limited Financial Dividend Date of Total Dividend Unclaimed Dividend Due for Year Identification Declaration (`) as on 31/03/2011 transfer to IEPF No. of Dividend on (`) % 2003-04 74th 30th July, 2004 4,95,35,77,020.00 2,57,78,280.00 0.52 4th September, 2011* 2004-05 75th 29th July, 2005 7,73,24,56,356.00 3,98,03,194.00 0.51 3rd September, 2012 2005-06 76th 21st July, 2006 9,95,12,91,267.00 5,47,83,609.00 0.55 26th August, 2013 2006-07 77th 27th July, 2007 11,66,29,29,029.00 7,29,75,577.00 0.63 1st September, 2014 2007-08 78th 30th July, 2008 13,19,01,73,540.00 7,89,18,235.00 0.60 4th September, 2015 2008-09 79th 24th July, 2009 13,96,53,10,312.00 8,67,08,611.00 0.62 29th August, 2016 2009-10 80th 23rd July, 2010 38,18,17,67,900.00 24,03,47,980.00 0.63 29th August, 2017 * It will not be possible to entertain any claim received by ISC after 2nd September, 2011.

Erstwhile ITC Hotels Limited Financial Date of Declaration Total Dividend Unclaimed Dividend Due for Year of Dividend (`) as on 31/03/2011 transfer to IEPF on (`) % 2003-04 14th July, 2004 6,04,32,984.00 6,59,370.00 1.09 18th August, 2011* * It will not be possible to entertain any claim received by ISC after 17th August, 2011. Unclaimed Dividend Unclaimed dividend for the years prior to and including the financial year 2002-03 has been transferred to the General Revenue Account of the Central Government / the Investor Education and Protection Fund established by the Central Government (IEPF), as applicable. Shareholders who have not encashed their dividend warrants relating to financial year(s) up to and including 1993-94 may claim such dividend (transferred to the General Revenue Account) from the Registrar of Companies, West Bengal, Government of India, Nizam Palace, II MSO Building, 2nd Floor, 234/4 A.J.C. Bose Road, Kolkata 700 020, by applying in the prescribed form. This form can be downloaded from the Companys corporate website www.itcportal.com under the section Investor Relations or can be furnished by the Investor Service Centre of the Company (ISC) on request. The dividend for the undernoted years, if remaining unclaimed for 7 years, will be statutorily transferred by the Company to IEPF in accordance with the schedule given below. Communication has been sent by the Company to the concerned Shareholders advising them to write to ISC with respect to their unclaimed dividend. Attention is drawn that the unclaimed dividend for the financial year 2003-04, pertaining to both ITC Limited and erstwhile ITC Hotels Limited are due for transfer to IEPF on 4th September, 2011 and 18th August, 2011, respectively.

Once unclaimed dividend is transferred to IEPF, no claim shall lie in respect thereof.Permanent Account Number (PAN) Shareholders holding shares in the physical form are advised that SEBI has made it mandatory that copy of PAN Card is to be furnished in the following cases: i) Transferees PAN Cards for transfer of shares, ii) Surviving joint holders PAN Cards for deletion of name of deceased shareholder, iii) Legal heirs PAN Cards for transmission of shares, and iv) Joint holders PAN Cards for transposition of shares. Remittance of Dividend through National Electronic Clearing Service (NECS) The Company provides the facility for remittance of dividend to the Shareholders through NECS. This facility can be availed by Shareholders across the country provided they maintain accounts with those branches of the banks which have implemented the Core Banking System (CBS) and participated in the NECS facility extended by the Reserve Bank of India. Shareholders who have not availed the NECS facility so far and wish to avail the same may For shares held in Dematerialised Form Have their new bank account number under CBS updated with their respective Depository Participants (DPs). For shares held in Physical Form Send their NECS mandate in the prescribed form to the Company, which can be downloaded from the Companys corporate website www.itcportal.com under the section Investor Relations or can be furnished by ISC on request. Nomination Facility Shareholders who hold shares in the physical form and wish to make any nomination / change nomination made earlier in respect of their shareholding in the Company, may submit to ISC the prescribed Form 2B. This Form can be downloaded

from the Companys corporate website www.itcportal.com under the section Investor Relations or can be furnished by ISC on request. Depository Services Shareholders may write to the respective Depository or to ISC for guidance on depository services. Address for Correspondence with Depositories National Securities Depository Limited Central Depository Services (India) Limited Trade World, A Wing, 4th Floor Phiroze Jeejeebhoy Towers, 17th Floor Kamala Mills Compound Dalal Street, Fort Senapati Bapat Marg, Lower Parel Mumbai 400 001 Mumbai 400 013 Telephone no. : 022-2499 4200 Telephone no. : 022-2272 3333 Facsimile no. : 022-2497 6351 Facsimile no. : 022-2272 3199 e-mail : info@nsdl.co.in e-mail : investors@cdslindia.com website : www.nsdl.co.in website : www.cdslindia.com Address for Correspondence with ISC Investor Service Centre ITC Limited 37 Jawaharlal Nehru Road Kolkata 700 071 India Telephone nos. : 033-2288 6426 / 2288 0034 Facsimile no. : 033-2288 2358 e-mail : isc@itc.in website : www.itcportal.com Shareholders holding shares in the dematerialised form should address their correspondence to their respective DPs, other than for dividend and Report and Accounts which should be addressed to ISC.

In all correspondence with ISC, to facilitate prompt response, account numbers / DP ID & Client ID numbers are required to be furnished. Shareholders are requested to also provide their e-mail addresses and telephone / fax numbers. Shareholder Referencer ITC Report and Accounts 2011 35Report of the Directors & Management Discussion and Analysis For the Financial Year Ended 31st March, 2011 Your Directors submit their Report for the financial year ended 31st March, 2011. SOCIO-ECONOMIC ENVIRONMENT World output staged a smart recovery in 2010 growing by 5% during the year after a decline of 0.6% in 2009. While growth in the first half of the year stood at 5.25%, there was a marked deceleration in the second half which recorded a growth of 3.75%. Receding fears of a global depression in 2009 initially led to a lower rate of destocking by business and subsequently to a phase of rebuilding depleted inventories. This fostered a sharp rebound in industrial production and trade which lasted through the first half of 2010. Simultaneously, accommodative policies adopted by most governments, improvement in business confidence and financial conditions encouraged investments and helped arrest rising unemployment levels and boost consumption. Consequently, recovery has become more self-sustaining and the risk of a double-dip recession in advanced

economies has abated. The recovery, however, is broadly moving at two speeds. While economic growth in the advanced economies remained modest at around 3% in 2010 after a decline of 3.4% in 2009, emerging and developing economies recorded robust growth in excess of 7% during the year led primarily by China and India. According to the International Monetary Fund (IMF), world real GDP growth for 2011 is forecast at 4.4%, representing a modest slowdown from 2010 levels. Real GDP in the advanced economies is expected to grow by 2.5% while that in the emerging and developing economies is forecast to grow by 6.5%. However, downside risks to these estimates continue to outweigh the upsides. In the case of advanced economies, the key concerns revolve around weak sovereign balance sheets, the possibility of financial troubles in peripheral Euro area spreading to core Europe, high levels of unemployment, the continued weakness of the US real estate market and the lack of progress in formulating medium-term fiscal consolidation plans. In the emerging economies, key risks relate to overheating, asset price bubbles, rapid rise in inflationary pressures, spurt in commodity prices and the potential for boom-bust cycles could eventually result in a hard landing in these economies. With emerging markets accounting for 40% of global consumption and two-thirds of global growth, a slowdown in these economies could dent global

recovery significantly. Closer home, after growing at 8.0% in 2009/10, the Indian economy picked up further steam in 2010/11 recording a real GDP growth of 8.6% during the year. While the Agricultural sector posted an above-trend growth of 5.4% aided in part by a low base effect, Industry and Services grew by 8.1% and 9.6% respectively. After clocking an impressive growth of 8.9% in the first half of the year, the economy showed signs of moderation in the second half especially in capital goods production and investment spending. A good performance on the external front with exports growing by 37.5% even as imports grew by 21.6% during the year helped reduce the Current Account Deficit to approximately 2.5% of GDP from 2.8% in the previous year. The Centres Fiscal Deficit for the year stood at 5.1% of GDP a significant improvement from 6.4% recorded in 2009/10 driven by buoyant tax collections and proceeds of the 3G spectrum auction. However, amongst these positives, the persistently high level of inflation in the economy despite good monsoons was a key cause for concern. The year-on-year headline WPI inflation started trending up from December 2009 through to April 2010 when it touched 11%. After remaining in double digits from April 2010 to July 2010, headline inflation moderated progressively to 7.5% in November 2010 before reversing the trend from December 2010 mainly due to supply

bottlenecks in food items. Inflation levels remained elevated in the December 2010 to March 2011 period mainly on account of fuel, power and non-food manufacturing products. Thus, the inflationary pressures, 36 ITC Report and Accounts 2011 India is expected to be the third largest economy by 2050. Studies indicate a near tripling of household disposable incomes and a burgeoning middle-class which will comprise over 40% of Indias population. These trends augur well for the nation and could provide enormous opportunities for private enterprise and sustaining the growth trajectory. 03.06.11, 7:40 PMwhich emanated from food items clearly spilled over and became generalised, as the year progressed. The recent slowdown in Industrial growth, as reflected by the Index of Industrial Production (IIP) and data pertaining to the six core industries, is also a cause for concern. According to the monetary policy statement released on May 3, 2011, RBIs baseline growth projection for the Indian economy is expected to slow down to 8% with year-end WPI inflation estimated at 6% with an upward bias. As the policy challenge shifts to taming inflation, the economy will have to contend with high interest rates which in turn could impact growth. Risks to global recovery as stated earlier, high commodity prices especially of oil - with Brent crude crossing USD 120 per barrel in April 2011 triggered by events in the MENA (Middle East and North Africa) region, elevated levels of inflation including in food prices, high subsidy burden arising out

of high oil prices and commitments arising out of the proposed implementation of the National Food Security Bill pose the key downside risks to economic growth in the near term. In the medium to long term, Indias economic growth engine is expected to be powered by multiple drivers such as the increasing momentum in the savings and investment rates (which should further improve with Indias demographic dividend playing out in the ensuing years), a vibrant services sector, a large domestic demand base and the emergence of internationally competitive firms. The challenge of raising the growth bar to the desired double-digit levels, however, remains daunting and would require, inter-alia, significant improvement in agricultural productivity, step up in investments especially in physical and social infrastructure, skill development, achieving energy security, job creation and addressing the governance deficit. As captured in the Union Finance Ministers 2011 Budget speech, ...in the medium term perspective, our three priorities of sustaining a high growth trajectory; making development more inclusive; and improving our institutions, public delivery and governance practices, remain relevant. Indias rapid economic growth in recent years and the prospects of building further on this momentum in the medium to long-term has led it to command a new respect in the world order. According to recent studies

India is expected to be the third largest economy by 2050. Indias demographic trends indicate that the nation will add over 200 million people to the working age population over the next 20 years, more than any other country in the world. Several studies indicate a near tripling of household disposable incomes and a burgeoning middle-class which will comprise over 40% of Indias population and grow ten-fold to touch 583 million people by 2025. These trends augur well for the nation and could provide enormous opportunities for private enterprise and sustaining the growth trajectory. Yet, with 17% of the worlds population, 2.4% of global land mass, 4% of the worlds freshwater resources and 1% of the worlds forest resources, the pressure of economic growth on the countrys natural capital will be enormous. Equally, the need to make economic growth more equitable and inclusive is compelling. A comprehensive growth strategy for rural India, including the agricultural sector which continues to underperform, is necessary to address the serious issues relating to sustainability and inclusive growth. The governments focus on social sector programmes such as Bharat Nirman, National Rural Employment Guarantee Scheme (NREGS), Sarva Shiksha Abhiyan, food security legislation and strategies to improve benefit delivery mechanisms have the potential to transform the Indian rural landscape. It is here that unique business models

like the ones forged by your Company can supplement the efforts of the government in creating societal value and enhancing societal capital. It is an essential pre-requisite of rural development that markets are co-created with local communities and in a constructive public-private-people partnership. Your Companys e-Choupal network is a close replica of this model. It provides the farming community with value-added services such as crop advisories, advance weather forecasts, output price discovery, direct communication tools and distribution of unadulterated agri inputs. The footprint of this network is well established to source most requirements of your Companys Branded Packaged Foods business and is poised to grow in line with entry into newer categories. Similarly, your Companys unique and path-breaking Choupal Pradarshan Khet (CPK) initiative, a collaborative and paid extension service aimed towards enhancing farm productivity with emphasis Report of the Directors ITC Report and Accounts 2011 37 Unique business models like the ITC e-Choupal can supplement the efforts of the government in creating societal value and enhancing societal capital. It is an essential pre-requisite of rural development that markets are co-created with local communities and in a constructive public-private-people partnership.on adoption of sustainable agricultural best practices, continues to attract the interest of both farmers and partnering companies. The demonstration plots under

CPK have recorded significant productivity gains as compared to control plots. An estimated 40,000 farmers participated in this programme during the year. In line with the national agenda of pursuing sustainable and inclusive growth, your Company is proactively engaged in enlarging its contribution across the three dimensions of the Triple Bottom Line - economic, environmental and social - through investments and operations that foster the competitiveness of entire value chain that it is engaged in. In line with this philosophy, it is your Companys endeavour to embed larger societal goals in its various business models. Major initiatives in this direction include the e-Choupal network which is contributing to increasing rural incomes by providing a wide range of support services to the farming community, the Social and Farm Forestry programmes which create sustainable livelihoods among marginal farmers and poor tribals, adoption of environment friendly technologies including the increasing use of renewable sources of energy, recycling processes and creation of rainwater harvesting structures. Such initiatives have combined to make ITC the only Company in the world, of comparable size, to be carbon positive, water positive and waste recycling positive. The following sections outline your Companys progress in pursuit of the Triple Bottom Line objectives. FINANCIAL PERFORMANCE

Your Company, in its Centenary Year, posted yet another year of stellar performance with an impressive topline growth and high quality earnings reflecting the robustness of its corporate strategy of creating multiple drivers of growth. This performance is particularly noteworthy when viewed against the backdrop of the extremely challenging business context in which this was achieved, namely, the steep increase in excise duties in the Union Budget 2010 coupled with the amplified impact of arbitrary increases in VAT on cigarettes, brand building and incubation costs of the new FMCG businesses, the impact of the significant investments made in augmenting distribution infrastructure and the gestation costs of the large investments in the Hotels business. Gross Turnover for the year grew by 16.5% to ` 30604.39 crores. Net Turnover at ` 21167.58 crores grew by 16.6% primarily driven by a 23.1% growth in the non-cigarette FMCG businesses, 22.9% growth in Agri business and 17.6% growth in the Hotels segment. Pre-tax profits increased by 20.8% to ` 7268.16 crores while Post-tax profits at ` 4987.61 crores registered a growth of 22.8%. Earnings Per Share for the year stands at ` 6.49 (previous year - adjusted for Bonus Issue - ` 5.34). Cash flows from Operations stood at ` 7460 crores compared to ` 6632 crores in the previous year. Your Company completed 100 years in August 2010. It is a matter of great pride to reflect on the enormous

progress made by your Company over the years. Your Company today is the leading FMCG marketer in India, the second largest Hotel chain, the clear market leader in the Indian Paperboard and Packaging industry and the countrys foremost Agri business player. Additionally, your Companys wholly owned subsidiary, ITC Infotech India Limited, is one of Indias fast growing Information Technology companies in the mid-tier segment. Over the last fifteen years, your Company has created multiple drivers of growth by developing a portfolio of world class businesses. During this period, your Companys Gross Turnover and Post-tax profits recorded an impressive compounded growth of 12.7% and 21.7% per annum respectively. Profitability, as measured by Return on Capital Employed improved substantially from 28.4% to 43.4% during this period. Total Shareholder Returns, measured in terms of increase in market capitalisation and dividends, grew at a compounded rate of 25.6% during this period, placing your Company amongst the foremost in the country in terms of efficiency of servicing financial capital. It is indeed a matter of pride that your Company was ranked, by The Boston Consulting Group, an international management consultancy firm, amongst the top 10 global consumer goods companies in terms of sustained shareholder value creation for the period 2005 - 2009. Your Company today is one of Indias most admired and valuable

corporations with a market capitalisation in excess of ` 140000 crores and has consistently been, over the last fifteen years, amongst the top 10 private sector companies in terms of market capitalisation. 38 ITC Report and Accounts 2011 Report of the Directors Net Turnover at ` 21167.58 crores grew by 16.6% primarily driven by a 23.1% growth in the non-cigarette FMCG businesses, 22.9% growth in Agri business and 17.6% growth in the Hotels segment.PROFITS, DIVIDENDS AND RETENTION BUSINESS SEGMENTS A. FAST MOVING CONSUMER GOODS FMCG Cigarettes Disproportionate taxation coupled with a growing incidence of smuggling and illegal manufacture, continue to be the biggest challenge for the Indian cigarette industry. In western countries, the belief is that loading the cigarette sector with high taxation would lead to a reduction in overall tobacco consumption. This approach, when followed in India, is flawed as it overlooks the critical fact that, in India, cigarettes constitute less than 15% of tobacco consumption whilst the larger proportion of tobacco consumption in the country is through other forms such as bidi, khaini, gutkha, zarda etc. These products, over and above being lightly taxed, also avoid substantial taxes by virtue of being products of the unorganised sector. Consequently, cigarettes, despite accounting for a minor Last year, in celebration of your Company completing

a 100 years, your Directors had recommended and you had approved a Special Centenary Dividend of ` 5.50 per share (adjusted for bonus issue - ` 2.75 per share) in addition to a Dividend of ` 4.50 per share (adjusted for bonus issue - ` 2.25 per share). Your Directors had also recommended and you had approved a 1:1 Bonus issue in the Centenary year. This year, on the occasion of your Company convening its milestone Hundredth Annual General Meeting, your Directors are pleased to recommend a Special Dividend of ` 1.65 per share (previous year Nil) in addition to a Dividend of ` 2.80 per share (previous year - adjusted for bonus issue ` 2.25) for the year ended 31st March, 2011. Total cash outflow in this regard will be ` 4002.09 crores (previous year ` 4452.33 crores) including Dividend Distribution Tax of ` 558.62 crores (previous year ` 634.15 crores). Your Board further recommends a transfer to General Reserve of ` 498.76 crores (previous year ` 406.10 crores). Consequently, your Board recommends leaving an unappropriated balance in the Profit and Loss Account of ` 548.67 crores (previous year ` 61.31 crores). FOREIGN EXCHANGE EARNINGS 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. The ITC groups contribution to foreign exchange earnings over the last ten years amounted to nearly USD 4.5 billion, of which agri exports constituted 57%. Earnings from agri exports are an indicator of your Companys contribution to the rural economy through effectively linking small farmers with international markets. During the financial year 2010/11, your Company and its subsidiaries earned ` 3123 crores in foreign exchange. The direct foreign exchange earned by your Company amounted to ` 2814 crores (` 2354 crores in 2009-10), powered by exports of major agri-commodities. Your Companys expenditure in foreign currency amounted to ` 1254 crores, comprising purchase of raw materials, spares and other expenses of ` 1028 crores and import of capital goods at ` 226 crores. Details of foreign exchange earnings and outgo are provided in Schedule 19 to the Accounts. 2011 2010 a) Profit before Tax 7268.16 6015.31 b) Income Tax 2280.55 1954.31 c) Profit after Tax 4987.61 4061.00 d) Add: Profit brought forward from previous year 61.31 858.14 e) Surplus available for Appropriation 5048.92 4919.14 f) Transfer to General Reserve 498.76 406.10

g) Proposed Dividend for the financial year Ordinary Dividend of ` 2.80 per ordinary share of ` 1/- each (previous year - adjusted for Bonus Issue ` 2.25 per share) 2166.68 1718.18 Special Centenary Dividend of Nil per ordinary share of ` 1/- each (previous year - adjusted for Bonus Issue - ` 2.75 per share) 2100.00 Special Dividend of ` 1.65 per ordinary share of ` 1/- each (previous year - adjusted for Bonus Issue Nil) 1276.79 h) Income Tax on proposed dividends 558.62 634.15 i) Earlier years provision no longer required (0.60) (0.60) j) Retained Profit carried forward to the following year 548.67 61.31 5048.92 4919.14 (` in Crores) Report of the Directors ITC Report and Accounts 2011 39 Disproportionate taxation coupled with a growing incidence of smuggling and illegal manufacture, continue to be the biggest challenge for the Indian cigarette industry.portion of tobacco consumption, contribute more than 75% of taxes raised from the tobacco sector. Latest research findings published in the Global Adult Tobacco Survey (GATS) - conducted under the

stewardship of the Ministry of Health and Family Welfare, Government of India show that cigarettes are the least popular form of tobacco consumption in India - only 5.7% of all adults smoke cigarettes while almost 35% adults consume tobacco. The low share of cigarettes is a clear reflection of the impact of prolonged high taxation in this sector. In fact, the disproportionate tax to consumption ratio of cigarettes encourages mass migration of consumers to other forms of tobacco products that, by virtue of being lightly taxed, are much cheaper. In fact, per capita consumption of cigarettes in India is among the lowest in the world while tax per 1000 cigarettes as a percentage of per capita GDP is one of the highest, as is evident from the following: Disproportionate and high taxation on cigarettes has led to a dwindling of its share in total tobacco consumption from about 25% in the 1970s to about 15% currently. However, at the same time total tobacco consumption in the country has continued to grow by way of increased consumption of other revenue inefficient forms of tobacco. The high taxation of cigarettes has not only sub-optimised the revenue potential from the tobacco sector but has also failed to achieve the objective of reducing aggregate tobacco consumption in the country. The problem of discriminatory central taxation on cigarettes was exacerbated during the year under review with many States increasing the rate of VAT on cigarettes

from the revenue neutral rate of 12.5%. These rate increases by the States is completely against the basic tenets of VAT enshrined in the White Paper on VAT issued by the Empowered Committee of State Finance Ministers, wherein it is unequivocally stated ...the multiplicity of rates in the existing structure will be done away with under the VAT system... Under 4% VAT rate category, there will be the largest number of goods (about 270), common for all States, the remaining commodities, common for all States, will fall under the general VAT rate of 12.5%. 40 ITC Report and Accounts 2011 Report of the Directors Latest research findings published in the Global Adult Tobacco Survey (GATS) show that cigarettes are the least popular form of tobacco consumption in India only 5.7% of all adults smoke cigarettes while almost 35% adults consume tobacco. Per capita consumption of cigarettes in India is among the lowest in the world while tax per 1000 cigarettes as a percentage of per capita GDP is one of the highest. Source: Tax per 1000 Cigarettes Industry estimates Tax includes Excise Duty, VAT and Other State Taxes on Cigarettes per capita GDP http://en.wikipedia.org/wiki/list_of_countries_by_GDP_(nominal)_per_capita. Source: The Tobacco Atlas 3rd Edition Japan China USA Pakistan Nepal Bangladesh India 2028 1646 1196

391 274 172 99 Per capita consumption of Cigarettes - per annum USA China Nepal Pakistan India 0.26% 0.47% 1.38% 1.43% 3.16% Tax per 1000 Cigarettes as a % of per capita GDP Consumption Share Other Tobacco Products 85% Cigarettes 15% From Cigarettes 75% Tax Revenue Share From Other Tobacco Products

25% Consumption Share Tax Revenue ShareYour Company has, during the year, repeatedly drawn the attention of policy-makers to the fact that: Sub-optimal taxation practices of States like differential VAT rates may well derail the implementation of GST with a unitary standard rate of tax across the Indian common market. Being highly taxed products, cigarettes are vulnerable to large scale smuggling. The differential rate of VAT across the States only encourages unscrupulous tax arbitrage. In line with international trends, the illegal trade in cigarettes results in funds flowing in to the coffers of criminal syndicates with consequential detrimental impact on civil society by way of heightened law and order problems. In addition to the taxation challenge, the legitimate domestic industry is grappling with another complex problem the burgeoning illegal trade in cigarettes which, according to recent independent international market studies, accounts for more than 16% of the total industry size. The high rates of Central Excise and VAT have helped fuel the menace of illegal trade in cigarettes. It is estimated that the illegal cigarette trade costs the Exchequer more than ` 3000 crores per annum in lost revenues apart from offering products of dubious and inferior quality to consumers. According to recent

independent international market studies, India now ranks 6th globally in illicit cigarette trade with one of the highest growth rates - 58% over the period 2004 2009. Despite the rapid growth in illegal trade the rate of taxation on legitimate domestic cigarettes continues to grow. The rate of Central Excise Duty on cigarettes was increased by 17% effective March 2010 whilst several State governments increased the rate of VAT. Your Company continues to engage with the authorities on this issue, highlighting the fact that punitive rates of tax and lack of tax harmonisation across States fuels the menace of illicit cigarette trade with consequential adverse impact on the legitimate industry. While there have been some reports of seizure of such illegal stocks by enforcement agencies, illicit cigarette units continue to mushroom and grow. Illegal cigarette trade has serious concerns for the country and needs to be reined in quickly through appropriate policy and enforcement attention. The effective and sustainable solution lies in eliminating the tax arbitrage that encourages these activities by ensuring harmonious and moderate tax rates on cigarettes. The year under review also saw unprecedented activity including new brand launches by global cigarette companies trying to gain a foothold in India. The challenges in the market place were met by uncompromising and continuous value creation through

innovative and differentiated products and investments in trade marketing and channel engagements. Your Companys continuing leadership position and market standing was nurtured by successfully fortifying the business and growing its portfolio of brands catering to diverse consumer preferences across segments. Innovation across all areas of operation was the central theme around which enhanced market standing and competitive superiority was achieved. Inherent expertise in the areas of contemporary product development, cutting-edge technology and robust go-to-market processes, combined with your Companys deep consumer insights saw the launch of several new and exciting offers, in line with the strategy of continually meeting emerging consumer needs. Lucky Strike was launched during the year, further enhancing your Companys position at the premium end of the cigarette industry. Classic and Gold Flake further strengthened their position through the launch of differentiated offers like Classic Menthol Rush, Gold Flake Sleek Line Kings and Gold Flake Arctic Menthol. Players Gold Leaf and a variant of Gold Flake Premium Filter were also launched during the year. The year also saw your Companys premium line of hand-rolled cigars consolidating its position in the market. Armenteros, which is specially manufactured for your Company in the Dominican Republic, has already carved

a niche for itself amongst discerning cigar aficionados, further reaffirming your Companys reputation of delivering fully against consumer expectations of top quality tobacco products. During the year, the new cigarette factory set up at Ranjangaon scaled up operations to full capacity, enabling your Company to service the markets better. Report of the Directors ITC Report and Accounts 2011 41 India now ranks 6th globally in illicit cigarette trade with one of the highest growth rates - 58% over the period 2004 2009. It is estimated that the illegal cigarette trade costs the Exchequer more than ` 3000 crores per annum in lost revenues apart from offering products of dubious and inferior quality to consumers.Your Company also continued the strategic initiatives of upgrading primary and secondary technology platforms and running continuous improvement programmes in the areas of operating efficiencies and quality at all cigarette factories. The Process Improvement Practices initiative, using structured problem-solving methodologies such as Lean and Six Sigma have not only contributed to quality and productivity improvements but also resulted in improvements in operating metrics and internal processes across all the factories. In line with your Companys commitment to building sustainable environmental capital, the business continues to invest in wind energy farms to increase usage of renewable sources of energy. Till date 14.7 Megawatt

(MW) of wind energy farms have been commissioned in Karnataka and 6.3 MW of wind energy farms are in the process of being implemented in Maharashtra. Cigarette factories continue to recycle 100% of the solid waste generated. They also maintained the highest standards of Environment Health and Safety (EHS) and won recognition by way of numerous awards. The Munger Factory was awarded the Prashansa Patra Safety Award under the National Safety Council of India Safety Award Scheme 2009 (Manufacturing Sector), Energy Efficient Unit under the CII National Energy Award 2010, Globe of Honour Award from the British Safety Council and Certificate of Appreciation at the CII Eastern Region Energy Conservation Award. The Bengaluru factory won the Energy Efficient Unit under the CII National Energy Award 2010, Globe of Honour Award from the British Safety Council, Most Innovative Environment Project Award and Most Useful Environment Project Award under the CII Environmental Best Practices Award 2011 and the Best Fuel Efficient Industrial Boiler Award from the Karnataka State Safety Institute. The Kidderpore factory won the Water Efficient Unit Award at the CII National Award for Excellence in Water Management 2011. The punitive rates of taxation and the menace of illegal trade remain the most serious concerns for the cigarette industry. To serve the interests of all stakeholders of the industry your Company, as always, will continue to

engage with policy makers on: Implementation of a balanced regulatory and fiscal framework for tobacco, Harmonisation of VAT rates across the States and Creation of a true Indian common market through implementation of GST with a unitary, standard rate of tax. Despite the manifold challenges, your Company remains confident that the continuing support of consumers, coupled with the resilience of its brands, superior execution of competitive strategies, leveraging of its internationally benchmarked product quality and its ability to innovate will enable it to retain and reinforce its leadership position. FMCG - Others The Indian FMCG industry is estimated to be over ` 1,30,000 crores in size and accounts for 2.2% of the GDP of the country. The industry has tripled in size over the last 10 years and has grown at approximately 17% CAGR in the last 5 years, driven by robust macroeconomic conditions, rising income levels, increasing urbanisation and favourable demographic trends. These drivers are expected to continue to favourably impact the industry which is estimated to further triple in size in the next ten years to ` 4,00,000 crores by 2020 (Source: CII, FMCG Roadmap to 2020).

Relatively low levels of per capita consumption of many FMCG products, the growing population of working women and increased government spending on education are some of the other key factors that augur well for the sectors growth prospects. According to a study by the consultancy firm Deloitte Touche Tohmatsu Limited Consumer 2020: Reading the signs, India will emerge as the world's fifth largest consumer market by 2025 providing significant opportunities in the FMCG space. Given these positive fundamentals, your Company has been rapidly scaling-up its new FMCG businesses comprising Branded Packaged Foods, Personal Care Products, Education and Stationery Products, Lifestyle Retailing, Safety Matches and Incense Sticks (Agarbattis) with Segment Revenues growing at an impressive compound annual growth rate of 35% during the last 5 years. Report of the Directors 42 ITC Report and Accounts 2011 Your Companys unwavering focus on quality, innovation and differentiation backed by deep consumer insights, world class R&D and an efficient and responsive supply chain will further strengthen its leadership position in the Indian FMCG industry.investments in product development, innovation, manufacturing technology and unmatched distribution infrastructure have substantially enhanced the market standing and consumer franchise of your Companys

brands. The quality of your Companys products continues to be best-in-class and is seen as a benchmark in the industry across all segments. The year saw unprecedented inflation in food prices around the world. In India, food inflation had spiralled to an all time high of around 18% with commodities such as edible vegetable oils and dairy products witnessing close to 50% inflation owing to several global and India centric causes. The inflationary pressure on input costs was mitigated through a combination of smart sourcing, increased internal efficiencies and cost saving actions across the supply chain, thereby minimizing the cost burden on the consumer. During the year, your Company launched Sunfeast Yippee! noodles in the fast growing instant noodles category in two exciting flavours. Extensive consumer research and product development were undertaken to incorporate consumer relevant differentiation and uniqueness in the offerings. This was further fortified by an effective communication campaign highlighting the product differentiators. Sunfeast Yippee! has received an encouraging consumer response and holds out the promise of emerging as a sizeable winner. In the Staples business, Aashirvaad atta sustained its leadership position. Aashirvaad multigrain atta, launched last year, was well received by consumers and is witnessing significant growth. Your Company also

scaled up its presence in the branded Spices segment during the year with the launch of Aashirvaad rasam and sambhar blended powders in target markets, leveraging the brands market standing of superior and consistent quality. In the Biscuits category, your Companys Sunfeast brand recorded significant growth, especially in the value-added and premium end. The year witnessed the launch of a slew of products in new and exciting formats. Research on consumer preferences and understanding of regional palates were undertaken and led to the launch of differentiated milk cookies for consumers in target markets. The Sunfeast range witnessed enrichment Within a relatively short span of time, your Company has established several strong consumer brands in the Indian FMCG market. Segment Results reflect the gestation costs of these businesses largely comprising costs associated with brand building, product development, R&D and infrastructure creation. The year under review saw a 23% growth in Segment Revenues and a significant improvement in Segment Results which recorded a positive swing of ` 52 crores at the PBIT level. Your Companys unwavering focus on quality, innovation and differentiation backed by deep consumer insights, world class R&D and an efficient and responsive supply chain will further strengthen its leadership position in the Indian FMCG industry.

Highlights of progress in each category are set out below. Branded Packaged Foods Your Companys Branded Packaged Foods business continued to expand rapidly with sales recording an impressive growth of 25% over the previous year. During the year, the business focused on enhancing consumer franchise through new product launches, heightened communication and increased levels of consumer activation. Value capture was improved through cost reductions across the supply chain and optimisation of working capital deployment. A wide range of welldifferentiated products, supported by significant Report of the Directors ITC Report and Accounts 2011 43 Your Companys Branded Packaged Foods business continued to expand rapidly with sales recording an impressive growth of 25% over the previous year. 2002-03 2003-04 2004-05 2005-06 2007-08 2008-09 2006-07 2009-10 500 1000 1500 2000 2500 3000 3500 4000 0 FMCG Others Sales (` Crs)

4500 2010-11 (` Crs) 304 563 1704 3014 3642 2511 4482 1013 109various consumer benefit segments with the introduction of new variants in the soaps and shampoos categories. The business continues to receive accolades for its product innovation initiatives. Last year the Fiama Di Wills gel bathing bar was voted the Product of the Year in the soap category and this year three of its products, namely Fiama Di Wills Aqua Pulse shower gel, Vivel Active Fair skin cream and Vivel Deo Spirit soap, have been voted Product of the Year in the shower gel, fairness cream and soap categories respectively. This year saw the successful introduction of Vivel Active Fair, your Companys newest foray into the growing fairness cream category. In a very short period of time, the brand has garnered a healthy market share in launch markets. Fiama Di Wills with its new Aqua Pulse Bath Care line of shower gel and bathing bar has augmented

the brand franchise to men. The Mens range has been well received in launch markets. It is estimated that Vivel and Superia soaps and shampoos have together reached over 9.9 crore households so far (according to IMRB Household Panel: February 2011). The business continues to focus on leveraging more effective ways of communicating with consumers through multiple channels, including TV, digital social-networking, print / outdoor advertising, point of sale merchandising and one-on-one consumer interactions. The business grew at a pace distinctly ahead of industry despite extreme competitive pressures from entrenched players. This was achieved through a judicious mix of innovative consumer offers and by leveraging the distribution network of your Company to reach consumers even in remote areas. This has helped the business garner significant market share in a short span of three years. During the year, the manufacturing unit at Haridwar received certifications for ISO 9001:2008 (Quality Management System), ISO 14001 (Environment Management System) and OHSAS 18001 (Occupational Health & Safety Assessment System). To broad-base process excellence knowledge as well as lead improvement initiatives across the business, a program using Six Sigma and Lean methodologies was put in place and is contributing to the competitiveness of the business.

and premiumisation of its product mix with the re-launch of Dark Fantasy and the introduction of premium Dark Fantasy Choco Fills biscuits. In the Confectionery category, Candyman is the clear market leader in the hard boiled segment. Further, growth through flavour extensions continued with the launch of mint-O GOL Orange which was very well received by consumers. In the Savoury Snacks segment, Bingo! demonstrated robust sales performance during the year and penetrated new markets, gaining further consumer franchise, driven by innovative product development and impactful, clutter breaking communication. The entire product portfolio ranging from Potato Chips to Finger Snacks continued to witness robust growth. The business continues to invest in manufacturing and distribution infrastructure to support larger scale in the wake of growing volumes and exploit the benefits of distributed manufacture to service proximal markets. The business continued to focus on supply chain improvements to enhance market servicing and margins. In the backdrop of a resilient economy, the year ahead is expected to witness robust growth in the Branded Packaged Foods category despite anticipated inflationary pressures. Product development and brand building will be critical to driving sales. Innovative interventions will continue to be essential for building strong consumer

franchise. Well researched and robust product development processes will continue to be leveraged to launch innovative and differentiated products across all segments. With effective and cost-efficient servicing of target markets continuing to be a key success factor, the business will continue to leverage your Companys sales and distribution network to achieve deep penetration, visibility and availability for its products. Personal Care Products Your Companys Personal Care Products business made significant strides in gaining consumer franchise during the year. The business continues to roll out its product offerings under the Essenza Di Wills, Fiama Di Wills, Vivel and Superia brands and is focused on addressing 44 ITC Report and Accounts 2011 Report of the Directors The Personal Care Product business continues to receive accolades for its product innovation initiatives. Last year the Fiama Di Wills gel bathing bar was voted the Product of the Year in the soap category and this year three of its products, namely Fiama Di Wills Aqua Pulse shower gel, Vivel Active Fair skin cream and Vivel Deo Spirit soap, have been voted Product of the Year.Product innovation and quality continue to be focus areas and are expected to provide the requisite competitive advantage and impetus for growth in the near future. Investments have been made, over the past few years, on product development and research capabilities to support creation of new consumer-centric products with enhanced consumer benefits. These

interventions will enable your Company to further strengthen its portfolio of value-added products. The Personal Care industry in India continues to be on a long term growth path, with rising disposable incomes and changing consumer preference for enhanced personal grooming. Your Company is positioning itself to actively participate in the emerging growth opportunities in this sector. Education & Stationery Products The Education & Stationery Products business recorded an impressive sales growth powered by brand Classmate which continued to consolidate its leadership position in student notebooks. Sales of non-paper categories registered an impressive growth of 100% indicating a growing consumer acceptance of Classmate pens, pencils, mathematical instruments, erasers & sharpeners. The year also witnessed the launch of art stationery under the Classmate-Colour Crew brand. On the occasion of ITCs Centenary, your Company rolled out the Classmate Ideas for India Challenge (CIIC) a contest that provided a platform for Indias youth to express their ideas for nation building. The event reached out to 25 lakh students across 30 cities and received nearly 60,000 entries that culminated in 11 national winners. Winning ideas covered potential solutions to Indias health, education, water, energy and transportation problems. These interventions have

enhanced the level of consumer awareness of Classmates growing product basket beyond its flagship category of notebooks. Brand health indicators have shown a strong improvement across all markets. In addition, the distribution footprint of the business continues to grow. The Classmate range of notebooks continued to be sourced from small scale manufacturers, who have continuously improved their delivery and quality capabilities. A majority of them, with your Companys assistance, are ISO 9001:2008 certified. Paper and recycled board are sourced from your Companys mills at Bhadrachalam and Kovai respectively. The paper used in Classmate notebooks leverages your Companys world class fibre line at Bhadrachalam which is Indias first ozone treated elemental chlorine free facility. Classmate notebooks continue to feature different aspects of sustainability as core themes, such as Global Warming, Save the Environment and Save the Tiger, to name a few. These product values, which are contributing significantly to creating sustainability awareness among the countrys younger generation, have distinctly enhanced Classmates brand equity. Every Classmate notebook also carries a powerful social message that reflects your Companys commitment to improve the quality of primary education in rural India. During the year, the business took significant steps to promote Paperkraft, its executive and office supplies

stationery brand. Working in tandem with your Companys Paperboards & Specialty Papers Division, the business has positioned Paperkraft as the finest green paper for business applications viz. copy-scan-print-fax. Paperkrafts green credentials are supported, among other factors, by your Companys membership of the prestigious Global Forest & Trade Network, an international initiative of the WWF (World Wide Fund for Nature) and your Companys social forestry programme which has created a green cover of nearly 1,14,000 hectares by planting high yielding varieties of trees. Paperkrafts green profile has begun to appeal to a number of corporate and other institutional consumers who are switching over to Paperkraft to symbolise their commitment to reducing carbon footprint. The Paperkraft range of executive notebooks was enriched with the launch of a Green Impression Series which showcases your Companys sustainability performance. The education & stationery products industry continues to grow on the back of massive government and private investments in the education sector. The governments flagship Sarva Shiksha Abhiyan programme coupled with the mid-day meals initiative is successfully enhancing enrolment and reducing dropouts at the primary school level. Efforts are also underway to improve the enrolment Report of the Directors ITC Report and Accounts 2011 45

The Education & Stationery Products business recorded an impressive sales growth powered by brand Classmate which continued to consolidate its leadership position in student notebooks.ratios at the secondary and tertiary levels. Progressive reforms will enable flow of private sector investments into capacity building and quality enhancement in education delivery. The recent enactment of The Right of Children to Free and Compulsory Education Act, 2009 will further accelerate growth in the education and stationery supplies sectors. Your Company, with its widening high quality product range and excellent distribution infrastructure, is poised advantageously to respond to this opportunity. Lifestyle Retailing During the year, your Companys Lifestyle Retailing business further strengthened its position in the branded apparel market. Leveraging the revival in consumer sentiment after a protracted period of sluggish demand post the global economic slowdown, the business undertook several initiatives to further fortify its brands, expand its retail reach and improve product and range vitality. In the Premium segment, Wills Lifestyle, with its high fashion imagery, growing desirability and richer product mix, continues to enjoy strong market standing and consumer bonding. During the year, the brand reach was expanded to 73 exclusive stores in 40 cities and more than 150 shop-in-shops in leading departmental

stores. This was further supported by significant improvements in product range, enhanced availability and impactful visibility resulting in impressive growth in volumes. During the year, the premium imagery of the brand was further reinforced through its association with the Wills Lifestyle India Fashion Week, the countrys most prestigious lifestyle event. Under the business Ramp to Racks initiative, the brand has tied up with leading designers of the country such as Rohit Bal, Tarun Tahiliani, Rohit Gandhi-Rahul Khanna, Rajesh Pratap Singh, JJ Valaya, Satya Paul and Ranna Gill to exclusively co-create the Wills Signature range of designer wear. This initiative has been very well received by consumers and has enhanced the brands exclusive aura, strengthened its premium standing and deepened its aspirational dimension. Product equity and premiumness was further enhanced through several initiatives undertaken during the year. The Wills Classic Luxuria range of super-premium formals for men, finely crafted from luxurious cotton with high end trims and superior garmenting, was introduced during the year and received extremely encouraging response from consumers. The Womens range was further augmented by offerings in stylised formals, an extensive variety of trendy silhouettes and an international collection crafted by a leading Milan-based design house. During the year, Wills Lifestyle opened its first Mens

luxury store in Chennai offering a comprehensive Formals collection of shirts, trousers, suits & jackets and accessories aimed at the premium business consumer. The business added a Wills Lifestyle boutique store in your Companys hotel, ITC Gardenia, Bengaluru, enhancing brand availability to high-end business and leisure travellers. This is in addition to the existing boutique stores in ITC Maurya, New Delhi and ITC Mughal, Agra. The customer privileges programme Club Wills comprising over 1,10,000 loyal and discerning members contributed significantly to sales. Social media was also leveraged effectively to engage with customers, enhancing word-of-mouth and driving footfalls to stores. In the popular segment, John Players has established a strong pan India presence with over 280 Flagship Stores and 1,100 Multi Brand Outlets and Departmental Stores. During the year, the retail footprint was expanded significantly, with nearly 100 new stores being opened, increasing brand reach, penetrating more markets and acquiring new consumers. John Players continues to have a strong presence and has become a leading brand in the segment, with new products such as denims, knits and jackets. The continued celebrity association with the popular film star, Ranbir Kapoor, was well received by consumers, further enhancing brand desirability. During the year, the business received several industry

recognitions, including Retailer of the year Fashion & Lifestyle and Best Retail Marketing Campaign of the Year at the Asia Retail Congress 2011 and Winner Customer & Brand Loyalty at the Loyalty Awards 2011. Rising cotton prices and the re-imposition of Excise Duty on branded apparel in this years Union Budget will exert Report of the Directors 46 ITC Report and Accounts 2011 During the year, ITCs Lifestyle Retailing business received several industry recognitions, including Retailer of the year Fashion & Lifestyle and Best Retail Marketing Campaign of the Year at the Asia Retail Congress 2011 and Winner Customer & Brand Loyalty at the Loyalty Awards 2011.Report of the Directors ITC Report and Accounts 2011 47 inflationary pressure on costs in the coming year. However, the business has initiated a number of strategic cost management actions along with operational efficiency improvement measures to minimise its impact on consumers. Improvements in business processes for creation of designs, including incorporation of regional preferences in product design for wider brand appeal and further strengthening of the supply chain led to better sell-thrus and improved margins during the year. Retail productivity continues to be a key focus area, and the business undertook several initiatives to strengthen capabilities at the frontline through training, knowledge and skill inputs. Investments are also being made in store design,

visual merchandising and customer service to enhance the international quality shopping experience that has become synonymous with Wills Lifestyle. The business will continue to increase the fashion quotient of its offerings on the basis of a deep understanding of consumer preferences, and delivering products benchmarked to world class quality standards. Safety Matches Your Companys Safety Matches business sustained its market standing through continued consumer preference for its strong brand portfolio across all market segments. Domestic volumes were impacted during the year as a result of proliferation of cheaper low quality formats in the marketplace. Despite increased competition, your Companys flagship brand Aim, continued to grow. While steep escalations in the prices of raw materials like wood, paperboard and key chemicals subjected the industry to severe margin pressure during the year, the business mitigated some of the adverse impact through a series of strategic cost management and pricing initiatives. Your Company continues to partner the small scale sector by sourcing a significant portion of its requirement from multiple units in this sector. This has helped improve the competitive ability of these units with your Company providing technical inputs to strengthen their process capabilities. Technology induction in manufacturing is crucial for the

long term sustainability of this industry. A uniform taxation framework which provides a level playing field to all manufacturers is necessary to trigger the required investments for modernising this industry and enabling it to become globally competitive. Incense sticks (Agarbattis) Market standing of your Companys Mangaldeep brand of incense sticks was further strengthened during the year with sales recording an impressive growth of 54%, driven by increasing consumer franchise for the brand combined with enhanced distribution reach and innovative product offerings. Mangaldeep is currently the second largest national brand. During the year the business launched a new variant in the premium category, Sarvatra under the umbrella brand Mangaldeep. This introduction has received wide consumer acceptance and is being rolled out across India. The business continues to contribute to your Companys commitment to the Triple Bottom Line, by providing livelihood opportunities to more than 12,000 persons through small scale entrepreneurs, NGOs and Self Help Groups across India. This business initiative and the continuing partnerships with the governments of Orissa, Assam and Tripura for setting up sourcing centres are creating sustainable livelihood opportunities for rural women through Agarbatti rolling. Your Company continues to partner small and medium

enterprises in raising their process and quality standards. B. HOTELS The year witnessed a gradual recovery for the Indian hotels industry after two successive years of decline aided by a gradual revival in source markets like the USA and Europe and the strong showing of the Indian economy. The buoyancy, however, was muted on account of several reasons including the run up to the elections in a number of States. Inbound travel fell short of projections even for large events like the Commonwealth Games. The Agarbatti business continues to contribute to your Companys commitment to the Triple Bottom Line by providing livelihood opportunities to more than 12,000 persons through small scale entrepreneurs, NGOs and Self Help Groups across India.In pursuit of your Companys Triple Bottom Line objectives, the business has increased investments in wind energy to provide clean power to its hotels in Bengaluru (ITC Windsor and ITC Gardenia) and Jaipur (WelcomHotel Rajputana). Further investments in wind energy are on the anvil. These are in addition to the wind energy investments made in the previous year for ITC Maratha in Mumbai. Your Companys commitment to Responsible Luxury has given it the unique distinction of being the only green hotel chain in India. ITC Maurya is now the first and the largest hotel in the world to receive the Leadership in Energy and Environment Design (LEED)

Platinum rating for an existing building. In addition, ITC Maratha, ITC Grand Central, ITC Windsor, ITC Mughal, ITC Kakatiya and ITC Sonar have also successfully obtained the LEED Platinum rating. These together with ITC Gardenia, which achieved the LEED Platinum rating in the previous year, uniquely position your Company as the first hotel chain in the world to have all its premium luxury hotels rated at the highest LEED Platinum rating. In view of the positive long term outlook for the Indian hotel industry, your Company continues to sustain its aggressive investment led growth strategy. Construction activity of new super luxury properties at Chennai, Kolkata and at Classic Golf Resort near Gurgaon are progressing satisfactorily. In addition, several new projects including joint ventures and management contracts are on the anvil to rapidly scale up the business across all four market segments. During the year, the Fortune brand which caters to the mid-market to upscale segment, forged new alliances taking the total number of hotels in its fold to 63 with an aggregate room inventory of 4,915. The brand now has 38 operating hotels and 4 more hotels are slated to be commissioned during the course of the next financial year. The remaining 21 hotels are in various stages of development. The brand is now well established as a front-runner among the mid-market to upscale segment

of hotels in India. The WelcomHeritage brand continues to be Indias most successful and largest chain of heritage hotels with 53 operating properties, spread across 18 States in India. In the backdrop of this mixed business environment, your Companys Hotels business witnessed robust growth of 18% and 23% in Revenues and Pre-tax profits respectively, reversing the declining trend witnessed in the last 2 years. The business continues to maintain its leadership position in terms of its operating efficiency with a PBDIT to Net Revenues ratio of 36%. Your Companys Hotels business continues to be rated amongst the fastest growing hospitality chains, with over 105 properties at more than 90 locations in India, operating under 4 brands ITC Hotel at the luxury end, WelcomHotel in the 5 star segment, Fortune in the mid-market to upscale segment and WelcomHeritage in the heritage leisure segment. In addition, the business has licensing and franchising arrangements for two international brands The Luxury Collection and Sheraton from the Starwood Group. These offerings make your Company one of the leading hotel chains in India. ITC Gardenia, launched last year, has rapidly established itself as the premier hotel in Bengaluru and delivered profits in its first full year of operations. ITC Mughal, Agra has undergone a major refurbishment.

The hotel now offers a richer ambience with the refurbishment of the public areas and the creation of a special new wing, the Khwab Mahal, featuring various categories of rooms, including two luxurious Presidential Suites. These suites offer private plunge pools and spa rooms, where special treatments from the hotels awardwinning spa can be experienced. ITC Mughals award winning Kaya Kalp The Royal Spa, continues to attract attention and receive accolades from all over the world. Food and beverage has been one of the business main strengths over the years, regularly bringing accolades and awards from domestic and international media. Its restaurants Bukhara, Dum Pukht, Dakshin, Kebabs & Kurries, Pan Asian and West View are today well renowned and powerful cuisine brands. To this enviable collection, your Company debuted its first Japanese offering with the opening of the Edo at ITC Gardenia. Edo has earned rave reviews and many awards for its superlative quality of authentic Japanese food, ambience and informal dining style. 48 ITC Report and Accounts 2011 Report of the Directors With all ITCs premium luxury hotels successfully obtaining the LEED Platinum rating, your Company is uniquely positioned as the worlds first hotel chain to achieve this distinction.Your Companys Hotels business, with its globally benchmarked levels of product and service excellence and customer centricity represented by its four brands,

is not only well positioned to sustain its leadership position in the industry, but is also poised to emerge as the largest hotel chain in the country over the next few years. C. PAPERBOARDS, PAPER AND PACKAGING The Paperboards, Paper and Packaging segment recorded yet another year of steady growth in revenues and profits. Segment revenues grew by 13% over the previous year to touch ` 3667 crores. Segment results at ` 819 crores reflect a growth of 20%. Paperboards & Specialty Papers The global demand for paper & paperboard recovered strongly to post a growth of nearly 7% over the previous year driven by resurgence in demand in Western Europe, North America and growth in emerging Asian and Latin American economies. The domestic paperboard industry also grew at about 8% aided by the strong showing of the Indian economy with value-added paperboard growing at a much faster rate. Though India has 17% of the worlds population, it consumes only about 2% of global paper production. Per capita consumption is very low at only 9 kgs compared to a global level of 55 kgs. Going forward, the continued growth of the Indian economy coupled with favourable demographics, demand expansion in rural markets, rising demand for branded and packaged products supported by growth in organised retail and

differentiated packaging, are expected to augur well for the paperboard industry. Aided by these facilitating drivers, value-added paperboard is expected to grow at a faster rate of around 15% within the overall paperboard industry growth of 8% over the next five years. FMCG, pharma, liquid packaging, apparel and consumer durables will continue to provide the overall impetus for accelerated growth in derived demand for paperboard. The growing potential of this industry is also attracting the attention of global players who are keenly looking at Asia as their next growth engine. While most majors have taken up large manufacturing positions in China, some of them are also exploring opportunities in other countries in Asia, including India. The domestic paper industry is estimated at 10.3 million tonnes per annum, out of which paperboard demand is estimated to be 2.3 million tonnes per annum. Your Company, with its wide range of products in the paperboard segment, is the market leader with a value market share of 26% and a significantly higher share of the fast-growing value-added paperboard segment. To further consolidate its pre-eminent position in the paperboard segment, the business is in the process of investing in a state-of-the-art machine which is expected to be operational by early 2013. The Writing and Printing paper segment, estimated at 3.3 million tonnes grew by 7% in 2010-11. Your

Companys state-of-the-art paper machine is being currently optimally utilised to meet the demand for high quality copier and writing paper, leveraging the strong forward linkages with your Companys Education and Stationery Products business. The growth in the valueadded writing and printing paper segment will continue to be fuelled by initiatives like Sarva Shiksha Abhiyan, together with increasing literacy levels, changing demographic profiles and GDP growth. This segment is expected to grow at around 8% per annum during the next 5 years, with higher growth expected in the Copier paper and Fine paper categories at 16%. Specialty papers, with an estimated market size of 4 lakh tonnes, is expected to grow at 9% over the next 5 years, with increased spends on infrastructure and construction driving demand for quality dcor and insulating grades. Your Company is the largest manufacturer of cigarette tissue in India and continues to be the market leader with a share of 65% of the domestic market. In the growing dcor segment, your Company maintained its market share of 26%. In consonance with your Companys value proposition of delivering sustainable value to all its stakeholders, the business participated in the Check Your Paper rating system developed by WWF - World Wide Fund for Nature's Global Forest and Trade Network, which evaluates paper and paperboard on parameters such as Forest, Climate and Water performance and awards

star ratings and an overall score. During the year, two grades of paperboard manufactured by your Company were submitted for evaluation and received 4 and 5 star ratings and scores which are comparable to those achieved by global paperboard majors. Your Company Report of the Directors ITC Report and Accounts 2011 49 The continued growth of the Indian economy coupled with favourable demographics, demand expansion in rural markets, rising demand for branded and packaged products supported by growth in organised retail and differentiated packaging, are expected to augur well for the paperboard industry.addressed simultaneously. Furthermore, inter-cropping technologies/practices also help to take pressure off the remaining natural forests and to increase the diversity of vegetation on existing farms. Your Company continues to represent to policy makers the need to introduce appropriate amendments to the Forest (Conservation) Act, 1980 and related Rules to permit industry to use degraded forest land for afforestation linked to the end-use of such wood. An enabling policy framework that encourages public-private partnerships for the development of degraded forest lands would serve the multiple objectives of enhancing the competitiveness of the Indian paper and paperboard industry, creating sustainable livelihoods in rural India and contributing to the national objective of enhancing the countrys green cover. Your Companys collaborative initiative called Wealth

out of Waste (WOW) continues to promote and facilitate waste paper recycling, another major environmental objective to conserve scarce resources. This initiative has now been extended to 6 cities in Southern India scaling up significantly from the 2 cities where this programme was launched earlier. Existing processes and systems in the areas of collection, sorting and recycling were further strengthened to improve the overall efficacy of the initiative. A first-of-its-kind National Recycling Day was initiated to build awareness and increase involvement amongst target consumers. Celebrated on the 1st of July 2010 at Hyderabad, this event attracted large participation from school children as well as government and corporate bodies. With a growing base, the business is also in the process of enhancing its capability to handle larger volumes of recycled waste. Your Company has invested significantly in the deployment of contemporary technologies including environment-friendly Elemental Chlorine-Free (ECF) and Ozone bleaching for pulp thereby improving environmental standards of its manufacturing operations. Such investments are expected to provide customers with a sophisticated product, way ahead of legislation, creating new dimensions in environmental stewardship. has commenced this initiative with recycled board grades and will gradually include more paper and paperboard

products. In addition, the business improved its service delivery to its customers through shortened order servicing timelines. It also facilitated customers in the usage of your Companys Forestry Stewardship Certified boards. During the year a number of new paperboard applications have been successfully developed for the communication, entertainment and packaging industries. Your Company continued with its aggressive clonal propagation strategy with the distribution of over 54 million saplings to farmers during the year. Research on clonal development has resulted in the introduction of topography specific, high yielding and disease resistant clones. This initiative, besides securing the long term supply of fibre at competitive costs, also assists in generating farm incomes through utilisation of marginal wastelands. Enhanced R&D activity has resulted in the development of high yielding eucalyptus and subabul clones and your Companys continued focus on clonal plantations in core areas is expected to yield significant competitive advantage in the years to come. Your Companys R&D is actively collaborating with several expert agencies to further leverage bio-technology for enhancing both farm and manufacturing yields. In the last 15 years, your Companys bio-technology based research initiatives have resulted in the planting of nearly 487 million saplings which are currently sown in nearly 1,14,000 hectares of plantations, including around 12,000

hectares planted during the year under review. These pioneering initiatives have generated over 51 million person days of employment opportunities over this period for small farmers and poor tribals. Agro-forestry has an important role to play in developing countries like India, both for food and wood security and conservation of the environment. During the year under review, your Company facilitated the introduction of agro forestry models which incorporate inter-cropping practices where eucalyptus trees are grown on the same land as agricultural crops, in Andhra Pradesh and Madhya Pradesh. By integrating tree growing with crop production, the problems of poor agricultural production, worsening wood shortages and environmental degradation can be Report of the Directors 50 ITC Report and Accounts 2011 In the last 15 years, your Companys bio-technology based research initiatives have resulted in the planting of nearly 487 million saplings which are currently sown in nearly 1,14,000 hectares of plantations. These pioneering initiatives have generated over 51 million person days of employment opportunities over this period for small farmers and poor tribals.consciousness, integrated operations, customer service and ability to create new market segments is well placed to mitigate the impact of these cost escalations. The integrated nature of the business model - access to high-quality fibre from the economic vicinity of the Bhadrachalam mill, in-house pulp mill and state-of-theart manufacturing facilities on the one hand and a robust

forward linkage with the Education and Stationery Products business on the other strategically positions your Company to further consolidate and enhance its leadership status in the Indian paper and paperboard industry. Packaging and Printing Your Companys Packaging and Printing business continues to invest in best-in-class technology and skills to provide the most contemporary and superior value delivery in paper, paperboard and flexible packaging. The business continued to provide strategic support to your Companys FMCG businesses by ensuring security of supplies in addition to sustaining international quality at competitive cost. During the year, business from external trade grew significantly, driven by growth in volumes from existing customers as well as an enlargement of its customer base. Your Company continues to be a leading supplier of value-added packaging to the Consumer Electronics and FMCG segments. The further consolidation of the business operations in the flexibles packaging segment at its state-of-the-art manufacturing facilities at Chennai and Haridwar continued to provide innovative packaging solutions to your Companys FMCG businesses. This in-house capability has enabled your Company to facilitate quicker turnarounds of designs, pack changes and reduced

product launch timelines, thereby providing a source of competitive advantage in the market place. The business is augmenting capability and capacity at its Haridwar plant to cater to the increased packaging requirements of your Companys FMCG business and external trade customers based in the northern region. The business won several national awards for excellence in packaging solutions and also won 20 India Star The Industry would welcome policies that lay down environmental benchmarks in tune with other industries such as automotives etc. and suitably reward those who achieve or exceed such parameters. While all manufacturing units have already achieved near 100% solid waste recycling by its usage for making products like lime, fly ash bricks, grey boards, egg trays etc., the procurement and recycling of over 1,19,000 tonnes of waste paper during the year has further consolidated the business overall positive solid waste recycling footprint. In addition, your Company is also working on various Clean Development Mechanism (CDM) projects under the Kyoto Protocol to enable full realisation of potential benefits in this area. Your Companys unique social forestry project has been the first of its kind in India to be registered with the United Nations Framework Convention on Climate Change (UNFCCC) as a CDM project. The net benefits from this project will be passed on to the partnering farming communities.

The Bhadrachalam and Tribeni units were awarded the Sword of Honour by the British Safety Council. All manufacturing units of the business received the 5 Star Rating from the British Safety Council for the third successive year. The Bhadrachalam unit also won the Most Innovative Project on Environment Best Practices Award 2011 from CII, Indian Paper Manufacturers Association (IPMA) - Paper Mill of the year 2010 award and SIEMENS - Ecovatives award 2011. The Kovai unit won the CII - National award for Excellence in Energy Management 2010. After having laid a strong foundation in implementing Total Productive Maintenance (TPM) at its units in Bhadrachalam and Bollaram, the programme has now been extended to Tribeni and Kovai units. This is expected to further improve operational excellence and profitability. During the year, the industry faced enormous challenges on account of steep hike in costs of key domestic raw materials, coal and imported pulp. This hike in input costs, coupled with the large additions to capacity in the industry, adversely impacted overall industry profitability. It is expected that continuing inflation in the cost of domestic raw materials and imported pulp will continue to impact industry profitability in the near term. Your Company with its unwavering focus on quality, cost Report of the Directors ITC Report and Accounts 2011 51

Your Companys Packaging and Printing business continues to invest in best-in-class technology and skills to provide the most contemporary and superior value delivery in paper, paperboard and flexible packaging.awards in printing in several categories instituted by the Indian Institute of Packaging for excellence in packaging during the year. The 14.1 MW wind energy farm, which was commissioned in 2008, continued operating at optimum levels providing clean energy to the Chennai unit. The initiative flowing from your Companys commitment to the Triple Bottom Line, is now a certified project under the Clean Development Mechanism of the Kyoto Protocol under the auspices of the United Nations Framework Convention on Climate Change and is generating carbon credits and contributing to the reduction in your Companys carbon footprint. The factories at Chennai, Munger and Haridwar continued to maintain their highest standards in Environment, Health and Safety (EHS) and quality management during the year. The Chennai unit was awarded the British Safety Council Globe of Honour for Environment Management. The unit was also awarded National Water Management Award 2010 by CII for being an excellent water efficient unit. During the year, Chennai and Munger units were also certified for ISO 9001:2008, ISO 14001:2004 Quality Management System and have been re-certified for OHSAS 18001:2007 Occupational Health and Safety Management System. All the three

units at Chennai, Munger and Haridwar received the 5 Star Rating for safety from the British Safety Council. With substantial investments in world class technology, best-in-class quality management systems, multiple locations and diversified packaging solutions portfolio, the business is well poised to continue servicing all the requirements of your Companys FMCG businesses and to rapidly grow its external trade. D. AGRI BUSINESS Cigarette Leaf Tobacco Against a backdrop of a decline in global leaf production in key regions over the past two to three years and low inventory pipeline with international cigarette majors, the current year saw global leaf production grow by 4% with countries like Zimbabwe, Malawi, Tanzania, India and Brazil driving overall supply. On the demand side, the year witnessed global cigarette production remaining flat, primarily as a result of the slow and tentative recovery in the advanced economies, as well as the growth in illicit trade triggered by excessive taxation. This dramatically altered the demand-supply scenario during the year. In India, leaf tobacco crop grew by 14% in 2010 supported by a favourable price trend. With global cigarette production tempered and record crop sizes projected in key tobacco growing countries like Brazil, Zimbabwe, Malawi and European Union, it is expected that global leaf demand would be benign in

the near term. A correction in this cycle is expected in the medium term with the anticipated revival of the global economy coupled with growing consumption in Asian and African countries. In the Indian market, it has been seen that the consumption of other non cigarette forms of tobacco, particularly chewing tobacco, is growing at a much faster rate. Despite these adverse conditions, your Company was able to sustain the demand for Indian tobacco through focused strategies based on delivering superior value to the customer, variety offerings in the burley and oriental segment through collaborative and customised programs and an enlarged customer base. The business is exploring market opportunities in the growing smokeless tobacco segment through customised offerings. While flavour has not been a source of competitive strength for Indian tobaccos, focused attention to reliability, scalability, product integrity, service and competitive pricing would continue to be the imperatives to sustain and grow market share. The business continued to provide strategic sourcing support to your Companys cigarette business. Your Companys pioneering R&D efforts on varietal improvements in leaf tobacco was further fortified with the development of various burley and oriental type tobaccos. These initiatives such as improved nursery management designed for higher efficiencies in seed

use, optimised usage of crop production chemicals and other agronomic practices are improving the potential of the newly developed varieties. These efforts are not only helping to secure global demand for Indian leaf tobacco, but also in improving the socio-economic status of the small/tribal farmers and providing enhanced value to global customers. Vertical growth to achieve enhanced 52 ITC Report and Accounts 2011 Report of the Directors Your Company with its unmatched R&D capability, state-of-the-art facilities, unique crop development and extension expertise, deep understanding of customer and farmer needs, is well poised to leverage emerging opportunities for Indian leaf tobacco.productivity continues to be the focus area of research and crop development initiatives. Similarly, substantial progress has been made to strengthen the pipeline of new hybrid combinations for deployment in the growth zones. Capitalising on your Companys R&D efforts on varietal improvement, the growing areas of Flue-Cured Virginia hybrids were substantially increased in collaboration with the Central Tobacco Research Institute and the Tobacco Board of India. Significant milestones were achieved towards the development of a new curing regime in tobacco and further experimental trials are underway to bring forth a unique product portfolio. Your Company continues to focus on maintaining the highest quality and safety standards in all its units. During the year, the Chirala unit won the Globe of Honour

award from the British Safety Council for best environmental practices and the Best Management Award from the Government of Andhra Pradesh for industrial relations & employee welfare. The Anaparti unit won the Gold Medal and Silver Medal awards for Quality Circles in competitions held by Quality Circle Forum of India at regional level competitions and Distinguished Awards at National level competitions. Total Cost Management Maturity Model Level 3 from CII for Total Cost Management was awarded to both the Chirala and Anaparti units. In order to service the growing demand for leaf tobacco, your Company is in the process of commissioning additional capacities in Karnataka. The business is in the process of reorganising the supply chain to address the ever increasing complexity of the leaf supply chain from a strategic cost management perspective. Your Company with its unmatched R&D capability, state-of-the-art facilities, unique crop development and extension expertise, deep understanding of customer and farmer needs, is well poised to leverage emerging opportunities for Indian leaf tobacco and sustain its position as a world class leaf tobacco organisation. Other Agri Commodities Global trade grew by 12% on the strength of robust growth witnessed in developing and emerging economies as also on account of the fiscal stimulus

provided by advanced nations. This has been achieved despite the sluggish post recession recovery in the world economy, reduced availability of credit and trade volumes which are still ruling below the pre-recession levels in countries severely affected by the financial crisis. Food grain production in the country is expected to touch 232 million tonnes representing a growth of 6.4% over the previous year. Despite this impressive growth, food inflation continued to be high and a cause of worry. Consequently, the ban on export of some key commodities like wheat, rice and sugar continued during the year. A decline in global soya bean production led by a sharp drop in Argentina resulted in good demand for Indian soya bean and soya meal in the international markets. Aided by good monsoons in the crop growing regions, Indian soya crop output registered an increase over last year. Your Company, a leading player in the Indian soya bean market, was able to benefit from this opportunity and record significant increase in business size and profits. The agri-business model has been reoriented to focus on providing comprehensive assistance to customers on all aspects of commodity sourcing viz. procurement, inventory, logistics and costs. The target customer segments comprise brand owners, private labels, food processors and exporters. The new model has enabled your Company to deliver relatively risk free

returns even as the markets remained volatile. Your Company proposes to further strengthen this model to scale up business in the future. Your Company continued to source identity preserved, specific high quality wheat through its e-Choupal channel for its Foods business. The initiative of procuring a part of its wheat requirement directly at the processing plants on a just-in-time basis was scaled up during the year. This yielded significant reduction in freight, warehousing and other operational costs without diluting its stringent quality norms. In sourcing chip stock potato for its Bingo! potato chips business, your Company continued its initiative of Report of the Directors ITC Report and Accounts 2011 53 New initiatives launched will progressively transform the e-Choupal network into an all-weather venture relatively de-risked from regulatory uncertainties and market volatility even as it continues to provide strategic sourcing support to your Companys Foods business as well as to serve as an efficient intervention model for rural development.sourcing locally grown potatoes (closer to manufacturing units) in order to provide encouragement to local farmers and to minimise logistics costs. During the year, 57% of the consumption at your Companys Haridwar processing plant was sourced locally. Trials on development of new varieties and new areas continued during the year. India is the worlds largest producer, consumer and exporter of spices. Exports of spices from India have

been growing at 16% and the domestic market for branded spice powders is growing at 11%. With the growing concerns of food safety and product integrity, there is an increasing demand for suppliers with end-to-end capabilities having complete custody of the supply chain, supported by appropriate technology to deliver quality and augmented with traceability management systems to provide the required product assurance. Your Company seeks to harness this opportunity by building a business model based on customised products and services with requisite crop development, state-of-the-art infrastructure and tailor made products and processes to garner an increasing share of the fast growing domestic and export market. In the last five years, the spices business, apart from providing support to the Aashirvaad range of spice powders has gained considerable market standing amongst large domestic and export customers as a supplier of assured quality with customised processes and infrastructure, with a significantly high level of source credibility. Your Companys initiative of marketing Kisan Credit Cards on behalf of the State Bank of India continued to receive encouraging response from the farmers. Credit camps were organised by your Company to help farmers improve awareness of Kisan Credit Cards, and were received enthusiastically by the farming community.

This increased awareness and continuous communication at the field level, significantly improved the quality of documentation, lowered application rejection levels while improving turnaround times. The rural retailing business of your Company continued to make good progress by registering an overall increase in sales by 87% facilitated by expansion of product range, introduction of reputed brands of apparel, footwear and other products at affordable prices and quicker product replenishment. The Kisan Vikas Yojana, a unique customer loyalty scheme designed to cater to the requirements of the farmers was received very well by the farming community. The range of agri-inputs was expanded to include products and brands specifically to meet local requirements. This resulted in a 90% increase in sales of agri-inputs. Your Company also organised mass consumer awareness programmes - Choupal Mahotsav in the premises of the stores, which comprise of product / brand familiarisation, product demonstration and entertainment. Based on the considerable interest evinced by customers towards this programme, as evident in the enhanced footfalls at your Companys stores, plans are afoot to scale up the programme in the coming years. Last year, your Company launched an initiative to strengthen and expand the distribution reach of its e-Choupal network for FMCG products in the rural

markets. The year saw throughputs increasing by more than 40%. Based on the learnings over the last few years, your Company now proposes to synchronise its rural marketing and rural distribution businesses. Towards this end, your Company has piloted convergence programmes engaging a large number of rural consumers. These convergence programmes which are called Choupal Haats, focus on product awareness, demonstration and brand marketing and targets higher availability of quality FMCG products in rural retail outlets. Last year, your Company had launched an employment portal Rozgarduniya.com in alliance with Monster India an online career and recruitment firm, to assist the rural youth in finding jobs in the non-agricultural sector. During the year, the initiative was extended across several locations and a large number of rural youth were registered for employment search. The portal also partnered many companies who are potential employers. Your Company has definite plans to increase the number of partners, geographical reach and sectors under this portal. Your Company has piloted a Market Based Partnership for Health programme in alliance with United States Agency for International Development (USAID) and other partners. The pilot, which has been launched in Gonda and Chandauli districts of Uttar Pradesh focuses on improvement of maternal and child health and general

hygiene and thereby reducing mortality rates. Under the programme, several village health workers have been trained. These village health workers will create awareness among the rural womenfolk and will market products from partnering companies which address health and hygiene issues. In the year ahead, your Company plans to focus on market activation through these convergence platforms, awareness creation through village level contacts by village health workers and making the products available at the villages. These initiatives will progressively transform the 54 ITC Report and Accounts 2011 Report of the Directorse-Choupal network into an all-weather venture relatively de-risked from regulatory uncertainties and market volatility even as it continues to provide strategic sourcing support to your Companys Foods business as well as to serve as an efficient intervention model for rural development. NOTES ON SUBSIDIARIES The following may be read in conjunction with the Consolidated Financial Statements enclosed with the Accounts, prepared in accordance with Accounting Standard 21. In view of the general exemption granted by the Ministry of Corporate Affairs, the report and accounts of subsidiary companies are not required to be attached to your Companys Accounts. Shareholders desirous of obtaining the report and accounts of your

Companys subsidiaries may obtain the same upon request. The report and accounts of the subsidiary companies will be kept for inspection at your Companys registered office and those of the subsidiary companies. Further, the report and accounts of the subsidiary companies will also be available at the Shareholder Value section of your Companys website, www.itcportal.com in a downloadable format. ITC Global Holdings Pte. Limited, Singapore (ITC Global), a subsidiary of your Company, was under Judicial Management from 8th November, 1996 till 30th November, 2007. On an application of the Judicial Managers of ITC Global, the High Court of the Republic of Singapore on 30th November, 2007 ordered winding up of ITC Global, appointed a Liquidator and discharged the Judicial Managers. Consequently, your Company is not in a position to consolidate the accounts of ITC Global and its subsidiaries for the financial year ended 31st December, 2010 or to make available copies of the same for inspection by shareholders. Surya Nepal Private Limited The unsettled political environment in Nepal continued through the year under review. After several months of functioning under a caretaker Prime Minister, a coalition government assumed charge but the absence of consensus amongst coalition partners stalled the formation of a full cabinet.

Social, economic and political disruptions continued to take place from time to time. Workers of several companies in Nepal, including those at the companys factories, went on strike on 27th March, 2011, demanding inter-alia, 100% increase in wages. While the factories have since resumed normal operations, negotiations involving various unions, the Government of Nepal and industry continue. While GDP growth for the financial year ending mid July 2011 is estimated at 3.5%, such tensions coupled with the political uncertainties have restrained the economy from performing at a higher level. Amidst the challenging operating environment, the company maintained its growth trajectory during the year under review. In the twelve-month period ended 14th March, 2011 (30th Falgun 2067), the company recorded a 25% growth in sales with Gross Turnover (net of VAT) increasing to Nepalese Rupees (NRs.) 1256 crores from NRs. 1005 crores in the previous year. Profit After Tax at NRs. 237 crores increased by 31% over the previous year. The company retains its status as the single largest private sector contributor to the exchequer accounting for about 3.5% of the total revenues of the Government of Nepal. The company consolidated its leadership position in the cigarette market through its investments in product development and quality. Despite the agro-climatic

challenges of growing tobacco in Nepal, the companys continuous engagement with tobacco farmers from the stage of seed development to crop harvesting have helped in enhancing productivity and quality at the farm level, thereby enhancing returns to the farmers. Encouraged by the interventions of the company, farmers have sharply stepped up the acreage under tobacco cultivation. Efforts are underway to further improve the quality of the domestic grades of tobacco. On the manufacturing front, the company continued to invest in new technology cigarette making and packing lines, additional infrastructure and development of human talent to sustain superior and consistent product quality and augment capacity. Energy conservation measures were further reinforced. Construction of a second cigarette factory near Pokhara has commenced and will position the company well for servicing consumer demand for its products over the longer term. The garments export business, while continuing to service orders for the John Players and Wills Lifestyle range of apparels, strengthened its forays into new export markets and increased such export volumes significantly over the previous year. In the domestic garments market, John Players continued to retain its leadership status in the branded apparel segment while Springwood, the companys mass market brand, positioned as an alternative to low

price imports from China and South East Asia, has further consolidated its position in the value for money segment. Report of the Directors ITC Report and Accounts 2011 5556 ITC Report and Accounts 2011 In the Safety Matches business, the companys brand Tir, has established a strong consumer franchise within a few years of its launch. The company continued to remain committed to its role as a responsible corporate citizen and promoted sports and tourism in the country under the Surya Nepal Khelparyatan programme, in collaboration with Nepal Tourism Board. The company declared a dividend of NRs. 90/- per equity share of NRs. 100/- each for the year ended 16th July, 2010 (32nd Ashad 2067). ITC Infotech India Limited While global Information Technology (IT) spends in hardware and software improved in 2010, growth in IT Services was relatively moderate. Further, in the US, although the recessionary conditions eased towards the latter part of the financial year, client budgets continued to be tightly monitored. These trends reflect the continuing uncertainty during the economic recovery. Surveys by global analysts suggest that IT services are expected to grow during the next 24 months on the back of increased IT spends on implementation of software application systems and infrastructural support.

Despite the sluggish market conditions, the company grew total income for the year by 13%. During the year, the business focused on building differentiated capability and in strengthening its sales and technical delivery teams. Although these investments, predominantly in manpower, impacted margins for the year, it has at the same time strengthened its capability platform for future growth. For the year under review: (a) ITC Infotech India Limited registered an Income of ` 426.42 crores (previous year ` 377.71 crores) and a Profit After Tax of ` 7.46 crores (previous year ` 34.01 crores); (b) ITC Infotech Limited, UK, (I2B) a wholly owned subsidiary of the company, registered a Turnover of GBP 22.22 million (previous year GBP 19.44 million) and a Net Profit of GBP 1.03 million (previous year GBP 0.69 million). (c) ITC Infotech (USA), Inc., (I2A) a wholly owned subsidiary of the company, together with its wholly owned subsidiary Pyxis Solution LLC, registered Total Revenues of US$ 38.43 million (previous year US$ 30.99 million) and a Net Profit of US$ 0.01 million (previous year US$ 0.08 million). In line with its focus on continuously providing quality deliverables to its customers, the companys delivery processes have been certified at a maturity Level 3 of

the Software Engineering Institutes (SEI) Capability Maturity Model Integration (CMMI) framework. The company continues to invest in improving program management processes to ensure the highest levels of quality in technical delivery. As mentioned earlier, the company also continues to invest in building differentiated capabilities. Some of these capabilities include solutions in the areas of customer loyalty, end-to-end transformational services in IT outsourcing and Global Reporting Initiative (GRI) based sustainability reporting. Further, the company has maintained its partnerships with the worlds leading Independent Software Vendors (ISVs) in building niche solutions to address white spaces and joint go-to-market initiatives. ITC Infotech India has been ranked 26th in the Leaders Category for the 2011 Global Outsourcing 100 by the International Association of Outsourcing Professionals (IAOP). This is the fifth consecutive year that the company has featured in this prestigious list. The partner co-innovation strategy and the focused strategy of launching solutions which demonstrate value to clients in addressing some of their critical business challenges such as effective client relationship management and lowering the cost of operations, have yielded encouraging results and led to the acquisition of several marquee, high potential clients and a growing funnel of prospects. During the year, the company has

renewed its focus on India and the larger Asia-Pacific region and this has already resulted in significant traction in acquiring new customers, particularly in India. Market focus has also been extended to specific regions in Western Europe. Based on a survey commissioned through a reputed external agency, existing customers of the company have given satisfaction scores which are amongst the highest in the industry. On the talent front, as expected, there has been a build-up of pressure on availability of quality talent. The company has addressed this through a process of growing and nurturing talent internally through continuous employee engagement and training programs. With strategies in place to expand to new markets, a portfolio of differentiated solutions, the ability to provide superior customer care and excellence in delivery through project management capabilities, knowledge management, solution accelerators and a robust quality system, the company is poised to achieve rapid growth. Report of the DirectorsRussell Credit Limited During the year, the company registered an Income of ` 27.72 crores and a Profit After Tax of ` 19.97 crores. As stated in earlier Reports, a petition was filed by an individual in the High Court at Calcutta, seeking an injunction against the companys Counter Offer to the shareholders of VST Industries Limited, made in

accordance with the Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulation, 1997, as a competitive bid, pursuant to a Public Offer made by an Acquirer, which closed on 13th June, 2001. The High Court at Calcutta, while refusing to grant such an injunction, instructed that the acquisition of shares pursuant to the Counter Offer by the company and the other Acquirer would be subject to the final order of the High Court, which is still awaited. Similar suits filed by an individual and two shareholders of VST, in the High Courts of Delhi at New Delhi and Andhra Pradesh at Hyderabad, had earlier been dismissed by the respective High Courts. Wimco Limited The company achieved a Turnover of `192 crores during the year and posted a net loss for the year of ` 59.65 crores against `16.24 crores loss in the previous year, primarily as a result of one-time separation costs (` 37 crores) and steep increases in input costs. During the year under review, margins in the Matches business continued to remain under pressure due to a very sharp escalation in the prices of raw materials, primarily wood, splints, paperboard and key chemicals. Several measures were taken to rationalise costs and improve margins in this highly competitive category. Availability of critical raw materials like wood at

competitive prices is crucial for the success of this industry. The Agro Forestry business of the company is taking steps towards this end by supplying high quality poplar saplings to farmers in northern India. Apart from creating a long term sustainable supply of a critical raw material, the companys initiative of creating sustainable and meaningful linkages across the farmer community is helping to create employment and livelihood and in improving the green cover in the region. The continuing differentials in taxation between the mechanised and non-mechanised sectors have forced the company to evaluate alternatives to arrive at a viable business model. As a first step, a voluntary separation scheme was effected at Chennai and Ambernath factories, during the year, to enable better leveraging of the underlying asset base. The Engineering business of the company continued to be supported by steady orders with the improving investment climate. This business is poised for further growth through new customer acquisitions, both in the domestic and overseas markets. The business plans to leverage new and improved product designs to offer superior packaging solutions to customers. The initiatives taken by the company during the year to restructure its operations are expected to yield positive results in the years to come. Srinivasa Resorts Limited

During the financial year ended 31st March, 2011, the company recorded an Income of ` 56.04 crores (previous year ` 54.57 crores) and a Profit Before Tax of ` 12.85 crores (previous year ` 14.11 crores). Profit After Tax stood at ` 9.26 crores (previous year ` 9.62 crores) after providing for income tax of ` 3.59 crores (previous year ` 4.49 crores). The financial performance of the companys hotel at Hyderabad, ITC Kakatiya, was adversely impacted by the continuing political uncertainty in the State. The hotel initiated various measures to contain costs and improve profitability without compromising on the quality of superior guest experience. The hotel received the Times Food Guide awards for Kebabs & Kurries and Dakshin- with both being rated the best restaurants in their respective categories. The Board of Directors of the company has recommended a dividend of ` 2/- per equity share of ` 10/- each for the year ended 31st March, 2011. Fortune Park Hotels Limited During the financial year ended 31st March, 2011, the company recorded an Income of ` 18.01 crores (previous year ` 14.92 crores) and earned a Profit After Tax of ` 4.12 crores (previous year ` 2.13 crores) after providing for income tax of ` 1.90 crores (previous year ` 1.20 crores). The company, which caters to the mid-market to upscale

segment, forged new alliances during the year taking the total number of properties under the Fortune brand to 63, with a total room count of 4,915. Of these, 38 properties are operating hotels. Additionally, 4 hotels are slated to be commissioned during the course of the financial year 2011-12. The remaining 21 hotel Report of the Directors ITC Report and Accounts 2011 57projects are under various stages of development. The company seeks to be a leading player in the mid market to upscale segment, providing quality products and services that would position Fortune as the premier value brand in the Indian hospitality sector. The Board of Directors of the company has recommended a dividend of ` 7/- per equity share of ` 10/- each for the year ended 31st March, 2011. Bay Islands Hotels Limited During the year 2010-11, the company earned an Income of ` 1.12 crores (previous year ` 1.01 crores) and Profit After Tax of ` 0.76 crores (previous year ` 0.68 crores) after providing for income tax of ` 0.30 crores (previous year ` 0.27 crores). The Board of Directors of the company has recommended a dividend of ` 50/- per equity share of ` 100/- each for the year ended 31st March, 2011. Landbase India Limited Landbase India Limited owns and operates the Classic Golf Resort, a Jack Nicklaus Signature Course, near

Gurgaon. As reported in the previous years, golf based resorts present attractive long-term prospects in view of their growing popularity all over the world. The work towards creating a destination luxury resort hotel at the Classic Golf Resort is now under construction and the project is progressing as per schedule. During the year, the company issued and allotted to ITC Limited, 25,00,000 Redeemable Preference Shares of ` 100/- each for cash at par, aggregating ` 25 crores. The proceeds from the Preference Share issue are being utilised by the company for the construction of the destination luxury resort. Technico Pty Limited The company continued to focus on the commercialisation of its TECHNITUBER technology and subsequent field multiplication of seed potatoes through its wholly owned subsidiaries in different geographies. The company is also engaged in the marketing of TECHNITUBER seeds to global customers from the production facilities of its subsidiaries in India, China and Canada. During the year under review, Technicos leadership in the production of early generation seed potatoes and strong agronomy skills have been leveraged by your Companys Branded Packaged Foods business for its chip stock sourcing operations for the Bingo! brand of potato chips as well as by the Other Agri Commodities business in servicing the seed potato requirements of

its farmer base in key States. For the year under review: a) Technico Pty Limited, Australia registered a Turnover of Australian Dollar (A$) 1.58 million (previous year: A$ 1.95 million) and a Net Profit of A$ 0.10 million (previous year: A$ 0.71 million). Sales and Post-tax profits for the year under review were adversely affected by the appreciation in the Australian Dollar versus the US Dollar, which is the invoicing currency for the company. b) Technico Agri Sciences Limited, India registered a Turnover of ` 47.65 crores (previous year: ` 54.31 crores) and a Profit After Tax of ` 7.02 crores (previous year: ` 14.02 crores). During the year under review, a record potato crop drove down table potato prices. Consequently, sales realisation during the year for seed potatoes were also lower compared to the prices achieved in the previous financial year. While this resulted in lower Post-tax profits relative to the previous year, the company was successful in wiping-out its accumulated losses and looks forward to the future with confidence. c) Technico ISC Pty Limited, a dormant entity since its incorporation, was voluntarily deregistered on 3rd November, 2010. d) Technico Asia Holdings Pty Limited, Australia,

Technico Technologies Inc., Canada and Technico Horticultural (Kunming) Co. Limited, China There were no major events to report with respect to the above companies. King Maker Marketing Inc. King Maker Marketing Inc. (KMM) is a wholly owned subsidiary of your Company registered in the State of New Jersey, USA. It is engaged in the distribution of your Companys tobacco products in the US market. It also provides your Company, marketing research and business development services related to the US Market for FMCG and other products. During the year under review, KMM continued to face a challenging operating environment, post the Federal Excise Tax increases of the previous year, which resulted in a decline of cigarette volumes and the end of the Roll Your Own (RYO) industry segment. In the year under review, the Food and Drug Administration (FDA) initiated cigarette packing changes in June 2010 and most States 58 ITC Report and Accounts 2011 Report of the DirectorsReport of the Directors ITC Report and Accounts 2011 59 adopted the costlier Low Ignition Propensity (LIP) cigarette law. Discontinuation of RYO coupled with regulatory changes viz., changes in LIP cigarette law, inter-alia, resulted in inventory obsolescence. The company used this occasion to rationalise its product offers, while

focusing on developing its brands. The year also saw the large multinational cigarette companies operating in the US, investing in the discount segment in which the company operates. Growth of Pipe tobaccos as a substitute for RYO, cigarette manufacturing machine at retail, presence of flavoured little cigars akin to cigarettes, discount cigarettes manufactured in Native American reservations and illicit trade, all challenged the companys ability to drive volume upturns. Consequently, revenues declined by 32% over the previous year. However, improved productivity and cost saving actions enabled improved profitability. The FDA is expected to announce several new initiatives in the next two years to regulate product standards and packaging of cigarette products. The company will continue to review the regulatory and market environment for tobacco, to fine-tune its strategies in the US Market. ITC Global Holdings Pte. Limited The Judicial Managers had been conducting the affairs of ITC Global Holdings Pte. Limited (Global) from 8th November, 1996 under the authority of the High Court of Singapore. Pursuant to the application of the Judicial Managers, the Singapore Court on 30th November, 2007 ordered the winding up of Global, appointed a Liquidator and discharged the Judicial Managers. As stated in the previous years Reports, the Judicial Managers of Global had filed a Writ against your

Company in November 2002 before the Singapore High Court claiming approximately USD 18.10 million. Based on legal advice, your Company filed an appropriate application for setting aside the said Writ. On 2nd March, 2006, the Assistant Registrar of the Singapore High Court set aside the service of Writ of Summons on your Company and some individuals. Subsequently in November 2006, your Company received a set of papers purportedly sent by Global including what appeared to be a copy of the earlier Writ of Summons. Your Company filed a fresh Motion in the Singapore High Court praying for setting aside the said Writ of Summons, which was upheld by the Assistant Registrar of the Singapore Court on 13th August, 2007. Global filed an Appeal against this Order before the High Court of Singapore, which on 30th January, 2009, set aside the order giving leave to Global to serve the Writ out of Singapore against your Company and also dismissed the said appeal. Thereafter on 14th December, 2009, your Company received a binder purportedly sent by Global including what appeared to be a copy of the same earlier Writ of Summons. Based on legal advice, your Company again filed a Motion in the Singapore High Court praying for setting aside the said Writ of Summons. On 18th November, 2010, the Assistant Registrar of the Singapore High Court passed an order dismissing your Companys motion to set aside the Writ of Summons. Your Company has filed an appeal

in the Singapore High Court against the Assistant Registrars decision. BFIL Finance Limited The company continues to focus its efforts on recoveries through negotiated settlements including property settlements and pursuit of legal cases against various defaulters. The company has no external liabilities outside the ITC group. The company will examine options for further business opportunities at the appropriate time. Gold Flake Corporation Limited, Wills Corporation Limited, Greenacre Holdings Limited & MRR Trading and Investment Company Limited There were no major events to report with respect to the above companies. NOTES ON JOINT VENTURES ITC Filtrona Limited Gross sales for the year ended 31st December, 2010 at ` 139 crores represents a growth of 3% over the previous year. Pre-tax profits at ` 12.1 crores was adversely impacted by high input costs and pricing pressures. The company continued its modernisation programme aimed at upgrading its filter making machines to sustain the companys technological edge over competition and to further consolidate its position as the market leader. In addition, the company plans to augment its capacity to address future market potential. While striking a

balance between the need to sustain investments for growth and the shareholders expectation for growing income, the Directors of the company have recommended a dividend of ` 9/- per Equity share of ` 10/- each for the year ended 31st December, 2010. While quality continues to be its prime focus, innovation and support to customers for product development has resulted in the company attaining the status of a preferred supplier.Maharaja Heritage Resorts Limited Maharaja Heritage Resorts Limited, a joint venture of your Company with Jodhana Heritage Resorts Pvt. Limited, currently operates 53 heritage properties under the WelcomHeritage brand and continues to grow, with additional 14 properties under development. Espirit Hotels Private Limited During the year, your Company entered into a joint venture towards developing a luxury hotel complex at Begumpet, Hyderabad. Under the terms of the Joint Venture Agreement, your Company acquired 26% equity stake in the joint venture company, Espirit Hotels Pvt. Ltd. (EHPL) and will, inter-alia, provide hotel management services to EHPL under an Operating Services Agreement upon commissioning of the hotel. RISK MANAGEMENT As a diversified enterprise, your Company has always had a system-based approach to business risk management. Backed by strong internal control systems,

the current risk management framework consists of the following elements: The Corporate Governance Policy clearly lays down the roles and responsibilities of the various entities in relation to risk management. A range of responsibilities, from the strategic to the operational, is specified in the Governance Policy. These role definitions, inter-alia, are aimed at ensuring formulation of appropriate risk management policies and procedures, their effective implementation and independent monitoring and reporting by Internal Audit. The Corporate Risk Management Cell works with the businesses to establish and monitor the specific profiles including both strategic risks and operational risks. The process includes the prioritisation of risks, selection of appropriate mitigation strategies and periodic reviews of the progress on the management of risks. A combination of centrally issued policies and divisionally-evolved procedures brings robustness to the process of ensuring business risks are effectively addressed. Appropriate structures have been put 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 improved. The Audit Committee of the Board reviews Internal Audit findings, and provides strategic guidance on internal controls. The Audit Compliance and Review Committee closely monitors the internal control environment within your Company and ensures that Internal Audit recommendations are effectively implemented. 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 operations. 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 plan with agreed timelines and accountability. Businesses have confirmed that all relevant risks have been identified, assessed, evaluated and

appropriate mitigation systems implemented. The combination of policies and processes as outlined above adequately addresses the various risks associated with your Companys businesses. The senior management of your Company periodically reviews the risk management framework to maintain its contemporariness so as to effectively address the emerging challenges in a dynamic business environment. AUDIT AND SYSTEMS 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 provides assurance on the efficiency of operations and security of assets. Well established and robust internal audit processes, both at business and corporate levels, continuously monitor the adequacy and effectiveness of the internal control environment across your Company and the status of compliance with operating systems, internal 60 ITC Report and Accounts 2011 Report of the Directorsdeveloping and nurturing distributed leadership has ensured that each of your Companys businesses are managed by a team of competent, passionate and inspiring leaders, capable of building a future-ready organisation through continuous learning, innovation

and world class execution. Your Companys unswerving belief in the mutuality of interests of key stakeholders binds all employees to a shared vision and purpose, thus providing it with the vital force for winning in the market place. During the year under review, your Company successfully concluded long-term agreements at several of its manufacturing units and hotel properties, strengthening the collaborative spirit across all sections of employees. Continuous investment in contemporary management practices and manufacturing systems has resulted in significant enhancement in quality and productivity. Your Companys employees will relentlessly strive to deliver world class performance, innovate newer and better ways of doing things, uphold human dignity and foster team spirit and discharge their role as trustees of all stakeholders with true faith and allegiance. Over 24,000 of your Companys employees have collectively envisioned the next hundred years with commitment to realising your Companys vision of creating enduring value for your Company and for the country. SUSTAINABILITY CONTRIBUTION TO THE TRIPLE BOTTOM LINE The societal challenges arising out of widespread poverty and alarming degradation of the environment, exacerbated now by the spectre of climate change, continue to be major threats for the future sustainability

of the economy and indeed the nation. It is critically important for all organs of society to recognise these challenges and align its forces to find innovative solutions to ensure a secure, sustainable and equitable future. Your Company has achieved wide acclaim and significant business advantage by foreseeing these challenges and crafting sustainable and inclusive growth strategies that are in consonance with a larger societal purpose. Your Companys Triple Bottom Line philosophy of creating value that encompasses the economic, environmental and social dimension summarises this approach and has indeed made your Company a global exemplar of Corporate Citizenship. Your Companys environmental leadership is manifest in the unique position it has achieved as the only company in the world, of comparable size, to be carbon policies and regulatory requirements. In the networked IT environment of your Company, validation of IT security continues to receive focused attention of the internal audit team which includes IT specialists. The Internal Audit function, consisting of professionally qualified accountants, engineers and IT specialists reviews the quality of planning and execution of all ongoing projects involving significant expenditure to ensure that project management controls are adequate to yield value for money. Your Companys Internal Audit function is certified as

complying with ISO 9001:2008 quality standards in its processes. The Audit Committee of your Board met nine times during the year. It reviewed, inter-alia, the adequacy and effectiveness of the internal control environment and monitored implementation of internal audit recommendations including those relating to strengthening of your Companys risk management policies and systems. It also engaged in overseeing financial disclosures. HUMAN RESOURCE DEVELOPMENT The human resource philosophy and strategy of your Company has been designed to attract and retain the best talent on offer. In practice it creates and nurtures workplace challenges that keep employees engaged, motivated and innovative. This talent has, through strong alignment with your Companys vision, successfully built and sustained your Companys standing as one of Indias most admired and valuable corporations despite unrelenting competitive pressures. Your Company has conscientiously fostered a culture that rewards continuous learning, collaboration and development across the organisation to be future-ready and meet the challenges posed by ever-changing market realities. Employees are your Companys most valuable assets and your Companys processes are designed to empower employees and support creative approaches

in order to create enduring value. Your Companys unflagging commitment to investing in talent development ensures performance and achievement of the highest order. Your Companys human resource management systems and processes aim to enhance organisational capability and vitality, so that each business is world class and equipped to seize emerging market opportunities. The strategy of organisation and its ongoing emphasis on Report of the Directors ITC Report and Accounts 2011 6162 ITC Report and Accounts 2011 positive, water positive and waste recycling positive. These path-breaking initiatives taken by your Company have not only helped in demonstrating its leadership in responsible corporate stewardship, but have also enabled significant cost savings and nurtured the creation of environmental and societal capital, transforming the lives of many living at the margin. Your Companys sustainability initiatives are in line with the Prime Ministers vision for corporate participation in ensuring sustainable economic development with equity and are also in full alignment with the Government of Indias National Action Plan on Climate Change. Your Companys 7th Sustainability Report published during the year and independently assured by Ernst & Young is in accordance with the Global Reporting Initiative G3 Guidelines and at the highest A+ level. The

report, ranked 7th globally in best carbon disclosure by the Corporate Responsibility Reporting Awards, details your Companys progress across all dimensions of the Triple Bottom Line. The 8th Sustainability Report covering the sustainability performance during the year 2010-11 is in the process of publication and will continue to be independently assured by Ernst & Young. Your Company has pro-actively pursued a low carbon growth strategy that addresses climate change mitigation and adaptation through several innovative and pioneering initiatives. This integrated strategy encompasses large scale afforestation initiatives for carbon sequestration, increasing use of renewable energy in its operations, continuous efforts towards energy conservation and efficiency, establishment of inspirational green buildings, extensive watershed development programmes and promotion of sustainable agricultural practices amongst farming communities. This is manifest in your Companys Social and Farm Forestry programme that covers nearly 1,14,000 hectares, its Integrated Watershed Development programmes that spans nearly 65,000 hectares of water-stressed land, as well as initiatives under the credo of Responsible Luxury of your Companys Hotels business which is today the worlds greenest hotel chain, with all luxury hotels being LEED Platinum rated. In the process, your Company has significantly added to the environmental and social

capital of the nation. Your Company has actively participated in market-based mechanisms for mitigating the impact of climate change under Clean Development Mechanism (CDM) developed by the United Nations Framework Convention on Climate Change (UNFCCC). Eight CDM projects are presently registered with the UNFCCC and many of them have already started earning carbon credits. In addition, a number of new CDM projects are also at various stages of registration. Furthermore, your Company is also positioned to take advantage of other opportunities in voluntary carbon markets and India specific schemes on the anvil, such as the Perform, Achieve and Trade (PAT) promoted by the Government of India. Your Companys focus on carbon reduction is also reflected in its commitment to reduce its dependence on fossil fuel based energy. Towards this, your Company has progressively made investments in renewable resources of energy. In addition to the 20.1 MW wind energy capacity set-up earlier, a 90 tonnes per hour biomass fired boiler has also been in operation for over a year. Reinforcing this capacity, your Company has now installed a 21 MW wind energy unit in Karnataka and a 2.5 MW unit in Rajasthan. These investments and better utilisation of biomass in the Paperboards and Specialty Papers business ensure that 35.3% of your Companys total energy requirements come from

renewable sources. Recognising that more than half of Indias districts are acutely water stressed, your Company has developed several water conservation initiatives to enhance its positive water footprint. These include adopting the best available technologies and benchmarked practices to achieve zero effluent discharges, enhance rainwater harvesting both within units and in socially relevant areas as well as provide treated wastewater for irrigation as an alternate option for farmers in water stressed areas. All these initiatives have resulted in the creation of rainwater harvesting potential which is over two times the net water consumption of your Company. Continuing in the low carbon growth path, your Company has been at the forefront of establishing iconic green buildings certified to the highest levels of energy efficiency and environmental design. A journey that began with the ITC Green Centre in Gurgaon (the largest Report of the Directors Your Companys leadership in sustainability is manifest in the unique position it has achieved as the only Company in the world, of comparable size, to be carbon positive, water positive and solid waste recycling positive. ITCs businesses create sustainable livelihoods for over 5 million people.LEED - Leadership in Energy and Environment Design - Platinum rated office space in the world in 2004) and the ITC Gardenia in Bengaluru (the Worlds largest LEED Platinum rated hotel), has now inspired the implementation of validated green/sustainability

standards in existing hotels and factories. As a testament to these efforts, during the year under review, ITC Maurya in New Delhi became the first LEED Platinum rated hotel worldwide in the existing building category, followed closely by ITC Grand Central, ITC Maratha, ITC Windsor, ITC Mughal, ITC Sonar and ITC Kakatiya, all of whom received the LEED Platinum rating from the US Green Building Council (USGBC). This remarkable achievement makes your Company the greenest hospitality chain in the world. Your Companys WOW Wealth Out of Waste programme has been instrumental in creating awareness amongst the public on the benefits of the ReduceReuse-Recycle approach. The waste recycling initiatives implemented by the programme have contributed significantly to the protection of the environment, as well as in improving civic amenities, public health and hygiene. This initiative has received several accolades from the government, NGOs, commercial institutions and the public at large, including the prestigious Papyrus Award from the Bureau of International Recycling (BIR). Your Company benefits from the generation of sustainable raw material sources at competitive prices, while conserving precious environmental resources and also generating considerable livelihood opportunities. All units of your Company are mandated to achieve total recycling of solid waste generated by their operations. The Paperboards and Specialty Papers

business, which accounts for more than 91% of total waste generated in your Company, has recycled over 99% of the total waste generated by its operations. This business has also recycled an additional 1,19,002 tonnes of externally sourced waste paper, thereby reinforcing your Companys waste recycling positive status for the 4th consecutive year. Your Company continued with its commitment towards ensuring a safe and healthy workplace for all employees, guests and visitors, by maintaining the highest levels of safety and occupational health standards. All units of your Company have best-in-class infrastructure, competent resources and state-of-art fire detection and protection measures. The Environment, Occupational Health and Safety Management Systems in all manufacturing units and hotels conform to the best international standards. Overall accident statistics show a continual improvement trend which has been reaffirmed by several national & international safety awards and certifications. The CII ITC Centre of Excellence for Sustainable Development, set up by your Company and the apex national chamber CII in 2006, continues its endeavours to promote sustainable business practices amongst corporates across the country. It has enhanced its activities to meet the core objectives of creating awareness, promoting thought leadership and building

capacity amongst Indian enterprises in their quest for sustainable growth solutions. The CII ITC Sustainability Awards, instituted to recognise excellence in sustainability performance, have honoured a large number of leading Indian companies and provided encouragement to many others. It is heartening that the number of aspirants for the Award is steadily increasing year on year. The CII-ITC Centre is today playing a major role in engaging with policy makers to create an environment that encourages the adoption of sustainable business practices. The Centre is a consulting partner in several policy interventions such as Green Guidelines for Public Procurement, Low Carbon Expert Group of the Planning Commission, National Innovation Council, Ministry of Corporate Affairs on CSR policy and is also represented on the Board of the Central Pollution Control Board and other bodies. During the year, the Centre introduced three new service lines in the areas of stakeholder engagement, climate change strategies and training of sustainability assurance professionals. It is the only certified trainer for sustainability assurance professionals in South-East and South Asia. In pursuit of your Companys commitment to the Triple Bottom Line, your Companys Social Investments strategy continues to be driven by the needs and concerns of two important stakeholders - the rural

communities with whom your Companys Agri business has forged a long and enduring partnership and the communities (both rural and urban) residing in close proximity of your Companys manufacturing units. The Social Investments Programme aims to address certain key challenges that these stakeholders face in terms of livelihoods. For rural India, the major challenge is that of a deteriorating agri-production base that is likely to worsen, due to the adverse impacts of climate change. For households around the units, the challenge is that of providing the necessary social infrastructure to enable a decent quality of life. Report of the Directors ITC Report and Accounts 2011 63Your Company addresses these challenges through a range of activities with the overarching objective of creating sustainable sources of livelihood for the stakeholders: (a) For rural communities, the attempt is to diversify farming systems by broad-basing the farm and off-farm based livelihoods portfolio of the poor. This is sought to be achieved through an integrated approach that includes the development of wastelands, watersheds, agriculture and milch animals. (b) In the catchment habitations of manufacturing units, your Companys focus is on nurturing and developing social capital to create a level playing field in the market for relevant and contemporary skills and to compete with the demands for higher productivity. This is being achieved

through the promotion of gender-centric economic empowerment programmes for women, enhancing the quality of primary education and improving health and sanitation conditions focusing on the mother and child. The footprints of your Companys Social Investments Programme has spread to 51 districts in the States of Andhra Pradesh, Bihar, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Haryana, Uttar Pradesh and West Bengal. Your Companys pioneering Social and Farm Forestry initiative covers nearly 1,14,000 hectares today and is aligned to your Companys pulpwood supply chain which creates a sustainable source of raw material for your Company and also meets the energy requirements of rural households. Within this, the Social Forestry Programme covers 19,820 hectares in 541 villages, impacting 24,382 poor households. The coverage of your Companys Soil and Moisture Conservation programme, designed to assist farmers in identified moisture-stressed districts, increased by another 13,204 hectares. 416 water-bodies were created during the year. The total area covered under the watershed programme cumulatively stands at 64,498 hectares. A significant achievement this year was the partnerships forged with a number of State governments for implementing watershed programmes. Agreements have been signed with the governments of Maharashtra,

Rajasthan and Madhya Pradesh to bring 92,000 hectares under soil and moisture conservation over the next five years. The Sustainable Livelihoods initiative of your Company strives to create alternative employment for surplus labour and decrease pressure on arable land by promoting non-farm incomes. The programme for improvement of cattle through artificial insemination to produce high-yielding crossbred progenies has been given special emphasis because it reaches out to the most impoverished and has the potential to enable them to live with social and economic dignity. 49 Cattle Development Centres were established during the year, taking the total to 210 centres, which provided 1.67 lakh artificial inseminations during the year. With the objective of improving the quality of life of people living in the proximity of the manufacturing units, the Womens Empowerment Programme covered 15,068 women through 1,314 self-help groups (SHG) with total savings of ` 206 lakhs. More than 37,000 women were gainfully employed either through micro-enterprises or assisted with loans to pursue income generating activities. Over 2,47,000 children have been covered under the Supplementary Education Programme till date, through the 2,523 Supplementary Learning Centres. Infrastructural support has been provided to 741 government schools till date.

The advances made towards contributing to Indias sustainable development goals have been possible, in large measure, to your Companys partnerships with some globally renowned NGOs like BAIF Institute for Rural Development, DHAN Foundation, Foundation for Ecological Security (FES), Mysore Resettlement and Development Agency (MYRADA), Pratham, Self Employed Women Association (SEWA), Self Reliant Initiatives through Joint Actions (SRIJAN) and Watershed Organisation Trust (WOTR). 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 grassroot solutions to some of Indias worst problems of development in the years to come. R&D, QUALITY AND PRODUCT DEVELOPMENT Your Company, over the years, has invested significantly in its Research & Development (R&D) programme to develop a unique source of sustainable competitive advantage by leveraging contemporary advances in several relevant areas of science and technology and blending the same with classical concepts of product development. This challenging task of creating a culture of science-led product innovation in your Company was carefully addressed by appropriately identifying the required set of core competency areas of science such as Plant

Breeding and Genetics, Agronomy, Microbiology, Cell Biology, Genomics, Proteomics, Silviculture and several disciplines of Chemistry. Presently, your Companys R&D Centre is staffed with world class scientists and 64 ITC Report and Accounts 2011 Report of the Directorsequipped with state-of-the-art equipment for carrying out research and securing proprietary technologies for your Companys businesses. Your Companys Agrisciences R&D team continued its efforts in evaluating and introducing several germplasm lines of tobacco and eucalyptus to increase the genetic and trait diversities in these crops, which in turn will strengthen the research programs for developing new varieties with higher yields, better quality and other relevant traits for its businesses. Several research collaborations have been initiated with globally recognised Centres of Excellence to fast track its journey towards proof of concepts. These collaborations cover both Tobacco and Eucalyptus and are designed in a manner whereby your Company will gain fundamental insights to several technical aspects of plant breeding and genetics of these species. This will accelerate efforts in creating future generations of these crops with greater genetic and trait diversities, which indigenous crops currently lack, thereby supporting your Companys businesses. These outcomes have the potential of making a meaningful contribution to the nation as well.

Your Companys Biosciences R&D team continued to pursue strategies to leverage the potential of convergence amongst agricultural science, food science and the scientific dimensions of its personal care products portfolio. During the year under review, the R&D team continued to progress several long-term research platforms, which over time, will form the basis for launching new and competitively superior products. Your Companys R&D strategy is anchored on a clear vision and road map and is supported by a well-crafted Intellectual Property strategy. With scale, speed, science and sustainability considerations, your Companys R&D is poised to deliver long term competitive advantage and play a leading role in creating significant business impact. Pursuing your Companys relentless commitment to quality, each business is mandated to continuously innovate on processes and systems to deliver superior competitive capabilities. During the year, your Companys Hotels business extended its Lean practices programme to cover more business processes, in addition to the continuing implementation of the Six Sigma Quality Process supported by trained teams of black and green belts. This will further enhance capability to create superior customer value through a service excellence framework. The Paperboards, Paper & Packaging business have implemented the Total Productive

Maintenance (TPM) techniques in all units, resulting in substantial cost savings and productivity improvements. All manufacturing units of your Company have ISO quality certification. Almost all contract manufacturing units in the Foods business and hotels have stringent food safety and quality systems certified by an accredited third party in accordance with Hazard Analysis Critical Control Points (HACCP) standards. Additionally, the quality of all FMCG products of your Company is regularly monitored through Product Quality Ratings Systems (PQRS). EXCISE As mentioned in the previous years Report of the Directors, the demand for ` 27.58 crores made by Central Excise Department, Bangalore, in respect of a period prior to March 1983, was set aside by the Commissioner (Appeals), Bangalore, by his Order dated 22nd November, 1999, which order was confirmed by the CEGAT, Chennai vide its order dated 18th December, 2003. The Department has filed an appeal before Supreme Court, which is pending. With respect to the Munger factory, proceedings for finalisation of assessments for the period prior to March 1983 resulted in the Deputy Commissioners Orders dated 29th August, 2002 and 8th October, 2002 demanding ` 13.09 crores and ` 1.73 crores for clearances of cigarettes and smoking mixtures

respectively. These were confirmed by the Commissioner (Appeals), Patna vide his orders dated 22nd December, 2004, against which your Company has preferred appeals before CESTAT, Kolkata, which are pending. Your Company has made pre-deposits of ` 2 crores and ` 0.55 crores against the aforesaid demands at the stage when its appeals were pending before Commissioner (Appeals), Patna. Although your Company, in a spirit of settlement, paid the differential Excise Duty that arose out of an Order of the Director General dated 10th April, 1986, as early as in March, 1987, and although the Excise Department's aforesaid Demands had either been quashed or stayed, the Collectorates in Meerut, Patna and Bangalore, during the year 1995, filed criminal complaints in the Special Court for Economic Offences at Kanpur, Patna and Bangalore, charging your Company and some of its Directors and employees who were employed with your Company during the period 1975 to 1983 with Report of the Directors ITC Report and Accounts 2011 65offences under the Central Excises & Salt Act, 1944, purportedly on the basis of the Order of the Director General dated 10th April, 1986. Your Directors are advised that no prosecution would lie on the basis of the aforesaid Order of the Director General dated 10th April, 1986. As earlier reported, the criminal case in respect of the Bangalore factory was quashed by

the Court. In the proceedings relating to Saharanpur and Munger factories, the individuals concerned have been discharged. In all the above instances, your Directors are of the view that your Company has a strong case and the Demands and the Complaints are not sustainable. Since your Company is contesting the above cases and contending that the Show Cause, the Demand Notices and the Complaints are not sustainable, it does not accept any liability in this behalf. Your attention is drawn to the Note 19 (iv) in the Schedules to the Accounts and Note 19 (iii) in the Schedules to the Consolidated Financial Statements. LUXURY TAX As mentioned in earlier years, the Honble Supreme Court declared the various State luxury tax levies on cigarettes and other goods as unconstitutional. The Court further directed that if any party, after obtaining a stay order from the Court, had collected any amount towards luxury tax from its customers / consumers, such amounts should be paid to the respective State governments. Since your Company had not charged or collected any amounts towards luxury tax during the relevant period, there is no liability on your Company in this regard. However, the State of Andhra Pradesh has filed a contempt petition in the Supreme Court claiming a sum of about ` 323.25 crores towards luxury

tax, and a further sum of about ` 261.97 crores towards interest, on the allegation that your Company had charged and collected luxury tax from its customers, but in view of a stay order passed by the Court on 1st April, 1999, did not pay the tax to the government. The States contention is baseless, contrary to facts and is also contrary to the assessment orders passed by the State luxury tax authorities consistently holding that your Company, right from 1st March, 1997, did not charge or collect any amount towards luxury tax from its customers. Accordingly, the States petition is being contested. RECOVERY OF DUES FROM THE CHITALIAS AND PROCEEDINGS INITIATED BY THE ENFORCEMENT DIRECTORATE You are aware that your Company had secured from the District Court of New Jersey, USA, a decree for US$ 12.19 million together with interest and costs against Suresh and Devang Chitalia of USA and their companies, and that the Chitalias had filed Bankruptcy Petitions before the Bankruptcy Court, Orlando, Florida, which are yet to be determined. As explained in the previous reports of the Directors, though your Company has written off the export dues in foreign exchange from the Chitalias with the approval of the Reserve Bank of India, your Company continues with its recovery efforts in the Indian suit against the

Chitalia associates. The suit is in progress. In the proceedings initiated by the Enforcement Directorate, the return of non-relied documents in possession of the Enforcement Directorate, pursuant to the request of your Company, is in progress. 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. Meanwhile, some of the prosecutions launched by the Enforcement Directorate have been quashed by the Calcutta High Court while others are pending. TREASURY OPERATIONS During the year, your Companys treasury operations continued to remain focused on proactive management of temporary surplus liquidity and foreign exchange exposures within a well-defined risk management framework. The year under review was characterised by rising interest rates and tight liquidity conditions in the monetary system. Against the backdrop of high inflation and the consequent policy rate increases by the Central Bank, interest rates hardened across maturities. In the environment of rising interest rates, your Company by appropriately managing portfolio duration continued to improve its treasury performance within the ambit of

strong risk management processes. All investment decisions in deployment of temporary surplus liquidity continued to be guided by the tenets of Safety, Liquidity and Return. During the year, timely positioning of the portfolio in shorter maturity assets 66 ITC Report and Accounts 2011 Report of the Directorslike Liquid Mutual Funds, Fixed Maturity Plans and Bank Fixed Deposits enabled your Company to take advantage of rising interest rates and enhancing yields. The portfolio mix was constantly rebalanced in line with the changing risk/return scenario. Your Companys risk management processes ensured that all deployments were made with proper evaluation of underlying risk while remaining focused on capturing market opportunities. In the foreign exchange market, the Indian Rupee appreciated gradually during the year on the strength of FII inflows with intermittent volatility. In a scenario where the US Dollar was under pressure, your Company adopted an appropriate forex management strategy, including use of foreign exchange forward contracts and plain vanilla options to manage volatility and reduce risks/costs. However, it refrained from entering into any exotic derivative structures. As in earlier years, commensurate with the size of the temporary surplus liquidity under management, treasury operations continue to be supported by appropriate control mechanisms, including an independent check

of 100% of transactions by your Companys Internal Audit function. TAXATION As mentioned in the Report of the Directors of earlier years, your Company had obtained Stay Orders from the Honble Calcutta High Court in respect of the Income Tax notices for re-opening the past assessments for the period 1st July, 1983 to 30th June, 1986. This status remains unchanged. As stated in the Report of the Directors of earlier years, in respect of similar Income Tax notices for re-opening the past assessments for the period 1st April, 1990 to 31st March, 1993, the Honble Calcutta High Court had admitted the Writ Petitions and ordered that no final assessment orders be passed without the leave of the Court. This status also remains unchanged. PUBLIC DEPOSITS Your Companys Public Deposit Scheme closed in the year 2000. As at 31st March, 2011, there were no deposits due for repayment except in respect of 2 deposit holders for ` 0.20 lakhs which have been withheld on the directives received from 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 Companys erstwhile Schemes. INVESTOR SERVICE CENTRE

During the year, the ISO 9001:2008 Quality Management System Certification for investor servicing by Investor Service Centre (ISC) was renewed by Messrs. Det Norske Veritas (DNV) for a further period of three years. DNV also accorded Level 5 rating to ISC, the highest possible rating level, for the second consecutive year, for its systems and processes, which stands testimony to the exemplary standards of investor servicing practices by the ISC. ISC continues to operate with an experienced team of professionals backed by state-of-the-art infrastructure and systems focused towards meeting the increasing expectations of investors and regulatory authorities. DIRECTORS Mr. Krishnamoorthy Vaidyanath, Wholetime Director, retired from your Company after 35 years of service, with effect from close of business on 2nd January, 2011 on completion of his term. Your Directors would like to record their appreciation of the services rendered by Mr. Vaidyanath. The Board of Directors (the Board) at its meeting held on 22nd December, 2010, appointed Mr. Vaidyanath as Non-Executive Director of your Company with effect from 3rd January, 2011 to draw upon his knowledge and vast experience. Mr. Anup Singh ceased to be Additional Wholetime Director on 23rd July, 2010, the date of the last Annual General Meeting (AGM) of your Company.

Mr. Nakul Anand and Mr. Pradeep Vasant Dhobale were appointed by the Board at its meeting held on 22nd December, 2010, as Additional Wholetime Directors of your Company with effect from 3rd January, 2011. By virtue of the provisions of Article 96 of the Articles of Association of your Company and Section 260 of the Companies Act, 1956, Messrs. Vaidyanath, Anand and Dhobale will vacate office at the ensuing AGM of your Company. Your Board at its meeting held on 20th May, 2011, recommended for the approval of the Members the appointment of Messrs. Anand and Dhobale as Directors, liable to retire by rotation, and also as Wholetime Directors of your Company for a period of three years from 3rd January, 2011. Your Board at the said meeting also recommended for the approval of the Members the appointment of Mr. Vaidyanath as Non-Executive Director of your Company, liable to retire by rotation, with effect from the date of the ensuing AGM of your Company. Report of the Directors ITC Report and Accounts 2011 67Your Board at its meeting held on 20th May, 2011 recommended for the approval of the Members the re-appointment of Mr. Yogesh Chander Deveshwar as a Director, not liable to retire by rotation, and also as Wholetime Director and Chairman of your Company, for a period of five years from 5th February, 2012.

Notices have been received from Members of your Company under Section 257 of the Companies Act, 1956 for the appointments / re-appointment of Messrs. Anand, Dhobale, Vaidyanath and Deveshwar, who have filed their consents to act as Directors of your Company, if appointed. Appropriate resolutions seeking your approval to their appointments / re-appointment are appearing in the Notice convening the 100th AGM of your Company. In accordance with the provisions of Article 91 of the Articles of Association of your Company, Mr. Hugo Geoffrey Powell, Dr. Basudeb Sen, Mr. Balakrishnan Vijayaraghavan and Mr. Serajul Haq Khan will retire by rotation at the ensuing AGM of your Company and, being eligible, offer themselves for re-election. The Board has recommended their re-election. CHANGES IN SHARE CAPITAL During the year, the following changes were effected in the Share Capital of your Company:(i) Increase in Authorised Share Capital The Authorised Share Capital of your Company was increased from ` 500 crores to ` 1000 crores divided into 1000,00,00,000 Ordinary Shares of ` 1/- each, with effect from 23rd July, 2010. (ii) Issue of Bonus Shares 382,67,01,530 Ordinary Shares of ` 1/- each, fully paid-up, were issued as Bonus Shares,

in the ratio of 1 (One) Bonus Share for every existing 1 (One) Ordinary Share of ` 1/- each held on 4th August, 2010, being the Record Date fixed for the purpose. The Bonus Shares were allotted on 6th August, 2010. (iii) Issue of Shares under the ITC Employee Stock Option Schemes 9,32,65,960 Ordinary Shares of ` 1/- each, fully paid-up, were issued and allotted during the year upon exercise of 93,26,596 Options under your Companys Employee Stock Option Schemes. Consequently, the Issued and Subscribed Share Capital of your Company, as on 31st March, 2011, stands increased to ` 773,81,44,280/- divided into 773,81,44,280 Ordinary Shares of ` 1/- each. The new Ordinary Shares issued during the year rank pari passu with the existing Ordinary Shares of your Company. AUDITORS Your Companys Auditors, Messrs. Deloitte Haskins & Sells, retire at the ensuing AGM and, being eligible, offer themselves for re-appointment. Since not less than 25% of the Subscribed Share Capital of your Company is held collectively by Public Financial Institutions, the re-appointment of Auditors is being proposed as a Special Resolution in accordance with Section 224A of the Companies Act, 1956.

EMPLOYEE STOCK OPTION SCHEME Details of the Options granted up to 31st March, 2011, and other disclosures as required under Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the SEBI Guidelines) are set out in the Annexure to this Report. Your Companys Auditors, Messrs. Deloitte Haskins & Sells, have certified that your Companys Employee Stock Option Schemes have been implemented in accordance with the SEBI Guidelines and the resolutions passed by the Members in this regard. DIRECTORS RESPONSIBILITY STATEMENT As required under Section 217 (2AA) of the Companies Act, 1956, 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 judgments 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 Report of the Directors

68 ITC Report and Accounts 201120th May, 2011 On behalf of the Board Virginia House 37 J L Nehru Road Kolkata 700071 India Y. C. DEVESHWAR Chairman P. V. DHOBALE Director accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; and (d) prepared the Annual Accounts on a going concern basis. CONSOLIDATED FINANCIAL STATEMENTS In accordance with Accounting Standard 21 Consolidated Financial Statements, ITC Group Accounts form part of this Report & Accounts. These Group Accounts also incorporate the Accounting Standard 23 - Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures as notified under the Companies (Accounting Standards) Rules, 2006. These Group Accounts have been prepared on the basis of audited financial statements received from Subsidiary, Associate and Joint Venture Companies, as approved by their respective Boards.

OTHER INFORMATION The total number of employees as on 31st March, 2011 stood at 24,027. The certificate of the Auditors, Messrs. Deloitte Haskins & Sells confirming compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is annexed. There were no changes to your Companys significant Accounting Policies. Particulars as required under Section 217(1)(e) of the Companies Act, 1956 relating to Conservation of Energy and Technology Absorption are also provided in the Annexure to this Report. There were 31 employees, who were employed throughout the year and were in receipt of remuneration aggregating ` 60 lakhs or more or were employed for part of the year and were in receipt of remuneration aggregating ` 5 lakhs per month or more during the financial year ended 31st March, 2011. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules thereunder, in respect of the aforesaid employees, is provided in the Annexure forming part of this Report. FORWARD-LOOKING STATEMENTS 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. CONCLUSION Your Companys Board and employees are inspired by the Vision of sustaining your Companys position as one of Indias most admired and valuable companies through world class performance, creating enduring value for all stakeholders, including the shareholders and the Indian society. Each business within the portfolio is continuously engaged in upgrading strategic capability to effectively address the challenge of growth in an increasingly competitive market scenario. Effective management of diversity enhances your Companys adaptive capability and provides the intrinsic ability to effectively manage business risk. The vision of enlarging

your Companys contribution to the Indian economy is manifest in the creation of unique business models that foster international competitiveness of not only its businesses but also of the entire value chain of which it is a part. 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. Report of the Directors ITC Report and Accounts 2011 69ITC Employee Stock ITC Employee Stock Total Option Scheme Option Scheme - 2006 (i) (ii) (i) + (ii) (C) Total number of Options vested : 1,16,93,812 1,74,82,469 2,91,76,281 (D) Total number of Options exercised : 1,11,69,757 60,78,656 1,72,48,413 (Each Option represents 10 Ordinary Shares of ` 1/- each) (E) Total number of Ordinary Shares of ` 1/- each : 11,16,97,570 6,07,86,560 17,24,84,130 arising as a result of exercise of Options (F) Total number of Options lapsed : 13,33,225 18,97,251 32,30,476 (G) Variation of terms of Options : Nil (H) Money realised by exercise of Options : ` 1247.48 crores ` 623.31 crores ` 1870.79 crores (I) Total number of Options in force : 1,62,851 2,95,97,929 2,97,60,780 Annexure to the Report of the Directors 2010 42,30,600 42,21,225 84,51,825 2,923.50 1,461.75 Statement as at 31st March, 2011, pursuant to Clause 12 (Disclosure in the Directors Report) of the Securities and Exchange

Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. 2001 3,39,119 3,39,119 779.95 2002 6,27,070 6,27,070 617.90 2003 9,99,115 1,83,501 11,82,616 679.90 453.27 2004 8,57,208 2,85,987 11,43,195 880.45 586.97 2005 9,72,433 4,75,638 14,48,071 1,531.65 1,021.10 2006 60,95,625 18,30,137 79,25,762 1,814.00 907.00 2007 55,77,343 38,29,364 94,06,707 1,661.00 830.50 Total 2,01,23,541 1,74,50,295 3,75,73,836 2008 59,69,437 51,30,034 1,10,99,471 1,896.00 948.00 2009 43,46,161 42,69,672 86,15,833 2,180.00 1,090.00 ITC Employee Stock Option Scheme - 2006 (B) Pricing Formula : The Pricing Formula, as approved by the Shareholders of the Company, shall be such price which is no lower than the closing price of the Companys Share on the National Stock Exchange of India Limited (the NSE) on the date of grant, or the average price of the Companys Share in the six months preceding the date of grant based on the daily closing price on the NSE, or the Market Price as defined from time to time under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as determined by the Compensation Committee. (A) ITC Employee Stock Option Scheme * Bonus Options were allocated in 2005-06 and 2010-11 in the same ratio as Bonus Shares issued (i.e. in the ratio of 1 Bonus Share for every 2 Ordinary Shares & in the ratio of 1 Bonus Share for every 1 Ordinary Share, respectively) in accordance with the ITC Employee Stock Option Schemes read with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. ** As adjusted on allocation of Bonus Options.

Total 98,90,570 27,75,263 1,26,65,833 70 ITC Report and Accounts 2011 Sl. Year of Grant No. of No. of Bonus Total Exercise Adjusted No. Options Options Price per Exercise Granted Allocated* Option Price per Option (i) (ii) (i) + (ii) (`) (`)**ITC Report and Accounts 2011 71 (J) Details of Options granted to (i) Senior managerial personnel : As provided below (ii) Any other employee who received a : grant in any one year of Options amounting to 5% or more of the Options granted during that year. (iii) Identified employees who were : granted Options during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. None None Sl. No. Name Sl. No. Name No. of Options granted

during the financial year# 1 Y. C. Deveshwar 1,35,000 2 N. Anand^ 20,000 3 P. V. Dhobale^ 20,000 4 K. N. Grant 67,500 5 A. Baijal 10,000 6 S. H. Khan 10,000 7 S. B. Mathur 10,000 8 H. G. Powell 10,000 9 P. B. Ramanujam 10,000 10 A. Ruys 10,000 11 K. Vaidyanath@ 67,500 12 S. M. Ahmad 11,500 13 N. Arif 15,000 14 P. Banerjea 8,625 15 S. Basu 13,750 16 M. S. Bhatnagar 13,750 17 A. Chand 13,750 18 S. Chandrasekhar 11,500 19 L. C. Chandrasekharan 15,000 20 B. B. Chatterjee 20,000 21 C. Dar 20,000 22 C. S. Das 13,750 23 D. Haksar 13,750 24 S. Kaul 13,750

25 U. Lall 11,500 26 H. Malik 13,750 27 A. K. Mukerji 13,750 28 A. Nayak 20,000 29 A. R. Noronha 13,750 30 R. Parasuram 13,750 31 A. Pathak 13,750 32 S. Puri 20,000 33 R. Rai 13,750 34 V. L. Rajesh 9,725 35 A. Rajput 20,000 36 T. V. Ramaswamy 20,000 37 S. Rangrass 13,750 38 S. Janardhana Reddy 13,750 39 R. Senguttuvan 9,725 40 S. K. Singh 13,750 41 S. Sivakumar 20,000 42 R. Sridhar 13,750 43 B. Sumant 13,750 44 K. S. Suresh 20,000 45 R. Tandon 20,000 # Bonus Options were also allocated consequent to the Bonus Share issue in 2010-11. ^ Options granted prior to appointment as Executive Director. @ Options granted when he was Executive Director. No. of Options granted during the financial year#On behalf of the Board Y. C. DEVESHWAR Chairman

Kolkata, 20th May, 2011 P. V. DHOBALE Director The employee compensation cost has been calculated using the intrinsic value method of accounting for Options issued under the Companys Employee Stock Option Schemes. The employee compensation cost as per the intrinsic value method for the financial year 2010-11 is Nil. ` 338.40 crores The effect on the profits and earnings per share, had the fair value method been adopted, is presented below: Profit After Tax ` in Crores As reported 4987.61 Add: Intrinsic Value Compensation Cost Nil Less: Fair Value Compensation Cost 338.40 (Black Scholes model) Adjusted Profit 4649.21 Earnings Per Share Basic (`) Diluted (`) As reported 6.49 6.41 As adjusted 6.05 5.97 Weighted average exercise price per Option : ` 1,461.75 (Adjusted for Bonus Share Issue 1:1) Weighted average fair value per Option : ` 436.17

The fair value of each Option is estimated using the Black Scholes Option Pricing model after applying the following key assumptions on a weighted average basis: (i) Risk-free interest rate 6.91% (ii) Expected life 3.19 years (iii) Expected volatility 34.98% (iv) Expected dividends 1.97%

(v) The price of the underlying ` 1,488.50 shares in market at the time of Option grant (Adjusted for Bonus Share Issue 1:1) (L) (i) Method of calculation of employee : compensation cost. (ii) Difference between the employee : compensation cost so computed at (i) above and the employee compensation cost that shall have been recognised if it had used the fair value of the Options. (iii) The impact of this difference on : profits and on Earnings Per Share of the Company. (M) Weighted average exercise prices and : weighted average fair values of Options granted for Options whose exercise price either equals or exceeds or is less than the market price of the stock. (N) A description of the method and : significant assumptions used during the year to estimate the fair values of Options. (K) Diluted Earnings Per Share : ` 6.41 pursuant to issue of Ordinary Shares on exercise of Options calculated in

accordance with Accounting Standard (AS) 20 Earnings Per Share. 72 ITC Report and Accounts 2011Annexure to the Report of the Directors Particulars of Employees under Section 217(2A) of the Companies Act, 1956 and forming part of the Report of the Directors Name Age Designation/ Gross Net Qualifications Experi- Date of Previous Employment/ Nature of Duties Remuneration Remuneration ence Commence- Position Held (`) (`) (Years) ment of Employment 12 3 4 5 6 78 9 For the Financial Year Ended 31st March, 2011 Employed throughout the year and in receipt of remuneration aggregating ` 60,00,000/- or more per annum. Ahmad S M 57 Executive V.P. - Marketing (ITD) 68,58,292 33,52,091 M.A. 34 06.03.1980 ANZ Grindlays Bank Plc., Mgmt. Trainee Anand Nakul 54 Executive Director 1,20,16,461 47,60,618 B.A. (Hons.) 31 01.12.1979 @ Chandrasekhar S 58 Services on Loan to Subsidiary Co. 60,65,958 30,02,419 B.Sc., F.C.A. 33 01.01.1978 @ Chandrasekharan L C (Dr.) 56 Chief Scientist - Research & 81,34,344 53,32,409 Ph.D. 29 01.10.2005 G.E. India, Director, Mfg. Engg. Technology Innovation (Corp. R & D) Chatterjee B B 58 Executive V.P. & Company Secretary 74,35,678 42,55,172 B.Com. (Hons.), F.C.A., 33 16.05.1983 Wacsgen, Deputy Mgr. F.C.S., LL.B. Dar C 55 Divisional Chief Executive - FD 83,39,246 39,18,620 B.Tech. (Hons.), P.G.D.M. 32 01.05.1981 Tata Eng. & Loco. Co., Shift Supvr. Deveshwar Y C 64 Executive Chairman 9,59,81,297 4,72,90,589 B.Tech. (Mech.) 42 11.02.1994 Air India Ltd., Chairman & M.D. Dhobale P V 55 Executive Director 1,04,43,973 47,75,687 B.Tech. (Chem.) 34 01.07.1977 #

Grant K N 53 Executive Director 1,29,06,201 54,69,991 B.A. (Hons.), M.B.A. 32 02.06.1980 DCM Ltd., Mgmt. Trainee Janardhana Reddy S 62 Executive V. P. - Corporate Affairs 62,75,407 32,45,478 B.Sc. (Ag.) 38 27.12.1972 Nil Lall U 60 Services on Loan to 65,87,289 32,75,565 B.A. (Hons.) 39 03.01.1972 PARCO, Officer on Spl. Duty Tobacco Institute of India Malik Hemant 44 Head of TM & D (ITD) 60,06,720 29,17,717 B.A., M.B.A 22 01.06.1989 Nil Mukerji Arup K 52 Corporate Financial Controller 62,86,166 31,29,604 B.Com. (Hons.), A.C.A. 29 01.11.1982 Gupta Chowdhury & Ghose, Jr. Officer Nayak Anand 59 Executive V.P. - Corporate 1,02,29,193 55,03,138 B.Sc., P.G.D.I.R. 38 14.05.1973 Nil Human Resources Pathak Arun 51 Executive V.P. - Finance (HD) 70,40,454 30,50,004 B.Com. (Hons.), F.C.A. 28 20.06.1983 Nil Puri Sanjiv 48 Divisional Chief Executive - ITD 97,50,881 36,23,714 B.Tech. 26 20.01.1986 TELCO Ltd., Trainee Rajput A K 55 Senior V.P. - Corporate Affairs 77,48,288 37,10,510 B.Com., M.B.A. 35 10.04.1976 Nil Ramaswamy T V 59 Group Head - R & D, Projects, EHS 84,83,504 40,37,494 B.E., M.M.S. 37 01.07.1974 Nil Rangrass S 50 Divisional Chief Executive - 64,42,273 28,49,451 B. Tech. 29 01.07.1982 Nil ABD - ILTD Singh S K 54 Divisional Chief Executive - PSPD 61,34,426 30,18,074 B.Tech. (Chem.), 34 21.06.1977 # Sivakumar S 50 Divisional Chief Executive - ABD 89,37,539 48,31,464 B.Sc., P.G. Dip. in 28 18.09.1989 Gujarat Co-op Oil Seeds Growers Rural Mgmt. Fed. Ltd., Mgr. Mktg. Suresh K S 51 General Counsel 83,28,864 39,86,237 B.A., B.L., P.G.D.P.M., 28 01.09.1990 Chambers of Sri C.S. Venkata I.R. & L.W. Subramaniam, Advocate Tandon R 57 Chief Financial Officer 83,79,691 39,50,117 B.Sc., F.C.A. 33 01.01.1987 Triveni Handlooms Ltd., Finance

Mgr. & Secy. Employed for a part of the year and in receipt of remuneration aggregating ` 5,00,000/- or more per month. Gooptu T K 60 Sr. Administrator - Salaries & 32,83,142 15,21,920 B.Com. (Hons.), LL.B., 39 15.11.1991 Brooke Bond (I) Ltd., Retirement Funds M.I.M.A. Accountant, Welfare Funds Madhok M K 57 Assistant General Counsel 5,82,220 4,77,232 B.A.(Hons.), LL.B., L.L.M.C., 33 07.12.1998 Indian Navy, Dy. Director P.G. Dip. in H.R.M. Singh A 66 Executive Director 2,60,35,912 1,28,05,054 B. Tech. (Hons.) 43 01.03.1968 Nil Singh L B 53 Services on Loan to 10,03,779 6,78,805 B.A. (Hons.), M.A. 30 01.07.1982 Mayo College, Teacher Subsidiary Company Srinivasan R 59 Not Assigned - Employment 59,67,031 33,39,038 B.Tech. (Hons.) 37 10.09.1974 DCM Usha Sales, Mgmt. Trainee Ceased w.e.f. 30th April, 2010 Tandon A K 60 Sr. Legal Advisor 47,57,385 25,97,897 B.Sc., LL.B., F.C.S. 36 01.09.1982 @ ITC Report and Accounts 2011 73Particulars of Employees under Section 217(2A) of the Companies Act, 1956 and forming part of the Report of the Directors Name Age Designation/ Gross Net Qualifications Experi- Date of Previous Employment/ Nature of Duties Remuneration Remuneration ence Commence- Position Held (`) (`) (Years) ment of Employment 12 3 4 5 6 78 9 On behalf of the Board Y. C. DEVESHWAR Chairman P. V. DHOBALE Director Kolkata, 20th May, 2011 Vaidyanath K 61 Executive Director 4,05,28,418 2,07,00,851 B.Com.(Hons.), M.B.A. 38 16.01.1976 Shriram Refrigeration Industries

Ltd., Mgmt. Trainee Verma P K 64 Sr. Exec. V.P.- Hotels 39,53,653 22,10,167 B.Sc.(Chem. Tech.), M.B.A., 39 31.01.1986 @ Operations (HD) Dip. in Hotel Mgmt. Abbreviations denote : ITD : India Tobacco Division PSPD : Paperboards & Specialty Papers Division ABD : Agri Business Division ABD - ILTD : Agri Business, Leaf Tobacco FD : Foods Division HD : Hotels Division @ Previously employed with ITC Hotels Ltd. which was merged with the Company on March 23, 2005 # Previously employed with ITC Bhadrachalam Paperboards Ltd. which was merged with the Company on March 13, 2002 Notes : 1. Remuneration includes salary, performance bonus, allowances & other benefits / applicable perquisites except contribution to the approved Group Pension under the defined benefit scheme and Gratuity Funds and provisions for leave encashment which are actuarially determined on an overall Company basis. The term remuneration has the meaning assigned to it in Section 198 of the Companies Act, 1956. 2. Net remuneration comprises cash income less : a) income tax & education cess deducted at source. b) managers own contribution to Provident Fund. 3. All appointments are/were contractual in accordance with terms and conditions as per Company rules. 4. None of the above employees is a relative of any Director of the Company . 74 ITC Report and Accounts 2011Annexure to the Report of the Directors VI. Retrofitting measures and replacement of motors, pumps, boilers, air compressors, cooling towers and

transformers by high-energy efficiency sets across different business units. b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: I. Renewable sources such as wind turbines and micro hydel projects. II. Process improvements across different factories and installation of more energy efficient technologies. III. Solar pre-heating arrangement for boiler feed water and furnace oil at different factories. IV. Replacement of pumps, motors, compressors, blowers etc. with higher efficiency sets. V. Installation of capacitor sets to improve power factor of electrical system. c) Impact of measures of (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: The holistic approach towards energy costs reduction by focusing on specific energy costs and increasing investments on renewable energy options have resulted in significant energy cost savings for the Company. The various process improvements brought about by retrofitting and implementation of newer and better technologies have also resulted in more efficient processes. Continuing focus on sustainable business practices have led to several units of the Company

such as ITC Windsor, ITC Gardenia, ITC Maratha, Welcomhotel Rajputana, ITC InfoTech Park Bengaluru, ITC R&D Bengaluru and Printing & Packaging Business unit at Tiruvottiyur Chennai, meeting most of their energy requirements from renewable sources. Wherever feasible, less carbon intensive fuels are also being adopted to deal with the concerns of climate change and a continual system of periodic energy audits ensures that all energy conservation opportunities are realised. The Company has also 8 registered CDM (Clean Development Mechanism) projects under UNFCCC (United Nations Framework Convention on Climate Change) which have generated significant amount of Certified Emission Reductions (CERs) during the year. CONSERVATION OF ENERGY INFORMATION UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS REPORT a) Energy conservation measures taken: All business units continued their efforts to improve energy usage efficiency and increase contributions from renewable sources of energy. Various key performance indicators like specific energy (energy consumed per unit of production), specific energy costs and renewable energy contributions were continuously tracked to monitor alignment with the

Companys overall carbon strategy. Innovative ways and new technologies were constantly explored to bring about alignment with the Government of Indias National Action Plan on Climate Change. Some of the measures adopted across the Company were: I. Optimisation in energy consumption by replacing air-cooled chillers with higher efficiency water-cooled chillers, installing high efficiency burners in existing boilers and improved waste heat recovery. II. Improvement in energy usage efficiency in lighting systems by installation of automated lighting controls & sensors, changing over to higher efficiency lighting solutions such as Light Emitting Diodes and increased daylight harvesting. III. Obtaining LEED (Leadership in Energy and Environment Design) Platinum rating from US Green Building Council (USGBC) in the Existing Building (EB) category, as part of a holistic approach towards sustainability, for ITC Maurya, ITC Maratha, ITC Grand Central, ITC Sonar, ITC Mughal and ITC Windsor. This has helped achieve significant energy savings. IV. Installation of renewable energy sources like wind turbine generators and harnessing solar energy through thermal & photovoltaic systems. V. Appropriate fuel switching measures from furnace oil to piped natural gas and producer gas across different business units.

ITC Report and Accounts 2011 75TECHNOLOGY ABSORPTION INFORMATION UNDER SECTION 217(1)(e) OF THE COMP ANI E S ACT , 1 9 5 6 RE AD WI TH COMP ANI E S (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS REPORT. Research & Development 1. Specific areas in which R&D was carried out by the Company: I. Research projects for enhancing analytical capabilities, new product development and cost management. II. Development of eco-friendly paper, food grade paper, premium printing papers and coated papers and paperboards with high strength and better print aesthetics. III. Development of site specific and disease resistant clones of Eucalyptus, Casuarina and Subabul trees. IV. Control of eucalyptus gall insect (leptocybe invasa) in association with the National Bureau of Agriculturally Important Insects (NBAII, CSIR), Bengaluru. V. Development of new grades of digital printing paperboards and modification of existing products benchmarked to global standards. VI. Development of botanical formulations compatible with the Integrated Pest Management strategies of field and commercial crops. A) POWER AND FUEL CONSUMPTION

Relating to Paperboards & Paper For the For the Year ended Year ended 31st March, 31st March, 2011 2010 1. Electricity (Excluding Consumption in Colony) a) Purchased Units (KwH in Lakhs) 230 254 Total Amount (` in Lakhs) 1714 1459 Rate/Unit (`) 7.47 5.74 b) Own Generation i) Through Diesel Generator 6 17 Units (KwH in Lakhs) Units/Litre of Diesel Oil 3.03 2.98 Cost/Unit (`) 12.60 10.91 ii) Through Steam Turbine/ 4115 3899 Generator Units (KwH in Lakhs) Units/Kg. of Coal 1.45 1.62 Cost/Unit (`) 2.76 2.57 {considering all fuel types} B) CONSUMPTION PER UNIT OF PRODUCTION For the Year ended For the Year ended 31st March, 2011 31st March, 2010 Products (Paper in MT) 602099 587624 Electricity (KwH) 1036 1024 Coal C/F Grade (MT) 0.71 0.67

Furnace Oil (Litre) 30 34 Others - De Oiled Rice Bran/ 0.100 0.101 Saw Dust/Raw Lignite / LP Gas, etc. (MT) 76 ITC Report and Accounts 2011 Process Power Total Process Power Total 2. Coal (Specify Quantity & Where Used) B/C/D/E/ F Grades Coal Used Coal Quantity (MT) 398260 284708 682968 365811 240950 606761 Total Cost (` in Lakhs) 13809 11539 Average Rate 2021.96 1901.66 (` per MT) 3. F