Itc Profile

ITC profile ITC is one of India's foremost private sector companies with a market capitalization of nearly US $ 18 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today. ITC also ranks among India's top 10 `Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery. As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practices this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part." ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India. ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach. ITC's wholly owned Information Technology subsidiary, ITC Infotech India Limited, is aggressively pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services and business process outsourcing. ITC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management

systems. ITC was the first company in India to voluntarily seek a corporate governance rating. ITC employs over 21,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 3, 73,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations. This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. For the nation. For the Shareholder." History ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of India Limited'. Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more ways than one. It was to mark the beginning of a long and eventful journey into India's future. The Company's headquarter building, 'Virginia House', which came up on that plot of land two years later, would go on to become one of Kolkata's most venerated landmarks. The Company's ownership progressively Indianised, and the name of the Company was changed to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting & Stationery - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'. Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the Company. ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation. ITC chose the hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. Since then ITC's Hotels business has grown to occupy a position of leadership, with over 70 owned and managed properties spread across India. In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this division merged with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers Division. ITC's paperboards' technology,

productivity, quality and manufacturing processes are comparable to the best in the world. It has also made an immense contribution to the development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is directly involved in education, environmental protection and community development. In 2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve customer service with reduced lead time and a wider product range. In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. Since inception, its shares have been held by ITC, British American Tobacco and various independent shareholders in Nepal. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal). In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry. The merged entity was named the Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty Papers Division in November 2002. Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities. The Division is today one of India's largest exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000 with Soya farmers in Madhya Pradesh. Now it extends to 9 states covering over 4 million farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operational in the 3 states of Madhya Pradesh, Maharashtra and Uttar Pradesh. In 2000, ITC launched a line of high quality greeting cards under the brand name 'Expressions'. In 2002, the product range was enlarged with the introduction of Gift wrappers, Autograph books and Slam books. In the same year, ITC also launched 'Expressions Matrubhasha', a vernacular range of greeting cards in eight languages and 'Expressions Paper Kraft', a range of premium stationery products. In 2003, the company rolled out 'Classmate', a range of notebooks in the school stationery segment. ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained recognition from buyers and retailers as the single largest B-2-B platform for the Fashion Design industry. To mark the occasion, ITC launched a special 'Celebration Series', taking the event forward to consumers. In 2007, the Company introduced 'Miss Players'- a fashion brand in the popular segment for the young woman. In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC InfoTech India Limited, to more aggressively pursue emerging

opportunities in this area. Today ITC InfoTech is one of India’s fastest growing global IT and IT-enabled services companies and has established itself as a key player in offshore outsourcing, providing outsourced IT solutions and services to leading global customers across key focus verticals - Manufacturing, BFSI (Banking, Financial Services & Insurance), CPG&R (Consumer Packaged Goods & Retail) and THT (Travel, Hospitality and Transportation). ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC's entered the fast growing branded snacks category with Bingo! in 2007. In just six years, the Foods business has grown to a significant size with over 200 differentiated products under six distinctive brands, with an enviable distribution reach, a rapidly growing market share and a solid market standing. In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative. ITC now markets popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro. ITC’s foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands include Spriha and Mangaldeep across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Sambrani and Nagchampa. ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body care products for men and women in July 2005. Inizio, the signature range under Essenza Di Wills provides a comprehensive grooming regimen with distinct lines for men (Inizio Homme) and women (Inizio Femme). Continuing with its tradition of bringing world class products to Indian consumers the Company launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October and December 2007 respectively. The Company also launched the 'Superia' range of Soaps and Shampoos in the mass-market segment at select markets in October 2007 and Vivel De WIlls & Vivel range of soaps in February 2008.

Leadership Flowing from the concept and principles of Corporate Governance adopted by the Company, leadership within ITC is exercised at three levels. The Board of Directors at the apex, as trustee of shareholders, carries the responsibility for strategic supervision of the Company. The strategic management of the Company rests with the Corporate Management Committee comprising the wholetime Directors and members drawn from senior management. The executive management of each business division is vested with the Divisional Management Committee (DMC), headed by the Chief Executive. Each DMC is responsible for and totally focused on the management of its assigned business.

This three-tiered interlinked leadership process creates a wholesome balance between the need for focus and executive freedom, and the need for supervision and control. Corporate governance Definition and purpose Preamble Over the years, ITC has evolved from a single product company to a multibusiness corporation. Its businesses are spread over a wide spectrum, ranging from cigarettes and tobacco to hotels, packaging, paper and paperboards and international commodities trading. Each of these businesses is vastly different from the others in its type, the state of its evolution and the basic nature of its activity, all of which influence the choice of the form of governance. The challenge of governance for ITC therefore lies in fashioning a model that addresses the uniqueness of each of its businesses and yet strengthens the unity of purpose of the Company as a whole. Since the commencement of the liberalisation process, India's economic scenario has begun to alter radically. Globalisation will not only significantly heighten business risks, but will also compel Indian companies to adopt international norms of transparency and good governance. Equally, in the resultant competitive context, freedom of executive management and its ability to respond to the dynamics of a fast changing business environment will be the new success factors. ITC's governance policy recognises the challenge of this new business reality in India. DEFINITION AND PURPOSE 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 vast quantum of societal resources, we believe that the governance process should ensure that these companies are managed in a manner that meets stakeholders aspirations and societal expectations. CORE PRINCIPLES ITC's Corporate Governance initiative is based on two core principles. These are : (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 provide empowerment to the executive management of the Company, and simultaneously create a mechanism of checks and balances which ensures that the decision making powers vested in the executive management is not only not misused, but is used with care and responsibility to meet stakeholder aspirations and societal expectations. Cornerstones From the above definition and core principles of Corporate Governance emerge the cornerstones of ITC's governance philosophy, namely trusteeship, transparency, empowerment and accountability, control and ethical corporate citizenship. ITC believes that the practice of each of these leads to the creation of the right corporate culture in which the company is managed in a manner that fulfíls the purpose of Corporate Governance. Trusteeship : ITC believes that large corporations like itself have both a social and economic purpose. They represent a coalition of interests, namely those of the shareholders, other providers of capital, business associates and employees. This belief therefore casts a responsibility of trusteeship on the Company's Board of Directors. They are to act as trustees to protect and enhance shareholder value, as well as to ensure that the Company fulfils its obligations and responsibilities to its 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 : ITC believes that transparency means explaining Company's policies and actions to those to whom it has responsibilities. Therefore transparency must lead to maximum appropriate disclosures without jeopardising the Company's strategic interests. Internally, transparency means openness in Company's relationship with its employees, as well as the conduct of its business in a manner that will bear scrutiny. We believe transparency enhances accountability. Empowerment and Accountability : Empowerment is an essential concomitant of ITC's first core principle of governance that management must have the freedom to drive the enterprise forward. ITC believes that empowerment is a process of actualising the potential of its employees. Empowerment unleashes creativity and innovation throughout the organisation by truly vesting decision-making powers at the most appropriate levels in the organisational hierarchy. ITC believes that the Board of Directors are accountable to the shareholders, and the management is accountable to the Board of Directors. We believe that empowerment, combined with accountability, provides an impetus to performance and improves effectiveness, thereby enhancing shareholder value. Control : 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. Control should prevent misuse of power, facilitate timely management response to change, and ensure that business risks are pre-emptively and effectively managed. Ethical Corporate Citizenship : ITC believes that corporations like itself have a responsibility to set exemplary standards of ethical behaviour, both internally within the organisation, as well as in their external relationships. We believe that unethical behaviour corrupts organisational culture and undermines stakeholder value. THE GOVERNANCE STRUCTURE The governance structure Flowing from the philosophy and core principles, Corporate Governance in ITC shall take place at three interlinked levels, namely Strategic supervision by the Board of Directors Strategic management by the Corporate Management Committee Executive management by the Divisional Chief Executive assisted by the Divisional Management Committee It is ITC's belief that the right balance between freedom of management and accountability to shareholders can be achieved by segregating strategic supervision from strategic and executive management. The Board of Directors (Board) as trustees of the shareholders will exercise strategic supervision through strategic direction and control, and seek accountability for effective strategic management from the Corporate Management Committee (CMC). The CMC will have the freedom, within Board approved direction and framework, to focus its attention and energies on the strategic management of the Company. The Divisional Chief Executive, assisted by the Divisional Management Committee, will have the freedom to focus on the executive management of the divisional business. The 3-tier governance structure thus 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 the divisional business, free from collective strategic responsibilities for ITC as a whole, gets focused on enhancing the quality, efficiency and effectiveness of its business. ROLES The core roles of the various entities at the three levels of Corporate Governance will be as follows :

Roles The core role of various entities at the 3 levels of corporate governance will be as follows Board of Directors (Board) : The primary role of the Board of Directors 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 they will ensure that the Company has clear goals relating to shareholder value and its growth. They should set strategic goals and seek accountability for their fulfillment. They will provide direction, and exercise appropriate control to ensure that the Company is managed in a manner that fulfills stakeholder aspirations and societal expectations. The Board must periodically review its own functioning to ensure that it is fulfilling its role. The ITC Board will be a balanced Board, consisting of Executive and NonExecutive Directors, the latter including independent professionals. Executive directors, including the Executive Chairman, shall not generally exceed 1/3rd of the total strength of the Board. The Non-Executive Directors shall comprise eminent professionals, drawn from amongst persons with experience in business / finance / law / public enterprises. Directors shall be appointed / re-appointed for a period of three to five years, and in the case of Executive Directors up to the date of their retirement, whichever is earlier. The Board shall determine from time to time the retirement age for both Executive and Non-Executive Directors. The Board shall specify the maximum number of company Directorships which can be held by members of the ITC Board. Non-Executive Directors are expected to play a critical role in imparting balance to the Board processes by bringing an independent judgement to bear on issues of strategy, performance, resources, standards of Company conduct, etc. The Board shall meet at least six times a year and as far as possible meetings will be held once in two months. The annual calendar of meetings shall be agreed upon at the beginning of each year. As laid down in the Articles of Association of the Company, the quorum for meetings shall be one third of members and decisions shall be taken by simple majority, unless statutorily required otherwise. Meetings shall be governed by a structured agenda. All major issues included in the agenda shall be backed by comprehensive background information to enable the Board to take informed decisions. Agenda papers, as far as practicable, shall be circulated at least three working days prior to the meeting. Normally items for the Board Agenda, except those emanating from Board Committees, shall have been examined by the CMC. Minutes shall be circulated within 15 working days of the meeting and confirmed at the next meeting. Board decisions shall record the related logic as far as practicable. The Board shall have the following Committees whose terms of reference shall be determined by the Board from time to time : Audit Committee : To provide assurance to the Board on the adequacy of internal control systems and financial disclosures. The Head of Internal Audit will

act as co-ordinator to the Audit Committee, but will be administratively under the control of the Director accountable to the Board for the Finance function. Compensation Committee : To recommend to the Board compensation terms for Executive Directors and the seniormost level of management below the Executive Directors. Nominations Committee : To recommend to the Board nominations for membership of the CMC and the Board, and oversee succession for the seniormost level of management below the Executive Directors. Investor Services Committee : To look into redressal of shareholder and investors grievances, approval of transmissions, sub-division of shares, issue of duplicate shares, etc. Terms of Reference of the Board Committees shall include : - Objectives, Role, Responsibilities - Authority / Powers - Membership & Quorum - Chairmanship - Tenure - Frequency of Meetings The composition of these Committees will be as follows :Committee Members Chairman Audit Committee

Directors of the Company, as may be decided by the Board, with not less than 3 members, all being Non-Executive Directors with majority of them being independent; and with at least one Director having financial and accounting knowledge. The Director accountable to the Board for the Finance function, Head of Internal Audit and representative of External Auditors shall be the Permanent Invitees with the Company Secretary to act as the Secretary.

One of the Independent Directors, to be determined by the Board.

Compensation Non-Executive Directors, as may be Committee decided by the Board, with the Director accountable to the Board for the HR Function as the Secretary.

One of the Independent Directors, to be determined by the Board.

Nominations Committee

The Executive Chairman and all the Non-Executive Directors.

Executive Chairman.

Investor Services Committee

Directors of the Company, as may be decided by the Board, with the Company Secretary as the Secretary.

One of the nonExecutive Directors, to be determined by

the Board. Normally meetings of the Board Committees shall be convened by their respective Chairmen. However, any member of the Committee may, with the consent of the concerned Chairman, convene a meeting of the Committee. The Chairmanship of Board Committees shall be for two years at a time. Signed minutes of Board Committee meetings shall be tabled for the Board's information as soon as possible. However, issues requiring Board's attention / approval should be tabled in the form of a note to the Board from the Committee Chairman. In the event there are no issues to be brought before the Board by the Audit Committee, the Committee Chairman shall submit a 'NIL' report to the Board. Corporate Management Committee (CMC) : The primary role of the CMC is strategic management of the Company's businesses within Board approved direction / framework. The CMC will operate under the superintendence and control of the Board. The composition of the CMC will be determined by the Board (based on the recommendation of the Nominations Committee), and will consist of all the Executive Directors and three or four key senior members of management. Membership of the CMC shall be reviewed by the Nominations Committee annually. The CMC shall be convened and chaired by the Executive Chairman of the Company. The Company Secretary shall be the Secretary of the CMC. The quorum for meetings will be 50% of the members, subject to a minimum of three members. Decisions will be taken by simple majority. Minutes of CMC meetings shall be tabled before the Board for its information. However, issues arising from CMC Meetings and requiring Board's approval / attention should be tabled in the form of a note from the relevant Executive Director. Agenda items shall be backed by comprehensive notes from the concerned member / invitee, along with DMC approval where applicable. Agenda papers, as far as practicable, shall be circulated at least three days prior to the meeting. The CMC shall normally meet once a month. Executive Chairman of ITC : The Executive Chairman of ITC shall operate as the Chief Executive for ITC as a whole. He shall be the Chairman of the Board and the CMC. His primary role is to provide leadership to the Board and CMC for realising Company goals in accordance with the charter approved by the Board. He shall be responsible for the working of the Board, for its balance of membership (subject to Board and Shareholder approvals), for ensuring that all relevant issues are on the agenda, for ensuring that all directors are enabled and encouraged to play a full part in the activities of the Board. He shall keep the Board informed on all matters of importance. He shall preside over the General Meetings of shareholders. As Chairman of the CMC he will be responsible for its working, for ensuring that all relevant issues are on the agenda, for ensuring that all CMC members are enabled and encouraged to play a full part in its activities.

Executive Director : a) As a member of the CMC, contribute to the strategic management of the Company's businesses within Board approved direction / framework. b) As Director accountable to the Board for a business (Line Director), assume overall responsibility for its strategic management, including its governance processes and top management effectiveness. c) As Director accountable to the Board for a wholly owned subsidiary, or its wholly owned subsidiary (Line Director), act as the custodian of ITC's interest and be responsible for their governance in accordance with the charter approved by the Board. d) As Director accountable to the Board for a particular corporate function (Line Director), assume overall strategic responsibility for its performance. Divisional Management Committee (DMC) : Executive management of the divisional business to realise tactical and strategic objectives in accordance with CMC / Board approved plan. Composition of the DMC shall be determined by the Line Director with the approval of the CMC. The Divisional CEO shall convene and chair the DMC meetings. If the Divisional CEO, for any reason, is not in a position to convene a required DMC meeting, he shall in writing delegate the power to convene and chair the required meeting to one of the DMC members identified by name. Such delegation should be either for a specific meeting or for meetings to be held during a specific period of time. It cannot be a general, openended delegation. The key functions of the Division shall be represented on the DMC. Normally the Divisional Financial Controller, in addition to being a member, shall act as the Secretary to the DMC and will be responsible for circulation and custody of agenda notes and minutes. The DMC shall generally meet at least once a month to review Divisional performance and related issues. Quorum for meetings shall be 50% of the members subject to a minimum of three members. Decisions will be taken by simple majority. Minutes of meetings shall be tabled before the CMC for its information. Agenda items shall be backed by comprehensive notes from the relevant member / invitee. Agenda papers, as far as practicable, shall be circulated at least three days prior to the meeting. Divisional CEO : The Divisional CEO shall function as the Chief Operating Officer with executive responsibility for day-to-day operation of the Divisional business, and shall provide leadership to the Divisional Management Committee in its task of executive management of the Divisional business. Board committe Audit Committee P B Ramanujam

Chairman

S B Mathur

Member

B Vijayaraghavan

Member

K Vaidyanath

Permanent Invitee (Director in charge of Finance)

S Basu

Permanent Invitee

(Head of Internal Audit) B B Chatterjee

Secretary

Compensation Committee B Sen

Chairman

J P Daly

Member

S B Mathur

Member

Ram S Tarneja

Member

Investor Services Committee B Sen

Chairman

P B Ramanujam

Member

A Singh

Member

B B Chatterjee

Secretary

Nominations Committee Y C Deveshwar

Chairman

J P Daly

Member

S H Khan

Member

S B Mathur

Member

D K Mehrotra

Member

P B Ramanujam

Member

B Sen

Member

Ram S Tarneja

Member

B Vijayaraghavan Member Core values Trusteeship As professional managers, we are conscious that ITC has been given to us in "trust" by all our stakeholders. We will actualise stakeholder value and interest on a long term sustainable basis. Customer Focus We are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction. Respect For People

We are result oriented, setting high performance standards for ourselves as individuals and teams. We will simultaneously respect and value people and uphold humanness and human dignity. We acknowledge that every individual brings different perspectives and capabilities to the team and that a strong team is founded on a variety of perspectives. We want individuals to dream, value differences, create and experiment in pursuit of opportunities and achieve leadership through teamwork. Excellence We do what is right, do it well and win. We will strive for excellence in whatever we do. Innovation We will constantly pursue newer and better processes, products, services and management practices. Nation Orientation We are aware of our responsibility to generate economic value for the Nation. In pursuit of our goals, we will make no compromise in complying with applicable laws and regulations at all levels Global honors ITC constantly endeavours to benchmark its products, services and processes to global standards. The Company's pursuit of excellence has earned it national and international honours. ITC is one of the eight Indian companies to figure in Forbes A-List for 2004, featuring 400 of "the world's best big companies". Forbes has also named ITC among Asia's'Fab 50' and the World's Most Reputable Companies. ITC has several firsts to its credit: ITC is the first from India and among the first 10 companies in the world to publish its Sustainability Report in compliance (at the highest A+ level) with the latest G3 guidelines of the Netherlands-based Global Reporting Initiative (GRI), a UN-backed, multistakeholder international initiative to develop and disseminate globally applicable Sustainability Reporting Guidelines. ITC is the first Indian company and the second in the world to win the prestigious Development Gateway Award. It won the $100,000 Award for the year 2005 for its trailblazing ITC e-Choupal initiative which has achieved the scale of a movement in rural India. The Development Gateway Award recognizes ITC's e-Choupal as the most exemplary contribution in the field of Information and Communication Technologies (ICT) for development during the last 10 years. ITC e-Choupal won the Award for the importance of its contribution to development priorities like poverty reduction, its scale and replicability, sustainability and transparency. ITC has won the inaugural 'World Business Award', the worldwide business award recognising companies who have made significant efforts to create sustainable livelihood opportunities and enduring wealth in developing countries. The award has been instituted jointly by the United Nations Development

Programme (UNDP), International Chamber of Commerce (ICC) and the HRH Prince of Wales International Business Leaders Forum (IBLF). ITC is the first Corporate to receive the Annual FICCI Outstanding Vision Corporate Triple Impact Award in 2007 for its invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation. ITC has won the Golden Peacock Awards for 'Corporate Social Responsibility (Asia)' in 2007, the Award for ‘CSR in Emerging Economies 2005’ and ‘Excellence in Corporate Governance' in the same year. These Awards have been instituted by the Institute of Directors, New Delhi, in association with the World Council for Corporate Governance and Centre for Corporate Governance The Company's Green Leaf Threshing plants at Chirala and Anaparti in Andhra Pradesh are the first units of their kind in the world to get ISO 14001 environment management systems certification. ITC's cigarette factory in Kolkata is the first such unit in India to get ISO 9000 quality certification and the first among cigarette factories in the world to be awarded the ISO 14001 certification ITC Maurya in New Delhi is the first hotel in India to get the coveted ISO 14001 Environment Management Systems certification. ITC Filtrona is the first cigarette filter company in the world to obtain ISO 14001 ITC Infotech finds pride of place among a select group of SEI CMM Level 5 companies in the world. ITC's Green Leaf Threshing plant in Chirala is the first in India and among the first 10 units in the world to bag the Social Accountability (SA 8000) certification ITC Chairman Y C Deveshwar has received several honours over the years. Notable among them are: Year Award 2007 2006 2006 2005 2001 1998 1996 1994

SAM/SPG Sustainability Leadership Award conferred at the International Sustainability Leadership Symposium, Zurich. Business Person of the Year from UK Trade & Investment, the UK Government organisation that supports overseas businesses in that country. Inducted into the `Hall of Pride' by the 93rd Indian Science Congress Honoured with the Teacher's Lifetime Achievement Award Manager Entrepreneur of the Year from Ernst & Young Retail Visionary of the Year from Images, India's only fashion and retail trade magazine Honorary Fellowship from the All India Management Association Distinguished Alumni Award from IIT, Delhi Marketing Man of the Year from A&M, the leading marketing

1986

magazine Meridien Hotelier of the Year

Some of the other notable recognitions are: The Stockholm Challenge 2006 for the e-Choupal initiative. This award is for using Information Technology for the economic development of rural communities. The Company won the Corporate Social Responsibility Crown Award for Water Practices from UNESCO and Water Digest for its distinguished work carried out in the water sector in India. ITC also received the National Award for Excellence in Water Management 2007 in the 'beyond the fence' category from the CII Sohrabji Godrej Green Business Centre for its leadership role in implementing water and watershed management practices. The watershed programme also won the Asian CSR Award 2007 for Environmental Excellence given by the Asian Institute of Management. The Award recognizes and honours Asian companies for outstanding, innovative and world-class projects. The Company also received the Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum. This Award aims at promoting information dissemination of good practices towards sustainable development in the Asia-Pacific region.

The The Corporate Award for Social Responsibility 2008 from The Energy and Resources Institute (TERI) in recognition of its exemplary initiatives in implementing integrated watershed development programmes across 7 states in India. The company also won the award in 2004 for its e-Choupal initiative. The Award provides impetus to sustainable development and encourages ongoing social responsibility processes within the corporate sector.

ITC has won the 'Enterprise Business Transformation Award' for Asia Pacific (Apac), instituted by Infosys Technologies and Wharton School of the University of Pennsylvania for its celebrated e-Choupal initiative. ITC is the only Indian FMCG company to have featured in the Forbes 2000 list. The Forbes 2000 is a comprehensive ranking of the world's biggest companies, measured by a composite of sales, profits, assets and market value. The list spans 51 countries and 27 industries. ITC continues its dominance of The Economic Times' Brand Equity listing of India's 100 Biggest FMCG Brands, with three brands from its stable making it to the top five. Gold Flake remains India's biggest FMCG brand in terms of sales. Navy Cut ranks at No. 4. ITC's Scissors brand ranks at No 5 and is the only new entrant into the top 10. Restaurant magazine has chosen Bukhara at the ITC Maurya, New Delhi as the best Indian restaurant in the world and the best restaurant in Asia. Bukhara has also been adjudged one of the top 50 restaurants in the world by the London based magazine 'The Good Food Guide'. Bukhara is the only South Asian restaurant to figure in the list. ITC's Lifestyle Retailing Business Division (LRBD) has won the "Best Supply Chain Practices Award" for time-effective and cost-efficient Logistics Management in Organized Retail. The awards were organized by Retailers Association of India (rai) in association with ITW Signode - the International leaders in packaging solutions. Sunfeast :: Snack foods Sunfeast In 2003, ITC forayed into the Biscuits market with the Sunfeast range of Glucose, Marie and Cream Biscuits. Sunfeast’s brand essence, "Spread the Smile" connotes happiness, contentment, satisfaction and pleasure. The mascot Sunny reinforces the emotional aspects of the brand. Sunfeast immediately established itself as a provider of innovative and distinctive products - Sunfeast Marie was launched in an innovative orange flavor and the 'Sunfeast Dream Cream' range includes new flavors as well as flavor enhancers. The Sunfeast Dream Cream range is currently available in 8 variants. The Company has also introduced 'Sunfeast Dark Fantasy', a dark chocolate and vanilla cream offering for the premium segment in select markets. Riding on the success of its initial offerings, ITC also entered the milk biscuit category with Sunfeast Milky Magic biscuits in the general milk and milk cream

categories. Apart from milk which helps mental growth, these biscuits also contain the finest quality wheat aiding physical growth. Both cream and milk biscuits have received enthusiastic response from consumers. In the last few years the Sunfeast biscuits portfolio has been enhanced to include salted crackers and cookies. The 'Sunfeast Snacky' salted crackers are available in 2 unique variants viz., Chilli Flakes and Classic Salted. Sunfeast's cookie offering, 'Sunfeast Special' biscuits are also available in select markets. The Sunfeast Special range currently includes cookies in three variants – Butter, Cashew and crunchy Coconut, as well as cream biscuits in two variants – Choco and Orange. The recently launched Sunfeast Golden Bakery offers the freshly baked taste of cookies in 3 variants - Choco-nut, Butter-nut and Butter scotch. The brand has also launched Sunfeast Nice, a tasty and delightful offering of crispy, sugar sprinkled biscuits. The Sunfeast product portfolio has been further expanded to include healthy snacking options as well. 'Sunfeast Pasta Treat', a whole wheat based instant pasta was introduced as a healthy snacking option for children. After the tremendous success of the 4 initial flavours the instant Pasta range has been extended with two new exciting flavours – Pizza and Chicken. The pasta segment was further expanded with the launch of 'Sunfeast Benne Vita' in 4 innovative variants. This range has been enhanced recently with the launch of Sunfeast Benne Vita Flax Seed biscuits that reflect the brand essence of Benne Vita, which in Italian stands for ‘Good Life’. The flax seed content in these protein and mineral enriched biscuits is a rich vegetarian source of Omega III acids. With continued focus on health and nutrition, Sunfeast extended the biscuits portfolio to the nutritional segment with the launch Sunfeast Sachin's Fit Kit – a range of healthy products co-created with Sachin Tendulkar. It is for the first time in India that an icon of the stature of Sachin Tendulkar has been actively involved in the product development process as co-creator of the Sunfeast Sachin's Fit Kit range. It is the shared vision of Sunfeast as well as Sachin Tendulkar that products under the Sachin's Fit Kit range will enable create "Champions of Tomorrow". The launch range comprises two offerings - Sunfeast Sachin's Vitamin and Protein enriched biscuits and Sunfeast Sachin's Multigrain biscuits.

Turn over - Chairman Y C Deveshwar, AGM 2000 PARTICULARS

1995-96

Gross Income

5188

Market Capitalisation*

5571

Profit After Tax (before exceptional items)

261

Profit After Tax (after exceptional items)

261 0.71 0.71

EPS - Basic (Rs.) (before exceptional items)

1121

EPS - Basic (Rs.) (after exceptional items) Net Worth

3 1886 28.4

Book Value per Share (Rs.)

(Rs. In Crores) 2006-07 19842 56583* 2700 2700 7.19 7.19 10437 28 11111 35.3

Capital Employed ROCE %

Quarterly results Segment-wise Revenue, Results and Capital Employed for the Quarter and Twelve months ended 31st March, 2008 (Rs. in Crores) Quarter Quarter ended ended 31.03.2008 31.03.2007

Twelve Twelve Months Months ended ended 31.03.2008 31.03.2007

1. Segment Revenue a) FMCG - Cigarettes - Gross

3583.00

3294.04

13825.60

12833.70

- Net

1730.23

1545.13

6634.98

5894.90

- Others - Gross

738.43

491.22

2511.05

1689.46

- Net

737.26

491.22

2509.57

1689.46

4321.43

3785.26

16336.65

14523.16

- Net

2467.49

2036.35

9144.55

7584.36

b) Hotels – Gross

339.28

304.35

1100.20

985.67

312.54

279.10

1012.10

905.84

1078.11

841.49

3868.44

3501.28

1078.11

841.49

3868.44

3501.28

619.67

533.35

2364.33

2100.06

567.71

484.45

2157.94

1910.58

6358.49

5464.45

23669.62

21110.17

4425.85

3641.39

16183.03

13902.06

512.44

287.57

2313.68

1810.13

491.46

269.53

2235.50

1737.77

Gross sales / Income from operations

5846.05

5176.88

21355.94

19300.04

Net sales / Income from operations

3934.39

3371.86

13947.53

12164.29

870.06

741.68

3634.04

3172.15

(117.89)

(48.34)

(263.52)

(201.99)

Total FMCG

752.17

693.34

3370.52

2970.16

b) Hotels

142.76

117.05

410.77

350.78

37.01

8.67

129.19

123.55

122.72

97.17

453.14

416.78

1054.66

916.23

4363.62

3861.27

2.70

(0.05)

4.61

3.28

(32.20)

(24.15)

(212.76)

(68.71)

1084.16

940.43

4571.77

3926.70

Provision for Taxation

348.52

289.74

1451.67

1226.73

Profit After Tax

735.64

650.69

3120.10

2699.97

Total FMCG - Gross

- Net c) Agri Business - Gross - Net d) Paperboards, Paper & Packaging - Gross - Net Total – Gross - Net Less : Inter-segment revenue - Gross - Net

2. Segment Results a) FMCG - Cigarettes - Others

c) Agri Business d) Paperboards, Paper & Packaging Total Less : i) Interest (Net) ii) Other un-allocable income net of un-allocable expenditure Profit Before Tax

3. Capital Employed

a) FMCG - Cigarettes *

2314.64

1996.70

1826.66

962.26

Total FMCG

4141.30

2958.96

b) Hotels

1865.32

1466.25

c) Agri Business

1468.97

1480.00

d) Paperboards, Paper & Packaging

3264.18

2559.46

10739.77

8464.67

- Others

Total Segment Capital Employed

* Before considering provision of Rs. 598.42 Crores (31.03.2007 - Rs. 535.95 Crores) in respect of disputed State taxes, the levy/collection of which has been stayed. Notes: (1) The Company's corporate strategy aims at creating multiple drivers of growth anchored on its core competencies. The Company is currently focused on four business groups : FMCG, Hotels, Paperboards, Paper & Packaging and Agri Business. The Company's organisational structure and governance processes are designed to support effective management of multiple businesses while retaining focus on each one of them. (2) The business groups comprise the following : FMCG : Cigarettes - Cigarettes & Smoking Mixtures. : Others

Hotels

- Branded Packaged Foods (Staples, Biscuits, Confectionery, Snack Foods and Ready to Eat Foods), Garments, Educational and other Stationery, Matches, Agarbattis and Personal Care products. - Hoteliering.

Paperboards, Paper - Paperboards, Paper including Specialty Paper & & Packaging Packaging including Flexibles. Agri Business

- Agri commodities such as rice, soya, coffee and leaf tobacco.

(3) Segment results of the new business activities namely 'FMCG : Others' largely reflect business development and gestation costs. (4) The Company's Agri Business markets agri commodities in the export and domestic markets; supplies agri raw materials to the Branded Packaged Foods Business and sources leaf tobacco for the Cigarettes Business. The segment results for the year are after absorbing costs relating to the strategic e-Choupal initiative. (5) Figures for the corresponding previous quarter and year ended 31st March,

2007 have been re-arranged, wherever necessary, to conform to the figures of the current quarter and year. Disclosure as required under other clauses of the Listing Agreement (Rs. in Crores) Twelve months Ended Twelve months Ended 31.03.2008 31.03.2007 NET PROFIT

3120.10

2699.97

PROFIT BROUGHT FORWARD

647.53

562.06

AVAILABLE FOR APPROPRIATION

3767.63

3262.03

1500.00

1250.00

b) Profit carried forward

724.45

647.53

DIVIDEND INCLUDING DIVIDEND TAX

1543.18

1364.50

APPROPRIATION OF PROFIT AND RESERVE a) Transfer to General Reserve

Notes: (i) The above was approved at the meeting of the Board of Directors of the Company held on 23rd May, 2008. (ii) Figures for the previous year have been re-arranged wherever necessary. (iii) The Board of Directors of the Company has recommended a dividend of Rs. 3.50 per Ordinary Share of Re.1/- each for the financial year ended 31st March, 2008 and the dividend, if declared, will be paid on or after 31st July, 2008 to those members entitled thereto. (iv) The Register of Members of the Company shall remain closed from Friday, 18th July, 2008 to Wednesday, 30th July, 2008, both days inclusive. (v) The 97th Annual General Meeting of the Company has been convened for Wednesday, 30th July, 2008. Audited Financial Results (Consolidated) for the Twelve Months ended 31st March, 2008 (Rs. in Crores) Consolidated Financial Results for Twelve Months ended 31.03.2008

31.03.2007

GROSS INCOME

22894.73

20364.52

NET SALES TURNOVER

[1]

14659.10

12668.72

OTHER INCOME

[2]

586.19

360.76

NET INCOME (1 + 2)

[3]

15245.29

13029.48

(12.45)

(192.22)

b) Consumption of raw materials.

4789.65

3801.92

c) Purchase of traded goods

1165.76

1476.75

d) Employees cost

1066.94

858.88

472.87

393.78

3081.06

2637.21

EXPENDITURE a) (Increase) / decrease in stock-in-trade and work in progress

e) Depreciation f) Other Expenditure g) Total

[4]

10563.83

8976.32

INTEREST (Net)

[5]

6.28

4.10

PROFIT BEFORE TAX (3-4-5)

[6]

4675.18

4049.06

TAX EXPENSE

[7]

1497.01

1274.72

PROFIT AFTER TAX BEFORE SHARE OF PROFIT / (LOSS) OF ASSOCIATES AND MINORITY INTERESTS(6-7)

[8]

3178.17

2774.34

[9]

7.86

6.63

PROFIT AFTER TAX BEFORE MINORITY INTERESTS (8+9)

[10]

3186.03

2780.97

MINORITY INTERESTS

[11]

28.27

25.71

3157.76

2755.26

[12]

376.86

376.22

RESERVES EXCLUDING REVALUATION RESERVES

[13]

11849.81

10135.62

EARNING PER SHARE (Rs.)

[14]

- Basic

8.39

7.33

- Diluted

8.35

7.31

Less:

SHARE OF PROFIT / (LOSS) OF ASSOCIATES

NET PROFIT (10-11) PAID UP EQUITY SHARE CAPITAL (Ordinary shares of Re.1.00 each)

On Net Profit

PUBLIC SHAREHOLDING

[15]

- NUMBER OF SHARES - PERCENTAGE OF SHAREHOLDING

Registered Office: Virginia House, 37 J.L.Nehru Road, Kolkata - 700 071, India Dated : 23rd May, 2008 Place : Kolkata, India

3741500893

3706609279

99.28

98.52

For and on behalf of the Board Sd/- Y C Sd/- K Vaidyanath Deveshwar Executive Director Chairman