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ITC Ltd.

BSE: 500875 Sector: Consumer
NSE: ITC ISIN Code: INE154A01025
BSE 00:00 | 16 Nov 276.25 1.80
(0.66%)
OPEN

277.00

HIGH

278.15

LOW

275.05

NSE 00:00 | 16 Nov 276.55 2.05
(0.75%)
OPEN

275.80

HIGH

278.30

LOW

275.25

OPEN 277.00
PREVIOUS CLOSE 274.45
VOLUME 533862
52-Week high 322.70
52-Week low 250.50
P/E 29.36
Mkt Cap.(Rs cr) 338,232
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 277.00
CLOSE 274.45
VOLUME 533862
52-Week high 322.70
52-Week low 250.50
P/E 29.36
Mkt Cap.(Rs cr) 338,232
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

ITC Ltd. (ITC) - Auditors Report

Company auditors report

to the Members of ITC Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of ITCLIMITED ("the Company") which comprise the Balance Sheet as at 31st March2018 and the Statement of Profit and Loss (including Other Comprehensive Income)Statement of Changes in Equity and Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone FinancialStatements

2. The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these standalone financial statements that give a true and fair view ofthe financial position financial performance including other comprehensive income cashflows and changes in equity of the Company in accordance with the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended and other accounting principles generallyaccepted in India.

This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

Auditor's Responsibility

3. Our responsibility is to express an opinion on these standalonefinancial statements based on our audit.

In conducting our audit we have taken into account the provisions ofthe Act the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules made thereunderand the Order issued under section 143(11) of the Act.

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the standalone financial statements arefree from material misstatement.

4. An audit involves performing procedures to obtain audit evidenceabout the amounts and the disclosures in the standalone financial statements. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error. In making those risk assessments the auditor considers internal financialcontrol relevant to the Company's preparation of the standalone financial statementsthat give a true and fair view in order to design audit procedures that are appropriate inthe circumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by theCompany's Directors as well as evaluating the overall presentation of the standalonefinancial statements.

5. We believe that the audit evidence obtained by us is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.

Opinion

6. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the Ind AS and other accounting principles generally accepted in India ofthe state of affairs of the Company as at 31st March 2018 and its profit totalcomprehensive income the changes in equity and its cash flows for the year ended on thatdate.

Report on Other Legal and Regulatory Requirements

7. As required by section 143(3) of the Act based on our audit wereport that:

(a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) in our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.

(c) the Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.

(d) in our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards prescribed under section 133 of the Act.

(e) on the basis of the written representations received from thedirectors of the Company as on 31st March 2018 taken on record by the Board of Directorsnone of the directors is disqualified as on 31st March 2018 from being appointed as adirector in terms of Section 164(2) of the Act.

(f) with respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.

(g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements in accordance with the generallyaccepted accounting practice - also refer Note 27 (vi) (a) (i) to the standalone financialstatements.

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

8.As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.

For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 302009E)
P. R. Ramesh
Gurugram Partner
16th May 2018 (Membership No. 70928)

Annexure - A to the Independent Auditor's Report

(Referred to in paragraph 7 (f) under ‘Report on Other Legal andRegulatory Requirements' section of our report to the Members of ITC Limited of evendate)

Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls over financialreporting of ITC Limited ("the Company") as of 31st March 2018 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected.

Also projections of any evaluation of the internal financial controlsover financial reporting to future periods are subject to the risk that the internalfinancial control over financial reporting may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2018 based on thecriteria for internal control over financial reporting established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 302009E)
P. R. Ramesh
Gurugram Partner
16th May 2018 (Membership No. 70928)

Annexure - B to the Independent Auditor's Report

(Referred to in paragraph 8 under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.

(b) The property plant and equipment were physically verified duringthe year by the Management in accordance with a regular programme of verification whichin our opinion provides for physical verification of all the property plant andequipment at reasonable intervals. According to the information and explanations given tous no material discrepancies were noticed on such verification.

(c) With respect to immovable properties of acquired land and buildingsthat are freehold according to the information and explanations given to us and therecords examined by us and based on the examination of the registered sale deed / transferdeed / conveyance deed / court orders approving schemes of arrangements/amalgamations andother documents provided to us we report that the title deeds of such immovableproperties are held in the name of the Company as at the balance sheet date.

(ii) As explained to us the inventories other than material lying withthird parties (which have substantially been confirmed) were physically verified duringthe year by the Management at reasonable intervals and no material discrepancies werenoticed on such physical verification.

(iii) The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the Registermaintained under Section 189 of the Companies Act 2013.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Sections 185 and 186 of theCompanies Act 2013 in respect of grant of loans making investments and providingguarantees and securities as applicable.

(v) According to the information and explanations given to us theCompany has not accepted any deposit during the year and accordingly the question ofcomplying with Sections 73 and 76 of the Companies Act 2013 does not arise. In respect ofunclaimed deposits the Company has complied with the provisions of Sections 74 and 75 orany other relevant provisions of the Companies Act 2013. According to the information andexplanations given to us no Order has been passed by the Company Law Board or theNational Company Law Tribunal or the Reserve Bank of India or any Court or any otherTribunal on the Company.

(vi) The maintenance of cost records has been prescribed by the CentralGovernment under Section 148(1) of the Companies Act 2013 in respect of specifiedproducts of the Company. For such products we have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended and are of the opinion that prima facie the prescribed cost records havebeen made and maintained. We have however not made a detailed examination of the costrecords with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us inrespect of statutory dues:

(a) The Company has been regular in depositing undisputed statutorydues including Provident Fund Employees' State Insurance Income-tax Goods andService Tax Sales tax Service Tax Customs Duty Excise Duty Value Added Tax Cess andother material statutory dues applicable to it with the appropriate authorities.

(b) Details of dues of Income-tax Sales Tax Service Tax CustomsDuty Excise Duty and Value Added Tax which have not been deposited as on 31st March2018 on account of disputes are given below:

Name of statute Nature of dues Amount ( Rs in Crores) Period to which the amount relates Various years covering the period Forum where dispute is pending
Sales Tax and Value Added Tax Sales tax and VAT 71.97 1987-2017 Appellate Authority - upto Commissioners' / Revisional authorities level
Laws 13.14 1994-2015 Appellate Authority - Tribunal level
259.99 2005-2015 High Court
Customs Act 1962 Customs duty 0.15 2010-2016 Appellate Authority - upto Commissioners' /
0.56 2005-2007 Revisional authorities level Appellate Authority - Tribunal level
Central Excise Act 1944 Excise duty 9.49 1996-2016 Appellate Authority - upto Commissioners' / Revisional authorities level
101.22 1973-2016 Appellate Authority - Tribunal level
4.14 2005-2010 High Court
Finance Act 1994 Service tax 6.43 2010-2016 Appellate Authority - upto Commissioners' / Revisional authorities level
60.95 2003-2015 Appellate Authority - Tribunal level

Out of the total disputed dues aggregating Rs 528.04 Crores as aboveRs 406.83 Crores pertain to matters which have been stayed for recovery by the relevantauthorities.

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of loans or borrowings tofinancial institutions banks and government and dues to debenture holders.

(ix) The Company has not raised moneys by way of initial public offeror further public offer (including debt instruments) or term loans and hence reportingunder clause (ix) of the Order is not applicable.

(x) To the best of our knowledge and according to the information andexplanations given to us no fraud by the Company and no material fraud on the Company byits officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanationsgiven to us the Company has paid / provided managerial remuneration in accordance withthe requisite approvals mandated by the provisions of Section 197 read with Schedule V tothe Companies Act 2013.

(xii) The Company is not a Nidhi Company and hence reporting underclause (xii) of the Order is not applicable.

(xiii) In our opinion and according to the information and explanationsgiven to us the Company is in compliance with Sections 177 and 188 of the Companies Act2013 where applicable for all transactions with the related parties and the details ofrelated party transactions have been disclosed in the standalone financial statements etc.as required by the applicable Indian accounting standards.

(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause (xiv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any non-cash transactionswith its directors or directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of Section 192 of the Companies Act 2013 are notapplicable.

(xvi) The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934.

For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 302009E)
P. R. Ramesh
Gurugram Partner
16th May 2018 (Membership No. 70928)