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ITC Ltd.

BSE: 500875 Sector: Consumer
NSE: ITC ISIN Code: INE154A01025
BSE 14:50 | 07 Feb 374.00 -9.30






NSE 14:39 | 07 Feb 373.85 -9.55






OPEN 383.40
VOLUME 473616
52-Week high 384.50
52-Week low 207.00
P/E 27.34
Mkt Cap.(Rs cr) 464,284
Buy Price 373.95
Buy Qty 151.00
Sell Price 374.00
Sell Qty 30.00
OPEN 383.40
CLOSE 383.30
VOLUME 473616
52-Week high 384.50
52-Week low 207.00
P/E 27.34
Mkt Cap.(Rs cr) 464,284
Buy Price 373.95
Buy Qty 151.00
Sell Price 374.00
Sell Qty 30.00

ITC Ltd. (ITC) - Director Report

Company director report


Management Discussion and Analysis

For the Financial Year Ended 31st March 2022


After a tumultuous 2020 which witnessed unprecedented disruption to human life andeconomic activity across the globe the world economy witnessed a sharp recovery on theback of enhanced vaccination coverage and continued fiscal and monetary stimuli acrosscountries. As per IMF estimates global growth in 2021 stood at 6.1% (Vs. 3.1% decline in2020); Advanced Economies grew by 5.2% (Vs. 4.5% decline in 2020) while Emerging Markets& Developing Economies clocked a faster pace of 6.8% (Vs. 2.0% decline in 2020).

The recovery momentum was however weakened in course of the year by new strains ofthe virus and an unprecedented spike in commodity prices due to global supply chaindisruptions container shortages and congestion in ports.

Even prior to the ongoing Russia-Ukraine conflict inflation had started surging inmany economies due to soaring commodity prices and pandemic-induced supply-demandimbalances. This led central banks such as the US Federal Reserve European Central Bankand the Bank of England to bring forward the timing of tightening monetary conditions intheir respective countries. The situation was exacerbated with the ongoing Russia-Ukraineconflict that caused sharp escalation and volatility in agri fuel and crude-linkedcommodity prices. Persistently elevated and sticky inflation has emerged as a key concernglobally. As per IMF global inflation in 2022 is projected at 7.4% - the highest in 26years. In some Advanced Economies including the United States and certain Europeancountries inflation has reached multi-decadal highs. In Emerging Markets & DevelopingEconomies rise in food and fuel prices poses significant risk to growth prospects.Consequently central banks the world over are increasingly pivoting from supportinggrowth to combating inflation.

According to the latest IMF estimates aggregate global economic growth is estimated at3.6% in 2022 representing a downward adjustment of 80 bps to earlier estimates. AdvancedEconomies are projected to grow by 3.3% with growth in major economies such as the UnitedStates and Euro Area estimated at 3.7% and 2.8% respectively. Emerging Market &Developing Economies are estimated to grow by 3.8% impacted by muted growth in China andsharp decline in Russia. The amalgam of recent events including the latest surge in COVIDcases in certain regions continued geopolitical tensions inflationary headwinds on theback of commodity super cycles & ‘greenflation' and extended supply chaindisruptions pose significant downside risks to global economic prospects in the yearahead.

FY 2021-22 turned out to be another challenging year for the Indian economy marked byheightened uncertainty and volatility due to the COVID pandemic. The year began with thesecond wave of the pandemic having a devastating socio-economic impact in the countryfollowed by a sharp drop in its intensity which aided smart recovery in economic activitythat reached pre-pandemic levels towards the end of the second quarter. Even as economicprospects started looking up the country was hit hard by the third wave with new casesrising exponentially across major cities and halting the recovery momentum. Just as thethird wave had abated in India geopolitical tensions in Europe sparked off a fresh roundof uncertainty in the operating environment.

Amidst such a challenging backdrop the Indian economy rebounded during the yeargrowing by 8.9% albeit on a low base. The Government of India continued to make concertedefforts through several path-breaking initiatives across the areas of healthcareinfrastructure social welfare and digital to support various sections of the economyduring these turbulent times which helped accelerate the pace of resumption of economicactivities over the year. These include an effective and focused vaccination programmetargeted localised restrictions during peak caseloads support to economically weaksections of society and assistance to sectors most impacted by the pandemic.

The recovery was however uneven with different sectors of the economy and incomeclasses experiencing varying degrees of impact. The external sector was a bright spot inthe economy with India's merchandise exports surging 43% to a record high of US$ 418billion during the year. Foreign currency reserves also remained robust despite increasein imports with rising levels of activity. Tax collections remained buoyant during theyear with record GST collections on the back of pick-up in economic activity enhancedcompliance and efficient administration.

On the other hand private consumption remained subdued and below its pre-pandemicgrowth path rural demand witnessed a marked slowdown and private capital expenditure didnot see any material improvement although signs of an incipient revival emerged in certainsectors. Unprecedented rise in commodity and crude oil prices led to persistently stickyand elevated inflation with March 2022 CPI hitting a 17-month high of 6.95% resettinginflation expectations and the interest rate trajectory going forward.

Up until January 2022 near-term prospects for the Indian economy seemed extremelypromising - with all sectors of the economy including the contactintensive servicesector having made steady recovery. However sustained inflationary headwinds andoutbreak of the Russia-Ukraine conflict leading to extended global disruptions andspiraling of commodity prices have led to downward revisions to the growth forecast for2022. The Indian economy is now estimated to grow by 7.2% in FY 2022-23 driven byGovernment capital expenditure and anticipated pick-up in the private capex cycle. Afavourable monsoon coupled with disruptions in global supply chains are expected toprovide opportunities to service overseas markets and aid the agri sector.

The Services sector is expected to grow at a higher pace aided by full re-opening ofthe economy and release of pent-up demand for contact-intensive services includingresumption of business and international travel. Continued geopolitical tensions extendedglobal supply chain disruptions and elevated inflation pose key downside risks for theyear ahead.

Even as the Indian economy faces multi-dimensional challenges in the short term itremains one of the most dynamic major economies in the world with immense headroom forgrowth. A favourable demographic profile rapid urbanisation and increasing affluencerepresent some of the key structural drivers of growth of the Indian economy. TheGovernment of India's multi-dimensional reforms framework has the potential to unleash aquantum leap in the country's growth agenda. Several transformative economic reforms havebeen undertaken in recent years to enhance competitiveness and foster inclusive growth.These include the implementation of Goods and Services Tax (GST) Insolvency andBankruptcy Code (IBC) Real Estate (Regulation and Development) Act direct tax reformsand revision in Micro Small & Medium Enterprises (MSME) norms. The NationalInfrastructure Pipeline PM Gati Shakti National Industrial Corridors Smart CitiesMission and PM Awas Yojana are some of the key interventions that are transforming thecountry's infrastructure landscape. The new Labour Code which has done away with a numberof archaic legislations and investment boosting measures like sector-focused ProductionLinked Incentive (PLI) Schemes are expected to catalyse the manufacturing sector andenhance its competitiveness. A robust digital infrastructure has been put in place withUnified Payments Interface (UPI) Jan Dhan-Aadhaar-Mobile trinity and several otherinitiatives under Digital India paving the way for democratising technology andconnectivity to bring about the next phase of financial inclusion in the country. Focusedinitiatives in the rural and agri sector such as PM KISAN Pradhan Mantri Garib KalyanAnna Yojana (PMGKAY) central scheme for Farmer Producer Organisations (FPOs) and ruralelectrification programme amongst others are expected to engender inclusive growth.

As the economy faces the immediate challenges of muted consumption persistently highinflationary headwinds and supply chain disruptions policy interventions would need to besharply focused on supporting sustainable livelihoods and fostering inclusive growth. Thegrowth oriented initiatives announced by the Government in the visionary Union Budget 2022including provision of food healthcare and social security benefits to the vulnerablethrust on rural and agri sector measures to raise farm incomes and focus on publiccapital expenditure to crowd in private investments are expected to bolster the growthmomentum and also enhance competitiveness of the Indian economy. Structural support wouldalso need to be provided to sectors that have large multiplier effects on employment andthe economy. These include agri-based industries such as food processing tourism travel& hospitality and domestic agri and wood-based industries amongst others. Developmentof robust value chains to support and strengthen these sectors remains critical toachieving such multiplier effects and realising India's goal of becoming a US$ 5 trillioneconomy.

As reported in earlier years enhancing agricultural productivity and value addition tointernational standards while simultaneously improving market linkages remain criticalto enhance the competitiveness of the agricultural sector and drive significant increasein farmersRs income. India is the leading producer worldwide of several commoditiesincluding pulses spices fruits such as mangoes bananas etc.; it is also the secondlargest producer of rice and has the largest population of buffaloes globally. HoweverIndia's agri exports aggregating appx. US$ 50 billion represent a global market share ofless than 3%.

Expert studies indicate the potential to double India's agri exports by strengtheningthe competitiveness of agri-value chains in areas that are aligned to global demand andwhere the country has inherent advantages. This calls for a transformational shift of theagri ecosystem from the conventional production-centric supply chains to demand-responsivevalue chains anchored by market players.

It is pertinent to note that food and dietary patterns are fast evolving across theglobe with sustainable sourcing becoming increasingly mainstream.

Such shifts accentuate the need to enhance the competitiveness of agri-value chains inorder to cater to the dynamic market requirements of the future. Achieving scale andproductivity have also become pre-requisites for the success of the agri sector.

As per estimates over the next four decades global food production would need toequal the total food production achieved over the past eight millennia in order to meetthe burgeoning global demand over such time. The Government's initiatives to promote FPOsin order to enhance market access for farmers and leverage economies of scale are expectedto reap rich dividends for the agri sector in the medium term. FPOs have a tremendouspotential to serve as major enablers in augmenting farm livelihoods by facilitating acrucial link between markets and individual farmers especially those with small andmarginal land holdings. In this context your Company has adopted targeted collaborativemodels to multiply the scale and impact of its agri and rural interventions.

This collaborative approach as opposed to a traditional transactional approach cancontribute meaningfully towards building next generation agriculture that is climateresilient and capable of supporting gainful livelihoods. Digitalisation of agriculturealso offers the potential to increase productivity and foster structural changes acrossthe value chain thereby enabling efficient use of resources. In line with its commitmentto bring the power of cutting-edge digital technologies and unlock the potential ofIndia's farmers your Company has launched ITCMAARS (Metamarket for Advanced Agricultureand Rural Services).

This digitally powered platform will empower the farming community by deliveringcustomised solutions to stakeholders by synergistically integrating NextGenagri-technologies. Further details on this transformative initiative are provided in theAgri Business section of this report.

As reported in earlier years it is pertinent to note that a substantial quantum offood is wasted along the chain in India depending on the inherent perishability of thecrop and the season. Higher levels of food processing in the economy can create a muchlarger pull for quality agri-commodities thereby reducing farm wastages and raising farmincomes. This would require focused investments in developing product-specificclimate-controlled infrastructure as well as in branded products that benefit largeagri-value chains. Corporate participation is essential not only to invest in requisiteinfrastructure but also to provide assured market linkages to farmers.

A big thrust on India's Food Processing sector can play a pivotal role and have amultiplier effect which will lead to significant job creation enhance rural incomes andhelp manage food inflation. In this context the recently announced PLI Scheme for theFood Processing sector with an estimated outlay of Rs 10900 crores is expected to play apivotal role in boosting investments agri exports farmer incomes employment generationand building Indian brands for the global market. Your Company has been included under theScheme for several of its Branded Packaged Foods Businesses details of which are providedin the relevant section.

Similarly the Agro-forestry sector as a source of raw material for wood-basedindustry is woefully constrained by policies that not only impede job creation in Indiabut also promote avoidable imports. Recent initiatives announced in the Union Budget 2022to provide financial assistance to members of marginalised communities taking upAgro-forestry is a good starting point to reverse this situation. Supportive policies inthis area would go a long way in enhancing sustainable livelihoods while simultaneouslyaugmenting the Nation's environmental capital.

The integrated nature of your Company's business models along with strategicinvestments to enhance efficiencies across its operating segments - includingagri-commodity sourcing expertise for the Branded Packaged Foods Businesses andcost-competitive fibre supply chain along with in-house pulp manufacturing capability ofthe Paperboards & Specialty Papers Business - is a key source of competitiveadvantage especially against the backdrop of severe inflationary headwinds. YourCompany's interventions across operating segments are aligned to the national prioritiesof enhancing competitiveness of Indian agriculture and industry generating large-scaleemployment opportunities and supporting sustainable livelihoods driving importsubstitution by enhancing the competitiveness of domestic agri-value chains and industrycreating national brands to maximise value capture in India increasing Indian agriexports and promoting sustainable business practices. Investments made by your Companycontinue to be guided by the national objectives of ‘Make in India' and‘Doubling FarmersRs income' and the overarching theme of ‘AatmaNirbhar Bharat'that seeks to make the country stronger resilient and more competitive.

The collaboration with NITI Aayog aimed at boosting agricultural and allied activitiesin 27 backward districts of eight states under the Aspirational Districts programme wassuccessfully completed during the year and plans are on the anvil to extend the same.Under the programme around 34 lakh farmer interactions have taken place with trainingbeing imparted on package of practices appropriate for the dominant crops of the region aswell as towards livestock rearing. Your Company recognises the critical role of technologyand the digital revolution towards fostering inclusive and sustainable growth to reducesocial inequity. Towards this end digital training platforms were leveraged during theyear through customised apps together with the formation of more than 6200 WhatsAppgroups in around 18900 villages building capacity of 5.9 lakh farmers to achieve theobjectives of your Company's collaborative initiative with NITI Aayog. These interventionshave led to improvement in yields and reduction in cultivation costs thereby augmentingfarmer incomes by up to 60%.

Your Company has also partnered with the State Government of Andhra Pradesh towardsimproving the quality of chilli produced in the country to meet global standards. A PublicPrivate Partnership programme - ‘Integrated Agri-Extension Platform for Chilli FarmValue Chain Development' - has been conceptualised under which 40000 farmers coveringabout 100000 acres are expected to be benefited by 2025. In FY 2021-22 the programmecovered over 16400 farmers and 52500 acres across 107 villages. Improved quality farmproductivity and higher share of farm gate sales enabled farmers covered under the projectto generate additional income.

Your Company is also working towards developing village level institutions andfostering micro entrepreneurship by promoting custom hiring centres for farmmechanisation post-harvest product management infrastructure and community managed seedbanks for self-reliance in quality seed material. Environmentally sustainable farmpractices including zero-till sowing of wheat direct seeding of rice micro-irrigationand watershed development continue to be promoted.

The farm sector faces enormous threats arising out of climate change as evident fromthe growing number of extreme weather events such as droughts and floods. Given thevulnerabilities it is critical to strengthen climate resilience and adaptability of theagri-food sector. In this context your Company's interventions in collaboration withCGIAR's ‘Climate Change and Food Security Programme' to build climate smart villageswas expanded to over 2500 villages across 11 states and supported farmers in themanagement of risks arising from erratic and extreme weather events. Your Company throughstakeholder consultations and extensive research has prepared state level agricultureclimate change adaptation plans for three states i.e. Rajasthan Maharashtra and MadhyaPradesh and continues to engage with the respective governments for adoption of the same.Further your Company's Climate Smart Village intervention in Madhya Pradesh demonstratedan average increase in yield of 38% and 15% in soyabean and wheat respectively over thebaseline. Along with reduction in cost of cultivation this has led to an average increasein net income by 93% in soyabean and 46% in wheat over the baseline. According to CGIARestimates average Green House Gas emissions reduced by 66% for soyabean and 13% for wheatas compared to the baseline.

Your Company continues to be a carbon water and solid waste re-cycling positiveorganisation and is a global exemplar in sustainability.

Demand side management is another critical component of your Company's WaterStewardship programme. Recognising the critical imperative of reducing water useespecially in agriculture your Company continues to work with farmers to achieve‘more crop per drop' and improve farmer incomes. Around 7.3 lakh acres have beencovered till date across 11 states. Various studies indicate potential water savings tothe tune of 497 million cubic metres per annum through micro irrigation technologies andcrop-specific agronomical practices.

In Kapurthala District Punjab your Company under its flagship programme of ‘ITCMission Sunehra Kal' has over the last four years implemented solutions that haveeffectively substituted the burning of paddy stubble by farmers. During the year theprogramme covered 1.8 lakh acres with appx. 87% of the area witnessing total stoppage ofstubble burning thereby avoiding appx. 1.3 lakh tonnes of carbon release into theatmosphere.

Although India has appx. 18% of the world population its share of natural resources isdisproportionately low with only 2% of global land mass 4% of freshwater resources and 2%of forest resources. It is more critical than ever before to redouble efforts both at thenational and corporate level to fashion strategies that foster sustainable equitable andinclusive growth.

It is your Company's belief that businesses can bring about transformational change bypursuing innovative business models that synergise the creation of sustainable livelihoodsand the preservation of natural capital while enhancing shareholder value.

This ‘Triple Bottom Line' approach to creating larger ‘stakeholder value' asopposed to merely focusing on uni-dimensional ‘shareholder value' creation is thedriving force that defines your Company's sustainability vision and its growth path intothe future.

Your Company is a global exemplar in RsTriple Bottom Line' performance. The focus oncreating unique business models that generate substantial livelihoods across the valuechains has led to your Company's Businesses supporting over six million sustainablelivelihoods many of whom belong to the weaker sections of society.

Your Company sustained its ‘AA' rating by MSCI-ESG for the 4th successive year -the highest amongst global tobacco companies. Your Company has also been included in theDow Jones Sustainability Emerging Markets Index - a reflection of being a sustainabilityleader in the industry and a recognition of its continued commitment to people and planet.Your Company has also been rated at the ‘Leadership Level' score of ‘A-' forboth Climate Change and Water Security (Asia and Global average at ‘B-' for climatechange and ‘B' for water security) by CDP a reputed independent global platform fordisclosures on environmental impacts.

As a testament to your Company's ‘Triple Bottom Line' philosophy and ResponsibleLuxury ethos ITC Windsor Bengaluru achieved the distinction of being the first hotel inthe world to achieve LEED? Zero Carbon Certification. ITC Grand Chola Chennai (thelargest hotel in the world to receive such certification) and ITC Gardenia Bengalurualso received the LEED? Zero Carbon Certification during the year. These properties arethe first three hotels in the world to receive the LEED? Zero Carbon Certification.

Your Company recognises the urgent need to combat climate change for building a moresecure future and the role it can play in enabling a net-zero economy.

To this end your Company is pursuing a low carbon growth strategy through extensivedecarbonisation programmes across its value chain. With its bold Sustainability 2.0agenda your Company is setting the bar higher and remains committed to making ameaningful contribution to the Nation's future while retaining its status as asustainability exemplar. Further details on this subject are available in theSustainability section of this Report.


The operating environment during the year remained extremely challenging and was markedby heightened uncertainty and volatility due to the COVID pandemic and unprecedentedinflationary headwinds; geopolitical tensions towards the end of the year exacerbated thesituation. Your Company demonstrated tremendous resilience and navigated the dynamicenvironment with speed and agility leveraging the experiences from prior waves of thepandemic. In spite of significant disruptions during the year your Company'sconsumer-centricity agility in seizing market opportunities focus on executionexcellence and proactive strategic interventions enabled it to post robust growth inRevenues and Profits surpassing pre-pandemic levels.

Overall for FY 2021-22 Gross Revenue at Rs 59101.09 crores increased by 22.7% whileEBITDA increased by 22.0% to Rs 18933.66 crores. Profit Before Tax at Rs 19829.53 croresgrew by 15.5% over previous year and Profit After Tax stood at Rs 15057.83 crores(previous year Rs 13031.68 crores). Total Comprehensive Income for the year stood at Rs15631.68 crores (previous year Rs 13277.93 crores). Earnings Per Share for the year stoodat Rs 12.22 (previous year Rs 10.59).

- The FMCG-Others Segment turned in a resilient performance with Segment Revenuegrowing by 8.6% amidst subdued demand conditions.

After a relatively muted first half revenue in the second half of the year witnesseddoubledigit growth. Staples and Convenience Foods remained resilient even as the pace ofrevenue growth moderated on a relatively high base. Discretionary/Out-of-Home categoriesrecorded strong growth surpassing pre-pandemic levels driven by progressive improvement inmobility.

The Health & Hygiene portfolio witnessed demand volatility in line with COVIDcaseload intensity while remaining significantly above pre-pandemic levels. Progressiveresumption of physical classes at educational institutions led to gradual recovery in theEducation & Stationery Products Business; however sales remained below pre-pandemiclevels. Segment EBITDA for the year grew by 10.0% to Rs 1448.97 crores with margins beingsustained at 9.1% in spite of unprecedented inflationary headwinds. The unprecedentedincrease in prices of key inputs was mitigated through focused cost managementinterventions across the value chain premiumisation product mix enrichment judiciouspricing actions and fiscal incentives. Inflation continues to remain a key monitorable forthe Segment in the near term.

- The FMCG-Cigarettes Segment rebounded during the year on the back of progressivenormalisation of economic activity and concerted actions to reinforce market standingthrough strategic portfolio interventions and enhancing product availability backed bysuperior on-ground execution. Volumes surpassed pre-pandemic levels in the latter half ofthe year.

- After an extremely challenging FY 2020-21 the Hotels Segment witnessed smartrecovery driven by the domestic leisure and wedding segments; business travel also sawprogressive improvement albeit remaining well below pre-pandemic levels. Pick-up inrevenues together with relentless focus on cost management resulted in a positive swing ofRs 346.63 crores in Segment EBITDA despite considerable disruptions caused by the twowaves of the pandemic during the year.

- The Agri Business Segment delivered stellar performance with Segment Revenue andResults growing by 28.7% and 25.6% respectively.

This was driven by strong growth in wheat rice spices and leaf tobacco exports on theback of strong customer relationships robust sourcing network and agile execution.

- The Paperboards Paper & Packaging Segment recorded strong growth of 36.0% inSegment Revenue and 54.7% in Segment Results.

This was aided by demand revival across most end-user segments higher realisationsproduct mix enrichment and exports. Robust margin expansion of appx. 270 bps was achievedleveraging the integrated nature of the business model Industry 4.0 and other digitalinterventions.

The Directors of your Company are pleased to recommend a Final Dividend of Rs 6.25 perOrdinary Share of Rs 1/- each for the financial year ended 31st March 2022. Together withthe Interim Dividend of Rs 5.25 per share paid on 4th March 2022 the total Dividend forthe financial year ended 31st March 2022 amounts to Rs 11.50 per share (previous year Rs10.75 per share). Total cash outflow on account of Dividends (including Interim Dividendof Rs 6469.48 crores paid in March 2022) will be Rs 14171.51 crores.


Over the last five years the Value-Added by your Company i.e. the value created bythe economic activities of your Company and its employees aggregated over Rs 250000crores of which over Rs 172000 crores accrued to the Exchequer.

Including the share of dividends paid and retained earnings attributable to governmentowned institutions your Company's contribution to the Central and State Governmentsrepresented over 75% of its Value-Added during the year.

Your Company has over the years ranked amongst the Top 3 Indian corporates in theprivate sector in terms of Contribution to Exchequer.


Your Company continues to view foreign exchange earnings as a priority. All Businessesin your Company's portfolio are mandated to engage with overseas markets with a view totesting and demonstrating international competitiveness and seeking profitableopportunities for growth. Foreign exchange earnings of the ITC Group over the last tenyears aggregated nearly US$ 8.2 billion of which agri exports constituted 59%. Earningsfrom agri exports which effectively link small farmers with international markets are anindicator of your Company's contribution to the rural economy.

During the financial year 2021-22 your Company and its subsidiaries earned Rs 11472crores in foreign exchange. The direct foreign exchange earned by your Company more thandoubled to Rs 9779 crores mainly on account of exports of agri-commodities.

Your Company's expenditure in foreign currency amounted to Rs 2756 crores comprisingpurchase of raw materials spares and other expenses of Rs 2456 crores and import ofcapital goods of Rs 300 crores.


(Rs in crores)

PROFITS 2021 - 22 2020 - 21
a) Profit Before Tax 19829.53 17164.19
b) Tax Expense
- Current Tax 4833.88 4035.36
- Deferred Tax (62.18) 97.15
c) Profit for the year 15057.83 13031.68
d) Other Comprehensive Income 573.85 246.25
e) Total Comprehensive Income 15631.68 13277.93
a) At the beginning of the year 28210.63 33596.14
b) Add: Profit for the year 15057.83 13031.68
c) Add: Other Comprehensive Income (net of tax) 23.66 (29.66)
d) Add: Transfer from share option on exercise and lapse 315.34 222.96
e) Less: Dividends
- Final Dividend of Rs 5.75 (2021: Rs 10.15) per share 7077.59 12476.61
- Interim Dividend of Rs 5.25 (2021: Rs 5.00 ) per share 6469.48 6152.68
- Income Tax on Dividend paid - (13.98)
f) Transfer from Equity Instruments through Other Comprehensive Income reserve on renunciation of rights entitlements (net of tax) - 4.82
g) At the end of the year 30060.39 28210.63


After facing significant challenges in FY 2020-21 the Business navigated through twodisruptive waves of the pandemic during the year under review. Despite such disruptionsthe Business progressively recovered in course of the year surpassing pre-pandemic levelsin the latter half. The Business effectively leveraged institutional strengths digitaltechnologies and learnings from prior waves to respond with agility across all nodes ofoperations. This included inter alia re-configuring and re-aligning supply chainoperations to service market requirements through dynamic planning strengthening directreach in target markets across all traditional trade channels and augmenting the stockistnetwork to service rural and semi-urban markets efficiently.

Your Company sustained its leadership position in the cigarette industry through itsunwavering focus on nurturing a portfolio of world-class products anchored on superiorconsumer insights robust innovation pipeline and world-class product developmentcapabilities. Your Company continues to counter illicit trade and reinforce marketstanding by fortifying the product portfolio through innovation democratisingpremiumisation across segments and enhancing product availability backed by superioron-ground execution. Several differentiated variants were introduced to cater tocontinuously evolving consumer preferences and ensure future-readiness of the productportfolio. These include innovative launches such as ‘Classic Connect' ‘GoldFlake Indie Mint' ‘Gold Flake Neo SMART Filter' ‘Wills Protech' ‘CapstanExcel' ‘American Club Smash' ‘Gold Flake Kings Mixpod' ‘Wave Boss' and‘Flake Nova'. The Business also expanded its presence in focus markets with thelaunch of differentiated offerings across segments.

Globally cigarette smoking is the dominant form of tobacco use. In the Indian contexttobacco use comprises a diverse range of chewing and smoking formats that are available atdifferent price points consequent to significant divergence in tax rates across differentformats of tobacco. While India is the world's second largest consumer of tobacco legalcigarettes constitute only 8% of overall tobacco consumption in India as against a globalaverage of 90%. It is pertinent to note that India accounts for less than 2% of globalcigarette consumption despite comprising 18% of the world's population making India's percapita cigarette consumption amongst the lowest in the world.

Over the years discriminatory and punitive taxation on cigarettes has led toprogressive migration from consumption of duty-paid cigarettes to other lightlytaxed/tax-evaded forms of tobacco products comprising illicit cigarettes and bidichewing tobacco gutkha zarda snuff etc. Consequently while the share of legalcigarettes in total tobacco consumption has declined from 21% in 1981-82 to a mere 8%aggregate tobacco consumption in the country has increased over the same period. As aresult despite accounting for less than 1/10th of the tobacco consumed in the countryduty-paid cigarettes contribute more than 4/5th of the revenue generated from the tobaccosector.

Taxes on cigarettes are one of the highest in India as depicted in the chart.

Taxes on cigarettes in India are multiple times higher than in developed countries viz.17x of USA 10x of Japan 7x of Germany and so on. Further the same is also substantiallyhigher than that in neighbouring countries.

It is pertinent to note that India's per capita cigarette consumption is amongst thelowest in the world and is significantly lower compared to that of China Japan USA UKand even neighbouring countries such as Bangladesh and Pakistan.

During the period 2012-13 to 2016-17 excise duty on cigarettes increased sharply at aCAGR of 15.7%; however tax revenue from cigarettes grew by a mere 4.7% CAGR during thesame period.

In 2017-18 the legal cigarette industry was further impacted by a sharp rise of 20% intax incidence as a result of increase in excise duty and transition to the GST regime.Thereafter relative stability in taxation until January 2020 helped the legal industrypartially claw back volumes lost to the illicit trade in earlier years; consequentlyrevenue collections witnessed a marked buoyancy growing by 10.2% during this period.

Period Increase in Tax Rate Growth in Revenue Collections
2012-13 to 2016-17 (CAGR) 15.7% 4.7%
Apr '18-Jan '20 over Jul '17-Mar '18 - 10.2%

After a steep hike in taxation in February 2020 the respite from further increases inthe subsequent period has provided an opportunity for the legal industry to partiallyrecover volumes lost to illicit trade in earlier years.

Punitive taxes on the legal cigarette industry have resulted in rapid growth in illicitcigarette trade making India the 4th largest illicit cigarette market globally accordingto Euromonitor estimates. Over the years this has created extremely attractive taxarbitrage opportunities for unscrupulous players indulging in illicit cigarette trade.While legitimate cigarette industry volumes have declined consistently over the lastdecade illicit cigarette trade volumes in contrast have grown rapidly during the sameperiod accounting for about 1/4th of the domestic industry.

During the year the media reported several cases of evasion of taxes/duties by dealersin illicit cigarettes which came to light because of raids conducted by DirectorateGeneral of GST Intelligence (DGGI). Several interventions in this area continue to be madeby the respective authorities. As per the reply given by the Union Minister of State forCommerce & Industry in the Lok Sabha on 17th March 2021 the seizure of illicitcigarettes has seen a quantum jump over previous years. It is estimated that on account ofillicit cigarettes alone revenue loss to the Government is appx. Rs 170001 crores perannum. In respect of the other tobacco products as well the revenue losses aresignificant since about 68%2 of the total tobacco consumed in the country remains outsidethe tax net.

Tobacco control measures in India have ranked amongst the most stringent in the worldfrom the time of enactment of the Cigarettes (Regulation of Production Supply andDistribution) Act 1975 to the present. India is also one of the few countries wheretobacco products are regulated across the value chain - from their manufacture to sale toconsumers. The Cigarettes and Other Tobacco Products (Prohibition of Advertisement andRegulation of Trade and Commerce Production Supply and Distribution) Act 2003 (COTPA)requires cigarette packages to bear the statutorily mandated pictorial and textualwarnings covering 85% of the surface area of the packet - one of the largest in the world.

It may be observed that smuggled international brands of cigarettes do not bear any ofthe pictorial or textual warnings mandated by Indian laws or bear much smaller pictorialwarnings as per the tobacco laws of the countries from where these cigarettes originate.

As reported in prior years findings from research conducted by IMRB International anindependent market research organisation show that the lack of pictorial warnings onpackets of smuggled international brands of cigarettes or their diminutive size creates aperception in the consumers' mind that these illicit cigarettes are ‘safer' thandomestic duty-paid cigarettes that carry the 85% pictorial warnings. The combination oflow prices to consumers consequent to tax evasion and the misleading perception created bythe absence of statutory pictorial warnings provides significant buoyancy to illicitcigarette volumes.

India is among the top three tobacco growing countries in the world. Tobacco occupies apreeminent position in the Indian economy on account of its considerable contribution tothe agricultural industrial and export sectors3. The large and rapidly growing illicitcigarette trade also has a deleterious impact on farmers and farm workers engaged in thetobacco value chain. In India cigarettes are manufactured largely using Flue CuredVirginia (FCV) tobacco grown in the states of Andhra Pradesh Telangana and Karnataka. Assmuggled international brands of cigarettes do not use Indian tobaccos in addition torevenue losses the growth of illicit cigarette trade has also resulted in a sharp drop indemand for Indian FCV tobaccos in the domestic market.

It is pertinent to note that several other major tobacco producing countries includingthe USA have established regulatory frameworks taking into consideration the economicinterests of their tobacco farmers. The punitive and discriminatory taxation &regulatory regime on cigarettes in India continues to adversely affect the livelihood ofIndian tobacco farmers with corresponding gains to those countries that have opted formoderate and equitable tobacco regulations. These developments coupled with loweravailability of Indian crop lower export incentives in India and relative weakness ofcurrencies in certain competing geographies have had a debilitating impact on 46 millionlivelihoods comprising tobacco farmers farm workers etc. who are dependent on thetobacco value chain. It is estimated that since 2014 Indian tobacco farmers have suffereda cumulative drop in earnings of over Rs 7000 crores. As seen in the past stability intaxes on cigarettes enables the legal cigarette industry to claw back volumes lost toillicit trade thereby engendering domestic demand for Indian tobaccos while alsomitigating loss of tax revenue to the Exchequer due to illicit trade.

As reported in earlier years your Company and several other stakeholders hadchallenged the validity of the pictorial and textual warning covering 85% of the surfacearea of the packet prescribed under COTPA. The Honourable Karnataka High Court by itsjudgement in December 2017 held the 85% pictorial warnings to be factually incorrect andunconstitutional. Upon Special Leave Petitions filed by the Government and others theHonourable Supreme Court has stayed the judgment of the High Court. The cases are pendingbefore the Honourable Supreme Court.

The extremely stringent regulations along with the discriminatory and steep taxation oncigarettes have had numerous negative albeit unintended repercussions. These include:

- rapid growth in illicit cigarette volumes which resulted in sub-optimisation of therevenue potential of the tobacco sector and significant loss to the Exchequer. It isestimated that on account of illicit cigarettes alone revenue loss to the Government isappx. Rs 17000 crores per annum.

- widespread availability of illicit cigarettes and other tobacco products of dubiousquality and hygiene to consumers at extremely affordable prices.

As a result despite accounting for less than 1/10th of the tobacco consumed in thecountry duty-paid cigarettes contribute more than 4/5th of the revenue generated from thetobacco sector.

- a large component of tobacco consumption in the country aggregating around 68%remaining outside the tax net.

- persistent negative impact on the livelihood of tobacco farmers and others dependenton tobacco. Studies by the Central Tobacco Research Institute (CTRI) indicate that onaccount of agro-climatic conditions there is no equally remunerative alternate crop thatcan be grown in the FCV tobacco growing regions of the country.

Your Company continues to engage with policy makers for a framework of pragmaticequitable non-discriminatory evidence-based regulations and taxation policies thatbalance the economic imperatives of the country and tobacco control objectives cognisingfor the unique tobacco consumption pattern in India. Stability in taxes is critical foraddressing the interests of all the stakeholders of this industry including the tobaccofarmers the Exchequer and the consumers.

As in the past the research and development initiatives of your Company continue toadd to the country's bank of Intellectual Property Rights (IPR).

In addition to grant of several patents in earlier years it is deeply satisfying toreport that your Company has been granted six more patents during the year.

Manufacturing facilities continue to be modernised by inducting contemporarytechnologies to drive innovation and secure higher levels of productivity and productexcellence. New benchmarks were set in areas of quality sustainability supply chainresponsiveness and productivity. Cutting-edge technologies such as Industry 4.0 and DataSciences were leveraged to build a smart manufacturing environment of connected systems.These initiatives coupled with innovative capabilities in-house design and developmentexpertise have further improved the speed-to-market of new launches and augmented theinnovation pipeline of the Business.

It is extremely satisfying to report that your Company continued to be recognised forits commitment towards operational excellence. The Bengaluru and Ranjangaon units wereadjudged ‘WinnerRs in Frost and Sullivan 2021 Project Evaluation & RecognitionProgram (PERP) in Robotics & Automation Quality Excellence and ArtificialIntelligence categories in the Manufacturing Sector.

In line with your Company's commitment to the ‘Triple Bottom Line' the Businesshas put in focused efforts through innovative interventions for resource conservation andadoption of best-in-class technologies and processes. More than 50% of the total energyused by the Business is generated from renewable sources. Various interventions over theyears like investments in renewable energy sources continued wheeling of wind energythrough interstate open access and purchase of renewable energy from Indian EnergyExchange (IEX) have enabled the same. Sustainability initiatives of the Business continuedto be recognised with Saharanpur Kidderpore and Bengaluru units receiving the‘National Energy Leader Award' ‘Excellent Energy Efficient Unit Award' and‘Energy Efficient Unit Award' respectively at the CII National Award for Excellencein Energy Management 2021. The Munger unit received ‘Most Innovative Project Award'at the CII National Award for Environmental Best Practices 2021.

The 21 MW wind farm in Karnataka also received ‘Best Performing Wind Farm AwardRsin Karnataka Andhra Pradesh & Telangana by Indian Wind Power Association for FY2020-21. The Kidderpore unit won the EFI CII National Award for ‘SignificantAchievement in Employee Relations 2021' for excellence in Employee Relations practices.

While respite from further increase in taxes has provided the legal cigarette industryan opportunity to claw back volumes lost to illicit trade the operating environmentremains challenging due to elevated levels of taxation high share of illicit trade anddisproportionate regulatory pressures. Notwithstanding these challenges your Companyremains confident of responding with agility to the dynamic environment and fortifying itsmarket standing in the legal cigarette industry leveraging its superior strategiesfuture-ready portfolio robust innovation pipeline cutting-edge manufacturing &digital technologies and best-in-class execution capabilities.


During the year the FMCG industry witnessed moderation in growth mainly due to subdueddemand conditions especially in rural markets high inflation eating into householdbudgets and high base effect in certain categories such as Staples & ConvenienceFoods. Health & Hygiene personal care products witnessed demand volatility in linewith varying intensity of the pandemic while remaining significantly above pre-pandemiclevels. Discretionary/Out-of-Home categories witnessed strong growth on a favourable baseand surpassed pre-Covid levels driven by improved mobility and progressive return tonormalcy. The year saw an unprecedented increase in prices of key inputs such as edibleoils packaging materials soap noodles fuel logistics etc. which exerted considerablepressure on margins. This was mitigated by adopting a comprehensive approach across thevalue chain entailing sharp focus on cost management portfolio premiumisationcompetitive trade and marketing investments fiscal incentives supply chain agility andjudicious pricing actions.

Notwithstanding the challenging conditions prevailing during the year your Company'sFMCG businesses recorded Segment Revenue of Rs 15994.49 crores representing an increase of8.6% over the previous year. Segment EBITDA for the year grew by 10.0% to Rs 1448.97crores with margins being sustained at 9.1% in spite of unprecedented inflation in inputcosts as aforestated.

A consumer-centric approach backed by speed and agility in execution was at the coreof your Company's response in navigating the heightened uncertainty and volatility in theoperating environment. Digital technologies and platforms continue to be leveraged toeffectively service emergent consumer demand across channels.

Your Company remains focused on building purpose- led brands powered by agileinnovation and anchored on larger consumer needs. The Businesses continue to leveragedigital technologies and platforms towards enhancing consumer experience. Strategicinterventions in this area are aimed at delivering delightful brand experiences seamlesslyacross touchpoints through personalised journeys mapped to individual's needs preferencesand context.

The Businesses continue to increasingly leverage ‘Sixth Sense' the MarketingCommand Centre and Consumer Data Hub - an Al-powered hyper-personalised platform backed bya robust partner ecosystem for content and data - to gain insights on market trends andconsumer behaviour and synthesise the same to craft contextual and hyper-personalisedbrand communication and product development. Over 3000 content assets have been deployedleveraging this capability within a relatively short span of time at significantly lowercost.

Your Company continues to leverage deep consumer insights and cutting-edge R&Dcapability to fuel growth by addressing present and emergent consumer need spaces. Over110 new products were launched across target markets during the year leveraging therobust innovation platforms of your Company's Life Sciences and Technology Centre (LSTC).

Cutting-edge digital technologies including Industry 4.0 Advanced Analytics Big Dataand industrial Internet of Things (loT) continue to be deployed towards strengthening yourCompany's real time operations and execution platform. Several digitally poweredinterventions are underway towards enhancing productivity driving efficiency and reducingcosts. These initiatives are anchored on the key pillars of synchronised planning andforecasting next generation agile supply chain smart manufacturing and sourcing andsmart demand capture and fulfilment. Strategic investments are also being made towardsenhancing value creation leveraging data and analytics. Key interventions includeaugmenting your Company's NextGen data architecture powered by Artificial Intelligence/Machine Learning (AI/ML) identifying and prioritising use cases for impactful outcomesand setting up a Data Science academy comprising data scientists and engineers tostrengthen data and analytics programmes.

The FMCG Businesses comprising Branded Packaged Foods Personal Care ProductsEducation and Stationery Products Incense Sticks (Agarbattis) and Safety Matches havegrown at an impressive pace over the past several years.

Your Company's vibrant portfolio of over 25 world-class Indian brands largely builtthrough an organic growth strategy in a relatively short period of time represents anannual consumer spend of over Rs 24000 crores and reach over 200 million households inIndia. These home-grown purpose-led Indian brands support the competitiveness of domesticvalue chains especially in the agri space thereby ensuring creation and retention ofvalue within the country.

Your Company's FMCG brands have achieved impressive market standing4 in a relativelyshort span of time in their respective categories viz. Aashirvaad is No. 1 in BrandedAtta Bingo! is No. 1 in the Bridges segment of Snack Foods (No. 2 overall in Snacks &Potato Chips) Sunfeast is No. 1 in the Cream Biscuits segment Classmate is No. 1 inNotebooks

Engage is No. 1 in women's Deo Savlon is No. 1 in Surface Disinfectant sprayMangaldeep is No. 2 in Agarbattis (No. 1 in Dhoop segment) Nimyle is No. 2 in FloorCleaners (No. 1 in Herbal Floor Cleaners) and YiPPee! is No. 2 in Noodles.

Your Company remains focused on rapidly scaling up the FMCG businesses anchored onstrong growth platforms and a future-ready portfolio. It is pertinent to note that thesecategories which are largely characterised by low household penetration levels and/or lowper capita consumption offer significant headroom for long-term growth. This is borne outby several reports which highlight that your Company's total addressable market expansionpotential is amongst the highest in the Indian FMCG space. In this context it ispertinent to note that your Company is well poised to address adjacent growthopportunities by leveraging the 25+ powerful mother brands it has established over theyears. Recent examples of such brand extensions include Aashirvaad to Dairy Ready-to-EatVermicelli Salt and Spices; Sunfeast to Dairy Beverages and Cakes; Bingo to Namkeens; ITCMaster Chef to Frozen Snacks and cooking pastes; Savlon to surface and clothesdisinfectant sprays sanitizers masks etc. Simultaneously the FMCG Businesses continueto make strategic investments in building categories of the future and establishing yourCompany's ‘right to win' by progressively scaling up those nascent categories wherebeachheads have been created. Your Company is also proactively pursuing value accretiveacquisition joint venture and collaboration opportunities in strategic areas towardsaccelerating growth and value creation.

The FMCG Businesses continue to expand their export footprint leveraging the equity oftheir world-class brands - with a reach now spanning over 60 countries. The recentlyannounced PLI Scheme is expected to provide further fillip to exports of your Company'sproducts across Biscuits & Cakes Snacks Dairy and Ready-to-Eat categories. YourCompany also continues to explore opportunities in proximal markets as a potential vectorof growth going forward.

The FMCG Businesses continue to create structural competitive advantages and enhanceprofitability by leveraging world-class distributed infrastructure multi-channeldistribution network delayered operations smart buying & value engineering and smartmanufacturing anchored on the twin pillars of digital and sustainability. Investments overthe years in several state-of-the-art Integrated Consumer Goods Manufacturing andLogistics facilities (ICMLs) have laid a strong foundation to drive structural advantagessuch as ensuring product freshness enhancing agility and responsiveness of the supplychain reducing cost of servicing proximal markets through lower distance-to-market etc.Capacity utilisation at the 10 operational ICMLs continues to be ramped up along withfocused smart manufacturing interventions leveraging automation and Industry 4.0technologies to drive operational efficiencies yield and energy management and furtherenhance safety and quality. With increasing scale supply chain operations are beingincreasingly delayered through direct-to-market shipments thereby reducing freight costsand eliminating multiple handling. Your Company is confident that these strategicinterventions which are already delivering substantial benefits will realise their fullpotential over the medium term and continue to create long-term value.

The unprecedented inflationary headwinds pose significant challenges in the near termand remain a key monitorable for the FMCG industry. Your Company continues to takeproactive measures to counter the impact of such headwinds across all nodes of operationsand deliver competitively superior performance leveraging its institutional strengths andharnessing advantages of scale smart buying initiatives and world-class talent in aconsumer-centric agile and innovative manner.

Notwithstanding the short-term challenges the structural drivers of long-term growthsuch as rising disposable incomes and consumer awareness low levels of penetration ofconsumer goods favourable demographics increasing urbanisation and growing preferencefor trusted brands remain firmly in place in India. Your Company remains confident ofrapidly scaling up its FMCG Businesses on the back of a strong future-ready portfoliopowered by world- class quality superior consumer insights and product qualitycutting-edge innovation agile and efficient supply chain and purpose-led brands.

The Businesses will continue to leverage their institutional strengths viz. strongbackward linkages with the Agri Business a deep and wide multi-channel distributionnetwork cuisine knowledge resident in the Hotels Business packaging knowhow and accessto robust R&D platforms nurtured by LSTC. Investments in innovation smart & agilevalue chains state-of-the-art distributed manufacturing footprint and digitaltechnologies will continue to be pursued to strengthen market standing and seize growthopportunities going forward.

Branded Packaged Foods

The recurring waves of the pandemic continued supply chain disruptions volatility indemand along with unprecedented inflationary headwinds particularly in edible oil andpackaging material posed severe challenges to the Branded Packaged Foods industry duringthe year.

Against the backdrop of an extremely challenging operating environment as aforestatedyour Company sustained its position as one of the fastest growing branded packaged foodsbusinesses in the country leveraging a robust portfolio of brands a slew offirst-to-market offers a range of distinctive products customised to address regionaltastes and preferences supported by an efficient supply chain and distribution network.

The Branded Packaged Foods Businesses remain focused on addressing emerging consumerneeds with innovations anchored on the vectors of health wellness immunity naturalsindulgence and convenience. The Businesses launched several innovative and first-to-marketproducts leveraging superior consumer insights capabilities of your Company's LifeSciences and Technology Centre (LSTC) and the cuisine expertise resident in your Company'sHotels Business. While strengthening its core portfolio the Businesses continue toexplore opportunities in value-added adjacencies leveraging powerful mother brands andbuild categories of the future.

The Businesses continued to make sharp targeted brand building investments and scalingup their nascent categories. Clutter-breaking advertising campaigns and consumerengagement both in conventional and digital media along with focused market developmentefforts resulted in reinforcement of brand positioning for your Company's bouquet ofworld-class brands in the Branded Packaged Foods space. Digital campaigns launched duringthe year received wide recognition and won prestigious awards across leading platforms.Some of the key awards received during the year include ‘A Lot Can Happen Inside'Gold for Best Brand Influencer Collaboration by IAMAI for Sunfeast Dark Fantasy‘Augmented Reality Snapchat Lens' Gold for Augmented Reality by Digital Crest Awardsfor Sunfeast YiPPee! ‘Leveraging a community to be the voice of the brand' Gold forMost Organic Campaign by Impact Digital Influencer Awards for Aashirvaad Atta and Best useof Digital Media by Digixx 2022 for ITC e-Store.

Your Company also collaborated with several social influencers to deepen consumerengagement.

The Businesses continue to increasingly leverage ‘Sixth Sense' the MarketingCommand Centre and Consumer Data Hub. Focused consumer conversations and sharpcohort-based insights have enabled your Company's world-class brands to create innovativemarketing campaigns in both Web 2.0 & 3.0 (Gaming and Metaverse) with interventionsusing Augmented/Virtual Reality and Artificial Intelligence providing a unique opportunityto interact with next generation consumers. The rise of social commerce has created uniqueopportunities for brands to engage with their target audience using social media.

During the year your Company launched its first social commerce event - ITC StoreJugalbandi - a fusion of food and music with the event being virtually hosted by ITCStore in association with ITC Master Chef Frozen Snacks.

Relentless focus on delivering superior quality products to consumers continues to be akey source of sustainable competitive advantage for the Branded Packaged Foods Businesses.In this context the Businesses continue to leverage the agri-commodity sourcing expertiseresident in your Company's Agri Business to procure high quality raw materials therebyensuring the highest levels of quality consistency and safety of its products. Inaddition each of your Company's branded packaged food products is manufactured inHACCP/ISO-certified manufacturing locations ensuring compliance with all applicable lawsand adherence to the highest quality norms.

- In the Staples Business ‘Aashirvaad' posted a resilient performance on a highbase and fortified its market standing across geographies while addressing emergingconsumer preferences for healthy products and catering to regional tastes. The value-addedportfolio consisting of Multigrain Select and Sugar Release Control Atta posted robustgrowth driven by higher salience in Modern Trade and e-Commerce channels. ‘AashirvaadNature's Super Foods' a differentiated range of products comprising Gluten Free FlourRagi Flour Multi-Millet Mix Organic Atta and Organic Dals continued their robust growthtrajectory. These products are available across select General and Modern Trade outlets aswell as leading e-Commerce platforms. The range of value-added products was furtheraugmented with the launch of ‘Aashirvaad Vermicelli' during the year.

The Business also forayed into Frozen Indian Flat Breads (Paratha Naan and Chapati) toservice export markets. Focused and purposeful marketing inputs consumer activations andregion-specific interventions supported by sharply directed media investments especiallyin digital platforms enabled further improvement in Aashirvaad's brand health metrics.Powered by the trust reposed by nearly 74 million households your Company is confident ofsustaining Aashirvaad's position as India's No. 1 Atta brand going forward.

As highlighted in prior years the Business continues to contend with increasedcompetitive intensity post the implementation of 5% GST on branded atta. While it has beenthe Government's intention to provide relief of nil rate of GST only to small and localmanufacturers thereby benefiting consumers with lower priced staple products manyunscrupulous players have used this distinction in rates as an attractivetax-evasion/avoidance opportunity by classifying their products as unbranded or with adeclaration that all actionable claims or rights associated with brand identity have beenforegone while continuing to market the product with brand names and distinct trademarks.This inequitable GST differential between branded and unbranded players has resulted inmarket distortion widening the price gap between national registered brands and localunregistered brands and acts as a disincentive to invest in value creation for the FoodProcessing sector.

Supported by its new positioning ‘Created by Sun and Sea - pure just like natureintended it to be' Aashirvaad Salt strengthened leadership in key focus geographies andposted healthy growth during the year. The two recently launched variants - Crystal saltin Southern markets and Proactive salt (15% Lesser Sodium) - were scaled up during theyear.

In the Spices category integration of M/s. Sunrise Foods Private Limited with yourCompany was successfully completed. The Sunrise brand delivered robust growth during theyear and further strengthened its market standing as the leader in its core market of WestBengal on the back of increased market penetration and heightened consumer engagementinitiatives.

The brand was extended to other markets in the East/North East and is amongst the topspices brands in the region. The Business deployed region-specific communication strategyto enhance consumer engagement. ‘Aashirvaad Spices' continues to enhance its presencein blended spices in emerging channels and core markets to enable full portfolio play.Together the two brands are well positioned to leverage your Company's institutionalstrengths to progressively enhance their market standing further.

- After witnessing sharp growth in the previous year the Biscuits categorystrengthened its portfolio leveraging superior capability across innovativeproduct/technology platforms. The Business continued to focus on the premium segment toenhance brand affinity and increase penetration in emerging channels. Unique capabilitiesin RsFills' technology were leveraged to launch innovative variants both under‘Sunfeast Dark Fantasy' and ‘Sunfeast Bounce Fills' and create new benchmarks inthe premium indulgence space. Product portfolio was augmented with the launch of‘Sunfeast Bounce FillsRs in several exciting flavours - Orange Vanilla StrawberryVanilla and Choco Creme. The ‘Sunfeast Dark Fantasy' range of differentiated cookiessustained its leadership position in the premium segment. The range was augmented with thelaunch of innovative variants - ‘Sunfeast Dark Fantasy Vanilla Fills' and‘Sunfeast Dark Fantasy Desserts'. The Cakes portfolio was also strengthened with thelaunch of Sliced Cakes.

- Despite being impacted by multiple waves of the pandemic the Snacks Businesssustained its robust growth trajectory during the year primarily driven by its coreportfolio comprising ‘Bingo! Tedhe Medhe' ‘Bingo! Potato Chips' and the‘Bingo! Mad Angles' range. ‘Bingo!' continues to be the market leader in theBridges segment and in the potato chips segment in South India. Several innovativevariants were launched during the year including Cream & Onion flavour under Bingo!Potato Chips ‘Chatar Matar' under Bingo! Tedhe Medhe and Tomato flavour under‘Bingo! No Rulz Curlz'. The ‘Tedhe Medhe' range of Namkeens was augmented withthe launch of four new variants - Punjabi Tadka Moong Dal Navrattan Mix and KhattaMeetha.

The Business enhanced consumer engagement through innovative and exciting communicationinitiatives leveraging the brand's association with Ranveer Singh.

- The Instant Noodles category witnessed normalisation of demand during the year aftera sharp surge in previous year. Product portfolio was augmented with the launch of MaxMasala in target markets. Innovative media campaigns focused digital interventions andcelebrity endorsements with MS Dhoni continued to create buzz around the brand resultingin sustained traction with consumers. The ‘YiPPee!' brand continued to strengthen itsconsumer franchise and consolidated its market standing as a strong No. 2 brand.

- The Ready-To-Eat (RTE) category grew significantly in the institutional and domesticsegments led by Modern Trade and e-Commerce channels. In order to enhance consumerconvenience innovative microwavable pouches of products under the ‘Kitchens ofIndia' brand were introduced in the US and are receiving encouraging consumer response.

In the Frozen Snacks category the range of ‘ITC Master Chef' products comprisingseveral differentiated variants continues to garner increasing consumer franchise. Duringthe year the Business expanded the portfolio by foraying into the ‘plant based meat'space under the ‘ITC Master Chef' brand. With rapidly evolving consumer tastes andpreferences this area is expected to offer substantial headroom for growth over themedium term. In addition four new products were launched in the retail segment.

In a short span of time the Business has expanded availability to 100+ markets.Accessibility of the range is being further scaled up via e-Commerce and direct-to-homemodels with product assortments being crafted for specific channels in line with consumerdemand.

- In the Dairy & Beverages Business the ‘Aashirvaad Svasti' fresh dairyportfolio comprising pouch milk pouch curd lassi and paneer continued to gain strongconsumer traction on the back of best-in-class quality standards and superior tasteprofile. These products are currently available in Bihar and West Bengal.

During the year value-added fresh dairy segment was augmented with the launch of a newmango flavoured lassi. The Business also introduced a bucket curd offering for itsinstitutional customers.

In order to further broaden its portfolio the Business launched ‘Mishti Doi' atraditional delicacy of West Bengal in cup format under the Aashirvaad Svasti brand. TheBusiness also launched Aashirvaad Svasti Easy Digest Milk - West Bengal's firstlactose-free milk in pouch format to fulfil dairy needs for those seeking solutions tomilk indigestion issues without compromising on nutrition and taste. Aashirvaad SvastiGhee continued to receive excellent product feedback and garner increasing consumerfranchise. The Sunfeast range of milk shakes was augmented with the launch of ProteinShake and Mango Smoothie and are being extended to target markets.

The ‘B Natural' range of juices faced severe disruptions during the peak summerseason in FY 2021-22 due to the second wave of the pandemic. Amidst extremely challengingcircumstances B Natural continued to deepen consumer connect by leveraging its‘goodness of fruit and fibre' proposition. The product portfolio was augmented withlaunch of differentiated variants of ‘B Natural-Nutrilite'; these ‘No addedsugar' products were developed leveraging LSTC's expertise in nutrition and Nutrilite'singredients. In recent years the Business has strengthened presence in the rapidlyemerging Direct to Consumer (D2C) Travel and QSR segments. Partnerships with alternatedelivery channels enhanced product availability in spite of disruptions in traditionaltrade channels.

These strategic alliances along the vectors of portfolio product and positioning havelaid a strong foundation to enhance the market standing of the B Natural range goingforward.

- In the Chocolates Coffee & Confectionery Business the Confectionery categorywitnessed progressive recovery and continued to focus on building its premium portfolioleveraging ‘Fantastik Choco Sticks' and ‘Jelimals'. The Fantastik range wasaugmented with the launch of a vanilla variant while the Jelimals range was enhanced withthe launch of ‘Jelimals Nutrition+' (vitamin fortified jellies) ‘Jelimals YummySpace Jellies' - an exciting format with space themed jellies and ‘Jelimals TastySparkles'.

‘Fabelle' chocolates continue to perform well in the luxury segment and receivedencouraging product and market feedback. During the year availability of Fabelle wasenhanced through Quick Commerce in Delhi and Bengaluru; alternate platforms including theITC e-Store e-Commerce channels food delivery aggregators and the takeaway menus of ITCHotels continue to be leveraged to enhance product accessibility. Fantastik Chocobar XLlaunched last year in the popular segment at convenient price points continued to garnerpositive consumer traction; availability of the product was further scaled up during theyear.

- ‘Sunbean Beaten Caffe' a unique ready-to-use beaten coffee paste that producesa rich creamy and frothy cup of coffee continues to receive favourable response fromdiscerning consumers. The Business has also introduced a premium ‘Strong' variant forconsumers demanding a stronger cup of coffee.

- Acute shortage in container availability and steep increase in ocean freight ratesadversely impacted exports in the first half of the year. However the business bouncedback strongly in the second half powered by the growing franchise of your Company'sbrands amongst the Indian diaspora. The Branded Packaged Foods Businesses currently exportto nearly 60 countries across the globe. Going forward the Businesses propose to rapidlyscale up exports across categories by leveraging the brand equity of core brands such asAashirvaad Sunfeast and Kitchens of India and investment-led incentives under theGovernment of India's PLI Scheme.

- New launches across categories continue to garner excellent consumer response and arebeing scaled up in the target markets.

Over the years your Company has invested in setting up state-of-the-art IntegratedConsumer Goods Manufacturing and Logistics facilities (ICMLs) proximal to large demandcentres. These facilities are at the heart of your Company's strategy to create structuraladvantage by enhancing product freshness improving market responsiveness reducing thecost of servicing proximal markets and ensuring the highest standards of product hygienesafety and quality. The ICMLs also enable scalability besides setting new benchmarks inquality safety productivity and process excellence.

Your Company commissioned a new ICML at Medak Telangana in March 2022. With this tenICMLs are operational in locations proximal to large demand centres enabling delivery offresher products reduction in distance to market and higher cost agility. Capacityutilisation at existing ICMLs continued to be ramped up. Several of these manufacturingfacilities represent industry leading gender diversity in the labour force. With everysuccessive ICML coming on-stream the representation of women has progressively increasedwith the recent ICMLs at Pudukkottai and Medak having women representation at 79% and 100%of the on-roll labour force respectively. The ICML units received several prestigiousawards and accolades during the year from leading industry bodies such as theConfederation of Indian Industry (CII) Union Ministry of Labour & Employment Foodand Agriculture Centre of Excellence etc. for their high standards of safety qualityoperational excellence and benchmarks in green and sustainable manufacturing.

The Business implemented several strategic cost management initiatives in areas such assupply chain optimisation smart procurement and productivity improvement throughautomation leveraging new-age technologies such as Industry 4.0 and smart utilities.These interventions aided in partially mitigating the steep escalation in input costsabsorbing start-up costs of new facilities and strategic investments in brand building fornew categories viz. Dairy Juices Chocolates and Coffee.

A big thrust on India's Food Processing sector which lies at the intersection ofvalue-added agriculture and manufacturing can lead to significant job creation. Thesector also holds immense potential to enhance rural incomes and help manage foodinflation. Recognising this potential and headroom for growth in the Indian market yourCompany has made significant investments in food processing and remains focused onestablishing itself as the leading player in the branded packaged foods industry.

The PLI Scheme for the food processing industry with an estimated outlay of Rs 10900crores is expected to not only boost farmer incomes but also infuse fresh investmentsbuild Indian brands for the global market and promote exports. Your Company has beenincluded under the PLI Scheme towards sales-based incentives in the Ready to Eat Fruits& Vegetables and Marine categories respectively as well as for incentives towardsexpenditure incurred for branding and marketing in export markets.

Your Company is well poised to strengthen its position as one of the fastest growingfood companies and the ‘most trusted provider of food productsRs in the Indian marketin line with its purpose to ‘Help India Eat Better'. Your Company remains confidentof rapidly scaling up the Branded Packaged Foods Businesses leveraging the strong growthplatforms nurtured over the years in chosen categories which offer immense headroom forgrowth and powerful purpose-led mother brands that have the potential to be extended toaddress opportunities in adjacent spaces. In addition your Company's deep & widemulti-channel distribution network with growing presence in emerging channels such ase-Commerce Modern Trade on-the-go and institutional sales continues to delivercompetitive advantage through superior product availability visibility and freshness.Recent investments in establishing a world-class distributed manufacturing footprint havecreated a solid foundation to secure structural advantage over time. Cutting-edge R&Dplatforms of your Company's LSTC are driving agile innovation and faster turnaround timesfor introduction of differentiated & first-to-market products catering to constantlyevolving consumer needs. Investments in leading-edge digital technologies and platformscontinue to be stepped up across the value chain to drive competitive advantage.

Personal Care Products

The operating environment during the year under review was rendered extremelychallenging with the twin effects of recurrent pandemic waves and persistently high levelsof commodity inflation.

Industry volumes remained under pressure due to sharp increase in inflationconstraining household budgets especially in the latter half of the year.

Rural markets also remained subdued with the second wave of the pandemic causingsignificant disruptions. Further the Health & Hygiene segment which had grownsignificantly last year witnessed marked volatility in demand in line with the varyingintensity of the pandemic albeit remaining above pre-pandemic levels.

Your Company's Personal Care Products Business continued to demonstrate agility andresponsiveness to the dynamic market conditions leveraging its core strategic levers ofbuilding brands with purpose first-in-category innovations focus on categories of thefuture and accelerating presence in emerging channels. Improved product availability andagile response to demand volatility enabled the Business to navigate the challengingoperating environment during the year.

In the Personal Wash segment ‘Fiama' continued to strengthen its brand equity of‘joyful bathing and mood upliftment' registering healthy growth over the previousyear. This was driven by increase in direct distribution and household penetration andgrowth in e-Commerce channel. Catering to the emerging consumer preference for Naturalsthe Business launched innovative offerings in the gel bar format viz. ‘Fiama Amyris& Cedarwood Oil' and ‘Fiama Green Apple & Brazilian Orange Oil'. The Vivelrange of soaps continued to be well received by consumers. Both Fiama and Vivel have beenfrontrunners in adopting sustainable packaging. The carton soap portfolio for both brandshas fully migrated to recyclable paperboard cartons; Vivel wrapped soap portfolio has alsobeen transitioned to recyclable packaging. Further Fiama Shower Gel bottles are now madewith 30% Post-Consumer Recycled (PCR) material.

These innovative packaging solutions have been developed leveraging the synergisticcapabilities of your Company's Packaging and Printing Business and Life Sciences andTechnology Centre (LSTC) and are a testament to your Company's philosophy of embeddingsustainability into its business value chains.

‘Savlon' reinforced its position as one of the most preferred brands for expertgerm protection. In spite of demand volatility in line with COVID caseload intensitysales of Health and Hygiene portfolio remains significantly above pre-pandemic levels.Leveraging the brand's strong ‘germ-protection' equity the portfolio was augmentedwith the launch of ‘Savlon Powder HandwashRs in consumer-friendly low unit packs todemocratise the category by generating trials and driving penetration. The brand continuesto be the clear market leader in Surface Disinfectant spray category. As per IQVIA surveySavlon has emerged as the ‘Doctors' Most Trusted' brand in Antiseptic LiquidHandwash and Surface Disinfectant Spray categories.

The Business leveraged the ‘Nimyle' brand and the equity associated with‘Nim' to expand presence in the Home Hygiene segment. During the year Nimylerecorded strong growth and strengthened its leadership position in West Bengal and Odisha.

The brand was rolled-out nationally and continued to garner increasing consumerfranchise backed by clutter-breaking communication anchored on Naturals propositioncoupled with product's efficacy against virus strains. ‘Nimeasy' - an enzyme-basedeco-friendly Dishwash Gel launched recently continued to gain encouraging responsepremised on its differentiated positioning.

The Fragrance industry continued to be impacted on account of the pandemic as mobilityrestrictions reduced occasions of product use. As a result category penetration levelshave witnessed a decline over the last two years. Notwithstanding these challenges theBusiness registered strong growth on a relatively soft base and is expected to pick-up topre-pandemic levels in the near term. The Business continued to introduce innovativeproducts during the year; the range was augmented with the launch of L'amante Click &Brush Perfume Pen a unique gel-based perfume in the premium segment as well as four newvariants of deodorants - Floral Zest Garden Mystique Ocean Zest Spice Mystique. TheBusiness also launched ‘Engage ON Chhota pocket' as a value-for-money offering and anew ‘Moderna' range designed especially for Modern Trade and e-Commerce channels.Leveraging the capabilities of your Company's Life Sciences and Technology Centre theBusiness launched ‘Engage Fragrance Finder' an Al-powered technology-enabledexperience that aids the selection of fragrances based on the consumer's preferences andoccasion of usage.

The ‘Engage L'amante' and ‘EDW Essenza' range of fragrances continues toreceive encouraging response from discerning consumers and is well positioned to addressthe increasing trend of premiumisation witnessed particularly in the e-Commerce channel.

The Business continued to strengthen its presence in the premium skincare space throughits digital-first brand ‘Dermafique' and in the popular space through‘Charmis'. Growth in the skincare category was driven by sharply focused marketinginitiatives product and brand refresh and vibrant communication campaigns.

In keeping with its strategy of winning in emerging channels the Business bolsteredits presence in the rapidly growing e-Commerce channel and continues to widen itsassortment of offerings tailored to consumer needs. During the year salience of thee-Commerce channel stood at double digits for the Business.

In furtherance of your Company's strategy to scale up presence in the naturals andayurvedic space as well as in the fast-growing D2C channel during the year your Companyacquired a minority stake in RsMother Sparsh' a premium ayurvedic and natural personalcare startup with focus on mother and baby care segments. Further in April 2022 yourCompany acquired a minority stake in RsMylo' a full stack community eco-system whichaddresses the parenting needs of consumers. The investments will enable your Company toprogressively enhance presence in this area which has enormous growth potential besidesleveraging its early mover advantage in the rapidly evolving D2C space.

The Business continued to leverage creative brand campaigns and social media platformstowards deepening consumer engagement through purpose driven brands across its portfolio.

Vivel's #RespectWorkForHome campaign which subtly spotlights the chores enablingsmooth functioning of a household as being no different from managing work at aprofessional workplace resonated well with the target consumers. In order to promotemental wellness Fiama launched ‘Virtual Therapy' sessions in association with‘MINDS Foundation' to encourage proactive conversations and awareness on mentalwell-being.

Your Company is setting up a state-of-the-art Personal Care and Home Care productsmanufacturing unit in Uluberia West Bengal in line with its strategy of buildingin-house manufacturing capabilities for products with unique formulations enhancingsupply chain agility and responsiveness and reducing distance to market.

Manufacturing excellence continues to be accorded the highest priority with all threeCompany-owned units at Haridwar Manpura and Guwahati continuing to be Five-S certified bythe Quality Circle Forum of India. The Haridwar unit won the HR Excellence ‘Platinum'category award for large-scale organisations from the Professional Network Group of Indiafor ‘Excellence in COVID Management'. The unit was also conferred Best EnvironmentalPractices Award by CII in May 2021.

Your Company's strategic focus in recent years has been to invest behind emerging needspaces spanning health & hygiene fragrances naturals and liquids. This has beensupported by superior consumer insight discovery processes agile innovations purpose-ledbrands and impactful communication in digital and conventional media. Access toinstitutional strengths such as robust R&D platforms resident in LSTCstate-of-the-art in-house packaging knowhow and your Company's multi-channel distributionnetwork continue to be leveraged to rapidly scale up the Business. Your Company with itsfuture-ready portfolio and purpose-led brands is well positioned to seize theopportunities and emerge as a significant player in this space.

Education and Stationery Products

The Education and Stationery products industry which was severely impacted in FY2020-21 due to the pandemic witnessed gradual recovery towards the end of the year underreview driven by progressive resumption of physical classes at educational institutions;however sales remained below pre-pandemic levels. Inflationary headwinds in commodityprices also exerted pressure on margins.

The Business reinforced its market leadership position in the industry delivering acompetitively superior performance driven by portfolio premiumisation judicious pricingactions enhanced presence in alternate channels and continued focus on cost and workingcapital management.

The Business continued to leverage its innovation platform in collaboration with yourCompany's Life Sciences and Technology Centre to launch differentiated products ofsuperior quality.

The Notebook portfolio was augmented with the launch of ‘A5' notebooks under the‘Classmate Pulse' range catering to the youth segment. The recently launched‘Classmate Interaktiv' series was also scaled up during the year and continues toreceive encouraging consumer response. During the year the Business strengthened itsreach in the youth and economy segments of the notebook industry through ‘ClassmatePulse' and ‘Saathi' brands respectively. The Institutional channel was also leveragedby increasing the reach to educational institutions.

The Writing Instruments portfolio was bolstered with the launch of ‘Classmate UVO'pens for school students.

The multi-channel capability of your Company's strong distribution network wasleveraged to enhance availability and drive sales. Proactive management of inventory andreceivables helped reduce working capital intensity and manage risks associated with ahighly uncertain operating environment. The Business sustained its leadership position one-Commerce platforms through consistent availability of customised product assortmentsbacked by focused interventions to enhance consumer traction. Consumer engagement wasfurther enhanced through a D2C platform which facilitates brandaffinity through creative product personalisations.

During the year was awarded ‘SilverRs in the ET Brand EquityDisruption Awards under the Education category.

The Business continues to ramp up capacity utilisation of its dedicated notebookmanufacturing facility at Vijayawada. Equipped with state-of-the-art technology thefacility enables the Business to develop highly differentiated notebook formats drivecost reduction and address opportunities in overseas markets. During the year theBusiness expanded its exports footprint to newer markets and successfully onboarded largeglobal retailers leveraging capabilities at the aforestated facility.

The Classmate and Paperkraft range of notebooks leverage your Company's world-classfibre line at Bhadrachalam - India's first ozone treated elemental chlorine free facility- and embody the environmental capital built by your Company in its paper business. TheBusiness continued to scale up the premium Paperkraft range of world-class notebooks usingForest Stewardship Council (FSC?) certified paper made at your Company's paper mill.

With over 250 million school going students India has one of the largest educationsystems in the world. The Indian Education and Stationery Products industry holds immensepotential driven by growing literacy increasing enrolment ratios the Government'scontinued thrust on the education sector and a favourable demographic profile of thecountry's population. Your Company with its strong brands robust product portfoliocollaborative linkages with small & medium enterprises and superior distributionnetwork is well poised to further strengthen its leadership position in the industry.

Incense Sticks (Agarbattis) and Safety Matches

After the disruptions witnessed in the previous year the Agarbatti industry surpassedpre-pandemic levels during the year driven by gradual opening of markets and places ofworship across the country.

‘Mangaldeep' Agarbattis and Dhoop enhanced household penetration leveraging itsrobust product portfolio. The Business continued to drive brand salience through sharplyfocused marketing interventions and a differentiated and superior product experience witha deep connect to devotion. Proactive steps were also taken towards driving product mixenrichment and cost optimisation. The Business mitigated inflationary headwinds during theyear by leveraging economies of scale driving sourcing efficiencies and ensuring smartprocurement.

In line with its vision to enable the pursuit of devotion for every consumerMangaldeep focused its brand interventions on digital media to reach out to devotees whowere unable to visit places of worship during the pandemic. Interventions such as‘Live PujasRs initiated during the first wave of the pandemic were further scaled upduring the year thereby deepening engagement with devotees. The Mangaldeep App which hasgarnered over 1 million downloads continues to play a key role in the devotional journeyof consumers.

The Business continues to strengthen its core portfolio through focused mediainvestments consumer-centric portfolio extensions and enhanced accessibility. Innovativeproduct offerings such as the Upaveda range of ‘Naturals' agarbattis drawinginspiration from ancient scriptures were launched during the year under the Mangaldeepbrand.

Over the years the Business has implemented several measures to enhance thecompetitiveness of the agarbatti value chain in India. These include import substitutionand backward integration of sourcing raw materials and manufacturing raw battis usingindigenous inputs. The Business has been a pioneer in developing domestic manufacturingcapabilities for raw battis and is also working closely with the Government under theaegis of the National Bamboo Mission and other nodal agencies of state governments forcultivating bamboo plantations in the country.

The proactive measures implemented by your Company as highlighted above sub-serve thenational priorities of employment generation and provide a source of competitive advantageto the Business while contributing towards enhancing income of bamboo farmers in theagarbatti stick and raw batti manufacturing value chain.

Amidst sluggish demand conditions in the Safety Matches industry the Businessstrengthened its market leadership position by leveraging its robust product portfolio andstrong distribution network backed by an agile and highly responsive supply chain. TheBusiness continues to focus on scaling up the share of value-added products in itsportfolio and enhancing supply chain efficiency by sourcing products manufactured closerto markets.


Your Company's Trade Marketing & Distribution (TM&D) vertical demonstrated ahigh degree of agility and responsiveness to mitigate the heightened uncertainty andmarket disruptions caused by the pandemic during the year. Concerted actions were takenacross all nodes of operations to ensure efficient market servicing and availability ofyour Company's products. These include realignment of distribution infrastructuredeployment of innovative delivery models strategic partnerships enhanced usage ofdigital technologies and focused approach to accelerate growth in emerging channels.

Against the backdrop of significant variability in demand TM&D continued to focuson shorter demand planning cycles sharper demand forecasting leveraging data analyticsoptimised nodes of distribution and direct-to-customer/market deliveries to ensure timelyaccess to your Company's wide range of products.

The dynamic interplay of varied and evolving consumer preferences multiplicity ofchannels including emergence of new channels diverse demographic profiles vastgeographical landscape along with multifaceted socio-economic factors pose a high degreeof complexity for distribution of FMCG products in India. Given the varied set of needsand challenges associated with each channel TM&D continues to sharpenchannel-specific strategies to efficiently service consumer demand across the country.Critical insights into consumer behaviour and channel-specific trends gained over theyears are being continuously leveraged to deliver superior performance in terms ofavailability visibility and freshness. The rapid growth of Modern Trade & e-Commercechannels and the emergence of several new players in recent years have also warrantedcrafting of differentiated market/outlet specific strategies to seize the emergentopportunities.

Your Company's multi-channel distribution network which facilitates availability ofits products in nearly seven million retail outlets was further strengthened during theyear with the addition of new markets and outlets to its direct servicing base. Market andoutlet coverage were stepped up to appx. 1.4x and 1.1x respectively over the previousyear. In rural markets your Company continued to roll out market-specific interventionsto enhance direct coverage on the basis of socio-economic indicators and market potentialto achieve growth rates higher than industry and support enhanced scale of operationsgoing forward. Direct reach enhancement in rural markets was supported through a hub andspoke distribution model with the expansion of rural stockists network to 1.4x overprevious year and collaborations with rural-focused eB2B players. Your Company's extensivee-Choupal network and deep connect with rural entrepreneurs were also leveraged in keygeographies to build local connect and carry out extensive consumer engagement activities.These initiatives helped in substantially mitigating the impact of disruptions in thetraditional wholesale channel and enhancing distribution reach in rural markets. The FoodService and Institutional channels also registered robust growth during the yearleveraging existing partnerships and enhancement of product range. Further newroutes-to-market were unlocked during the year through several strategic partnerships todeepen capabilities catering to specialised segments including ‘on-the-go'consumption direct marketing and QSRs.

Urban markets continue to witness increasing channel shift with proliferation ofemerging channels/eB2B players impinging on the performance of traditionalwholesale/retail channels. In line with its multi-channel strategy your Company continuedto invest in strengthening traditional trade by leveraging digital technology. Continuingits focus on automation data-led insighting and machine-learning enabled solutions yourCompany has implemented a slew of innovations to drive field-force productivity andperformance in urban markets. Customised servicing basis outlet potential and retailengagement programmes were deployed to stimulate demand for your Company's products withenhanced focus on premium grocery outlets.

As reported earlier your Company was amongst the frontrunners in the industry tolaunch an app-based anytime ordering system for retailers - UNNATI.

The digitally powered eB2B platform was rapidly scaled up during the year coveringnearly 3 lakh outlets within a short span of time since national launch facilitating sharpand direct engagement with retailers superior analytics personalised recommendations ofhyperlocal baskets based on consumer purchase insights and deeper brand engagement. YourCompany also scaled up VIRU (Virtual Salesman) a technology solution to enablecontactless ordering by retailers and direct communication with trade especially duringtimes of limited mobility or absence of salesforce using Machine Learning forhyper-personalisation.

During the year TM&D continued to focus on enhancing availability in marketsproximal to its ICMLs through increased awareness levels product trial generationsexpansion of distribution reach and consumer promotions.

The Modern Trade channel witnessed robust growth on the back of improved mobility andstore footfalls.

In addition reach expansion in Tier 2 and Tier 3 cities coupled with omni channelpresence also aided growth. Cash and Carry format which operates in the B2B spacecontinued to grow rapidly. Your Company's business with Modern Trade continued to grow onthe back of a format-based assortment approach catering to the needs of a diverse set ofshoppers with category specific sell-out strategies. Agile supply chain initiativesincluding collaborations with eco-system partners led to enhanced operational andexecution efficiencies.

Significant increase in internet penetration led by smartphones growing adoption ofdigital payments attractive loyalty programmes wide assortment of products and fasterdeliveries continue to drive the rising salience of e-Commerce channel. Your Companycollaborated with leading e-Commerce platforms on all aspects of operations i.e. categorydevelopment marketing supply chain and customer acquisition. This was augmented bydevelopment of exclusive and relevant pack assortments driving ‘Digital First'brands and enabling platform discoverability through jointly curated campaigns. JointBusiness Plans built and executed in close co-ordination with e-Commerce platformsfurther consolidated the market standing of your Company.

Further the presence of your Company's brands in Health and Hygiene space wasstrengthened on e-Commerce channel with the addition of new partners. Sales through thee-Commerce channel stood at 3x over FY 2019-20 levels taking the channel salience to 7%.

‘ITC e-Store' your Company's exclusive D2C platform is now operational in 15cities and continues to receive excellent consumer response. Powered by state-of-the-artdigital technology and robust fulfilment infrastructure the platform offers consumerson-demand access to a wide range of your Company's FMCG products across 45+ categories andover 700 products under one roof. Your Company continues to scale up its presence in therapidly growing emerging channels and has further expanded availability of its productswith new trade partners on Quick Commerce and Social Commerce platforms.

The scale and diversity of your Company's distribution network continues to be acritical lever to enhance market presence gain valuable insights into consumer &trade behaviour and provide speed and scale of execution for launches across geographies.In order to effectively leverage new routes-to-markets and meet the assortment needs ofemerging channels your Company also executed over 110 new product launches across targetmarkets besides extending distribution reach of several existing products in theportfolio.

TM&D continues to leverage cutting-edge digital technologies to drive productivityimprove market servicing draw actionable insights for sharp-focused interventionsaugment sales force capability and deepen connect with retailers. Technology enablement inthe form of customised mobility and routing solutions machine learning algorithms datascience models data analytics comprising insightful visualisation tools and predictiveanalysis is being increasingly leveraged to enable speedy and accurate data captureenable real-time informed decisions and aid in scientific design of trade inputs to drivesales.

Several interventions were undertaken by TM&D during the year to enhanceoperational efficiency and productivity in order to drive structural competitiveadvantage. These include delayering of operations through direct shipments to customerssmart buying including efficient freight procurement and supply chain & networkoptimisation.

During the year your Company completed setting up of two state-of-the-art AncillaryManufacturing cum Logistics Facilities (AMLF) - at Pudukkottai and Kapurthala. Thesestate-of-the-art automated facilities are co-located with the respective ICMLs and are inline with the strategy of minimising total delivered cost and enhancing marketresponsiveness besides reducing complexity in operations and cost of servicing.

Your Company continues to invest in augmenting the depth and width of its distributionnetwork while adopting a differentiated approach to address the unique needs of itsdiverse FMCG product portfolio market segments and trade channels. Cutting-edge digitaltechnologies are being scaled up towards strengthening TM&D's real time operations andexecution platform spanning synchronised planning and forecasting NextGen agile supplychain and smart demand capture and fulfilment.

With its best-in-class systems and processes an agile and responsive supply chain anda synergistic relationship with its channel partners TM&D's distribution highway is asource of sustainable competitive advantage for your Company's FMCG Businesses and is wellpoised to support the rapid scale up of operations in the ensuing years.


The global Travel & Tourism industry has been severely impacted by the COVIDpandemic over the last two years. The industry's contribution to global GDP which hadcontracted to 5.3% in 2020 from 10.3% in 2019 recovered to 6.1% in 2021.

As per estimates of the World Travel and Tourism Council the Travel & Tourismsector which had suffered 62 million job losses in 2020 could recover only 18 millionjobs in 2021. According to United Nations World Tourism Organisation (UNWTO) whileinternational tourist arrivals witnessed a 4% increase in 2021 on a soft base the sameremains below pre-pandemic levels by 72%.

The Travel & Tourism sector holds prime importance for the Indian economy as wellwith its direct and indirect economic impact estimated at appx. 10% of GDP (atpre-pandemic levels). The extensive tourism value chain spanning hotels travel agentsairlines tour operators restaurants tourist transporters and guides etc. results in ahuge economic multiplier impact ranking it amongst the highest across industries on thiscount. India's Travel & Tourism sector has also been severely impacted by the pandemicsince early 2020. Domestic Air Passenger traffic declined by over 40% and internationaltourist arrivals degrew by 87% during 2021 over pre-pandemic levels leading to cascadingeffect across the entire hospitality industry.

After a severely disrupted FY 2020-21 India's Travel & Tourism sector witnessed asmart recovery even as recurrent waves of the pandemic caused severe disruptions on anintermittent basis. Periodic restrictions on travel public gatherings and restaurant/banquet operations induced by the second wave of the pandemic severely impacted theindustry's performance in the first half of the year. The Business responded with agilityfocusing on alternate customer segments and revenue streams such as domestic leisurestaycations long weekend stays and weddings. Receding intensity of the second wave of thepandemic coupled with pickup in the pace of vaccination gradually improved consumerconfidence for travel; events such as weddings & social gatherings also enabled theBusiness to garner revenues. In the second half of the year green shoots of recovery inbusiness travel became visible leading to improved occupancy levels in business hubs.

While the third wave in January 2022 briefly halted the recovery momentum the industrybounced back towards the end of the year with exit occupancies surpassing pre-pandemiclevels and business travel sentiments improving. While Average Room Rate improved over theprevious year it remained below pre-pandemic levels.

The Business continued to focus on its strategy of offering a host of curatedpropositions across accommodation dining and banqueting to augment revenues acrossproperties. This included introduction of special packages offering value and flexibilitytargeting short getaways/staycations revamped packages for the MICE (Meeting IncentivesConferencing Exhibition) & wedding segments and extension of additional benefits tomembers of the Club ITC Loyalty programme.

The Business also catered to the growing need of food delivery and take away with‘Gourmet Couch by ITC Hotels' offering signature cuisines and specially designedmenus based on occasions and festivities.

The Business continued to reinforce its commitment towards health & hygiene with‘WeAssure' - a programme designed in collaboration with medical professionals &disinfection experts to reassure guests and to provide best-in-class experience in hygieneand safety at your Company's iconic Hotels.

The programme incorporates cutting-edge technologies to provide a pathogen-freeenvironment across all ITC owned properties and has received a Platinum Levelcertification from M/s. DNV (one of the world's leading certification bodies). TheBusiness continues to invest in creating contactless technologies and ensuring socialdistancing protocols.

Against the backdrop of a challenging operating environment Segment Revenue for theyear stood at Rs 1285.00 crores representing a growth of 104.8% while Segment EBITDA stoodat Rs 78.03 crores against a loss of Rs 268.60 crores in the previous year. Segment PBITfor the second half of the year turned positive against a loss of Rs 107.43 crores in thecorresponding period of the previous year.

Your Company's Hotels Business remains amongst the fastest growing hospitality chainsin the country with 113 properties and over 10700 rooms under four distinct brands -‘ITC HotelsRs in the Luxury segment ‘WelcomhotelRs in the premium segment‘FortuneRs in the Mid-market to Upscale segment and ‘WelcomHeritageRs in theLeisure & Heritage segment. ITC Hotels was recognised as the best Luxury Hotel Chainfor the 3rd consecutive year at Travel + Leisure India's Best Awards 2021. In the premiumsegment the ‘Welcomhotel' brand continues to strengthen its equity with refreshedand distinctive positioning of ‘Enriching Experiences'. During the year nine newproperties were added to the Group portfolio including four under the Welcomhotel brand -

- Welcomhotel Bhubaneswar located in Odisha offering 107 guest rooms and suites whichdraws inspiration from the magnificence of 500+ temples that adorn the city;

- Welcomhotel Guntur located in Andhra Pradesh offering 104 guest rooms inspired by thecultural ethos of the region;

- Welcomhotel Katra in Jammu & Kashmir and Welcomhotel Chail in Himachal Pradesh(managed properties) offering a distinct repertoire of premium accommodation and signaturedining.

These properties have received excellent response from guests within a short span oftime.

The Welcomhotel brand now consists of 23 hotels and over 2600 keys. With a strongpipeline of properties to be onboarded under the management contract route the brand iswell poised for rapid scale up in line with the ‘asset-right' growth strategy of theBusiness.

The ‘Fortune' brand continues to maintain its pre-eminent position in theMid-market to Upscale segment with the positioning of ‘First class full servicehotels - an affordable alternative' comprising 39 properties and nearly 3000 rooms. The‘WelcomHeritage' brand continues to create best-in-class authentic experiences withan operational inventory of 37 hotels comprising over 900 rooms.

Two new brands were introduced during the year - ‘MementosRs in the luxury segment& ‘StoriiRs in the premium segment. ‘Mementos by ITC hotels' brings togethera collection of unique hotels across varied destinations ranging from modern marvelshidden retreats to historic treasures leaving guests with experiences and memories whichbecome prized mementos long after their visit. ‘Storii by ITC Hotels' is positionedas a collection of handpicked properties offering unique bespoke experience-led stays inharmony with the environment and the local community. Several agreements/memoranda ofunderstanding have already been signed under these brands; properties are expected to belaunched in a phased manner over the next few quarters.

Leveraging its expertise and experience in the domain of sleep the Business launchedits signature ‘Sleeep' Boutiques across the country offering a wide range of premiumhome bedding products with both online and offline retail options. These boutiquespresent across seven ITC Hotels have received encouraging response and plans are on theanvil to scale up operations going forward.

The world-class ambience of your Company's luxury hotels continues to be leveraged forgourmet luxury chocolates under the Fabelle brand with exclusive boutiques across eightITC Hotels and kiosks at four Welcomhotels.

During the year ITC Grand Goa was recognised as the ‘Best Wedding Destination'and ITC Royal Bengal as the ‘Best Bleisure Hotel' by Travel + Leisure India's BestAwards 2021. ITC Maurya was also recognised as the ‘Favourite Indian hotel' for foodand drinks at the Conde Nast Traveller Readers' awards.

‘Responsible Luxury' continues to guide business best practices in line with the‘Triple Bottom Line' philosophy of your Company. ITC Hotels and Welcomhotels haveachieved 2030 Carbon emissions targets basis COP 21 Paris agreement (as per the HotelDecarbonisation report issued by International Tourism Partnership). Furthering yourCompany's Responsible Luxury ethos ITC Grand Chola at Chennai and ITC Gardenia atBengaluru have received LEED? Zero Carbon Certification in addition to ITC Windsor atBengaluru which achieved the prestigious accreditation last year. Together theseproperties are the first three hotels in the world to receive the LEED? Zero CarbonCertification. Further Welcomhotel Guntur Welcomhotel Bhubaneswar and WelcomhotelChennai received the prestigious LEED? Platinum Certification by USGBC (U.S. GreenBuilding Council)/IGBC (Indian Green Building Council). Going forward the Business willcontinue to further enhance the renewable electrical energy portfolio increase the numberof LEED? Zero carbon certifications and reduce carbon emission levels.

Digital investments continue to be leveraged towards facilitating guest acquisitionenhancing guest experience augmenting revenue generation and driving operationalefficiency. During the year the managed properties portfolio was seamlessly integratedwith the contemporary cloud based central reservation and distribution system of theBusiness. The ITC Hotels website was also refreshed with additional functionalities tocater to segment specific customer requirements and leverage advanced analytics to providea single window platform for brands across your Company's Hotels Business. During theyear the Business also launched its full stack ITC Hotels Mobile App with cutting-edgeuser experience enabling swift and easy access to Room and F&B Reservations Fooddelivery loyalty benefits and a host of exclusive offers. The App continues to receivegood response within a short span of time and is being leveraged effectively to enhancecustomer engagement and enable revenue growth.

Over the years your Company has expanded its footprint in the Luxury and Upper Upscalesegments of the Indian hospitality industry and has created 15 iconic propertiescomprising around 3600 rooms across the country. Construction of ITC Narmada in Ahmedabadis progressing well and the hotel is expected to be commissioned shortly.

Your Company's ‘asset-right' strategy envisages a substantial part of incrementalroom additions going forward to accrue through management contracts. The Business iswitnessing growing interest amongst property owners to partner with its iconic brandsresulting in healthy generation of leads and pipeline for management contracts. TheBusiness is confident of rapidly scaling up revenues through this route going forward.

As reported earlier your Company remains committed to aggressively implement its‘asset-right' strategy focus on sweating existing assets create additional revenuestreams and pursue alternate structures in line with industry recovery dynamics towardsengendering the next horizon of growth as also enhancing value creation.

With its highest standards of hygiene and safety portfolio of world-class propertiesiconic cuisine brands and best-in-class service levels anchored on ‘ResponsibleLuxury' ethos your Company is well placed to sustain its pre-eminent position in theIndian Hospitality industry.


Paperboards & Specialty Papers

After a sharp decline in FY 2020-21 global demand for Paper & Paperboardswitnessed a growth of about 10% in FY 2021-22. Paperboards segment is estimated to havegrown faster at about 11-13% on the back of robust demand from end-user industry segments.Higher global demand for virgin grades and continued supply chain disruptions led tointernational fibre prices remaining elevated throughout the year. Writing & PrintingPaper which had degrown significantly in FY 2020-21 grew at a moderate pace of 5-7% witheducational institutions and offices continuing to remain partially closed in the courseof the year. The Indian industry witnessed broad based uptick in demand across mostend-user segments driven by Consumer Goods Pharmaceuticals Food Service and e-Commerce.

Despite significant operational challenges due to the pandemic and continued globalsupply chain disruptions the Business achieved record volumes and higher realisationsduring FY 2021-22.

Structural interventions across the value chain including inter alia developing highyielding clones augmenting value added paperboard & in-house pulp manufacturingcapacity and creating superior distribution infrastructure product & processinnovation digital interventions including Industry 4.0 continue to provide the Businesssustainable competitive advantage. The Business fortified its clear leadership in theValue Added Paperboard (VAP) segment through the introduction of innovative new productscustomised for end-use industries and maintaining best-in-class service levels for keycustomers. The Business is also a leading player in the eco-labelled products segment aswell as the premium recycled paperboards space.

The Business demonstrated agility amidst supply chain disruptions and achieved robustgrowth in domestic and export markets while reinforcing its position as a reliable supplychain partner.

This was enabled through strategic partnerships proactive supply chain management andagility in execution. The Business expanded its footprint in key geographies such as UKWest Europe Middle East and the Mediterranean region enhancing its share of businesswith leading paper merchants.

Your Company is actively engaged in developing and promoting suitable paper andpaperboard substrates to replace single-use plastics. ‘FiloPack' and ‘FiloServe'under the ‘Filo' series are certified as ‘100% Recyclable' by Central Pulp &Paper Research Institute (CPPRI) while ‘OmegaBev' and ‘OmegaBarr' under the‘Omega' series are certified as ‘Bio-degradable under compostable environment'by Central Institute of Petrochemicals Engineering & Technology (CIPET). Theseproducts which serve as alternatives to plastic coated containers cups and other deepfreeze applications registered robust growth during the year and continue to gainpopularity with increasing awareness levels amongst customers. The portfolio was alsoaugmented with the launch of a new range of Specialty Papers for e-Commerce/ courierenvelopes and paper tapes. The Business is stepping up investments in this fast-evolvingspace which holds immense growth potential supported by the R&D capabilities of yourCompany's Life Sciences and Technology Centre and through external collaborations withglobal specialists. To rapidly scale up its future-ready product portfolio throughcutting-edge innovation the Business has also set up a dedicated ‘Nextgen Cell'which is actively engaged in building a robust innovation pipeline.

During the year the Business delivered robust performance in the Specialty Paperssegment.

Market standing stood enhanced during the year driven by product mix enrichmentdiversification of the customer base and launch of innovative products such as anti-viraland anti-bacterial Specialty Paper - ‘NPP Pro' for use in pharmaceutical leaflets andpackaging applications. The domestic industry continues to remain under pressure onaccount of cheap imports from China. The recent introduction of anti-dumping duty on Decorpaper is expected to increase ‘Make in India' opportunities and enable importsubstitution.

Cost of key inputs remained elevated throughout the year. Besides a sharp increase inpulpwood prices recycled fibre prices also ruled high due to lower collections/suppliesas a result of pandemic led disruptions and high shipping costs. While the prices of keychemicals increased significantly due to strong global demand coupled with increase incrude prices & energy costs coal supplies were adversely impacted by supply chaindisruptions and prioritisation of domestic supplies to thermal power plants. Geopoliticaltensions in Europe exacerbated the pressure on supplies of major inputs during the lastquarter of FY 2021-22. In spite of these challenges the Business responded to marketrequirements with agility to ensure uninterrupted supplies to customers.

The Business continues to make structural interventions to reduce dependence onimported pulp enabling substantial reduction in operating costs. Significant increase inin-house pulp production was achieved through strategic interventions Industry

4.0 initiatives and improved wood mix. Capacity utilisation of Bleached Chemical ThermoMechanical Pulp mill (BCTMP) at the Bhadrachalam unit touched a record high during theyear. Initiatives such as bund plantation and scaling up plantations in new catchmentareas in Odisha and Chhattisgarh have enabled procurement of more than 10000 MT of woodfrom these areas with further potential for increasing cost-effective access to fibre inthe future.

The Business has been practising the principles of Total Productive Maintenance (TPM)Lean and Six Sigma for over a decade now and continues to reap substantial benefitsthrough its Business Excellence initiatives. In recent years the Business has embarkedupon a comprehensive Digital Transformation Programme across the vectors of manufacturingsupply chain and support services to achieve operational excellence and drive improvementin profitability.

Your Company is a pioneer in the adoption of Industry

4.0 in the Indian Paper & Paperboard industry. Digital and emergent technologiesremain deeply embedded in the operations of your Company's Paperboards & SpecialtyPapers Business and continue to be leveraged towards enhancing operational efficiencyreducing wastages and enabling cost optimisation across the value chain. Themulti-dimensional digital interventions encompass Industrial IoT for Smart OperationsIntegrated Data Infra/Platform AI/ML algorithms for optimisation in the manufacturingprocess AI/ML based image analytics and IoT based crop monitoring & advisory. TheBusiness is also collaborating with partners from the start-up ecosystem as well asestablished solution providers in building scalable solutions that are custom-fit tobusiness requirements. Over 50 use cases have already been developed and implementedacross multiple spheres of the Business aiding in margin expansion.

During the year the Business received global recognition and was adjudged winner atthe Pulp & Paper International (PPI) Awards by Fastmarkets RISI in the category of‘The Internet of Things & Digitalisation'. Your Company became the first Asiancompany to receive this global award demonstrating its ‘best-in-class' credentialsamongst the leading players of the international pulp and paper industry.

Your Company continues to procure its wood requirements from sustainable sources.Research on clonal development has resulted in introduction of high-yielding anddisease-resistant clones that are adaptable to a wide variety of agro-climatic conditionswhich aid in securing greater consistency in farmer earnings. In this context yourCompany's Life Sciences and Technology Centre is engaged in developing higher yieldingsecond generation clones with enhanced pest and disease resistant attributes.

Your Company has the distinction of being the first in India to have obtained theForest Stewardship Council-Forest Management (FSC?-FM) certification which confirmscompliance with the highest international benchmarks of plantation management across thedimensions of environmental responsibility social benefit and economic viability. Tilldate your Company has received FSC?-FM certification for close to 1.3 lakh acres ofplantations involving over 30000 farmers. During the year over 3 lakh tonnes ofFSC?-certified wood were procured from these certified plantations. Your Companysustained its position as the leading supplier of FSC?-certified paper and paperboards inIndia.

All manufacturing units of the Business continue to recycle nearly 100% of the solidwaste generated during operations by converting the same into lime fly ash bricks greyboards egg trays etc. In addition the Business recycled around 1.1 lakh tonnes of wastepaper during the year thereby sustaining your Company's positive solid waste recyclingfootprint.

The manufacturing facilities at Bhadrachalam Kovai Tribeni and Bollaram continue toreceive industry recognition for their green credentials and safety standards in line withyour Company's focus on sustainable business practices. The Bhadrachalam Unit is the firstpulp & paper plant and the second in the country overall to be rated GreenCoPlatinum+ by CII as part of the Green Company rating system.

The Kovai unit is the first site in India and the first paper mill in the world toachieve the highest platinum rating under the Alliance for Water Stewardship Standards.Bhadrachalam and Kovai mills won awards for Excellence in Energy Management at the 22ndNational Awards for ‘Excellence in Energy ManagementRs in the Pulp & Papersector. The Bhadrachalam unit was rated as the Winner in RsWithin the Fence' categoryunder CII-National awards for Water management.

The Business continues to strengthen its safety management processes adopt globallyrecognised best practices and ensure that facilities are designed constructed operatedand maintained in an inherently safe manner.

In line with the objective of enhancing the share of renewable energy in itsoperations the Business has implemented several initiatives including investments in agreen boiler high pressure & efficiency circulating fluidised bed boiler solar &wind energy and increased usage of bio-fuel. With these initiatives renewable sourcespresently account for appx. 44% of total energy consumed at the four manufacturing units.

The year marked the commissioning of the state-of-the-art and future-ready HighPressure Recovery Boiler at the Bhadrachalam mill replacing conventional soda recoveryboilers ahead of project schedule despite the disruptions caused by recurrent waves ofCOVID. The boiler is one of the largest to be commissioned in the country and is atestament to your Company's commitment towards embedding sustainability in its operations.By enhancing energy efficiency this intervention will reduce the carbon footprint of theunit's operations through significantly lower coal consumption.

Going forward paperboard demand is expected to be driven by end-user segments such ashousehold appliances consumer goods ready-made garments e-Commerce pharmaceuticalsetc. Writing & Printing paper demand is also expected to bounce back in the short-termon the back of demand from the publishing and notebooks industry following re-opening ofeducational institutions.

The integrated nature of your Company's business model - comprising access tohigh-quality cost competitive and renewable fibre supply chain in-house pulpmanufacturing capability import pulp substitution world-class product qualitystate-of-the-art manufacturing facilities leveraging data analytics and Industry 4.0 alongwith robust forward linkages with the Education and Stationery Products Business and thePrinting and Packaging Business - is a key source of competitive advantage for yourCompany's Paperboards & Specialty Papers Business. Your Company is confident ofsustaining and further consolidating its clear leadership position in the Indian Paper andPaperboards industry leveraging recent investments in innovation platforms anchored on thedevelopment of sustainable products and cutting-edge digital technologies to set newbenchmarks of competitiveness efficiencies and productivity.

Packaging and Printing

Your Company's Packaging and Printing Business is a leading provider of superiorvalue-added packaging solutions leveraging its comprehensive capability-set spanningmultiple technology platforms coupled with in-house cylinder making and blown filmmanufacturing lines. The Business caters to the packaging requirements of leading playersacross several industry segments viz. Food & Beverage Personal Care Home CareFootwear Consumer Electronics QSR Pharma Liquor and Tobacco.

It also provides strategic support to your Company's FMCG and Cigarettes Businesses byfacilitating faster turnaround for new launches providing innovative packaging solutionsensuring security of supplies and delivering benchmarked international quality atcompetitive cost.

The year under review remained challenging for the Business due to disruptions causedby the pandemic along with steep increase in commodity prices. Notwithstanding thechallenging operating environment the Business demonstrated resilience with an uptick indemand across most end-use segments leading to robust growth in domestic as well asexports businesses.

The Business continued to service the critical packaging requirements of severalindustry segments including your Company's Branded Packaged Foods Personal Care Productsand Cigarettes Businesses. Leveraging its supply chain network and superior customerrelationships the Business also responded with agility to seize opportunities in exportmarkets reinforcing its position as a reliable supply chain partner.

The Business continues to craft innovative packaging solutions leveraging its deepunderstanding of end-user needs and the capabilities of your Company's Life Sciences andTechnology Centre. Recognising the need for sustainable packaging and the resultantemerging demand for plastic substitutes the Business launched its flagship‘InnovPack' campaign and identified certain end-use segments with potential for rapidadoption of sustainable packaging and plastic substitution solutions. Further a steadypipeline of pioneering solutions anchored on molecular science research is also in placesuch as ‘Bioseal' (compostable packaging solution for Quick Service Restaurantspersonal care and packaged foods industries) ‘Oxyblock' (a recyclable coatingsolution with enhanced barrier properties for packaged foods edible oils etc.) and‘Germ free coating' (solution for microbial free packaging surface addressing theconsumer consciousness towards hygiene and safety). These products continue to receiveencouraging response; the portfolio is being augmented progressively with a range ofsolutions that are in various stages of commercialisation. Investments are being steppedup in this fast-evolving space which holds immense growth potential.

The Business has been consistently recognised amongst the top ranked global packagingcompanies on productivity parameters as per the latest International Packaging Group andInternational Flexibles Packaging Network rankings. During the year the Business wonseveral prestigious awards viz. the WorldStar award for Getkrrackin Bottle ProfiledPouch the IFCA Star award and SIES SOP Star Award for its excellence in packaging undervarious categories including sustainability and eco-friendliness. The manufacturingfacilities at Tiruvottiyur Haridwar and Munger maintained the highest standards inQuality and Environment Health & Safety (EHS). All three units are certified as perthe Integrated Management System consisting of ISO 9001:2015 ISO 14001:2015 ISO45001:2018 and have also received Social Accountability Certification (SA 8000:2014).

The cartons packaging lines in both the Tiruvottiyur and Haridwar units received the‘Grade AA' Brand Reputation Compliance Global Standards (BRCGS) certification forglobal standards in packaging and packaging materials - a key enabler for supplies to thepackaged foods industry. The Tiruvottiyur unit received the Silver Award for Excellence inEHS from CII. The Haridwar unit received the Gold trophy from the National Safety Councilfor Excellence in EHS systems.

To cater to its growing customer base across the country and to further improvecustomer service levels the Business has initiated investments to expand itsmanufacturing footprint in the Western region. The facility equipped withstate-of-the-art technologies is expected to be commissioned in FY 2022-23 and providesignificant opportunities to tap the growing demand in the region.

With world-class manufacturing technology across a diverse range of platforms andbest-in-class quality management systems the Packaging and Printing Business hasestablished itself as a one-stop packaging solutions provider to several segments and isrecognised as a ‘first choice packaging partner' across the consumer goods industry.The Business is confident of sustaining its pre-eminent position in the Packaging andPrinting industry through focused investments towards expanding its range of sustainablepackaging solutions and by diversifying its manufacturing base in the western region alarge potential market for the Business.


Leaf Tobacco

A punitive and discriminatory taxation and regulatory regime on cigarettes apart fromproviding a fillip to illicit trade and severely impacting the domestic legal cigaretteindustry has also exerted significant pressure on the leaf tobacco crop grown in India.Excess supply from certain competing geographies coupled with weakness in their currencieshas resulted in reduced demand for Indian tobacco in international markets causing lowerrealisations for Indian farmers. Lower export incentives in India have adversely affectedthe competitiveness of Indian tobacco in global markets and impacted farmer earnings.

In addition to the above the recent pandemic- induced disruptions in major consumptionmarkets overseas have also impacted regional manufacturers in such markets therebyreducing their leaf tobacco purchases from India. Consequently Indian leaf tobaccoexports have declined by around 20% over the last eight years from 236 million kgs in FY2013-14 to 188 million kgs in FY 2021-22.

However during the year global supply chain disruptions led to global manufacturersscouting for alternate sourcing origins like India to ensure continuity of supplies.Consequently exports of leaf tobacco from India have grown by 8% over the previous year.

The Business continued to leverage its crop development expertise sustainable valuechain and sustainability credentials superior product quality and world-class processingfacilities to strengthen its position as a reliable supply chain partner.

Superior customer engagement operational agility and supply chain efficiency enabledthe Business to deliver enhanced value to existing customers and increase new businessdevelopment. The Business consolidated its pre-eminent position as the largest

Indian exporter of unmanufactured tobacco and aided in improving its market share byabout 600 bps.

Strategic cost management across the value chain continues to be a key focus area forthe Business.

The AI/ML powered smart buying platform continues to be scaled up to facilitateefficient leaf tobacco buying across auction platforms. Several initiatives implemented inrecent years have led to improved operating efficiencies across manufacturing and supplychain.

The Business continues to make focused investments across the tobacco value chainanchored on the key vectors of Quality Consistency Compliance and Sustainability. Cropand region-specific agronomic practices continue to be deployed to cater to the emergingpreferences of customers. Synergistic R&D initiatives with focus on varietaldevelopment climate smart farming techniques and usage of water efficient technologiesare being scaled up towards improving productivity product quality and reduction incultivation costs. The Business has successfully implemented integrated energy managementinitiatives spanning energy conservation promotion of alternative fuel usage and energyplantations towards achieving fuel self-sufficiency in the curing process of Flue CuredVirginia tobacco. In addition to these initiatives your Company is taking up integratedwatershed management programmes to ensure availability of water for irrigation duringcritical phases of the crop cycle.

The Business continues to set benchmarks in leaf threshing operations through focusedinitiatives and innovative technological solutions. Investments continue to be made inyour Company's Green Leaf Threshing plants (GLT) at Anaparti Chirala and Mysuru towardsdelivering world-class quality and upgrading processing technology. The energy needs ofall three GLTs are substantially met from renewable sources in line with your Company'sphilosophy of adopting a low-carbon growth path. Continuity of operations was ensuredduring the second and third wave of the pandemic through systematic and proactiveengagement with all stakeholders.

The Business remains committed to the highest standards of EHS (Environment HealthSafety) and Quality and continues to win recognition in these areas. During the year theBusiness received the CII awards for "National Excellence" in Energy managementand "Most Innovative Best Practices" as well as the "Prashansa Patra"award from National Safety Council. In addition the Business received various awards atevents organised by the Quality Circle Forum of India & CII for technologicalimprovements and quality control.

With increasing focus on sustainability and human rights compliance driven byregulations in EU and US your Company is well poised to meet the current and emergingrequirements of global customers with its best-in-class sustainability policiesprogrammes and systems across the value chain.

Over the years a sharp fall in domestic crop output sustained pressure on domesticlegal cigarette volumes and decline in leaf tobacco exports as aforestated have led tosevere stress on farmer earnings which have declined by over Rs 7000 crores in the lastseven years since FY 2014-15. Illicit cigarettes as well as smuggled New GenerationProducts (NGPs) and Electronic Nicotine Delivery Systems (ENDS) in the country also impactleaf tobacco trade as these products do not use Indian tobacco. As seen in the paststability in tax incidence and regulations lead to stable demand for leaf tobacco with thelegal cigarette industry being able to recover volumes lost to illicit trade. Accordinglya more balanced regulatory and taxation regime that cognises for the unique tobaccoconsumption pattern prevalent in India and the economic realities of the country is theneed of the hour to support the Indian tobacco farmer and the 46 million livelihoodsdependent on tobacco. Lower export incentives in India and unfavourable import duty leviedin several markets including the USA and Europe have weighed on the competitiveness ofIndian leaf tobacco exports. Restoring export incentives to earlier levels and necessarypolicy support to alleviate trade barriers would go a long way in enhancing thecompetitiveness of unmanufactured tobacco exports from India and contribute to increasingfarmer earnings. Your Company continues to engage with policy makers on these matters.

The Business will continue to provide strategic sourcing support to your Company'sCigarettes Business even as it consolidates its leadership position as a major exporter ofquality Indian tobacco thereby catalysing the multiplier impact of increased farmerincomes to benefit the rural economy. With its strong R&D capability modernprocessing facilities crop development & extension expertise and deep understandingof customer and farmer needs your Company is well poised to sustain its position as aworld-class leaf tobacco organisation.

Other Agri Commodities

The operating environment remained challenging during the year due to disruptions inoperations caused by the second and third waves of the pandemic. Severe shortages incontainer availability congestion in ports and steep increase in freight ratesexacerbated the situation. In spite of such challenges India emerged as a resilient anddependable source of agri-commodities to meet global demand.

Notwithstanding the challenging operating environment the Business leveraged marketopportunities and delivered robust growth in revenues driven by wheat and rice exports.This was achieved on the back of your Company's strong farm linkages and sourcingnetworks multi modal transport capability agile supply chain operations and deepcustomer relationships.

The scope and scale of operations of your Company's Agri Business have grown manifoldover the years and currently encompass over 4 million tonnes in 22 states and over 20agri-value chains. The strategic focus of the Business in recent years has been toaccelerate growth by rapidly developing and scaling up its Value-Added Agri Products(VAAP) straddling multiple value chains comprising Spices Coffee Frozen Marine Productsand Processed Fruits amongst others. The portfolio continues to be rapidly scaled upleveraging your Company's deep rural linkages and extensive sourcing expertise towardsstrengthening and customising supply chains for traceable and identity-preserved sourcingof agricommodities. Rapid adoption of analytics led smart procurement tools continue toenhance competitively superior sourcing capabilities.

- Your Company is a leading player in whole spices such as Chilli Turmeric Corianderand Cumin.

In line with its strategy of enhancing value addition the Business has in recentyears expanded into ‘food safe' markets viz. USA EU and Japan leveraging its keystrengths such as identity- preserved sourcing expertise strong backward integrationsuperior processes custody of supply chain and customer focused strategies. During theyear the Business consolidated its position as a preferred supplier for discerningcustomers in the food safe segment private labels steam sterilised and organic products.Strong growth in exports was driven by new customers and richer product mix. The domesticbusiness also posted robust growth on the back of higher offtake from large formatretailers. The Business scaled up its Integrated Crop Management (ICM) programme therebyenhancing its ability to produce food safe spices in a sustainable manner.

The Business continues to partner with the various State Governments for production offood safe spices and has maintained an unblemished track record over the years in terms ofcompliance with stringent food safety parameters.

- The Business also leveraged its strong backward integration linkages to enhancepresence in the organic spices segment with the entire value chain being certified byglobally renowned agencies providing assurance on product authenticity and compliancewith stringent norms in the EU US and Indian markets. The Business continues to pursuesustainable farm management practices anchored on Rainforest Alliance and Global GAPaccreditation. The Spices Business received the ‘Outstanding Performance in FoodSafety' award from CII under the Large Food Business category for its backward integrationprogramme.

- During the year domestic coffee trade remained muted in anticipation of higherrealisations on account of lower crop size in Brazil coupled with container shortages andelevated ocean freight rates. Notwithstanding these challenges the Business recordedrobust growth in exports driven by European and Middle East markets.

This was enabled through strategic presence in key coffee producing regions in Indiadeep knowledge of estate and region-specific characteristics and focus on premium gradesof Arabica Certified Coffees Specialty and Monsooned Coffee. Apart from servicing theneeds of leading coffee houses in the value-added space the Business continues to sourcehigh quality coffee grades customised to the needs of your Company's gourmet coffee brand‘Sunbean'.

- Your Company is one of the leading exporters of value-added frozen marine productsfrom India with expertise in processing individually quick-frozen (IQF) raw and cookedproducts which adhere to the highest standards of safety and hygiene prevalent indeveloped markets such as the US EU and Japan. During the year the Business touchedrecord levels of sales driven by expansion into new markets in North America and MiddleEast. Leveraging its strong domain knowledge and sourcing expertise the Business alsosources shrimps and supports the ‘ITC Master Chef' range of ‘Super Safe' frozenprawns in the domestic market and supplies high-quality shrimps to your Company's Hotelsbusiness.

- In the Processed Fruits & Vegetables segment the Business continues to expandits footprint in categories of fruit pulp and tomato paste across conventional andcertified segments through a robust collaborative network comprising a large number ofsmall and marginal farmers across four states.

The Business remains focused on enlarging its scope of operations to include fresh andprocessed products in identified agri-commodities such as staples for the Food Servicesegment fresh and frozen fruits & vegetables. As these businesses develop criticalmass the Business is also scaling up end-to-end presence across the value chainsupported by the R&D capabilities of your Company's Life Sciences and TechnologyCentre and external collaborations.

Towards building deeper expertise in Medicinal and Aromatic Plant Extracts (MAPE) theBusiness scaled up its customised crop development programme in Madhya Pradesh during theyear. Collaborations with farmers are underway with the Business providing necessaryinputs advisory and on-field support.

The Business is also focusing on developing unique value-added products by leveragingthe research platforms of your Company's Life Sciences and Technology Centre.

More than two decades ago your Company conceptualised and rolled out the e-Choupalnetwork as a unique model towards enhancing agricultural growth and productivity andfostering sustainable rural development. Leveraging this robust platform your Companycontinues to focus on providing a range of value-added services in rural areas towardsenhancing the competitiveness of Indian agriculture and playing a critical enabling rolein integrating farmers input vendors and government agencies besides facilitatingnecessary market linkages. Integrated rural service hubs ‘Choupal Saagar' continueto serve farmers through their procurement and storage infrastructure and front-endretail stores. The Choupal Saagars facilitate efficient sourcing of a wide range ofagri-commodities while making available assorted brands and merchandise spanningcategories such as apparel footwear consumer durables electronics and fuel tailored tofarmers' needs. The Choupal Saagars also serve as an ideal platform for your Company'sFMCG brands to deepen their engagement with rural markets. Interventions such as ChoupalPradarshan Khet Choupal Mahotsav etc. continue to enhance the vitality of your Company'se-Choupal network.

Towards enhancing the competitiveness of domestic agri-value chains fostering newbusiness models and further augmenting value creation opportunities your Company hassuccessfully launched ITCMAARS (Metamarket for Advanced Agriculture and Rural Services) -a crop-agnostic ‘phygital' full stack AgriTech platform in six states with over 200FPOs encompassing more than 40000 farmers already added to your Company's network. Thisinitiative powered by cutting-edge digital technologies will create a robust eco systemto deliver seamless customised solutions to farmers whilst creating new revenue streamsstrengthening sourcing efficiencies and powering your Company's world-class Indian brands.This digitally powered platform seeks to empower the farming community by deliveringcustomised solutions through synergistically integrating NextGen agri-technologies. Theseinclude an e-Marketplace for agri inputs and farm outputs wide range of advisory servicescovering weather forecasts agronomy best practices for improved productivity qualityassurance etc. Value propositions across each of these opportunity spaces are expected tocreate new and scalable revenue streams for your Company over time. The Business expectsto rapidly scale up the initiative to create a unique platform providing significantcompetitive advantage to your Company's Agri Business.

Over the years your Company has invested significantly in building competitivelysuperior agri-commodity sourcing expertise comprising multiple business models widegeographical spread and customised infrastructure. These capabilities and infrastructurehave created structural advantages facilitating competitive sourcing of agri raw materialsfor your Company's Branded Packaged Foods Businesses.

- The Business continues to leverage its strong farm linkages and wide sourcing networkacross geographies to secure supplies of critical grades of wheat of benchmark qualitytowards meeting the growing requirements of Aashirvaad atta.

During the year the Business further scaled up its strategic sourcing and supply chaininterventions. These include focused crop development towards securing the right varietiesfor Aashirvaad atta to provide consumers best-in-class product quality and experience useof multi-modal transportation comprising rail road & coastal routes and enablingsupply of attribute based/identity preserved crop. The Business also ramped up directbuying at various atta factories. For instance at the Kapurthala ICML plant directbuying of wheat offers substantial benefits to farmers including transparency in gradingweighment and pricing besides reducing transaction costs due to minimisation of handlingand transportation. This initiative is being scaled up through focused crop development inthe area to upgrade crop quality.

In recognition of the various initiatives undertaken by the Business including keepingthe entire supply chain fully functional during the multiple waves of the pandemic yourCompany was awarded the ‘Best Practice in Digital Transformation of Supply ChainRs inMost Innovative Category at the CII Digital Transformation DX Awards 2021.

The Business continues to collaborate with reputed research organisations such as theIndian Agricultural Research Institute Indian Institute of Wheat & Barley ResearchIndian Institute of Rice Research Indian Institute of Soybean Research Indian Instituteof Vegetable Research Punjab Agricultural University and Agharkar Research Institutetowards building an efficient and cost competitive agri-value chain. During the year theBusiness further scaled up its wheat crop development programme and introducedlocation-specific new and superior seed varieties along with appropriate package ofpractices across Rajasthan Uttar Pradesh Bihar West Bengal Punjab Madhya Pradesh andMaharashtra. Sharp focus on deepening capabilities in proprietary crop intelligencescaling up the sourcing & delivery network and developing customised blends willsupport your Company's Branded Packaged Foods Businesses in the years to come.

- The Business continues to leverage its strong backward linkages and wide sourcingnetwork across geographies to source high-quality fruit pulp and frozen vegetables foryour Company's ‘B Natural' and ‘Farmland' brands.

- Milk procurement network in Bihar and West Bengal was strengthened during the yeartowards meeting the growing requirements of your Company's Fresh Dairy portfolio under the‘Aashirvaad Svasti' brand and in Punjab for ‘Sunfeast' Dairy Beverages. TheBusiness continues to empower farmers by providing infrastructure such as automated milkcollection units & chillers and imparting package of best practices to improveoperational efficiency maintain high quality and ensure identity preservation andtraceability. The capability to source superior quality milk has enabled the launch of‘Aashirvaad Svasti Easy Digest Milk' - West Bengal's first lactose free milk in pouchformat and ‘Sunfeast Protein ShakeRs in the Fresh Dairy and Beverages categoriesrespectively.

- The Business continues to scale up sourcing of spices to meet the growingrequirements of Sunrise and Aashirvaad brands.

In line with the national goal of doubling farmersRs income your Company remainscommitted to catalyse a transformational shift of the agri ecosystem from the conventionalproduction-centric to demand-responsive value chains. Towards this the Business continuesto focus on developing NextGen Indian agriculture anchored on digitally enabled andclimate smart agri-value chains with strong market linkages.

The focus of these interventions is to reduce vulnerability and increase the resilienceof farmers while lowering greenhouse gas emissions and promoting food security. YourCompany is confident of effectively participating in the emerging market opportunitiesarising out of these interventions to create and capture enhanced value for itsstakeholders.


The following may be read in conjunction with the Consolidated Financial Statements ofyour Company prepared in accordance with Indian Accounting Standard 110. Shareholdersdesirous of obtaining the Report and Accounts of your Company's subsidiaries may obtainthe same upon request. Further the Report and Accounts of the subsidiary companies isalso available under the ‘Investor Relations' section of your Company's in a downloadable format. Your Company's Policy for determination of amaterial subsidiary as adopted by your Board in conformity with Regulation 16 of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 can be accessed on your Company's corporate website at subsidiary-policy . Presently your Company does nothave any material subsidiary.

Surya Nepal Private Limited

The year under review continued to be extremely challenging for Nepal. Economicactivities remained impacted due to lockdowns and other restrictions for more than fourmonths from April 2021 in order to curb the spread of the second wave of the pandemic.Consequently the GDP growth of Nepal remained muted at 4.3% for the year ended 15th July2021 significantly below the Government of Nepal's target growth rate of 7%.

Progressive economic recovery was witnessed from September 2021 on the back ofincreased vaccination coverage and other initiatives taken by the Government of Nepal.

On the external front higher imports and lower remittances contributed to the wideningof the country's Current Account deficit. Due to drawdowns to finance such deficitforeign exchange reserves fell to US$ 9.58 billion as at mid-March 2022 from US$ 11.8billion in mid-July 2021 which represents less than 7 months of imports.

The Central Bank of Nepal has announced several initiatives to curb the sharp increasein imports and bolster the foreign exchange reserves of the country. While theseinitiatives are expected to promote external sector stability in the near terminitiatives towards encouraging Foreign Direct Investment (FDI) in the countryincentivising domestic manufacturing to substitute imports and promoting the hospitalitysector which has significant potential to generate foreign exchange earnings remain keyfor long-term sustainable growth of the economy.

The legal cigarette industry occupies an important place in Nepal's economy and is amajor contributor to the manufacturing sector of the country. However the industrycontinues to face challenges from a stringent taxation and regulatory regime. The companycontinues to engage with policy makers for equitable non-discriminatory pragmaticevidence-based regulations and taxation policies.

The pandemic-induced disruptions rendered the operating environment extremelychallenging particularly during the first half of the year under review. Notwithstandingthe same the company reinforced its market standing by leveraging its robust portfoliosuperior product quality and wide distribution network. Differentiated and innovativeportfolio interventions under the Surya and Shikhar trademarks registered encouraginggrowth. Supply chain agility coupled with proactive scenario planning ensured continuityof manufacturing operations amidst the disturbances caused by the second wave of thepandemic.

During the year the company strengthened its market standing in the Agarbatti industryleveraging its differentiated product portfolio sharply focused marketing investments andbest-in-class product availability across target markets on the back of its robust trademarketing and distribution infrastructure. New offers of ‘Mangaldeep Treya' and‘Mangaldeep Jasmine 100' strengthened portfolio presence in the Popular segment.

The Confectionery industry was adversely impacted in the first half of the year due topandemic led disruptions. With progressive opening of markets the company launched twonew offers ‘Toffichoo Cofitino' and ‘Toffichoo Creme Lacto' in the categoryand continues to make focused investments towards strengthening its market standing.

The company continues to adopt all measures towards ensuring the safety and well-beingof all its stakeholders. The company also places immense emphasis on making significantcontributions towards building the societal and economic capital of Nepal.

In this regard the company continues to:

- assist farmers in areas proximate to the company's operating locations to enhanceproductivity and enable upliftment of agri-infrastructure.

- support the animal husbandry sector by providing extension services covering animalbreeding health and nutrition to drive yield improvement and higher returns for farmers.

- contribute towards improvement in quality of education in public schools in theeconomic vicinity of its operating locations.

- support development of local public infrastructure in the catchment areas ofoperating locations.

In addition the company also provided support to government/community hospitalsinvolved in treatment of COVID patients by providing critical care equipment oxygenplant ambulances and other medical supplies.

During the year the company recorded Revenue from Operations of NRs. 4382 crores(previous year NRs. 3612 crores) and Net Profit of NRs. 1005 crores (previous year NRs.867 crores) representing a growth of 21% and 16% respectively.

The company declared a dividend of NRs. 467 per equity share of NRs. 100 each for theyear ended 15th July 2021 (31st Asadh 2078) amounting to NRs. 941.47 crores (previousyear NRs. 488 per equity share amounting to NRs. 983.81 crores).

The company continues to be the largest contributor to the exchequer in Nepal. Thecompany is well positioned to consolidate its leadership position by leveraging its robustportfolio of products deep and wide distribution network best-in-class manufacturingfacilities and execution excellence. The company continues to explore opportunities torapidly scale up the newer FMCG businesses and evaluate emerging opportunities in thisspace.

ITC Infotech India Limited and its subsidiaries

The Information Technology industry witnessed continued acceleration in mainstreamadoption of digital technologies such as Cloud Intelligent Automation Digital Workplaceand Cybersecurity in the enterprise technology landscape. As per NASSCOM estimates theTechnology Market grew by 15.5% in FY 2021-22 significantly ahead of the pre-pandemicgrowth trajectory. Going forward Digital and capability-led opportunities based on newparadigms of technology consumption such as ‘Everything as a Service' model areexpected to drive industry growth. Hybrid operations sustainable business modelscustomer centricity personalised employee engagement and digital skilling will continueto accelerate and drive strategic decisions for the Technology industry in 2022. Hiringand training the right talent with a focus on up-skilling and re-skilling remains a keyimperative for the industry with employee well-being and engagement continuing to remaincritical to empower the distributed workforce.

The company continues to sharpen its focus on the strategic pillars of CustomerCentricity Employee Centricity and Operational Excellence while building differentiatedofferings around the strategic areas of Cloud Technologies Digital Workplace SolutionsDigital Manufacturing Customer Experience and Data Analytics. During the year thecompany recorded robust growth in revenue on the back of strong traction in the AmericasIndia and Rest of World markets. Industry 4.0 solutions Global In-house Centre servicesand Digital Experience using data analytics and Infrastructure services were the keydrivers of growth. The company also continued to forge new alliances and strengthenexisting relationships with Independent Software Vendors (ISVs) in focus areas such asDigital Workplace Solutions Digital Manufacturing and Data analytics. These partnershipsare aligned to the company's vision of taking a leadership role in enabling the DigitalTransformation and Software as a Service (SaaS) adoption journey of its clients.

The company also launched an industry-defining ‘ITC Infotech Work From Anywhere'(IWFA) productivity framework to provide its employees the flexibility to work fromanywhere with sustained focus on client priorities and data security. The growing demandfor high-skilled talent was met through prioritisation of investments in training &skill development and building a robust learning & development platform.

Business-friendly solutions and new-age capabilities offered by the company continue toearn global recognition. The company's Automation capabilities were positioned in the‘Leadership ZoneRs in the Zinnov Zones Hyper Intelligent Automation Services 2021 forRobotic Process Automation (Small & Medium Service Providers) IT Automation andCPG-Retail. The company's Digital Workplace capabilities were considered a‘DisruptorRs in Avasant's Digital Workplace Services 2021 RadarView™ (from beingplaced under the ‘Challengers' category in the previous year). The company's DigitalManufacturing capabilities were also profiled in an exclusive ‘Briefing Note' byInformation Services Group Inc. titled ‘ITC Infotech: Business-friendly ApproachStrategically Placing Manufacturers a Step Ahead of Competitors'.

During the year the company's consolidated Total Income grew by 16.8% to Rs 2884.30crores (previous year Rs 2469.29 crores). Profit Before Tax stood at Rs 719.64 crores(previous year Rs 604.13 crores) and Net Profit stood at Rs 541.04 crores (previous yearRs 451.30 crores).

For the year under review:

a. ITC Infotech India Limited recorded Revenue from Operations of Rs 2288.57 crores(previous year Rs 1834.98 crores) and Net Profit of Rs 517.81 crores (previous year Rs447.79 crores). The company paid a total dividend of Rs 53.00 per Equity Share of Rs 10/-each aggregating Rs 451.56 crores (previous year Rs 32.50 per Equity Share of Rs 10/- eachaggregating Rs 276.90 crores).

b. ITC Infotech Limited UK a wholly-owned subsidiary of the company recorded Revenueof GBP 40.02 million (previous year GBP 48.80 million) and Net Profit of GBP 0.79 million(previous year GBP 0.90 million).

c. ITC Infotech (USA) Inc. a wholly-owned subsidiary of the company together withits wholly-owned subsidiary Indivate Inc. recorded Revenue of US$ 133.76 million(previous year US$ 108.36 million) and Net Profit of US$ 2.53 million (previous year US$2.59 million).

A key element of the company's strategy going forward is to pursue inorganicopportunities to accelerate growth and profitability for which it has identified priorityareas including Digital Experience - Data Analytics and AI Salesforce and BPM Tools;Infrastructure Services - Service Management and Cloud Service Providers and Product 4.0 -Digital Factory and Digital Thread. Building on the successful 20-year alliance with PTCInc. a 10-year Strategic Partner Agreement has recently been announced to acceleratecustomer digital transformation initiatives through jointly developed offerings andGo-to-Market strategies focused on facilitating conversion of customers' Product LifecycleManagement (PLM) implementations to SaaS. Under the terms of this agreement the companywill acquire a substantial portion of PTC's PLM implementation services business andcreate a new business unit called DxP Services which will include PLM professionalservices experts from both companies. The company will continue to explore value accretiveinorganic opportunities in identified priority areas as stated above.

The company will continue to focus on interventions around areas of strategic interestincluding creating and winning large transformation opportunities expanding presence instrategic accounts building and sharpening domain-specific digital solutionsstrengthening distributed delivery framework and re-skilling/up-skilling employees infuture-focused capabilities.

Technico Agri Sciences Limited

The company's leadership in production of early generation seed potatoes and strengthin agronomy continue to support the Bingo! range of potato chips of your Company and inservicing the seed potato requirements of the farmer base of your Company's Agri Business.

During the year under review potato production in India touched a record high of about53 million MT increasing by 12% over the previous year due to favourable weatherconditions. Consequently potato prices reduced considerably on account of high suppliescoupled with demand volatility arising out of the disruptions caused by the second wave ofthe pandemic.

Despite the challenging environment the company delivered a resilient performanceleveraging its strong brand equity superior product quality better on-field performanceand strong trade & customer relationships. The company's Revenue from Operations stoodat Rs 256.67 crores (previous year Rs 287.09 crores) with a Net Profit and TotalComprehensive Income of Rs 43.04 crores (previous year Rs 72.92 crores). During the yearthe company paid a total dividend of Rs 8.00 per Equity Share of Rs 10 each aggregatingRs 30.37 crores (previous year Rs 16.00 per Equity Share aggregating Rs 60.74 crores).

The company continues to build a strong foundation for the future and remains confidentof effectively leveraging its deep domain expertise to fortify its market standing in theseed potato industry.

Technico Pty Limited and its subsidiaries

The company continues to focus on upgradation and commercialisation of itsTECHNITUBER? Seed Technology and customising its application across various geographies.Further the company is also engaged in the marketing of TECHNITUBER? seed produced atthe facilities of its subsidiaries in China and Canada and Technico Agri Sciences LimitedIndia a wholly-owned subsidiary of your Company to global customers. For the year underreview:

a. Technico Pty Limited Australia registered a turnover of Australian Dollar (A$) 1.86million (previous year A$ 2.09 million) and a Net Profit of A$ 0.91 million (previous yearA$ 0.79 million).

b. Technico Asia Holdings Pty Limited Australia Technico Technologies Inc. Canadaand Technico Horticultural (Kunming) Co. Limited China - there were no significant eventsto report with respect to the above companies.

WelcomHotels Lanka (Private) Limited

WelcomHotels Lanka (Private) Limited (WLPL) a wholly-owned subsidiary of your Companywas incorporated in Sri Lanka in April 2012 with the objective of developing and operatinga mixed-use development project (‘Project') comprising a luxury hotel and asuper-premium residential apartment complex situated on 5.86 acres of prime sea-facingland in Colombo.

The Project has been accorded the status of a ‘Strategic Development Project'entitling the company to various fiscal benefits in Sri Lanka. Further the Project isalso exempt from Sri Lankan foreign exchange regulations.

Project construction activity which was running on schedule till Q3 FY 2018-19 wasadversely impacted due to disruptions in the aftermath of the terror incidents in 2019 andthereafter by recurrent waves of the COVID pandemic. The recent deterioration of themacro-economic scenario in the country has exacerbated the situation. The Government ofSri Lanka is taking several measures to mitigate the crisis; these include securingfinancial assistance from multi-lateral agencies/other countries increasing interestrates to curb inflation and restricting imports to conserve foreign exchange. The companycontinues to closely monitor the evolving situation.

In spite of the aforementioned challenges and operational constraints the companyremains focused on completing the Project in an expeditious manner. The macro-economicchallenges faced by the country have impacted inter alia the sales velocity of ‘TheSapphire Residences' luxury apartments.

Given its unique positioning in the market and superior value proposition the companyexpects apartment sales to gain traction as the project nears completion and normalisationof the situation in the country.

Your Company's investment in WLPL stood at Rs 2169 crores as at 31st March 2022.

Landbase India Limited

The company owns and operates the Classic Golf & Country Club a 27-hole JackNicklaus Signature Golf Course - which continues to enjoy strong brand equity with itsmembers guests and the golfing fraternity. Operations at the Club remained impacted bythe disruptions caused by the pandemic particularly in the first half of the year. TheClub continued to ensure the highest safety and hygiene standards and social distancingnorms leading to progressive improvement in member footfalls in course of the year. TheClub continues to remain an 'Asian Tour Destinations Member' the only one in the countryand hosted the prestigious Asian Tour Golf Tournament that was held in India after aperiod of three years.

The company also owns ‘ITC Grand Bharat' - a 104- key all-suite luxury retreat atGurugram which has been licensed to your Company. The retreat an oasis of unhurriedluxury is co-located with the company's prestigious Classic Golf & Country Club.

ITC Grand Bharat has received several accolades establishing itself amongst the topluxury resort destination hotels in the world. Travel + Leisure one of the world'sleading magazines in the travel and hospitality sector had declared ITC Grand Bharat asthe ‘Best Wellness RetreatRs in the domestic category as part of India's Best Awards2020.

The retreat has also been recognised as the 'Best Destination Wedding Venue in IndiaHotels (North)' by WeddingSutra Influencer Awards 2021.

During the year ended 31st March 2022 the company recorded Total Income of Rs 29.45crores (previous year Rs 25.03 crores) and Net Profit of Rs 2.85 crores (previous year Rs3.80 crores). Total Comprehensive Income for the year stood at Rs 2.88 crores (previousyear Rs 3.85 crores).

Srinivasa Resorts Limited

The company owns ‘ITC Kakatiya' - a 188-key luxury hotel located in Hyderabadcity which is operated and marketed by your Company. The property has received severalaccolades establishing itself as one of the finest luxury hotels and F&B destinationsin the city. During the year the property received LEED? Platinum certification fromUnited States Green Building Council as well as the Gold Award under ‘EnergyConservation' category by Telangana State Renewable Energy Development CorporationLimited. ‘Dakshin' was adjudged the ‘Best South Indian Fine Dining Restaurant'at the Times Food Guide Nightlife Awards 2022 for the 12th consecutive year and‘Gourmet Couch' was adjudged the ‘Best Takeaway' at the Times Food GuideNightlife Awards 2022 for the 2nd consecutive year.

The company witnessed progressive recovery driven by resumption of business andinternational travel.

The hotel continued to follow the highest standards of safety and hygiene for allstakeholders.

During the year ended 31st March 2022 the company recorded Total Income of Rs 44.86crores (previous year Rs 26.74 crores) with Net Loss of Rs 1.63 crores (previous year NetLoss Rs 8.42 crores). Total Comprehensive Income for the year stood at (-) Rs 1.59 crores(previous year (-) Rs 8.34 crores).

Fortune Park Hotels Limited

The company which caters to the ‘Mid-market to Upscale' Business Hotels segmentunder the brand ‘Fortune' remains a front-runner in its operating segment and iswell positioned to sustain its leadership position in the industry.

While the ‘Fortune' brand is already established as a premier business hotel brandin the country it is also rapidly expanding its footprint in the leisure segment in linewith evolving market demand. During the year two hotels were added to the portfolio atHubbali and Goa taking the aggregate operating inventory to nearly 3000 rooms across 39properties. The brand also has a healthy pipeline of leads in place with a number ofproperties slated to be commissioned over the short to medium term.

The ‘Mid-market to Upscale' segment witnessed progressive recovery in course ofthe year especially in the leisure segment. The company strengthened its ‘SafeStays' programme across hotels with enhanced focus on safety health and hygiene with 16properties receiving ISO 9001:2015 certifications for implementing quality managementsystems for safe practices.

During the year ended 31st March 2022 the company recorded Total Income of Rs 25.39crores (previous year Rs 17.71 crores) and Net Profit of Rs 0.19 crore (previous year NetLoss Rs 6.28 crores). Total Comprehensive Income for the year stood at Rs 0.28 crore(previous year Net Loss Rs 6.28 crores).

Bay Islands Hotels Limited

The company's hotel in Port Blair licensed to your Company continues to offer aunique gateway to the Andamans with its strategic location excellent architectural designand superior product and service quality. Consequent to its upgradation the hotel wasrebranded as ‘Welcomhotel' last year and has received favourable guest response.

Tourism in the Andamans remained severely restricted on account of the pandemic duringthe year. In addition partial closure of airport operations at Port Blair due to ongoingrenovation activities also impacted tourist arrivals to the island. In spite of suchchallenges the hotel has demonstrated progressive improvement across the year andappropriate measures relating to safety health and hygiene protocols continue to be inplace.

During the year ended 31st March 2022 the company recorded Total Income of Rs 1.61crores (previous year Rs 1.11 crores) and Net Profit and Total Comprehensive Income of Rs1.14 crores (previous year Rs 0.77 crore).

The Board of Directors of the company has recommended a dividend of Rs 70.00 per EquityShare of Rs 100 each for the year ended 31st March 2022 (previous year Rs 70.00 perEquity Share).

Wimco Limited

The company's business activities comprise fabrication and assembly of machinery fortube filling cartoning wrapping material handling including conveyor solutions andengineering services for the FMCG and Pharmaceutical industries.

In view of the uncertainties arising out of the pandemic the operating environmentremained subdued during the year. However the company leveraged its strong customerrelationships to improve its order book during the year. The company's Revenue fromOperations for the year stood at Rs 11.62 crores (previous year Rs 6.29 crores) with a NetLoss of Rs 0.42 crore (previous year Net Loss of Rs 2.42 crores). Total ComprehensiveIncome for the year stood at (-) Rs 0.44 crore (previous year (-) Rs 2.42 crores). Thecompany continues to focus on developing superior solutions towards addressing customerrequirements.

The Honourable National Company Law Tribunal Mumbai Bench (‘NCLT') vide Orderdated 9th April 2021 had confirmed the reduction of Issued Subscribed and Paid-upEquity Share Capital of the company from Rs 188460000/- comprising 188460000 EquityShares of Rs 1/- each to Rs 185081193/- comprising 185081193 Equity Shares of Rs 1/-each by way of cancelling and extinguishing in aggregate 3378807 Equity Shares of Rs1/- each held by shareholders other than your Company in lieu of payment not exceeding Rs1/- per Equity Share to such shareholders.

During the year the said reduction of Equity Share Capital of the company becameeffective and the company became a wholly owned subsidiary of your Company with effectfrom 29th July 2021 upon completion of necessary formalities under Section 66 of theCompanies Act 2013.

North East Nutrients Private Limited

Your Company holds 76% equity stake in North East Nutrients Private Limited which hasset up a food processing facility in Mangaldoi Assam to cater to the fast-growingbiscuits market in Assam and other north-eastern states.

During the year the company faced challenging operating environment which resulted insubdued demand. The company continued to drive margins through its strategic costmanagement measures. Over the years the company has consistently improved operationalefficiency productivity and strengthened safety standards. During the year the companyreceived the Platinum Award in the CII National Poka Yoke Competition.

The company's Revenue from Operations for the year stood at Rs 163.90 crores (previousyear Rs 172.52 crores) while Net Profit for the year increased to Rs 14.43 crores(previous year Rs 9.06 crores). Total Comprehensive Income for the year stood at Rs 14.37crores (previous year Rs 9.08 crores).

ITC IndiVision Limited

ITC IndiVision Limited (IIVL) was incorporated as a wholly-owned subsidiary of yourCompany on 9th July 2020.

The company made steady progress during the year towards construction of themanufacturing facility near Mysuru Karnataka primarily for the manufacture and export ofnicotine and nicotine derivative products; the project is progressing as per schedule. Thefacility is being geared to manufacture purest nicotine derivatives conforming to US andEU pharmacopoeia standards.

Your Company's investment in IIVL stood at Rs 150 crores as at 31st March 2022.

Russell Credit Limited

The company recorded Total Income of Rs 41.56 crores (previous year Rs 64.37 crores)and Net Profit of Rs 33.46 crores (previous year Rs 49.47 crores) reflecting the lowermarket interest rates that prevailed during the year on account of accommodative policiespursued by the Reserve Bank of India.

Total Comprehensive Income for the year stood at Rs 120.79 crores (previous year Rs86.38 crores) reflecting the recovery in the market value of certain long-term strategicinvestments which had been impacted due to the pandemic. The company continues to closelymonitor its investments in line with market interest rate movements and exploreopportunities to make strategic investments for the ITC Group.

Temporary surplus liquidity of the company is mainly deployed in bonds debt mutualfunds bank fixed deposits etc. For the financial year 2021-22 the company declaredinterim dividend of Rs 0.19 per Equity Share of Rs 10 each and a final dividend of Rs 0.06per Equity Share of Rs 10 each aggregating Rs 16.16 crores (previous year Rs 0.20 perEquity Share of Rs 10 each aggregating Rs 12.93 crores).

Gold Flake Corporation Limited

The company holds 50% equity stake in ITC Essentra Limited - a joint venture withEssentra Group UK. During the year the company recorded Total Income of Rs 17.29 crores(previous year Rs 8.41 crores) and Net Profit of Rs 16.08 crores (previous year Rs 7.30crores). The company declared interim dividend of Rs 10.00 per Equity Share of Rs 10 eachaggregating Rs 16.00 crores (previous year Rs 6.25 per Equity Share of Rs 10 eachaggregating Rs 10.00 crores).

Greenacre Holdings Limited

The company continues to provide maintenance services for commercial office buildings;engineering procurement and construction management services as well as projectmanagement consultancy services.

During the year the company recorded Total Income of Rs 8.09 crores (previous year Rs5.65 crores) and Net Profit of Rs 1.79 crores (previous year Rs 3.71 crores whichincluded a one-off reversal of deferred tax liabilities aggregating Rs 1.44 crores).

ITC Investments & Holdings Limited

The company an unregistered Core Investment company within the meaning of the CoreInvestment Companies (Reserve Bank) Directions 2016 and related guidelines recordedTotal Income of Rs 0.05 crore during the year (previous year Rs 0.06 crore) and Net Profitof Rs 0.01 crore (previous year Rs 0.01 crore).

MRR Trading & Investment Company Limited

The company a wholly-owned subsidiary of ITC Investments & Holdings Limited holdstenancy rights in a commercial building located in Mumbai and also provides estatemaintenance services.

During the year the company recorded Total Income of Rs 7.25 lakhs (previous year Rs7.26 lakhs) and Net Profit of Rs 0.13 lakh (previous year Rs 0.33 lakh).

Pavan Poplar Limited

The operations of the company continue to be adversely impacted pursuant to the Orderof the Honourable High Court of Uttarakhand at Nainital in February 2014 dismissing theWrit Petition filed by the company against the Order of the District Magistrateauthorising the State authorities to take possession of the land leased to the company.The appeal filed by the company against the aforestated Order was admitted in April 2014and the matter is pending before the Honourable High Court.

During the year the company recorded Total Income of Rs 0.05 crore (previous year Rs0.22 crore) and Net Loss of Rs 0.04 crore (previous year Net Profit of Rs 0.09 crore).

Prag Agro Farm Limited

The operations of the company continue to be adversely impacted pursuant to the Orderof the Honourable High Court of Uttarakhand at Nainital in February 2014 dismissing thewrit petition filed by the company against the Order of the District Magistrateauthorising the State authorities to take possession of the land leased to the company.The appeal filed by the company against the aforestated Order was admitted in April 2014and the matter is pending before the Honourable High Court.

During the year the company recorded Total Income of Rs 0.09 crore (previous year Rs0.10 crore) and Net Loss of Rs 0.05 crore (previous year Net Loss of Rs 0.03 crore).


Essentra Limited

The Business registered strong recovery in course of the year in spite of pandemic leddisruptions. Operational agility and effective customer service enabled the company toensure seamless performance delivery during the year. The company retained its leadershipposition of being the preferred supply chain partner for several well-known national andinternational brands leveraging its core strengths of strong customer relationshipsfocused innovation best-in-class quality and consistent delivery.

The company continues to partner with its customers and make investments in innovationtechnology upgradation and capability building towards sustaining its position as the‘innovation and quality benchmarkRs in the Indian cigarette filter industry. Duringthe year the company expanded its capacity for manufacture of Specialty Filters in linewith its strategy of offering a wide range of innovative products to its customers.

During the year ended 31st March 2022 the company's Revenue from Operations stood atRs 385.62 crores (previous year Rs 337.87 crores). Net Profit during the year stood at Rs41.09 crores (previous year Net Profit of Rs 36.23 crores).

The Board of Directors has recommended a dividend of Rs 80.00 per Equity Share of Rs 10each for the year ended 31st March 2022 (previous year Rs 70.00 per Equity Shareincluding special dividend of Rs 30.00 per equity share).

Maharaja Heritage Resorts Limited

Maharaja Heritage Resorts Limited (MHRL) a joint venture of your Company with JodhanaHeritage Resorts Private Limited currently operates 37 heritage properties across 15States in India under the ‘WelcomHeritage' brand. The portfolio of propertiescomprising ‘Legend Hotels' ‘Heritage Hotels' and ‘Nature Resorts'provides uniquely differentiated offerings to guests in the cultural heritage naturewildlife and adventure tourism segments respectively. Operations across properties wereimpacted by the pandemic and demonstrated progressive recovery in course of the year.During the year MHRL expanded its footprint in southern markets with the signing of newproperties in Kochi and Ootacamund.

During the year ended 31st March 2022 the company recorded Total Income of Rs 4.70crores (previous year Rs 2.30 crores) and Net Profit of Rs 0.28 crores (previous year NetLoss of Rs 0.68 crores). Total Comprehensive Income for the year stood at Rs 0.29 crores(previous year Net Loss Rs 0.68 crores).

Espirit Hotels Private Limited

Espirit Hotels Private Limited (EHPL) is a joint venture between your Company and theAmbience Group Hyderabad for developing a luxury hotel complex at Begumpet Hyderabad.Under the terms of the Joint Venture Agreement your Company acquired 26% equity stake inEHPL and will inter alia provide hotel operating services upon commissioning of thehotel.

As reported in prior years the Ambience Group has expressed its desire to review thetiming of further investments in EHPL citing concerns about the viability of the projectin view of the challenging economic environment and the sluggish demand conditionscurrently prevailing in the relevant market. Your Company continues to explore its optionsin this regard.

Your Company's investment in EHPL stood at Rs 46.51 crores as at 31st March 2022.

Logix Developers Private Limited

Logix Developers Private Limited (LDPL) is a joint venture between your Company andLogix Estates Private Limited for developing a luxury hotel-cum-service apartment complexat the company's leasehold site located at Sector 105 in New Okhla Industrial DevelopmentAuthority (NOIDA). Under the terms of the Joint Venture Agreement your Company holds27.9% equity stake in LDPL and will inter alia provide hotel operating services uponcommissioning of the hotel.

As reported in prior years your Company reiterated its position with the JV partnerthat it was committed to developing a luxury hotel-cum-service apartment complex asenvisaged under the JV Agreement and that it was not interested in progressing with anyalternative project plans proposed by the JV partner. However the JV partner refused toprogress the project and instead expressed its intent to exit from the JV by selling itsstake to your Company.

Subsequently the JV partner proposed that both parties should find a third party tosell the entire shareholding in LDPL. In view of these developments your Company hadfiled a petition before the erstwhile Company Law Board submitting that the affairs of theJV entity were being conducted in a manner that was prejudicial to the interest of yourCompany and the JV entity. The matter is currently before the National Company LawTribunal (NCLT). The JV partner had also filed a petition before the Honourable Delhi HighCourt for winding up the JV company which was transferred to the NCLT by the HonourableDelhi High Court. The matter was heard before the NCLT on several occasions in the pastbut could not be concluded. On 21st January 2020 the matter was assigned to a new bench;the matter is being heard and the date of next hearing is slated for 30th May 2022.

During the year the company received notices from NOIDA demanding payments in respectof the aforesaid lease. The company has submitted its responses in this regard.

During the year ended 31st March 2022 the company recorded a Net Loss of Rs 47.58crores (previous year Rs 40.28 crores). The Net Worth of the company stood at (-) Rs195.20 crores as at 31st March 2022 (previous year (-) Rs 147.62 crores). Your Company'stotal investment in LDPL was Rs 41.95 crores.

Your Company had made provisions aggregating Rs 33.45 crores towards diminution in thecarrying value of investment in LDPL in the previous years bringing the carrying value ofyour Company's investment in LDPL as at 31st March 2022 to Rs 8.50 crores.

The financial statements of LDPL for the year ended 31st March 2022 are yet to beapproved by its Board of Directors. In the absence of audited financial statements ofLDPL the Consolidated Financial Statements of your Company for the year ended 31st March2022 have been prepared based on the financial statements prepared by the management ofLDPL.


International Travel House Limited

The company is engaged in the business of providing travel related services tocorporate travellers in India and abroad. The services include car rentals businesstravel leisure meetings incentives conferencing exhibitions foreign exchange andhotel travel services. During the year the industry was severely impacted by the secondand third waves of the pandemic. In spite of a challenging operating environment thecompany witnessed a healthy recovery with gradual pick-up in mobility.

To reinforce the concerns of safety the company continued to leverage its program of‘The SAFE Car Promise' reassuring its customers on the highest standards ofreliability safety and hygiene. During the year the company expanded its leisureofferings and continued to make focused initiatives towards further strengthening itscustomer service model.

During the year ended 31st March 2022 the company recorded a Total Income of Rs 96.51crores (previous year Rs 62.16 crores) and Net Loss for the year of Rs 10.70 crores(previous year Net Loss of Rs 45.07 crores). Total Comprehensive Income for the year stoodat (-) Rs 10.18 crores (previous year (-) Rs 45.01 crores).

Gujarat Hotels Limited

The company's hotel ‘Welcomhotel Vadodara' at Vadodara is operated by yourCompany under an Operating License Agreement.

Pandemic-induced restrictions during the first half of the year adversely impacted therevenue from License Agreement.

During the financial year ended 31st March 2022 the company recorded Total Income ofRs 3.57 crores (previous year Rs 3.06 crores) with Net Profit and Total ComprehensiveIncome of Rs 2.72 crores (previous year Rs 2.27 crores). The Board of Directors of thecompany has recommended a dividend of Rs 2.00 per Equity Share of Rs 10/- each for theyear ended 31st March 2022 (previous year Rs 1.80 per Equity Share).

ATC Limited (an associate of Gold Flake Corporation Limited)

The company is a contract manufacturer of cigarettes. The company's operations duringthe first quarter of the year were impacted by supply chain disruptions due to thepandemic. The company continued to maintain high levels of operational responsiveness andbenchmark quality in its manufacturing operations to service its customers. During theyear the company was conferred with the EHS Excellence Gold Award by Federation of IndianChambers of Commerce & Industry (FICCI) and Energy Efficient Unit Award byConfederation of Indian Industry (CII).

During the year the company recorded Total Income of Rs 27.11 crores (previous year Rs25.47 crores) and Net Profit of Rs 0.35 crore (previous year Rs 0.24 crore).

Delectable Technologies Private Limited

During the year your Company invested Rs 1.87 crores towards the third tranche ofCompulsorily Convertible Preference Shares in Delectable Technologies Private Limited(Delectable). Your Company's effective shareholding in Delectable increased to 27.34%(previous year 20.06%) on a fully diluted basis.

The company is inter alia engaged in sale of FMCG products leveraging app-basedtechnology through vending machines primarily installed across office locations.Operations of the company were impacted in the first half with most offices remainingshut or operating with limited employees on account of the pandemic. The businesswitnessed gradual recovery in the second half on the back of improved mobility and easingof restrictions.

During the year the company recorded Total Income of Rs 1.14 crores (previous year Rs0.90 crore) and Net Loss of Rs 1.30 crores (previous year Net Loss of Rs 1.87 crores).

Associates of Russell Credit Limited

Russell Investments Limited

During the year the company recorded Total Income of Rs 2.83 crores (previous year Rs3.50 crores) and Net Profit of Rs 3.38 crores (previous year Rs 2.27 crores). TotalComprehensive Income for the year stood at Rs 15.51 crores (previous year Rs 8.88 crores)reflecting the recovery in market value of certain investments which had been impacted dueto the pandemic in the previous year. The company continues to explore opportunities forstrategic investments.

Divya Management Limited

During the year the company recorded Total Income of Rs 0.40 crore (previous year Rs0.52 crore) and Net Profit of Rs 0.28 crore (previous year Rs 0.17 crore).

The company continues to explore opportunities for strategic investments.

Antrang Finance Limited

During the year the company recorded Total Income of Rs 0.22 crore (previous year Rs0.28 crore) and Net Profit of Rs 0.05 crore (previous year Rs 0.10 crore).

The company continues to explore opportunities for strategic investments.


The Corporate Governance Policy guides the conduct of affairs of your Company andclearly delineates the roles responsibilities and authorities at each level of itsthree-tiered governance structure and key functionaries involved in governance. The ITCCode of Conduct commits management to financial and accounting policies systems andprocesses.

The Corporate Governance Policy and the ITC Code of Conduct stand widely communicatedacross the enterprise at all times and together with the ‘Strategy of Organisation'Planning & Review Processes and the Risk Management Framework provide the foundationfor Internal Financial Controls with reference to your Company's Financial Statements.

Such Financial Statements are prepared on the basis of the Significant AccountingPolicies that are carefully selected by management and approved by the Audit Committee andthe Board. These Policies are supported by the Corporate Accounting and Systems Policiesthat apply to the entity as a whole to implement the tenets of Corporate Governance andthe Significant Accounting Policies uniformly across your Company. The Accounting Policiesare reviewed and updated from time to time. These in turn are supported by a set ofDivisional policies and Standard Operating Procedures (SOPs) that have been establishedfor individual businesses.

Your Company uses Enterprise Resource Planning (ERP) systems as a business enabler andalso to maintain its books of accounts. The SOPs in tandem with transactional controlsbuilt into the ERP systems ensure appropriate segregation of duties tiered approvalmechanisms and maintenance of supporting records. The Information Management Policyreinforces the control environment. The systems SOPs and controls are reviewed byDivisional management and audited by Internal Audit whose findings and recommendations arereviewed by the Audit Committee and tracked through till implementation.

Your Company has in place adequate internal financial controls with reference to theFinancial Statements. These have been designed to provide reasonable assurance with regardto recording and providing reliable financial information; complying with applicablestatutes; safeguarding assets from unauthorised use; ensuring that transactions arecarried out with proper authorisation and complying with Corporate Policies and Processes.Such controls have been assessed during the year after taking into consideration theessential components of internal controls stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by The Institute of CharteredAccountants of India. Based on the results of such assessment carried out by managementno reportable material weakness or significant deficiency in the design or operation ofinternal financial controls was observed. Nonetheless your Company recognises that anyinternal control framework no matter how well designed has inherent limitations andaccordingly regular audit and review processes ensure that such systems are reinforced onan ongoing basis.


As a diversified enterprise your Company continues to focus on a system-based approachto business risk management. The management of risk is embedded in the corporatestrategies of developing a portfolio of world-class businesses that best matchorganisational capability with opportunities in domestic and international marketsdeveloping capabilities and competencies for the future in order to enhancecompetitiveness and win in the markets of tomorrow. Accordingly management of risk hasalways been an integral part of your Company's ‘Strategy of Organisation' andstraddles its planning execution and reporting processes & systems. Backed by stronginternal control systems the current Risk Management Framework consists of the followingkey elements:

- The Corporate Governance Policy approved by the Board clearly lays down the rolesand responsibilities of the various entities in relation to risk management covering arange of responsibilities from strategic to the operational. These role definitionsinter alia provide the foundation for appropriate risk management procedures theireffective implementation across your Company and independent monitoring and reporting byInternal Audit.

- The Risk Management Committee constituted by the Board monitors and reviews thestrategic risk management plans of your Company as a whole and provides necessarydirections on the same.

- The Corporate Risk Management Cell through focused interactions with businessesfacilitates the identification and prioritisation of strategic and operational risksdevelopment of appropriate mitigation strategies and conducts periodic reviews of theprogress on the management of identified risks.

- A combination of centrally issued policies and Divisionally-evolved procedures bringsrobustness to the process of ensuring that business risks are effectively addressed.

- Appropriate structures are in place to proactively monitor and manage the inherentrisks in businesses with unique/relatively high risk profiles.

- Foreign currency exposures continue to be managed within the framework of the ForexManual.

- A strong and independent Internal Audit function at the Corporate level carries outrisk focused audits across all businesses enabling identification of areas where riskmanagement processes may need to be strengthened. The Audit Committee of the Board reviewsInternal Audit findings and provides strategic guidance on internal controls. The AuditCompliance Review Committee closely monitors the internal control environment within yourCompany including implementation of the action plans emerging out of internal auditfindings.

- At the Business level Divisional Auditors continuously verify compliance with laiddown policies and procedures and help plug control gaps by assisting operating managementin the formulation of control procedures.

- A robust and comprehensive framework of strategic planning and performance managementensures realisation of business objectives based on effective strategy implementation. Theannual planning exercise requires all Businesses to clearly identify their top risks andset out a mitigation plan with agreed timelines and accountabilities. Businesses arerequired to confirm periodically that all relevant risks have been identified assessedevaluated and that appropriate mitigation systems have been implemented.

Your Company endeavours to continuously sharpen its Risk Management systems andprocesses in line with a rapidly changing business environment.

In this regard it is pertinent to note that some of the key Businesses of your Companyhave adopted the ISO 31000 Risk Management Standard and accordingly the Risk Managementsystems and processes prevalent in these Businesses have been independently assessed to becompliant with the said global Standard on Risk Management. This year Agri SBU PersonalCare Products Business and the Life Sciences and Technology Centre were assessed forcompliance with ISO 31000 Risk Management Standard. This is in addition to the sixBusinesses which were previously assessed for such compliance. The centrally anchoredinitiative of conducting external independent reviews of key business processes with high‘value at risk' continued during the year. These interventions provide furtherassurance on the robust nature of risk management practices prevalent in your Company.

During the year the Risk Management Policy & Framework of your Company was revisedin line with the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) (Second Amendment) Regulations 2021 inter alia to incorporate(i) framework for identification of Environmental Social Governance (ESG) related risksas well as sustainability risks information risks and cyber security risks (ii) measuresfor risk mitigation including systems and processes for internal control of identifiedrisks and (iii) Business Continuity Plan(s). Your Company already has systems andprocesses to monitor and mitigate the aforementioned risks. With the amendment addedemphasis is being given to these areas across your Company.

The Risk Management Committee met thrice during the year and was updated on the statusand effectiveness of the risk management plans. The Audit Committee was also updated onthe effectiveness of your Company's Risk Management systems and policies.

A Cyber Security Committee chaired by the Chief Information Officer is in place toprovide specific focus on cyber security related risks with the primary responsibility oftracking emerging practices and technologies and providing suitable recommendations forenhancing security of the IT systems and infrastructure. The Chief Information Officer aninvitee to the Risk Management Committee is responsible for ensuring that the CyberSecurity systems of your Company remain effective and contemporary.

Cyber security controls are embedded in your Company's Information Technology (IT)environment to ensure protection from risks of unauthorised access unauthorised changesor unavailability of the systems. Key cyber security controls include secure configurationof enterprise assets and software malware defences periodic vulnerability andpenetration testing controlled access to critical business applications appropriatesegregation of duties and ongoing cyber security awareness programs for users.

The cyber security framework of your Company includes specific checks and controls foryour Company's digital marketing initiatives and public facing websites. The frameworkfurther encompasses secure management of Mobile Applications and Industrial ControlSystems (ICS).

An independent agency has confirmed that the practices in the area of InformationTechnology- Operational Technology (IT-OT) integration across major Businesses of yourCompany are adequate and benchmarked to Industry. However since this is a fast-evolvingarea ongoing attention will be accorded to ensure contemporariness and best-in-classcapabilities.

Your Company sources several commodities for use as inputs in its Businesses and alsoengages in agri-commodity trading as part of its Agri Business.

In respect of commodities sourced for use as inputs in its Businesses your Company haswell laid out policies to manage risks arising out of the inherent price volatilityassociated with such commodities.

This includes robust mechanisms for monitoring market dynamics towards making informedsourcing decisions; well defined inventory holding norms based on considerations such asseasonality and the strategic nature of the commodity concerned; long-term contracts withsuppliers to secure supply of critical items at competitive costs and continuousdiversification of supplier base. Multiple sourcing models wide geographical spreadextensive sourcing and supply chain network and associated infrastructure in key growingareas coupled with deep-rooted farmer linkages ensure sourcing of high qualityagri-commodities at competitive costs.

Your Company's strategy of backward integration in sourcing of agri-commodities such aswheat potato fruit pulp spices milk and leaf tobacco; in-house manufacturing ofpaperboards paper and packaging (including pulp production and print cylinder makingfacilities); wood procurement from the economic vicinity of the Bhadrachalam unitfacilitates access to critical inputs at benchmark quality and competitive cost besidesensuring security of supplies. Further each of your Company's Businesses continuouslyfocuses on product mix enrichment and yield improvement towards protecting margins andinsulating operations from spikes in input price.

In respect of Agri-commodity trading your Company has a well laid out policy to managerisks associated with sourcing of such commodities. This includes:

- segregation of duties and robust internal controls through a system of checks andbalances embedded in the organisation and governance structure;

- clearly defined limits for trading position (long and short) and net cash loss forspecific commodities/ commodity groups;

- mitigation of price liquidity and counter party risks in respect of commodities suchas soya mustard and chana through hedging on commodity exchanges (mainly NCDEX).Correlation between prices prevailing in the physical market and those on the commodityexchange is analysed regularly to ensure effectiveness of hedging;

- robust monitoring and review mechanisms of net open positions and ‘value atrisk'.

The combination of policies and processes as outlined above adequately addresses thevarious risks associated with sourcing of commodities for your Company's Businesses.

During the year systems and processes to handle pandemic related threats and riskswere further strengthened against the backdrop of the second and third waves of thepandemic. This has enabled seamless transition to ‘Work from Home' safety ofemployees and service providers continued availability of raw materials rapid resumptionof operations at units and agile response to the dynamic requirements of the distributionnetwork. Recent learnings in dealing with the pandemic have been seamlessly incorporatedin the day-to-day procedures of your Company and will continue to be leveraged goingforward.

In response to the pandemic and escalation of geopolitical tensions various measureshave been taken to ensure continuity in operations and servicing your Company's customers.This includes increasing safety stock levels leveraging alternate channels ofdistribution broad basing manufacturing partners and activating alternate suppliers ofkey materials thereby increasing the resilience of supply chain.

The risk management practices of your Company as reviewed through the Risk ManagementCell and Internal Audit processes have been found to be relevant and commensurate withthe size and complexity of your Company's operations.


Your Company believes that strong internal control systems that are commensurate withthe scale scope and complexity of its operations are concomitant to the principle ofgovernance that freedom of management should be exercised within a framework ofappropriate checks and balances.

Your Company remains committed to ensuring a mature and effective internal controlenvironment that inter alia provides assurance on orderly and efficient conduct ofoperations security of assets prevention and detection of frauds/errors accuracy andcompleteness of accounting records and Management Information Systems timely preparationof reliable financial information adherence with relevant statutes and compliance withrelated party transactions.

Your Company's internal control systems include documented policies and proceduressegregation of duties and careful selection and development of employees.

Your Company's independent and robust Internal Audit processes both at the Businessand Corporate level provide assurance on the adequacy and effectiveness of internalcontrols compliance with operating systems internal policies and regulatoryrequirements.

The Internal Audit function consisting of professionally qualified accountantsengineers and Information Technology (IT) specialists is adequately skilled and resourcedto deliver audit assurances at highest levels. Targeted Learning and Developmentprogrammes on contemporary topics are periodically organised to enhance knowledge andskill sets.

Independent consultants have confirmed compliance of Internal Audit systems andprocesses with the Standards on Internal Audit (SIA) issued by the Institute of CharteredAccountants of India. Although the Standards continue to be recommendatory in nature suchexternal validation evidences the contemporariness of the Internal Audit function.

In the context of your Company's IT environment systems and policies relating toInformation Management are periodically reviewed and benchmarked for contemporariness.Compliance with the Information Management policies receives focused attention of theInternal Audit team. Business-led Information Technology systems undergopre-implementation audit before being deployed in the operating environment therebydelivering assurance with respect to the rigour of implementation.

Your Company's Internal Audit continues to leverage digital and automation toolsbenchmarked to global technology standards to ensure focused Information Technologycontrol assessment for various areas of automation including robotics and IT applicationsacross Businesses.

Qualified engineers in the Internal Audit function review the quality of designplanning and execution of all ongoing projects involving significant expenditure to ensurethat project management controls are adequate and yield ‘value for money'. InternalAudit continues to use state-of-the-art tools and software for conducting project audits.

Processes in the Internal Audit function are continuously strengthened for enhancedeffectiveness and productivity including the deployment of contemporary best-in-classtools for audit analytics.

Your Company's Internal Audit processes are certified as complying with ISO 9001:2015Quality Standards. The Audit methodology is also designed to validate effectiveness ofcritical IT controls that are embedded in business systems deployed across your Companyenabling a high degree of assurance on efficacy of business process controls. The scope ofInternal Audit coverage also includes assessment of emerging risks in the social mediaecosystem and adoption of digital technologies.

Restrictions on mobility caused by recurrent waves of the pandemic during the yearcontinued to impact the physical audit process. Under such challenging circumstances andconsidering the safety & well-being of employees the team continued its audits underthe ‘remote audit' approach leveraging technology to ensure continuity in audit andassurance processes.

A comprehensive Standard Operating Procedure comprising inter alia data securitycontrols and communication protocols facilitated seamless and effective conduct of remoteinternal audits during the year.

With a view to further enhancing productivity improving the efficacy of auditprocesses and optimising costs Internal Audit is progressively moving towards adopting a‘hybrid' approach involving a combination of onsite and offsite audits.

The Audit Committee of your Board met ten times during the year. The Committee approvesthe Internal Audit programme for the year so as to ensure adequacy of coverage. The Termsof Reference of the Audit Committee inter alia include reviewing the effectiveness ofthe internal control environment evaluation of your Company's internal financialcontrols and risk management systems monitoring implementation of the action plansemerging out of review of significant Internal Audit findings including those relating tostrengthening of your Company's risk management systems and discharging of statutorymandates.


The talent management strategy of your Company focuses on sustaining ITC's position asone of India's most valuable corporations remaining customer- focused competitivelysuperior performance-driven and future-ready. The initiatives and processes of yourCompany strive to deliver the unique talent promise of Building Winning BusinessesBuilding Business Leaders and Creating Value for India. The talent development practiceshelp create foster and strengthen the capability of human capital to deliver criticaloutcomes on the vectors of strategic impact operational efficiency and capitalproductivity.

Your Company's ‘Strategy of Organisation' is designed to promote agility through aculture and practice of distributed leadership enabled by a three- tier governancestructure. This is manifested in market and consumer facing Businesses which are drivenby empowered cluster-based teams and supported by shared assets and capabilitiesenabling strategic relevance speed responsiveness and operational excellence. Thisapproach allows Businesses through their Management Committees to focus develop andexecute Business Plans relevant to their product-market spaces while leveraging theinstitutional strengths of your Company and harvesting internal synergies.

Your Company's Human Resources development approach spans four key organisationaldimensions of Agility Alignment Ability and Architecture; which are supported throughstrategies crafted in areas of impact such as talent acquisition engagement diversity& inclusion capability building employee relations performance & rewards andemployee well-being.

The year under review witnessed significant upheaval in the talent market. While thepandemic led to a short-term demand-supply disequilibrium in the workforce the rapiddigitalisation of the ecosystem and entry of several technology-driven and privatelyfunded enterprises have heightened competition for certain critical talent pools. YourCompany's unique employer equity as an exemplary Indian enterprise creating world-classbrands building business leaders and generating economic social and environmentalcapital for the Indian economy continues to play a vital role in the attraction andretention of high-quality talent. The management trainee programme augmented withrecruitment of experienced talent from the market is an integral part of the leadershippipeline development process. Your Company continues to draw the finest managementtechnical and commercial talent from premier institutions in the country and is rankedamongst the leading companies in these institutions. Intensive engagement with thecountry's premier academic institutions over the years to communicate your Company'stalent proposition through case-study competitions knowledge-sharing programmes by seniormanagers and the annual internship programmes have all contributed to creating acompelling proposition for the best candidates to aspire for a career with your Company.Your Company continues to enthuse talent with high-impact roles competitive andperformance driven remuneration with an emphasis on long-term incentives relative toindustry diversity in learning opportunities a commitment to enhancing diversity &inclusion an employee-centric climate well-being focused infrastructure and support thatpromotes fellowship and commitment amongst employees.

Your Company's approach to management development is founded on the belief thatlearning initiatives must remain synergistic and aligned to business outcomes. Towardsthis end your Company has built a culture of continuous learning innovation andcollaboration by providing contemporary and relevant learning and development support tomanagers through a combination of platforms - classroom on-the-job self-paced e-learningmodules and application projects. The emphasis is on providing experiential learning whileremaining current with the curriculum and providing access to nationally and globallyrecognised high-quality faculty. Deep functional expertise is fostered early in one'scareer through immersion in complex problem-solving assignments requiring the applicationof domain expertise. Managers are assessed on your Company's behavioural competencyframework and provided with learning and development support to address areas identifiedfor improvement. Key talent is provided critical experiences in high impact roles andmentored by senior managers. This promotes the development of a pool of high-qualitytalent through mentorship coaching and learning opportunities.

Your Company has identified three capability platforms relevant to making Businessesfuture- ready - Business Critical Strategic Competencies Leadership Development andOrganisation Identity & Pride. Capability needs are identified for talent cohortsacross domains covering dimensions which are of vital significance to competitiveperformance. These include Brand Marketing Data Science and Analytics Marketing in aDigital world Business Strategy and Commercial Acumen. Globally benchmarked curriculumsare designed in these domains delivered through internationally recognised faculty andsupplemented with business-critical application projects. This approach ensures that theapplication of learning fructifies in a manner which benefits your Company's businessresults. Similarly as a part of leadership development initiatives the Reflections 360programme comprising feedback and coaching was conducted during the year to enablepersonal development of employees.

Your Company continues to strengthen its performance management system and its cultureof accountability through the widespread adoption of the system ofManagement-by-Objectives. Performance planning through clearly defined goalsoutcome-based assessment and alignment of rewards to achievement of results have allcontributed to a robust culture of ownership and accountability. ‘CareerConversations' and succession planning processes have contributed to helping employeesrealise their potential craft their careers while recognising their strengths and areasof development and ensuring a sound workforce planning system.

In the spirit of continuous improvement your Company maintains a practice ofperiodically assessing employee engagement through a Company-wide survey. The impact wasvisible in the survey in 2020 wherein Engagement Performance Enablement and ManagerialEffectiveness measures improved significantly over the previous survey. The recent surveyin 2022 affirms high levels of employee engagement and reflects significant consolidationof gains achieved over recent years. During the year a range of engagement programmeswere designed and implemented including initiatives such as leadership outreach throughextensive communication recognition programmes acknowledging exceptional contributions ofemployees and teams career conversations and development planning for robust positioningand progression decisions and investments in employee wellbeing. The year also witnessedthe Cigarettes Business winning the ‘SilverRs in the prestigious ‘Economic TimesHuman Capital Awards 2021' for ‘Excellence in Reward & Recognition programs'where your Company was appreciated for its employee recognition framework. The CigarettesBusiness also secured the ‘Gold' award in the ‘Excellence in Health &Wellness initiatives' category where your Company showcased its ‘Living Well'programme.

Your Company's efforts to enhance Diversity Equity and Inclusion are founded on theconviction that a diverse workforce contributes to rich discourse promotes holisticperspectives fosters creative solutions and is integral to serving customers better whilecreating value for all stakeholders.

Your Company is committed to enhancing gender diversity and participation of thedifferently-abled in the workforce and where needed will undertake supportive actions inthe spirit of equity at the workplace. Such concerted actions span three vectors namely:

- Representation

- Inclusion & Enablement

- Commitment and Assurance

Measures to enhance diversity include ensuring sufficient representation of women inselection pools and deployment of the differently-abled across suitable opportunities inthe value chain. Through policies offering flexible work arrangements extended child careleave travel support for infants and care-givers secure transport paternity leave samegender partner medical benefits infrastructure support coupled with various sensitisationprogrammes formation of Employee Resource Groups and the commitment and sponsorship ofleaders your Company provides an enabling environment to further its Diversity Equityand Inclusion goals. Amongst several positive outcomes your Company's recruitment oftalent from premier campuses reflects diversity ratios superior to the prevailing norm insuch institutions.

Your Company continued its practice of active leadership outreach to employees.Periodic communication with the ITC community through ‘StudioOne Townhalls' led bythe Chairman provided employees avenues to hear from and engage with leaders about yourCompany's vision strategy and milestones. This was supplemented by a more personalisedengagement through the ‘StudioOne XchangeRs initiative. The Chairman and othermembers of the Corporate Management Committee interacted with managers across Businessesin small groups sharing your Company's vision and strategies while also invitingsuggestions and feedback.

While your Company has covered significant ground and scaled up its digital investmentsexponentially in recent years it seeks to embrace digitalisation as a foundationcapability vital to accelerating value creation offering novel ways of interacting withconsumers and reconfiguring value chains and transforming business models.

The ‘Young Digital Innovators Lab' constituted in 2021 identified innovativeopportunities deploying contemporary digital tools across your Company's value chains.Various ‘proofs of concept' were tested which have the potential to be scaled up tocreate further business value. ‘DigiNext' the Digital Council participated inideation and evaluating the adoption of various suggestions to enhance your Company'sdigital quotient and competitiveness.

Your Company believes that alignment of all employees to a shared vision and purpose isvital for winning in the marketplace. It also recognises the mutuality of interests withkey stakeholders and is committed to continue building harmonious employee relations. YourCompany remains dedicated to an Employee Relations climate of partnership and mutualitywhile ensuring operations are competitive flexible and responsive. The Employee Relationsphilosophy of your Company anchored in the tenets of Scientific Management IndustrialDemocracy Human Relations and Employee Well-being has contributed towards building arobust platform which has aided the conclusion of collective bargaining agreements atseveral of its manufacturing units and hotel properties ensuring smooth commencement ofoperations at greenfield locations and the execution of productivity improvementpractices. Several initiatives have been taken to foster a culture of commitment amongstthe demographically diverse workforce in these new facilities. Your Company's FoodsBusiness was recognised with the ‘Significant Achievement in Employee Relations'Award by Employers' Federation of India. The award recognises your Company's consistentcommitment to excellence in Employee Relations engage involve and develop employees -particularly factory personnel - through a series of targeted actions contributing to aculture of collaboration mutuality and trust.

The pandemic has cast unprecedented challenges and your Company has taken a host ofmeasures to ensure employee wellbeing and business continuity. Your Company partnered withvarious internal as well as external stakeholders to support employees and their familymembers in the face of widespread infections especially during the second wave of thepandemic. The provision of medical equipment across locations COVID Care Centres foremployees and their families assistance with hospitalisation and treatment paid leavefor those infected or in quarantine vaccination facilitation through camps for employeesand their family members service provider personnel and supply chain partners medicaladvice through a network of Company doctors webinars on preventive measures counsellingservices and stringent risk mitigation protocols such as zoning in factories restrictionson travel and office presence masking precautionary random testing temperature checksand social distancing measures in all locations have been instrumental in reassuringemployees mitigating risks and ensuring medical care in the event of infection. YourCompany also extended financial assistance for medical treatment of employees' parents andassistance to families of deceased employees.

Your Company‘s thought strategy and action are inspired by a larger purpose - apurpose to be an exemplary Indian enterprise that not only pursues agile innovation to beextremely competitive but also one that embeds sustainability and inclusiveness at thecore of its Businesses. This approach has enabled it to create enduring value for theIndian economy and the larger community of stakeholders as also delight consumers with avibrant portfolio of best-in-class products and services. Each one of your Company'semployees will relentlessly strive to meet the bold growth agenda deliver world-classperformance innovate newer and better ways of doing things uphold human dignity fosterteam spirit and discharge their role as ‘trustees' of all stakeholders with truefaith and allegiance.

Your Company is committed to perpetuating this vitality - its growth as a valuegenerating engine and also as an exemplary institution - so that it continues to succeedin its relentless pursuit of creating enduring value.

Details of the constitution of the Internal Complaints Committee under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 areprovided in the ‘Business Responsibility Report' forming part of the Report andAccounts.


Your Company's Whistleblower Policy encourages Directors and employees to bring to yourCompany's attention instances of illegal or unethical conduct actual or suspectedincidents of fraud actions that affect the financial integrity of your Company or actualor suspected instances of leak of unpublished price sensitive information that couldadversely impact your Company's operations business performance and/or reputation.

The Policy requires your Company to investigate such incidents when reported in animpartial manner and take appropriate action to ensure that the requisite standards ofprofessional and ethical conduct are always upheld. Anonymous complaints are alsoentertained if the complaint sets out specific allegations & verifiable facts and isaccompanied with supporting evidence. It is your Company's Policy to ensure that nocomplainant is victimised or harassed for bringing such incidents to the attention of yourCompany and to keep the information disclosed during the course of the investigation asconfidential. The practice of the Whistleblower Policy is overseen by the Audit Committeeand no employee was denied access to the Committee during the year. The WhistleblowerPolicy is available on your Company's corporate website at .


Your Company believes that when enterprises make societal value creation an integralpart of their corporate strategy powerful drivers of innovation emerge that make growthmore enduring for all stakeholders. This paradigm is called ‘Responsible Capitalism'- an abiding strategy that focuses on extreme competitiveness but in a manner thatreplenishes the environment and supports sustainable livelihoods.

Your Company's innovative business models synergise the building of economicenvironmental and social capital thus embedding sustainability at the core of itscorporate strategy. Today this strategy has not only contributed to building strongbusinesses of the future as well as a portfolio of winning world-class brands but also inmaking your Company a global exemplar in RsTriple Bottom Line' performance. Your Companyis the only enterprise in the world of comparable dimensions to have achieved andsustained the three key global indices of environmental sustainability of being 'waterpositive' (for 20 years) 'carbon positive' (for 17 years) and 'solid waste recyclingpositive' (for 15 years). This approach has enabled your Company and its businesses tosupport sustainable livelihoods for more than six million people.

As the world prepares for a post-pandemic future your Company is actively workingtowards Sustainability 2.0 an agenda which reimagines sustainability under the pressingchallenges of climate change and social inequity. Sustainability 2.0 calls for inclusivestrategies that can support sustainable livelihoods pursue newer ways to fight climatechange enable the transition to a net zero economy work towards ensuring water securityfor all and create an effective circular economy for post-consumer packaging waste. Italso entails protecting and restoring biodiversity and ecosystem services through adoptionof nature- based solutions. Your Company believes that agility in thought and actionmeaningful public-private-people partnerships and Responsible Capitalism will act as coreenablers of this new agenda. Your Company has the potential to make a large-scale impactnot only from an economic standpoint but also from an employment generation and socialenablement lens because of its presence across several critical sectors of the economy.With its bold Sustainability 2.0 agenda your Company is setting the bar higher andremains committed to making meaningful contribution to the Nation's future while retainingits status as a sustainability exemplar. The Sustainability 2.0 ambitions include:

Climate Change

- Enhancing the share of renewable energy usage to 50% of total energy consumption by2030.

- Meeting 100% of purchased grid electricity requirements from renewable sources by2030.

- Reducing specific energy consumption by 30% and specific GHG emissions by 50% by 2030as compared to the FY 2018-19 baseline.

- Sustain and enhance carbon sequestration by expanding forestry projects on wastelandsthrough your Company's Social and Farm Forestry programme and other such initiatives.

Water Stewardship

- Achieving 40% reduction in specific water consumption by 2030 as compared to the FY2018-19 baseline.

- Creation of rainwater harvesting potential equivalent to over 5 times the net waterconsumption by 2030.

- Certification of all sites in high water stressed areas as per the internationalwater stewardship standard by Alliance for Water Stewardship (AWS) by 2035.

- Improve crop water use efficiency in agri-value chains through demand side managementinterventions and enable savings of 2000 million kilolitres of water by 2030.

Plastic Waste and Circular Economy

- 100% of your Company's Packaging to be Reusable Recyclable or Compostable/Biodegradable by 2028.

Sustainable Agriculture

- Promote climate smart village approach in core Agri Business catchments covering over3 million acres by 2030.

Biodiversity Conservation

- Revive & sustain ecosystem services and products provided by nature throughadoption of nature- based solutions and biodiversity conservation covering over 1 millionacres by 2030.

Sustainable Livelihoods

- Supporting sustainable livelihoods for 10 million people by 2030.

Your Company's Businesses are actively working towards achieving your Company'sSustainability 2.0 vision. During the year around 42% of your Company's total energyrequirements were met from renewable sources. Commendable progress has been made in linewith 2030 targets relating to specific energy specific GHG emissions and specific waterconsumption across Businesses.

In line with its commitment your Company has also achieved its goal of becomingplastic neutral during FY 2021-22. During the year your Company's large-scale programmeson Sustainable Agriculture were expanded to cover 1.5 million acres. A detailedperformance dashboard against the 2030 commitments is available in your Company'sSustainability & Integrated Report 2022.

To achieve its Sustainability 2.0 vision your Company continues to strengthen itsmanagement approach which is guided by a comprehensive set of sustainability policies andis being implemented across the organisation. Your Company is also strengthening themechanisms of engagement with key stakeholders identification of material sustainabilityissues and progressively monitoring and mitigating the impacts along the value chain ofeach Business. Your Company will continue to update these systems and processes in linewith evolving disclosure standards and Environmental Social and Governance (ESG)requirements.

Your Company's 18th Sustainability Report published during the year detailed theprogress made across all dimensions of the ‘Triple Bottom Line' for FY 2020-21. Thisreport is in conformance with the Global Reporting Initiative (GRI) standards under‘In Accordance - Comprehensive' category and is third-party assured at the‘Reasonable Level' as per International Standard on Assurance Engagements (ISAE)3000.

In addition your Company's 4th Integrated Report was also published during the yearwhich conforms with the requirements of the International <IR> Framework publishedby the Value Reporting Foundation. The report presents a range of financial andnon-financial disclosures to illustrate how different ‘capitals' are deployed toenable creation of enduring value.

Your Company's Sustainability & Integrated Report for FY 2021-22 in addition toconforming with GRI Standards is also aligned with the requirements of the International<IR> Framework developed by the International Integrated Reporting Council.

The Sustainability & Integrated Report 2022 is available on your Company'scorporate website at Report-2022.pdf .

In addition the Business Responsibility & Sustainability Report (BRSR) asmandated by the Securities and Exchange Board of India (SEBI) for the year under review isannexed to the Report and Accounts. The BRSR maps the sustainability performance of yourCompany against the nine principles forming part of the National Guidelines on ResponsibleBusiness Conduct issued by the Ministry of Corporate Affairs Government of India.

During the year your Company sustained its ‘AA' rating by MSCI-ESG - the highestamongst global tobacco companies and has also been included in the Dow JonesSustainability Emerging Markets Index. Additionally your Company was rated ‘A -' atthe Leadership Level for both Climate Change and Water Security by CDP which is above theAsia and Global average of ‘B-' for climate change and ‘B' for water security.

Contribution to the United Nations Sustainable Development Goals (UN SDGs)

Your Company's Sustainability strategies and Social Investment Programmes &interventions in addition to their alignment with national priorities are also wellpositioned to contribute to the achievement of India's commitment under the UN SDGs. Forinstance your Company's programme on Climate Smart Agriculture is aligned to theGovernment's National Mission for Sustainable Agriculture and also contributes to theachievement of multiple SDGs including SDG 13 (Climate Action) SDG 15 (Life on Land)SDG 1 (No Poverty) and SDG 2 (Zero Hunger). A comprehensive statement linking yourCompany's interventions to the SDGs including corresponding targets is available in yourCompany's Sustainability & Integrated Report for FY 2021-22.

Building Climate Resilience

Your Company recognises the urgent need to combat climate change for building a moresecure future and the role it can play in enabling a net-zero economy.

To this end your Company is pursuing a low carbon growth strategy through extensivedecarbonisation programmes across its value chain. These include increasing the share ofrenewable energy continuous reduction of specific energy construction of greenbuildings greening logistics and optimising 'distance-to-market' and promotingregenerative agriculture practices in agri-value chains.

Additionally in order to identify long-term risks your Company has worked withclimate experts to conduct a comprehensive climate change risk and vulnerabilityassessment using climate models across its operating locations (factories hotelswarehouses etc.).

The assessment considered the impact of climate variables like temperatureprecipitation sea level rise river/coast proximity and extreme weather events overlong-term time frames (2040-2060 and 2060-2080) under two Representative ConcentrationPathway (RCP) scenarios - RCP 4.5 and RCP 8.5. In line with the findings of theassessment detailed site-specific assessments are being undertaken for risk mitigationand adaptation.

Similarly factors such as rise in extreme weather events varying climatic parametersand dependence on rainwater for irrigation make agriculture in India quite vulnerable toclimate change. For major crops like wheat pulp-wood and leaf tobacco among others thereis significant and sustained work being done on the development of climate-tolerantvarieties as well as dissemination of climate-resilient and regenerative agronomicpractices in the growing areas.

Detailed farm-level studies are also being conducted to understand the potentialadverse impacts of climate change on your Company's key agri-value chains. These riskassessments will help calibrate the climate resilience measures that are being implementedacross your Company's value chains.

Energy Conservation and Renewable Energy

As a responsible corporate citizen your Company has made a commitment to reducedependence on energy from fossil fuels. Accordingly all factories incorporate appropriategreen features and premium luxury hotels and office complexes continue to be certified atthe highest level by either the US Green Building Council or Indian Green BuildingCouncil. During the year around 42% (previous year 41%) of your Company's total energyrequirements were met from renewable sources such as biomass wind and solar. During theyear your Company commissioned its first offsite solar plant in Dindigul Tamil Nadu inline with its Sustainability 2.0 vision. The 14.9 MW solar plant will help reduce CO2emissions significantly and has already enabled your Company to meet 90% of itselectricity requirement in the state of Tamil Nadu from renewable sources. Additionallyyour Company's Paperboards & Specialty Papers Business commissioned a state-of-the-artand future-ready High Pressure Recovery Boiler at the Bhadrachalam mill replacingconventional soda recovery boilers which will contribute towards reducing carbonfootprint through lower coal consumption.

Your Company is well positioned to benefit from energy conservation and renewableenergy promotion schemes such as Perform Achieve and Trade (PAT) and Renewable EnergyCertificates (RECs) promoted by the Government of India. Your Company continues itsefforts towards meeting 100% of purchased grid electricity requirements from renewablesources and achieving 50% renewable energy share in its total energy consumption by 2030based on a mix of energy conservation and renewable energy investments despitesignificant enhancement in its scale of operations going forward.

Greenhouse Gases and Carbon Sequestration

The GHG inventory of your Company for FY 2021-22 compiled according to the ISO 14064Standard has been assured as in the earlier years at the 'Reasonable Level' by anindependent third party. The GHG inventory covers emissions from your Company's operationsand GHG removals from your Company's large-scale forestry programmes.

In order to continuously reduce your Company's energy footprint green features arebeing integrated in all new and old constructions including hotels manufacturing unitswarehouses and office complexes. Your Company is a pioneer in the green building movementwith 38 buildings having received Platinum certification by USGBC (U.S. Green BuildingCouncil)/IGBC (Indian Green Building Council).

Several of your Company's factories and office complexes have received the GreenBuilding certification from IGBC and the Leadership in Energy & Environmental Design(LEED?) certification from USGBC. In 2004 the ITC Green Centre at Gurugram receivedLEED? Platinum certification by USGBC making it the largest Platinum rated building inthe world at that point in time. The data centre at Bengaluru ITC Sankhya is the firstdata centre in the world to receive the LEED? Platinum certification by USGBC. Largeinfrastructure investments such as the ITC Green Centre at Guntur and the ITC Green Centreat Bengaluru (both LEED? Platinum certified) continue to demonstrate your Company'scommitment to green buildings. Virginia House Kolkata and ITC Centre Kolkata - theheadquarters of your Company is also certified at the highest ‘LEED? Platinum'rated Green Building by USGBC.

Reaffirming your Company's commitment to the ethos of ‘Responsible Luxury' allluxury collection hotels of your Company are LEED? Platinum certified making yourCompany a trailblazer in green hoteliering globally. ITC Grand Chola the 600-keysuper-premium luxury hotel complex in Chennai is amongst the world's largest LEED?Platinum certified green hotels. In 2020 ITC Windsor's best practices on carbonmanagement distinguished it as the first hotel in the world to be LEED? Zero Carboncertified. Additionally in FY 2021-22 ITC Grand Chola and ITC Gardenia were alsocertified as LEED? Zero Carbon with ITC Grand Chola being the largest and ITC Gardeniabeing the third hotel with LEED? Zero Carbon certification in the world.

Your Company's Social and Farm Forestry initiatives besides mitigating the impact ofincreasing levels of GHG emissions in the atmosphere help greening of degraded wastelandprevent soil erosion enhance organic matter content in soil and increase ground waterrecharge.

Towards Water Security for All

Your Company continues to focus on an integrated water management approach thatincludes water conservation and harvesting initiatives at its Units - while at the sametime working towards meeting the water security needs of all stakeholders at the localwatershed level. Interventions have been rolled out to improve water-use efficiencies byadopting latest technologies and increasing reuse and recycling practices within the fencewhile also working with farmers and other community members towards improving theirwater-use efficiencies.

The demand side measures are followed by augmenting supply at the sub-catchment levelthrough various interventions focused on harvesting rainwater based on the recommendationsof hydro-geological studies. The supply side interventions include enhancing capture andstorage of rainwater (in soil and storage ponds) and recharging aquifers. Your Companyalso conducts efficacy studies to assess the impact of the watershed work carried out andto ensure that maximum benefits accrue in the long-term. As on 31st March 2022 yourCompany's integrated watershed development projects covering over 1.3 million acres ofland have created a total rainwater harvesting potential (RWH) of over 46 million klwhich is nearly 4 times the net water consumed by your Company's operations in FY 2021-22.

Your Company's Paperboards & Specialty Papers unit at Kovai was only the secondfacility in the world and first in India to be awarded the AWS Platinum levelcertification in FY 2019-20 - the highest recognition for water stewardship in the world.

Your Company is in the process of implementing the AWS Standards at other Units in highwater stress areas and will progressively obtain AWS certification for these sites in thecoming years.

Building a Circular Economy for Post-Consumer Packaging

Your Company continues to make significant progress in reducing specific wastegeneration through constant monitoring and improvement of efficiencies in materialutilisation and also in achieving almost total recycling of waste generated in operations.In this way your Company has prevented waste reaching landfills and the associatedproblems of soil and groundwater contamination and GHG emissions all of which canadversely impact public health. In the current year your Company has achieved over 99%waste recycling. In addition your Company's Paperboards & Specialty Papers Businessrecycled over 85000 tonnes of externally sourced post-consumer waste paper therebycreating yet another positive environmental footprint.

Your Company aims to go beyond the requirements of Plastic Waste Management Rules 2016to ensure that over the next decade 100% of packaging is reusable recyclable orcompostable/biodegradable. Your Company is working towards optimising packaging in a waythat reduces the environmental impact arising out of post-consumer packaging waste withoutaffecting product integrity. This is being done in a structured manner by optimisingdesign identifying alternative packaging material with lower environmental impact andsuitable end-of-life solutions for packaging waste. Your Company has successfullyimplemented multiple large-scale models of municipal solid waste management across thecountry.

These models based on principles of circular economy are scalable replicable andsustainable and have enabled your Company to become plastic neutral in FY 2021-22. Theapproach is centred around treating waste as a resource and ensuring that zero waste goesto landfill which can be achieved only when waste is segregated at source. Theinitiatives focus on educating citizens on segregating waste at source into dry and wetstreams and ensuring that value is derived from these resources and in the process supportsustainable livelihood for waste collectors and rag-pickers. These models operate on apublic-private partnership basis with active involvement of urban local bodies civilsociety and the informal sector of waste collectors.

Your Company has exceeded its commitment on plastic neutrality made in the previousyear collecting and sustainably managing more than 54000 tonnes of plastic waste across35 States/Union Territories.

Your Company's waste recycling programme ‘WOW - Well Being Out of Waste' enablesthe creation of a clean & green environment and promotes sustainable livelihoods forwaste collectors. During the year the programme continued to be executed in BengaluruMysuru Hyderabad Coimbatore Chennai Muzaffarpur Delhi major towns of Telangana andseveral districts of Andhra Pradesh. The quantum of dry waste collected during the yearwas about 60000 MT from over 1000 wards.

The programme has covered over 1.8 crore citizens in over 46 lakh households 52 lakhschool children and around 2040 corporates since its inception.

It has promoted sustainable livelihood for over 17000 waste collectors by facilitatingan effective collection system in collaboration with municipal corporations. Theintervention has also created over 140 social entrepreneurs who are involved in maximisingvalue capture from dry waste collected.

In Pune your Company is spearheading a circular economy based on first-of-its-kindMulti-Layer Plastic (MLP) collection and recycling programme.

In addition to WOW a separate community-driven programme on decentralised Solid WasteManagement (SWM) in collaboration with Swachh Bharat Mission is operational in 17districts of 10 states covering 14.6 lakh households.

This programme deals with both wet and dry waste and focuses on minimising waste tolandfill by managing waste at source. Under the programme more than 99700 MT of wastewas collected during FY 2021-22 out of which around 63700 MT of wet waste was composted19000 MT of dry waste was recycled and only 17% of the total waste was sent tolandfills. Further home composting was practiced by over 3.2 lakh households.

In Uttar Pradesh your Company partnered with the Urban Development Department leadingto over 1400 Government officials from 31 municipalities being trained on decentralisedSWM till date.

During the year your Company also signed an MoU with Lohiya Swachh Bihar Abhiyan(LSBA) Rural Development Department Government of Bihar to train officials onimplementation of decentralised SWM in nearly 500 villages of Ganga region (‘GangaGram') across 12 districts of Bihar.

The ‘Green TempleRs initiative powered by your Company's Social Investmentsprogramme ‘Mission Sunehra Kal' is a closed loop waste management model involvingprocessing of waste generated in temples to provide biogas to the kitchen and compost forits gardens. During the year the initiative was expanded to 500 temples across AndhraPradesh Bihar Uttar Pradesh Uttarakhand Tamil Nadu Karnataka and Maharashtra.

Promoting Thought Leadership in Sustainability

Your Company's pursuit of the ‘Triple Bottom Line' approach has allowed it todevelop unique sustainable and industry-leading solutions to some of the most pressingsustainable development challenges faced by our country. Combining deep-rooted insightsperspectives and on-ground managerial expertise with meaningful collaborations andpartnerships your Company has created sustainable scalable and replicable businessmodels in response to these challenges.

To ensure wider adoption of the ‘Triple Bottom Line' philosophy across theIndustry your Company established the ‘CII-ITC Centre of Excellence for SustainableDevelopmentRs in 2006 in collaboration with the Confederation of Indian Industry (CII).

The Centre continues to focus on its endeavour to promote sustainable businesspractices amongst Indian enterprises. The major highlights during the year include thefollowing:

Climate Change

- A CEO's working group on ‘Driving Accelerated Climate Action' was set up withthe objective of developing and driving a compelling strategy and action plan to enableIndian businesses adopt sustainability for building a climate-resilient future. Theworking group is led by the Chairman and Managing Director of your Company and comprises11 CEOs from leading businesses. Rapid progress is being made by the working group on theagenda of creation of CII Vision 2030 on Climate Change and Sustainability establishmentof the CII Climate Action Charter MSME toolkit for climate risk management andinterlinking climate related policy advocacy in CII Councils and Committees.

- A roundtable of industry members and GIZ (a German development agency that providesservices in the field of international development cooperation and international educationwork) held in December 2021 documented the challenges and opportunities in implementingVoluntary Climate Action (VCA) through Voluntary Carbon Market (VCM) and Internal CarbonPrizing (ICP) to address climate risks and achieve net zero emissions. An industry-led‘Task Force on Afforestation' created modalities to partner with the Government ofIndia and also developed comprehensive afforestation-based methodologies towards themission of developing carbon sinks of appx. 3 billion tonnes and restoring 26 millionhectares by 2030.

- A pre-COP26 Conclave in October 2021 brought together different stakeholders on thevital issue of combating climate change. The virtual Conclave had two sessions - (a)Adopting Clean Energy for Climate Change and (b) Information Technology Sector: TacklingClimate Crisis. In the run up to COP26 and as part of a global campaign the Centre alsoorganised a series of six webinars during the period June to August 2021 on ‘Race toZero' with emphasis on topics including RE100 SME Climate Hub RE100 EV 100 andtechnology transfer.

- At COP26 the delegation members held high-level discussions with the Minister ofEnvironment

Forest and Climate Change Government of India Chair of the Energy TransitionsCommission UK and the US Special Presidential Envoy for Climate on business' perspectivesto mainstream climate action. The Centre in collaboration with World Business Council forSustainable Development (WBCSD) also organised a session on ‘Greening India's PowerGrids'.

Circular Economy

- The India Plastics Pact a collaboration between Centre and the WWF became part of anetwork of 13 Plastic Pacts across the globe at its launch at the 16th SustainabilitySummit. The Pact has set four major targets: eliminate unnecessary or problematic plasticpackaging and items reuse or recycle 100% of plastic packaging recycle 50% of plasticpackaging and ensure 25% average recycled content across all plastic packaging.

- The Centre continued working on the inventory of plastics in India and created amaterial flow of major plastic resins in India. Along with the CII-Sohrabji Godrej GreenBusiness Centre the Centre also began a study to identify greenhouse gas mitigationstrategies through resource efficiency and circular economy across the cement value chain.

- The Plastics-use Protocol developed in 2020 to help companies record certify andverify plastic use reduction in packaging and product lines enabled 60 sites of 6companies to be certified Single Use Plastics (SuP) free by 2021.


- India Business & Biodiversity Initiative (IBBI) in collaboration with the WorldSpice Organisation (WSO) interacted with companies in the Spices sector operating inWestern Ghats to integrate biodiversity practices in their business plans.

- The Centre WWF India and GIZ jointly organised a virtual business consultation onthe first draft of Post 2020 Global Biodiversity Framework released by the Secretariat ofthe UN Convention on Biological Diversity (CBD) in August 2021. The key recommendationssubmitted to Ministry of Environment Forest and Climate Change (MoEFCC) and CBD includeguidance on goals & targets of post 2020 Global Biodiversity Framework development ofmodules & mechanisms for biodiversity conservation and building partnerships andcollaborations for effective management of biodiversity.

Air Pollution

- Signatories to the Clean Air Better Life forum has grown to 72 companies and membershave agreed to work on a common framework for inter-corporate collaboration and sharing ofbest practices. The Industry Platform on Sustainable Transportation has 85 members and asan outcome of two platform meetings and bilateral consultations with members held in 2021a draft map of on ground barriers and potential solutions has been developed.

- A report on the Economic Impacts of Air Pollution in India prepared by Dalberg withsupport from the Centre and Clean Air Fund was launched at the 6th CEOs meeting of IndiaCEO Forum under the Cleaner Air-Better Life (CABL).

- The Crop Residue Management programme was expanded to 44 new villages in 3 newclusters.

The project also became a case study by IIM Bangalore which was published in theHarvard Business Review (HBR).

- The Multi Agency Collaborative Project on Air Pollution with support of the MadhyaPradesh Pollution Control Board (MPPCB) was initiated in Indore Metropolitan Region(IMR) offering a common platform to stakeholders to contribute to cleaner air. Airquality modelling is being conducted by IIT Delhi and is being downscaled for the IndoreMetropolitan region with inputs from experts of California Air Resources Board.Additionally CII CABL team is working with Smart City Indore to integrate 20 sensorsinstalled by John Snow India into a network of 50 sensors.

Excellence in Sustainability

- The Centre organised the 16th Sustainability Summit virtually on the theme of‘Building a Resilient Future: Leveraging Science Technology and FinanceRs inSeptember 2021 in partnership with 23 multi-sectoral organisations. The emphasis of theSummit was on interactions and interconnectedness between elements of physical socialnatural and human capital. A total of 21 sessions were held on diverse topics.

There were 107 speakers with 25% global and 27% female speakers with a total audienceof 800 participants.

- At the 16th CII-ITC Sustainability Awards in January 2022 21 companies wererecognised for Corporate Excellence Environment Management and Biodiversity. Shri RaoInderjit Singh MP Union Minister of State (Independent Charge) of the Ministry ofStatistics and Programme Implementation; Union Minister of State (Independent Charge) ofthe Ministry of Planning and Union Minister of State in the Ministry of Corporate Affairsand Mr. Sanjiv Puri Chairman and Managing Director ITC Limited recognised the winnersfor Excellence in Sustainable Business.

Capacity Building on various topics

- Nearly 1400 participants were covered through 50 capacity building programmesconducted during the year. Topics of discussions included Climate Change Energy andEnergy Management Systems Health and Safety Value Innovation CSR Rules and ImpactMeasurement Sustainability Reporting Integrated Reporting Human Rights CircularEconomy and Biodiversity Waste Management Rules Plastic use Protocol SustainableProcurement Corporate Risk Management among others.


The two waves of the pandemic during the year severely impacted health and livelihoodsacross the country especially those of the poor and vulnerable sections of society. YourCompany rose to the challenge and took proactive initiatives to provide relief tovulnerable sections of society and also facilitated their economic rehabilitation in themedium term.

Your Company not only aided the Government's efforts but also proactively took a hostof actions to provide relief to the poor and vulnerable sections of society including (a)providing support to ensure regular oxygen supply in hospitals by being amongst the firstto import cryogenic ISO containers (24 nos.) installation of 22 oxygen generation unitsand distribution of 1200 oxygen concentrators to different hospitals; (b) providingessential medical infrastructure support through a wide range of interventions likesetting up of COVID isolation centres setting-up of 600 hospital beds in three statessupply of ventilators oxygen cylinders modular ICU units and ambulances; (c)distribution of food and personal hygiene products; and (d) large-scale vaccination drivesin multiple states.

Your Company's overarching commitment to create significant and sustainable societalvalue is manifest in its CSR initiatives that embrace the most disadvantaged sections ofsociety especially in rural India through economic empowerment based on grassrootscapacity building. Towards this end your Company has a comprehensive CSR Policy outliningprogrammes projects and activities that your Company undertakes to create a significantpositive impact on identified stakeholders. All these programmes fall within the purviewof Section 135 read with Schedule VII of the Companies Act 2013 and the Companies(Corporate Social Responsibility Policy) Rules 2014.

The key elements of your Company's CSR interventions are to:

- deepen engagement in identified core operational geographies to promote holisticdevelopment and design interventions in order to respond to the most significantdevelopment challenges of your Company's stakeholder groups.

- strengthen capabilities of Non-Government Organisations (NGOs)/Community BasedOrganisations (CBOs) in all project catchments for participatory planning ownership andsustainability of interventions.

- drive the development agenda in a manner that empowers women and benefits the poorand marginalised communities in our factory and agri-catchments thereby significantlyimproving Human Development Indices (HDI).

- ensure behavioural change through focus on demand generation for all interventionsthereby enabling participation contribution and asset creation for the community.

- strive for scale with impact by leveraging government partnerships and accessing themost contemporary knowledge/technical know-how.

Your Company's stakeholders are confronted with multi-dimensional and inter-relatedconcerns at the core of which is the challenge of securing sustainable livelihoods.Accordingly interventions under your Company's Social Investments programme areappropriately designed to build capacities and promote sustainable livelihoods.

The footprint of your Company's CSR projects is spread across 25 States/UnionTerritories covering over 200 districts.

Your Company's CSR interventions were conferred with two prestigious awards during FY2021-22:

- First prize in the 'Best Industry for CSR Activities' category at the third NationalWater Awards by Ministry of Jal Shakti which was presented by Shri Ram Nath KovindHon'ble President of India.

- Institute of Company Secretaries of India (ICSI) CSR Excellence Award in the 'Large'category for consistently demonstrating innovation and sustainability in managing CSR.The Award was presented by Shri Amit Shah Union Minister for Home Affairs andCooperation.

Social Forestry

Your Company's pioneering afforestation initiative through the Social Forestryprogramme greened over 30700 acres during the year. It is currently spread across 19districts in 9 States covering over 4.25 lakh acres in nearly 7000 villages impactingover 1.4 lakh poor households. Together with your Company's Farm Forestry programme thisinitiative has greened over 9.5 lakh acres till date and generated over 173 millionperson days of employment for rural households including women poor tribal and marginalfarmers. Integral to the Social Forestry programme is the Agro-Forestry initiativeincluding plantations on bunds which cumulatively extends to about 1.8 lakh acres andensures food fodder and wood security. Further fast growing high yielding and diseaseresistant hybrid clones and saplings of eucalyptus pulpwood developed by your Companydeliver significantly higher productivity vis-a-vis earlier clones.

The clones have been developed to grow under varying ecological conditions therebybuilding resilience and contributing towards increasing income for the farming community.Data from wood supplied by Mutually Aided Co-operative Society (MACS) shows improvement inyield by over 12% primarily enabled through improved focus on promoting inter-croppractices in agro-forestry and farmer training on productivity improvement.

Besides enhancing farm level employment generating incomes and increasing green coverthis large-scale initiative also contributes meaningfully to the nation's endeavour tocreate additional carbon sinks for tackling climate change.

In addition to the above the Social and Farm Forestry initiative of your Companythrough a multiplier effect has led to improvement in pulpwood and fuelwood availabilityin Andhra Pradesh Telangana Karnataka and Odisha.

Soil and Moisture Conservation

The Soil and Moisture Conservation programme aims to ensure water security for alldependents in the factory catchments and to drought-proof the agri-catchments to minimiserisks to agricultural livelihoods arising from drought and moisture stress. The programmepromotes the development and management of local water resources in moisture-stressedareas by facilitating community participation in planning and implementing such measuresas well as building reviving and maintaining water-harvesting structures. The coverage ofthis programme currently extends to 40 districts of 16 states. During the year the areaunder watershed increased by over 1 lakh acres taking the cumulative coverage area toover 13.3 lakh acres. Over 3100 water-harvesting structures including ground waterrecharge structures were built during the year creating nearly 3.5 million cubic metresof rainwater harvesting potential. This took the total number of water harvestingstructures to over 25000 and the net water storage to over 45 million cubic meters. Inaddition your Company continues to work with farmers to achieve 'more crop per drop' bypromoting agronomic practices and micro irrigation techniques targeted towards savingwater in cultivation and improving farmer incomes. Around 7.3 lakh acres have been coveredacross 11 states during the year; more than twice over previous year. Studies have beenconducted by Vasantdada Sugar Institute and Tamil Nadu Agricultural University to estimatewater savings in sugarcane coconut and banana in your Company's programme locations.According to these studies demand management practices promoted by your Company have ledto potential water savings to the tune of 497 million cubic metres during the year.

Additionally your Company is continuing partnerships with multiple state governmentdepartments for Soil and Moisture Conservation. Under the partnership with WatershedDevelopment Department Government of Karnataka signed in the previous year capacitiesare being built using your Company's Water Stewardship approach to drought proof 100watersheds across 29 districts covering over 1.1 million acres. During the yearGovernment officials responsible for all 100 watersheds were trained to incorporate yourCompany's drought proofing and positive water balance based planning.


The focus of the programme is on reviving ecosystem services provided to agriculturesuch as natural regulation of pests pollination nutrient cycling soil health retentionand genetic diversity which have witnessed considerable erosion over the past fewdecades. During the year your Company's biodiversity conservation initiative covered over89000 acres taking the cumulative area under biodiversity conservation to over 1.3 lakhacres in more than 29 districts across 10 states. While the conservation work is beingcarried out in select plots of village commons this intervention significantly benefitsagricultural activity in the vicinity of these plots through soil moisture retentioncarbon sequestration and by acting as hosts to insects and birds beneficial toagriculture.

To increase the coverage for pastureland development and biodiversity conservationyour Company partnered with Forest Departments of Maharashtra and Telangana and Wasteland& Pastureland Development Board (WPDB) of Rajasthan. The partnership with WPDB istargeted to cover 2.5 lakh acres across 8 districts. Further during the year 475Government staff were trained for implementing the programme across 2800 villagesencompassing 34000 acres.

Sustainable Agriculture

The Sustainable Agriculture programme attempts to de-risk farmers from erratic weatherevents through the promotion of climate-smart agriculture premised on dissemination ofrelevant package of practices adoption of appropriate mechanisation and provision ofinstitutional services. Currently 15.2 lakh acres and over 4.5 lakh farmers are coveredunder the programme representing an increase of 71% and 77% respectively over theprevious year. This has a significant multiplier effect in terms of adoption ofsustainable practices by the farming community. During the year knowledge wasdisseminated through more than 7100 Farmer Field Schools and over 3000 ChoupalPradarshan Khets. More than 610 Agri Business Centres delivered extension servicesarranged agri-credit linkages established collective input procurement and providedagricultural equipment for hire. In pursuit of your Company's long-term sustainabilityobjective of increasing soil organic carbon more than 2500 compost units wereconstructed during the year taking the total number till date to over 51300 units.

Your Company with its presence across multiple commodities and geographies includinge-Choupal network and agri extension programmes network undertook an initiative tofacilitate formation of new FPOs and/or strengthening existing FPOs thus enhancing farmincomes rural livelihood and partnering in other relevant rural development initiatives.During FY 2021-22 your Company supported around 200 FPOs across 6 states.

The 'Village Adoption Programme' pioneered by your Company's Agri Business presentlycovers 245 model villages in the states of Andhra Pradesh and Karnataka. This initiativeis aligned to the Prime Minister's Sansad Adarsh Gram Yojana (SAGY) an initiative topromote holistic rural development. Under this programme your Company is addressing thehuman rights and farm safety challenges in Indian farming by educating the farmers labourand community and providing access to tools and Personal Protective Equipment (PPE) kitsfor use on the field.

Your Company had entered into a partnership with NITI Aayog in April 2018 to improveagriculture and other allied services in 27 aspirational districts of 8 states (AssamBihar Jharkhand Rajasthan Madhya Pradesh Maharashtra Odisha and Uttar Pradesh) bytraining government officers who in turn would cascade the methodology to farmers.During the year 5.9 lakh farmers from appx. 18900 villages were trained digitallythrough WhatsApp groups while over 6.1 lakh farmers were trained through physicalsessions taking the cumulative reach to around 34 lakh farmer interactions. Estimatesindicate yield improvement of up to 30% for cotton maize paddy and soyabean in locationscovered by the programme; similarly cost of cultivation is estimated to have reduced bynearly 15% resulting in expansion of farmer incomes by up to 60%.

The 'Baareh Mahine Hariyali' programme in select districts of Uttar Pradesh (ChandauliGhazipur Prayagraj and Varanasi) is a pioneering initiative to facilitate farmers toenhance their incomes.

This programme is founded on a 360-degree multipronged approach with interventionssuch as increased cropping intensity with a third crop during summer enhancement ofproductivity through context-specific agronomic practices demonstrated through ChoupalPradarshan Khets (on-farm demonstrations) and provision of market linkages withtransparency in assessment of quality price and weighment. In some regions taking aholistic approach to income diversification as an adjacency livestock development womenempowerment and agro-forestry are also included. Over 2 lakh farmers have alreadybenefited from the interventions under this programme - over 35000 farmers who haveadopted the package of practices reported doubling of income and those who haveimplemented the programme partially reported increase in their incomes by 30% to 75%.

Livestock Development

The programme provides an opportunity for households to improve their livestock-basedlivelihoods by improving productivity of the progeny through breed improvement anddissemination of improved animal husbandry practices.

The programme provided extension services including breeding fodder propagation andtraining to farmers owning cows and buffaloes in 5 states and 18 districts. During theyear over 1.1 lakh artificial inseminations (AIs) were carried out which led to the birthof 0.5 lakh high yielding progeny. Cumulatively the figures for AIs and calving stand atover 27 lakh and 9.5 lakh respectively. In addition the livestock programme also coveredfamilies engaged in goat and sheep rearing enhancing their productivity through promotionof improved management practices.

Under the programme 164 women trained as 'Pashu Sakhis' provided extension services toover 16000 households till date thus enabling them to earn supplementary income of up toRs 5000 per month.

Your Company is also working with dairy farmers in Bihar and West Bengal to improveproductivity through several extension services and to facilitate higher milk production.Qualified teams comprising veterinarians and para-veterinarians have been deployed tofacilitate animal breeding animal nutrition and animal health services towards improvingproductivity and promoting commercial dairy farming among farmers. During the year about84400 cattle of over 48000 dairy farmers across 507 villages in 8 districts of Bihar and2 districts of West Bengal were supported through training programmes on clean milkproduction mastitis control and animal husbandry services like deworming ectoparasitecontrol etc.

Women Empowerment

During the year this initiative provided a range of gainful employment opportunitiesto around 6200 poor women taking the cumulative coverage to over 86000 women supportedwith capacity building and provided financial assistance by way of loans and grants. Thisincludes more than 30500 ultra-poor women in your Company's core catchments who now haveaccess to sustainable sources of income through various livelihood opportunities. Thefinancial literacy and inclusion project in partnership with Madhya Pradesh State RuralLivelihood Mission (MPSRLM) and CRISIL Foundation was operational in 43 districts duringthe year. 568 Super Trainers were trained directly who in turn trained 678 MasterTrainers; the training was thereafter cascaded to over 56000 self-help-groups (SHGs)covering more than 5.4 lakh women during the year. The programme has cumulatively coveredover 1.3 lakh SHGs benefiting over 13 lakh women across 15600 villages. Over 4 lakhtrained women have been provided access to bank accounts and government social securityschemes. As a result enrolments of women witnessed significant increase against theproject baseline.


The Primary Education programme aims to provide children from weaker sections ofsociety in your Company's factory catchments access to education with focus on learningoutcomes and retention. Operational in 28 districts of 13 states the programme coveredover 55000 children during the year taking the cumulative coverage to over 8.6 lakhchildren.

Over 400 government primary schools and anganwadis were provided infrastructure supportcomprising boundary walls additional classrooms sanitation units and furniture takingthe total number of government primary schools and anganwadis covered till date to around2500. Infrastructure support to government schools has helped in increasing enrolmentparticularly of girls in schools. To ensure sustainable operations and maintenance ofinfrastructure provided more than 1290 School Management Committees and around 750 ChildCabinets and Water and Sanitation (WATSAN) Committees were operational in various schoolsduring the year with active involvement of students and teachers.

Skilling & Vocational Training

This programme provides training in market linked skills to youth to enable them tocompete in the job market. More than 13300 youth were enrolled under different coursesduring the year of which 46% were female and 32% belonged to the SC/ST communities.Cumulatively over 1 lakh youth have been enrolled under this programme. The programme isoperational in 33 districts of 17 states. Further the pandemic led to increased enrolmentin bedside assistance courses with over 1700 youth trained during the year.

Overall nearly 76% of the trained youth have found job placements during the year.


Your Company continues to adopt a multi-pronged approach towards improving publichealth and hygiene across 26 districts and 12 states. To promote a hygienic environmentthrough prevention of open defecation and reduced incidence of water-borne diseases 1200Individual Household Toilets (IHHTs) were constructed in Bihar and Tamil Nadu incollaboration with the respective State Governments/District sanitation departmentstaking the total to over 39400 IHHTs constructed so far in your Company's catchmentareas. In addition 18 community toilets were constructed/renovated in West Bengal andTamil Nadu in the year for households without land taking the cumulative to 122.Cumulatively IHHTs and community toilets are estimated to be benefiting over 1 lakhcommunity members. Along with sanitation infrastructure development special focus wasalso given to awareness campaigns to create demand and drive behavioural change.

Health & Nutrition

Your Company continued to enhance awareness on various health related issues through anetwork of 430 women Village Health Champions (VHCs) who covered nearly 1.1 lakh women andadolescent girls during the year. The programme is operational in seven districts of UttarPradesh and three districts of Madhya Pradesh. As the group activities remained restricteddue to the pandemic the VHCs conducted door-to-door visits in the villages focusing onaspects like sanitation menstrual and personal hygiene family planning diarrhoeaprevention and nutrition.

Over 4.8 lakh beneficiaries were covered under the Mother and Child Health initiativeaimed at improving the health-nutrition status of women adolescents and children in thecatchments of a few of your Company's factories with high maternal and infant mortalityindices. As per internal estimates the proportion of underweight children between 0-5years of age in select project locations of two districts stood at 2.6% and 5.0% in2021-22 significantly lower than district averages5 of 19.7% and 33.1% respectively.

To bridge gaps in primary and secondary healthcare delivery and to address thechallenges of awareness availability accessibility and affordability your Company hasundertaken several Rural Healthcare interventions which will be implemented in a phasedmanner. After launching the Mother and Child Health initiative in FY 2016-17 your Companyis now adopting a holistic approach focusing on two major components - preventive healthcare and curative services. The objective of the initiative is to improve health andnutrition by strengthening institutional capacity supplementing existing infrastructurepromoting greater convergence with existing government schemes leveraging technology andincreasing access to basic primary and secondary healthcare services. As part of thisproject mobile medical units are in the process of being deployed at Saharanpur andMunger. Simultaneously plans have been initiated to set up a 50-bed hospital forsecondary care at Munger.

To make potable water available to local communities in Andhra Pradesh Reverse Osmosis(RO) water purification plants were set up in villages where the water quality was poor.24 new RO plants were established in FY 2021-22 taking the total operational RO plants to151 thus providing safe drinking water to over 2 lakh rural people.

Your Company's ‘Swasth India Mission' programme has been a front runner in drivingbehavioural change towards good hand hygiene habits since its inception in 2016. The‘Swasth India Mission' drove a range of initiatives to aid and enable the country inits fight against COVID:

- The Doctor's Connect Program (DCP) reached a total of 1.1 lakh doctors across nearly3000 hospitals.

- To encourage and instil mask etiquette and compliance and spread awareness onchoosing the right type of mask your Company launched a print campaign as well asvignettes with news anchors.

- Your Company also launched a print campaign ‘Do it for Kids' to spreadawareness on power of simple hygiene habits and encouraging children to follow the same.To spread awareness on how to take precautions in day-to-day situations your Companylaunched ‘Beat the Second Wave' series in pictorial format in both English andregional languages.

- To seed positive attitude towards hygiene your Company launched the ‘HygieneSahi toh Health Sahi' series in partnership with Times Network.

- Your Company also commissioned a nationwide study on current hygiene trends incollaboration with ‘YouGov' one of the world's leading full-service market researchcompanies which assessed usage perception and behavior towards hygiene practicesfocusing on hand hygiene surface disinfection and mask etiquettes.

This study aims to provide a roadmap to improve the understanding of health &hygiene practices and simultaneously work towards building a healthier society and nation.

Solid Waste Management

Your Company's initiatives focus on creating replicable scalable and sustainablemodels of municipal solid waste management that can be implemented across the country toensure that zero waste goes to landfills. Details of these models are provided in the'Building a Circular Economy for Post-Consumer Packaging' section above.

ITC Sangeet Research Academy

The ITC Sangeet Research Academy (ITC SRA) established in 1977 is an embodiment ofyour Company's sustained commitment to a priceless national heritage. Your Company'spledge towards ensuring enduring excellence in Classical Music education continues todrive ITC SRA in furthering its objective of preserving and propagating HindustaniClassical Music based on the age-old principle of ‘Guru-Shishya Parampara'. Theeminent Gurus of the Academy impart intensive training and quality education in Hindustaniclassical music to the scholars. The present Gurus of the Academy are Padma Bhushan Pt.Ajoy Chakrabarty

Padma Shri Pt. Ulhas Kashalkar Pt. Partha Chatterjee Pt. Uday Bhawalkar VidushiSubhra Guha and Shri Omkar Dadarkar. The Academy's focus continues to be on nurturingexceptionally gifted students selected from across the country through a system ofmulti-level audition. Full scholarship is provided to them to reside and pursue musiceducation in the Academy's campus and in other designated locations under the tutelage ofthe country's most distinguished musicians. Creation of the next generation of masters ofHindustani classical music for the propagation of a precious legacy continues to be theAcademy's objective.

Forging Partnerships with NGOs

The meaningful contribution made by your Company's Social Investments Programme toaddress some of the country's key development challenges has been possible in significantmeasure due to your Company's partnerships with globally renowned NGOs such as BAIF DSCFES DHAN Foundation MYRADA Pratham SEWA Bharat WASH Institute and Water for PeopleYouth Invest amongst others. These partnerships which bring together the best-in-classmanagement practices of your Company and the development experience and mobilisationskills of NGOs will continue to provide innovative grassroots solutions to some ofIndia's most challenging problems of development in the years to come.

CSR Expenditure

The annual report on Corporate Social Responsibility activities as required underSections 134 and 135 of the Companies Act 2013 read with Rule 8 of the Companies(Corporate Social Responsibility Policy) Rules 2014 and Rule 9 of the Companies(Accounts) Rules 2014 is provided in the Annexure forming part of this Report.

Environment Health & Safety

Your Company's Environment Health & Safety (EHS) strategies are directed towardsachieving the greenest and safest operations across all your Company's units by optimisingnatural resource usage and providing a safe and healthy workplace. Systemic effortscontinue to be made towards natural resource conservation by continuously improvingresource-use efficiencies.

Your Company believes that a safe and healthy work environment is a pre-requisite forensuring employee well-being and adopting best practices in occupational health &safety bears a direct impact on overall performance. With an aim to percolate safetydeeper into ITC's operational practices and achieve the ‘Zero Accident' goal yourCompany has adopted a comprehensive EHS strategy founded on two pillars: ‘Safety byDesign' and ‘Safety by Culture'.


Your Company follows ‘Safety by Design' by continuously striving to improve onsafety performance by incorporating best-in-class engineering standards for allinvestments in the built environment. During the year following the principle ofcontinuous improvement technical guidelines were contemporised in line with the recenttechnological advances and changes in code. In addition periodic Environment Health& Safety audits were carried out to verify compliance with standards.

Additionally your Company is implementing digitisation of the EHS management system atan enterprise level. This upgradation will enable seamless integration of Safety withoperations optimising overall efforts.

To drive a culture of safety your Company is making use of tools such as a structuredconversation with workers on ‘Safe and Unsafe' Acts which was supplemented byadoption of keystone behaviours that inculcates individual ownership for safe behaviour.Your Company has also pioneered the usage of Design Thinking principles for seamlessintegration of safety in business operations. This initiative is bringing in positivebehavioural changes.

Several national awards and certifications received by various units reaffirm yourCompany's commitment to provide safe and healthy workplace to all.

COVID Response: Health & Safety

During the year disruptions caused by the pandemic were effectively managed throughcollective and concerted efforts leveraging the learnings from the first wave. To controlworkplace COVID transmission your Company followed best practices on air management inindoor spaces while also complying with masking and sanitation protocols. Periodicinspections across business locations were conducted to ensure compliance with laid downprotocols thereby ensuring business continuity.


Your Company's state-of-the-art ITC Life Sciences and Technology Centre (LSTC) inBengaluru is at the core of driving science-led product innovation to support and buildyour Company's portfolio of world-class products and brands. The LSTC team comprising over350 highly qualified scientists has a mandate to work on future-ready science platformsdesign differentiated products to address unique consumer needs and deliver superiorbenefits.

LSTC harnesses contemporary advances in relevant core areas of science and technologyto continuously translate ‘proofs of concept' to novel product opportunities. R&Dteams seamlessly integrate classical concepts of product development backed by purposefulinnovation to bring exciting offerings to consumers with speed and agility. LSTC is at theforefront of executing robust R&D strategies and plans that embed sustainability anddigitalisation to enable rapid go-to-market timelines enhanced quality of insights andlong-term competitiveness for each Business.

LSTC is equipped with world-class scientific infrastructure and state-of-the-artfacilities to create deep knowledge base and build intellectual property for your Companythrough research rapid prototyping and process development. Over 900 patents have beenfiled till date bearing testimony to LSTC's innovation capabilities. Your Company wasranked ‘Top InnovatorRs in India amongst Indian Pharma and Healthcare PrivateCompanies (Source: Sagacious IP Report August 2021). Centres of Excellence in BiosciencesAgri-sciences & Materials sciences and future-ready platforms such as Beauty &Hygiene Heath & Wellness Agro-forestry Crop Sciences Consumer & SensorySciences and Sustainable Materials & Packaging continue to drive world-classinnovation. Rigorous systems processes and industry best practices have enabled securingglobal quality certifications - a key enabler in delivering products that follow thehighest standards in quality safety and efficacy to the Indian consumers.

In line with your Company's relentless focus on operational excellence and qualityeach Business is mandated to continuously innovate on materials training processes andsystems to enhance their competitiveness. LSTC actively collaborates with and supports theBusinesses to drive their innovation agenda and accelerate growth. Your Company has been aforerunner in introducing first-to-market innovative products for Indian consumers. In thecontext of recurrent COVID waves LSTC researchers and product development teams continueto enable the Branded Packaged Foods and Personal Care Businesses to deliver a range ofdifferentiated and superior quality products. Innovative science-based programmes continueto be leveraged to drive systematic reduction in salt sugar and fat from packaged foodproducts recipes without compromising on sensory attributes. Leading edge technologyplatforms in Hygiene Health & Wellness continue to power innovation and develop nextgeneration product offerings to serve emergent consumer needs. LSTC's unique competenciesin Materials and Packaging have enabled innovative recyclable flexible packaging andbio-compostable coating solutions in line with your Company's environmental sustainabilityagenda. New synergistic value chains in health nutrition and sensory sciences have beencreated to propel growth going forward.

In Agro Forestry and Crop Science Platforms LSTC has an ambitious R&D programme onimproving yield and quality given the shrinking plantation acreage in the country.Ongoing research on climate resilient crops and pulp wood seeks to address the security ofraw material supplies across your Company's value chains. Research on wheat and potatovarietal securitisation are at advanced stages of development to achieve flexibility insourcing of raw material create region-specific blends and ensure robust agro-climaticadaptability. Future-ready alternate value chains that mitigate risks arising out ofdisruptions to existing models continue to be explored. LSTC in collaboration with theAgri and Branded Packaged Foods Businesses endeavours to ensure that contemporaryscience-based outcomes are fully integrated across the value chain from farm to fork.Scientific platforms in Agro forestry have led to pioneering work in development of newclones in tandem with Paperboards & Specialty Papers Business to enhance woodproductivity and pulp quality for sustainable raw materials and farmer profitability.

The Paperboards Paper and Packaging Businesses continue to pursue ‘TotalProductive Maintenance' (TPM) programmes with focus on customer delivered quality. ThePaperboards & Specialty Papers Business has also set up a state-of-the-art NextGeneration Smart and Hyperscale Digital and Data Infrastructure at its plants to enablereal time operations control process optimisation and quality improvements. Consistentquality enables customers of your Company in improving their operating efficienciesthrough reduced wastages and lower machine down-times.

During the year your Company's Hotels Business leveraged technology to enhancebusiness process efficiencies and outcomes. The Hotels Business continues to heighten itscommitment towards prioritising the safety and security of guests through the awardwinning ‘WeAssure' programme. Building agile operating systems that adapt quickly tothe dynamic business environment and strengthening the service excellence framework havebeen the key strategies of the Hotels Business amidst pandemic-induced disruptions.

All branded packaged foods manufacturing units of your Company not only have ISOquality certification but also follow the stringent standards under the integrated foodquality management system-FSSC 22000; these systems ensure adherence to internationallyaccepted quality standards in producing safe and high-quality food.

All manufacturing units of the Branded Packaged Foods Businesses (including contractmanufacturing units) and Hotels operate in compliance with stringent food safety andquality standards. Your Company's food quality assurance laboratories are also accreditedunder ISO 17025 a global standard for testing and calibrating labs which guaranteesquality of every analysis. Additionally the quality of all FMCG ingredients and finishedproducts of your Company is monitored through best-in-class customer-centric ‘QualityControl and Quality Assurance Processes' and ‘Product Quality Ratings Systems' (PQRS)enhancing competitive superiority of your Company's product offerings.

As a future-ready innovation engine LSTC is developing and deploying advanced toolsfor quality performance analytics and competition benchmarking leveraging ArtificialIntelligence and Machine Learning technologies. Robust risk management practices are inplace to ensure that your Company's intellectual properties remain adequately protected atall times. Going forward your Company will continue to identify opportunities to addressemerging trends by leveraging R&D insights based on contemporary sciences and yourCompany's diverse core competencies.


In the proceedings initiated by the Enforcement Directorate in 1997 the appropriateauthority after hearing arguments on behalf of your Company has passed orders in favour ofyour Company and dropped some of the show cause notices issued by the Directorate. Inrespect of some of the remaining notices your Company filed writ petitions challengingtheir validity. The Honourable Calcutta High Court by its orders allowed these writpetitions and the proceedings in respect of these notices were quashed. The remainingnotices are pending.

Meanwhile some of the prosecutions launched by the Enforcement Directorate have beenquashed by the Honourable Calcutta High Court while others are pending.


Your Company's treasury operations continued to focus on deployment of surplusliquidity and management of foreign exchange exposures within a well-defined riskmanagement framework.

Market interest rates witnessed an upward trajectory during the year as the ReserveBank of India (RBI) commenced the process of Monetary Policy normalisation by way ofgradual withdrawal of liquidity infused into the Banking system during the pandemic.Globally inflation remained persistently high during the year due to elevated commodityprices and supply chain disruptions forcing central banks across most countries to pivotfrom supporting growth to combating inflation. While the RBI continued to advocatecontinuation of accommodative Monetary Policy stance to support the incipient recovery indomestic economic activity markets started to cognise for a faster pace of normalisationby the RBI in line with global peers. In addition higher than expected market borrowingsbudgeted by the Central Government for FY 2022-23 and spiraling commodity prices due togeo-political tensions in Europe towards the end of the year dented market sentiments andpushed market interest rates higher.

Investment decisions relating to deployment of surplus liquidity continued to be guidedby the tenets of Safety Liquidity and Return. Treasury operations focused on proactiverebalancing of portfolio duration and mix in line with the evolving interest rateenvironment. Further your Company's ongoing practice of continuous review and monitoringof credit worthiness including engagement with market participants ensured that theinvestment portfolio was not exposed to undue credit risks.

As in earlier years commensurate with the size of the temporary surplus liquidityunder management treasury operations continue to be supported by appropriate controlmechanisms including independent check of 100% of transactions by your Company's InternalAudit Department.

In the currency market the Indian Rupee (INR) depreciated against the US Dollar (USD)during the year. The weakness was attributed to strength of the USD relative to all majorcurrencies during the year. While the USD initially gained on the back of the US FederalReserve tightening monetary conditions rise in geo-political tensions in Europe towardsthe end of the financial year triggered risk-off sentiment amongst global investorsaiding safe haven currencies such as the USD. Lower capital inflows and a higher thananticipated Current Account Deficit also weighed on the INR. On the other handcomfortable foreign exchange reserves and judicious interventions in the forex market byRBI provided support to the INR.

To effectively navigate the high volatility in currency markets your Company adopted aproactive risk management strategy and actively managed foreign currency exposures throughappropriate hedging strategies and market instruments to protect business margins.


Your Company's erstwhile Public Deposit Scheme closed in the year 2000. As at 31stMarch 2022 there were no deposits due for repayment except in respect of two depositholders aggregating Rs 20000 which have been withheld on the basis of directives receivedfrom the government agencies.

There was no failure to make repayments of Fixed Deposits on maturity and the interestdue thereon in terms of the conditions of your Company's erstwhile Schemes.

Your Company has not accepted any deposit from the public/members under Section 73 ofthe Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014during the year.


Changes in Directors

During the year Mr. Shyamal Mukherjee and Mr. Hemant Bhargava who have the requiredintegrity expertise and experience were appointed with your approval as Directors andalso as Independent Directors of your Company for a period of five years with effect from11th August 2021 and 20th December 2021 respectively.

Messrs. Mukesh Gupta representing the Life Insurance Corporation of India(‘LIC') Navneet Doda representing the General Insurers' (Public Sector) Associationof India (‘GIPSA') and Sunil Panray representing the Tobacco Manufacturers (India)Limited (a subsidiary of British American Tobacco p.l.c.) were also appointed with yourapproval as Non-Executive Directors of your Company for a period of three years witheffect from 20th December 2021. Mr. Sumant Bhargavan was re-appointed with yourapproval as a Director and also as a Wholetime Director of your Company for a period ofthree years with effect from 12th July 2022.

The Board of Directors of your Company (‘the Board') has recommended for theapproval of the Members appointment of Mr. Supratim Dutta as a Director liable to retireby rotation and also as a Wholetime Director of your Company for a period of three yearswith effect from 22nd July 2022. Appropriate resolution seeking your approval to theabove is appearing in the Notice convening the 111th Annual General Meeting (‘AGM')of your Company.

Mr. Atul Jerath representing GIPSA and Mr. Hemant Bhargava representing LIC steppeddown from the Board with effect from 1st May 2021 and 23rd August 2021 respectively.Mr. Sunil Behari Mathur ceased to be a Director of your Company with effect from 15thSeptember 2021 on completion of his term as an Independent Director. Your Directorsplace on record their appreciation for the services rendered by Messrs. Jerath Bhargavaand Mathur.

Retirement by Rotation

In accordance with the provisions of Section 152 of the Companies Act 2013 (‘theAct') read with Articles 94 and 95 of the Articles of Association of your Company Messrs.David Robert Simpson and Nakul Anand will retire by rotation at the ensuing AGM and beingeligible offer themselves for re-election.

The Board has recommended their re-election.

Number of Board Meetings

Six meetings of the Board were held during the year ended 31st March 2022.

Attributes Qualifications & Independence of Directors and their Appointment

The Corporate Governance Policy of your Company inter alia requires that theNon-Executive Directors be drawn from amongst eminent professionals with experience inbusiness/finance/law/public administration and enterprises. The Nomination &Compensation Committee has laid down the criteria for determining qualifications positiveattributes and independence of Directors (including Independent Directors). The BoardDiversity Policy of your Company requires the Board to have balance of skills experienceand diversity of perspectives appropriate to your Company. The skills expertise andcompetencies of the Directors as identified by the Board along with those available inthe present mix of the Directors of your Company are provided in the ‘Report onCorporate Governance' forming part of the Report and Accounts.

In terms of the applicable regulatory requirements read with the Articles ofAssociation of your Company the strength of the Board shall not be fewer than six normore than eighteen. Directors are appointed/re-appointed with the approval of the Membersfor a period of three to five years or a shorter duration in accordance with retirementguidelines and as may be determined by the Board from time to time. All Directors otherthan Independent Directors are liable to retire by rotation unless otherwise approved bythe Members. One-third of the Directors who are liable to retire by rotation retire everyyear and are eligible for re-election.

The Independent Directors of your Company have confirmed that (a) they meet thecriteria of independence prescribed under Section 149 of the Act and Regulation 16 of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (‘Listing Regulations') (b) they are independent from themanagement of your Company and (c) they are not aware of any circumstance or situationwhich could impair or impact their ability to discharge duties with an objectiveindependent judgement and without any external influence. In the opinion of the Board theIndependent Directors fulfil the conditions prescribed under the Act and the ListingRegulations and are independent of the management of your Company.

Remuneration Policy

Details of your Company's Policy on remuneration of Directors Key Managerial Personneland other employees are provided in the ‘Report on Corporate Governance' forming partof the Report and Accounts.

Board Evaluation

The Nomination & Compensation Committee as reported in earlier years formulatedthe Policy on Board evaluation evaluation of Board Committees' functioning and individualDirector evaluation and also specified that such evaluation will be done by the Board.

In keeping with ITC's belief that it is the collective effectiveness of the Board thatimpacts Company's performance the primary evaluation platform is that of collectiveperformance of the Board as a whole. Board performance is assessed inter alia againstthe roles and responsibilities of the Board as provided in the Act the ListingRegulations and your Company's Governance Policy. The parameters for Board performanceevaluation have been derived from the Board's core role of trusteeship to protect andenhance shareholder value as well as to fulfil expectations of other stakeholders throughstrategic supervision of your Company; such parameters include securing alignment of yourCompany's goals with the nation's economic ecological and social priorities ensuringthat your Company has a clearly defined strategic direction for realisation of its visionand supporting your Company's management to meet challenges arising from the operating& policy environment in the country. Evaluation of functioning of Board Committees isbased on discussions amongst Committee members and shared by the respective CommitteeChairmen with the Board. Individual Directors are evaluated in the context of the roleplayed by each Director as a member of the Board at its meetings in assisting the Boardin realising its role of strategic supervision of the functioning of your Company inpursuit of its purpose and goals. The peer group ratings of the individual Directors arecollated by the Chairman of the Nomination & Compensation Committee and made availableto the Chairman of your Company.

While the Board evaluated its performance against the parameters laid down by theNomination & Compensation Committee the evaluation of individual Directors wascarried out against the laid down parameters anonymously in order to ensure objectivity.Reports on functioning of Committees were placed before the Board.

The Independent Directors Committee of the Board also reviewed the performance of theChairman other non-Independent Directors and the Board pursuant to Schedule IV to theAct and Regulation 25 of the Listing Regulations.


There were no changes in the Key Managerial Personnel of your Company.


The composition of the Audit Committee is provided under the section ‘Board ofDirectors and CommitteesRs in the Report and Accounts.

Statutory Auditors

Messrs. S R B C & CO LLP Chartered Accountants (‘SRBC') were appointed withyour approval as the Auditors of your Company for a period of five years till theconclusion of the 113th AGM. The Board on the recommendation of the Audit Committee hasrecommended for the approval of the Members the remuneration of SRBC for the financialyear 2022-23. Appropriate resolution seeking your approval to the remuneration of SRBC isappearing in the Notice convening the 111th AGM of your Company.

Cost Auditors

Your Board as recommended by the Audit Committee appointed the following CostAuditors for the financial year 2022-23:

(i) Messrs. ABK & Associates Cost Accountants for audit of Cost Recordsmaintained by your Company in respect of ‘Wood Pulp' and ‘Paper and Paperboard'products.

(ii) Messrs. S. Mahadevan & Co. Cost Accountants for audit of Cost Recordsmaintained in respect of all applicable products of your Company other than ‘WoodPulp' and ‘Paper and Paperboard' products.

Pursuant to Section 148 of the Act read with the Companies (Audit and Auditors) Rules2014 appropriate resolutions seeking your ratification to the remuneration of theaforesaid Cost Auditors are appearing in the Notice convening the 111th AGM of yourCompany.

Your Company maintains necessary cost records as specified by the Central Governmentunder Section 148(1) of the Act read with the Companies (Cost Records and Audit) Rules2014.

Secretarial Auditors

Messrs. Vinod Kothari & Company Practising Company Secretaries were appointed bythe Board as the Secretarial Auditors of your Company for the financial year ended 31stMarch 2022.

The Secretarial Auditors have confirmed that your Company has complied with theapplicable laws and that there are adequate systems and processes in your Companycommensurate with its size and scale of operations to monitor and ensure compliance withthe applicable laws.

The Report of the Secretarial Auditors pursuant to Section 204 of the Act is providedin the Annexure forming part of this Report.


During the year 14411700 Ordinary Shares of Rs 1/- each fully paid-up were issuedand allotted upon exercise of 1441170 Options under your Company's Employee Stock OptionSchemes. Consequently the Issued and Subscribed Share Capital of your Company as on 31stMarch 2022 stands increased to Rs 12323255931/- divided into 12323255931 OrdinaryShares of Rs 1/- each.

The Ordinary Shares issued during the year rank pari passu with the existing OrdinaryShares of your Company.


Disclosures with respect to Stock Options as required under Regulation 14 of theSecurities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity)Regulations 2021 (‘the Regulations') are available in the Notes to the FinancialStatements of the Company. The said disclosures forming part of the Financial Statementscan also be accessed on your Company's corporate website underthe section ‘Investor Relations'. During the year there has not been any materialchange in your Company's Employee Stock Option Schemes.

Your Company's Secretarial Auditors

Messrs. Vinod Kothari & Company Practising Company Secretaries have certifiedthat the Employee Stock Option Schemes of your Company have been implemented in accordancewith the Regulations and the resolutions passed by the Members in this regard.


The Investor Service Centre of your Company (‘ISC') accredited with ISO 9001:2015certification is registered with the Securities and Exchange Board of India as CategoryII Share Transfer Agent for providing in-house share registration and related services.ISC continues to focus on maintaining exemplary standards of investor servicing andproviding best-in-class services to the shareholders and investors while ensuringcompliance with the applicable statutory requirements.

The ‘Investor Relations' section on your Company's corporate website serves as a user-friendly reference for the shareholders andinvestors in respect of share related matters.


All contracts or arrangements entered into by your Company with its related partiesduring the financial year were in accordance with the provisions of the Companies Act2013 and the Listing Regulations. All such contracts or arrangements which were approvedby the Audit Committee were in the ordinary course of business and on arm's length basis.No material contracts or arrangements with related parties were entered into during theyear under review. Accordingly the disclosure of Related Party Transactions as requiredin terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules2014 in Form AOC -2 is not applicable for this year.


As required under Section 134 of the Companies Act 2013 your Directors confirmhaving:

a) followed in the preparation of the Annual Accounts the applicable accountingstandards with proper explanation relating to material departures if any;

b) selected such accounting policies and applied them consistently and made judgementsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of your Company at the end of the financial year and of the profit ofyour Company for that period;

c) taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act 2013 for safeguarding the assetsof your Company and for preventing and detecting fraud and other irregularities;

d) prepared the Annual Accounts on a going concern basis;

e) laid down internal financial controls to be followed by your Company and that suchinternal financial controls were adequate and were operating effectively; and

f) devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.


Your Company's Board of Directors is responsible for the preparation of theconsolidated financial statements of your Company and its Subsidiaries (‘the Group')Associates and Joint Venture entities in terms of the requirements of the Companies Act2013 (the Act) and in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified under Section 133 of the Act.

The respective Boards of Directors of the companies included in the Group and of itsassociates and joint venture entities are responsible for maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of each company and for preventing and detecting frauds and other irregularities;the selection and application of appropriate accounting policies; making judgements andestimates that are reasonable and prudent; and the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error. Such financial statements have beenused for the purpose of preparation of the consolidated financial statements by theDirectors of your Company as aforestated.


Compliance with the conditions of Corporate Governance

The certificate from your Company's Statutory Auditors Messrs. S R B C & CO LLPconfirming compliance with the conditions of Corporate Governance as stipulated under theListing Regulations is annexed.

Going Concern status

There is no significant or material order passed during the year by any regulatorcourt or tribunal impacting the going concern status of your Company or its futureoperations.

Annual Return

The Annual Return of your Company is available on its corporate website at SEBI.aspx .

Particulars of loans guarantees or investments

Details of Loans Guarantees or Investments covered under the provisions of Section 186of the Companies Act 2013 are provided in Notes 4 5 and 9 to the Financial Statementsas applicable.

Particulars relating to Conservation of Energy and Technology Absorption

Particulars as required under Section 134 of the Companies Act 2013 relating toConservation of Energy and Technology Absorption are also provided in the Annexure to thisReport.

Compliance with Secretarial Standards

Your Company is in compliance with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India and approved by the Central Government underSection 118(10) of the Act.


The total number of employees as on 31st March 2022 stood at 23829.

There were 220 employees who were employed throughout the year and were in receipt ofremuneration aggregating Rs 102 lakhs or more or were employed for part of the year andwere in receipt of remuneration aggregating Rs 8.5 lakhs per month or more during thefinancial year ended 31st March 2022. The information required under Section 197(12) ofthe Companies Act 2013 and the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is provided in the Annexure forming part of this Report.

Dividend Distribution Policy

Your Company's Dividend Distribution Policy approved by the Board on 18th March 2020may be accessed on its corporate website at distribution-policy.pdf .

Key Financial Ratios

Key Financial Ratios for the financial year ended 31st March 2022 are provided in theAnnexure forming part of this Report.


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 toyour Company and/or its Businesses are intended to identify such forward-lookingstatements. Your Company undertakes no obligation to publicly update or revise anyforward-looking statements whether as a result of new information future events orotherwise. Actual results performances or achievements could differ materially from thoseexpressed or implied in such forward-looking statements. Readers are cautioned not toplace undue reliance on these forward-looking statements that speak only as of theirdates. This Report should be read in conjunction with the financial statements includedherein and the notes thereto.


Your Company's ‘Triple Bottom Line' philosophy has over the years spurred thecreation of innovative business models that synergise the building of economicenvironmental and social capital. It is now universally evident that enterprises of thefuture will not only have to be agile consumer-centric innovative and digital-first butalso purpose-driven and responsibly competitive. With Digital and Sustainability as thebedrock of your Company's corporate strategy the superordinate goal of serving largernational priorities and creating value for all stakeholders has evolved into a newparadigm - ‘Responsible Capitalism' - an abiding strategy that focuses on extremecompetitiveness but in a manner that replenishes the environment and supports sustainablelivelihoods.

The strategic Vision of creating multiple drivers of growth through the pursuit ofmarket opportunities that best match institutional strengths has resulted in thedevelopment of strong Businesses of the future as well as a portfolio of winningworld-class brands and future-ready products. Today your Company is the leading FMCGmarketer in India a pre-eminent hotel chain and a globally acclaimed icon in greenhoteliering the clear market leader in the Indian Paperboards and Packaging industry apioneering trailblazer in farmer and rural empowerment through its Agri Business and aglobal exemplar in sustainable business practices. In the last two decades your Company'snon-cigarettes businesses have grown over 27-fold and presently constitute over two-thirdsof Net Segment Revenue.

At the heart of this transformation lies the power of synergy with seamless access foryour Company's new Businesses/initiatives to the deep and varied capabilities residentacross different parts of the enterprise and its world-class talent pool.

An extensive strategy reset has been undertaken in recent years to architect thestructural drivers that will power ITC's next horizon of growth and ensure that theenterprise remains future-ready consumer-centric and nimble. Each of your Company'sbusinesses has pivoted to create new frontiers for the future with enhancedcompetitiveness as well as sharper focus on cost management to strengthen leadership orrapidly enhance market standing in the case of newer segments. As a core element of theITC Next strategy your Company will continue to explore opportunities to craft disruptivebusiness models anchored at the intersection of Digital and Sustainability the twodefining trends in the ‘new normal' leveraging its institutional strengths.

In recent years the FMCG Businesses have delivered strong revenue growth along withsignificant margin expansion and are well poised to be rapidly scaled up.Multi-dimensional interventions have been made to strengthen the FMCG Businesses forsustained profitable growth. Following a strategic review of the business portfolio a fewyears ago your Company has restructured the Lifestyle Retailing Business during the year.At the same time the product portfolio has been strengthened in alignment with newopportunities and enterprise strengths with sharper focus on fortifying the coreaddressing adjacencies through world-class mother brands and building categories of thefuture to power growth. To accentuate consumer-centricity agility and enable sharperfocus in the context of the growing scale and complexity of operations the BrandedPackaged Foods Businesses have been reorganised into market centric clusters withintegrated and empowered teams. Focused interventions made in the recent past have alsoaugmented your Company's multi-channel go-to-market capability resulting in manifoldexpansion in the reach and availability of its products. Over the last five years marketand outlet coverage have grown 4x and 1.6x respectively while the network of stockists hasexpanded to 6.4x during the same period. Sharp-focused investments have augmentedcapability in emerging channels such as e-Commerce and Modern Trade resulting in stronggrowth in sales and enhanced market standing; a new vertical has also been developed toaddress the fast-growing Food Service segment. In addition investments towardsaccelerating agile and purposeful innovation with platform centricity optimising supplychain efficiencies digitisation and strategic partnerships have significantly enhancedcompetitiveness.

The impact of these multi-dimensional interventions is evident in the substantialmargin expansion of 650 bps in Segment EBITDA over the last five years even in the face ofsignificant inflationary headwinds witnessed during the year.

The Businesses will continue to leverage your Company's institutional strengths as akey source of sustainable competitive advantage viz. strong backward linkages with theAgri Business a deep & wide multi-channel distribution network cuisine knowledgeresident in the Hotels Business packaging knowhow and the robust R&D platformsnurtured by LSTC. Structural advantages arising out of distributed manufacturingfootprint anchored on state-of-the-art ICMLs strategically located proximal to largedemand centres will be increasingly leveraged to drive rapid growth of the FMCGBusinesses. With enhanced scale and margin expansion the FMCG Businesses are expected tomake increasingly higher contributions to your Company's profit pool thereby setting thestage for further value enhancement opportunities.

The Agri Business has been a strong backbone and a key source of competitive advantagefor your Company's FMCG and Cigarettes Businesses. The scope and scale of operations havegrown manifold over the years and currently encompass over 4 million tonnes in 22 statesand over 20 agri-value chains. In recent years the Business has pivoted its strategicfocus towards rapidly scaling up its Value-Added Agri Products portfolio to accelerategrowth. With policy enablers in place your Company is developing NextGen agriculturevalue chains that are digitally enabled and climate smart and re-structuring the back-endinto a robust network of Farmer Producer Organisations. This will further strengthen thesourcing network and facilitate the development of customised supply chains for traceableand identity-preserved sourcing of agri-commodities and in augmenting the productportfolio with the addition of value-added products such as staples for the Food Servicesegment fresh and frozen fruits & vegetables medicinal and aromatic plant extractsetc. Towards enhancing the competitiveness of domestic agri-value chains fostering newbusiness models and further augmenting value creation opportunities your Company ispiloting ITCMAARS (Metamarket for Advanced Agriculture and Rural Services) - acrop-agnostic ‘phygital' full stack AgriTech platform integrating NextGenagri-technologies and solutions - to seamlessly deliver hyperlocal and personalisedsolutions to the farming community whilst creating new and scalable revenue streams andstrengthening sourcing efficiencies. The agility and depth of your Company's institutionalcapabilities was demonstrated by leveraging opportunities in the global markets to enhanceshare of India's exports in agri-commodities.

The Paperboards Paper and Packaging Businesses have made significant progress inrecent years in terms of enhanced scale and profitability improvement. Strategicinvestments have been stepped up in areas such as pulp import substitution proactivecapacity augmentation in Value Added Paperboards segment decarbonisation of operationsapplication of Industry 4.0 and towards nurturing robust innovation platforms. The focusgoing forward is on driving cutting-edge innovation to rapidly scale up single use plasticsubstitutes as a new vector of growth building structural advantage through product mixenrichment and scaling up the use of emergent technologies such as Industry 4.0 to enhanceoperational efficiency reduce wastage and costs.

The Hotels Business has established a strong footprint of iconic properties and F&Bbrands on the back of an investment-led growth strategy. In recent years the strategy hasbeen reset to pursue an ‘asset-right' growth path and augment revenue streams whilesimultaneously leveraging your Company's world- class properties to drive growth. Asreported earlier your Company will continue to pursue alternate structures in line withindustry recovery dynamics towards engendering the next horizon of growth as alsoenhancing value creation.

Your Company's powerful innovation engine across the portfolio of Businesses based onsharp consumer insights superior vectors of differentiation and agile executioncapabilities remains a strong source of sustainable competitive advantage.

The state-of-the-art Life Sciences & Technology Centre at Bengaluru with itsmulti-dimensional science-based research platforms and centres of excellence anchors theinnovation engine across your Company and is effectively complemented throughcollaborations and partnerships with several prestigious institutions in India and acrossthe world.

Your Company continues to build a dynamic ‘Future-Tech' enterprise powered bystate-of-the-art digital technologies and infrastructure across the value chain addingsignificant impetus to digital marketing digital commerce digital products and digitaloperations. Your Company today is a pioneer in adoption of cutting-edge digitaltechnologies across strategic impact areas spanning Intelligent new-age insights thatreimagine Consumer Experience Business Model Transformation Smart Operations andEmployee Experience. Initiatives such as ‘DigiNext' and ‘Young Digital LeadersForum' are accelerating your Company's digital journey and inculcating a data driven and‘digital first' culture across the organisation.

As the world prepares for a post-pandemic future your Company is actively workingtowards its Sustainability 2.0 agenda which calls for inclusive strategies that cansupport sustainable livelihoods pursue newer ways to fight climate change enable thetransition to a net zero economy work towards ensuring water security for all and createan effective circular economy. With its bold Sustainability 2.0 ambitions your Company issetting the bar higher with a multi-dimensional contribution to societal value creationand remains committed to making a meaningful contribution to the Nation's future whileretaining its status as a sustainability exemplar.

Disruptive business models and value propositions anchored at the intersection ofDigitalisation and Sustainability form an integral part of your Company's strategicroadmap going forward. NextGen business models such as ITCMAARS in the agri-ecosystemtech-enabled cloud kitchens in the food service space sustainable paperboards andpackaging solutions customised for end-use with focus on single use plastic substitutesare being piloted/progressed to actualise these opportunities. Value-accretiveacquisitions joint venture and collaborations continue to be proactively pursued towardsaccelerating growth and value creation.

The operating environment during the year continued to remain challenging and wasmarked by heightened uncertainty and volatility due to the COVID pandemic continuedgeopolitical tension inflationary headwinds on the back of commodity super cycles andextended supply chain disruptions. The post-pandemic recovery momentum was weakened incourse of the year by new strains of COVID and an unprecedented spike in commodity pricesdue to global supply chain disruptions container shortages and port congestion.

Inflation continues to remain a key monitorable for your Company in the near term.

In the face of such challenges the resilience agility and adaptive capacitydemonstrated by your Company is a testament to the talent determination and untiringefforts of its pool of dedicated professionals associates and partners. Lessons from theprior waves of the pandemic were leveraged to navigate the dynamic environment in acompetitively superior manner. Your Company's diverse talent pool of professionalentrepreneurs ‘proneurs' have the unique opportunity to create categories productsand brands from the ground up. This talent pool is being nurtured not only to createwinning products and services for today but also to seize larger opportunities as theyemerge from the expanding horizons of your Company's businesses. The strategicinterventions and sustainable competitive advantages of your Company have set the stagefor leveraging emergent market opportunities and engendering further value enhancement forstakeholders.

Your Company's Board and employees are inspired by the Vision of sustaining ITC'sposition as one of India's most admired and valuable companies creating enduring valuefor all stakeholders including the shareholders and the Indian society. The vision ofenlarging your Company's contribution to the Indian economy is driven by its ‘NationFirst: Sab Saath Badhein' credo anchored on the core values of Trusteeship TransparencyEmpowerment Accountability and Ethical Citizenship which are the cornerstones of yourCompany's Corporate Governance philosophy.

Inspired by this Vision driven by Values and powered by internal Vitality yourDirectors and employees look forward to the future with confidence and stand committed tocreating an even brighter future for all stakeholders.

On behalf of the Board
Kolkata S. PURI Chairman & Managing Director
18th May 2022 R. TANDON Director