The Statutory Audit Report of ITC Ltd.

Year end: Mar '13

Master of Management Studies (MMS) Mumbai University

Academic Year: 2013-2014 Submitted By

Nikhil D. Gavande Roll No. 11

Chetanas R.K. Institute of Management & Research Bandra (East), Mumbai 400051.

Audit Report (ITC)

Year End : Mar '13

1. Following is the audit report of ITC LIMITED (the Company) accompanying financial statements, which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. Managements Responsibility for the Financial Statements

2. The Companys Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (the Act) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. According to the information and explanations given to us, the nature of the Companys business / activities during the year are such that clauses (v), (x), (xii), (xiii), (xv), (xviii), (xix) and (xx) of paragraph 4 of the Order are not applicable to the Company. In respect of the other clauses, we report as under: (i) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) During the year, in our opinion, a substantial part of fixed assets has not been disposed off by the Company. (ii) In respect of its inventory: (a) As explained to us, the inventories other than material lying with third parties (which have substantially been confirmed) were physically verified during the year by the Management at reasonable intervals. (b) According to the information and explanations given to us, the procedures of physical verification of inventory followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. (c) According to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. (iii) The Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. (iv) According to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. (v) According to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no Order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal on the Company. (vi) The Company has an internal audit system commensurate with the size of the Company and the nature of its business.

(vii) The cost records maintained by the Company, as prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete. (viii) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion: (a) The Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities. (b) As at 31st March, 2013, the following are the particulars of dues on account of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess matters that have not been eposited on account of any dispute:
Period to which Amount the amount (Rs. in relates (various Forum where pending crores) years covering the period)

Name of the statute

Nature of the dues

Sales Tax and VAT Laws

Sales tax and VAT

104.02 5.29 165.83

1987-2013 1994-2007 1994-2008 2008-2010 2005-2007 1996-2012 1973-2012

Appellate Authority- upto Commissioners/Revisional authorities level Appellate Authority- Tribunal level High Court Appellate Authority- upto Commissioners/Revisional authorities level Appellate Authority- Tribunal level Appellate Authority- upto Commissioners/Revisional authorities level Appellate Authority- Tribunal level

Customs Act, 1962

Customs duty

0.05 1.5

Central Excise Act, 1944

Excise duty

9.7 86

1.43 0.31 Finance Act, 1994 Service Tax 3.28 24.54 Income Tax Act, 1961 Income tax 1.34

2005-2010 1991-1996 2004-2012 2005-2011 1990-2006

High Court Supreme Court Appellate Authority- upto Commissioners/Revisional authorities level Appellate Authority- Tribunal level Appellate Authority- upto Commissioners/Revisional authorities level

Out of the total disputed dues aggregating Rs. 403.29 Crores as above, Rs. 306.82 Crores has been stayed for recovery by the relevant authorities. (ix) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or to debenture holders during the year. (x) According to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has maintained proper records of transactions and contracts in respect of shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name. (xi) According to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained. (xii) According to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on shortterm basis have not been used during the year for long-term investment. (xiii) According to the information and explanations given to us, no fraud by the Company and no significant fraud on the Company has been noticed or reported during the year.

Balance Sheet of ITC

in Rs. Cr. Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 790.18 790.18 0 0 21,497.67 0 22,287.85 0 66.4 66.4 22,354.25 Mar '13

12 mths

12 mths

12 mths

12 mths

781.84 781.84 0 0 17,957.00 53.05 18,791.89 1.77 77.32 79.09 18,870.98 Mar '12

773.81 773.81 0 0 15,126.12 53.34 15,953.27 1.94 97.26 99.2 16,052.47 Mar '11

381.82 381.82 0 0 13,628.17 54.39 14,064.38 0 107.71 107.71 14,172.09 Mar '10

377.44 377.44 0 0 13,302.55 55.09 13,735.08 11.63 165.92 177.55 13,912.63 Mar '09

12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets 16,679.17 5,469.83 11,209.34 1,487.79 7,060.29 6,600.20 1,163.34 3,615.00 11,378.54 2,881.47 0 14,260.01 0 6,404.43 5,258.75 11,663.18 2,596.83 0 22,354.25

12 mths

12 mths

12 mths

12 mths

13,926.34 4,819.66 9,106.68 2,572.06 6,316.59 5,637.83 986.02 140.5 6,764.35 1,952.54 2,678.43 11,395.32 0 6,108.60 4,411.07 10,519.67 875.65 0 18,870.98

12,765.82 4,420.75 8,345.07 1,333.40 5,554.66 5,267.53 907.62 98.77 6,273.92 2,173.89 2,144.47 10,592.28 0 5,668.10 4,104.84 9,772.94 819.34 0 16,052.47

11,967.86 3,825.46 8,142.40 1,008.99 5,726.87 4,549.07 858.8 120.16 5,528.03 1,929.16 1,006.12 8,463.31 0 4,619.54 4,549.94 9,169.48 -706.17 0 14,172.09

10,558.65 3,286.74 7,271.91 1,214.06 2,837.75 4,599.72 668.67 68.73 5,337.12 2,150.21 963.66 8,450.99 0 4,121.59 1,740.49 5,862.08 2,588.91 0 13,912.63

Contingent Liabilities Book Value (Rs)

2,122.83 28.21

2,533.61 23.97

2,228.40 20.55

258.73 36.69

261.36 36.24

Profit & Loss account of ITC

in Rs. Cr. Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 29,901.27 0 29,901.27 938.7 935.83 31,775.80 12,531.44 550.11 1,387.01 0 0 5,741.03 0 20,209.59 Mar '13

12 mths

12 mths

12 mths

12 mths

35,247.25 10,157.14 25,090.11 761.25 149.3 26,000.66 9,933.19 453.19 1,265.41 634.8 2,691.41 1,339.60 0 16,317.60 Mar '12

30,633.57 9,512.74 21,120.83 775.76 308.42 22,205.01 8,601.13 421.68 1,178.46 560.57 2,408.03 1,120.89 -60.54 14,230.22 Mar '11

26,399.63 7,832.18 18,567.45 545.05 -447.54 18,664.96 7,140.69 387.34 1,014.87 413.79 2,093.87 1,008.91 -71.88 11,987.59 Mar '10

23,247.84 8,262.03 14,985.81 426.21 630.3 16,042.32 6,864.96 394.12 903.37 402.88 1,684.41 516.9 -72.55 10,694.09 Mar '09

12 mths Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) 10,627.51 11,566.21 86.47 11,479.74 795.56 0 10,684.18 0 10,684.18 3,265.79 7,418.39 7,678.15 0 4,148.46 705.03 79,018.33 9.39 525 28.21

12 mths 8,921.81 9,683.06 87.02 9,596.04 698.51 0 8,897.53 2.51 8,900.04 2,737.08 6,162.37 6,384.41 0 3,518.29 570.75 78,184.24 7.88 450 23.97

12 mths 7,199.03 7,974.79 78.11 7,896.68 655.99 0 7,240.69 35.21 7,275.90 2,287.69 4,987.61 5,629.09 0 3,443.47 558.62 77,381.44 6.45 445 20.55

12 mths 6,132.32 6,677.37 90.28 6,587.09 608.71 0 5,978.38 48.65 6,027.03 1,965.43 4,061.00 4,846.90 0 3,818.18 634.15 38,181.77 10.64 1,000.00 36.69

12 mths 4,922.02 5,348.23 47.65 5,300.58 549.41 0 4,751.17 81.52 4,832.69 1,565.13 3,263.59 3,829.13 0 1,396.53 237.34 37,744.00 8.65 370 36.24

Cash Flow of ITC

in Rs. Cr. Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths

12 mths

12 mths

12 mths

12 mths

Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents

10684.18 6709.89

8897.53 6015.59

7268.16 5264.24

6015.31 4630.65

4825.74 3279.03

-3580.78 -3232.55

-2210.19 -3246.55

-616.22 -3551.64

-3531.56 -1009.86

-1260.74 -1556.15

-103.44 259.34 155.9

558.85 2178.92 2737.77

1096.38 1082.93 2179.31

89.23 993.7 1082.93

462.14 570.25 1032.39

Source: Dion Global Solutions Limited