ITC Ltd
Directors Reports
#MDStart#
Management Discussion and Analysis
For the Financial Year Ended 31st March, 2022
SOCIO-ECONOMIC ENVIRONMENT
After a tumultuous 2020, which witnessed unprecedented disruption to human life and
economic activity across the globe, the world economy witnessed a sharp recovery on the
back of enhanced vaccination coverage and continued fiscal and monetary stimuli across
countries. As per IMF estimates, global growth in 2021 stood at 6.1% (Vs. 3.1% decline in
2020); 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 of
the virus and an unprecedented spike in commodity prices due to global supply chain
disruptions, container shortages and congestion in ports.
Even prior to the ongoing Russia-Ukraine conflict, inflation had started surging in
many economies due to soaring commodity prices and pandemic-induced supply-demand
imbalances. This led central banks such as the US Federal Reserve, European Central Bank
and the Bank of England to bring forward the timing of tightening monetary conditions in
their respective countries. The situation was exacerbated with the ongoing Russia-Ukraine
conflict that caused sharp escalation and volatility in agri, fuel and crude-linked
commodity prices. Persistently elevated and sticky inflation has emerged as a key concern
globally. As per IMF, global inflation in 2022 is projected at 7.4% - the highest in 26
years. In some Advanced Economies, including the United States and certain European
countries, inflation has reached multi-decadal highs. In Emerging Markets & Developing
Economies, rise in food and fuel prices poses significant risk to growth prospects.
Consequently, central banks, the world over, are increasingly pivoting from supporting
growth to combating inflation.
According to the latest IMF estimates, aggregate global economic growth is estimated at
3.6% in 2022, representing a downward adjustment of 80 bps to earlier estimates. Advanced
Economies are projected to grow by 3.3% with growth in major economies such as the United
States 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 and
sharp decline in Russia. The amalgam of recent events, including the latest surge in COVID
cases in certain regions, continued geopolitical tensions, inflationary headwinds on the
back of commodity super cycles & ‘greenflation', and extended supply chain
disruptions, pose significant downside risks to global economic prospects in the year
ahead.
FY 2021-22 turned out to be another challenging year for the Indian economy, marked by
heightened uncertainty and volatility due to the COVID pandemic. The year began with the
second wave of the pandemic having a devastating socio-economic impact in the country
followed by a sharp drop in its intensity, which aided smart recovery in economic activity
that reached pre-pandemic levels towards the end of the second quarter. Even as economic
prospects started looking up, the country was hit hard by the third wave with new cases
rising exponentially across major cities and halting the recovery momentum. Just as the
third wave had abated in India, geopolitical tensions in Europe sparked off a fresh round
of uncertainty in the operating environment.
Amidst such a challenging backdrop, the Indian economy rebounded during the year
growing by 8.9%, albeit on a low base. The Government of India continued to make concerted
efforts, through several path-breaking initiatives across the areas of healthcare,
infrastructure, social welfare and digital, to support various sections of the economy
during these turbulent times which helped accelerate the pace of resumption of economic
activities over the year. These include an effective and focused vaccination programme,
targeted localised restrictions during peak caseloads, support to economically weak
sections of society and assistance to sectors most impacted by the pandemic.
The recovery was, however, uneven with different sectors of the economy and income
classes experiencing varying degrees of impact. The external sector was a bright spot in
the economy with India's merchandise exports surging 43% to a record high of US$ 418
billion during the year. Foreign currency reserves also remained robust, despite increase
in imports with rising levels of activity. Tax collections remained buoyant during the
year with record GST collections on the back of pick-up in economic activity, enhanced
compliance and efficient administration.
On the other hand, private consumption remained subdued and below its pre-pandemic
growth path, rural demand witnessed a marked slowdown and private capital expenditure did
not see any material improvement although signs of an incipient revival emerged in certain
sectors. Unprecedented rise in commodity and crude oil prices led to persistently sticky
and elevated inflation with March 2022 CPI hitting a 17-month high of 6.95%, resetting
inflation expectations and the interest rate trajectory going forward.
Up until January 2022, near-term prospects for the Indian economy seemed extremely
promising - with all sectors of the economy, including the contactintensive service
sector, having made steady recovery. However, sustained inflationary headwinds and
outbreak of the Russia-Ukraine conflict leading to extended global disruptions and
spiraling of commodity prices have led to downward revisions to the growth forecast for
2022. The Indian economy is now estimated to grow by 7.2% in FY 2022-23, driven by
Government capital expenditure and anticipated pick-up in the private capex cycle. A
favourable monsoon coupled with disruptions in global supply chains are expected to
provide 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 of
the economy and release of pent-up demand for contact-intensive services, including
resumption of business and international travel. Continued geopolitical tensions, extended
global supply chain disruptions and elevated inflation pose key downside risks for the
year ahead.
Even as the Indian economy faces multi-dimensional challenges in the short term, it
remains one of the most dynamic major economies in the world with immense headroom for
growth. A favourable demographic profile, rapid urbanisation and increasing affluence
represent some of the key structural drivers of growth of the Indian economy. The
Government of India's multi-dimensional reforms framework has the potential to unleash a
quantum leap in the country's growth agenda. Several transformative economic reforms have
been undertaken in recent years to enhance competitiveness and foster inclusive growth.
These include the implementation of Goods and Services Tax (GST), Insolvency and
Bankruptcy Code (IBC), Real Estate (Regulation and Development) Act, direct tax reforms
and revision in Micro, Small & Medium Enterprises (MSME) norms. The National
Infrastructure Pipeline, PM Gati Shakti, National Industrial Corridors, Smart Cities
Mission and PM Awas Yojana are some of the key interventions that are transforming the
country's infrastructure landscape. The new Labour Code which has done away with a number
of archaic legislations and investment boosting measures like sector-focused Production
Linked Incentive (PLI) Schemes are expected to catalyse the manufacturing sector and
enhance its competitiveness. A robust digital infrastructure has been put in place, with
Unified Payments Interface (UPI), Jan Dhan-Aadhaar-Mobile trinity and several other
initiatives under Digital India paving the way for democratising technology and
connectivity to bring about the next phase of financial inclusion in the country. Focused
initiatives in the rural and agri sector such as PM KISAN, Pradhan Mantri Garib Kalyan
Anna Yojana (PMGKAY), central scheme for Farmer Producer Organisations (FPOs) and rural
electrification programme amongst others, are expected to engender inclusive growth.
As the economy faces the immediate challenges of muted consumption, persistently high
inflationary headwinds and supply chain disruptions, policy interventions would need to be
sharply focused on supporting sustainable livelihoods and fostering inclusive growth. The
growth oriented initiatives announced by the Government in the visionary Union Budget 2022
including provision of food, healthcare and social security benefits to the vulnerable,
thrust on rural and agri sector, measures to raise farm incomes and focus on public
capital expenditure to crowd in private investments are expected to bolster the growth
momentum and also enhance competitiveness of the Indian economy. Structural support would
also need to be provided to sectors that have large multiplier effects on employment and
the economy. These include agri-based industries such as food processing, tourism, travel
& hospitality and domestic agri and wood-based industries, amongst others. Development
of robust value chains to support and strengthen these sectors remains critical to
achieving such multiplier effects and realising India's goal of becoming a US$ 5 trillion
economy.
As reported in earlier years, enhancing agricultural productivity and value addition to
international standards, while simultaneously improving market linkages, remain critical
to enhance the competitiveness of the agricultural sector and drive significant increase
in farmersRs income. India is the leading producer worldwide of several commodities,
including pulses, spices, fruits such as mangoes, bananas, etc.; it is also the second
largest producer of rice and has the largest population of buffaloes globally. However,
India's agri exports aggregating appx. US$ 50 billion represent a global market share of
less than 3%.
Expert studies indicate the potential to double India's agri exports by strengthening
the competitiveness of agri-value chains in areas that are aligned to global demand and
where the country has inherent advantages. This calls for a transformational shift of the
agri ecosystem from the conventional production-centric supply chains to demand-responsive
value chains anchored by market players.
It is pertinent to note that food and dietary patterns are fast evolving across the
globe with sustainable sourcing becoming increasingly mainstream.
Such shifts accentuate the need to enhance the competitiveness of agri-value chains in
order to cater to the dynamic market requirements of the future. Achieving scale and
productivity 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 to
equal the total food production achieved over the past eight millennia, in order to meet
the burgeoning global demand over such time. The Government's initiatives to promote FPOs
in order to enhance market access for farmers and leverage economies of scale are expected
to reap rich dividends for the agri sector in the medium term. FPOs have a tremendous
potential to serve as major enablers in augmenting farm livelihoods, by facilitating a
crucial link between markets and individual farmers, especially those with small and
marginal land holdings. In this context, your Company has adopted targeted collaborative
models to multiply the scale and impact of its agri and rural interventions.
This collaborative approach, as opposed to a traditional transactional approach, can
contribute meaningfully towards building next generation agriculture that is climate
resilient and capable of supporting gainful livelihoods. Digitalisation of agriculture
also offers the potential to increase productivity and foster structural changes across
the value chain thereby enabling efficient use of resources. In line with its commitment
to bring the power of cutting-edge digital technologies and unlock the potential of
India's farmers, your Company has launched ITCMAARS (Metamarket for Advanced Agriculture
and Rural Services).
This digitally powered platform will empower the farming community by delivering
customised solutions to stakeholders by synergistically integrating NextGen
agri-technologies. Further details on this transformative initiative are provided in the
Agri Business section of this report.
As reported in earlier years, it is pertinent to note that a substantial quantum of
food is wasted along the chain in India, depending on the inherent perishability of the
crop and the season. Higher levels of food processing in the economy can create a much
larger pull for quality agri-commodities, thereby reducing farm wastages and raising farm
incomes. This would require focused investments in developing product-specific
climate-controlled infrastructure as well as in branded products that benefit large
agri-value chains. Corporate participation is essential not only to invest in requisite
infrastructure, 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 a
multiplier effect which will lead to significant job creation, enhance rural incomes and
help manage food inflation. In this context, the recently announced PLI Scheme for the
Food Processing sector, with an estimated outlay of Rs 10900 crores, is expected to play a
pivotal role in boosting investments, agri exports, farmer incomes, employment generation
and building Indian brands for the global market. Your Company has been included under the
Scheme for several of its Branded Packaged Foods Businesses, details of which are provided
in the relevant section.
Similarly, the Agro-forestry sector, as a source of raw material for wood-based
industry, is woefully constrained by policies that not only impede job creation in India
but also promote avoidable imports. Recent initiatives announced in the Union Budget 2022
to provide financial assistance to members of marginalised communities taking up
Agro-forestry is a good starting point to reverse this situation. Supportive policies in
this area would go a long way in enhancing sustainable livelihoods while simultaneously
augmenting the Nation's environmental capital.
The integrated nature of your Company's business models along with strategic
investments to enhance efficiencies across its operating segments - including
agri-commodity sourcing expertise for the Branded Packaged Foods Businesses and
cost-competitive fibre supply chain along with in-house pulp manufacturing capability of
the Paperboards & Specialty Papers Business - is a key source of competitive
advantage, especially against the backdrop of severe inflationary headwinds. Your
Company's interventions across operating segments are aligned to the national priorities
of enhancing competitiveness of Indian agriculture and industry, generating large-scale
employment opportunities and supporting sustainable livelihoods, driving import
substitution by enhancing the competitiveness of domestic agri-value chains and industry,
creating national brands to maximise value capture in India, increasing Indian agri
exports and promoting sustainable business practices. Investments made by your Company
continue 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 activities
in 27 backward districts of eight states under the Aspirational Districts programme, was
successfully 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 training
being imparted on package of practices appropriate for the dominant crops of the region as
well as towards livestock rearing. Your Company recognises the critical role of technology
and the digital revolution towards fostering inclusive and sustainable growth to reduce
social inequity. Towards this end, digital training platforms were leveraged during the
year through customised apps together with the formation of more than 6,200 WhatsApp
groups in around 18,900 villages, building capacity of 5.9 lakh farmers to achieve the
objectives of your Company's collaborative initiative with NITI Aayog. These interventions
have led to improvement in yields and reduction in cultivation costs, thereby augmenting
farmer incomes by up to 60%.
Your Company has also partnered with the State Government of Andhra Pradesh towards
improving the quality of chilli produced in the country to meet global standards. A Public
Private Partnership programme - ‘Integrated Agri-Extension Platform for Chilli Farm
Value Chain Development' - has been conceptualised under which 40,000 farmers covering
about 100,000 acres are expected to be benefited by 2025. In FY 2021-22, the programme
covered over 16,400 farmers and 52,500 acres across 107 villages. Improved quality, farm
productivity and higher share of farm gate sales enabled farmers covered under the project
to generate additional income.
Your Company is also working towards developing village level institutions and
fostering micro entrepreneurship by promoting custom hiring centres for farm
mechanisation, post-harvest product management infrastructure and community managed seed
banks for self-reliance in quality seed material. Environmentally sustainable farm
practices including zero-till sowing of wheat, direct seeding of rice, micro-irrigation
and watershed development continue to be promoted.
The farm sector faces enormous threats arising out of climate change as evident from
the growing number of extreme weather events such as droughts and floods. Given the
vulnerabilities, it is critical to strengthen climate resilience and adaptability of the
agri-food sector. In this context, your Company's interventions in collaboration with
CGIAR's ‘Climate Change and Food Security Programme' to build climate smart villages
was expanded to over 2,500 villages across 11 states and supported farmers in the
management of risks arising from erratic and extreme weather events. Your Company, through
stakeholder consultations and extensive research has prepared state level agriculture
climate change adaptation plans for three states i.e. Rajasthan, Maharashtra and Madhya
Pradesh and continues to engage with the respective governments for adoption of the same.
Further, your Company's Climate Smart Village intervention in Madhya Pradesh demonstrated
an average increase in yield of 38% and 15% in soyabean and wheat respectively, over the
baseline. Along with reduction in cost of cultivation, this has led to an average increase
in net income by 93% in soyabean and 46% in wheat over the baseline. According to CGIAR
estimates, average Green House Gas emissions reduced by 66% for soyabean and 13% for wheat
as compared to the baseline.
Your Company continues to be a carbon, water and solid waste re-cycling positive
organisation and is a global exemplar in sustainability.
Demand side management is another critical component of your Company's Water
Stewardship programme. Recognising the critical imperative of reducing water use,
especially 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 been
covered till date across 11 states. Various studies indicate potential water savings to
the tune of 497 million cubic metres per annum through micro irrigation technologies and
crop-specific agronomical practices.
In Kapurthala District, Punjab, your Company under its flagship programme of ‘ITC
Mission Sunehra Kal' has, over the last four years, implemented solutions that have
effectively substituted the burning of paddy stubble by farmers. During the year, the
programme covered 1.8 lakh acres with appx. 87% of the area witnessing total stoppage of
stubble burning, thereby avoiding appx. 1.3 lakh tonnes of carbon release into the
atmosphere.
Although India has appx. 18% of the world population, its share of natural resources is
disproportionately 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 the
national and corporate level, to fashion strategies that foster sustainable, equitable and
inclusive growth.
It is your Company's belief that businesses can bring about transformational change by
pursuing innovative business models that synergise the creation of sustainable livelihoods
and the preservation of natural capital while enhancing shareholder value.
This ‘Triple Bottom Line' approach to creating larger ‘stakeholder value', as
opposed to merely focusing on uni-dimensional ‘shareholder value' creation, is the
driving force that defines your Company's sustainability vision and its growth path into
the future.
Your Company is a global exemplar in RsTriple Bottom Line' performance. The focus on
creating unique business models that generate substantial livelihoods across the value
chains has led to your Company's Businesses supporting over six million sustainable
livelihoods, 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 the
Dow Jones Sustainability Emerging Markets Index - a reflection of being a sustainability
leader 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-' for
both Climate Change and Water Security (Asia and Global average at ‘B-' for climate
change and ‘B' for water security) by CDP, a reputed independent global platform for
disclosures on environmental impacts.
As a testament to your Company's ‘Triple Bottom Line' philosophy and Responsible
Luxury ethos, ITC Windsor, Bengaluru achieved the distinction of being the first hotel in
the world to achieve LEED? Zero Carbon Certification. ITC Grand Chola, Chennai (the
largest hotel in the world to receive such certification), and ITC Gardenia, Bengaluru
also received the LEED? Zero Carbon Certification during the year. These properties are
the 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 more
secure 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 extensive
decarbonisation programmes across its value chain. With its bold Sustainability 2.0
agenda, your Company is setting the bar higher, and remains committed to making a
meaningful contribution to the Nation's future while retaining its status as a
sustainability exemplar. Further details on this subject are available in the
Sustainability section of this Report.
FINANCIAL PERFORMANCE
The operating environment during the year remained extremely challenging and was marked
by heightened uncertainty and volatility due to the COVID pandemic and unprecedented
inflationary headwinds; geopolitical tensions towards the end of the year exacerbated the
situation. Your Company demonstrated tremendous resilience and navigated the dynamic
environment with speed and agility leveraging the experiences from prior waves of the
pandemic. In spite of significant disruptions during the year, your Company's
consumer-centricity, agility in seizing market opportunities, focus on execution
excellence and proactive strategic interventions enabled it to post robust growth in
Revenues and Profits, surpassing pre-pandemic levels.
Overall for FY 2021-22, Gross Revenue at Rs 59101.09 crores increased by 22.7%, while
EBITDA increased by 22.0% to Rs 18933.66 crores. Profit Before Tax at Rs 19829.53 crores
grew 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 Rs
15631.68 crores (previous year Rs 13277.93 crores). Earnings Per Share for the year stood
at Rs 12.22 (previous year Rs 10.59).
- The FMCG-Others Segment turned in a resilient performance with Segment Revenue
growing by 8.6% amidst subdued demand conditions.
After a relatively muted first half, revenue in the second half of the year witnessed
doubledigit growth. Staples and Convenience Foods remained resilient even as the pace of
revenue growth moderated on a relatively high base. Discretionary/Out-of-Home categories
recorded strong growth surpassing pre-pandemic levels driven by progressive improvement in
mobility.
The Health & Hygiene portfolio witnessed demand volatility in line with COVID
caseload intensity while remaining significantly above pre-pandemic levels. Progressive
resumption of physical classes at educational institutions led to gradual recovery in the
Education & Stationery Products Business; however, sales remained below pre-pandemic
levels. Segment EBITDA for the year grew by 10.0% to Rs 1448.97 crores with margins being
sustained at 9.1% in spite of unprecedented inflationary headwinds. The unprecedented
increase in prices of key inputs was mitigated through focused cost management
interventions across the value chain, premiumisation, product mix enrichment, judicious
pricing actions and fiscal incentives. Inflation continues to remain a key monitorable for
the Segment in the near term.
- The FMCG-Cigarettes Segment rebounded during the year on the back of progressive
normalisation of economic activity and concerted actions to reinforce market standing
through strategic portfolio interventions and enhancing product availability backed by
superior on-ground execution. Volumes surpassed pre-pandemic levels in the latter half of
the year.
- After an extremely challenging FY 2020-21, the Hotels Segment witnessed smart
recovery driven by the domestic leisure and wedding segments; business travel also saw
progressive improvement, albeit remaining well below pre-pandemic levels. Pick-up in
revenues together with relentless focus on cost management resulted in a positive swing of
Rs 346.63 crores in Segment EBITDA, despite considerable disruptions caused by the two
waves of the pandemic during the year.
- The Agri Business Segment delivered stellar performance with Segment Revenue and
Results growing by 28.7% and 25.6% respectively.
This was driven by strong growth in wheat, rice, spices and leaf tobacco exports on the
back of strong customer relationships, robust sourcing network and agile execution.
- The Paperboards, Paper & Packaging Segment recorded strong growth of 36.0% in
Segment Revenue and 54.7% in Segment Results.
This was aided by demand revival across most end-user segments, higher realisations,
product mix enrichment and exports. Robust margin expansion of appx. 270 bps was achieved
leveraging the integrated nature of the business model, Industry 4.0 and other digital
interventions.
The Directors of your Company are pleased to recommend a Final Dividend of Rs 6.25 per
Ordinary Share of Rs 1/- each for the financial year ended 31st March, 2022. Together with
the Interim Dividend of Rs 5.25 per share paid on 4th March, 2022, the total Dividend for
the financial year ended 31st March, 2022, amounts to Rs 11.50 per share (previous year Rs
10.75 per share). Total cash outflow on account of Dividends (including Interim Dividend
of Rs 6469.48 crores paid in March 2022) will be Rs 14171.51 crores.
VALUE-ADDED AND CONTRIBUTION TO EXCHEQUER
Over the last five years, the Value-Added by your Company, i.e. the value created by
the economic activities of your Company and its employees, aggregated over Rs 250000
crores, of which over Rs 172000 crores accrued to the Exchequer.
Including the share of dividends paid and retained earnings attributable to government
owned institutions, your Company's contribution to the Central and State Governments
represented over 75% of its Value-Added during the year.
Your Company has, over the years, ranked amongst the Top 3 Indian corporates in the
private sector in terms of Contribution to Exchequer.
FOREIGN EXCHANGE EARNINGS
Your Company continues to view foreign exchange earnings as a priority. All Businesses
in your Company's portfolio are mandated to engage with overseas markets with a view to
testing and demonstrating international competitiveness and seeking profitable
opportunities for growth. Foreign exchange earnings of the ITC Group over the last ten
years aggregated nearly US$ 8.2 billion, of which agri exports constituted 59%. Earnings
from agri exports, which effectively link small farmers with international markets, are an
indicator of your Company's contribution to the rural economy.
During the financial year 2021-22, your Company and its subsidiaries earned Rs 11472
crores in foreign exchange. The direct foreign exchange earned by your Company more than
doubled to Rs 9779 crores, mainly on account of exports of agri-commodities.
Your Company's expenditure in foreign currency amounted to Rs 2756 crores, comprising
purchase of raw materials, spares and other expenses of Rs 2456 crores and import of
capital goods of Rs 300 crores.
PROFITS, DIVIDENDS AND RETAINED EARNINGS
(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 |
| STATEMENT OF RETAINED EARNINGS |
|
|
| 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 |
FMCG CIGARETTES
After facing significant challenges in FY 2020-21, the Business navigated through two
disruptive waves of the pandemic during the year under review. Despite such disruptions,
the Business progressively recovered in course of the year, surpassing pre-pandemic levels
in the latter half. The Business effectively leveraged institutional strengths, digital
technologies and learnings from prior waves to respond with agility across all nodes of
operations. This included, inter alia, re-configuring and re-aligning supply chain
operations to service market requirements through dynamic planning, strengthening direct
reach in target markets across all traditional trade channels and augmenting the stockist
network to service rural and semi-urban markets efficiently.
Your Company sustained its leadership position in the cigarette industry through its
unwavering focus on nurturing a portfolio of world-class products anchored on superior
consumer insights, robust innovation pipeline and world-class product development
capabilities. Your Company continues to counter illicit trade and reinforce market
standing by fortifying the product portfolio through innovation, democratising
premiumisation across segments and enhancing product availability backed by superior
on-ground execution. Several differentiated variants were introduced to cater to
continuously evolving consumer preferences and ensure future-readiness of the product
portfolio. These include innovative launches such as ‘Classic Connect', ‘Gold
Flake Indie Mint', ‘Gold Flake Neo SMART Filter', ‘Wills Protech', ‘Capstan
Excel', ‘American Club Smash', ‘Gold Flake Kings Mixpod', ‘Wave Boss' and
‘Flake Nova'. The Business also expanded its presence in focus markets with the
launch of differentiated offerings across segments.
Globally, cigarette smoking is the dominant form of tobacco use. In the Indian context,
tobacco use comprises a diverse range of chewing and smoking formats that are available at
different price points, consequent to significant divergence in tax rates across different
formats of tobacco. While India is the world's second largest consumer of tobacco, legal
cigarettes constitute only 8% of overall tobacco consumption in India, as against a global
average of 90%. It is pertinent to note that India accounts for less than 2% of global
cigarette consumption despite comprising 18% of the world's population, making India's per
capita cigarette consumption amongst the lowest in the world.
Over the years, discriminatory and punitive taxation on cigarettes has led to
progressive migration from consumption of duty-paid cigarettes to other lightly
taxed/tax-evaded forms of tobacco products, comprising illicit cigarettes and bidi,
chewing tobacco, gutkha, zarda, snuff, etc. Consequently, while the share of legal
cigarettes 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 a
result, despite accounting for less than 1/10th of the tobacco consumed in the country,
duty-paid cigarettes contribute more than 4/5th of the revenue generated from the tobacco
sector.
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 substantially
higher than that in neighbouring countries.
It is pertinent to note that India's per capita cigarette consumption is amongst the
lowest in the world and is significantly lower compared to that of China, Japan, USA, UK
and even neighbouring countries such as Bangladesh and Pakistan.
During the period 2012-13 to 2016-17, excise duty on cigarettes increased sharply at a
CAGR of 15.7%; however, tax revenue from cigarettes grew by a mere 4.7% CAGR during the
same period.
In 2017-18, the legal cigarette industry was further impacted by a sharp rise of 20% in
tax 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 industry
partially claw back volumes lost to the illicit trade in earlier years; consequently,
revenue 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 in
the subsequent period has provided an opportunity for the legal industry to partially
recover volumes lost to illicit trade in earlier years.
Punitive taxes on the legal cigarette industry have resulted in rapid growth in illicit
cigarette trade, making India the 4th largest illicit cigarette market globally according
to Euromonitor estimates. Over the years this has created extremely attractive tax
arbitrage opportunities for unscrupulous players indulging in illicit cigarette trade.
While legitimate cigarette industry volumes have declined consistently over the last
decade, illicit cigarette trade volumes, in contrast, have grown rapidly during the same
period, accounting for about 1/4th of the domestic industry.
During the year, the media reported several cases of evasion of taxes/duties by dealers
in illicit cigarettes which came to light because of raids conducted by Directorate
General of GST Intelligence (DGGI). Several interventions in this area continue to be made
by the respective authorities. As per the reply given by the Union Minister of State for
Commerce & Industry in the Lok Sabha on 17th March, 2021, the seizure of illicit
cigarettes has seen a quantum jump over previous years. It is estimated that on account of
illicit cigarettes alone, revenue loss to the Government is appx. Rs 170001 crores per
annum. In respect of the other tobacco products as well, the revenue losses are
significant since about 68%2 of the total tobacco consumed in the country remains outside
the tax net.
Tobacco control measures in India have ranked amongst the most stringent in the world
from the time of enactment of the Cigarettes (Regulation of Production, Supply and
Distribution) Act, 1975 to the present. India is also one of the few countries where
tobacco products are regulated across the value chain - from their manufacture to sale to
consumers. The Cigarettes and Other Tobacco Products (Prohibition of Advertisement and
Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (COTPA)
requires cigarette packages to bear the statutorily mandated pictorial and textual
warnings 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 of
the pictorial or textual warnings mandated by Indian laws or, bear much smaller pictorial
warnings 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, an
independent market research organisation, show that the lack of pictorial warnings on
packets of smuggled international brands of cigarettes or their diminutive size creates a
perception in the consumers' mind that these illicit cigarettes are ‘safer' than
domestic duty-paid cigarettes that carry the 85% pictorial warnings. The combination of
low prices to consumers consequent to tax evasion and the misleading perception created by
the absence of statutory pictorial warnings provides significant buoyancy to illicit
cigarette volumes.
India is among the top three tobacco growing countries in the world. Tobacco occupies a
preeminent position in the Indian economy on account of its considerable contribution to
the agricultural, industrial and export sectors3. The large and rapidly growing illicit
cigarette trade also has a deleterious impact on farmers and farm workers engaged in the
tobacco value chain. In India, cigarettes are manufactured largely using Flue Cured
Virginia (FCV) tobacco grown in the states of Andhra Pradesh, Telangana and Karnataka. As
smuggled international brands of cigarettes do not use Indian tobaccos, in addition to
revenue losses, the growth of illicit cigarette trade has also resulted in a sharp drop in
demand for Indian FCV tobaccos in the domestic market.
It is pertinent to note that several other major tobacco producing countries, including
the USA, have established regulatory frameworks taking into consideration the economic
interests of their tobacco farmers. The punitive and discriminatory taxation &
regulatory regime on cigarettes in India continues to adversely affect the livelihood of
Indian tobacco farmers with corresponding gains to those countries that have opted for
moderate and equitable tobacco regulations. These developments, coupled with lower
availability of Indian crop, lower export incentives in India and relative weakness of
currencies in certain competing geographies have had a debilitating impact on 46 million
livelihoods comprising tobacco farmers, farm workers, etc. who are dependent on the
tobacco value chain. It is estimated that since 2014, Indian tobacco farmers have suffered
a cumulative drop in earnings of over Rs 7000 crores. As seen in the past, stability in
taxes on cigarettes enables the legal cigarette industry to claw back volumes lost to
illicit trade, thereby engendering domestic demand for Indian tobaccos, while also
mitigating loss of tax revenue to the Exchequer due to illicit trade.
As reported in earlier years, your Company and several other stakeholders had
challenged the validity of the pictorial and textual warning covering 85% of the surface
area of the packet prescribed under COTPA. The Honourable Karnataka High Court, by its
judgement in December, 2017, held the 85% pictorial warnings to be factually incorrect and
unconstitutional. Upon Special Leave Petitions filed by the Government and others, the
Honourable Supreme Court has stayed the judgment of the High Court. The cases are pending
before the Honourable Supreme Court.
The extremely stringent regulations along with the discriminatory and steep taxation on
cigarettes have had numerous negative, albeit unintended repercussions. These include:
- rapid growth in illicit cigarette volumes, which resulted in sub-optimisation of the
revenue potential of the tobacco sector and significant loss to the Exchequer. It is
estimated that on account of illicit cigarettes alone, revenue loss to the Government is
appx. Rs 17000 crores per annum.
- widespread availability of illicit cigarettes and other tobacco products of dubious
quality and hygiene to consumers at extremely affordable prices.
As a result, despite accounting for less than 1/10th of the tobacco consumed in the
country, duty-paid cigarettes contribute more than 4/5th of the revenue generated from the
tobacco 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 dependent
on tobacco. Studies by the Central Tobacco Research Institute (CTRI) indicate that on
account of agro-climatic conditions, there is no equally remunerative alternate crop that
can be grown in the FCV tobacco growing regions of the country.
Your Company continues to engage with policy makers for a framework of pragmatic,
equitable, non-discriminatory, evidence-based regulations and taxation policies that
balance the economic imperatives of the country and tobacco control objectives, cognising
for the unique tobacco consumption pattern in India. Stability in taxes is critical for
addressing the interests of all the stakeholders of this industry, including the tobacco
farmers, the Exchequer and the consumers.
As in the past, the research and development initiatives of your Company continue to
add to the country's bank of Intellectual Property Rights (IPR).
In addition to grant of several patents in earlier years, it is deeply satisfying to
report that your Company has been granted six more patents during the year.
Manufacturing facilities continue to be modernised by inducting contemporary
technologies to drive innovation and secure higher levels of productivity and product
excellence. New benchmarks were set in areas of quality, sustainability, supply chain
responsiveness and productivity. Cutting-edge technologies such as Industry 4.0 and Data
Sciences were leveraged to build a smart manufacturing environment of connected systems.
These initiatives, coupled with innovative capabilities, in-house design and development
expertise, have further improved the speed-to-market of new launches and augmented the
innovation pipeline of the Business.
It is extremely satisfying to report that your Company continued to be recognised for
its commitment towards operational excellence. The Bengaluru and Ranjangaon units were
adjudged ‘WinnerRs in Frost and Sullivan 2021 Project Evaluation & Recognition
Program (PERP) in Robotics & Automation, Quality Excellence, and Artificial
Intelligence categories in the Manufacturing Sector.
In line with your Company's commitment to the ‘Triple Bottom Line', the Business
has put in focused efforts through innovative interventions for resource conservation and
adoption of best-in-class technologies and processes. More than 50% of the total energy
used by the Business is generated from renewable sources. Various interventions over the
years like investments in renewable energy sources, continued wheeling of wind energy
through interstate open access and purchase of renewable energy from Indian Energy
Exchange (IEX) have enabled the same. Sustainability initiatives of the Business continued
to 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 Excellence
in 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 AwardRs
in Karnataka, Andhra Pradesh & Telangana by Indian Wind Power Association for FY
2020-21. The Kidderpore unit won the EFI CII National Award for ‘Significant
Achievement in Employee Relations 2021' for excellence in Employee Relations practices.
While respite from further increase in taxes has provided the legal cigarette industry
an opportunity to claw back volumes lost to illicit trade, the operating environment
remains challenging due to elevated levels of taxation, high share of illicit trade and
disproportionate regulatory pressures. Notwithstanding these challenges, your Company
remains confident of responding with agility to the dynamic environment and fortifying its
market standing in the legal cigarette industry leveraging its superior strategies,
future-ready portfolio, robust innovation pipeline, cutting-edge manufacturing &
digital technologies and best-in-class execution capabilities.
FMCG - OTHERS
During the year, the FMCG industry witnessed moderation in growth mainly due to subdued
demand conditions especially in rural markets, high inflation eating into household
budgets and high base effect in certain categories such as Staples & Convenience
Foods. Health & Hygiene personal care products witnessed demand volatility in line
with varying intensity of the pandemic, while remaining significantly above pre-pandemic
levels. Discretionary/Out-of-Home categories witnessed strong growth on a favourable base
and surpassed pre-Covid levels driven by improved mobility and progressive return to
normalcy. The year saw an unprecedented increase in prices of key inputs such as edible
oils, packaging materials, soap noodles, fuel, logistics, etc. which exerted considerable
pressure on margins. This was mitigated by adopting a comprehensive approach across the
value chain entailing sharp focus on cost management, portfolio premiumisation,
competitive trade and marketing investments, fiscal incentives, supply chain agility and
judicious pricing actions.
Notwithstanding the challenging conditions prevailing during the year, your Company's
FMCG businesses recorded Segment Revenue of Rs 15994.49 crores representing an increase of
8.6% over the previous year. Segment EBITDA for the year grew by 10.0% to Rs 1448.97
crores with margins being sustained at 9.1% in spite of unprecedented inflation in input
costs as aforestated.
A consumer-centric approach, backed by speed and agility in execution, was at the core
of your Company's response in navigating the heightened uncertainty and volatility in the
operating environment. Digital technologies and platforms continue to be leveraged to
effectively service emergent consumer demand across channels.
Your Company remains focused on building purpose- led brands powered by agile
innovation and anchored on larger consumer needs. The Businesses continue to leverage
digital technologies and platforms towards enhancing consumer experience. Strategic
interventions in this area are aimed at delivering delightful brand experiences seamlessly
across touchpoints through personalised journeys mapped to individual's needs, preferences
and context.
The Businesses continue to increasingly leverage ‘Sixth Sense', the Marketing
Command Centre and Consumer Data Hub - an Al-powered hyper-personalised platform backed by
a robust partner ecosystem for content and data - to gain insights on market trends and
consumer behaviour, and synthesise the same to craft contextual and hyper-personalised
brand communication and product development. Over 3,000 content assets have been deployed
leveraging this capability within a relatively short span of time at significantly lower
cost.
Your Company continues to leverage deep consumer insights and cutting-edge R&D
capability to fuel growth by addressing present and emergent consumer need spaces. Over
110 new products were launched across target markets during the year, leveraging the
robust innovation platforms of your Company's Life Sciences and Technology Centre (LSTC).
Cutting-edge digital technologies including Industry 4.0, Advanced Analytics, Big Data
and industrial Internet of Things (loT) continue to be deployed towards strengthening your
Company's real time operations and execution platform. Several digitally powered
interventions are underway towards enhancing productivity, driving efficiency and reducing
costs. These initiatives are anchored on the key pillars of synchronised planning and
forecasting, next generation agile supply chain, smart manufacturing and sourcing, and
smart demand capture and fulfilment. Strategic investments are also being made towards
enhancing value creation leveraging data and analytics. Key interventions include
augmenting your Company's NextGen data architecture powered by Artificial Intelligence/
Machine Learning (AI/ML), identifying and prioritising use cases for impactful outcomes
and setting up a Data Science academy comprising data scientists and engineers to
strengthen data and analytics programmes.
The FMCG Businesses comprising Branded Packaged Foods, Personal Care Products,
Education and Stationery Products, Incense Sticks (Agarbattis) and Safety Matches have
grown at an impressive pace over the past several years.
Your Company's vibrant portfolio of over 25 world-class Indian brands, largely built
through an organic growth strategy in a relatively short period of time, represents an
annual consumer spend of over Rs 24000 crores and reach over 200 million households in
India. These home-grown, purpose-led Indian brands support the competitiveness of domestic
value chains, especially in the agri space, thereby ensuring creation and retention of
value within the country.
Your Company's FMCG brands have achieved impressive market standing4 in a relatively
short span of time in their respective categories viz. Aashirvaad is No. 1 in Branded
Atta, 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 in
Notebooks,
Engage is No. 1 in women's Deo, Savlon is No. 1 in Surface Disinfectant spray,
Mangaldeep is No. 2 in Agarbattis (No. 1 in Dhoop segment), Nimyle is No. 2 in Floor
Cleaners (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 on
strong growth platforms and a future-ready portfolio. It is pertinent to note that these
categories, which are largely characterised by low household penetration levels and/or low
per capita consumption, offer significant headroom for long-term growth. This is borne out
by several reports which highlight that your Company's total addressable market expansion
potential is amongst the highest in the Indian FMCG space. In this context, it is
pertinent to note that your Company is well poised to address adjacent growth
opportunities by leveraging the 25+ powerful mother brands it has established over the
years. Recent examples of such brand extensions include Aashirvaad to Dairy, Ready-to-Eat,
Vermicelli, Salt and Spices; Sunfeast to Dairy Beverages and Cakes; Bingo to Namkeens; ITC
Master Chef to Frozen Snacks and cooking pastes; Savlon to surface and clothes
disinfectant sprays, sanitizers, masks, etc. Simultaneously, the FMCG Businesses continue
to make strategic investments in building categories of the future and establishing your
Company's ‘right to win' by progressively scaling up those nascent categories where
beachheads have been created. Your Company is also proactively pursuing value accretive
acquisition, joint venture and collaboration opportunities in strategic areas towards
accelerating growth and value creation.
The FMCG Businesses continue to expand their export footprint leveraging the equity of
their world-class brands - with a reach now spanning over 60 countries. The recently
announced PLI Scheme is expected to provide further fillip to exports of your Company's
products across Biscuits & Cakes, Snacks, Dairy and Ready-to-Eat categories. Your
Company also continues to explore opportunities in proximal markets as a potential vector
of growth going forward.
The FMCG Businesses continue to create structural competitive advantages and enhance
profitability by leveraging world-class distributed infrastructure, multi-channel
distribution network, delayered operations, smart buying & value engineering and smart
manufacturing anchored on the twin pillars of digital and sustainability. Investments over
the years in several state-of-the-art Integrated Consumer Goods Manufacturing and
Logistics facilities (ICMLs) have laid a strong foundation to drive structural advantages
such as ensuring product freshness, enhancing agility and responsiveness of the supply
chain, 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 with
focused smart manufacturing interventions leveraging automation and Industry 4.0
technologies to drive operational efficiencies, yield and energy management and further
enhance safety and quality. With increasing scale, supply chain operations are being
increasingly delayered through direct-to-market shipments thereby reducing freight costs
and eliminating multiple handling. Your Company is confident that these strategic
interventions which are already delivering substantial benefits will realise their full
potential over the medium term and continue to create long-term value.
The unprecedented inflationary headwinds pose significant challenges in the near term
and remain a key monitorable for the FMCG industry. Your Company continues to take
proactive measures to counter the impact of such headwinds across all nodes of operations
and deliver competitively superior performance leveraging its institutional strengths and
harnessing advantages of scale, smart buying initiatives and world-class talent in a
consumer-centric, agile and innovative manner.
Notwithstanding the short-term challenges, the structural drivers of long-term growth
such as rising disposable incomes and consumer awareness, low levels of penetration of
consumer goods, favourable demographics, increasing urbanisation and growing preference
for trusted brands remain firmly in place in India. Your Company remains confident of
rapidly scaling up its FMCG Businesses on the back of a strong future-ready portfolio
powered by world- class quality, superior consumer insights and product quality,
cutting-edge innovation, agile and efficient supply chain and purpose-led brands.
The Businesses will continue to leverage their institutional strengths viz. strong
backward linkages with the Agri Business, a deep and wide multi-channel distribution
network, cuisine knowledge resident in the Hotels Business, packaging knowhow and access
to robust R&D platforms nurtured by LSTC. Investments in innovation, smart & agile
value chains, state-of-the-art distributed manufacturing footprint and digital
technologies will continue to be pursued to strengthen market standing and seize growth
opportunities going forward.
Branded Packaged Foods
The recurring waves of the pandemic, continued supply chain disruptions, volatility in
demand along with unprecedented inflationary headwinds, particularly in edible oil and
packaging material, posed severe challenges to the Branded Packaged Foods industry during
the year.
Against the backdrop of an extremely challenging operating environment as aforestated,
your Company sustained its position as one of the fastest growing branded packaged foods
businesses in the country, leveraging a robust portfolio of brands, a slew of
first-to-market offers, a range of distinctive products customised to address regional
tastes and preferences, supported by an efficient supply chain and distribution network.
The Branded Packaged Foods Businesses remain focused on addressing emerging consumer
needs with innovations anchored on the vectors of health, wellness, immunity, naturals,
indulgence and convenience. The Businesses launched several innovative and first-to-market
products leveraging superior consumer insights, capabilities of your Company's Life
Sciences and Technology Centre (LSTC) and the cuisine expertise resident in your Company's
Hotels Business. While strengthening its core portfolio, the Businesses continue to
explore opportunities in value-added adjacencies leveraging powerful mother brands and
build categories of the future.
The Businesses continued to make sharp targeted brand building investments and scaling
up their nascent categories. Clutter-breaking advertising campaigns and consumer
engagement both in conventional and digital media along with focused market development
efforts resulted in reinforcement of brand positioning for your Company's bouquet of
world-class brands in the Branded Packaged Foods space. Digital campaigns launched during
the 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 Awards
for Sunfeast YiPPee!, ‘Leveraging a community to be the voice of the brand' Gold for
Most Organic Campaign by Impact Digital Influencer Awards for Aashirvaad Atta and Best use
of Digital Media by Digixx 2022 for ITC e-Store.
Your Company also collaborated with several social influencers to deepen consumer
engagement.
The Businesses continue to increasingly leverage ‘Sixth Sense', the Marketing
Command Centre and Consumer Data Hub. Focused consumer conversations and sharp
cohort-based insights have enabled your Company's world-class brands to create innovative
marketing campaigns in both Web 2.0 & 3.0 (Gaming and Metaverse), with interventions
using Augmented/Virtual Reality and Artificial Intelligence providing a unique opportunity
to interact with next generation consumers. The rise of social commerce has created unique
opportunities for brands to engage with their target audience using social media.
During the year, your Company launched its first social commerce event - ITC Store
Jugalbandi - a fusion of food and music, with the event being virtually hosted by ITC
Store in association with ITC Master Chef Frozen Snacks.
Relentless focus on delivering superior quality products to consumers continues to be a
key source of sustainable competitive advantage for the Branded Packaged Foods Businesses.
In this context, the Businesses continue to leverage the agri-commodity sourcing expertise
resident in your Company's Agri Business to procure high quality raw materials thereby
ensuring the highest levels of quality, consistency and safety of its products. In
addition, each of your Company's branded packaged food products is manufactured in
HACCP/ISO-certified manufacturing locations ensuring compliance with all applicable laws
and adherence to the highest quality norms.
- In the Staples Business, ‘Aashirvaad' posted a resilient performance on a high
base and fortified its market standing across geographies, while addressing emerging
consumer preferences for healthy products and catering to regional tastes. The value-added
portfolio, consisting of Multigrain, Select and Sugar Release Control Atta, posted robust
growth driven by higher salience in Modern Trade and e-Commerce channels. ‘Aashirvaad
Nature's Super Foods', a differentiated range of products comprising Gluten Free Flour,
Ragi Flour, Multi-Millet Mix, Organic Atta and Organic Dals continued their robust growth
trajectory. These products are available across select General and Modern Trade outlets as
well as leading e-Commerce platforms. The range of value-added products was further
augmented with the launch of ‘Aashirvaad Vermicelli' during the year.
The Business also forayed into Frozen Indian Flat Breads (Paratha, Naan and Chapati) to
service export markets. Focused and purposeful marketing inputs, consumer activations and
region-specific interventions supported by sharply directed media investments, especially
in 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 of
sustaining Aashirvaad's position as India's No. 1 Atta brand going forward.
As highlighted in prior years, the Business continues to contend with increased
competitive intensity post the implementation of 5% GST on branded atta. While it has been
the Government's intention to provide relief of nil rate of GST only to small and local
manufacturers thereby benefiting consumers with lower priced staple products, many
unscrupulous players have used this distinction in rates as an attractive
tax-evasion/avoidance opportunity, by classifying their products as unbranded or with a
declaration that all actionable claims or rights associated with brand identity have been
foregone, while continuing to market the product with brand names and distinct trademarks.
This inequitable GST differential between branded and unbranded players has resulted in
market distortion, widening the price gap between national registered brands and local
unregistered brands and acts as a disincentive to invest in value creation for the Food
Processing sector.
Supported by its new positioning, ‘Created by Sun and Sea - pure just like nature
intended it to be', Aashirvaad Salt strengthened leadership in key focus geographies and
posted healthy growth during the year. The two recently launched variants - Crystal salt
in Southern markets and Proactive salt (15% Lesser Sodium) - were scaled up during the
year.
In the Spices category, integration of M/s. Sunrise Foods Private Limited with your
Company was successfully completed. The Sunrise brand delivered robust growth during the
year and further strengthened its market standing as the leader in its core market of West
Bengal on the back of increased market penetration and heightened consumer engagement
initiatives.
The brand was extended to other markets in the East/North East and is amongst the top
spices brands in the region. The Business deployed region-specific communication strategy
to enhance consumer engagement. ‘Aashirvaad Spices' continues to enhance its presence
in 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 institutional
strengths to progressively enhance their market standing further.
- After witnessing sharp growth in the previous year, the Biscuits category
strengthened its portfolio leveraging superior capability across innovative
product/technology platforms. The Business continued to focus on the premium segment to
enhance brand affinity and increase penetration in emerging channels. Unique capabilities
in RsFills' technology were leveraged to launch innovative variants, both under
‘Sunfeast Dark Fantasy' and ‘Sunfeast Bounce Fills' and create new benchmarks in
the premium indulgence space. Product portfolio was augmented with the launch of
‘Sunfeast Bounce FillsRs in several exciting flavours - Orange Vanilla, Strawberry
Vanilla and Choco Creme. The ‘Sunfeast Dark Fantasy' range of differentiated cookies
sustained its leadership position in the premium segment. The range was augmented with the
launch of innovative variants - ‘Sunfeast Dark Fantasy Vanilla Fills' and
‘Sunfeast Dark Fantasy Desserts'. The Cakes portfolio was also strengthened with the
launch of Sliced Cakes.
- Despite being impacted by multiple waves of the pandemic, the Snacks Business
sustained its robust growth trajectory during the year, primarily driven by its core
portfolio comprising ‘Bingo! Tedhe Medhe', ‘Bingo! Potato Chips' and the
‘Bingo! Mad Angles' range. ‘Bingo!' continues to be the market leader in the
Bridges segment, and in the potato chips segment in South India. Several innovative
variants 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 with
the launch of four new variants - Punjabi Tadka, Moong Dal, Navrattan Mix and Khatta
Meetha.
The Business enhanced consumer engagement through innovative and exciting communication
initiatives leveraging the brand's association with Ranveer Singh.
- The Instant Noodles category witnessed normalisation of demand during the year after
a sharp surge in previous year. Product portfolio was augmented with the launch of Max
Masala in target markets. Innovative media campaigns, focused digital interventions and
celebrity endorsements with MS Dhoni continued to create buzz around the brand, resulting
in sustained traction with consumers. The ‘YiPPee!' brand continued to strengthen its
consumer franchise and consolidated its market standing as a strong No. 2 brand.
- The Ready-To-Eat (RTE) category grew significantly in the institutional and domestic
segments led by Modern Trade and e-Commerce channels. In order to enhance consumer
convenience, innovative microwavable pouches of products under the ‘Kitchens of
India' brand were introduced in the US and are receiving encouraging consumer response.
In the Frozen Snacks category, the range of ‘ITC Master Chef' products comprising
several differentiated variants continues to garner increasing consumer franchise. During
the 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 and
preferences, this area is expected to offer substantial headroom for growth over the
medium 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-home
models, with product assortments being crafted for specific channels in line with consumer
demand.
- In the Dairy & Beverages Business, the ‘Aashirvaad Svasti' fresh dairy
portfolio comprising pouch milk, pouch curd, lassi and paneer, continued to gain strong
consumer traction on the back of best-in-class quality standards and superior taste
profile. 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 new
mango flavoured lassi. The Business also introduced a bucket curd offering for its
institutional customers.
In order to further broaden its portfolio, the Business launched ‘Mishti Doi', a
traditional delicacy of West Bengal, in cup format under the Aashirvaad Svasti brand. The
Business also launched Aashirvaad Svasti Easy Digest Milk - West Bengal's first
lactose-free milk in pouch format, to fulfil dairy needs for those seeking solutions to
milk indigestion issues without compromising on nutrition and taste. Aashirvaad Svasti
Ghee continued to receive excellent product feedback and garner increasing consumer
franchise. The Sunfeast range of milk shakes was augmented with the launch of Protein
Shake and Mango Smoothie and are being extended to target markets.
The ‘B Natural' range of juices faced severe disruptions during the peak summer
season in FY 2021-22 due to the second wave of the pandemic. Amidst extremely challenging
circumstances, B Natural continued to deepen consumer connect by leveraging its
‘goodness of fruit and fibre' proposition. The product portfolio was augmented with
launch of differentiated variants of ‘B Natural-Nutrilite'; these ‘No added
sugar' products were developed leveraging LSTC's expertise in nutrition and Nutrilite's
ingredients. In recent years, the Business has strengthened presence in the rapidly
emerging Direct to Consumer (D2C), Travel and QSR segments. Partnerships with alternate
delivery channels enhanced product availability in spite of disruptions in traditional
trade channels.
These strategic alliances along the vectors of portfolio, product and positioning have
laid a strong foundation to enhance the market standing of the B Natural range going
forward.
- In the Chocolates, Coffee & Confectionery Business, the Confectionery category
witnessed progressive recovery and continued to focus on building its premium portfolio
leveraging ‘Fantastik Choco Sticks' and ‘Jelimals'. The Fantastik range was
augmented with the launch of a vanilla variant while the Jelimals range was enhanced with
the launch of ‘Jelimals Nutrition+' (vitamin fortified jellies), ‘Jelimals Yummy
Space Jellies' - an exciting format with space themed jellies and ‘Jelimals Tasty
Sparkles'.
‘Fabelle' chocolates continue to perform well in the luxury segment and received
encouraging product and market feedback. During the year, availability of Fabelle was
enhanced through Quick Commerce in Delhi and Bengaluru; alternate platforms including the
ITC e-Store, e-Commerce channels, food delivery aggregators and the takeaway menus of ITC
Hotels continue to be leveraged to enhance product accessibility. Fantastik Chocobar XL,
launched last year in the popular segment at convenient price points, continued to garner
positive consumer traction; availability of the product was further scaled up during the
year.
- ‘Sunbean Beaten Caffe', a unique ready-to-use beaten coffee paste that produces
a rich, creamy and frothy cup of coffee, continues to receive favourable response from
discerning consumers. The Business has also introduced a premium ‘Strong' variant for
consumers demanding a stronger cup of coffee.
- Acute shortage in container availability and steep increase in ocean freight rates
adversely impacted exports in the first half of the year. However, the business bounced
back strongly in the second half, powered by the growing franchise of your Company's
brands amongst the Indian diaspora. The Branded Packaged Foods Businesses currently export
to nearly 60 countries across the globe. Going forward, the Businesses propose to rapidly
scale up exports across categories by leveraging the brand equity of core brands such as
Aashirvaad, Sunfeast and Kitchens of India and investment-led incentives under the
Government of India's PLI Scheme.
- New launches across categories continue to garner excellent consumer response and are
being scaled up in the target markets.
Over the years, your Company has invested in setting up state-of-the-art Integrated
Consumer Goods Manufacturing and Logistics facilities (ICMLs) proximal to large demand
centres. These facilities are at the heart of your Company's strategy to create structural
advantage by enhancing product freshness, improving market responsiveness, reducing the
cost of servicing proximal markets and ensuring the highest standards of product hygiene,
safety and quality. The ICMLs also enable scalability, besides setting new benchmarks in
quality, safety, productivity and process excellence.
Your Company commissioned a new ICML at Medak, Telangana in March 2022. With this, ten
ICMLs are operational in locations proximal to large demand centres enabling delivery of
fresher products, reduction in distance to market and higher cost agility. Capacity
utilisation at existing ICMLs continued to be ramped up. Several of these manufacturing
facilities represent industry leading gender diversity in the labour force. With every
successive ICML coming on-stream, the representation of women has progressively increased,
with 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 prestigious
awards and accolades during the year from leading industry bodies such as the
Confederation of Indian Industry (CII), Union Ministry of Labour & Employment, Food
and Agriculture Centre of Excellence, etc. for their high standards of safety, quality,
operational excellence and benchmarks in green and sustainable manufacturing.
The Business implemented several strategic cost management initiatives in areas such as
supply chain optimisation, smart procurement and productivity improvement through
automation, leveraging new-age technologies such as Industry 4.0 and smart utilities.
These interventions aided in partially mitigating the steep escalation in input costs,
absorbing start-up costs of new facilities and strategic investments in brand building for
new categories viz. Dairy, Juices, Chocolates and Coffee.
A big thrust on India's Food Processing sector, which lies at the intersection of
value-added agriculture and manufacturing, can lead to significant job creation. The
sector also holds immense potential to enhance rural incomes and help manage food
inflation. Recognising this potential and headroom for growth in the Indian market, your
Company has made significant investments in food processing and remains focused on
establishing 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 10900
crores, is expected to not only boost farmer incomes but also infuse fresh investments,
build Indian brands for the global market and promote exports. Your Company has been
included under the PLI Scheme towards sales-based incentives in the Ready to Eat, Fruits
& Vegetables and Marine categories respectively, as well as for incentives towards
expenditure incurred for branding and marketing in export markets.
Your Company is well poised to strengthen its position as one of the fastest growing
food companies and the ‘most trusted provider of food productsRs in the Indian market
in line with its purpose to ‘Help India Eat Better'. Your Company remains confident
of rapidly scaling up the Branded Packaged Foods Businesses leveraging the strong growth
platforms nurtured over the years in chosen categories which offer immense headroom for
growth and powerful purpose-led mother brands that have the potential to be extended to
address opportunities in adjacent spaces. In addition, your Company's deep & wide
multi-channel distribution network, with growing presence in emerging channels such as
e-Commerce, Modern Trade, on-the-go and institutional sales, continues to deliver
competitive advantage through superior product availability, visibility and freshness.
Recent investments in establishing a world-class distributed manufacturing footprint have
created a solid foundation to secure structural advantage over time. Cutting-edge R&D
platforms of your Company's LSTC are driving agile innovation and faster turnaround times
for introduction of differentiated & first-to-market products catering to constantly
evolving consumer needs. Investments in leading-edge digital technologies and platforms
continue 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 extremely
challenging with the twin effects of recurrent pandemic waves and persistently high levels
of commodity inflation.
Industry volumes remained under pressure due to sharp increase in inflation
constraining household budgets, especially in the latter half of the year.
Rural markets also remained subdued, with the second wave of the pandemic causing
significant disruptions. Further, the Health & Hygiene segment, which had grown
significantly last year, witnessed marked volatility in demand in line with the varying
intensity of the pandemic, albeit remaining above pre-pandemic levels.
Your Company's Personal Care Products Business continued to demonstrate agility and
responsiveness to the dynamic market conditions leveraging its core strategic levers of
building brands with purpose, first-in-category innovations, focus on categories of the
future and accelerating presence in emerging channels. Improved product availability and
agile response to demand volatility enabled the Business to navigate the challenging
operating 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 previous
year. This was driven by increase in direct distribution and household penetration and
growth in e-Commerce channel. Catering to the emerging consumer preference for Naturals,
the Business launched innovative offerings in the gel bar format viz. ‘Fiama Amyris
& Cedarwood Oil' and ‘Fiama Green Apple & Brazilian Orange Oil'. The Vivel
range of soaps continued to be well received by consumers. Both Fiama and Vivel have been
frontrunners in adopting sustainable packaging. The carton soap portfolio for both brands
has fully migrated to recyclable paperboard cartons; Vivel wrapped soap portfolio has also
been transitioned to recyclable packaging. Further, Fiama Shower Gel bottles are now made
with 30% Post-Consumer Recycled (PCR) material.
These innovative packaging solutions have been developed leveraging the synergistic
capabilities of your Company's Packaging and Printing Business and Life Sciences and
Technology Centre (LSTC) and are a testament to your Company's philosophy of embedding
sustainability into its business value chains.
‘Savlon' reinforced its position as one of the most preferred brands for expert
germ protection. In spite of demand volatility in line with COVID caseload intensity,
sales of Health and Hygiene portfolio remains significantly above pre-pandemic levels.
Leveraging the brand's strong ‘germ-protection' equity, the portfolio was augmented
with the launch of ‘Savlon Powder HandwashRs in consumer-friendly low unit packs to
democratise the category by generating trials and driving penetration. The brand continues
to be the clear market leader in Surface Disinfectant spray category. As per IQVIA survey,
Savlon has emerged as the ‘Doctors' Most Trusted' brand in Antiseptic Liquid,
Handwash 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, Nimyle
recorded strong growth and strengthened its leadership position in West Bengal and Odisha.
The brand was rolled-out nationally and continued to garner increasing consumer
franchise backed by clutter-breaking communication anchored on Naturals proposition
coupled with product's efficacy against virus strains. ‘Nimeasy' - an enzyme-based
eco-friendly Dishwash Gel launched recently continued to gain encouraging response
premised on its differentiated positioning.
The Fragrance industry continued to be impacted on account of the pandemic as mobility
restrictions reduced occasions of product use. As a result, category penetration levels
have witnessed a decline over the last two years. Notwithstanding these challenges, the
Business registered strong growth on a relatively soft base and is expected to pick-up to
pre-pandemic levels in the near term. The Business continued to introduce innovative
products 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 new
variants of deodorants - Floral Zest, Garden Mystique, Ocean Zest, Spice Mystique. The
Business also launched ‘Engage ON Chhota pocket' as a value-for-money offering and a
new ‘Moderna' range designed especially for Modern Trade and e-Commerce channels.
Leveraging the capabilities of your Company's Life Sciences and Technology Centre, the
Business launched ‘Engage Fragrance Finder', an Al-powered, technology-enabled
experience that aids the selection of fragrances based on the consumer's preferences and
occasion of usage.
The ‘Engage L'amante' and ‘EDW Essenza' range of fragrances continues to
receive encouraging response from discerning consumers and is well positioned to address
the increasing trend of premiumisation witnessed particularly in the e-Commerce channel.
The Business continued to strengthen its presence in the premium skincare space through
its digital-first brand, ‘Dermafique' and in the popular space through
‘Charmis'. Growth in the skincare category was driven by sharply focused marketing
initiatives, product and brand refresh and vibrant communication campaigns.
In keeping with its strategy of winning in emerging channels, the Business bolstered
its presence in the rapidly growing e-Commerce channel and continues to widen its
assortment of offerings tailored to consumer needs. During the year, salience of the
e-Commerce channel stood at double digits for the Business.
In furtherance of your Company's strategy to scale up presence in the naturals and
ayurvedic space as well as in the fast-growing D2C channel, during the year, your Company
acquired a minority stake in RsMother Sparsh', a premium ayurvedic and natural personal
care startup, with focus on mother and baby care segments. Further, in April 2022, your
Company acquired a minority stake in RsMylo', a full stack community eco-system which
addresses the parenting needs of consumers. The investments will enable your Company to
progressively enhance presence in this area which has enormous growth potential, besides
leveraging its early mover advantage in the rapidly evolving D2C space.
The Business continued to leverage creative brand campaigns and social media platforms
towards deepening consumer engagement through purpose driven brands across its portfolio.
Vivel's #RespectWorkForHome campaign, which subtly spotlights the chores enabling
smooth functioning of a household as being no different from managing work at a
professional workplace, resonated well with the target consumers. In order to promote
mental wellness, Fiama launched ‘Virtual Therapy' sessions in association with
‘MINDS Foundation' to encourage proactive conversations and awareness on mental
well-being.
Your Company is setting up a state-of-the-art Personal Care and Home Care products
manufacturing unit in Uluberia, West Bengal, in line with its strategy of building
in-house manufacturing capabilities for products with unique formulations, enhancing
supply chain agility and responsiveness, and reducing distance to market.
Manufacturing excellence continues to be accorded the highest priority, with all three
Company-owned units at Haridwar, Manpura and Guwahati continuing to be Five-S certified by
the 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 India
for ‘Excellence in COVID Management'. The unit was also conferred Best Environmental
Practices Award by CII in May 2021.
Your Company's strategic focus in recent years has been to invest behind emerging need
spaces spanning health & hygiene, fragrances, naturals and liquids. This has been
supported by superior consumer insight discovery processes, agile innovations, purpose-led
brands and impactful communication in digital and conventional media. Access to
institutional strengths such as robust R&D platforms resident in LSTC,
state-of-the-art in-house packaging knowhow and your Company's multi-channel distribution
network continue to be leveraged to rapidly scale up the Business. Your Company, with its
future-ready portfolio and purpose-led brands, is well positioned to seize the
opportunities and emerge as a significant player in this space.
Education and Stationery Products
The Education and Stationery products industry, which was severely impacted in FY
2020-21 due to the pandemic, witnessed gradual recovery towards the end of the year under
review driven by progressive resumption of physical classes at educational institutions;
however, sales remained below pre-pandemic levels. Inflationary headwinds in commodity
prices also exerted pressure on margins.
The Business reinforced its market leadership position in the industry, delivering a
competitively superior performance driven by portfolio premiumisation, judicious pricing
actions, enhanced presence in alternate channels and continued focus on cost and working
capital management.
The Business continued to leverage its innovation platform in collaboration with your
Company's Life Sciences and Technology Centre to launch differentiated products of
superior 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 to
receive encouraging consumer response. During the year, the Business strengthened its
reach in the youth and economy segments of the notebook industry through ‘Classmate
Pulse' and ‘Saathi' brands respectively. The Institutional channel was also leveraged
by 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 was
leveraged to enhance availability and drive sales. Proactive management of inventory and
receivables helped reduce working capital intensity and manage risks associated with a
highly uncertain operating environment. The Business sustained its leadership position on
e-Commerce platforms through consistent availability of customised product assortments
backed by focused interventions to enhance consumer traction. Consumer engagement was
further enhanced through Classmateshop.com, a D2C platform, which facilitates brand
affinity through creative product personalisations.
During the year, Classmateshop.com was awarded ‘SilverRs in the ET Brand Equity
Disruption Awards under the Education category.
The Business continues to ramp up capacity utilisation of its dedicated notebook
manufacturing facility at Vijayawada. Equipped with state-of-the-art technology, the
facility enables the Business to develop highly differentiated notebook formats, drive
cost reduction and address opportunities in overseas markets. During the year, the
Business expanded its exports footprint to newer markets and successfully onboarded large
global retailers leveraging capabilities at the aforestated facility.
The Classmate and Paperkraft range of notebooks leverage your Company's world-class
fibre 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. The
Business continued to scale up the premium Paperkraft range of world-class notebooks using
Forest 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 education
systems in the world. The Indian Education and Stationery Products industry holds immense
potential driven by growing literacy, increasing enrolment ratios, the Government's
continued thrust on the education sector and a favourable demographic profile of the
country's population. Your Company, with its strong brands, robust product portfolio,
collaborative linkages with small & medium enterprises and superior distribution
network 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 surpassed
pre-pandemic levels during the year, driven by gradual opening of markets and places of
worship across the country.
‘Mangaldeep' Agarbattis and Dhoop enhanced household penetration leveraging its
robust product portfolio. The Business continued to drive brand salience through sharply
focused marketing interventions, and a differentiated and superior product experience with
a deep connect to devotion. Proactive steps were also taken towards driving product mix
enrichment and cost optimisation. The Business mitigated inflationary headwinds during the
year by leveraging economies of scale, driving sourcing efficiencies and ensuring smart
procurement.
In line with its vision to enable the pursuit of devotion for every consumer,
Mangaldeep focused its brand interventions on digital media to reach out to devotees who
were 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 up
during the year, thereby deepening engagement with devotees. The Mangaldeep App, which has
garnered over 1 million downloads, continues to play a key role in the devotional journey
of consumers.
The Business continues to strengthen its core portfolio through focused media
investments, consumer-centric portfolio extensions and enhanced accessibility. Innovative
product offerings such as the Upaveda range of ‘Naturals' agarbattis drawing
inspiration from ancient scriptures were launched during the year under the Mangaldeep
brand.
Over the years, the Business has implemented several measures to enhance the
competitiveness of the agarbatti value chain in India. These include import substitution
and backward integration of sourcing raw materials and manufacturing raw battis using
indigenous inputs. The Business has been a pioneer in developing domestic manufacturing
capabilities for raw battis and is also working closely with the Government under the
aegis of the National Bamboo Mission and other nodal agencies of state governments for
cultivating bamboo plantations in the country.
The proactive measures implemented by your Company, as highlighted above, sub-serve the
national priorities of employment generation and provide a source of competitive advantage
to the Business while contributing towards enhancing income of bamboo farmers in the
agarbatti stick and raw batti manufacturing value chain.
Amidst sluggish demand conditions in the Safety Matches industry, the Business
strengthened its market leadership position by leveraging its robust product portfolio and
strong distribution network backed by an agile and highly responsive supply chain. The
Business continues to focus on scaling up the share of value-added products in its
portfolio and enhancing supply chain efficiency by sourcing products manufactured closer
to markets.
TRADE MARKETING & DISTRIBUTION
Your Company's Trade Marketing & Distribution (TM&D) vertical demonstrated a
high degree of agility and responsiveness to mitigate the heightened uncertainty and
market disruptions caused by the pandemic during the year. Concerted actions were taken
across all nodes of operations to ensure efficient market servicing and availability of
your Company's products. These include realignment of distribution infrastructure,
deployment of innovative delivery models, strategic partnerships, enhanced usage of
digital technologies and focused approach to accelerate growth in emerging channels.
Against the backdrop of significant variability in demand, TM&D continued to focus
on shorter demand planning cycles, sharper demand forecasting leveraging data analytics,
optimised nodes of distribution and direct-to-customer/market deliveries to ensure timely
access to your Company's wide range of products.
The dynamic interplay of varied and evolving consumer preferences, multiplicity of
channels including emergence of new channels, diverse demographic profiles, vast
geographical landscape along with multifaceted socio-economic factors pose a high degree
of complexity for distribution of FMCG products in India. Given the varied set of needs
and challenges associated with each channel, TM&D continues to sharpen
channel-specific strategies to efficiently service consumer demand across the country.
Critical insights into consumer behaviour and channel-specific trends gained over the
years are being continuously leveraged to deliver superior performance in terms of
availability, visibility and freshness. The rapid growth of Modern Trade & e-Commerce
channels and the emergence of several new players in recent years, have also warranted
crafting of differentiated market/outlet specific strategies to seize the emergent
opportunities.
Your Company's multi-channel distribution network, which facilitates availability of
its products in nearly seven million retail outlets, was further strengthened during the
year with the addition of new markets and outlets to its direct servicing base. Market and
outlet coverage were stepped up to appx. 1.4x and 1.1x respectively over the previous
year. In rural markets, your Company continued to roll out market-specific interventions
to enhance direct coverage on the basis of socio-economic indicators and market potential
to achieve growth rates higher than industry and support enhanced scale of operations
going forward. Direct reach enhancement in rural markets was supported through a hub and
spoke distribution model with the expansion of rural stockists network to 1.4x over
previous year and collaborations with rural-focused eB2B players. Your Company's extensive
e-Choupal network and deep connect with rural entrepreneurs were also leveraged in key
geographies to build local connect and carry out extensive consumer engagement activities.
These initiatives helped in substantially mitigating the impact of disruptions in the
traditional wholesale channel and enhancing distribution reach in rural markets. The Food
Service and Institutional channels also registered robust growth during the year
leveraging existing partnerships and enhancement of product range. Further, new
routes-to-market were unlocked during the year through several strategic partnerships to
deepen capabilities catering to specialised segments including ‘on-the-go'
consumption, direct marketing and QSRs.
Urban markets continue to witness increasing channel shift with proliferation of
emerging channels/eB2B players impinging on the performance of traditional
wholesale/retail channels. In line with its multi-channel strategy, your Company continued
to invest in strengthening traditional trade by leveraging digital technology. Continuing
its focus on automation, data-led insighting and machine-learning enabled solutions, your
Company has implemented a slew of innovations to drive field-force productivity and
performance in urban markets. Customised servicing basis outlet potential and retail
engagement programmes were deployed to stimulate demand for your Company's products with
enhanced focus on premium grocery outlets.
As reported earlier, your Company was amongst the frontrunners in the industry to
launch an app-based anytime ordering system for retailers - UNNATI.
The digitally powered eB2B platform was rapidly scaled up during the year covering
nearly 3 lakh outlets within a short span of time since national launch facilitating sharp
and direct engagement with retailers, superior analytics, personalised recommendations of
hyperlocal baskets based on consumer purchase insights, and deeper brand engagement. Your
Company also scaled up VIRU (Virtual Salesman), a technology solution to enable
contactless ordering by retailers and direct communication with trade, especially during
times of limited mobility or absence of salesforce, using Machine Learning for
hyper-personalisation.
During the year, TM&D continued to focus on enhancing availability in markets
proximal to its ICMLs through increased awareness levels, product trial generations,
expansion of distribution reach and consumer promotions.
The Modern Trade channel witnessed robust growth on the back of improved mobility and
store footfalls.
In addition, reach expansion in Tier 2 and Tier 3 cities coupled with omni channel
presence also aided growth. Cash and Carry format, which operates in the B2B space,
continued to grow rapidly. Your Company's business with Modern Trade continued to grow on
the back of a format-based assortment approach catering to the needs of a diverse set of
shoppers with category specific sell-out strategies. Agile supply chain initiatives
including collaborations with eco-system partners led to enhanced operational and
execution efficiencies.
Significant increase in internet penetration led by smartphones, growing adoption of
digital payments, attractive loyalty programmes, wide assortment of products and faster
deliveries continue to drive the rising salience of e-Commerce channel. Your Company
collaborated with leading e-Commerce platforms on all aspects of operations i.e. category
development, marketing, supply chain and customer acquisition. This was augmented by
development of exclusive and relevant pack assortments, driving ‘Digital First'
brands and enabling platform discoverability through jointly curated campaigns. Joint
Business Plans, built and executed in close co-ordination with e-Commerce platforms,
further consolidated the market standing of your Company.
Further, the presence of your Company's brands in Health and Hygiene space was
strengthened on e-Commerce channel with the addition of new partners. Sales through the
e-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 15
cities and continues to receive excellent consumer response. Powered by state-of-the-art
digital technology and robust fulfilment infrastructure, the platform offers consumers
on-demand access to a wide range of your Company's FMCG products across 45+ categories and
over 700 products under one roof. Your Company continues to scale up its presence in the
rapidly growing emerging channels and has further expanded availability of its products
with new trade partners on Quick Commerce and Social Commerce platforms.
The scale and diversity of your Company's distribution network continues to be a
critical 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 of
emerging channels, your Company also executed over 110 new product launches across target
markets besides extending distribution reach of several existing products in the
portfolio.
TM&D continues to leverage cutting-edge digital technologies to drive productivity,
improve market servicing, draw actionable insights for sharp-focused interventions,
augment sales force capability and deepen connect with retailers. Technology enablement in
the form of customised mobility and routing solutions, machine learning algorithms, data
science models, data analytics comprising insightful visualisation tools and predictive
analysis is being increasingly leveraged to enable speedy and accurate data capture,
enable real-time informed decisions and aid in scientific design of trade inputs to drive
sales.
Several interventions were undertaken by TM&D during the year to enhance
operational efficiency and productivity in order to drive structural competitive
advantage. These include delayering of operations through direct shipments to customers,
smart buying including efficient freight procurement and supply chain & network
optimisation.
During the year, your Company completed setting up of two state-of-the-art Ancillary
Manufacturing cum Logistics Facilities (AMLF) - at Pudukkottai and Kapurthala. These
state-of-the-art automated facilities are co-located with the respective ICMLs and are in
line with the strategy of minimising total delivered cost and enhancing market
responsiveness, besides reducing complexity in operations and cost of servicing.
Your Company continues to invest in augmenting the depth and width of its distribution
network while adopting a differentiated approach to address the unique needs of its
diverse FMCG product portfolio, market segments and trade channels. Cutting-edge digital
technologies are being scaled up towards strengthening TM&D's real time operations and
execution platform spanning synchronised planning and forecasting, NextGen agile supply
chain, and smart demand capture and fulfilment.
With its best-in-class systems and processes, an agile and responsive supply chain, and
a synergistic relationship with its channel partners, TM&D's distribution highway is a
source of sustainable competitive advantage for your Company's FMCG Businesses and is well
poised to support the rapid scale up of operations in the ensuing years.
HOTELS
The global Travel & Tourism industry has been severely impacted by the COVID
pandemic over the last two years. The industry's contribution to global GDP, which had
contracted 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 & Tourism
sector, which had suffered 62 million job losses in 2020, could recover only 18 million
jobs in 2021. According to United Nations World Tourism Organisation (UNWTO), while
international tourist arrivals witnessed a 4% increase in 2021 on a soft base, the same
remains below pre-pandemic levels by 72%.
The Travel & Tourism sector holds prime importance for the Indian economy as well,
with its direct and indirect economic impact estimated at appx. 10% of GDP (at
pre-pandemic levels). The extensive tourism value chain spanning hotels, travel agents,
airlines, tour operators, restaurants, tourist transporters and guides, etc. results in a
huge economic multiplier impact, ranking it amongst the highest across industries on this
count. India's Travel & Tourism sector has also been severely impacted by the pandemic
since early 2020. Domestic Air Passenger traffic declined by over 40% and international
tourist arrivals degrew by 87% during 2021 over pre-pandemic levels, leading to cascading
effect across the entire hospitality industry.
After a severely disrupted FY 2020-21, India's Travel & Tourism sector witnessed a
smart recovery even as recurrent waves of the pandemic caused severe disruptions on an
intermittent basis. Periodic restrictions on travel, public gatherings and restaurant/
banquet operations induced by the second wave of the pandemic severely impacted the
industry's performance in the first half of the year. The Business responded with agility
focusing on alternate customer segments and revenue streams, such as domestic leisure,
staycations, long weekend stays and weddings. Receding intensity of the second wave of the
pandemic coupled with pickup in the pace of vaccination gradually improved consumer
confidence for travel; events such as weddings & social gatherings also enabled the
Business to garner revenues. In the second half of the year, green shoots of recovery in
business travel became visible, leading to improved occupancy levels in business hubs.
While the third wave in January 2022 briefly halted the recovery momentum, the industry
bounced back towards the end of the year with exit occupancies surpassing pre-pandemic
levels and business travel sentiments improving. While Average Room Rate improved over the
previous year, it remained below pre-pandemic levels.
The Business continued to focus on its strategy of offering a host of curated
propositions across accommodation, dining and banqueting to augment revenues across
properties. This included introduction of special packages offering value and flexibility
targeting short getaways/staycations, revamped packages for the MICE (Meeting, Incentives,
Conferencing, Exhibition) & wedding segments and extension of additional benefits to
members 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 designed
menus 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 hygiene
and safety at your Company's iconic Hotels.
The programme incorporates cutting-edge technologies to provide a pathogen-free
environment across all ITC owned properties and has received a Platinum Level
certification from M/s. DNV (one of the world's leading certification bodies). The
Business continues to invest in creating contactless technologies and ensuring social
distancing protocols.
Against the backdrop of a challenging operating environment, Segment Revenue for the
year stood at Rs 1285.00 crores representing a growth of 104.8% while Segment EBITDA stood
at Rs 78.03 crores against a loss of Rs 268.60 crores in the previous year. Segment PBIT
for the second half of the year turned positive against a loss of Rs 107.43 crores in the
corresponding period of the previous year.
Your Company's Hotels Business remains amongst the fastest growing hospitality chains
in the country with 113 properties and over 10,700 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 the
Leisure & Heritage segment. ITC Hotels was recognised as the best Luxury Hotel Chain
for the 3rd consecutive year at Travel + Leisure India's Best Awards 2021. In the premium
segment, the ‘Welcomhotel' brand continues to strengthen its equity with refreshed
and distinctive positioning of ‘Enriching Experiences'. During the year, nine new
properties were added to the Group portfolio, including four under the Welcomhotel brand -
- Welcomhotel Bhubaneswar located in Odisha offering 107 guest rooms and suites, which
draws inspiration from the magnificence of 500+ temples that adorn the city;
- Welcomhotel Guntur located in Andhra Pradesh offering 104 guest rooms inspired by the
cultural 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 signature
dining.
These properties have received excellent response from guests within a short span of
time.
The Welcomhotel brand now consists of 23 hotels and over 2,600 keys. With a strong
pipeline of properties to be onboarded under the management contract route, the brand is
well poised for rapid scale up in line with the ‘asset-right' growth strategy of the
Business.
The ‘Fortune' brand continues to maintain its pre-eminent position in the
Mid-market to Upscale segment, with the positioning of ‘First class, full service
hotels - an affordable alternative', comprising 39 properties and nearly 3,000 rooms. The
‘WelcomHeritage' brand continues to create best-in-class authentic experiences with
an 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 together
a collection of unique hotels across varied destinations ranging from modern marvels,
hidden retreats to historic treasures, leaving guests with experiences and memories which
become prized mementos long after their visit. ‘Storii by ITC Hotels' is positioned
as a collection of handpicked properties offering unique bespoke experience-led stays, in
harmony with the environment and the local community. Several agreements/memoranda of
understanding have already been signed under these brands; properties are expected to be
launched in a phased manner over the next few quarters.
Leveraging its expertise and experience in the domain of sleep, the Business launched
its signature ‘Sleeep' Boutiques across the country, offering a wide range of premium
home bedding products with both online and offline retail options. These boutiques,
present across seven ITC Hotels, have received encouraging response and plans are on the
anvil to scale up operations going forward.
The world-class ambience of your Company's luxury hotels continues to be leveraged for
gourmet luxury chocolates under the Fabelle brand with exclusive boutiques across eight
ITC 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 Best
Awards 2021. ITC Maurya was also recognised as the ‘Favourite Indian hotel' for food
and 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 have
achieved 2030 Carbon emissions targets basis COP 21 Paris agreement (as per the Hotel
Decarbonisation report issued by International Tourism Partnership). Furthering your
Company's Responsible Luxury ethos, ITC Grand Chola at Chennai and ITC Gardenia at
Bengaluru have received LEED? Zero Carbon Certification, in addition to ITC Windsor at
Bengaluru which achieved the prestigious accreditation last year. Together, these
properties are the first three hotels in the world to receive the LEED? Zero Carbon
Certification. Further, Welcomhotel Guntur, Welcomhotel Bhubaneswar and Welcomhotel
Chennai received the prestigious LEED? Platinum Certification by USGBC (U.S. Green
Building Council)/IGBC (Indian Green Building Council). Going forward, the Business will
continue to further enhance the renewable electrical energy portfolio, increase the number
of LEED? Zero carbon certifications, and reduce carbon emission levels.
Digital investments continue to be leveraged towards facilitating guest acquisition,
enhancing guest experience, augmenting revenue generation and driving operational
efficiency. During the year, the managed properties portfolio was seamlessly integrated
with the contemporary cloud based central reservation and distribution system of the
Business. The ITC Hotels website was also refreshed with additional functionalities to
cater to segment specific customer requirements and leverage advanced analytics to provide
a single window platform for brands across your Company's Hotels Business. During the
year, the Business also launched its full stack ITC Hotels Mobile App with cutting-edge
user experience enabling swift and easy access to Room and F&B Reservations, Food
delivery, loyalty benefits and a host of exclusive offers. The App continues to receive
good response within a short span of time and is being leveraged effectively to enhance
customer engagement and enable revenue growth.
Over the years, your Company has expanded its footprint in the Luxury and Upper Upscale
segments of the Indian hospitality industry and has created 15 iconic properties
comprising around 3,600 rooms across the country. Construction of ITC Narmada in Ahmedabad
is progressing well and the hotel is expected to be commissioned shortly.
Your Company's ‘asset-right' strategy envisages a substantial part of incremental
room additions, going forward, to accrue through management contracts. The Business is
witnessing growing interest amongst property owners to partner with its iconic brands
resulting in healthy generation of leads and pipeline for management contracts. The
Business 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 revenue
streams and pursue alternate structures in line with industry recovery dynamics towards
engendering the next horizon of growth as also enhancing value creation.
With its highest standards of hygiene and safety, portfolio of world-class properties,
iconic cuisine brands and best-in-class service levels anchored on ‘Responsible
Luxury' ethos, your Company is well placed to sustain its pre-eminent position in the
Indian Hospitality industry.
PAPERBOARDS, PAPER AND PACKAGING
Paperboards & Specialty Papers
After a sharp decline in FY 2020-21, global demand for Paper & Paperboards
witnessed a growth of about 10% in FY 2021-22. Paperboards segment is estimated to have
grown 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 to
international fibre prices remaining elevated throughout the year. Writing & Printing
Paper, which had degrown significantly in FY 2020-21, grew at a moderate pace of 5-7% with
educational institutions and offices continuing to remain partially closed in the course
of the year. The Indian industry witnessed broad based uptick in demand across most
end-user segments driven by Consumer Goods, Pharmaceuticals, Food Service and e-Commerce.
Despite significant operational challenges due to the pandemic and continued global
supply chain disruptions, the Business achieved record volumes and higher realisations
during FY 2021-22.
Structural interventions across the value chain including, inter alia, developing high
yielding clones, augmenting value added paperboard & in-house pulp manufacturing
capacity and creating superior distribution infrastructure, product & process
innovation, digital interventions including Industry 4.0 continue to provide the Business
sustainable competitive advantage. The Business fortified its clear leadership in the
Value Added Paperboard (VAP) segment through the introduction of innovative new products
customised for end-use industries and maintaining best-in-class service levels for key
customers. The Business is also a leading player in the eco-labelled products segment as
well as the premium recycled paperboards space.
The Business demonstrated agility amidst supply chain disruptions and achieved robust
growth in domestic and export markets while reinforcing its position as a reliable supply
chain partner.
This was enabled through strategic partnerships, proactive supply chain management and
agility in execution. The Business expanded its footprint in key geographies such as UK,
West Europe, Middle East and the Mediterranean region, enhancing its share of business
with leading paper merchants.
Your Company is actively engaged in developing and promoting suitable paper and
paperboard 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). These
products, which serve as alternatives to plastic coated containers, cups and other deep
freeze applications, registered robust growth during the year and continue to gain
popularity with increasing awareness levels amongst customers. The portfolio was also
augmented with the launch of a new range of Specialty Papers for e-Commerce/ courier
envelopes and paper tapes. The Business is stepping up investments in this fast-evolving
space which holds immense growth potential supported by the R&D capabilities of your
Company's Life Sciences and Technology Centre and through external collaborations with
global specialists. To rapidly scale up its future-ready product portfolio through
cutting-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 Papers
segment.
Market standing stood enhanced during the year driven by product mix enrichment,
diversification of the customer base and launch of innovative products such as anti-viral
and anti-bacterial Specialty Paper - ‘NPP Pro' for use in pharmaceutical leaflets and
packaging applications. The domestic industry continues to remain under pressure on
account of cheap imports from China. The recent introduction of anti-dumping duty on Decor
paper is expected to increase ‘Make in India' opportunities and enable import
substitution.
Cost of key inputs remained elevated throughout the year. Besides a sharp increase in
pulpwood prices, recycled fibre prices also ruled high due to lower collections/supplies
as a result of pandemic led disruptions and high shipping costs. While the prices of key
chemicals increased significantly due to strong global demand coupled with increase in
crude prices & energy costs, coal supplies were adversely impacted by supply chain
disruptions and prioritisation of domestic supplies to thermal power plants. Geopolitical
tensions in Europe exacerbated the pressure on supplies of major inputs during the last
quarter of FY 2021-22. In spite of these challenges, the Business responded to market
requirements with agility to ensure uninterrupted supplies to customers.
The Business continues to make structural interventions to reduce dependence on
imported pulp, enabling substantial reduction in operating costs. Significant increase in
in-house pulp production was achieved through strategic interventions, Industry
4.0 initiatives and improved wood mix. Capacity utilisation of Bleached Chemical Thermo
Mechanical Pulp mill (BCTMP) at the Bhadrachalam unit touched a record high during the
year. Initiatives such as bund plantation and scaling up plantations in new catchment
areas in Odisha and Chhattisgarh have enabled procurement of more than 10,000 MT of wood
from these areas, with further potential for increasing cost-effective access to fibre in
the 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 benefits
through its Business Excellence initiatives. In recent years, the Business has embarked
upon a comprehensive Digital Transformation Programme across the vectors of manufacturing,
supply chain and support services to achieve operational excellence and drive improvement
in profitability.
Your Company is a pioneer in the adoption of Industry
4.0 in the Indian Paper & Paperboard industry. Digital and emergent technologies
remain deeply embedded in the operations of your Company's Paperboards & Specialty
Papers Business, and continue to be leveraged towards enhancing operational efficiency,
reducing wastages and enabling cost optimisation across the value chain. The
multi-dimensional digital interventions encompass Industrial IoT for Smart Operations,
Integrated Data Infra/Platform, AI/ML algorithms for optimisation in the manufacturing
process, AI/ML based image analytics and IoT based crop monitoring & advisory. The
Business is also collaborating with partners from the start-up ecosystem, as well as
established solution providers, in building scalable solutions that are custom-fit to
business requirements. Over 50 use cases have already been developed and implemented
across multiple spheres of the Business, aiding in margin expansion.
During the year, the Business received global recognition and was adjudged winner at
the Pulp & Paper International (PPI) Awards by Fastmarkets RISI in the category of
‘The Internet of Things & Digitalisation'. Your Company became the first Asian
company to receive this global award, demonstrating its ‘best-in-class' credentials
amongst 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 and
disease-resistant clones that are adaptable to a wide variety of agro-climatic conditions
which aid in securing greater consistency in farmer earnings. In this context, your
Company's Life Sciences and Technology Centre is engaged in developing higher yielding
second generation clones with enhanced pest and disease resistant attributes.
Your Company has the distinction of being the first in India to have obtained the
Forest Stewardship Council-Forest Management (FSC?-FM) certification, which confirms
compliance with the highest international benchmarks of plantation management across the
dimensions of environmental responsibility, social benefit and economic viability. Till
date, your Company has received FSC?-FM certification for close to 1.3 lakh acres of
plantations involving over 30,000 farmers. During the year, over 3 lakh tonnes of
FSC?-certified wood were procured from these certified plantations. Your Company
sustained its position as the leading supplier of FSC?-certified paper and paperboards in
India.
All manufacturing units of the Business continue to recycle nearly 100% of the solid
waste generated during operations by converting the same into lime, fly ash bricks, grey
boards, egg trays etc. In addition, the Business recycled around 1.1 lakh tonnes of waste
paper during the year, thereby sustaining your Company's positive solid waste recycling
footprint.
The manufacturing facilities at Bhadrachalam, Kovai, Tribeni and Bollaram continue to
receive industry recognition for their green credentials and safety standards in line with
your Company's focus on sustainable business practices. The Bhadrachalam Unit is the first
pulp & paper plant and the second in the country overall, to be rated GreenCo
Platinum+ 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 to
achieve the highest platinum rating under the Alliance for Water Stewardship Standards.
Bhadrachalam and Kovai mills won awards for Excellence in Energy Management at the 22nd
National Awards for ‘Excellence in Energy ManagementRs in the Pulp & Paper
sector. The Bhadrachalam unit was rated as the Winner in RsWithin the Fence' category
under CII-National awards for Water management.
The Business continues to strengthen its safety management processes, adopt globally
recognised best practices and ensure that facilities are designed, constructed, operated
and maintained in an inherently safe manner.
In line with the objective of enhancing the share of renewable energy in its
operations, the Business has implemented several initiatives including investments in a
green boiler, high pressure & efficiency circulating fluidised bed boiler, solar &
wind energy and increased usage of bio-fuel. With these initiatives, renewable sources
presently 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 High
Pressure Recovery Boiler at the Bhadrachalam mill, replacing conventional soda recovery
boilers, ahead of project schedule despite the disruptions caused by recurrent waves of
COVID. The boiler is one of the largest to be commissioned in the country and is a
testament to your Company's commitment towards embedding sustainability in its operations.
By enhancing energy efficiency, this intervention will reduce the carbon footprint of the
unit's operations through significantly lower coal consumption.
Going forward, paperboard demand is expected to be driven by end-user segments such as
household appliances, consumer goods, ready-made garments, e-Commerce, pharmaceuticals,
etc. Writing & Printing paper demand is also expected to bounce back in the short-term
on the back of demand from the publishing and notebooks industry following re-opening of
educational institutions.
The integrated nature of your Company's business model - comprising access to
high-quality, cost competitive and renewable fibre supply chain, in-house pulp
manufacturing capability, import pulp substitution, world-class product quality,
state-of-the-art manufacturing facilities leveraging data analytics and Industry 4.0 along
with robust forward linkages with the Education and Stationery Products Business and the
Printing and Packaging Business - is a key source of competitive advantage for your
Company's Paperboards & Specialty Papers Business. Your Company is confident of
sustaining and further consolidating its clear leadership position in the Indian Paper and
Paperboards industry leveraging recent investments in innovation platforms anchored on the
development of sustainable products and cutting-edge digital technologies to set new
benchmarks of competitiveness, efficiencies and productivity.
Packaging and Printing
Your Company's Packaging and Printing Business is a leading provider of superior
value-added packaging solutions leveraging its comprehensive capability-set spanning
multiple technology platforms coupled with in-house cylinder making and blown film
manufacturing lines. The Business caters to the packaging requirements of leading players
across several industry segments viz. Food & Beverage, Personal Care, Home Care,
Footwear, Consumer Electronics, QSR, Pharma, Liquor and Tobacco.
It also provides strategic support to your Company's FMCG and Cigarettes Businesses by
facilitating faster turnaround for new launches, providing innovative packaging solutions,
ensuring security of supplies and delivering benchmarked international quality at
competitive cost.
The year under review remained challenging for the Business due to disruptions caused
by the pandemic, along with steep increase in commodity prices. Notwithstanding the
challenging operating environment, the Business demonstrated resilience with an uptick in
demand across most end-use segments, leading to robust growth in domestic as well as
exports businesses.
The Business continued to service the critical packaging requirements of several
industry segments, including your Company's Branded Packaged Foods, Personal Care Products
and Cigarettes Businesses. Leveraging its supply chain network and superior customer
relationships, the Business also responded with agility to seize opportunities in export
markets, reinforcing its position as a reliable supply chain partner.
The Business continues to craft innovative packaging solutions leveraging its deep
understanding of end-user needs and the capabilities of your Company's Life Sciences and
Technology Centre. Recognising the need for sustainable packaging and the resultant
emerging demand for plastic substitutes, the Business launched its flagship
‘InnovPack' campaign and identified certain end-use segments with potential for rapid
adoption of sustainable packaging and plastic substitution solutions. Further, a steady
pipeline of pioneering solutions anchored on molecular science research is also in place
such as ‘Bioseal' (compostable packaging solution for Quick Service Restaurants,
personal care and packaged foods industries), ‘Oxyblock' (a recyclable coating
solution with enhanced barrier properties for packaged foods, edible oils, etc.) and
‘Germ free coating' (solution for microbial free packaging surface addressing the
consumer consciousness towards hygiene and safety). These products continue to receive
encouraging response; the portfolio is being augmented progressively with a range of
solutions that are in various stages of commercialisation. Investments are being stepped
up in this fast-evolving space which holds immense growth potential.
The Business has been consistently recognised amongst the top ranked global packaging
companies on productivity parameters as per the latest International Packaging Group and
International Flexibles Packaging Network rankings. During the year, the Business won
several prestigious awards, viz., the WorldStar award for Getkrrackin Bottle Profiled
Pouch, the IFCA Star award and SIES SOP Star Award for its excellence in packaging under
various categories including sustainability and eco-friendliness. The manufacturing
facilities at Tiruvottiyur, Haridwar and Munger maintained the highest standards in
Quality and Environment, Health & Safety (EHS). All three units are certified as per
the Integrated Management System, consisting of ISO 9001:2015, ISO 14001:2015, ISO
45001:2018 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, for
global standards in packaging and packaging materials - a key enabler for supplies to the
packaged foods industry. The Tiruvottiyur unit received the Silver Award for Excellence in
EHS from CII. The Haridwar unit received the Gold trophy from the National Safety Council
for Excellence in EHS systems.
To cater to its growing customer base across the country and to further improve
customer service levels, the Business has initiated investments to expand its
manufacturing footprint in the Western region. The facility, equipped with
state-of-the-art technologies, is expected to be commissioned in FY 2022-23 and provide
significant opportunities to tap the growing demand in the region.
With world-class manufacturing technology across a diverse range of platforms and
best-in-class quality management systems, the Packaging and Printing Business has
established itself as a one-stop packaging solutions provider to several segments and is
recognised as a ‘first choice packaging partner' across the consumer goods industry.
The Business is confident of sustaining its pre-eminent position in the Packaging and
Printing industry through focused investments towards expanding its range of sustainable
packaging solutions and by diversifying its manufacturing base in the western region, a
large potential market for the Business.
AGRI BUSINESS
Leaf Tobacco
A punitive and discriminatory taxation and regulatory regime on cigarettes, apart from
providing a fillip to illicit trade and severely impacting the domestic legal cigarette
industry, has also exerted significant pressure on the leaf tobacco crop grown in India.
Excess supply from certain competing geographies coupled with weakness in their currencies
has resulted in reduced demand for Indian tobacco in international markets, causing lower
realisations for Indian farmers. Lower export incentives in India have adversely affected
the competitiveness of Indian tobacco in global markets and impacted farmer earnings.
In addition to the above, the recent pandemic- induced disruptions in major consumption
markets overseas have also impacted regional manufacturers in such markets, thereby
reducing their leaf tobacco purchases from India. Consequently, Indian leaf tobacco
exports have declined by around 20% over the last eight years from 236 million kgs in FY
2013-14 to 188 million kgs in FY 2021-22.
However, during the year, global supply chain disruptions led to global manufacturers
scouting 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 value
chain and sustainability credentials, superior product quality and world-class processing
facilities to strengthen its position as a reliable supply chain partner.
Superior customer engagement, operational agility and supply chain efficiency enabled
the Business to deliver enhanced value to existing customers and increase new business
development. The Business consolidated its pre-eminent position as the largest
Indian exporter of unmanufactured tobacco and aided in improving its market share by
about 600 bps.
Strategic cost management across the value chain continues to be a key focus area for
the Business.
The AI/ML powered smart buying platform continues to be scaled up to facilitate
efficient leaf tobacco buying across auction platforms. Several initiatives implemented in
recent years have led to improved operating efficiencies across manufacturing and supply
chain.
The Business continues to make focused investments across the tobacco value chain
anchored on the key vectors of Quality, Consistency, Compliance and Sustainability. Crop
and region-specific agronomic practices continue to be deployed to cater to the emerging
preferences of customers. Synergistic R&D initiatives with focus on varietal
development, climate smart farming techniques and usage of water efficient technologies
are being scaled up towards improving productivity, product quality and reduction in
cultivation costs. The Business has successfully implemented integrated energy management
initiatives spanning energy conservation, promotion of alternative fuel usage and energy
plantations, towards achieving fuel self-sufficiency in the curing process of Flue Cured
Virginia tobacco. In addition to these initiatives, your Company is taking up integrated
watershed management programmes to ensure availability of water for irrigation during
critical phases of the crop cycle.
The Business continues to set benchmarks in leaf threshing operations through focused
initiatives and innovative technological solutions. Investments continue to be made in
your Company's Green Leaf Threshing plants (GLT) at Anaparti, Chirala and Mysuru towards
delivering world-class quality and upgrading processing technology. The energy needs of
all three GLTs are substantially met from renewable sources in line with your Company's
philosophy of adopting a low-carbon growth path. Continuity of operations was ensured
during the second and third wave of the pandemic through systematic and proactive
engagement with all stakeholders.
The Business remains committed to the highest standards of EHS (Environment, Health,
Safety) and Quality and continues to win recognition in these areas. During the year, the
Business received the CII awards for "National Excellence" in Energy management
and "Most Innovative Best Practices" as well as the "Prashansa Patra"
award from National Safety Council. In addition, the Business received various awards at
events organised by the Quality Circle Forum of India & CII for technological
improvements and quality control.
With increasing focus on sustainability and human rights compliance driven by
regulations in EU and US, your Company is well poised to meet the current and emerging
requirements of global customers with its best-in-class sustainability policies,
programmes and systems across the value chain.
Over the years, a sharp fall in domestic crop output, sustained pressure on domestic
legal cigarette volumes and decline in leaf tobacco exports, as aforestated, have led to
severe stress on farmer earnings which have declined by over Rs 7000 crores in the last
seven years since FY 2014-15. Illicit cigarettes as well as smuggled New Generation
Products (NGPs) and Electronic Nicotine Delivery Systems (ENDS) in the country also impact
leaf tobacco trade as these products do not use Indian tobacco. As seen in the past,
stability in tax incidence and regulations lead to stable demand for leaf tobacco with the
legal cigarette industry being able to recover volumes lost to illicit trade. Accordingly,
a more balanced regulatory and taxation regime that cognises for the unique tobacco
consumption pattern prevalent in India and the economic realities of the country is the
need of the hour to support the Indian tobacco farmer and the 46 million livelihoods
dependent on tobacco. Lower export incentives in India and unfavourable import duty levied
in several markets, including the USA and Europe, have weighed on the competitiveness of
Indian leaf tobacco exports. Restoring export incentives to earlier levels and necessary
policy support to alleviate trade barriers would go a long way in enhancing the
competitiveness of unmanufactured tobacco exports from India and contribute to increasing
farmer earnings. Your Company continues to engage with policy makers on these matters.
The Business will continue to provide strategic sourcing support to your Company's
Cigarettes Business even as it consolidates its leadership position as a major exporter of
quality Indian tobacco thereby catalysing the multiplier impact of increased farmer
incomes to benefit the rural economy. With its strong R&D capability, modern
processing facilities, crop development & extension expertise and deep understanding
of customer and farmer needs, your Company is well poised to sustain its position as a
world-class leaf tobacco organisation.
Other Agri Commodities
The operating environment remained challenging during the year due to disruptions in
operations caused by the second and third waves of the pandemic. Severe shortages in
container availability, congestion in ports and steep increase in freight rates
exacerbated the situation. In spite of such challenges, India emerged as a resilient and
dependable source of agri-commodities to meet global demand.
Notwithstanding the challenging operating environment, the Business leveraged market
opportunities 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 sourcing
networks, multi modal transport capability, agile supply chain operations and deep
customer relationships.
The scope and scale of operations of your Company's Agri Business have grown manifold
over the years and currently encompass over 4 million tonnes in 22 states and over 20
agri-value chains. The strategic focus of the Business in recent years has been to
accelerate growth by rapidly developing and scaling up its Value-Added Agri Products
(VAAP) straddling multiple value chains comprising Spices, Coffee, Frozen Marine Products
and Processed Fruits amongst others. The portfolio continues to be rapidly scaled up,
leveraging your Company's deep rural linkages and extensive sourcing expertise towards
strengthening and customising supply chains for traceable and identity-preserved sourcing
of agricommodities. Rapid adoption of analytics led smart procurement tools continue to
enhance competitively superior sourcing capabilities.
- Your Company is a leading player in whole spices such as Chilli, Turmeric, Coriander
and Cumin.
In line with its strategy of enhancing value addition, the Business has, in recent
years, expanded into ‘food safe' markets viz. USA, EU and Japan, leveraging its key
strengths such as identity- preserved sourcing expertise, strong backward integration,
superior processes, custody of supply chain and customer focused strategies. During the
year, the Business consolidated its position as a preferred supplier for discerning
customers 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 domestic
business also posted robust growth on the back of higher offtake from large format
retailers. The Business scaled up its Integrated Crop Management (ICM) programme, thereby
enhancing its ability to produce food safe spices in a sustainable manner.
The Business continues to partner with the various State Governments for production of
food safe spices and has maintained an unblemished track record over the years in terms of
compliance with stringent food safety parameters.
- The Business also leveraged its strong backward integration linkages to enhance
presence in the organic spices segment, with the entire value chain being certified by
globally renowned agencies, providing assurance on product authenticity and compliance
with stringent norms in the EU, US and Indian markets. The Business continues to pursue
sustainable farm management practices anchored on Rainforest Alliance and Global GAP
accreditation. The Spices Business received the ‘Outstanding Performance in Food
Safety' award from CII under the Large Food Business category for its backward integration
programme.
- During the year, domestic coffee trade remained muted in anticipation of higher
realisations on account of lower crop size in Brazil coupled with container shortages and
elevated ocean freight rates. Notwithstanding these challenges, the Business recorded
robust growth in exports driven by European and Middle East markets.
This was enabled through strategic presence in key coffee producing regions in India,
deep knowledge of estate and region-specific characteristics and focus on premium grades
of Arabica, Certified Coffees, Specialty and Monsooned Coffee. Apart from servicing the
needs of leading coffee houses in the value-added space, the Business continues to source
high 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 products
from India with expertise in processing individually quick-frozen (IQF), raw and cooked
products, which adhere to the highest standards of safety and hygiene prevalent in
developed markets such as the US, EU and Japan. During the year, the Business touched
record levels of sales driven by expansion into new markets in North America and Middle
East. Leveraging its strong domain knowledge and sourcing expertise, the Business also
sources shrimps and supports the ‘ITC Master Chef' range of ‘Super Safe' frozen
prawns in the domestic market and supplies high-quality shrimps to your Company's Hotels
business.
- In the Processed Fruits & Vegetables segment, the Business continues to expand
its footprint in categories of fruit pulp and tomato paste across conventional and
certified segments through a robust collaborative network comprising a large number of
small and marginal farmers across four states.
The Business remains focused on enlarging its scope of operations to include fresh and
processed products in identified agri-commodities such as staples for the Food Service
segment, fresh and frozen fruits & vegetables. As these businesses develop critical
mass, the Business is also scaling up end-to-end presence across the value chain,
supported by the R&D capabilities of your Company's Life Sciences and Technology
Centre and external collaborations.
Towards building deeper expertise in Medicinal and Aromatic Plant Extracts (MAPE), the
Business scaled up its customised crop development programme in Madhya Pradesh during the
year. Collaborations with farmers are underway with the Business providing necessary
inputs, advisory and on-field support.
The Business is also focusing on developing unique value-added products by leveraging
the research platforms of your Company's Life Sciences and Technology Centre.
More than two decades ago, your Company conceptualised and rolled out the e-Choupal
network as a unique model towards enhancing agricultural growth and productivity, and
fostering sustainable rural development. Leveraging this robust platform, your Company
continues to focus on providing a range of value-added services in rural areas towards
enhancing the competitiveness of Indian agriculture and playing a critical enabling role
in integrating farmers, input vendors and government agencies besides facilitating
necessary market linkages. Integrated rural service hubs, ‘Choupal Saagar', continue
to serve farmers through their procurement and storage infrastructure, and front-end
retail stores. The Choupal Saagars facilitate efficient sourcing of a wide range of
agri-commodities while making available assorted brands and merchandise spanning
categories such as apparel, footwear, consumer durables, electronics and fuel, tailored to
farmers' needs. The Choupal Saagars also serve as an ideal platform for your Company's
FMCG brands to deepen their engagement with rural markets. Interventions such as Choupal
Pradarshan Khet, Choupal Mahotsav, etc. continue to enhance the vitality of your Company's
e-Choupal network.
Towards enhancing the competitiveness of domestic agri-value chains, fostering new
business models and further augmenting value creation opportunities, your Company has
successfully launched ITCMAARS (Metamarket for Advanced Agriculture and Rural Services) -
a crop-agnostic ‘phygital' full stack AgriTech platform in six states, with over 200
FPOs encompassing more than 40,000 farmers already added to your Company's network. This
initiative, powered by cutting-edge digital technologies, will create a robust eco system
to deliver seamless customised solutions to farmers, whilst creating new revenue streams,
strengthening sourcing efficiencies and powering your Company's world-class Indian brands.
This digitally powered platform seeks to empower the farming community by delivering
customised solutions through synergistically integrating NextGen agri-technologies. These
include an e-Marketplace for agri inputs and farm outputs, wide range of advisory services
covering weather forecasts, agronomy, best practices for improved productivity, quality
assurance, etc. Value propositions across each of these opportunity spaces are expected to
create new and scalable revenue streams for your Company over time. The Business expects
to rapidly scale up the initiative to create a unique platform providing significant
competitive advantage to your Company's Agri Business.
Over the years, your Company has invested significantly in building competitively
superior agri-commodity sourcing expertise comprising multiple business models, wide
geographical spread and customised infrastructure. These capabilities and infrastructure
have created structural advantages facilitating competitive sourcing of agri raw materials
for your Company's Branded Packaged Foods Businesses.
- The Business continues to leverage its strong farm linkages and wide sourcing network
across geographies to secure supplies of critical grades of wheat of benchmark quality
towards meeting the growing requirements of Aashirvaad atta.
During the year, the Business further scaled up its strategic sourcing and supply chain
interventions. These include focused crop development towards securing the right varieties
for Aashirvaad atta to provide consumers best-in-class product quality and experience, use
of multi-modal transportation comprising rail, road & coastal routes and enabling
supply of attribute based/identity preserved crop. The Business also ramped up direct
buying at various atta factories. For instance, at the Kapurthala ICML plant, direct
buying of wheat offers substantial benefits to farmers including transparency in grading,
weighment and pricing, besides reducing transaction costs due to minimisation of handling
and transportation. This initiative is being scaled up through focused crop development in
the area to upgrade crop quality.
In recognition of the various initiatives undertaken by the Business, including keeping
the entire supply chain fully functional during the multiple waves of the pandemic, your
Company was awarded the ‘Best Practice in Digital Transformation of Supply ChainRs in
Most Innovative Category at the CII Digital Transformation DX Awards, 2021.
The Business continues to collaborate with reputed research organisations such as the
Indian Agricultural Research Institute, Indian Institute of Wheat & Barley Research,
Indian Institute of Rice Research, Indian Institute of Soybean Research, Indian Institute
of Vegetable Research, Punjab Agricultural University and Agharkar Research Institute
towards building an efficient and cost competitive agri-value chain. During the year, the
Business further scaled up its wheat crop development programme and introduced
location-specific new and superior seed varieties along with appropriate package of
practices across Rajasthan, Uttar Pradesh, Bihar, West Bengal, Punjab, Madhya Pradesh and
Maharashtra. Sharp focus on deepening capabilities in proprietary crop intelligence,
scaling up the sourcing & delivery network and developing customised blends will
support your Company's Branded Packaged Foods Businesses in the years to come.
- The Business continues to leverage its strong backward linkages and wide sourcing
network across geographies to source high-quality fruit pulp and frozen vegetables for
your Company's ‘B Natural' and ‘Farmland' brands.
- Milk procurement network in Bihar and West Bengal was strengthened during the year
towards meeting the growing requirements of your Company's Fresh Dairy portfolio under the
‘Aashirvaad Svasti' brand, and in Punjab for ‘Sunfeast' Dairy Beverages. The
Business continues to empower farmers by providing infrastructure such as automated milk
collection units & chillers and imparting package of best practices to improve
operational efficiency, maintain high quality and ensure identity preservation and
traceability. 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 pouch
format and ‘Sunfeast Protein ShakeRs in the Fresh Dairy and Beverages categories
respectively.
- The Business continues to scale up sourcing of spices to meet the growing
requirements of Sunrise and Aashirvaad brands.
In line with the national goal of doubling farmersRs income, your Company remains
committed to catalyse a transformational shift of the agri ecosystem from the conventional
production-centric to demand-responsive value chains. Towards this, the Business continues
to focus on developing NextGen Indian agriculture, anchored on digitally enabled and
climate smart agri-value chains with strong market linkages.
The focus of these interventions is to reduce vulnerability and increase the resilience
of farmers, while lowering greenhouse gas emissions and promoting food security. Your
Company is confident of effectively participating in the emerging market opportunities
arising out of these interventions to create and capture enhanced value for its
stakeholders.
NOTES ON SUBSIDIARIES
The following may be read in conjunction with the Consolidated Financial Statements of
your Company prepared in accordance with Indian Accounting Standard 110. Shareholders
desirous of obtaining the Report and Accounts of your Company's subsidiaries may obtain
the same upon request. Further, the Report and Accounts of the subsidiary companies is
also available under the ‘Investor Relations' section of your Company's website,
www.itcportal.com, in a downloadable format. Your Company's Policy for determination of a
material subsidiary, as adopted by your Board, in conformity with Regulation 16 of the
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations 2015, can be accessed on your Company's corporate website at
https://www.itcportal.com/material- subsidiary-policy . Presently, your Company does not
have any material subsidiary.
Surya Nepal Private Limited
The year under review continued to be extremely challenging for Nepal. Economic
activities remained impacted due to lockdowns and other restrictions for more than four
months 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 July
2021, significantly below the Government of Nepal's target growth rate of 7%.
Progressive economic recovery was witnessed from September 2021 on the back of
increased vaccination coverage and other initiatives taken by the Government of Nepal.
On the external front, higher imports and lower remittances contributed to the widening
of the country's Current Account deficit. Due to drawdowns to finance such deficit,
foreign exchange reserves fell to US$ 9.58 billion as at mid-March 2022, from US$ 11.8
billion 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 increase
in imports and bolster the foreign exchange reserves of the country. While these
initiatives are expected to promote external sector stability in the near term,
initiatives towards encouraging Foreign Direct Investment (FDI) in the country,
incentivising domestic manufacturing to substitute imports and promoting the hospitality
sector, which has significant potential to generate foreign exchange earnings, remain key
for long-term sustainable growth of the economy.
The legal cigarette industry occupies an important place in Nepal's economy and is a
major contributor to the manufacturing sector of the country. However, the industry
continues to face challenges from a stringent taxation and regulatory regime. The company
continues to engage with policy makers for equitable, non-discriminatory, pragmatic,
evidence-based regulations and taxation policies.
The pandemic-induced disruptions rendered the operating environment extremely
challenging, particularly during the first half of the year under review. Notwithstanding
the same, the company reinforced its market standing by leveraging its robust portfolio,
superior product quality and wide distribution network. Differentiated and innovative
portfolio interventions under the Surya and Shikhar trademarks registered encouraging
growth. Supply chain agility coupled with proactive scenario planning ensured continuity
of manufacturing operations amidst the disturbances caused by the second wave of the
pandemic.
During the year, the company strengthened its market standing in the Agarbatti industry
leveraging its differentiated product portfolio, sharply focused marketing investments and
best-in-class product availability across target markets on the back of its robust trade
marketing 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 to
pandemic led disruptions. With progressive opening of markets, the company launched two
new offers, ‘Toffichoo Cofitino' and ‘Toffichoo Creme Lacto', in the category
and continues to make focused investments towards strengthening its market standing.
The company continues to adopt all measures towards ensuring the safety and well-being
of all its stakeholders. The company also places immense emphasis on making significant
contributions 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 enhance
productivity and enable upliftment of agri-infrastructure.
- support the animal husbandry sector by providing extension services covering animal
breeding, health and nutrition to drive yield improvement and higher returns for farmers.
- contribute towards improvement in quality of education in public schools in the
economic vicinity of its operating locations.
- support development of local public infrastructure in the catchment areas of
operating locations.
In addition, the company also provided support to government/community hospitals
involved in treatment of COVID patients by providing critical care equipment, oxygen
plant, 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 the
year ended 15th July, 2021 (31st Asadh, 2078), amounting to NRs. 941.47 crores (previous
year NRs. 488 per equity share amounting to NRs. 983.81 crores).
The company continues to be the largest contributor to the exchequer in Nepal. The
company is well positioned to consolidate its leadership position by leveraging its robust
portfolio of products, deep and wide distribution network, best-in-class manufacturing
facilities and execution excellence. The company continues to explore opportunities to
rapidly scale up the newer FMCG businesses and evaluate emerging opportunities in this
space.
ITC Infotech India Limited and its subsidiaries
The Information Technology industry witnessed continued acceleration in mainstream
adoption of digital technologies such as Cloud, Intelligent Automation, Digital Workplace
and Cybersecurity in the enterprise technology landscape. As per NASSCOM estimates, the
Technology Market grew by 15.5% in FY 2021-22, significantly ahead of the pre-pandemic
growth trajectory. Going forward, Digital and capability-led opportunities based on new
paradigms of technology consumption, such as ‘Everything as a Service' model, are
expected to drive industry growth. Hybrid operations, sustainable business models,
customer centricity, personalised employee engagement and digital skilling will continue
to accelerate and drive strategic decisions for the Technology industry in 2022. Hiring
and training the right talent with a focus on up-skilling and re-skilling remains a key
imperative for the industry, with employee well-being and engagement continuing to remain
critical to empower the distributed workforce.
The company continues to sharpen its focus on the strategic pillars of Customer
Centricity, Employee Centricity and Operational Excellence, while building differentiated
offerings around the strategic areas of Cloud Technologies, Digital Workplace Solutions,
Digital Manufacturing, Customer Experience and Data Analytics. During the year, the
company recorded robust growth in revenue on the back of strong traction in the Americas,
India and Rest of World markets. Industry 4.0 solutions, Global In-house Centre services
and Digital Experience using data analytics and Infrastructure services were the key
drivers of growth. The company also continued to forge new alliances and strengthen
existing relationships with Independent Software Vendors (ISVs) in focus areas such as
Digital Workplace Solutions, Digital Manufacturing and Data analytics. These partnerships
are aligned to the company's vision of taking a leadership role in enabling the Digital
Transformation 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 from
anywhere with sustained focus on client priorities and data security. The growing demand
for 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 to
earn global recognition. The company's Automation capabilities were positioned in the
‘Leadership ZoneRs in the Zinnov Zones Hyper Intelligent Automation Services 2021 for
Robotic Process Automation (Small & Medium Service Providers), IT Automation and
CPG-Retail. The company's Digital Workplace capabilities were considered a
‘DisruptorRs in Avasant's Digital Workplace Services 2021 RadarView™ (from being
placed under the ‘Challengers' category in the previous year). The company's Digital
Manufacturing capabilities were also profiled in an exclusive ‘Briefing Note' by
Information Services Group, Inc., titled ‘ITC Infotech: Business-friendly Approach
Strategically Placing Manufacturers, a Step Ahead of Competitors'.
During the year, the company's consolidated Total Income grew by 16.8% to Rs 2884.30
crores (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 year
Rs 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 Rs
447.79 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/- each
aggregating Rs 276.90 crores).
b. ITC Infotech Limited, UK, a wholly-owned subsidiary of the company, recorded Revenue
of 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 with
its 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 inorganic
opportunities to accelerate growth and profitability for which it has identified priority
areas 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 PTC
Inc., a 10-year Strategic Partner Agreement has recently been announced to accelerate
customer digital transformation initiatives through jointly developed offerings and
Go-to-Market strategies focused on facilitating conversion of customers' Product Lifecycle
Management (PLM) implementations to SaaS. Under the terms of this agreement, the company
will acquire a substantial portion of PTC's PLM implementation services business and
create a new business unit, called DxP Services, which will include PLM professional
services experts from both companies. The company will continue to explore value accretive
inorganic opportunities in identified priority areas as stated above.
The company will continue to focus on interventions around areas of strategic interest,
including creating and winning large transformation opportunities, expanding presence in
strategic accounts, building and sharpening domain-specific digital solutions,
strengthening distributed delivery framework, and re-skilling/up-skilling employees in
future-focused capabilities.
Technico Agri Sciences Limited
The company's leadership in production of early generation seed potatoes and strength
in agronomy continue to support the Bingo! range of potato chips of your Company and in
servicing 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 about
53 million MT, increasing by 12% over the previous year due to favourable weather
conditions. Consequently, potato prices reduced considerably on account of high supplies,
coupled with demand volatility arising out of the disruptions caused by the second wave of
the pandemic.
Despite the challenging environment, the company delivered a resilient performance
leveraging its strong brand equity, superior product quality, better on-field performance
and strong trade & customer relationships. The company's Revenue from Operations stood
at Rs 256.67 crores (previous year Rs 287.09 crores) with a Net Profit and Total
Comprehensive Income of Rs 43.04 crores (previous year Rs 72.92 crores). During the year,
the company paid a total dividend of Rs 8.00 per Equity Share of Rs 10 each, aggregating
Rs 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 confident
of effectively leveraging its deep domain expertise to fortify its market standing in the
seed potato industry.
Technico Pty Limited and its subsidiaries
The company continues to focus on upgradation and commercialisation of its
TECHNITUBER? Seed Technology and customising its application across various geographies.
Further, the company is also engaged in the marketing of TECHNITUBER? seed produced at
the facilities of its subsidiaries in China and Canada and Technico Agri Sciences Limited,
India, a wholly-owned subsidiary of your Company, to global customers. For the year under
review:
a. Technico Pty Limited, Australia registered a turnover of Australian Dollar (A$) 1.86
million (previous year A$ 2.09 million) and a Net Profit of A$ 0.91 million (previous year
A$ 0.79 million).
b. Technico Asia Holdings Pty Limited, Australia, Technico Technologies Inc., Canada
and Technico Horticultural (Kunming) Co. Limited, China - there were no significant events
to report with respect to the above companies.
WelcomHotels Lanka (Private) Limited
WelcomHotels Lanka (Private) Limited (WLPL), a wholly-owned subsidiary of your Company,
was incorporated in Sri Lanka in April 2012 with the objective of developing and operating
a mixed-use development project (‘Project') comprising a luxury hotel and a
super-premium residential apartment complex situated on 5.86 acres of prime sea-facing
land 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 is
also exempt from Sri Lankan foreign exchange regulations.
Project construction activity, which was running on schedule till Q3 FY 2018-19, was
adversely impacted due to disruptions in the aftermath of the terror incidents in 2019 and
thereafter by recurrent waves of the COVID pandemic. The recent deterioration of the
macro-economic scenario in the country has exacerbated the situation. The Government of
Sri Lanka is taking several measures to mitigate the crisis; these include securing
financial assistance from multi-lateral agencies/other countries, increasing interest
rates to curb inflation and restricting imports to conserve foreign exchange. The company
continues to closely monitor the evolving situation.
In spite of the aforementioned challenges and operational constraints, the company
remains focused on completing the Project in an expeditious manner. The macro-economic
challenges faced by the country have impacted, inter alia, the sales velocity of ‘The
Sapphire Residences' luxury apartments.
Given its unique positioning in the market and superior value proposition, the company
expects apartment sales to gain traction as the project nears completion and normalisation
of 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 Jack
Nicklaus Signature Golf Course - which continues to enjoy strong brand equity with its
members, guests and the golfing fraternity. Operations at the Club remained impacted by
the disruptions caused by the pandemic, particularly in the first half of the year. The
Club continued to ensure the highest safety and hygiene standards and social distancing
norms leading to progressive improvement in member footfalls in course of the year. The
Club continues to remain an 'Asian Tour Destinations Member', the only one in the country,
and hosted the prestigious Asian Tour Golf Tournament that was held in India after a
period of three years.
The company also owns ‘ITC Grand Bharat' - a 104- key all-suite luxury retreat at
Gurugram, which has been licensed to your Company. The retreat, an oasis of unhurried
luxury, is co-located with the company's prestigious Classic Golf & Country Club.
ITC Grand Bharat has received several accolades, establishing itself amongst the top
luxury resort destination hotels in the world. Travel + Leisure, one of the world's
leading magazines in the travel and hospitality sector, had declared ITC Grand Bharat as
the ‘Best Wellness RetreatRs in the domestic category as part of India's Best Awards,
2020.
The retreat has also been recognised as the 'Best Destination Wedding Venue in India,
Hotels (North)' by WeddingSutra Influencer Awards, 2021.
During the year ended 31st March, 2022, the company recorded Total Income of Rs 29.45
crores (previous year Rs 25.03 crores) and Net Profit of Rs 2.85 crores (previous year Rs
3.80 crores). Total Comprehensive Income for the year stood at Rs 2.88 crores (previous
year Rs 3.85 crores).
Srinivasa Resorts Limited
The company owns ‘ITC Kakatiya' - a 188-key luxury hotel located in Hyderabad
city, which is operated and marketed by your Company. The property has received several
accolades, establishing itself as one of the finest luxury hotels and F&B destinations
in the city. During the year, the property received LEED? Platinum certification from
United States Green Building Council as well as the Gold Award under ‘Energy
Conservation' category by Telangana State Renewable Energy Development Corporation
Limited. ‘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 Guide
Nightlife Awards 2022, for the 2nd consecutive year.
The company witnessed progressive recovery driven by resumption of business and
international travel.
The hotel continued to follow the highest standards of safety and hygiene for all
stakeholders.
During the year ended 31st March, 2022, the company recorded Total Income of Rs 44.86
crores (previous year Rs 26.74 crores) with Net Loss of Rs 1.63 crores (previous year Net
Loss 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 segment
under the brand ‘Fortune', remains a front-runner in its operating segment and is
well positioned to sustain its leadership position in the industry.
While the ‘Fortune' brand is already established as a premier business hotel brand
in the country, it is also rapidly expanding its footprint in the leisure segment in line
with evolving market demand. During the year, two hotels were added to the portfolio at
Hubbali and Goa, taking the aggregate operating inventory to nearly 3,000 rooms across 39
properties. The brand also has a healthy pipeline of leads in place, with a number of
properties slated to be commissioned over the short to medium term.
The ‘Mid-market to Upscale' segment witnessed progressive recovery in course of
the year, especially in the leisure segment. The company strengthened its ‘Safe
Stays' programme across hotels with enhanced focus on safety, health and hygiene, with 16
properties receiving ISO 9001:2015 certifications for implementing quality management
systems for safe practices.
During the year ended 31st March, 2022, the company recorded Total Income of Rs 25.39
crores (previous year Rs 17.71 crores) and Net Profit of Rs 0.19 crore (previous year Net
Loss 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 a
unique gateway to the Andamans with its strategic location, excellent architectural design
and, superior product and service quality. Consequent to its upgradation, the hotel was
rebranded as ‘Welcomhotel' last year and has received favourable guest response.
Tourism in the Andamans remained severely restricted on account of the pandemic during
the year. In addition, partial closure of airport operations at Port Blair due to ongoing
renovation activities also impacted tourist arrivals to the island. In spite of such
challenges, the hotel has demonstrated progressive improvement across the year and
appropriate measures relating to safety, health and hygiene protocols continue to be in
place.
During the year ended 31st March, 2022, the company recorded Total Income of Rs 1.61
crores (previous year Rs 1.11 crores) and Net Profit and Total Comprehensive Income of Rs
1.14 crores (previous year Rs 0.77 crore).
The Board of Directors of the company has recommended a dividend of Rs 70.00 per Equity
Share of Rs 100 each for the year ended 31st March, 2022 (previous year Rs 70.00 per
Equity Share).
Wimco Limited
The company's business activities comprise fabrication and assembly of machinery for
tube filling, cartoning, wrapping, material handling including conveyor solutions and
engineering services for the FMCG and Pharmaceutical industries.
In view of the uncertainties arising out of the pandemic, the operating environment
remained subdued during the year. However, the company leveraged its strong customer
relationships to improve its order book during the year. The company's Revenue from
Operations for the year stood at Rs 11.62 crores (previous year Rs 6.29 crores) with a Net
Loss of Rs 0.42 crore (previous year Net Loss of Rs 2.42 crores). Total Comprehensive
Income for the year stood at (-) Rs 0.44 crore (previous year (-) Rs 2.42 crores). The
company continues to focus on developing superior solutions towards addressing customer
requirements.
The Honourable National Company Law Tribunal, Mumbai Bench (‘NCLT'), vide Order
dated 9th April, 2021, had confirmed the reduction of Issued, Subscribed and Paid-up
Equity Share Capital of the company from Rs 18,84,60,000/- comprising 18,84,60,000 Equity
Shares of Rs 1/- each to Rs 18,50,81,193/- comprising 18,50,81,193 Equity Shares of Rs 1/-
each by way of cancelling and extinguishing, in aggregate, 33,78,807 Equity Shares of Rs
1/- each held by shareholders other than your Company in lieu of payment not exceeding Rs
1/- per Equity Share to such shareholders.
During the year, the said reduction of Equity Share Capital of the company became
effective, and the company became a wholly owned subsidiary of your Company with effect
from 29th July, 2021 upon completion of necessary formalities under Section 66 of the
Companies Act, 2013.
North East Nutrients Private Limited
Your Company holds 76% equity stake in North East Nutrients Private Limited, which has
set up a food processing facility in Mangaldoi, Assam, to cater to the fast-growing
biscuits market in Assam and other north-eastern states.
During the year, the company faced challenging operating environment which resulted in
subdued demand. The company continued to drive margins through its strategic cost
management measures. Over the years, the company has consistently improved operational
efficiency, productivity and strengthened safety standards. During the year, the company
received 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 (previous
year 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 14.37
crores (previous year Rs 9.08 crores).
ITC IndiVision Limited
ITC IndiVision Limited (IIVL) was incorporated as a wholly-owned subsidiary of your
Company on 9th July, 2020.
The company made steady progress during the year towards construction of the
manufacturing facility near Mysuru, Karnataka, primarily for the manufacture and export of
nicotine and nicotine derivative products; the project is progressing as per schedule. The
facility is being geared to manufacture purest nicotine derivatives conforming to US and
EU 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 lower
market interest rates that prevailed during the year on account of accommodative policies
pursued by the Reserve Bank of India.
Total Comprehensive Income for the year stood at Rs 120.79 crores (previous year Rs
86.38 crores), reflecting the recovery in the market value of certain long-term strategic
investments, which had been impacted due to the pandemic. The company continues to closely
monitor its investments in line with market interest rate movements and explore
opportunities to make strategic investments for the ITC Group.
Temporary surplus liquidity of the company is mainly deployed in bonds, debt mutual
funds, bank fixed deposits, etc. For the financial year 2021-22, the company declared
interim dividend of Rs 0.19 per Equity Share of Rs 10 each and a final dividend of Rs 0.06
per Equity Share of Rs 10 each, aggregating Rs 16.16 crores (previous year Rs 0.20 per
Equity 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 with
Essentra 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 7.30
crores). The company declared interim dividend of Rs 10.00 per Equity Share of Rs 10 each,
aggregating Rs 16.00 crores (previous year Rs 6.25 per Equity Share of Rs 10 each,
aggregating 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 project
management consultancy services.
During the year, the company recorded Total Income of Rs 8.09 crores (previous year Rs
5.65 crores) and Net Profit of Rs 1.79 crores (previous year Rs 3.71 crores, which
included 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 Core
Investment Companies (Reserve Bank) Directions, 2016 and related guidelines, recorded
Total Income of Rs 0.05 crore during the year (previous year Rs 0.06 crore) and Net Profit
of 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, holds
tenancy rights in a commercial building located in Mumbai and also provides estate
maintenance services.
During the year, the company recorded Total Income of Rs 7.25 lakhs (previous year Rs
7.26 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 Order
of the Honourable High Court of Uttarakhand at Nainital in February 2014 dismissing the
Writ Petition filed by the company against the Order of the District Magistrate
authorising 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 2014
and the matter is pending before the Honourable High Court.
During the year, the company recorded Total Income of Rs 0.05 crore (previous year Rs
0.22 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 Order
of the Honourable High Court of Uttarakhand at Nainital in February 2014 dismissing the
writ petition filed by the company against the Order of the District Magistrate
authorising 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 2014
and the matter is pending before the Honourable High Court.
During the year, the company recorded Total Income of Rs 0.09 crore (previous year Rs
0.10 crore) and Net Loss of Rs 0.05 crore (previous year Net Loss of Rs 0.03 crore).
NOTES ON JOINT VENTURES ITC
Essentra Limited
The Business registered strong recovery in course of the year in spite of pandemic led
disruptions. Operational agility and effective customer service enabled the company to
ensure seamless performance delivery during the year. The company retained its leadership
position of being the preferred supply chain partner for several well-known national and
international brands leveraging its core strengths of strong customer relationships,
focused innovation, best-in-class quality and consistent delivery.
The company continues to partner with its customers and make investments in innovation,
technology upgradation and capability building towards sustaining its position as the
‘innovation and quality benchmarkRs in the Indian cigarette filter industry. During
the year, the company expanded its capacity for manufacture of Specialty Filters, in line
with 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 at
Rs 385.62 crores (previous year Rs 337.87 crores). Net Profit during the year stood at Rs
41.09 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 10
each for the year ended 31st March, 2022 (previous year Rs 70.00 per Equity Share,
including 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 Jodhana
Heritage Resorts Private Limited, currently operates 37 heritage properties across 15
States in India under the ‘WelcomHeritage' brand. The portfolio of properties,
comprising ‘Legend Hotels', ‘Heritage Hotels' and ‘Nature Resorts',
provides uniquely differentiated offerings to guests in the cultural, heritage, nature,
wildlife and adventure tourism segments respectively. Operations across properties were
impacted 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 new
properties in Kochi and Ootacamund.
During the year ended 31st March, 2022, the company recorded Total Income of Rs 4.70
crores (previous year Rs 2.30 crores) and Net Profit of Rs 0.28 crores (previous year Net
Loss 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 the
Ambience 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 in
EHPL and will, inter alia, provide hotel operating services upon commissioning of the
hotel.
As reported in prior years, the Ambience Group has expressed its desire to review the
timing of further investments in EHPL, citing concerns about the viability of the project
in view of the challenging economic environment and the sluggish demand conditions
currently prevailing in the relevant market. Your Company continues to explore its options
in 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 and
Logix Estates Private Limited for developing a luxury hotel-cum-service apartment complex
at the company's leasehold site located at Sector 105 in New Okhla Industrial Development
Authority (NOIDA). Under the terms of the Joint Venture Agreement, your Company holds
27.9% equity stake in LDPL and will, inter alia, provide hotel operating services, upon
commissioning of the hotel.
As reported in prior years, your Company reiterated its position with the JV partner
that it was committed to developing a luxury hotel-cum-service apartment complex as
envisaged under the JV Agreement and that it was not interested in progressing with any
alternative project plans proposed by the JV partner. However, the JV partner refused to
progress the project and instead expressed its intent to exit from the JV by selling its
stake to your Company.
Subsequently, the JV partner proposed that both parties should find a third party to
sell the entire shareholding in LDPL. In view of these developments, your Company had
filed a petition before the erstwhile Company Law Board submitting that the affairs of the
JV entity were being conducted in a manner that was prejudicial to the interest of your
Company and the JV entity. The matter is currently before the National Company Law
Tribunal (NCLT). The JV partner had also filed a petition before the Honourable Delhi High
Court for winding up the JV company, which was transferred to the NCLT by the Honourable
Delhi High Court. The matter was heard before the NCLT on several occasions in the past
but 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 respect
of 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 47.58
crores (previous year Rs 40.28 crores). The Net Worth of the company stood at (-) Rs
195.20 crores as at 31st March, 2022 (previous year (-) Rs 147.62 crores). Your Company's
total investment in LDPL was Rs 41.95 crores.
Your Company had made provisions aggregating Rs 33.45 crores towards diminution in the
carrying value of investment in LDPL in the previous years, bringing the carrying value of
your 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 be
approved by its Board of Directors. In the absence of audited financial statements of
LDPL, the Consolidated Financial Statements of your Company for the year ended 31st March,
2022, have been prepared based on the financial statements prepared by the management of
LDPL.
NOTES ON ASSOCIATES
International Travel House Limited
The company is engaged in the business of providing travel related services to
corporate travellers in India and abroad. The services include car rentals, business
travel, leisure, meetings, incentives, conferencing, exhibitions, foreign exchange and
hotel travel services. During the year, the industry was severely impacted by the second
and third waves of the pandemic. In spite of a challenging operating environment, the
company 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 of
reliability, safety and hygiene. During the year, the company expanded its leisure
offerings and continued to make focused initiatives towards further strengthening its
customer service model.
During the year ended 31st March, 2022, the company recorded a Total Income of Rs 96.51
crores (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 stood
at (-) Rs 10.18 crores (previous year (-) Rs 45.01 crores).
Gujarat Hotels Limited
The company's hotel, ‘Welcomhotel Vadodara', at Vadodara is operated by your
Company under an Operating License Agreement.
Pandemic-induced restrictions during the first half of the year adversely impacted the
revenue from License Agreement.
During the financial year ended 31st March, 2022, the company recorded Total Income of
Rs 3.57 crores (previous year Rs 3.06 crores) with Net Profit and Total Comprehensive
Income of Rs 2.72 crores (previous year Rs 2.27 crores). The Board of Directors of the
company has recommended a dividend of Rs 2.00 per Equity Share of Rs 10/- each, for the
year 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 during
the first quarter of the year were impacted by supply chain disruptions due to the
pandemic. The company continued to maintain high levels of operational responsiveness and
benchmark quality in its manufacturing operations to service its customers. During the
year, the company was conferred with the EHS Excellence Gold Award by Federation of Indian
Chambers of Commerce & Industry (FICCI) and Energy Efficient Unit Award by
Confederation of Indian Industry (CII).
During the year, the company recorded Total Income of Rs 27.11 crores (previous year Rs
25.47 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 of
Compulsorily 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-based
technology through vending machines, primarily installed across office locations.
Operations of the company were impacted in the first half, with most offices remaining
shut or operating with limited employees on account of the pandemic. The business
witnessed gradual recovery in the second half on the back of improved mobility and easing
of restrictions.
During the year, the company recorded Total Income of Rs 1.14 crores (previous year Rs
0.90 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 Rs
3.50 crores) and Net Profit of Rs 3.38 crores (previous year Rs 2.27 crores). Total
Comprehensive 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 due
to the pandemic in the previous year. The company continues to explore opportunities for
strategic investments.
Divya Management Limited
During the year, the company recorded Total Income of Rs 0.40 crore (previous year Rs
0.52 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 Rs
0.28 crore) and Net Profit of Rs 0.05 crore (previous year Rs 0.10 crore).
The company continues to explore opportunities for strategic investments.
INTERNAL FINANCIAL CONTROLS
The Corporate Governance Policy guides the conduct of affairs of your Company and
clearly delineates the roles, responsibilities and authorities at each level of its
three-tiered governance structure and key functionaries involved in governance. The ITC
Code of Conduct commits management to financial and accounting policies, systems and
processes.
The Corporate Governance Policy and the ITC Code of Conduct stand widely communicated
across the enterprise at all times and together with the ‘Strategy of Organisation',
Planning & Review Processes and the Risk Management Framework provide the foundation
for Internal Financial Controls with reference to your Company's Financial Statements.
Such Financial Statements are prepared on the basis of the Significant Accounting
Policies that are carefully selected by management and approved by the Audit Committee and
the Board. These Policies are supported by the Corporate Accounting and Systems Policies
that apply to the entity as a whole to implement the tenets of Corporate Governance and
the Significant Accounting Policies uniformly across your Company. The Accounting Policies
are reviewed and updated from time to time. These, in turn, are supported by a set of
Divisional policies and Standard Operating Procedures (SOPs) that have been established
for individual businesses.
Your Company uses Enterprise Resource Planning (ERP) systems as a business enabler and
also to maintain its books of accounts. The SOPs, in tandem with transactional controls
built into the ERP systems, ensure appropriate segregation of duties, tiered approval
mechanisms and maintenance of supporting records. The Information Management Policy
reinforces the control environment. The systems, SOPs and controls are reviewed by
Divisional management and audited by Internal Audit whose findings and recommendations are
reviewed by the Audit Committee and tracked through till implementation.
Your Company has in place adequate internal financial controls with reference to the
Financial Statements. These have been designed to provide reasonable assurance with regard
to recording and providing reliable financial information; complying with applicable
statutes; safeguarding assets from unauthorised use; ensuring that transactions are
carried out with proper authorisation and complying with Corporate Policies and Processes.
Such controls have been assessed during the year, after taking into consideration the
essential components of internal controls stated in the Guidance Note on Audit of Internal
Financial Controls over Financial Reporting issued by The Institute of Chartered
Accountants of India. Based on the results of such assessment carried out by management,
no reportable material weakness or significant deficiency in the design or operation of
internal financial controls was observed. Nonetheless, your Company recognises that any
internal control framework, no matter how well designed, has inherent limitations and
accordingly, regular audit and review processes ensure that such systems are reinforced on
an ongoing basis.
RISK MANAGEMENT
As a diversified enterprise, your Company continues to focus on a system-based approach
to business risk management. The management of risk is embedded in the corporate
strategies of developing a portfolio of world-class businesses that best match
organisational capability with opportunities in domestic and international markets,
developing capabilities and competencies for the future in order to enhance
competitiveness and win in the markets of tomorrow. Accordingly, management of risk has
always been an integral part of your Company's ‘Strategy of Organisation' and
straddles its planning, execution and reporting processes & systems. Backed by strong
internal control systems, the current Risk Management Framework consists of the following
key elements:
- The Corporate Governance Policy, approved by the Board, clearly lays down the roles
and responsibilities of the various entities in relation to risk management covering a
range of responsibilities, from strategic to the operational. These role definitions,
inter alia, provide the foundation for appropriate risk management procedures, their
effective implementation across your Company and independent monitoring and reporting by
Internal Audit.
- The Risk Management Committee, constituted by the Board, monitors and reviews the
strategic risk management plans of your Company as a whole and provides necessary
directions on the same.
- The Corporate Risk Management Cell, through focused interactions with businesses,
facilitates the identification and prioritisation of strategic and operational risks,
development of appropriate mitigation strategies and conducts periodic reviews of the
progress on the management of identified risks.
- A combination of centrally issued policies and Divisionally-evolved procedures brings
robustness to the process of ensuring that business risks are effectively addressed.
- Appropriate structures are in place to proactively monitor and manage the inherent
risks in businesses with unique/relatively high risk profiles.
- Foreign currency exposures continue to be managed within the framework of the Forex
Manual.
- A strong and independent Internal Audit function at the Corporate level carries out
risk focused audits across all businesses, enabling identification of areas where risk
management processes may need to be strengthened. The Audit Committee of the Board reviews
Internal Audit findings and provides strategic guidance on internal controls. The Audit
Compliance Review Committee closely monitors the internal control environment within your
Company including implementation of the action plans emerging out of internal audit
findings.
- At the Business level, Divisional Auditors continuously verify compliance with laid
down policies and procedures and help plug control gaps by assisting operating management
in the formulation of control procedures.
- A robust and comprehensive framework of strategic planning and performance management
ensures realisation of business objectives based on effective strategy implementation. The
annual planning exercise requires all Businesses to clearly identify their top risks and
set out a mitigation plan with agreed timelines and accountabilities. Businesses are
required to confirm periodically that all relevant risks have been identified, assessed,
evaluated and that appropriate mitigation systems have been implemented.
Your Company endeavours to continuously sharpen its Risk Management systems and
processes in line with a rapidly changing business environment.
In this regard, it is pertinent to note that some of the key Businesses of your Company
have adopted the ISO 31000 Risk Management Standard and accordingly, the Risk Management
systems and processes prevalent in these Businesses have been independently assessed to be
compliant with the said global Standard on Risk Management. This year, Agri SBU, Personal
Care Products Business and the Life Sciences and Technology Centre were assessed for
compliance with ISO 31000 Risk Management Standard. This is in addition to the six
Businesses which were previously assessed for such compliance. The centrally anchored
initiative of conducting external independent reviews of key business processes with high
‘value at risk' continued during the year. These interventions provide further
assurance on the robust nature of risk management practices prevalent in your Company.
During the year, the Risk Management Policy & Framework of your Company was revised
in line with the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) (Second Amendment) Regulations 2021, inter alia, to incorporate
(i) framework for identification of Environmental, Social, Governance (ESG) related risks
as well as sustainability risks, information risks and cyber security risks, (ii) measures
for risk mitigation including systems and processes for internal control of identified
risks, and (iii) Business Continuity Plan(s). Your Company already has systems and
processes to monitor and mitigate the aforementioned risks. With the amendment, added
emphasis is being given to these areas across your Company.
The Risk Management Committee met thrice during the year and was updated on the status
and effectiveness of the risk management plans. The Audit Committee was also updated on
the effectiveness of your Company's Risk Management systems and policies.
A Cyber Security Committee, chaired by the Chief Information Officer, is in place to
provide specific focus on cyber security related risks, with the primary responsibility of
tracking emerging practices and technologies and providing suitable recommendations for
enhancing security of the IT systems and infrastructure. The Chief Information Officer, an
invitee to the Risk Management Committee, is responsible for ensuring that the Cyber
Security 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 changes
or unavailability of the systems. Key cyber security controls include secure configuration
of enterprise assets and software, malware defences, periodic vulnerability and
penetration testing, controlled access to critical business applications, appropriate
segregation of duties and ongoing cyber security awareness programs for users.
The cyber security framework of your Company includes specific checks and controls for
your Company's digital marketing initiatives and public facing websites. The framework
further encompasses secure management of Mobile Applications and Industrial Control
Systems (ICS).
An independent agency has confirmed that the practices in the area of Information
Technology- Operational Technology (IT-OT) integration across major Businesses of your
Company are adequate and benchmarked to Industry. However, since this is a fast-evolving
area, ongoing attention will be accorded to ensure contemporariness and best-in-class
capabilities.
Your Company sources several commodities for use as inputs in its Businesses and also
engages in agri-commodity trading as part of its Agri Business.
In respect of commodities sourced for use as inputs in its Businesses, your Company has
well laid out policies to manage risks arising out of the inherent price volatility
associated with such commodities.
This includes robust mechanisms for monitoring market dynamics towards making informed
sourcing decisions; well defined inventory holding norms based on considerations such as
seasonality and the strategic nature of the commodity concerned; long-term contracts with
suppliers to secure supply of critical items at competitive costs and continuous
diversification of supplier base. Multiple sourcing models, wide geographical spread,
extensive sourcing and supply chain network and associated infrastructure in key growing
areas coupled with deep-rooted farmer linkages ensure sourcing of high quality
agri-commodities at competitive costs.
Your Company's strategy of backward integration in sourcing of agri-commodities such as
wheat, potato, fruit pulp, spices, milk and leaf tobacco; in-house manufacturing of
paperboards, paper and packaging (including pulp production and print cylinder making
facilities); wood procurement from the economic vicinity of the Bhadrachalam unit,
facilitates access to critical inputs at benchmark quality and competitive cost besides
ensuring security of supplies. Further, each of your Company's Businesses continuously
focuses on product mix enrichment and yield improvement towards protecting margins and
insulating operations from spikes in input price.
In respect of Agri-commodity trading, your Company has a well laid out policy to manage
risks associated with sourcing of such commodities. This includes:
- segregation of duties and robust internal controls through a system of checks and
balances embedded in the organisation and governance structure;
- clearly defined limits for trading position (long and short) and net cash loss for
specific commodities/ commodity groups;
- mitigation of price, liquidity and counter party risks in respect of commodities such
as soya, mustard and chana through hedging on commodity exchanges (mainly NCDEX).
Correlation between prices prevailing in the physical market and those on the commodity
exchange is analysed regularly to ensure effectiveness of hedging;
- robust monitoring and review mechanisms of net open positions and ‘value at
risk'.
The combination of policies and processes as outlined above adequately addresses the
various risks associated with sourcing of commodities for your Company's Businesses.
During the year, systems and processes to handle pandemic related threats and risks
were further strengthened against the backdrop of the second and third waves of the
pandemic. This has enabled seamless transition to ‘Work from Home', safety of
employees and service providers, continued availability of raw materials, rapid resumption
of operations at units and agile response to the dynamic requirements of the distribution
network. Recent learnings in dealing with the pandemic have been seamlessly incorporated
in the day-to-day procedures of your Company and will continue to be leveraged going
forward.
In response to the pandemic and escalation of geopolitical tensions, various measures
have been taken to ensure continuity in operations and servicing your Company's customers.
This includes increasing safety stock levels, leveraging alternate channels of
distribution, broad basing manufacturing partners and activating alternate suppliers of
key materials thereby increasing the resilience of supply chain.
The risk management practices of your Company, as reviewed through the Risk Management
Cell and Internal Audit processes, have been found to be relevant and commensurate with
the size and complexity of your Company's operations.
AUDIT AND SYSTEMS
Your Company believes that strong internal control systems that are commensurate with
the scale, scope and complexity of its operations are concomitant to the principle of
governance that freedom of management should be exercised within a framework of
appropriate checks and balances.
Your Company remains committed to ensuring a mature and effective internal control
environment that, inter alia, provides assurance on orderly and efficient conduct of
operations, security of assets, prevention and detection of frauds/errors, accuracy and
completeness of accounting records and Management Information Systems, timely preparation
of reliable financial information, adherence with relevant statutes and compliance with
related party transactions.
Your Company's internal control systems include documented policies and procedures,
segregation of duties and careful selection and development of employees.
Your Company's independent and robust Internal Audit processes, both at the Business
and Corporate level, provide assurance on the adequacy and effectiveness of internal
controls, compliance with operating systems, internal policies and regulatory
requirements.
The Internal Audit function, consisting of professionally qualified accountants,
engineers and Information Technology (IT) specialists, is adequately skilled and resourced
to deliver audit assurances at highest levels. Targeted Learning and Development
programmes on contemporary topics are periodically organised to enhance knowledge and
skill sets.
Independent consultants have confirmed compliance of Internal Audit systems and
processes with the Standards on Internal Audit (SIA) issued by the Institute of Chartered
Accountants of India. Although the Standards continue to be recommendatory in nature, such
external validation evidences the contemporariness of the Internal Audit function.
In the context of your Company's IT environment, systems and policies relating to
Information Management are periodically reviewed and benchmarked for contemporariness.
Compliance with the Information Management policies receives focused attention of the
Internal Audit team. Business-led Information Technology systems undergo
pre-implementation audit before being deployed in the operating environment, thereby
delivering assurance with respect to the rigour of implementation.
Your Company's Internal Audit continues to leverage digital and automation tools
benchmarked to global technology standards to ensure focused Information Technology
control assessment for various areas of automation including robotics and IT applications
across Businesses.
Qualified engineers in the Internal Audit function review the quality of design,
planning and execution of all ongoing projects involving significant expenditure to ensure
that project management controls are adequate and yield ‘value for money'. Internal
Audit continues to use state-of-the-art tools and software for conducting project audits.
Processes in the Internal Audit function are continuously strengthened for enhanced
effectiveness and productivity including the deployment of contemporary best-in-class
tools for audit analytics.
Your Company's Internal Audit processes are certified as complying with ISO 9001:2015
Quality Standards. The Audit methodology is also designed to validate effectiveness of
critical IT controls that are embedded in business systems deployed across your Company,
enabling a high degree of assurance on efficacy of business process controls. The scope of
Internal Audit coverage also includes assessment of emerging risks in the social media
ecosystem and adoption of digital technologies.
Restrictions on mobility caused by recurrent waves of the pandemic during the year
continued to impact the physical audit process. Under such challenging circumstances and
considering the safety & well-being of employees, the team continued its audits under
the ‘remote audit' approach leveraging technology to ensure continuity in audit and
assurance processes.
A comprehensive Standard Operating Procedure comprising, inter alia, data security
controls and communication protocols facilitated seamless and effective conduct of remote
internal audits during the year.
With a view to further enhancing productivity, improving the efficacy of audit
processes 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 approves
the Internal Audit programme for the year so as to ensure adequacy of coverage. The Terms
of Reference of the Audit Committee, inter alia, include reviewing the effectiveness of
the internal control environment, evaluation of your Company's internal financial
controls, and risk management systems, monitoring implementation of the action plans
emerging out of review of significant Internal Audit findings including those relating to
strengthening of your Company's risk management systems and discharging of statutory
mandates.
HUMAN RESOURCE DEVELOPMENT
The talent management strategy of your Company focuses on sustaining ITC's position as
one of India's most valuable corporations, remaining customer- focused, competitively
superior, performance-driven and future-ready. The initiatives and processes of your
Company strive to deliver the unique talent promise of Building Winning Businesses,
Building Business Leaders, and Creating Value for India. The talent development practices
help create, foster and strengthen the capability of human capital to deliver critical
outcomes on the vectors of strategic impact, operational efficiency and capital
productivity.
Your Company's ‘Strategy of Organisation' is designed to promote agility through a
culture and practice of distributed leadership enabled by a three- tier governance
structure. This is manifested in market and consumer facing Businesses, which are driven
by empowered, cluster-based teams and supported by shared assets and capabilities,
enabling strategic relevance, speed, responsiveness, and operational excellence. This
approach allows Businesses, through their Management Committees, to focus, develop and
execute Business Plans relevant to their product-market spaces while leveraging the
institutional strengths of your Company and harvesting internal synergies.
Your Company's Human Resources development approach spans four key organisational
dimensions of Agility, Alignment, Ability and Architecture; which are supported through
strategies crafted in areas of impact such as talent acquisition, engagement, diversity
& inclusion, capability building, employee relations, performance & rewards and
employee well-being.
The year under review witnessed significant upheaval in the talent market. While the
pandemic led to a short-term demand-supply disequilibrium in the workforce, the rapid
digitalisation of the ecosystem and entry of several technology-driven and privately
funded enterprises have heightened competition for certain critical talent pools. Your
Company's unique employer equity as an exemplary Indian enterprise creating world-class
brands, building business leaders and generating economic, social and environmental
capital for the Indian economy, continues to play a vital role in the attraction and
retention of high-quality talent. The management trainee programme, augmented with
recruitment of experienced talent from the market, is an integral part of the leadership
pipeline development process. Your Company continues to draw the finest management,
technical and commercial talent from premier institutions in the country and is ranked
amongst the leading companies in these institutions. Intensive engagement with the
country's premier academic institutions over the years to communicate your Company's
talent proposition through case-study competitions, knowledge-sharing programmes by senior
managers and the annual internship programmes have all contributed to creating a
compelling proposition for the best candidates to aspire for a career with your Company.
Your Company continues to enthuse talent with high-impact roles, competitive and
performance driven remuneration, with an emphasis on long-term incentives relative to
industry, diversity in learning opportunities, a commitment to enhancing diversity &
inclusion, an employee-centric climate, well-being focused infrastructure and support that
promotes fellowship and commitment amongst employees.
Your Company's approach to management development is founded on the belief that
learning initiatives must remain synergistic and aligned to business outcomes. Towards
this end, your Company has built a culture of continuous learning, innovation and
collaboration by providing contemporary and relevant learning and development support to
managers through a combination of platforms - classroom, on-the-job, self-paced e-learning
modules and application projects. The emphasis is on providing experiential learning while
remaining current with the curriculum and providing access to nationally and globally
recognised high-quality faculty. Deep functional expertise is fostered early in one's
career through immersion in complex problem-solving assignments requiring the application
of domain expertise. Managers are assessed on your Company's behavioural competency
framework and provided with learning and development support to address areas identified
for improvement. Key talent is provided critical experiences in high impact roles and
mentored by senior managers. This promotes the development of a pool of high-quality
talent through mentorship, coaching and learning opportunities.
Your Company has identified three capability platforms relevant to making Businesses
future- ready - Business Critical Strategic Competencies, Leadership Development and
Organisation Identity & Pride. Capability needs are identified for talent cohorts
across domains covering dimensions which are of vital significance to competitive
performance. These include Brand Marketing, Data Science and Analytics, Marketing in a
Digital world, Business Strategy and Commercial Acumen. Globally benchmarked curriculums
are designed in these domains, delivered through internationally recognised faculty and
supplemented with business-critical application projects. This approach ensures that the
application of learning fructifies in a manner which benefits your Company's business
results. Similarly, as a part of leadership development initiatives, the Reflections 360
programme comprising feedback and coaching was conducted during the year to enable
personal development of employees.
Your Company continues to strengthen its performance management system and its culture
of accountability through the widespread adoption of the system of
Management-by-Objectives. Performance planning through clearly defined goals,
outcome-based assessment, and alignment of rewards to achievement of results have all
contributed to a robust culture of ownership and accountability. ‘Career
Conversations' and succession planning processes have contributed to helping employees
realise their potential, craft their careers while recognising their strengths and areas
of development and ensuring a sound workforce planning system.
In the spirit of continuous improvement, your Company maintains a practice of
periodically assessing employee engagement through a Company-wide survey. The impact was
visible in the survey in 2020 wherein Engagement, Performance Enablement, and Managerial
Effectiveness measures improved significantly over the previous survey. The recent survey
in 2022 affirms high levels of employee engagement and reflects significant consolidation
of gains achieved over recent years. During the year, a range of engagement programmes
were designed and implemented, including initiatives such as leadership outreach through
extensive communication, recognition programmes acknowledging exceptional contributions of
employees and teams, career conversations and development planning for robust positioning
and progression decisions and investments in employee wellbeing. The year also witnessed
the Cigarettes Business winning the ‘SilverRs in the prestigious ‘Economic Times
Human Capital Awards 2021' for ‘Excellence in Reward & Recognition programs'
where your Company was appreciated for its employee recognition framework. The Cigarettes
Business 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 the
conviction that a diverse workforce contributes to rich discourse, promotes holistic
perspectives, fosters creative solutions and is integral to serving customers better while
creating value for all stakeholders.
Your Company is committed to enhancing gender diversity and participation of the
differently-abled in the workforce, and where needed, will undertake supportive actions in
the 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 in
selection pools and deployment of the differently-abled across suitable opportunities in
the value chain. Through policies offering flexible work arrangements, extended child care
leave, travel support for infants and care-givers, secure transport, paternity leave, same
gender partner medical benefits, infrastructure support coupled with various sensitisation
programmes, formation of Employee Resource Groups and the commitment and sponsorship of
leaders, your Company provides an enabling environment to further its Diversity, Equity
and Inclusion goals. Amongst several positive outcomes, your Company's recruitment of
talent from premier campuses reflects diversity ratios superior to the prevailing norm in
such institutions.
Your Company continued its practice of active leadership outreach to employees.
Periodic communication with the ITC community through ‘StudioOne Townhalls' led by
the Chairman, provided employees avenues to hear from and engage with leaders about your
Company's vision, strategy and milestones. This was supplemented by a more personalised
engagement through the ‘StudioOne XchangeRs initiative. The Chairman and other
members of the Corporate Management Committee interacted with managers across Businesses
in small groups, sharing your Company's vision and strategies while also inviting
suggestions and feedback.
While your Company has covered significant ground and scaled up its digital investments
exponentially in recent years, it seeks to embrace digitalisation as a foundation
capability, vital to accelerating value creation, offering novel ways of interacting with
consumers and reconfiguring value chains and transforming business models.
The ‘Young Digital Innovators Lab' constituted in 2021, identified innovative
opportunities deploying contemporary digital tools across your Company's value chains.
Various ‘proofs of concept' were tested which have the potential to be scaled up to
create further business value. ‘DigiNext', the Digital Council, participated in
ideation and evaluating the adoption of various suggestions to enhance your Company's
digital quotient and competitiveness.
Your Company believes that alignment of all employees to a shared vision and purpose is
vital for winning in the marketplace. It also recognises the mutuality of interests with
key stakeholders and is committed to continue building harmonious employee relations. Your
Company remains dedicated to an Employee Relations climate of partnership and mutuality
while ensuring operations are competitive, flexible and responsive. The Employee Relations
philosophy of your Company, anchored in the tenets of Scientific Management, Industrial
Democracy, Human Relations and Employee Well-being, has contributed towards building a
robust platform which has aided the conclusion of collective bargaining agreements at
several of its manufacturing units and hotel properties, ensuring smooth commencement of
operations at greenfield locations and the execution of productivity improvement
practices. Several initiatives have been taken to foster a culture of commitment amongst
the demographically diverse workforce in these new facilities. Your Company's Foods
Business was recognised with the ‘Significant Achievement in Employee Relations'
Award by Employers' Federation of India. The award recognises your Company's consistent
commitment to excellence in Employee Relations, engage, involve and develop employees -
particularly factory personnel - through a series of targeted actions contributing to a
culture of collaboration, mutuality and trust.
The pandemic has cast unprecedented challenges and your Company has taken a host of
measures to ensure employee wellbeing and business continuity. Your Company partnered with
various internal as well as external stakeholders to support employees and their family
members in the face of widespread infections, especially during the second wave of the
pandemic. The provision of medical equipment across locations, COVID Care Centres for
employees and their families, assistance with hospitalisation and treatment, paid leave
for those infected or in quarantine, vaccination facilitation through camps for employees
and their family members, service provider personnel and supply chain partners, medical
advice through a network of Company doctors, webinars on preventive measures, counselling
services and stringent risk mitigation protocols such as zoning in factories, restrictions
on travel and office presence, masking, precautionary random testing, temperature checks
and social distancing measures in all locations, have been instrumental in reassuring
employees, mitigating risks and ensuring medical care in the event of infection. Your
Company also extended financial assistance for medical treatment of employees' parents and
assistance to families of deceased employees.
Your Company‘s thought, strategy and action are inspired by a larger purpose - a
purpose to be an exemplary Indian enterprise that not only pursues agile innovation to be
extremely competitive, but also one that embeds sustainability and inclusiveness at the
core of its Businesses. This approach has enabled it to create enduring value for the
Indian economy, and the larger community of stakeholders, as also delight consumers with a
vibrant portfolio of best-in-class products and services. Each one of your Company's
employees will relentlessly strive to meet the bold growth agenda, deliver world-class
performance, innovate newer and better ways of doing things, uphold human dignity, foster
team spirit and discharge their role as ‘trustees' of all stakeholders with true
faith and allegiance.
Your Company is committed to perpetuating this vitality - its growth as a value
generating engine and also as an exemplary institution - so that it continues to succeed
in its relentless pursuit of creating enduring value.
Details of the constitution of the Internal Complaints Committee under the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 are
provided in the ‘Business Responsibility Report', forming part of the Report and
Accounts.
WHISTLEBLOWER POLICY
Your Company's Whistleblower Policy encourages Directors and employees to bring to your
Company's attention, instances of illegal or unethical conduct, actual or suspected
incidents of fraud, actions that affect the financial integrity of your Company, or actual
or suspected instances of leak of unpublished price sensitive information that could
adversely impact your Company's operations, business performance and/or reputation.
The Policy requires your Company to investigate such incidents, when reported, in an
impartial manner and take appropriate action to ensure that the requisite standards of
professional and ethical conduct are always upheld. Anonymous complaints are also
entertained if the complaint sets out specific allegations & verifiable facts, and is
accompanied with supporting evidence. It is your Company's Policy to ensure that no
complainant is victimised or harassed for bringing such incidents to the attention of your
Company, and to keep the information disclosed during the course of the investigation as
confidential. The practice of the Whistleblower Policy is overseen by the Audit Committee
and no employee was denied access to the Committee during the year. The Whistleblower
Policy is available on your Company's corporate website at
https://www.itcportal.com/whistleblower-policy .
SUSTAINABILITY 2.0
Your Company believes that when enterprises make societal value creation an integral
part of their corporate strategy, powerful drivers of innovation emerge that make growth
more enduring for all stakeholders. This paradigm is called ‘Responsible Capitalism'
- an abiding strategy that focuses on extreme competitiveness but in a manner that
replenishes the environment and supports sustainable livelihoods.
Your Company's innovative business models synergise the building of economic,
environmental and social capital, thus embedding sustainability at the core of its
corporate strategy. Today, this strategy has not only contributed to building strong
businesses of the future as well as a portfolio of winning world-class brands, but also in
making your Company a global exemplar in RsTriple Bottom Line' performance. Your Company
is the only enterprise in the world of comparable dimensions to have achieved and
sustained the three key global indices of environmental sustainability of being 'water
positive' (for 20 years), 'carbon positive' (for 17 years), and 'solid waste recycling
positive' (for 15 years). This approach has enabled your Company and its businesses to
support sustainable livelihoods for more than six million people.
As the world prepares for a post-pandemic future, your Company is actively working
towards Sustainability 2.0, an agenda which reimagines sustainability under the pressing
challenges of climate change and social inequity. Sustainability 2.0 calls for inclusive
strategies that can support sustainable livelihoods, pursue newer ways to fight climate
change, enable the transition to a net zero economy, work towards ensuring water security
for all and create an effective circular economy for post-consumer packaging waste. It
also entails protecting and restoring biodiversity and ecosystem services through adoption
of nature- based solutions. Your Company believes that agility in thought and action,
meaningful public-private-people partnerships and Responsible Capitalism will act as core
enablers of this new agenda. Your Company has the potential to make a large-scale impact
not only from an economic standpoint, but also from an employment generation and social
enablement 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, and
remains committed to making meaningful contribution to the Nation's future while retaining
its 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 by
2030.
- Meeting 100% of purchased grid electricity requirements from renewable sources by
2030.
- Reducing specific energy consumption by 30% and specific GHG emissions by 50% by 2030
as compared to the FY 2018-19 baseline.
- Sustain and enhance carbon sequestration by expanding forestry projects on wastelands
through 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 FY
2018-19 baseline.
- Creation of rainwater harvesting potential equivalent to over 5 times the net water
consumption by 2030.
- Certification of all sites in high water stressed areas as per the international
water stewardship standard by Alliance for Water Stewardship (AWS) by 2035.
- Improve crop water use efficiency in agri-value chains through demand side management
interventions and enable savings of 2,000 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 over
3 million acres by 2030.
Biodiversity Conservation
- Revive & sustain ecosystem services and products provided by nature, through
adoption of nature- based solutions and biodiversity conservation covering over 1 million
acres by 2030.
Sustainable Livelihoods
- Supporting sustainable livelihoods for 10 million people by 2030.
Your Company's Businesses are actively working towards achieving your Company's
Sustainability 2.0 vision. During the year, around 42% of your Company's total energy
requirements were met from renewable sources. Commendable progress has been made in line
with 2030 targets relating to specific energy, specific GHG emissions and specific water
consumption across Businesses.
In line with its commitment, your Company has also achieved its goal of becoming
plastic neutral during FY 2021-22. During the year, your Company's large-scale programmes
on Sustainable Agriculture were expanded to cover 1.5 million acres. A detailed
performance dashboard against the 2030 commitments is available in your Company's
Sustainability & Integrated Report, 2022.
To achieve its Sustainability 2.0 vision, your Company continues to strengthen its
management approach which is guided by a comprehensive set of sustainability policies and
is being implemented across the organisation. Your Company is also strengthening the
mechanisms of engagement with key stakeholders, identification of material sustainability
issues and progressively monitoring and mitigating the impacts along the value chain of
each Business. Your Company will continue to update these systems and processes in line
with evolving disclosure standards and Environmental, Social and Governance (ESG)
requirements.
Your Company's 18th Sustainability Report, published during the year detailed the
progress made across all dimensions of the ‘Triple Bottom Line' for FY 2020-21. This
report 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 year
which conforms with the requirements of the International <IR> Framework published
by the Value Reporting Foundation. The report presents a range of financial and
non-financial disclosures to illustrate how different ‘capitals' are deployed to
enable creation of enduring value.
Your Company's Sustainability & Integrated Report for FY 2021-22, in addition to
conforming 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's
corporate website at https://www.itcportal.com/sustainability/sustainability-
integrated-report-2022/ITC-Sustainability-Integrated- Report-2022.pdf .
In addition, the Business Responsibility & Sustainability Report (BRSR), as
mandated by the Securities and Exchange Board of India (SEBI) for the year under review is
annexed to the Report and Accounts. The BRSR maps the sustainability performance of your
Company against the nine principles forming part of the National Guidelines on Responsible
Business Conduct issued by the Ministry of Corporate Affairs, Government of India.
During the year, your Company sustained its ‘AA' rating by MSCI-ESG - the highest
amongst global tobacco companies, and has also been included in the Dow Jones
Sustainability Emerging Markets Index. Additionally, your Company was rated ‘A -' at
the Leadership Level for both Climate Change and Water Security by CDP, which is above the
Asia 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 well
positioned to contribute to the achievement of India's commitment under the UN SDGs. For
instance, your Company's programme on Climate Smart Agriculture is aligned to the
Government's National Mission for Sustainable Agriculture and also contributes to the
achievement 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 your
Company's interventions to the SDGs, including corresponding targets, is available in your
Company's Sustainability & Integrated Report for FY 2021-22.
Building Climate Resilience
Your Company recognises the urgent need to combat climate change for building a more
secure 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 extensive
decarbonisation programmes across its value chain. These include increasing the share of
renewable energy, continuous reduction of specific energy, construction of green
buildings, greening logistics and optimising 'distance-to-market', and promoting
regenerative agriculture practices in agri-value chains.
Additionally, in order to identify long-term risks, your Company has worked with
climate experts to conduct a comprehensive climate change risk and vulnerability
assessment using climate models across its operating locations (factories, hotels,
warehouses etc.).
The assessment considered the impact of climate variables like temperature,
precipitation, sea level rise, river/coast proximity and extreme weather events over
long-term time frames (2040-2060 and 2060-2080) under two Representative Concentration
Pathway (RCP) scenarios - RCP 4.5 and RCP 8.5. In line with the findings of the
assessment, detailed site-specific assessments are being undertaken for risk mitigation
and adaptation.
Similarly, factors such as rise in extreme weather events, varying climatic parameters
and dependence on rainwater for irrigation make agriculture in India quite vulnerable to
climate change. For major crops like wheat, pulp-wood and leaf tobacco among others, there
is significant and sustained work being done on the development of climate-tolerant
varieties as well as dissemination of climate-resilient and regenerative agronomic
practices in the growing areas.
Detailed farm-level studies are also being conducted to understand the potential
adverse impacts of climate change on your Company's key agri-value chains. These risk
assessments will help calibrate the climate resilience measures that are being implemented
across your Company's value chains.
Energy Conservation and Renewable Energy
As a responsible corporate citizen, your Company has made a commitment to reduce
dependence on energy from fossil fuels. Accordingly, all factories incorporate appropriate
green features and premium luxury hotels and office complexes continue to be certified at
the highest level by either the US Green Building Council or Indian Green Building
Council. During the year, around 42% (previous year 41%) of your Company's total energy
requirements were met from renewable sources such as biomass, wind and solar. During the
year, your Company commissioned its first offsite solar plant in Dindigul, Tamil Nadu, in
line with its Sustainability 2.0 vision. The 14.9 MW solar plant will help reduce CO2
emissions significantly and has already enabled your Company to meet 90% of its
electricity requirement in the state of Tamil Nadu from renewable sources. Additionally,
your Company's Paperboards & Specialty Papers Business commissioned a state-of-the-art
and future-ready High Pressure Recovery Boiler at the Bhadrachalam mill, replacing
conventional soda recovery boilers, which will contribute towards reducing carbon
footprint through lower coal consumption.
Your Company is well positioned to benefit from energy conservation and renewable
energy promotion schemes such as Perform, Achieve and Trade (PAT) and Renewable Energy
Certificates (RECs) promoted by the Government of India. Your Company continues its
efforts towards meeting 100% of purchased grid electricity requirements from renewable
sources, and achieving 50% renewable energy share in its total energy consumption by 2030
based on a mix of energy conservation and renewable energy investments, despite
significant 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 14064
Standard has been assured, as in the earlier years, at the 'Reasonable Level' by an
independent third party. The GHG inventory covers emissions from your Company's operations
and GHG removals from your Company's large-scale forestry programmes.
In order to continuously reduce your Company's energy footprint, green features are
being integrated in all new and old constructions including hotels, manufacturing units,
warehouses and office complexes. Your Company is a pioneer in the green building movement,
with 38 buildings having received Platinum certification by USGBC (U.S. Green Building
Council)/IGBC (Indian Green Building Council).
Several of your Company's factories and office complexes have received the Green
Building certification from IGBC and the Leadership in Energy & Environmental Design
(LEED?) certification from USGBC. In 2004, the ITC Green Centre at Gurugram received
LEED? Platinum certification by USGBC, making it the largest Platinum rated building in
the world at that point in time. The data centre at Bengaluru, ITC Sankhya, is the first
data centre in the world to receive the LEED? Platinum certification by USGBC. Large
infrastructure investments such as the ITC Green Centre at Guntur and the ITC Green Centre
at Bengaluru (both LEED? Platinum certified) continue to demonstrate your Company's
commitment to green buildings. Virginia House, Kolkata and ITC Centre, Kolkata - the
headquarters 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', all
luxury collection hotels of your Company are LEED? Platinum certified, making your
Company a trailblazer in green hoteliering globally. ITC Grand Chola, the 600-key
super-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 carbon
management distinguished it as the first hotel in the world to be LEED? Zero Carbon
certified. Additionally, in FY 2021-22, ITC Grand Chola and ITC Gardenia were also
certified as LEED? Zero Carbon with ITC Grand Chola being the largest and ITC Gardenia
being the third hotel with LEED? Zero Carbon certification in the world.
Your Company's Social and Farm Forestry initiatives, besides mitigating the impact of
increasing levels of GHG emissions in the atmosphere, help greening of degraded wasteland,
prevent soil erosion, enhance organic matter content in soil and increase ground water
recharge.
Towards Water Security for All
Your Company continues to focus on an integrated water management approach that
includes water conservation and harvesting initiatives at its Units - while at the same
time working towards meeting the water security needs of all stakeholders at the local
watershed level. Interventions have been rolled out to improve water-use efficiencies by
adopting latest technologies and increasing reuse and recycling practices within the fence
while also working with farmers and other community members towards improving their
water-use efficiencies.
The demand side measures are followed by augmenting supply at the sub-catchment level
through various interventions focused on harvesting rainwater based on the recommendations
of hydro-geological studies. The supply side interventions include enhancing capture and
storage of rainwater (in soil and storage ponds) and recharging aquifers. Your Company
also conducts efficacy studies to assess the impact of the watershed work carried out, and
to ensure that maximum benefits accrue in the long-term. As on 31st March, 2022, your
Company's integrated watershed development projects covering over 1.3 million acres of
land have created a total rainwater harvesting potential (RWH) of over 46 million kl,
which 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 second
facility in the world and first in India to be awarded the AWS Platinum level
certification 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 high
water stress areas, and will progressively obtain AWS certification for these sites in the
coming years.
Building a Circular Economy for Post-Consumer Packaging
Your Company continues to make significant progress in reducing specific waste
generation through constant monitoring and improvement of efficiencies in material
utilisation and also in achieving almost total recycling of waste generated in operations.
In this way, your Company has prevented waste reaching landfills and the associated
problems of soil and groundwater contamination and GHG emissions, all of which can
adversely impact public health. In the current year, your Company has achieved over 99%
waste recycling. In addition, your Company's Paperboards & Specialty Papers Business
recycled over 85,000 tonnes of externally sourced post-consumer waste paper, thereby
creating yet another positive environmental footprint.
Your Company aims to go beyond the requirements of Plastic Waste Management Rules, 2016
to ensure that, over the next decade, 100% of packaging is reusable, recyclable or
compostable/biodegradable. Your Company is working towards optimising packaging in a way
that reduces the environmental impact arising out of post-consumer packaging waste without
affecting product integrity. This is being done in a structured manner by optimising
design, identifying alternative packaging material with lower environmental impact and
suitable end-of-life solutions for packaging waste. Your Company has successfully
implemented multiple large-scale models of municipal solid waste management across the
country.
These models, based on principles of circular economy, are scalable, replicable and
sustainable, and have enabled your Company to become plastic neutral in FY 2021-22. The
approach is centred around treating waste as a resource and ensuring that zero waste goes
to landfill, which can be achieved only when waste is segregated at source. The
initiatives focus on educating citizens on segregating waste at source into dry and wet
streams and ensuring that value is derived from these resources and in the process support
sustainable livelihood for waste collectors and rag-pickers. These models operate on a
public-private partnership basis with active involvement of urban local bodies, civil
society and the informal sector of waste collectors.
Your Company has exceeded its commitment on plastic neutrality made in the previous
year, collecting and sustainably managing more than 54,000 tonnes of plastic waste across
35 States/Union Territories.
Your Company's waste recycling programme, ‘WOW - Well Being Out of Waste', enables
the creation of a clean & green environment and promotes sustainable livelihoods for
waste collectors. During the year, the programme continued to be executed in Bengaluru,
Mysuru, Hyderabad, Coimbatore, Chennai, Muzaffarpur, Delhi, major towns of Telangana and
several districts of Andhra Pradesh. The quantum of dry waste collected during the year
was about 60,000 MT from over 1,000 wards.
The programme has covered over 1.8 crore citizens in over 46 lakh households, 52 lakh
school children and around 2,040 corporates since its inception.
It has promoted sustainable livelihood for over 17,000 waste collectors by facilitating
an effective collection system in collaboration with municipal corporations. The
intervention has also created over 140 social entrepreneurs who are involved in maximising
value capture from dry waste collected.
In Pune, your Company is spearheading a circular economy based on first-of-its-kind
Multi-Layer Plastic (MLP) collection and recycling programme.
In addition to WOW, a separate community-driven programme on decentralised Solid Waste
Management (SWM), in collaboration with Swachh Bharat Mission, is operational in 17
districts of 10 states covering 14.6 lakh households.
This programme deals with both wet and dry waste and focuses on minimising waste to
landfill by managing waste at source. Under the programme, more than 99,700 MT of waste
was collected during FY 2021-22 out of which around 63,700 MT of wet waste was composted,
19,000 MT of dry waste was recycled, and only 17% of the total waste was sent to
landfills. Further, home composting was practiced by over 3.2 lakh households.
In Uttar Pradesh, your Company partnered with the Urban Development Department, leading
to over 1,400 Government officials from 31 municipalities being trained on decentralised
SWM 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 on
implementation of decentralised SWM in nearly 500 villages of Ganga region (‘Ganga
Gram') across 12 districts of Bihar.
The ‘Green TempleRs initiative, powered by your Company's Social Investments
programme ‘Mission Sunehra Kal', is a closed loop waste management model involving
processing of waste generated in temples to provide biogas to the kitchen and compost for
its gardens. During the year, the initiative was expanded to 500 temples across Andhra
Pradesh, 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 to
develop unique, sustainable and industry-leading solutions to some of the most pressing
sustainable development challenges faced by our country. Combining deep-rooted insights,
perspectives and on-ground managerial expertise with meaningful collaborations and
partnerships, your Company has created sustainable, scalable and replicable business
models in response to these challenges.
To ensure wider adoption of the ‘Triple Bottom Line' philosophy across the
Industry, your Company established the ‘CII-ITC Centre of Excellence for Sustainable
DevelopmentRs in 2006 in collaboration with the Confederation of Indian Industry (CII).
The Centre continues to focus on its endeavour to promote sustainable business
practices amongst Indian enterprises. The major highlights during the year include the
following:
Climate Change
- A CEO's working group on ‘Driving Accelerated Climate Action' was set up with
the objective of developing and driving a compelling strategy and action plan to enable
Indian businesses adopt sustainability for building a climate-resilient future. The
working group is led by the Chairman and Managing Director of your Company, and comprises
11 CEOs from leading businesses. Rapid progress is being made by the working group on the
agenda of creation of CII Vision 2030 on Climate Change and Sustainability, establishment
of the CII Climate Action Charter, MSME toolkit for climate risk management, and
interlinking climate related policy advocacy in CII Councils and Committees.
- A roundtable of industry members and GIZ (a German development agency that provides
services in the field of international development cooperation and international education
work) held in December 2021 documented the challenges and opportunities in implementing
Voluntary Climate Action (VCA) through Voluntary Carbon Market (VCM) and Internal Carbon
Prizing (ICP) to address climate risks and achieve net zero emissions. An industry-led
‘Task Force on Afforestation' created modalities to partner with the Government of
India and also developed comprehensive afforestation-based methodologies towards the
mission of developing carbon sinks of appx. 3 billion tonnes and restoring 26 million
hectares by 2030.
- A pre-COP26 Conclave in October 2021 brought together different stakeholders on the
vital issue of combating climate change. The virtual Conclave had two sessions - (a)
Adopting Clean Energy for Climate Change and (b) Information Technology Sector: Tackling
Climate Crisis. In the run up to COP26 and as part of a global campaign, the Centre also
organised a series of six webinars during the period June to August 2021 on ‘Race to
Zero' with emphasis on topics including RE100, SME Climate Hub, RE100, EV 100, and
technology transfer.
- At COP26, the delegation members held high-level discussions with the Minister of
Environment,
Forest and Climate Change, Government of India, Chair of the Energy Transitions
Commission, UK and the US Special Presidential Envoy for Climate on business' perspectives
to mainstream climate action. The Centre, in collaboration with World Business Council for
Sustainable Development (WBCSD), also organised a session on ‘Greening India's Power
Grids'.
Circular Economy
- The India Plastics Pact, a collaboration between Centre and the WWF, became part of a
network of 13 Plastic Pacts across the globe at its launch at the 16th Sustainability
Summit. The Pact has set four major targets: eliminate unnecessary or problematic plastic
packaging and items, reuse or recycle 100% of plastic packaging, recycle 50% of plastic
packaging and ensure 25% average recycled content across all plastic packaging.
- The Centre continued working on the inventory of plastics in India and created a
material flow of major plastic resins in India. Along with the CII-Sohrabji Godrej Green
Business Centre, the Centre also began a study to identify greenhouse gas mitigation
strategies through resource efficiency and circular economy across the cement value chain.
- The Plastics-use Protocol, developed in 2020 to help companies record, certify and
verify plastic use reduction in packaging and product lines, enabled 60 sites of 6
companies to be certified Single Use Plastics (SuP) free by 2021.
Biodiversity
- India Business & Biodiversity Initiative (IBBI), in collaboration with the World
Spice Organisation (WSO), interacted with companies in the Spices sector operating in
Western Ghats to integrate biodiversity practices in their business plans.
- The Centre, WWF India and GIZ jointly organised a virtual business consultation on
the first draft of Post 2020 Global Biodiversity Framework, released by the Secretariat of
the UN Convention on Biological Diversity (CBD) in August 2021. The key recommendations,
submitted to Ministry of Environment, Forest and Climate Change (MoEFCC) and CBD, include
guidance on goals & targets of post 2020 Global Biodiversity Framework, development of
modules & mechanisms for biodiversity conservation, and building partnerships and
collaborations for effective management of biodiversity.
Air Pollution
- Signatories to the Clean Air Better Life forum has grown to 72 companies, and members
have agreed to work on a common framework for inter-corporate collaboration and sharing of
best practices. The Industry Platform on Sustainable Transportation has 85 members, and as
an outcome of two platform meetings and bilateral consultations with members held in 2021,
a 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 with
support from the Centre and Clean Air Fund, was launched at the 6th CEOs meeting of India
CEO Forum under the Cleaner Air-Better Life (CABL).
- The Crop Residue Management programme was expanded to 44 new villages in 3 new
clusters.
The project also became a case study by IIM Bangalore, which was published in the
Harvard Business Review (HBR).
- The Multi Agency Collaborative Project on Air Pollution, with support of the Madhya
Pradesh Pollution Control Board (MPPCB), was initiated in Indore Metropolitan Region
(IMR), offering a common platform to stakeholders to contribute to cleaner air. Air
quality modelling is being conducted by IIT Delhi and is being downscaled for the Indore
Metropolitan region with inputs from experts of California Air Resources Board.
Additionally, CII CABL team is working with Smart City Indore to integrate 20 sensors
installed 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 in
September 2021 in partnership with 23 multi-sectoral organisations. The emphasis of the
Summit was on interactions and interconnectedness between elements of physical, social,
natural 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 audience
of 800 participants.
- At the 16th CII-ITC Sustainability Awards in January 2022, 21 companies were
recognised for Corporate Excellence, Environment Management, and Biodiversity. Shri Rao
Inderjit Singh, MP, Union Minister of State (Independent Charge) of the Ministry of
Statistics and Programme Implementation; Union Minister of State (Independent Charge) of
the Ministry of Planning and Union Minister of State in the Ministry of Corporate Affairs,
and Mr. Sanjiv Puri, Chairman and Managing Director, ITC Limited, recognised the winners
for Excellence in Sustainable Business.
Capacity Building on various topics
- Nearly 1,400 participants were covered through 50 capacity building programmes
conducted during the year. Topics of discussions included Climate Change, Energy and
Energy Management Systems, Health and Safety, Value Innovation, CSR Rules and Impact
Measurement, Sustainability Reporting, Integrated Reporting, Human Rights, Circular
Economy and Biodiversity, Waste Management Rules, Plastic use Protocol, Sustainable
Procurement, Corporate Risk Management among others.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The two waves of the pandemic during the year severely impacted health and livelihoods
across the country, especially those of the poor and vulnerable sections of society. Your
Company rose to the challenge and took proactive initiatives to provide relief to
vulnerable sections of society and also facilitated their economic rehabilitation in the
medium term.
Your Company not only aided the Government's efforts but also proactively took a host
of 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 first
to import cryogenic ISO containers (24 nos.), installation of 22 oxygen generation units
and distribution of 1,200 oxygen concentrators to different hospitals; (b) providing
essential medical infrastructure support through a wide range of interventions like
setting up of COVID isolation centres, setting-up of 600 hospital beds in three states,
supply of ventilators, oxygen cylinders, modular ICU units, and ambulances; (c)
distribution of food and personal hygiene products; and (d) large-scale vaccination drives
in multiple states.
Your Company's overarching commitment to create significant and sustainable societal
value is manifest in its CSR initiatives that embrace the most disadvantaged sections of
society, especially in rural India, through economic empowerment based on grassroots
capacity building. Towards this end, your Company has a comprehensive CSR Policy outlining
programmes, projects and activities that your Company undertakes to create a significant
positive impact on identified stakeholders. All these programmes fall within the purview
of 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 holistic
development and design interventions in order to respond to the most significant
development challenges of your Company's stakeholder groups.
- strengthen capabilities of Non-Government Organisations (NGOs)/Community Based
Organisations (CBOs) in all project catchments for participatory planning, ownership and
sustainability of interventions.
- drive the development agenda in a manner that empowers women and benefits the poor
and marginalised communities in our factory and agri-catchments, thereby significantly
improving Human Development Indices (HDI).
- ensure behavioural change through focus on demand generation for all interventions,
thereby enabling participation, contribution and asset creation for the community.
- strive for scale with impact by leveraging government partnerships and accessing the
most contemporary knowledge/technical know-how.
Your Company's stakeholders are confronted with multi-dimensional and inter-related
concerns, at the core of which is the challenge of securing sustainable livelihoods.
Accordingly, interventions under your Company's Social Investments programme are
appropriately designed to build capacities and promote sustainable livelihoods.
The footprint of your Company's CSR projects is spread across 25 States/Union
Territories covering over 200 districts.
Your Company's CSR interventions were conferred with two prestigious awards during FY
2021-22:
- First prize in the 'Best Industry for CSR Activities' category at the third National
Water Awards by Ministry of Jal Shakti, which was presented by Shri Ram Nath Kovind,
Hon'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 and
Cooperation.
Social Forestry
Your Company's pioneering afforestation initiative through the Social Forestry
programme greened over 30,700 acres during the year. It is currently spread across 19
districts in 9 States covering over 4.25 lakh acres in nearly 7,000 villages, impacting
over 1.4 lakh poor households. Together with your Company's Farm Forestry programme, this
initiative has greened over 9.5 lakh acres till date, and generated over 173 million
person days of employment for rural households, including women, poor tribal and marginal
farmers. Integral to the Social Forestry programme is the Agro-Forestry initiative
including plantations on bunds, which cumulatively extends to about 1.8 lakh acres and
ensures food, fodder and wood security. Further, fast growing, high yielding and disease
resistant hybrid clones and saplings of eucalyptus pulpwood developed by your Company
deliver significantly higher productivity vis-a-vis earlier clones.
The clones have been developed to grow under varying ecological conditions, thereby
building resilience and contributing towards increasing income for the farming community.
Data from wood supplied by Mutually Aided Co-operative Society (MACS) shows improvement in
yield by over 12%, primarily enabled through improved focus on promoting inter-crop
practices in agro-forestry and farmer training on productivity improvement.
Besides enhancing farm level employment, generating incomes and increasing green cover,
this large-scale initiative also contributes meaningfully to the nation's endeavour to
create additional carbon sinks for tackling climate change.
In addition to the above, the Social and Farm Forestry initiative of your Company,
through a multiplier effect, has led to improvement in pulpwood and fuelwood availability
in Andhra Pradesh, Telangana, Karnataka and Odisha.
Soil and Moisture Conservation
The Soil and Moisture Conservation programme aims to ensure water security for all
dependents in the factory catchments and to drought-proof the agri-catchments to minimise
risks to agricultural livelihoods arising from drought and moisture stress. The programme
promotes the development and management of local water resources in moisture-stressed
areas by facilitating community participation in planning and implementing such measures,
as well as building, reviving and maintaining water-harvesting structures. The coverage of
this programme currently extends to 40 districts of 16 states. During the year, the area
under watershed increased by over 1 lakh acres, taking the cumulative coverage area to
over 13.3 lakh acres. Over 3,100 water-harvesting structures including ground water
recharge structures were built during the year, creating nearly 3.5 million cubic metres
of rainwater harvesting potential. This took the total number of water harvesting
structures to over 25,000 and the net water storage to over 45 million cubic meters. In
addition, your Company continues to work with farmers to achieve 'more crop per drop' by
promoting agronomic practices and micro irrigation techniques targeted towards saving
water in cultivation and improving farmer incomes. Around 7.3 lakh acres have been covered
across 11 states during the year; more than twice over previous year. Studies have been
conducted by Vasantdada Sugar Institute and Tamil Nadu Agricultural University to estimate
water savings in sugarcane, coconut and banana in your Company's programme locations.
According to these studies, demand management practices promoted by your Company have led
to potential water savings to the tune of 497 million cubic metres during the year.
Additionally, your Company is continuing partnerships with multiple state government
departments for Soil and Moisture Conservation. Under the partnership with Watershed
Development Department, Government of Karnataka, signed in the previous year, capacities
are being built using your Company's Water Stewardship approach to drought proof 100
watersheds across 29 districts covering over 1.1 million acres. During the year,
Government officials responsible for all 100 watersheds were trained to incorporate your
Company's drought proofing and positive water balance based planning.
Biodiversity
The focus of the programme is on reviving ecosystem services provided to agriculture
such as natural regulation of pests, pollination, nutrient cycling, soil health retention
and genetic diversity, which have witnessed considerable erosion over the past few
decades. During the year, your Company's biodiversity conservation initiative covered over
89,000 acres, taking the cumulative area under biodiversity conservation to over 1.3 lakh
acres in more than 29 districts across 10 states. While the conservation work is being
carried out in select plots of village commons, this intervention significantly benefits
agricultural activity in the vicinity of these plots through soil moisture retention,
carbon sequestration and by acting as hosts to insects and birds beneficial to
agriculture.
To increase the coverage for pastureland development and biodiversity conservation,
your Company partnered with Forest Departments of Maharashtra and Telangana, and Wasteland
& Pastureland Development Board (WPDB) of Rajasthan. The partnership with WPDB is
targeted to cover 2.5 lakh acres across 8 districts. Further, during the year, 475
Government staff were trained for implementing the programme across 2,800 villages
encompassing 34,000 acres.
Sustainable Agriculture
The Sustainable Agriculture programme attempts to de-risk farmers from erratic weather
events through the promotion of climate-smart agriculture premised on dissemination of
relevant package of practices, adoption of appropriate mechanisation and provision of
institutional services. Currently, 15.2 lakh acres and over 4.5 lakh farmers are covered
under the programme, representing an increase of 71% and 77% respectively over the
previous year. This has a significant multiplier effect in terms of adoption of
sustainable practices by the farming community. During the year, knowledge was
disseminated through more than 7,100 Farmer Field Schools and over 3,000 Choupal
Pradarshan Khets. More than 610 Agri Business Centres delivered extension services,
arranged agri-credit linkages, established collective input procurement and provided
agricultural equipment for hire. In pursuit of your Company's long-term sustainability
objective of increasing soil organic carbon, more than 2,500 compost units were
constructed during the year, taking the total number till date to over 51,300 units.
Your Company, with its presence across multiple commodities and geographies including
e-Choupal network and agri extension programmes network, undertook an initiative to
facilitate formation of new FPOs and/or strengthening existing FPOs, thus, enhancing farm
incomes, 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 presently
covers 245 model villages in the states of Andhra Pradesh and Karnataka. This initiative
is aligned to the Prime Minister's Sansad Adarsh Gram Yojana (SAGY), an initiative to
promote holistic rural development. Under this programme, your Company is addressing the
human rights and farm safety challenges in Indian farming by educating the farmers, labour
and community and providing access to tools and Personal Protective Equipment (PPE) kits
for use on the field.
Your Company had entered into a partnership with NITI Aayog in April, 2018, to improve
agriculture and other allied services in 27 aspirational districts of 8 states (Assam,
Bihar, Jharkhand, Rajasthan, Madhya Pradesh, Maharashtra, Odisha and Uttar Pradesh) by
training government officers who, in turn, would cascade the methodology to farmers.
During the year, 5.9 lakh farmers from appx. 18,900 villages were trained digitally
through WhatsApp groups, while over 6.1 lakh farmers were trained through physical
sessions, taking the cumulative reach to around 34 lakh farmer interactions. Estimates
indicate yield improvement of up to 30% for cotton, maize, paddy and soyabean in locations
covered by the programme; similarly cost of cultivation is estimated to have reduced by
nearly 15%, resulting in expansion of farmer incomes by up to 60%.
The 'Baareh Mahine Hariyali' programme in select districts of Uttar Pradesh (Chandauli,
Ghazipur, Prayagraj and Varanasi) is a pioneering initiative to facilitate farmers to
enhance their incomes.
This programme is founded on a 360-degree, multipronged approach with interventions
such as increased cropping intensity with a third crop during summer, enhancement of
productivity through context-specific agronomic practices demonstrated through Choupal
Pradarshan Khets (on-farm demonstrations) and provision of market linkages with
transparency in assessment of quality, price and weighment. In some regions, taking a
holistic approach to income diversification as an adjacency, livestock development, women
empowerment and agro-forestry are also included. Over 2 lakh farmers have already
benefited from the interventions under this programme - over 35,000 farmers who have
adopted the package of practices reported doubling of income and those who have
implemented 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-based
livelihoods by improving productivity of the progeny through breed improvement and
dissemination of improved animal husbandry practices.
The programme provided extension services, including breeding, fodder propagation and
training to farmers owning cows and buffaloes in 5 states and 18 districts. During the
year, over 1.1 lakh artificial inseminations (AIs) were carried out which led to the birth
of 0.5 lakh high yielding progeny. Cumulatively, the figures for AIs and calving stand at
over 27 lakh and 9.5 lakh, respectively. In addition, the livestock programme also covered
families engaged in goat and sheep rearing, enhancing their productivity through promotion
of improved management practices.
Under the programme, 164 women trained as 'Pashu Sakhis' provided extension services to
over 16,000 households till date, thus enabling them to earn supplementary income of up to
Rs 5000 per month.
Your Company is also working with dairy farmers in Bihar and West Bengal to improve
productivity through several extension services and to facilitate higher milk production.
Qualified teams comprising veterinarians and para-veterinarians have been deployed to
facilitate animal breeding, animal nutrition and animal health services towards improving
productivity and promoting commercial dairy farming among farmers. During the year, about
84,400 cattle of over 48,000 dairy farmers across 507 villages in 8 districts of Bihar and
2 districts of West Bengal were supported through training programmes on clean milk
production, mastitis control and animal husbandry services like deworming, ectoparasite
control, etc.
Women Empowerment
During the year, this initiative provided a range of gainful employment opportunities
to around 6,200 poor women, taking the cumulative coverage to over 86,000 women, supported
with capacity building and provided financial assistance by way of loans and grants. This
includes more than 30,500 ultra-poor women in your Company's core catchments who now have
access to sustainable sources of income through various livelihood opportunities. The
financial literacy and inclusion project, in partnership with Madhya Pradesh State Rural
Livelihood Mission (MPSRLM) and CRISIL Foundation, was operational in 43 districts during
the year. 568 Super Trainers were trained directly who in turn trained 678 Master
Trainers; the training was thereafter cascaded to over 56,000 self-help-groups (SHGs)
covering more than 5.4 lakh women during the year. The programme has cumulatively covered
over 1.3 lakh SHGs benefiting over 13 lakh women across 15,600 villages. Over 4 lakh
trained women have been provided access to bank accounts and government social security
schemes. As a result, enrolments of women witnessed significant increase against the
project baseline.
Education
The Primary Education programme aims to provide children from weaker sections of
society in your Company's factory catchments access to education with focus on learning
outcomes and retention. Operational in 28 districts of 13 states, the programme covered
over 55,000 children during the year, taking the cumulative coverage to over 8.6 lakh
children.
Over 400 government primary schools and anganwadis were provided infrastructure support
comprising boundary walls, additional classrooms, sanitation units and furniture, taking
the total number of government primary schools and anganwadis covered till date to around
2,500. Infrastructure support to government schools has helped in increasing enrolment,
particularly of girls, in schools. To ensure sustainable operations and maintenance of
infrastructure provided, more than 1,290 School Management Committees and around 750 Child
Cabinets and Water and Sanitation (WATSAN) Committees were operational in various schools
during 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 to
compete in the job market. More than 13,300 youth were enrolled under different courses
during 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 is
operational in 33 districts of 17 states. Further, the pandemic led to increased enrolment
in bedside assistance courses with over 1,700 youth trained during the year.
Overall, nearly 76% of the trained youth have found job placements during the year.
Sanitation
Your Company continues to adopt a multi-pronged approach towards improving public
health and hygiene across 26 districts and 12 states. To promote a hygienic environment
through prevention of open defecation and reduced incidence of water-borne diseases, 1,200
Individual Household Toilets (IHHTs) were constructed in Bihar and Tamil Nadu in
collaboration with the respective State Governments/District sanitation departments,
taking the total to over 39,400 IHHTs constructed so far in your Company's catchment
areas. In addition, 18 community toilets were constructed/renovated in West Bengal and
Tamil 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 lakh
community members. Along with sanitation infrastructure development, special focus was
also 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 a
network of 430 women Village Health Champions (VHCs) who covered nearly 1.1 lakh women and
adolescent girls during the year. The programme is operational in seven districts of Uttar
Pradesh and three districts of Madhya Pradesh. As the group activities remained restricted
due to the pandemic, the VHCs conducted door-to-door visits in the villages focusing on
aspects like sanitation, menstrual and personal hygiene, family planning, diarrhoea
prevention and nutrition.
Over 4.8 lakh beneficiaries were covered under the Mother and Child Health initiative
aimed at improving the health-nutrition status of women, adolescents and children in the
catchments of a few of your Company's factories with high maternal and infant mortality
indices. As per internal estimates, the proportion of underweight children between 0-5
years of age in select project locations of two districts stood at 2.6% and 5.0% in
2021-22, significantly lower than district averages5 of 19.7% and 33.1% respectively.
To bridge gaps in primary and secondary healthcare delivery and to address the
challenges of awareness, availability, accessibility and affordability, your Company has
undertaken several Rural Healthcare interventions, which will be implemented in a phased
manner. After launching the Mother and Child Health initiative in FY 2016-17, your Company
is now adopting a holistic approach focusing on two major components - preventive health
care and curative services. The objective of the initiative is to improve health and
nutrition by strengthening institutional capacity, supplementing existing infrastructure,
promoting greater convergence with existing government schemes, leveraging technology and
increasing access to basic primary and secondary healthcare services. As part of this
project, mobile medical units are in the process of being deployed at Saharanpur and
Munger. Simultaneously, plans have been initiated to set up a 50-bed hospital for
secondary 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 to
151, thus providing safe drinking water to over 2 lakh rural people.
Your Company's ‘Swasth India Mission' programme has been a front runner in driving
behavioural 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 in
its fight against COVID:
- The Doctor's Connect Program (DCP) reached a total of 1.1 lakh doctors across nearly
3,000 hospitals.
- To encourage and instil mask etiquette and compliance and spread awareness on
choosing the right type of mask, your Company launched a print campaign as well as
vignettes with news anchors.
- Your Company also launched a print campaign ‘Do it for Kids', to spread
awareness 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 Company
launched ‘Beat the Second Wave' series in pictorial format in both English and
regional languages.
- To seed positive attitude towards hygiene, your Company launched the ‘Hygiene
Sahi toh Health Sahi' series in partnership with Times Network.
- Your Company also commissioned a nationwide study on current hygiene trends in
collaboration with ‘YouGov', one of the world's leading full-service market research
companies, which assessed usage, perception and behavior towards hygiene practices
focusing 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 sustainable
models of municipal solid waste management that can be implemented across the country to
ensure 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 of
your Company's sustained commitment to a priceless national heritage. Your Company's
pledge towards ensuring enduring excellence in Classical Music education continues to
drive ITC SRA in furthering its objective of preserving and propagating Hindustani
Classical Music based on the age-old principle of ‘Guru-Shishya Parampara'. The
eminent Gurus of the Academy impart intensive training and quality education in Hindustani
classical 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, Vidushi
Subhra Guha and Shri Omkar Dadarkar. The Academy's focus continues to be on nurturing
exceptionally gifted students selected from across the country through a system of
multi-level audition. Full scholarship is provided to them to reside and pursue music
education in the Academy's campus and in other designated locations under the tutelage of
the country's most distinguished musicians. Creation of the next generation of masters of
Hindustani classical music for the propagation of a precious legacy continues to be the
Academy's objective.
Forging Partnerships with NGOs
The meaningful contribution made by your Company's Social Investments Programme to
address some of the country's key development challenges, has been possible in significant
measure, due to your Company's partnerships with globally renowned NGOs such as BAIF, DSC,
FES, DHAN Foundation, MYRADA, Pratham, SEWA Bharat, WASH Institute and Water for People,
Youth Invest, amongst others. These partnerships, which bring together the best-in-class
management practices of your Company and the development experience and mobilisation
skills of NGOs, will continue to provide innovative grassroots solutions to some of
India's most challenging problems of development in the years to come.
CSR Expenditure
The annual report on Corporate Social Responsibility activities, as required under
Sections 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 towards
achieving the greenest and safest operations across all your Company's units by optimising
natural resource usage and providing a safe and healthy workplace. Systemic efforts
continue to be made towards natural resource conservation by continuously improving
resource-use efficiencies.
Your Company believes that a safe and healthy work environment is a pre-requisite for
ensuring employee well-being, and adopting best practices in occupational health &
safety bears a direct impact on overall performance. With an aim to percolate safety
deeper into ITC's operational practices and achieve the ‘Zero Accident' goal, your
Company has adopted a comprehensive EHS strategy founded on two pillars: ‘Safety by
Design' and ‘Safety by Culture'.
Safety
Your Company follows ‘Safety by Design' by continuously striving to improve on
safety performance by incorporating best-in-class engineering standards for all
investments in the built environment. During the year, following the principle of
continuous improvement, technical guidelines were contemporised in line with the recent
technological 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 at
an enterprise level. This upgradation will enable seamless integration of Safety with
operations, optimising overall efforts.
To drive a culture of safety, your Company is making use of tools such as a structured
conversation with workers on ‘Safe and Unsafe' Acts which was supplemented by
adoption of keystone behaviours that inculcates individual ownership for safe behaviour.
Your Company has also pioneered the usage of Design Thinking principles for seamless
integration of safety in business operations. This initiative is bringing in positive
behavioural changes.
Several national awards and certifications received by various units reaffirm your
Company'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 through
collective and concerted efforts, leveraging the learnings from the first wave. To control
workplace COVID transmission, your Company followed best practices on air management in
indoor spaces while also complying with masking and sanitation protocols. Periodic
inspections across business locations were conducted to ensure compliance with laid down
protocols, thereby ensuring business continuity.
R&D, QUALITY AND PRODUCT DEVELOPMENT
Your Company's state-of-the-art ITC Life Sciences and Technology Centre (LSTC) in
Bengaluru is at the core of driving science-led product innovation to support and build
your Company's portfolio of world-class products and brands. The LSTC team comprising over
350 highly qualified scientists has a mandate to work on future-ready science platforms,
design differentiated products to address unique consumer needs and deliver superior
benefits.
LSTC harnesses contemporary advances in relevant core areas of science and technology
to continuously translate ‘proofs of concept' to novel product opportunities. R&D
teams seamlessly integrate classical concepts of product development backed by purposeful
innovation to bring exciting offerings to consumers with speed and agility. LSTC is at the
forefront of executing robust R&D strategies and plans that embed sustainability and
digitalisation to enable rapid go-to-market timelines, enhanced quality of insights and
long-term competitiveness for each Business.
LSTC is equipped with world-class scientific infrastructure and state-of-the-art
facilities to create deep knowledge base and build intellectual property for your Company
through research, rapid prototyping and process development. Over 900 patents have been
filed till date, bearing testimony to LSTC's innovation capabilities. Your Company was
ranked ‘Top InnovatorRs in India amongst Indian Pharma and Healthcare Private
Companies (Source: Sagacious IP Report August 2021). Centres of Excellence in Biosciences,
Agri-sciences & Materials sciences, and future-ready platforms such as Beauty &
Hygiene, Heath & Wellness, Agro-forestry, Crop Sciences, Consumer & Sensory
Sciences and Sustainable Materials & Packaging continue to drive world-class
innovation. Rigorous systems, processes and industry best practices have enabled securing
global quality certifications - a key enabler in delivering products that follow the
highest standards in quality, safety and efficacy to the Indian consumers.
In line with your Company's relentless focus on operational excellence and quality,
each Business is mandated to continuously innovate on materials, training, processes and
systems to enhance their competitiveness. LSTC actively collaborates with and supports the
Businesses to drive their innovation agenda and accelerate growth. Your Company has been a
forerunner in introducing first-to-market innovative products for Indian consumers. In the
context of recurrent COVID waves, LSTC researchers and product development teams continue
to enable the Branded Packaged Foods and Personal Care Businesses to deliver a range of
differentiated and superior quality products. Innovative science-based programmes continue
to be leveraged to drive systematic reduction in salt, sugar and fat from packaged food
products recipes without compromising on sensory attributes. Leading edge technology
platforms in Hygiene, Health & Wellness continue to power innovation and develop next
generation product offerings to serve emergent consumer needs. LSTC's unique competencies
in Materials and Packaging have enabled innovative recyclable flexible packaging and
bio-compostable coating solutions in line with your Company's environmental sustainability
agenda. New synergistic value chains in health, nutrition and sensory sciences have been
created to propel growth going forward.
In Agro Forestry and Crop Science Platforms, LSTC has an ambitious R&D programme on
improving 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 of
raw material supplies across your Company's value chains. Research on wheat and potato
varietal securitisation are at advanced stages of development to achieve flexibility in
sourcing of raw material, create region-specific blends and ensure robust agro-climatic
adaptability. Future-ready, alternate value chains that mitigate risks arising out of
disruptions to existing models continue to be explored. LSTC, in collaboration with the
Agri and Branded Packaged Foods Businesses, endeavours to ensure that contemporary
science-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 new
clones in tandem with Paperboards & Specialty Papers Business to enhance wood
productivity and pulp quality for sustainable raw materials and farmer profitability.
The Paperboards, Paper and Packaging Businesses continue to pursue ‘Total
Productive Maintenance' (TPM) programmes with focus on customer delivered quality. The
Paperboards & Specialty Papers Business has also set up a state-of-the-art Next
Generation Smart and Hyperscale Digital and Data Infrastructure at its plants, to enable
real time operations control, process optimisation and quality improvements. Consistent
quality enables customers of your Company in improving their operating efficiencies
through reduced wastages and lower machine down-times.
During the year, your Company's Hotels Business leveraged technology to enhance
business process efficiencies and outcomes. The Hotels Business continues to heighten its
commitment towards prioritising the safety and security of guests through the award
winning ‘WeAssure' programme. Building agile operating systems that adapt quickly to
the dynamic business environment and strengthening the service excellence framework have
been the key strategies of the Hotels Business amidst pandemic-induced disruptions.
All branded packaged foods manufacturing units of your Company not only have ISO
quality certification but also follow the stringent standards under the integrated food
quality management system-FSSC 22000; these systems ensure adherence to internationally
accepted quality standards in producing safe and high-quality food.
All manufacturing units of the Branded Packaged Foods Businesses (including contract
manufacturing units) and Hotels operate in compliance with stringent food safety and
quality standards. Your Company's food quality assurance laboratories are also accredited
under ISO 17025, a global standard for testing and calibrating labs, which guarantees
quality of every analysis. Additionally, the quality of all FMCG ingredients and finished
products of your Company is monitored through best-in-class customer-centric ‘Quality
Control 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 tools
for quality performance analytics and competition benchmarking leveraging Artificial
Intelligence and Machine Learning technologies. Robust risk management practices are in
place to ensure that your Company's intellectual properties remain adequately protected at
all times. Going forward, your Company will continue to identify opportunities to address
emerging trends by leveraging R&D insights based on contemporary sciences and your
Company's diverse core competencies.
PROCEEDINGS INITIATED BY THE ENFORCEMENT DIRECTORATE
In the proceedings initiated by the Enforcement Directorate in 1997, the appropriate
authority after hearing arguments on behalf of your Company has passed orders in favour of
your Company and dropped some of the show cause notices issued by the Directorate. In
respect of some of the remaining notices, your Company filed writ petitions challenging
their validity. The Honourable Calcutta High Court, by its orders, allowed these writ
petitions, and the proceedings in respect of these notices were quashed. The remaining
notices are pending.
Meanwhile, some of the prosecutions launched by the Enforcement Directorate have been
quashed by the Honourable Calcutta High Court while others are pending.
TREASURY OPERATIONS
Your Company's treasury operations continued to focus on deployment of surplus
liquidity and management of foreign exchange exposures within a well-defined risk
management framework.
Market interest rates witnessed an upward trajectory during the year as the Reserve
Bank of India (RBI) commenced the process of Monetary Policy normalisation by way of
gradual withdrawal of liquidity infused into the Banking system during the pandemic.
Globally, inflation remained persistently high during the year due to elevated commodity
prices and supply chain disruptions, forcing central banks across most countries to pivot
from supporting growth to combating inflation. While the RBI continued to advocate
continuation of accommodative Monetary Policy stance to support the incipient recovery in
domestic economic activity, markets started to cognise for a faster pace of normalisation
by the RBI, in line with global peers. In addition, higher than expected market borrowings
budgeted by the Central Government for FY 2022-23 and spiraling commodity prices due to
geo-political tensions in Europe towards the end of the year dented market sentiments and
pushed market interest rates higher.
Investment decisions relating to deployment of surplus liquidity continued to be guided
by the tenets of Safety, Liquidity and Return. Treasury operations focused on proactive
rebalancing of portfolio duration and mix in line with the evolving interest rate
environment. Further, your Company's ongoing practice of continuous review and monitoring
of credit worthiness, including engagement with market participants, ensured that the
investment portfolio was not exposed to undue credit risks.
As in earlier years, commensurate with the size of the temporary surplus liquidity
under management, treasury operations continue to be supported by appropriate control
mechanisms, including independent check of 100% of transactions by your Company's Internal
Audit 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 major
currencies during the year. While the USD initially gained on the back of the US Federal
Reserve tightening monetary conditions, rise in geo-political tensions in Europe towards
the end of the financial year triggered risk-off sentiment amongst global investors,
aiding safe haven currencies such as the USD. Lower capital inflows and a higher than
anticipated Current Account Deficit also weighed on the INR. On the other hand,
comfortable foreign exchange reserves and judicious interventions in the forex market by
RBI provided support to the INR.
To effectively navigate the high volatility in currency markets, your Company adopted a
proactive risk management strategy and actively managed foreign currency exposures through
appropriate hedging strategies and market instruments to protect business margins.
DEPOSITS
Your Company's erstwhile Public Deposit Scheme closed in the year 2000. As at 31st
March, 2022, there were no deposits due for repayment except in respect of two deposit
holders aggregating Rs 20000 which have been withheld on the basis of directives received
from the government agencies.
There was no failure to make repayments of Fixed Deposits on maturity and the interest
due thereon in terms of the conditions of your Company's erstwhile Schemes.
Your Company has not accepted any deposit from the public/members under Section 73 of
the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014
during the year.
DIRECTORS
Changes in Directors
During the year, Mr. Shyamal Mukherjee and Mr. Hemant Bhargava, who have the required
integrity, expertise and experience, were appointed, with your approval, as Directors and
also as Independent Directors of your Company for a period of five years with effect from
11th 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) Association
of India (‘GIPSA'), and Sunil Panray, representing the Tobacco Manufacturers (India)
Limited (a subsidiary of British American Tobacco p.l.c.), were also appointed, with your
approval, as Non-Executive Directors of your Company for a period of three years with
effect from 20th December, 2021. Mr. Sumant Bhargavan was re-appointed, with your
approval, as a Director and also as a Wholetime Director of your Company for a period of
three years with effect from 12th July, 2022.
The Board of Directors of your Company (‘the Board') has recommended for the
approval of the Members, appointment of Mr. Supratim Dutta as a Director, liable to retire
by rotation, and also as a Wholetime Director of your Company, for a period of three years
with effect from 22nd July, 2022. Appropriate resolution seeking your approval to the
above 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, stepped
down 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 15th
September, 2021, on completion of his term as an Independent Director. Your Directors
place on record their appreciation for the services rendered by Messrs. Jerath, Bhargava
and Mathur.
Retirement by Rotation
In accordance with the provisions of Section 152 of the Companies Act, 2013 (‘the
Act') 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 being
eligible, 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 the
Non-Executive Directors be drawn from amongst eminent professionals, with experience in
business/finance/law/public administration and enterprises. The Nomination &
Compensation Committee has laid down the criteria for determining qualifications, positive
attributes and independence of Directors (including Independent Directors). The Board
Diversity Policy of your Company requires the Board to have balance of skills, experience
and diversity of perspectives appropriate to your Company. The skills, expertise and
competencies of the Directors as identified by the Board, along with those available in
the present mix of the Directors of your Company, are provided in the ‘Report on
Corporate Governance' forming part of the Report and Accounts.
In terms of the applicable regulatory requirements read with the Articles of
Association of your Company, the strength of the Board shall not be fewer than six nor
more than eighteen. Directors are appointed/re-appointed with the approval of the Members
for a period of three to five years or a shorter duration, in accordance with retirement
guidelines and as may be determined by the Board from time to time. All Directors, other
than Independent Directors, are liable to retire by rotation, unless otherwise approved by
the Members. One-third of the Directors who are liable to retire by rotation, retire every
year and are eligible for re-election.
The Independent Directors of your Company have confirmed that (a) they meet the
criteria of independence prescribed under Section 149 of the Act and Regulation 16 of the
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (‘Listing Regulations'), (b) they are independent from the
management of your Company, and (c) they are not aware of any circumstance or situation
which could impair or impact their ability to discharge duties with an objective
independent judgement and without any external influence. In the opinion of the Board, the
Independent Directors fulfil the conditions prescribed under the Act and the Listing
Regulations, and are independent of the management of your Company.
Remuneration Policy
Details of your Company's Policy on remuneration of Directors, Key Managerial Personnel
and other employees are provided in the ‘Report on Corporate Governance' forming part
of the Report and Accounts.
Board Evaluation
The Nomination & Compensation Committee, as reported in earlier years, formulated
the Policy on Board evaluation, evaluation of Board Committees' functioning and individual
Director 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 that
impacts Company's performance, the primary evaluation platform is that of collective
performance of the Board as a whole. Board performance is assessed, inter alia, against
the roles and responsibilities of the Board as provided in the Act, the Listing
Regulations and your Company's Governance Policy. The parameters for Board performance
evaluation have been derived from the Board's core role of trusteeship to protect and
enhance shareholder value as well as to fulfil expectations of other stakeholders through
strategic supervision of your Company; such parameters include securing alignment of your
Company's goals with the nation's economic, ecological and social priorities, ensuring
that your Company has a clearly defined strategic direction for realisation of its vision,
and supporting your Company's management to meet challenges arising from the operating
& policy environment in the country. Evaluation of functioning of Board Committees is
based on discussions amongst Committee members and shared by the respective Committee
Chairmen with the Board. Individual Directors are evaluated in the context of the role
played by each Director as a member of the Board at its meetings, in assisting the Board
in realising its role of strategic supervision of the functioning of your Company in
pursuit of its purpose and goals. The peer group ratings of the individual Directors are
collated by the Chairman of the Nomination & Compensation Committee and made available
to the Chairman of your Company.
While the Board evaluated its performance against the parameters laid down by the
Nomination & Compensation Committee, the evaluation of individual Directors was
carried 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 the
Chairman, other non-Independent Directors and the Board, pursuant to Schedule IV to the
Act and Regulation 25 of the Listing Regulations.
KEY MANAGERIAL PERSONNEL
There were no changes in the Key Managerial Personnel of your Company.
AUDIT COMMITTEE & AUDITORS
The composition of the Audit Committee is provided under the section ‘Board of
Directors and CommitteesRs in the Report and Accounts.
Statutory Auditors
Messrs. S R B C & CO LLP, Chartered Accountants (‘SRBC'), were appointed with
your approval as the Auditors of your Company for a period of five years till the
conclusion of the 113th AGM. The Board, on the recommendation of the Audit Committee, has
recommended for the approval of the Members, the remuneration of SRBC for the financial
year 2022-23. Appropriate resolution seeking your approval to the remuneration of SRBC is
appearing in the Notice convening the 111th AGM of your Company.
Cost Auditors
Your Board, as recommended by the Audit Committee, appointed the following Cost
Auditors for the financial year 2022-23:
(i) Messrs. ABK & Associates, Cost Accountants, for audit of Cost Records
maintained by your Company in respect of ‘Wood Pulp' and ‘Paper and Paperboard'
products.
(ii) Messrs. S. Mahadevan & Co., Cost Accountants, for audit of Cost Records
maintained in respect of all applicable products of your Company, other than ‘Wood
Pulp' and ‘Paper and Paperboard' products.
Pursuant to Section 148 of the Act read with the Companies (Audit and Auditors) Rules,
2014, appropriate resolutions seeking your ratification to the remuneration of the
aforesaid Cost Auditors are appearing in the Notice convening the 111th AGM of your
Company.
Your Company maintains necessary cost records a