A Study of Financial Analysis of ITC LTD

INDEX
CHAPTER
CONTENTS PAGE NO:
NO.
INTRODUCTION
1.1 HISTORY OF ITC LTD
1.2 DEFINITION OF ITC LTD

CHAPTER 1
1.3 CHARACTERISTICS OF ITC LTD
1.4 ADVANTAGE & DISADVANTAGE

OF ITC LTD
1.5 IMPORTANCE OF ITC LTD
RESEARCH & METHODOLOGY
2.1 OBJECTIVE OF STUDY
2.2 SCOPE OF STUDY
CHAPTER 2 2.3 SIGNIFICANCE OF STUDY
2.4 LIMITATION OF STUDY
2.5 DATA COLLECTION
2.6 TECHNICAL & TOOLS FOR

ANALYSIS
CHAPTER 3 LITERATURE REVIEW
DATA ANALYSIS AND

CHAPTER 4
INTERPRETATION
FINDINGS, SUGGESTIONS AND

CHAPTER 5
CONCLUSION
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INDIA TOBACCO COMPANY LIMITED
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CHAPTER 1 - INTRODUCTION
Financial performance analysis is the process of evaluating businesses, project,

budgets and other finance related transactions to determine their performance and
suitability. Typically, financial analysis is used to analyze whether an entity is stable,
solvent, liquid or Profitable enough to warrant a monetary investment. The statement
includes the Income statement, Balance sheet, Statement of cash flow, notes to
accounts and a statement of changes in equity. It is used by a variety of stakeholders,
such as credit and equity investors, the government, the public, and decision-makers
within the organization. These stakeholders have different interests and apply a
variety of different techniques to meet their needs. For example, equity investors are
interested in the long-term earnings power of the organization and perhaps the
sustainability and growth of dividend payments. Creditors want to ensure the interest
and principal is paid on the organizations debt securities (e.g., bonds) when due.
Common methods of financial statement analysis include fundamental analysis,

DuPont analysis, horizontal and vertical analysis and the use of financial ratios.
Historical information combined with a series of assumptions and adjustments to the
financial information may be used to project future performance. The Chartered
Financial Analyst designation is available for professional financial analysts.
The financial performance analysis of a company or a firm Is generally done using

ratio analysis, comparative statements and common size statements. For the purpose
of analysis I also used the above mentioned tools such as the ratios, comparative
statements and common size statement.
Ratio analysis is the comparison of line items in the financial statements of a business.
Ratio analysis is used to evaluate a number of issues with an entity, such as its
liquidity, efficiency of operations, and profitability. This type of analysis is
particularly useful to analysts outside of a business, since their primary source of
information about an organization is its financial statements. Ratio analysis is less
useful to corporate insiders, who have better access to more detailed operational
information about the organization.
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Common size analysis, also referred as vertical analysis, is a tool that financial
managers use to analyze financial statements. It evaluates financial statements by
expressing each line item as a percentage of the base amount for that period. The
analysis helps to understand the impact of each item in the financial statement and its
contribution to the resulting figure. The technique can be used to analyze the three
primary financial statements, i.e., balance sheet, income statement, and cash flow
statement. In the balance sheet, the common base item to which other line items are
expressed is total assets, while in the income statement, it is total revenues.
The comparative financial statements are statements of the financial position at

different periods; of time. The elements of financial position are shown in a
comparative form so as to give an idea of financial position at two or more periods.
Any statement prepared in a comparative form will be covered in comparative
statements.
It Is important to all sorts of company to access its financial efficiency and financial
health. It is in this context that the present study on ITC Ltd is undertaken.
ITC Limited is an Indian conglomerate company headquartered in Kolkata. ITC has a

diversified presence across industries such as FMCG, hotels, software, packaging,
paperboards, specialty papers and agribusiness. The company has 13 businesses in 5
segments. It exports its products in 90 countries. Its products are available in 6 million
retail outlets.
ITC Ltd (NSE:ITC) is one of India’s foremost private sector companies and a
diversified conglomerate with businesses spanning Fast Moving Consumer Goods,
Hotels, Paperboards and Packaging, Agri Business and Information Technology. The
Company is acknowledged as one of India’s most valuable business corporations with
a Gross sales value of ₹ 76,097.31 crores and Net Profit of ₹ 15,136.05 crores (as on
31.03.2020). ITC was ranked as India’s most admired company, according to a survey
conducted by Fortune India, in association with Hay Group.
ITC is the country’s leading FMCG marketer, the clear market leader in the Indian
Paperboard and Packaging industry, a globally acknowledged pioneer in farmer
empowerment through its wide-reaching Agri Business, a pre-eminent hotel chain in
India that is a trailblazer in ‘Responsible Luxury’. ITC’s wholly-owned subsidiary,
ITC Infotech, is a specialized global digital solutions provider.
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Over the last decade, ITC’s new Consumer Goods Businesses have established a
vibrant portfolio of 25 world- class Indian brands that create and retain value in India.
ITC’s world class FMCG brands including Aashirvaad, Sunfeast, Yippee!, Bingo!, B
Natural, ITC Master Chef, Fabelle, Sunbean, Fiama, Engage, Vivel, Savlon,
Classmate, Paperkraft, Mangaldeep, Aim and others have garnered encouraging
consumer franchise within a short span of time. While several of these brands are
market leaders in their segments, others are making appreciable progress.
PLANT LOCATION
• CIGARETTE FACTORIES
1. Bengaluru,Karnataka
2. Kolkata,West Bengal
3. Munger,Bihar
4. Pune,Maharashtra
5. Saharanpur,Uttar Pradesh
• GREEN LEAF THRESHING PLANTS

1. Anaparti,Andhra Pradesh
2. Chirala,Andhra Pradesh
3. Nanjangud,Karnataka
• PACKAGING & PRINTING FACTORIES

1. Chennai,Tamil Nadu
2. Haridwar,Uttarakhand
3. Munger,Bihar
• PAPER & PAPERBOARD MILLS

1. Bollaram,Telangana
2. Sarapaka,Telangana
3. Thekkampatty,Tamil Nadu
4. Tribeni,West Bengal
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• FOODS FACTORIES
2. Kamrup,Assam
3. Kapurthala,Punjab
4. Malur,Karnataka
5. Munger,Bihar
6. Nanjangud,Karnataka
7. Panchla,West Bengal
8. Pudukkottai,Tamil Nadu
9. Pune,Maharashtra
10. Uluberia,West Bengal
• PERSONAL CARE PRODUCTS FACTORIES

2. Kamrup,Assam
3. Manpura,Himachal Pradesh
• PLANTS UNDER CONSTRUCTION

1. Ambarnath,Maharashtra
2. Khordha,Odisha
3. Medak,Telangana
BRANDS
Food Moving Consumer Goods
ITC is one of the India’s leading marketer in Fast Moving Consumer Goods Business.
Some of ITC’s brands that have gained significant market standing among consumers
are Aashirvaad, Sunfeast, Bingo!, YiPPee!, Candyman, mint-o and Kitchens of India
in the Branded Packaged Foods space; Essenza Di Wills, Fiama, Vivel and Superia in
the Personal Care Products segment; Classmate and Paperkraft in Education &
Stationery products; WLS in the Lifestyle Apparel business; Mangaldeep in
Agarbattis as well as Aim in Matches.
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Category Brands Descriptions
Ashirwad Atta, Ghee, Salt, Spices, Ready
To Eat Meals & Instant Mixes
Sunfeast Biscuits, Cookies & Cakes
Bingo Potato Chips & Finger Snacks
Kitchens of India Ready To Eat Gourmet Cuisine,
Masala Mixes, Chutneys &
Conserves
Sunfeast Yippee Instant Noodles & Pasta
B Natural Juices & Beverages
Mint-o Confectionery
Foods
Candyman Confectionery
GumOn Gums
Fabelle Luxury Chocolate
Sunbean Gourmet Coffee & Beaten
Coffee
Sunfeast Wonderz Milk Dairy Beverages
ITC Master Chef Blended Spices, Frozen Prawns,
Snacks & Kebabs
Farmland Fresh Potatoes, Frozen
Vegetables and Tomato Puree
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Category Brands Descriptions
Essenza Di Wills Fine Fragrances, Deodorants,
Hair and Body Shampoos &
Bathing Bars
Dermafique Premium Skin Care
Fiama Shower Gels, Bathing Bars,
Handwashes, Essential Oils,
Body Oils and Bathing
Accessories
Vivel Soaps & Body Wash
Personal Care Engage Colognes, Deodorants &
Perfume Sprays
Superia Soaps & Shampoos
Nimyle Nimyle Herbal Floor Cleaner
Nimwash Nimwash – Vegetable & Fruit
Wash
Savlon Antiseptic Liquid, Soaps &
Handwashes
Shower to Shower Prickly Heat Powder
Charmis Cream
Classmate Notebooks, Pens, Pencils, Art
Stationery, Geometry Boxes &
Education Scholastic Products
Paperkraft Premium Notebooks, Diaries,
Notepads & Pens
AIM Safety Matches
Mangaldeep Incense Sticks (Agarbattis) &
Matches & Agarbatti
Dhoop
Homelites Homelites matches
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HOTELS
Launched in 1975, ITC Hotels, India’s premier chain of luxury hotels, has become
synonymous with Indian hospitality. ITC Hotels pioneered the concept of
‘Responsible Luxury’ in the hospitality industry, drawing on the strengths of ITC
groups’ exemplary sustainability practices. Responsible Luxury personifies an ethos
that integrates world-class green practices with contemporary design elements to
deliver the best of luxury in the greenest possible manner.
The Responsible Luxury commitment of ITC Hotels blends elements of nature to

deliver a unique value proposition to guests, conscious of their responsibility to be
planet positive. Today, these unique interventions have made ITC Hotels a trailblazer
in green hoteliering with all its premium luxury hotels LEED (Leadership in Energy
and Environmental Design) Platinum certified.
ITC Hotels has an exclusive tie-up with Marriott’s ‘The Luxury Collection’. ITC
Hotels are luxury hotels located at strategic business and leisure locations.
Welcomhotelsoffers five-star hospitality for the discerning business and leisure
traveller.
Fortune Hotels operates mid-market to upscale properties in the first-class, full-

service business hotel segment all over India, in major metros, mini metros, state
capitals and business towns, promising business and leisure travellers a wide choice
of destinations and accommodation. WelcomHeritage brings together a chain of
palaces, forts, havelis and resorts that offer a unique experience.
During the year, the Business commissioned ITC Royal Bengal, Kolkata. Located
adjacent to ITC Sonar and in close proximity to the new business districts of Kolkata,
this ‘One of a Kind’ luxury hotel is an ode to the region’s cultural heritage and
lineage. Together, the two hotels offer one of the largest meetings and conventions
spaces in eastern India comprising 693 rooms & suites (including 82 serviced
apartments), appx. 1 lakh square feet of banqueting space, a range of dining
destinations and Kaya Kalp – The Royal Spa.
The Food & Beverage segment continues to be a major strength of the company’s
Hotels Business with some of the most iconic brands in the country. Bukhara at ITC
Maurya regained its coveted place in Asia’s 50 Best Restaurants 2020. EDO at ITC
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Gardenia was rated the No.1 restaurant at The Condé Nast Traveller & Himalayan
Top Restaurant Awards 2019. Travel+Leisure Delicious Food Awards 2019
acknowledged Yi Jing at ITC Kohenur for ‘Best Ambience’, Royal Vega at ITC
Grand Chola for ‘Best Veg Cuisine’ and Dum Pukht at ITC Maurya for ‘Best Mughlai
cuisine’. India’s Top 50 restaurants at the Condé Nast Traveller & Himalayan Awards
2019 featured Dum Pukht & Bukhara at ITC Maurya and Avartana at ITC Grand
Chola. The Food & Beverage offerings at ITC Royal Bengal is already much sought
after – The Grand Market Pavilion, acknowledged as the ‘Noteworthy Newcomer All
Day Dining’ at the Times Food and Night-life Awards 2020 and 12 other Food &
Beverage outlets at the integrated complex bear testimony to the wide range of
popular culinary offerings.
In the wellness space, Kaya Kalp-The Royal Spa at ITC Hotels, received multiple
accolades at the AsiaSpa Awards 2019 – ‘Best Indigenous Luxury Spa Chain’; Kaya
Kalp at ITC Grand Bharat was adjudged the ‘Best Destination Spa (India)’ and Kaya
Kalp at ITC Mughal was acknowledged as the ‘Best Hotel Spa (India)’.
The ‘Fortune’ brand maintained its prominent position in the Mid-market to Upscale
segment, with the sharpened brand positioning of ‘First class, full service hotels – an
affordable alternative’. The Fortune brand presently comprises 43 hotels and nearly
3200 rooms across 37 cities. The ‘WelcomHeritage’ brand retains its leadership as the
country’s most successful and largest chain of heritage hotels with 36 operational
hotels and over 900 rooms.
AGRI BUSINESS
ITC’s pre-eminent position as one of India’s leading corporates in the agricultural

sector is based on strong and enduring farmer partnerships that has revolutionized and
transformed the rural agricultural sector. A unique rural digital infrastructure network,
coupled with deep understanding of agricultural practices and intensive research, has
built a competitive and efficient supply chain that creates and delivers immense value
across the agricultural value chain. One of the largest exporters of agri products from
the country, ITC sources the finest of Indian Feed Ingredients, Food Grains, Marine
Products, Processed Fruits & Coffee.
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Exports of rice from India at 7.5 million tonnes witnessed a significant decline against
12 million tonnes last year. Exports to destination markets dwindled due to protective
import tariffs and surplus production in other competing origins. The Business
continued to service orders from customers in both domestic and export trade in
selected varieties.
The Agri Business remains focused on enhancing Its presence in identified high
value-added segments viz. spices for ‘food-safe’ markets, processed fruits, frozen
marine products, frozen vegetables, etc. This includes the ‘ITC Master Chef’ range of
‘Super Safe’ frozen prawns, which adhere to stringent standards prevalent in USA,
EU and Japan. These products go through rigorous testing (240+ tests) and are
‘individually quick frozen’ to ensure freshness and highest standards of safety and
hygiene. Launched in eight cities, leveraging the company’s experience of catering to
customers in international markets, the range has been well appreciated for its taste
and quality.
ITC’s Agri Business is the country’s second largest exporter of agri-products. It

currently focuses on exports and domestic trading of:
• Feed Ingredients – Soyameal

• Food Grains – Wheat & Wheat Flour, Rice, Pulses, Barley & Maize
• Marine Products – Shrimps and Prawns
• Processed Fruits – Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit
Products
• Coffee
PAPERBOARDS AND SPECIALTY PAPERS
ITC’s Paperboards and Specialty Papers Business is the leader in volume, product
range, market reach and environmental performance, and is the clear market leader in
the value-added paperboards segment. Providing internationally competitive quality
and cost, the Business caters to a wide spectrum of packaging, graphic,
communication, writing, printing and specialty paper requirements.
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ITC takes great pride in servicing a large cross-section of industry requirements –
from cigarette papers and Components to FMCG cartons, from electrical insulation
papers to Bio-based Barrier Coated Board, from decorative laminate base to writing
and printing papers and much more. ITC straddles the entire spectrum of paperboards
– from 100% virgin, food-grade boards which are made from renewable and
sustainable sources to 100% recycled boards.
Packaging Boards:
Virgin Boards Safire Graphik, Cyber Cypak, Cyber XLPac and Carte
Lumina, PearlXL
Packaging,Opus Card,Vivaa Card,Carte Persona
Recycled Boards Eco Natura, Eco Blanca, NeoWhite Bliss
Barrier Coated Boards Indobev, Indobarr 1PE & 2PE
Biodegradable Barrier Omegabev, Omegabarr
Coated Boards
Graphic Boards Art Maestro, Digiart, Indoluxx
Specialty Papers:
Communication Opaque Tissue, Bible Printing, Alfa Plus, Alfa Zap, Hi

Brite, Hi Zine, Perma White, Superfine Printing,
Pharma Print
Wrapping paper (Food WrapWell
grade)
Decor Decor Paper
PACKAGING
ITC’s Packaging & Printing Business is the largest value added converter of
paperboard packaging in South Asia. It converts over 70,000 tonnes of paper,
paperboard and laminates per annum into a variety of value-added packaging
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solutions for the food & beverage, personal products, cigarette, liquor and consumer
goods industries.
The Division, whichh was set up in 1925 as a strategic backward integration for ITC’s
Cigarettes business, is today India’s most sophisticated packaging house. State-of-the-
art technology, world-class quality and a highly skilled and dedicated team have
combined to position ITC as the first-choice supplier of high value added packaging.
The Division supplies value-added packaging to ITC’s various FMCG businesses. Its
client list includes several well-known national and international companies like
Nokia, Colgate Palmolive, Pernod Ricard, Diageo, British American Tobacco, Philip
Morris International, Agio Cigars, UB Group, Tata Tetley, Tata Tea, Reckitt
Benckiser, Radico Khaitan, Akbar Brothers, Surya Nepal, VST Industries, etc.
With three packaging factories at Tiruvottiyur near Chennai (in the South), Munger in
Bihar (in the East), and Haridwar (in the North of India), the Company offers a
comprehensive product range in packaging backed by its packaging expertise over the
decades and cutting edge technology making it truly a “One stop shop for Packaging”.
• Carton Board Packaging

UV offset printing, Foil Stamping, Embossing, Window patching & lined
cartons
• Flexible Packaging
ITC offers a completely integrated solution for laminates from Pre-press, In-
house Blown Film, Cast film, Extrusion Lamination, Hot Melt Coating,
specialty pouching and bag making
• Green Packaging
ITC Packaging has pioneered offering of Green Packaging which includes
usage of raw material from sustainable sources and conversion of the same in
a facility which is 100% powered by renewable energy (Wind Energy).
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PERSONAL CARE PRODUCTS
The company’s Personal Care Products Business consolidated its market standing
across categories driven by sustained focus on innovation, portfolio premiumisation
and expansion of distribution reach, both in traditional trade as well as e-Commerce.
While ‘Fiama’ handwash, ‘Vivel’ bodywash, ‘Savlon’ handwash and antiseptic liquid
and ‘Nimyle’ floor cleaner witnessed robust growth, performance in the bar soaps and
fragrancing products categories was relatively subdued in line with the slowdown in
consumer demand in the industry witnessed during the year.
In the Personal Wash & Hygiene category, the Business augmented the ‘Fiama’
bodywash range with the launch of ‘Fiama’ Scents in two exciting variants, thereby
strengthening the brand’s ‘mood upliftment’ value proposition. Fiama Scents, a first-
to-market product in India, is crafted with fragrance encapsulation technology which
enables long lasting fragrance delivery through skin friendly micro fragrance
capsules, which burst on touch or a slight rub. The Business also introduced a first-of-
its-kind Fiama ‘mood uplifting’ handwash in the premium segment with three
refreshing variants. The Business also launched two innovative products in record
time – ‘Savlon Surface Disinfectant Spray’ and ‘Savlon Hexa’ hand sanitizing liquid
for quick and persistent action.
In the Fragrances category, ‘Engage’ consolidated its position as the second largest
brand in the category. Over the years, the brand has been built on disruptive
innovations anchored on ‘affordability’ and ‘convenience’ thereby driving category
expansion. The Business also launched a range of innovative 2-in-1 pocket perfume
variants providing the consumer a choice of two fragrances in a single pack to cater to
different engagement occasions during the day.
The Business continued to expand Its presence in the Floor Cleaner category
leveraging the recently acquired ‘Nimyle’ brand. Nimyle is a 100% natural action
floor cleaner which derives its efficacy from neem extracts making it an ideal product
for daily household use for providing a clean and hygienic environment. During the
year, Nimyle witnessed strong growth in the East and also expanded its geographical
footprint to the South, to become the 3rd largest brand nationally in a relatively short
span of time. The brand’s unique natural action proposition offers immense potential
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to build on the values of authenticity and trust which have assumed critical
significance in the wake of COVID-19 pandemic.
The Business continued to strengthen Its presence in the premium skincare space
through its ‘Dermafique’ brand and in the popular space through ‘Charmis’. Designed
and validated for Indian consumers, the Dermafique range is powered by cutting-edge
skincare technology and extensive research. The brand is now available on all key e-
Commerce platforms and continues to receive encouraging consumer response.
The Business continues to accord the highest priority to manufacturing excellence.

The Haridwar and Manpura facility received the prestigious Five-S certification by
JUSE (Union of Japanese Scientists and Engineers) bearing testimony to the
company’s focus on manufacturing excellence, safety and quality. With this, all three
manufacturing facilities of the Business are Five-S certified.
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1.1 HISTORY OF ITC LTD
A conglomerate is a corporation that is made up of a number of different, sometimes

unrelated businesses. In a conglomerate, one company owns a controlling stake in a
number of smaller companies all of whom conduct business separately and
independently. In simple terms, conglomerate is a combination of two or more
corporations in a single corporate structure. This forms a group of companies that
usually involves a single parent company and different subsidiaries. However, in a
conglomerate, diversification of the business in the companies is normal practice, and
usually these companies depict a multi-industry corporate structure. These corporate
structures are often multinational.
History of conglomerate
In 1960s, conglomerates were popular as the very concept of a corporate structure was
the symbol of the power. This allowed these conglomerates to buy other businesses at
leveraged rates. In that time, the only method to measure the real value of a company
was its return on investment (ROI). Due to this, if the target company had the profits
for a period larger than its interest paid on the loans, it was considered to grow. Due
to their impact, conglomerate also had an improved aptitude in borrowing than a
smaller firm in money market and capital market. This allowed the conglomerates to
raise their stock value for many years as these were considered the giants in the
business. Many investors considered it secure to invest in these corporate structures.
Since the stock permitted them to raise money, these conglomerates could take out
loans and buy more companies.
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HISTORY
Established in 1910, ITC Limited is a diversified conglomerate with businesses

spanning Fast Moving Consumer Goods comprising Foods, Personal Care, Cigarettes
and Cigars, Branded Apparel, Education & Stationery Products, Incense Sticks and
Safety Matches; Hotels, Paperboards and Packaging, Agri Business and Information
Technology. The Company was incorporated on August 24, 1910 under the name
Imperial Tobacco Company of India Limited. As the Company’s ownership
progressively Indianised, the name of the Company was changed to India Tobacco
Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of the
ITC’s multi-business portfolio encompassing a wide range of businesses, the full
stops in the Company’s name were removed effective September 18, 2001. The
Company now stands rechristened ‘ITC Limited,’ where ‘ITC’ is today no longer an
acronym or an initialised form.The Company’s beginnings were humble. A leased
office on Radha Bazar Lane, Kolkata, was the centre of the Company’s existence. The
Company celebrated its16th birthday on August 24, 1926, by purchasing the plot of
land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the
sum of Rs 310,000. This decision of the Company was historic in more ways than
one. It was to mark the beginning of a long and eventful journey into India’s future.
The Company’s headquarter building, ‘Virginia House’, which came up on that plot
of land two years later, would go on to become one of Kolkata’s most venerated
landmarks.
1925: Packaging and Printing: Backward Integration
Though the first six decades of the Company’s existence were primarily devoted to
the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, ITC’s
Packaging & Printing Business was set up in 1925 as a strategic backwardintegration
for ITC’s Cigarettes business. It is today India’s most sophisticated packaging
house.1975: Entry into the Hospitality Sector – A ‘Welcom’ MoveThe Seventies
witnessed the beginnings of a corporate transformation that would usher in
momentous changes in the life of the Company. In 1975, the Company launched its
Hotels business with the acquisition of a hotel in Chennai which was rechristened
‘ITC-Welcomgroup Hotel Chola’ (now renamed My Fortune, Chennai). The objective
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of ITC’s entry into the hotels business was rooted in the concept of creating value for
the nation. ITC chose the Hotels business for its potential to earn high levels of
foreign exchange, create tourism infrastructure and generate large scale direct and
indirect employment. Since then ITC’s Hotels business has grown to occupy a
position of leadership, with over 100 owned and managed properties spread across
India under four brands namely, ITC Hotels -Luxury Collection, WelcomHotels,
Fortune Hotels and WelcomHeritage.ITC Hotels recently took its first step toward
international expansion with an upcoming super premium luxury hotel inColombo,
Sri Lanka. In addition, ITC Hotels also recently tied up with RP Group Hotels &
Resorts to manage 5 hotels in Dubai and India under ITC Hotels’ 5-star
‘WelcomHotel’ brand and the mid-market to upscale ‘Fortune’ brand.
1979: Paperboards & Specialty Papers Development of a Backward Area
In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam

Paperboards Limited. Bhadrachalam Paperboards amalgamated with the Company
effective March 13, 2002 and became a Division of the Company, Bhadrachalam
Paperboards Division. In November 2002, this division merged with the Company’s
Tribeni Tissues Division to form the Paperboards & Specialty Papers Division. ITC’s
paperboards’ technology, productivity, quality and manufacturing processes are
comparable to the best in the world. It has also made an immense contribution to the
development of Sarapaka, an economically backward area in the state of Andhra
Pradesh. It is directly involved in education, environmental protection and community
development. In 2004, ITC acquired the paperboard manufacturing facility of BILT
Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai
Unit allows ITC to improve customer service with reduced lead time and a wider
product range.
1985: Nepal Subsidiary – First Steps beyond National Borders
In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint
venture. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its
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name was changed to Surya Nepal Private Limited (Surya Nepal). In 2004, the
company diversified into manufacturing and exports of garments.
1990: Paperboards & Specialty Papers – Consolidation and Expansion
In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing

company and a major supplier of tissue paper to the cigarette industry. The merged
entity was named the Tribeni Tissues Division (TTD). To harness strategic and
operational synergies, TTD was merged with the Bhadrachalam Paperboards Division
to form the Paperboards & Specialty Papers Division in November 2002.
1990: Agri Business – Strengthening Farmer Linkages
Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business
Division for export of agri-commodities. The Division is today one of India’s largest
exporters. ITC’s unique and now widely acknowledged e-Choupal initiative began in
2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over
4 million farmers. Also, through the ‘ChoupalPradarshanKhet’ initiative, the agri
services vertical has been focusing on improving productivity of crops while
deepening the relationship with the farming community.
2002: Education & Stationery Products – Offering the Greenest products
ITC launched line of premium range of notebooks under brand Paperkraft in 2002. To
augment its offering and to reach a wider student population, the Classmaterange of
notebooks was launched in 2003. Classmate over the years has grown to become
India’s largest notebook brand and has also increased its portfolio to occupy a greater
share of the school bag. Years 2007- 2009 saw the launch of Practical Books,
Drawing Books, Geometry Boxes, Pens and Pencils under the ‘Classmate’ brand.
‘Paperkraft’ offers a diverse portfolio in the premium executive stationery and office
consumables segment.
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2000: Lifestyle Retailing – Premium Offerings
ITC also entered the Lifestyle Retailing business with the Wills Sport range of
international quality relaxed wear for men and women in 2000. In 2006, Wills
Lifestyle became title partner of the country’s most premier fashion event – Wills
Lifestyle India Fashion Week – that has gained recognition from buyers and retailers
as the single largest B-2-B platform for the Fashion Design industry. To mark the
occasion, ITC launched a special ‘Wills Signature’, taking the event forward to
consumers.
2000: Information Technology – Business Friendly Solutions
In 2000, ITC spun off its information technology business into a wholly owned
subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging
opportunities in this area. Today ITC Infotech is one of India’s fastest growing global
IT and IT-enabled services companies and has established itself as a key player in
offshore outsourcing, providing outsourced IT solutions and services to leading global
customers across key focus verticals – Banking Financial Services & Insurance
(BFSI), Consumer Packaged Goods (CPG), Retail, Manufacturing, Engineering
Services, Media & Entertainment, Travel, Hospitality, Life Sciences and
Transportation & Logistics.
2001: Branded Packaged Foods – Delighting Millions of Households
ITC’s foray into the Foods business is an outstanding example of successfully

blending multiple internal competencies to create a new driver of business growth. It
began in August 2001 with the introduction of ‘Kitchens of India’ ready-to-eat Indian
gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the
launch of the brands mint-o and Candyman confectionery and Aashirvaad Atta (wheat
flour). 2003 witnessed the introduction of Sunfeast as the Company entered the
biscuits segment. ITC entered the fast growing branded snacks category with Bingo!
In 2007. In 2010, ITC launched Sunfeast Yippee!to enter the Indian instant noodles
market. In September 2014, ITC launched GumOn Chewing Gum marking the entry
into the category of gums. The Company entered the Fruitbased juices and beverages
20
market with the launch of B Natural Fruit beverages in January 2015. ITC’s forayed
into the dairy segment with the launch of AashirvaadSvasti Ghee in November 2015.
Launched in April 2016, Fabellechocolates are ITC’s premier offering in the luxury
chocolate space. ITC forayed into the branded coffee category in July 2016 with the
launch of Sunbean Gourmet Coffee. In February 2017, ITC launched ITC
MasterChefsuper safe spices – the 23first-of-its-kind spices launched in India,
offering export quality super safe spices to the Indian homemaker. ITC MasterChef
Prawns were launched in June 2017 as the Company entered the Frozen foods
segment. ITC’s first foray into fresh fruits and vegetables segment was marked with
the launch of Farmland Potatoes in November 2017. In 2018, ITC forayed into the
packaged milk segment with the launch of AashirvaadSvasti pouch milk and into
dairy-based beverages with the SunfeastWonderz range of milkshakes. The ITC
Master Chef Frozen Snacksrange was also introduced the same year, marking the
Company’s first venture into the frozen snacks segment.
In just over a decade and a half, the Foods business has grown to a significant size
under numerous distinctive brands, with an enviable distribution reach, a rapidly
growing market share and a solid market standing.
2002: Agarbattis& Safety Matches – Supporting the Small and Cottage Sector
In 2002, ITC’s philosophy of contributing to enhancing the competitiveness of the

entire value chain found yet another expression in the Safety Matches initiative. ITC
now markets popular safety matches brands like iKno, Mangaldeep and Aim.ITC’s
foray into the marketing of Agarbattis (incense sticks) in 2003 marked the
manifestation of its partnership with the cottage sector.Mangaldeep is a highly
established national brand and is available across a range of fragrances like Rose,
Jasmine, Bouquet, Sandalwood and ‘Fragrance of Temple’.
2005: Personal Care Products – Expert Solutions for Discerning Consumers
ITC entered the Personal Care Business in 2005 and the portfolio has grown under
‘Essenza Di Wills’, ‘Fiama’, ‘Vivel’, ‘Superia’ brands which have received
24encouraging consumer response and have been progressively extended nationally.
21
In May 2013, the business expanded its product portfolio with the launch of
Engagedeodorants. ITC marked its foray into the health space with the acquisition of
the brand Savlon and Shower to Shower in 2015. In 2017, the business acquired the
brand Charmisto enhance its skincare portfolio. In 2018, ITC acquired the brand
Nimyle to enter the floor cleaner space. In 2018, the business also launched the
Dermafique brand, foraying into the premium skincare product territory. In 2020, the
Personal Care Product Business launched multiple personal and home hygiene
products and entered the fruit and vegetable wash category with the launch of brand
Nimwash.
2010: Expanding the Tobacco Portfolio
In 2010, ITC launched its handrolled cigar, Armenteros, in the Indian market.
Armenteros cigars are available exclusively at tobacco selling outlets in select hotels,
fine dining restaurants and exclusive clubs.ITC is one of India’s foremost private
sector companies and a diversified conglomerate with businesses spanning Fast
Moving Consumer Goods, Hotels, Paperboards and Packaging, Agri Business and
Information Technology. The Company is acknowledged as one of India’s most
valuable business corporations with a Gross sales value of 76,097.31 crores and Net
Profit of 15,136.05 crores (as on 31.03.2020). ITC was ranked as India’s most
admired company, according to a survey conducted by Fortune India, in association
with Hay Group.ITC is the country’s leading FMCG marketer, the clear market leader
in the Indian Paperboard and Packaging industry, a globally acknowledged pioneer in
farmer empowerment through its wide-reaching Agri Business, a pre-eminent hotel
chain in India that is a trailblazer in ‘Responsible Luxury’. ITC’s wholly-owned
subsidiary, ITC Infotech, is a specialized global digital solutions provider.
ITC’s Well-being Out of Waste programme (WOW) that comprehensively addresses

the problem of solid waste management, of which plastic waste is a significant
component, provides an end-to-end sustainable and scalable solution that has reached
out to over 1 crore citizens in the country.
Together with farmers and local communities, ITC has implemented largescale
interventions in climate-smart and sustainable agriculture that make a meaningful
contribution to the Hon’ble Prime Minister’s vision of doubling farmer incomes.
22
Towards this, ITC has launched an integrated programme titled
’BaarehMahineHariyali’ (maximising farm utilisation over 12 months of the year) to
give a new dimension to the complex task of multiplying farmer incomes. ITC is
collaborating with NITI Aayog to progressively build capacity of 2 million farmers in
27 aspirational Districts to help enhance rural incomes.
VISION
Sustain ITC’s position as one of India’s most valuable corporations through world
class performance, creating growing value for Indian economy and the Companies
Stakeholders.
MISSION
To enhance the wealth generating capability of the enterprise in a globalising

environment, delivering superior and sustainable Stakeholder value.
23
1.2 DEFINITION OF ITC LTD
ITC defines Corporate Governance as a systemic process by which companies are

directed and controlled to enhance their wealth generating capacity. Since large
corporations employ vast quantum of societal resources, ITC believes that the
governance process should ensure that these companies are managed in a manner that
meets stakeholders aspirations and societal expectations.
Cornerstones
From the above definition and core principles of Corporate Governance emerge the
cornerstones of ITC’s governance philosophy, namely trusteeship, transparency,
empowerment and accountability, control and ethical corporate citizenship. ITC
believes that the practice of each of these leads to the creation of the right corporate
culture in which the company is managed in a manner that fulfils the purpose of
Corporate Governance.
Trusteeship
ITC believes that large corporations like itself have both a social and economic
purpose. They represent a coalition of interests, namely those of the shareholders,
other providers of capital, business associates and employees. This belief therefore
casts a responsibility of trusteeship on the Company’s Board of Directors. They are to
act as trustees to protect and enhance shareholder value, as well as to ensure that the
Company fulfils its obligations and responsibilities to its other stakeholders. Inherent
in the concept of trusteeship is the responsibility to ensure equity, namely, that the
rights of all shareholders, large or small, are protected.
Transparency
ITC believes that transparency means explaining Company’s policies and actions to
those to whom it has responsibilities. Therefore transparency must lead to maximum
24
appropriate disclosures without compromising the Company’s strategic interests.
Internally, transparency means openness in Company’s relationship with its
employees, as well as the conduct of its business in a manner that will bear scrutiny.
ITC believes transparency enhances accountability.
Empowerment and accountability
Empowerment is an essential concomitant of ITC’s first core principle of governance

that management must have the freedom to drive the enterprise forward. ITC believes
that empowerment is a process of actualising the potential of its employees.
Empowerment unleashes creativity and innovation throughout the organisation by
truly vesting decision-making powers at the most appropriate levels in the
organisational hierarchy.
ITC believes that the Board of Directors are accountable to the shareholders, and the
management is accountable to the Board of Directors. The Company believes that
empowerment, combined with accountability, provides an impetus to performance
and improves effectiveness, thereby enhancing shareholder value.
Control
ITC believes that control is a necessary concomitant of its second core principle of
governance that the freedom of management should be exercised within a framework
of appropriate checks and balances. Control should prevent misuse of power, facilitate
timely management response to change, and ensure that business risks are pre-
emptively and effectively managed.
Ethical corporate citizenship
ITC believes that corporations like itself have a responsibility to set exemplary
standards of ethical behaviour, both internally within the organisation, as well as in
their external relationships. The Company believes that unethical behaviour corrupts
organisational culture and undermines stakeholder value.
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1.3 CHARACTERISTICS OF ITC LTD
ITC’s Core Values are aimed at developing a customer-focused, high-performance

organisation which creates value for all its stakeholders:
Trusteeship
• As professional managers, we are conscious that ITC has been given to us in

“trust” by all our stakeholders. We will actualise stakeholder value and interest
on a long term sustainable basis.
Customer focus
• We are always customer focused and will deliver what the customer needs in
terms of value, quality and satisfaction.
Respect for people
• We are result oriented, setting high performance standards for ourselves as

individuals and teams.
• We will simultaneously respect and value people and uphold humanness and
human dignity.
• We acknowledge that every individual brings different perspectives and
capabilities to the team and that a strong team is founded on a variety of
perspectives.
• We want individuals to dream, value differences, create and experiment in
pursuit of opportunities and achieve leadership through teamwork.
Excellence
• We do what is right, do it well and win. We will strive for excellence in

whatever we do.
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Innovation
• We will constantly pursue newer and better processes, products, services and
management practices.
Nation orientation
• We are aware of our responsibility to generate economic value for the Nation.
In pursuit of our goals.
• We will make no compromise in complying with applicable laws and
regulations at all levels.
Corporate strategies
• ITC is a board-managed professional company, committed to creating

enduring value for the nation and the shareholder. It has a rich organisational
culture rooted in its core values of respect for people and belief in
empowerment. Its philosophy of all-round value creation is backed by strong
corporate governance policies and systems.
27
1.4 ADVANTAGE & DISADVANTAGES OF ITC LTD
Although the ITC’s mission is to develop economies, there are some

additional positive outcomes. SMEs can benefit from the ITC’s efforts in
a variety of ways.
Let’s break down some of the most significant benefits.
Promotes trade facilitation reforms
• The reason that many nations struggle to break out of their

insufficient economic cycles is that the governing systems that are
set in place make it hard for them to make a change.
• Trade facilitation reform calls for the reconsideration of existing
trade policies and regulations that may be suppressing the
economy.
• The ITC takes a strategic approach to reform. Plans are crafted and
implemented after careful analysis of the current situation. The
organization works with a variety of policymakers to make this
possible.
• When trade facilitation reform is effective, SMEs can generally
operate in conditions that are more suitable for their success.
Connects SMEs to markets
• Private sector development is one of the many efforts of the ITC.

This directly affects SMEs because it often gives them the
resources to connect with their target market. The goal is to help
28
these businesses flourish so that they become a source of
prosperity.
• The idea is that if local SMEs are doing well, it will create jobs and
opportunities in the community. By creating jobs, more people
have money to spend which helps to stimulate the economy and
increase the quality of life for more people.
• The ITC puts an emphasis on trade and market intelligence.
They’ve used innovative research methods and market analysis
tools to facilitate global trade since the organization was founded
in the 60s. This intelligence is used to assess the market and public
goods.
• Access to these tools and resources gives SMEs the ability to
expand and grow.
Fosters sustainable and inclusive development
• Inclusion and sustainability are two cornerstones of the

International Trade Centre. The organization strives to protect
vulnerable groups of people and combating climate change ties into
that.
• In the name of inclusion, the ITC shines a special spotlight on
women’s economic empowerment and youth entrepreneurship.
These are two demographics that are traditionally overlooked when
it comes to creating opportunities and breeding prosperity, so the
ITC has made a special effort to empower these groups.
• The ITC offers support to these groups by providing resources and
mentorship for micro-entrepreneurs and social enterprises.
Specifically, they help them to forge relationships with
29
international customers and business partners to help them grow
their brands.
• Although a lot of the ITC’s inclusive development is specifically
geared towards micro-entrepreneurs and social enterprises, this
initiative provides support for women-owned SMEs, as well.
• The efforts to support vulnerable demographics are intertwined
with efforts for environmental protection, conservation, and
sustainability. This includes implementing support for sustainable
growth via green trade and environmental consciousness.
Builds export capacity of SMEs
• Internationalization is another main focal point of the ITC. It paves

the way for SMEs to trade across borders and tap into the global
market.
• One of the things that the ITC uses to help SMEs expand into the
international space is eCommerce. The organization offers a
special program called “ecomConnect” that helps aspiring
exporters learn the ropes of eCommerce and launch their own
online brands.
• Eco Connect was created specifically to help entrepreneurs harness
the power of the internet and build sustainable online operations
The major weakness for ITC LTD is that the majority of their business
and profits come from the tobacco industry which is being heavily
scrutinized around the world. Taxes are being raised higher and higher on
the industry and this is causing the company to raise prices or keep prices
the same and reduce their profits. This industry is also being seen in a
more negative light and this is going to hurt ITC LTD in the future. This
30
is why it is very important for ITC LTD to keep expanding their business
segments and become involved in other industries outside of the tobacco
industry.
ITC LTD is considered a very socially responsible organization and this

is recognized globally. The organization invests heavily in social
responsibility and they have many different plans and initiatives
dedicated to helping the environment and society. The company uses the
triple bottom line approach to gauge performance which includes social
and environment factors in addition to financial factors. In comparison to
other companies in their sector, ITC LTD is a leader in CSR. This is
shown through their various initiatives to improve the economy,
environment, and society in India as well as across the world.
• To fund its cash guzzling FMCG start-up, the company is still

dependent upon its tobacco revenue. Cigarettes account for 47% of
the company’s turnover and for 80% of its profits. So there is an
argument that ITC’s move into FMCG is being subsidised by its
tobacco operations.
• ITC is a local company. It does not have a large portfolio of
exports in either products or services. This makes the company
comparatively weak in terms of being able to leverage global
opportunities, talent & financing
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1.5 IMPORTANCE OF ITC LTD
In the conduct of the Company’s business, the practice of good corporate citizenship
is a pre-requisite and importance :
Dealing with People in the Organisation
In dealing with each other, Directors, senior management and employees shall uphold
the values which are at the core of ITC’s HR philosophy – trust, teamwork, mutuality
and collaboration, meritocracy, objectivity, self-respect and human dignity. Indeed,
these values form the basis of our HR management systems and processes. In areas
such as selection and recruitment, meritocracy will be the only criterion and all
managers will scrupulously avoid any consideration other than merit and suitability.
Performance management systems including appraisals, remuneration and rewards
will focus on meritocracy, equity and upholding of Company values.
ITC believes that all employees are important stakeholders in the enterprise and it is
imperative to build a culture of mutual trust & respect, interdependence and
meaningful engagement. This approach helps in building, strengthening and
sustaining harmonious employee relations across the organisation. ITC also believes
in a “No Child Labour and No Forced Labour” policy.
A Gender Friendly Workplace
As a good corporate citizen, ITC is committed to a gender friendly workplace. It seeks

to enhance equal opportunities for all genders, prevent / stop / redress sexual
harassment at the workplace and institute good employment practices.
Sexual harassment includes unwelcome sexually determined behaviour such as:

unwelcome physical contact; a demand or request for sexual favours; sexually
coloured remarks; showing pornography and any other unwelcome physical, verbal or
non-verbal conduct of a sexual nature.
32
ITC maintains an open door for reportees; encourages employees to report any
harassment concerns and is responsive to employee complaints about harassment or
other unwelcome or offensive conduct. Committees have been constituted across
locations to enquire into complaints and to recommend appropriate action, wherever
required. Necessary disclosures in relation to the sexual harassment complaints
received and redressal thereof are provided in the Report and Accounts of the
Company.
ITC demands, demonstrates and promotes professional behaviour and respectful

treatment of all employees.
Relationships with Suppliers and Customers
All Directors, senior management and employees shall ensure that in their dealings
with suppliers and customers, the Company’s interests are never compromised.
Accepting and giving gifts & presents of more than a nominal value, gratuity
payments, bribes and other payments from and to suppliers and customers will be
viewed as a serious breach of discipline as this could lead to compromising the
Company’s interests.
Transactions with suppliers and customers shall be strictly within the prevailing
Governance framework. All agreements entered into by the Company shall have an
appropriate clause in this regard.
Legal Compliance
It is the Company’s policy to fully comply with all the applicable laws and
regulations. All Directors, senior management and employees shall comply with the
applicable laws. The Company cannot accept practices that are unlawful or may be
damaging to its reputation. Ensuring legal and regulatory compliance is the
responsibility of the Chief Executives of the respective Businesses and their
Divisional Management Committees (DMCs) in case of Divisions, and the respective
Heads in case of Corporate Departments. The DMCs of the respective Businesses and
Heads of Corporate Departments must satisfy themselves that sound and adequate
33
arrangements exist to ensure compliance with the statutory and regulatory
requirements impacting the Business / Department, and identify & respond to
developments in the regulatory environment relevant to the Business / Department. In
the event the implication of any law is not clear, the Company’s Legal Department
shall be consulted for advice.
Monthly statutory compliance reports from the Businesses and Corporate

Departments shall be placed before the CMC and the Board of Directors of the
Company (the Board), highlighting the non-compliances, if any, along with related
action plan.
Health and Safety
The Company attaches great importance to a healthy and safe work environment. ITC
is committed to provide good physical working conditions and encourages that high
standards of hygiene and housekeeping are maintained. Particular attention should be
paid to training of employees to increase safety awareness and adoption of safe
working methods, including use of personal protective equipment, designed to prevent
serious or fatal accidents. Employees shall diligently comply and practice the health
and safety policies and practices of the Company.
Periodic as well as episodic internal and external health and safety audits shall be
conducted. Findings of such audits with action plans, if any, as well as reports on
accidents, shall be presented to the respective DMCs and where necessary to the CMC
and the Board.
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CHAPTER 2 – RESEARCH AND METHODOLOGY
Innovation
ITC’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 ITC’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 needs and deliver superior benefits to
Indian consumers.
ITC LSTC has evolved over the years and is presently equipped with world-class
scientific infrastructure and state-of-the-art facilities to create knowledge and build
intellectual property through experimental research, rapid prototyping and process
development. Over 800 patents have been filed in a relatively short period of time,
bearing testimony to LSTC’s vitality and capabilities.
Centres of Excellence
Centres of Excellence in Biosciences, Agri-sciences and Materials, and robust

research platforms for Beauty & Hygiene, Heath & Wellness, Agro-forestry & Crop
Sciences and Sustainable Packaging Materials 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 with the
highest standards in quality, safety and efficacy to the Indian consumers.
In line with ITC’s relentless focus on operational excellence and quality, each
Business is mandated to continuously innovate on materials, training, processes and
systems to enhance their quality competitiveness. Innovations are integral to the
Business strategies and LSTC actively collaborates with the Businesses in this regard,
making ITC a forerunner in introducing first-to-market innovative products for Indian
consumers.
35
Addressing emerging consumer needs
As the COVID-19 pandemic accelerated demand for health and hygiene products,
LSTC scientists and product development teams have enabled the Branded Packaged
Foods and Personal Care Businesses to deliver a range of differentiated and superior
quality products in the ‘new normal’. 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 technology
platforms in Hygiene and Health & Wellness continue to power innovation and
facilitate the development of next generation product offerings to serve emerging
consumer needs.
Securing Long-term Capabilities
LSTC is at the forefront of executing robust R&D strategies and plans that embed
sustainability and digital transformation, in order to secure long-term competitiveness
for each of ITC’s businesses. 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 to explore and leverage cross-business synergies.
LSTC has created long-term research platforms to incubate multi-generation product

concepts. New synergistic value chains in health, nutrition and sensory sciences have
been created to propel future growth and develop differentiated, first-to-market
products without compromising on sensory and other attributes. Advances in
materials chemistry, agronomy and process science have led to the replacement of
imported bamboo for manufacture of agarbatti sticks.
In the Agri-sciences domain, LSTC has an ambitious R&D programme to address

future demand of food security, improving yields & quality and developing new
varieties. Research on wheat and potato varietal securitisation are at advanced stages
to achieve flexibility in sourcing of raw material, creation of region-specific blends
and to ensure robust agro-climatic adaptability. LSTC, in collaboration with the Agri
Business Division endeavours to ensure contemporary science outcomes are fully
integrated across the value chain from farm to factory.
36
Scientific platforms in Agroforestry have led to pioneering work on new clones in
tandem with ITC’s Paperboards and Specialty Papers Division to enhance wood
productivity and pulp quality, for sustainable raw materials as well as farmer
profitability. ITC’s unique competencies in Materials and Packaging have delivered
innovative recyclable flexible packaging and bio-compostable coating solutions in
line with the environmental sustainability agenda.
In its quest to be an innovation engine and to be future-ready, LSTC is developing and

deploying bespoke tools and dashboards for quality performance analytics and
competition benchmarking, using Artificial Intelligence and Machine Learning
technological platforms to strengthen quality management systems (via
product/process optimisation).
Going forward, ITC will continue to identify opportunities to create new value chains
leveraging R&D insights emerging from contemporary sciences and ITC’s diverse
core competencies.
37
2.1 - OBJECTIVE OF ITC LTD
• To understand the liquidity and solvency position of the company during the
period 2017-18 to 2021-22.
• To assess the profitability position of the company from 2017-18 to 2021-22.
• To analyze the financial Position and performance of ITC Ltd
• To suggest measures to improve the performance of the company based on

findings of the study.
38
2.2 – SCOPE OF STUDY
Evaluating ITC Ltd financial performance requires to:
• To Analyze financial ratios to assess profitability, solvency, working capital

management, liquidity, and operating effectiveness.
• To Compare current performance with historical conditions using trend

analysis.
• To Compare with peer companies or industry averages to find out how well
companies are performing.
39
2.3 – SIGNIFICANCE OF STUDY
• The study helps the stakeholders and the directors to understand the financial
position and the financial performance of the ITC Ltd.
• The study helps the management to understand the drawbacks of the ITC Ltd
so that the management can rectify the problems and improve the financial
position in the upcoming years.
• The study analyzing the financial strengths and weaknesses and

creditworthiness of the ITC Ltd.
• The study of reasonability stock and debtors held by the ITC Ltd.
40
2.4 – LIMITATION OF STUDY
• The time available for the study is limited so in depth study could not be
undertaken.
• The information provided in the financial statement may not be precise.
• The cash flow statement may not prescribed in the website.
• The result of the study cannot be generalized.
41
2.5 – DATA COLLECTION
• The nature of study is financial analysis of ITC Ltd
• The study based on Secondary data
• The details related to the study are collected from the published financial
statements of the Company website of the ITC Ltd, books, journals and
internet.
• The study pertain a period of 5 years from 2017-18 to 2021-22
• Tools for analysis financial statement

✓ Ratio Analysis
✓ Comparative Balance Sheet
✓ Comparative Profit & Loss A/c
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2.6 – TECHNICAL & TOOLS FOR ANALYSIS
Tools for analysis for financial statement
RATIO ANALYSIS
Ratio analysis can be defined as the process of ascertaining the financial ratios that are
used for indicating the ongoing financial performance of a company using few types
of ratios such as liquidity, solvency, profitability, activity.
1. Liquidity ratios
The term liquidity refers to firm’s ability to pay its current liabilities out of its
current asset. Liquidity ratios are used to measure the liquidity position of the
firm.
a. Current Ratio
Current ratio establishes the relationship between total current assets
and total current liabilities. Generally current ratio of 2:1 is considered
satisfactory or ideal.
Current Ratio = Current Asset / Current Liability
b. Quick Ratio
Quick Ratio is the ratio of liquid assets to current liability. It is also
called acid test ratio. Ratio of 1:1 is considered ideal.
Quick Ratio = Quick asset / Current liability
c. Absolute Liquidity Ratio

This ratio measures the total liquidity available to the company. This
ratio only considers marketable securities and cash available to the
company. This ratio only tests short-term liquidity in terms of cash,
marketable securities, and current investment.
43
Absolute Liquidity Ratio = Cash + Marketable Securities /
Current Liability
2. Solvency Ratios
Solvency refers to the ability of the firm to pay its outside liabilities both short
term and long term. Solvency ratios are used to analyze long term financial
position of the business.
a. Debt Equity Ratio

This ratio indicates the relative proportion of debt and equity in
financing the asset of the firm. In short it expresses the relationship
between external equity and internal equity of a company.
Debt Equity Ratio = Debt / Equity
b. Proprietary Ratio
Proprietary ratio establishes the relationship between shareholders fund
and total asset. It is also called net worth ratio. Generally ratio of 0.5:1
is considered as ideal.
Proprietary Ratio = Shareholders Fund / Total Asset
c. Leverage Ratios
This ratio expresses the relationship between total asset and total
liability of a company. This ratio is also called as total asset to total
debt ratio.
Leverage Ratio = Total Asset / Total Liability
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3. Profitability Ratios
To the management, profit is the measure of efficiency and control of the

business.
Profitability can be easily measured by profitability ratios.
a. Net Profit Ratio

Net profit ratio is the ratio of net profit earned by the business and its
net sales. It is a measure of overall profitability.
Ideal net profit ratio is 5% to 10%.
Net Profit Ratio = Net Profit / Net Sales *100
b. Return on Investment
It is a profitability ratio based on investment. It establishes the
relationship between profit or return and investment. This ratio is also
called accounting rate of return. The standard return on investment
ratio is 15%.
ROI = Profit Before Interest and Tax / Capital Employed*100
c. Return on shareholder’s fund

It is the ratio of net profit to shareholders fund or net worth. It
measures the profitability from the shareholders point of view. This
ratio is also called the mother of all ratios.
Return on Shareholder’s Fund = Net Profit After Interest and Tax

/Shareholders Fund*100
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d. Return on Equity
This ratio measures Profitability of equity fund invested the company.
It also measures how profitably owner’s funds have been utilized to
generate company’s revenues. A high ratio represents better the
company.
Return on Equity = Profit After Tax ÷ Net Worth
e. Earnings Per Share

This ratio measures profitability from the point of view of the ordinary
shareholder.
A high ratio represents better the company is.
Earning Per Share = Net Profit ÷ Total No of Shares Outstanding
f. Dividend Per Share

This ratio measures the amount of dividend distributed by the company
to its shareholders. The high ratio represents that the company is
having surplus cash.
DPS = Amount Distributed to Shareholders ÷ No of Shares

Outstanding
g. Price Earnings Ratio

This ratio is used by the investor to check the undervalued and
overvalued share price of the company. This ratio also indicates
Expectation about the earning of the company and payback period to
the investors.
Price Earning Ratio = Market Price of Share ÷ Earnings Per Share
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h. Return on Assets
This ratio measures the earning per rupee of assets invested in the
company. A high ratio represents better the company is.
Return on Asset = Net Profit ÷ Total Assets
i. Gross Profit
This ratio measures the marginal profit of the company. This ratio is
also used to measure the segment revenue. A high ratio represents the
greater profit margin and it’s good for the company.
Gross Profit Ratio: Gross Profit ÷ Sales × 100
4. Activity Ratios
a. Total Asset Turnover Ratio

The total asset turnover ratio compares the sales of a company to its
asset base. The ratio measures the ability of an organization to
efficiently produce sales, and is typically used by third parties to
evaluate the operations of a business. Ideally, a company with a high
total asset turnover ratio can operate with fewer assets than a less
efficient competitor, and so requires less debt and equity to operate
Total Asset Turnover Ratio = Net sales / Total Asset
b. Current Asset Turnover Ratio

Current Assets Turnover Ratio indicates that the current assets are
turned over in the form of sales more number of times. A high current
assets turnover ratio indicates the capability of the organization to
achieve maximum sales with the minimum investment in current
assets. Higher the current ratio better will be the situation.
47
Current Asset Turnover Ratio = Net sales / Current Asset
c. Fixed Assets Turnover Ratio

This ratio measures the efficiency of the firm in utilizing its Fixed
Assets. A high ratio represents efficient utilization of Fixed Assets in
generating sales.
Fixed Assets Turnover Ratio = (Sales or Cost of Goods Sold)/

Fixed Assets
d. Working Capital Turnover Ratio

This ratio measures the efficiency of the firm in utilizing its Working
Capital. A high ratio represents efficient utilization of working Capital
in generating sales.
Working Capital Turnover Ratio = (Sales or Cost of Goods Sold)/

Working Capital
Stock Turnover Ratio
This ratio describes the relationship between the cost of goods sold and inventory held
in the business. This ratio indicates how fast inventory/ Stock is consumed/ sold. A
high ratio is good for the company. Low ratio indicated that stock is not consumed/
sold or remains in a warehouse for a longer period of time.
Cost of Goods Sold/Average Inventory
Average Inventory = (Opening Stock + Closing Stock)/2
Debtor Turnover ratio
This ratio helps the company to know the collection and credit policies of the firm. It
measures how efficiently the management is managing its accounts receivable. A high
ratio represents better credit policy as compared to a low ratio.
48
Credit Sales/Average Debtors
Average Debtor = (Opening Debtor + Closing Debtor)/2
Creditors Turnover Ratio
This ratio helps the company to know the payment policy that is being offered by the
vendors to the company. It also reflects how management is managing its account
payable. A high ratio represents that in the ability of management to finance its credit
purchase and vice versa.
Credit Purchase/ Average Creditors
Average Creditor = (Opening Creditor + Closing Creditor)/2
COMPARATIVE STATEMENT
Comparative statements or comparative financial statements are statements of

financial position of a business at different periods. These statements help in
determining the profitability of the business by comparing financial data from two or
more accounting periods.
The data from two or more periods are updated side by side, which is why it is also
known as Horizontal Analysis. The advantage of such an analysis is that it helps
investors to identify the trends of business, check a company’s progress and also
compare it with that of its competitors.
There are two types of comparative statements which are as follows
1. Comparative Balance Sheet

2. Comparative Profit & Loss A/c
49
CHAPTER 3 – LITERATURE REVIEW
CONCEPTUAL REVIEW
Financial performance analysis is the process of identifying the financial strength and
weakness of firm by properly establishing relationship between the items of balance
sheet and profit and loss account. It also helps in short term and long term forecasting
and growth can be identified with the help of financial performance analysis. To
determine the firms efficiency the analyst attempt to measure the firm’s solvency,
liquidity, profitability and other indicator in rational and normal way.
Financial statement analysis is the process of analyzing a company’s financial

statements for decision making purposes. Financial performance analysis includes
analysis and interpretation of financial statements in such a way that it undertakes full
diagnosis of the profitability and financial soundness of the business.
EMPIRICAL REVIEW
Kumar Mohan M.S, Vasu. V. and Narayana T. Aswatha (2016) the study has been
made through using different ratios , mean, standard deviation and Altman’s Z score
approach to study the financial health of the company. The study reveals there is a
positive correlation between liquidity and profitability ratios except return on total
assets as well as Z score value indicate good health of the company.
KaurHarpreet (2016) the author tries to examine the qualities & quantities performer
of Maruti Suzuki co. & how had both impact on its market share in India, For this
study secondary data has been collected from annual reports, journals, report
automobile sites. Result shows that MSL has been successfully leading automobile
sector in India for last few years.
Ravichandran, M. & Subramanian M Venkata (2016) the main idea behind this study
is to assessment of viability, stability and profitability of Force motors limited.
Operating position of the company can be measured by using various financial tools
such as profitability ratio, solvency ratio, comparative statement & graphs etc. This
study finds that company has got enough funds to meet its debts & liabilities.
50
Company can further improve financial performance by reducing the administrative,
selling & operating expenses.
Jothi K. &Geethalakshmi A. (2016) this study tries to evaluate the profitability &
financial position of selected companies of Indian automobile industry using
statistical tools like, ratio analysis, mean, standard deviation, correlation. The study
reveals the positive relationship between profitability, short term and long term
capital.
Kumar, Neeraj & Kaur Kuldip (2016) made an attempt to test the size and
profitability relationship in the Indian automobile industry. To analyze the
relationship linear regression model as well as cross-sectional has been employed for
the year 1998to2014. For profitability analysis two different measures have been used
(i) ratio of net profit to total sales turnover (ii) ratio of net income to net assets plus
working capital and for form size two indicators used namely, total sales turn over
and net assets. The time series analysis showed the positive relationship between firm
size and profitability but cross-sectional show no relationship between firm size and
profitability.
Agarwal, Nidhi (2015) the study focus on the comparative financial performance of
Maruti Suzuki and Tata motors ltd. The financial data and information required for
the study are drawn from the various annual reports of companies. The liquidity and
leverage analysis of both the firms are done. To analyze the leverage position four
ratios are considered namely, capital gearing, debt-equity, total debt and proprietary
ratio. The result shows that Tata motors ltd has to increase the portion of proprietor’s
fund in business to improve long term solvency position..
Jothi K & Geethalakshmi .A (2008), this study to evaluate the profitability and
financial position of selected companies of KSE ltd using statistical tools like ratio
analysis, mean, standard deviation, correlation. The study reveals the positive
relationship between profitability, short term and long term capital.
.Vanitha S and Selvam M (2007), “financial performance of Indian manufacturing

companies during pre and post – merger” they analyzed the pre and post – merger
performance of Indian manufacturing during 2000-2002 by using a sample of 17
companies out of 58 (third percent of such population) for financial performance
analysis, they used ratio analysis, mean, S.D and ‘t’ test. They found that the overall
51
financial performance of merged companies in respect of 13 variables were not
significantly different from the expectations
Vijayakumar A. (1996) has studied about ‘Assessment of Corporate Liquidity – a

discriminate analysis approach’ in this research he has revealed that the growth rate of
sales, leverage, current ratio, operating expenses to sales and vertical integration was
the important variables which determine the profitability of companies in the sugar
industry. Also he has studied the short-term liquidity position in twenty-eight selected
sugar factories in co-operative and private sectors. In research a discriminate analysis
has been used by the researcher, to undertaken to distinguish the good risk companies
from poor risk companies based on current and liquidity ratios. In this study
discriminating ‘Z’ scores have been calculated with the help of discriminate function
and according to the ‘Z’ scores the companies are ranked in the order of liquidity.
Mohan Rao (1993) examines the financial appraisal of Indian automotive tyre
industry. The main objective of this study was intended to probe into the financial
condition and financial strength and weakness of Indian tyre industry. Various
financial ratios have been calculated for the financial appraisal of automotive tyre
industry. The studies suggested improving the fixed asset utilization and proper
inventory management
52
CHAPTER 4 – DATA ANALYSIS, INTERPRETATION &
PRESENTATION
The data collected are analyzed using several variables and the results are given
below:
1. Current Ratio
Current Asset /Current Liability
Table 4.1
Table showing Current ratio
Current Asset Current Liabilities

Year Current Ratio
(₹ in Cr’s) (₹ in Cr’s)
2017-18 26393.62 9250.15 2.85
2018-19 31747.27 10011.99 3.17
2019-20 39505.35 9559.77 4.13
2020-21 34991.99 10689.68 3.27
2021-22 34232.45 12163.71 2.81
(Source: compiled from annual report)
The ideal current ratio is 2:1. From the above table it is clear that financial year’s
except 2015-16 has attained the ideal current ratio. This indicates that company is able
to pay off its short term obligations in the financial years 2016 to 2020.
Figure 4.1- Figure showing current ratio
CURRENT RATIO
5
4
3
2 CURRENT RATIO
1
0
2017-18 2018-19 2019-20 2020-21 2021-22
53
2. Quick Ratio
Quick Asset /Current Liability
Table 4.2
Table showing quick Ratio
Quick Asset Current Liability

Year Quick Ratio
2017-18 18809.09 9250.15 2.03
2018-19 23803.30 10011.99 2.37
2019-20 30539.82 9559.77 3.19
2020-21 24484.77 10689.68 2.29
2021-22 23258.86 12163.71 1.91
The ideal quick ratio is 1:1. From the above table it is clear that the company has
attained the ideal quick ratio. The ratio is increasing year by year. This indicates that
the short term solvency position of the company is good.
Figure 4.2 – Figure showing quick ratio
QUICK RATIO
2017-18
2018-19
2019-20
2020-21
2021-22
54
3. Debt Equity Ratio
Total Debt / Equity.
Table 4.3
Table showing Debt equity ratio
Total Debt Equity Debt-equity

Year
(₹ in Cr’s) (₹ in Cr’s) Ratio
2017-18 11444.28 52844.58 0.21
2018-19 12314.07 59484.34 0.20
2019-20 11716.31 65650.73 0.17
2020-21 13125.15 60694.15 0.21
2021-22 14437.68 62821.87 0.22
The Standard debt equity ratio is 1:1. From the above table it is clear that the
company has not attained the ideal debt equity ratio. It shows that the company tends
to use more of the owners fund than the borrowers fund.
Figure 4.3 – Figure showing Debt equity ratio
DEBT EQUITY RATIO

0.5
0.4
0.3
DEBT EQUITY RATIO

0.2
0.1
0
2017-18 2018-19 2019-20 2020-21 2021-22
55
4. Proprietary Ratio
Proprietor’s fund or Shareholder’s fund/ Total Asset
Table 4.4
Table showing Proprietary Ratio
Proprietor’s Fund Total Asset

Year Proprietary Ratio
2017-18 52844.58 64288.86 0.82
2018-19 59484.34 71798.41 0.82
2019-20 65650.73 77367.04 0.84
2020-21 60694.15 73819.30 0.82
2021-22 62821.87 77259.55 0.81
The ideal proprietary ratio is 0.5:1. From the above table it is clear that the company
has attained the ideal proprietary ratio. The company maintains a constant proprietary
ratio over the last 5 years.
Figure 4.4 – Figure showing Proprietary ratio
PROPRIETARY RATIO
1
0.9
0.8
0.7
0.6
0.5
PROPRIETARY RATIO
0.4
0.3
0.2
0.1
0
2017-18 2018-19 2019-20 2020-21 2021-22
56
5. Leverage Ratio
Total Asset / Total Debt
Table 4.5
Table showing Leverage Ratio
Total Asset Total Debt

Year Leverage Ratio
2017-18 64288.86 11444.28 5.61
2018-19 71798.41 12314.07 5.83
2019-20 77367.04 11716.31 6.60
2020-21 73819.30 13125.15 5.62
2021-22 77259.55 14437.68 5.35
The ideal leverage ratio is 1:1. The above table shows that the company has
attained the ideal leverage ratio. This means there is higher degree of solvency.
Figure 4.5 – Figure showing leverage ratio
LEVERAGE RATIO
2017-18
2018-19
2019-20
2020-21
2021-22
57
6. Net Profit Ratio
Net Profit /Net Sales x 100
Table 4.6
Table showing Net Profit Ratio
Year Net Profit(Cr) Net Sales(Cr) Net Profit Ratio
2017-18 11492.68 47688.55 24.09
2018-19 12835.90 49862.11 25.74
2019-20 15592.78 51393.47 30.34
2020-21 13382.88 53155.12 25.18
2021-22 15503.13 65204.96 23.78
The ideal net profit ratio is 5% to 10%. From the above table it is clear that company
has attained the ideal net profit ratio and the ratio is increasing year by year.
Figure 4.6 – Figure showing net profit ratio.
NET PROFIT RATIO
2017-18
2018-19
2019-20
2020-21
2021-22
58
7. Return on Capital Employed
Earnings before Interest and Taxes/ Capital Employed x 100
Table 4.7
Table showing Return on Capital Employed(ROCE)
Capital Employed Return on

EBIT
Year Capital
Employed
2017-18 17409.11 56104.12 31.03
2018-19 19149.82 61694.00 31.04
2019-20 20034.57 67230.10 29.80
2020-21 17938.17 62963.03 28.49
2021-22 20740.47 65037.53 31.89
The ideal ROCE is 10%. The above data shows that the ROCE is more than the ideal
ratio and it is increasing year by year. This indicates that the return on capital
employed shows a positive trend.
Figure 4.7 – Figure showing Return on Capital Employed
ROCE
60
40
20 ROCE
0
2017-18
2018-19
2019-20
2020-21
2021-22
59
8. Return on Shareholders fund or Return on Equity
Net Profit / Shareholders fund x 100
Table 4.8
Table showing return on Shareholders fund
Net Profit Shareholders Fund Return on

Year
(₹ in Cr’s) (₹ in Cr’s) Equity
2017-18 11492.68 52844.58 21.74
2018-19 12835.90 59484.34 21.57
2019-20 15592.78 65650.73 23.75
2020-21 13382.88 60694.15 22.04
2021-22 15503.13 62821.87 24.67
The ideal Return on shareholder’s fund is 15%. The above table shows that
Return on share holders fund is more than the standard for all the 5 years.
This means that ITC provides a fair amount as return to their shareholder’s.
Figure 4.8 – Figure showing return on shareholder’s fund
RETURN ON EQUITY
30
20
10
RETURN ON EQUITY
0
RETURN ON EQUITY
60
9. Total Asset Turnover Ratio
Net sales / Total Assets
Table 4.9
Table showing Total Asset turnover ratio
Net Sales Total Asset

Year Percentage
2017-18 47688.55 64288.86 0.74
2018-19 49862.11 71798.41 0.69
2019-20 51393.47 77367.04 0.66
2020-21 53155.12 73819.30 0.72
2021-22 65204.96 77259.55 0.84
The above table shows that the Total Asset Turnover Ratio is Fluctuating. The
highest turnover ratio is in the year 2021-22 and the lowest turnover ratio in the year
2019-20.
Figure 4.11 – Figure showing Total asset turnover ratio
TOTAL ASSET TURNOVER RATIO
2017-18
2018-19
2019-20
2020-21
2021-22
61
10. Current Asset Turnover Ratio
Net Sales/ Current Asset
Table 4.10
Table showing current asset turnover ratio
Net Sales Current Asset

Year Percentage
2017-18 47688.55 26393.62 1.80
2018-19 49862.11 31747.27 1.57
2019-20 51393.47 39505.35 1.30
2020-21 53155.12 34991.99 1.51
2021-22 65204.96 34232.45 1.90
The above table shows that the current asset turnover ratio is fluctuating year by year.
The highest current asset turnover ratio is in the year 2016-17
Figure 4.10 – Figure showing current asset turnover ratio
CURRENT ASSET TURNOVER RATIO
2017-18
2018-19
2019-20
2020-21
2021-22
62
Comparative Balance Sheet for the year 2017-18 & 2018-19
Table 4.11
Absolute
2017-18 2018-19
Particulars Percentage
(₹ in Cr’s) (₹ in Cr’s) Amount
Equity & Liability
Shareholders fund 52844.58 59484.34 6639.76 12.56
Non-current
2194.13 2302.08 107.95 4.91
Liability
Current Liability 9250.15 10011.99 761.84 8.23
TOTAL 64288.86 71798.41 7509.55 —
Asset
Fixed Asset 21829.76 23308.08 1478.32 6.77
Non-current
16065.48 16743.06 677.58 4.21
Investment
Current Asset 26393.62 31747.27 5353.65 20.28
TOTAL 64288.86 71798.41 7509.55 —
In the financial year 2018-19 the ITC ltd didn’t had any decrease in the Assets and
Liabilities comparing to the previous year. There was a 12.56% increase in
Shareholders fund and the Current Asset increased by 20.28%. Overall the ITC ltd
had increased in the Assets and Liability by 11.68%
63
Comparative Profit & Loss A/c for the year 2017-18 & 2018-19
Table 4.12
Absolute
2017-18 2018-19
Income
Revenue from
47688.55 49862.11 2173.56 4.55
Operation
Other Income 1831.86 2173.79 341.93 18.66
TOTAL INCOME 49520.41 52035.90 2515.49 5.07
Expenses
Cost of Materials 11943.75 13403.01 1459.26 12.21
Purchase 2883.97 4220.51 1336.54 46.34
Changes in
1027.76 (203.19) (1410.95) —
Inventories
Excise duty 4239.61 1509.43 (2730.18) (64.39)
Employee Benefits
3760.90 4177.88 416.98 11.08
Expenses
Finance Cost 89.91 45.42 (44.49) (49.48)
Depreciation &
Amortization 1236.28 1396.61 160.33 12.96
Expenses
Other Expenses 7349.60 8348.11 998.51 13.58
64
TOTAL
32531.78 32897.78 366.00 1.12
EXPENSES
Share of Profit /
(Loss) of Associates 7.58 11.70 4.12 54.35
and joint venture
Profit Before
Exceptional Items 16996.21 19149.82 — —
& Tax
Exceptional Items 412.90 — — —
Profit Before Tax 17409.11 19149.22 1740.11 10.00
Tax Expenses 5916.43 6316.92 397.49 6.71
Profit for the year 11492.68 12835.90 1343.22 11.68
In the financial year 2018-19 the ITC ltd didn’t had any decrease in the Income and
Expenses comparing to the previous year. There was a 5.07% increase in Income and
the Expenses increased by 1.12%. Overall the Profit for year is increased by 11.68%
comparing to the previous year of ITC Ltd.
65
Table 4.13
Absolute
2018-19 2019-20
Equity & Liability
Non-current
2302.08 2156.54 (145.54) (6.32)
Liability
Current Liability 10011.99 9559.77 (452.22) (4.51)
TOTAL 71798.41 77367.04 5568.63 —
Asset
Fixed Asset 23308.08 24767.27 1459.19 6.26
Non-current
16743.06 13094.42 (3648.64) (21.79)
Investment
Current Asset 31747.27 39505.35 7758.08 24.43
TOTAL 71798.41 77367.04 5568.63 —
In the financial year 2019-20 the ITC ltd had decrease in the Assets and Liabilities
comparing to the previous year. There was a decrease in Non-current Liability,
Current Liability and Non-current Investment by 6.32%, 4.51% & 21.79%
respectively. There were also increases in Current asset and non-current asset of the
company. Overall the ITC ltd had increased in the Assets and Liability by 7.75%
66
Table 4.14
2018-19 2019-20 Absolute

Income
Revenue from
49862.11 51393.47 1531.36 3.07
Operation
Other Income 2173.79 2597.89 424.10 19.50
TOTAL INCOME 52035.90 53991.36 1955.46 3.75
Expenses
Purchase 4220.51 4237.90 17.39 0.41
Changes in
(203.19) (703.13) (906.32) —
Inventories
Excise duty 1509.43 1989.42 479.99 31.79
Employee Benefits
4177.88 4295.79 117.91 2.82
Expenses
Finance Cost 45.42 54.68 9.26 20.38
Depreciation &
Amortization 1396.61 1644.91 248.30 17.77
Expenses
Other Expenses 8348.11 8502.63 154.52 1.85
TOTAL
32897.78 33832.90 935.12 2.84
EXPENSES
67
Share of Profit /
(Loss) of Associates 11.70 8.22 (3.48) (29.74)
and joint venture
Profit Before
& Tax
Exceptional Items — (132.11) — —
Tax Expenses 6316.92 4441.79 (1875.13) (29.68)

Expenses comparing to the previous year. There was a 3.75% increase in Income and
the Expenses increased by 2.84%. Overall the Profit for year is increased by 21.47%
comparing to the previous year of ITC Ltd.
68
Table 4.15
Absolute
2019-20 2020-21
Equity & Liability
Shareholders fund 65650.73 60694.15 (4956.58) (7.54)
Non-current
2156.54 2435.47 278.93 12.93
Liability
TOTAL 77367.04 73819.30 (3547.74) —
Asset
Fixed Asset 24767.27 26530.04 1762.77 7.11
Non-current
13094.42 12297.27 (797.15) (6.08)
Investment
Current Asset 39505.35 34991.99 (4513.36) (11.42)
TOTAL 77367.04 73819.30 (3547.74) —
comparing to the previous year. There was a decrease in Shareholders fund, Non-
current Investment and the Current Asset by 7.54%, 6.08% & 11.42% respectively.
Overall the ITC ltd had decreased in the Assets and Liability by 4.58%
69
Table 4.16
Absolute
2019-20 2020-21
Income
Revenue from
51393.47 53155.12 1761.65 3.42
Operation
Other Income 2597.89 2632.56 34.67 1.33
TOTAL INCOME 53991.36 55787.68 1796.32 3.32
Expenses
Purchase 4237.90 6836.87 2598.97 61.32
Changes in
(703.13) (645.27) (1348.40) —
Inventories
Excise duty 1989.42 3882.34 1892.92 95.14
Employee Benefits
4295.79 4463.33 165.54 3.90
Expenses
Finance Cost 54.68 44.58 (10.10) (18.47)
Depreciation &
Amortization 1644.91 1645.59 0.68 0.04
Expenses
Other Expenses 8502.63 7675.31 (827.32) (9.73)
TOTAL
33832.90 37842.59 4009.69 11.85
EXPENSES
70
Share of Profit /
(Loss) of Associates 8.22 6.92 (1.30) (15.81)
and joint venture
Profit Before
& Tax
Exceptional Items (132.11) — — —
Profit Before Tax 20034.57 17938.17 (2096.40) (10.46)
Tax Expenses 4441.79 4555.29 113.50 2.55
Profit for the year 15592.78 13382.88 (2209.90) (14.71)
Expenses Comparing to the previous year. There was a 3.32% increase in Income but
the Expenses increased by 11.85% which as the company has to face the Loss during
the year. Overall the Loss for year is 14.71% Comparing to the previous year of ITC
Ltd.
71
Table 4.17
Absolute
2020-21 2021-22
Equity & Liability
Non-current
2435.47 2273.97 (161.5) (6.63)
Liability
TOTAL 73819.30 77259.55 3440.25 —
Asset
Fixed Asset 26530.04 26677.40 147.36 0.55
Non-current
12297.27 16349.70 4052.43 32.95
Investment
Current Asset 34991.99 34232.45 (759.54) (2.17)
TOTAL 73819.30 77259.55 7509.55 —
comparing to the previous year. There was a decrease in Non-current Liability and
Current Asset by 6.63% & 2.17%. There were also increases in Current asset and non-
current asset of the company. Overall the ITC ltd had increased in the Assets and
Liability by 4.66%
72
Table 4.18
Absolute
2020-21 2021-22
Income
Revenue from
53155.12 65204.96 12049.84 22.66
Operation
Other Income 2632.56 1836.35 (796.21) (30.24)
TOTAL INCOME 55787.68 67041.31 11253.63 20.17
Expenses
Purchase 6836.87 10671.13 3834.26 56.08
Changes in
(645.27) (686.00) (1331.27) —
Inventories
Excise duty 3882.34 4536.87 654.53 16.85
Employee Benefits
4463.33 4890.55 427.22 9.57
Expenses
Finance Cost 44.58 39.36 (5.22) (11.70)
Depreciation &
Amortization 1645.59 1732.41 86.82 5.27
Expenses
Other Expenses 7675.31 8734.06 1058.75 13.79
TOTAL
37842.59 46318.32 8475.73 22.39
EXPENSES
73
Share of Profit /
(Loss) of Associates (6.92) 17.48 24.40 —
and joint venture
Profit Before
& Tax
Exceptional Items — — — —
Tax Expenses 4555.29 5237.34 682.05 14.97
Expenses comparing to the previous year. There was a 20.17% increase in Income
and the Expenses increased by 22.39%. Overall the Profit for year is increased by
15.84% comparing to the previous year which has the company improving there
production of ITC Ltd.
74
CHAPTER 5 – FINDING, SUGGESTION & CONCLUSION
FINDING
1. The company was able to attain the ideal current ratio for the previous 5 years
i.e. from 2017-18 to 2021-22.
2. The company attained the ideal quick asset ratio during the time period
in which the study was undertaken and it also shows a positive trend.
3. ITC limited has a fair liquidity position.
4. The company has not attained the ideal debt equity ratio which means that the
company tends to use more of the owners fund than the borrowers fund.
5. The proprietary ratio indicates that the ITC Limited has a strong financial
position and the company provides greater security to its creditors.
6. The solvency position of ITC Limited is considerably high.
7. The net profit ratio of the ITC Limited is more than the ideal ratio which
means that the company was able to obtain a fair amount as profit after the
deduction of tax and other expenses.
8. The Return on Investment is more than the ideal ratio which means that
company is more efficient and profitable.
9. More investors will be attracted to ITC Limited as the Return on Investment of

the Company is high.
10. The return on shareholder’s fund is more than the ideal ratio which indicates
that ITC limited provide fair amount of return to their shareholders from the
company’s profits.
75
11. The Total asset turnover ratio of ITC Ltd is fluctuating trend over the period
which means that the company decrease the value of financial resources
12. The current asset turnover ratio is fluctuating year by year. Increase in Current
asset turnover ratio decrease the value of financial resources.
13. The comparative statements of last 2 years showed that the liabilities such as
current and non-current liabilities showed a decrease and in the assets part the
Tangible asset showed a decrease when compared to previous year and all the
other items showed an increase.
SUGGESTIONS
1. The company should use more borrowers fund than the owners fund to attain
the ideal debt equity ratio.
2. The company should try to reduce the current asset turnover ratio for getting
increase in the value of the financial resources.
3. The return on investment of ITC limited is more than the ideal ratio but it is
showing a decreasing trend therefore the management should think for more
strategies to increase the return on investment so that they can attract more
investors to invest in their firm.
4. The company should try to increase the value of goodwill that the company
possess.
5. The liability of ITC limited is showing an increase in the years in which the
study was undertaken which is not good for the company so the company
should try to reduce their liabilities in the coming years.
CONCLUSION
76
The project entitled “study on the financial performance of ITC limited” helps to get a
critical analyses of the overall financial health of a firm over a given period of time
and comparison between financial health of similar firms. The study reveals that the
financial performance of ITC limited is satisfactory and the company has a fair
Liquidity, solvency and profitability position. The financial statement is analyzed and
interpreted with the help of Balance sheet and Profit and loss account of the last 5
years. The financial performance of ITC limited proves that the company has a bright
future.
Websites
• www.itcportal.com
• www.moneycontrol.com
• www.wikipedia.com
• www.investopedia.com
Books
• Accounting for management – Shashi .K. Gupta, R.K Sharma, Anuj Gupta
• Financial Management – Dr. R.M Srivastava – Kalyani Publishers
• Ratio Analysis – Dr. H.C Mehrotra, Dr. S.P Goyal – Sahitya Bhavan
Publications
77

A Study of Financial Analysis of ITC LTD

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A Study of Financial Analysis of ITC LTD

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INDEX

1.1 HISTORY OF ITC LTD

1.2 DEFINITION OF ITC LTD

1.4 ADVANTAGE & DISADVANTAGE

1.5 IMPORTANCE OF ITC LTD

RESEARCH & METHODOLOGY

2.1 OBJECTIVE OF STUDY

2.2 SCOPE OF STUDY

CHAPTER 2 2.3 SIGNIFICANCE OF STUDY

2.4 LIMITATION OF STUDY

2.5 DATA COLLECTION

2.6 TECHNICAL & TOOLS FOR

CHAPTER 3 LITERATURE REVIEW

DATA ANALYSIS AND

FINDINGS, SUGGESTIONS AND

Financial performance analysis is the process of evaluating businesses, project,

Common methods of financial statement analysis include fundamental analysis,

The financial performance analysis of a company or a firm Is generally done using

The comparative financial statements are statements of the financial position at

ITC Limited is an Indian conglomerate company headquartered in Kolkata. ITC has a

• GREEN LEAF THRESHING PLANTS

• PACKAGING & PRINTING FACTORIES

• PAPER & PAPERBOARD MILLS

• PERSONAL CARE PRODUCTS FACTORIES

• PLANTS UNDER CONSTRUCTION

Food Moving Consumer Goods

The Responsible Luxury commitment of ITC Hotels blends elements of nature to

Fortune Hotels operates mid-market to upscale properties in the first-class, full-

ITC’s pre-eminent position as one of India’s leading corporates in the agricultural

ITC’s Agri Business is the country’s second largest exporter of agri-products. It

• Feed Ingredients – Soyameal

PAPERBOARDS AND SPECIALTY PAPERS

Communication Opaque Tissue, Bible Printing, Alfa Plus, Alfa Zap, Hi

• Carton Board Packaging

The Business continues to accord the highest priority to manufacturing excellence.

A conglomerate is a corporation that is made up of a number of different, sometimes

Established in 1910, ITC Limited is a diversified conglomerate with businesses

1925: Packaging and Printing: Backward Integration

1979: Paperboards & Specialty Papers Development of a Backward Area

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam

1985: Nepal Subsidiary – First Steps beyond National Borders

1990: Paperboards & Specialty Papers – Consolidation and Expansion

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing

1990: Agri Business – Strengthening Farmer Linkages

2002: Education & Stationery Products – Offering the Greenest products

2000: Information Technology – Business Friendly Solutions

2001: Branded Packaged Foods – Delighting Millions of Households

ITC’s foray into the Foods business is an outstanding example of successfully

In 2002, ITC’s philosophy of contributing to enhancing the competitiveness of the

2005: Personal Care Products – Expert Solutions for Discerning Consumers

2010: Expanding the Tobacco Portfolio

ITC’s Well-being Out of Waste programme (WOW) that comprehensively addresses

To enhance the wealth generating capability of the enterprise in a globalising

ITC defines Corporate Governance as a systemic process by which companies are

Empowerment and accountability

Empowerment is an essential concomitant of ITC’s first core principle of governance

Ethical corporate citizenship

ITC’s Core Values are aimed at developing a customer-focused, high-performance

• As professional managers, we are conscious that ITC has been given to us in