to the Members of 


ITC Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of ITC LIMITED
("the Company"), which comprise the Balance Sheet as at 31st March, 2013, the
Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a
summary of the significant accounting policies and other explanatory information.


Management’s Responsibility for the Financial Statements

2. The Company’s Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the Accounting Standards referred to in
Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with
the accounting principles generally accepted in India. This responsibility includes the
design, implementation and maintenance of internal control relevant to the preparation and
presentation of the financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.


Auditors’ Responsibility

3. Our responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit in accordance with the Standards on Auditing issued by
the Institute of Chartered Accountants of India. Those Standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts
and the disclosures in the financial statements. The procedures selected depend on the
auditor’s judgement, including the assessment of the risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Company’s
preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also includes evaluating
the appropriateness of the accounting policies used and the reasonableness of the
accounting estimates made by the Management, as well as evaluating the overall
presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.


Opinion

6. In our opinion and to the best of our information and according to the explanations
given to us, the aforesaid financial statements give the information required by the Act
in the manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India: (a) in the case of the Balance Sheet, of the state
of affairs of the Company as at 31st March, 2013; (b) in the case of the Statement of
Profit and Loss, of the profit of the Company for the year ended on that date; and (c) in
the case of the Cash Flow Statement, of the cash flows of the Company for the year ended
on that date.


Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditor’s Report) Order, 2003 ("the
Order") issued by the Central Government in terms of Section 227(4A) of the Act, we
give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the
Order.

8. As required by Section 227(3) of the Act, we report that: 

(a) We have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purposes of our audit.

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

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement
dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the
Act.

(e) On the basis of the written representations received from the directors as on 31st
March, 2013 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2013 from being appointed as a director in terms of Section
274(1)(g) of the Act.


  

    

    
For Deloitte Haskins & Sells
  
  

    

    
Chartered Accountants
  
  

    

    
(Firm Registration No. 302009E)
  
  

    

    
P. R. Ramesh
  
  

    
Kolkata
    
Partner
  
  

    
17th May, 2013
    
(Membership No. 70928)
  



Annexure to the Independent Auditors’ Report

(Referred to in paragraph 7 under ‘Report on Other Legal and Regulatory
Requirements’ section of our report of even date)

In our opinion and according to the information and explanations given to us, the
nature of the Company’s business / activities during the year are such that clauses
(v), (x), (xii), (xiii), (xv), (xviii), (xix) and (xx) of paragraph 4 of the Order are not
applicable to the Company. In respect of the other clauses, we report as under:

(i) In respect of its fixed assets :

(a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of the fixed assets.

(b) The fixed assets were physically verified during the year by the Management in
accordance with a regular programme of verification which, in our opinion, provides for
physical verification of all the fixed assets at reasonable intervals. According to the
information and explanations given to us, no material discrepancies were noticed on such
verification.

(c) During the year, in our opinion, a substantial part of fixed assets has not been
disposed off by the Company. 

(ii) In respect of its inventory : 

(a) As explained to us, the inventories other than material lying with third parties
(which have substantially been confirmed) were physically verified during the year by the
Management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the
procedures of physical verification of inventory followed by the Management were
reasonable and adequate in relation to the size of the Company and the nature of its
business.

(c) In our opinion and according to the information and explanations given to us, the
Company has maintained proper records of its inventories and no material discrepancies
were noticed on physical verification.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to /
from companies, firms or other parties covered in the Register maintained under Section
301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us,
there are adequate internal control systems commensurate with the size of the Company and
the nature of its business for the purchase of inventory and fixed assets and for the sale
of goods and services. During the course of our audit, we have not observed any major
weakness in such internal control system.

(v) In our opinion and according to the information and explanations given to us, the
Company has complied with the provisions of Sections 58A and 58AA or any other relevant
provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,
1975 with regard to the deposits accepted from the public. According to the information
and explanations given to us, no Order has been passed by the Company Law Board or the
National Company Law Tribunal or the Reserve Bank of India or any Court or any other
Tribunal on the Company.

(vi) In our opinion, the Company has an internal audit system commensurate with the
size of the Company and the nature of its business.

(vii) We have broadly reviewed the cost records maintained by the Company, as
prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956,
and are of the opinion that prima facie the prescribed cost records have been maintained
and are being made up. We have, however, not made a detailed examination of the cost
records with a view to determine whether they are accurate or complete.

(viii) According to the information and explanations given to us and according to the
books and records as produced and examined by us, in our opinion: 

(a) The Company is regular in depositing undisputed statutory dues including provident
fund, investor education and protection fund, employees’ state insurance, income tax,
sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material
statutory dues as applicable with the appropriate authorities.

(b) As at 31st March, 2013, the following are the particulars of dues on account of
income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess matters
that have not been deposited on account of any dispute:


  

    
Name of the statute
    
Nature of the dues
    
Amount
    
Period to which the amount relates Various years covering the period
    
Forum where pending
  
  

    

    

    
(Rs. in Crores)
    

    

  
  

    
Sales Tax and VAT Laws
    
Sales tax and VAT
    
104.02
    
1987-2013
    
Appellate Authority – upto Commissioners’/ Revisional authorities level
  
  

    

    

    
5.29
    
1994-2007
    
Appellate Authority – Tribunal level
  
  

    

    

    
165.83
    
1994-2008
    
High Court
  
  

    
Customs Act, 1962
    
Customs duty
    
0.05
    
2008-2010
    
Appellate Authority – upto Commissioners’/ Revisional authorities level
  
  

    

    

    
1.50
    
2005-2007
    
Appellate Authority – Tribunal level
  
  

    
Central Excise Act, 1944
    
Excise duty
    
9.70
    
1996-2012
    
Appellate Authority – upto Commissioners’/ Revisional authorities level
  
  

    

    

    
86.00
    
1973-2012
    
Appellate Authority – Tribunal level
  
  

    

    

    
1.43
    
2005-2010
    
High Court
  
  

    

    

    
0.31
    
1991-1996
    
Supreme Court
  
  

    
Finance Act, 1994
    
Service tax
    
3.28
    
2004-2012
    
Appellate Authority – upto Commissioners’/ Revisional authorities level
  
  

    

    

    
24.54
    
2005-2011
    
Appellate Authority – Tribunal level
  
  

    
Income Tax Act, 1961
    
Income tax
    
1.34
    
1990-2006
    
Appellate Authority – upto Commissioners’/ Revisional authorities level
  


Out of the total disputed dues aggregating Rs. 403.29 Crores as above, Rs.
306.82 Crores has been stayed for recovery by the relevant authorities.

(ix) According to the information and explanations given to us, the Company has not
defaulted in repayment of dues to any financial institution, bank or to debenture holders
during the year.

(x) In our opinion and according to the information and explanations given to us, the
Company is not a dealer or trader in securities. The Company has maintained proper records
of transactions and contracts in respect of shares, securities, debentures and other
investments and timely entries have been made therein. All shares, securities, debentures
and other investments have been held by the Company in its own name.

(xi) In our opinion and according to the information and explanations given to us, the
term loans have been applied for the purposes for which they were obtained.

(xii) In our opinion and according to the information and explanations given to us and
on an overall examination of the Balance Sheet, we report that funds raised on short-term
basis have not been used during the year for long-term investment.

(xiii) To the best of our knowledge and according to the information and explanations
given to us, no fraud by the Company and no significant fraud on the Company has been
noticed or reported during the year.


  

    

    
For Deloitte Haskins & Sells
  
  

    

    
Chartered Accountants
  
  

    

    
(Firm Registration No. 302009E)
  
  

    

    
P. R. Ramesh
  
  

    
Kolkata
    
Partner
  
  

    
17th May, 2013
    
(Membership No. 70928)