A PROJECT REPORT ON

CORPORATE SOCIAL RESPONSIBILITY

A CASE STUDY ON INDIA TOBACCO COMPANY

SUBMITTED BY

MINAL MUKESH SUNDRAWAT

UNDER THE GUIDANCE OF

PROF. BHASKAR JOSHI

SUBMITTED TO

A. I. C. T. E.

THROUGH

N. L. DALMIA INSTITUTE OF MANANGEMENT STUDIES AND RESEARCH

 Acknowledgement
At the outset I would like to take the privilege to convey my gratitude to all
those who co-operated, supported, helped and suggested me as to how the
project could be completed. This project bears imprint of advices, from many
people who were either directly or indirectly involved in it.

The Internet has been a veritable treasure throve of information, the websites
and the information they contained helped me to do the project in a much easier
and better manner.

I am also desirous of placing on record my profound indebtedness to my guide

Professor Bhaskar Joshi for his valuable advices, guidance, precious time and
support that he lent to me.

1 | Page
 DECLARATION

I, Ms. MINAL SUNDRAWAT, student of PGDBM (HR), Semester IV, N.L.

DALMIA INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,
hereby declare that I have completed this project on INDIA TOBACCO
COMPANY- CORPORATE SOCIAL RESPONSIBILITY.

The information submitted is true and original to the best of my knowledge.

PLACE: MUMBAI NAME: MINAL SUNDRAWAT

DATE: 15-01-17

2 | Page
1. STATEMENT OF OBJECTIVE 4

2. ABSTRACT 5

3. CORPORATE SOCIAL RESPONSIBILITY 7

CH.3.1 INTRODUCTION
CH.3.2 FORERUNNERS OF CSR

4. THE FOUR PHASES OF CSR DEVELOPMENT 14

IN INDIA

5. WHAT IS TRIPLE BOTTOM LINE? 18

6. CASE STUDY ON ITC 21

TABLE OF CONTENTS

3 | Page
 STATEMENT OF OBJECTIVE

The main objectives of this project are as follows:

To gain knowledge about the working of CSR policies in real industry.

To know about the benefits that a company can derive from CSR.
To know about the benefits that a company can give to the society by
doing CSR.
To know about the benefits that a company can give to its employees by
CSR.
To know how a well renowned and established company ITC has
benefitted from CSR.

4 | Page
 ABSTRACT
CSR is not new to India; companies like TATA and BIRLA have been imbibing
the case of for social good in their operations for decades long before CSR
became a popular cause. Through donations and charity events, many other
organizations have been doing their part for the society. The basic objective of
CSR in these days is to maximize the company's overall impact on the society
and stakeholders. CSR policies, practices and programs are being
comprehensively integrated by an increasing number of companies throughout
their business operations and processes. A growing number of corporates feel
that CSR is not just another form of indirect expense but is important for
protecting the goodwill and reputation, defending attacks and increasing
business competitiveness.

Companies have specialised CSR teams that formulate policies, strategies and
goals for their CSR programs and set aside budgets to fund them. These
programs are often determined by social philosophy which have clear objectives
and are well defined and are aligned with the mainstream business. The
programs are put into practice by the employees who are crucial to this process.
CSR programs ranges from community development to development in
education, environment and healthcare, etc.

For example, a more comprehensive method of development is adopted by

some corporations such as Bharat Petroleum Corporation Limited, Maruti
Suzuki India Limited, and Hindustan Unilever Limited. Provision of improved
medical and sanitation facilities, building schools and houses, and empowering
the villagers and in process making them more self-reliant by providing
vocational training and a knowledge of business operations are the facilities that
these corporations focus on. Many of the companies are helping other peoples
by providing them good standard of living.

On the other hand, the CSR programs of corporations like GlaxoSmithKline

Pharmaceuticals focus on the health aspect of the community. They set up
health camps in tribal villages which offer medical check-ups and treatment and
undertake health awareness programs. Some of the non-profit organizations
which carry out health and education programs in backward areas are to a
certain extent funded by such corporations. Also Corporates increasingly join
hands with Non-governmental organizations (NGOs) and use their expertise in
devising programs which address wider social problems.
5 | Page
For example, a lot of work is being undertaken to rebuild the lives of the
tsunami affected victims. This is exclusively undertaken by SAP India in
partnership with Hope Foundation, an NGO that focuses mainly on bringing
about improvement in the lives of the poor and needy. The SAP Labs Center of
HOPE in Bangalore was started by this venture which looks after the food,
clothing, shelter and medical care of street children.

CSR has gone through many phases in India. The ability to make a significant
difference in the society and improve the overall quality of life has clearly been
proven by the corporates. Not one but all corporates should try and bring about
a change in the current social situation in India in order to have an effective and
lasting solution to the social woes. Partnerships between companies, NGOs and
the government should be facilitated so that a combination of their skills such as
expertise, strategic thinking, manpower and money to initiate extensive social
change will put the socio-economic development of India on a fast track.

Corporate social responsibility must not be defined by

tax planning strategies alone. Rather, it should be defined
within the framework of a corporate philosophy, which
factors the needs of the community and the regions in
which a corporate entity functions. Prime Minister -Dr.
Manmohan Singh

6 | Page
 INTRODUCTION

Corporate Social Responsibility is a management concept whereby companies

integrate social and environmental concerns in their business operations and
interactions with their stakeholders. CSR is generally understood as being the
way through which a company achieves a balance of economic, environmental
and social imperatives (Triple-Bottom-Line- Approach), while at the same
time addressing the expectations of shareholders and stakeholders.

The term "corporate social responsibility" came into common use in the late
1960s and early 1970s after many multinational corporations formed the term
stakeholder, meaning those on whom an organization's activities have an
impact. It was used to describe corporate owners beyond shareholders as a
result of an influential book by R. Edward Freeman, Strategic management: a
stakeholder approach in 1984.

A popular explanation of the term CSR is the continuing commitment by

businesses to behave ethically and contribute to economic development, while
improving the quality of life of the workforce and their families as well as of the
local community and society at large. Over the last years an increasing number
of companies worldwide started promoting their business through CSR
strategies because the customers, the public and the investors expect them to act
sustainable as well as responsible.

The CSR Executives have the task of reconciling the various programs,
quantifying their benefits, or at least sketching a logical connection to the
business, and securing the support of business line counterparts. CSR can not
only refer to the compliance of human right standards, labour and social
security arrangements, but also to the fight against climate change, sustainable
management of natural resources and consumer protection. The various
practices followed by the corporate in different parts of the world differ
significantly.

In the Developed nations, the basic needs of the population do not need so much
support as in the under-developed nations. The demographics, literacy rate,
poverty ratio and GDP of the country have significant role in determining the
directions of CSR initiatives of an organization. In the Asian context, CSR
mostly involves activities like adopting villages for holistic development, in
which they provide medical and sanitation facilities, build school and houses,
7 | Page
and helping villages become self-reliant by teaching them vocational and
business skills.

A properly implemented CSR concept can bring along a variety of competitive

advantages, such as enhanced access to capital and markets, increased sales and
profits, operational cost savings, improved productivity and quality, efficient
human resource base, improved brand image and reputation, enhanced customer
loyalty, better decision making and risk management processes.

The main principles involving corporate social responsibility involve economic,

legal, ethical and discretionary aspects. A corporation needs to generate profits,
while operating within the laws of the state. The corporation also needs to be
ethical, but has the right to be discretional about the decisions it makes. Levels
of corporate social responsiveness to an issue include being reactive, defensive,
responsive and interactive. All terms are useful in issues management. Selecting
when and how to act can make a difference in the outcome of the action taken.

The role among corporate stakeholders is to work collectively to pressure

corporations that are changing. Shareholders and investors themselves, through
socially responsible investing are exerting pressure on corporations to behave
responsibly. The extension of SRI bodies driving corporations to include an
element of ethical investment into their corporate agendas generates socially
embedded issues. The main issue correlates to the development and overall idea
of ethical investing or SRI, a concept that is constructed as a general social
perspective.

8 | Page
 Criticisms and concerns
Critics of CSR as well as proponents debate a number of concerns related to it.
These include CSR's relationship to the fundamental purpose and nature of
business and questionable motives for engaging in CSR, including concerns
about insincerity and hypocrisy. In some cases, CSR is a result of a variety of
social, environmental and economic pressures while some other cases many
large corporations, it is primarily a strategy to divert attention away from the
negative social and environmental impacts of their lives.

Despite certain criticisms on the CSR activities, more and more companies in
the world are inclined towards corporate social responsibility. In todays digital,
fast speed world, each business, small or big, needs to have a CSR program in
place. If CSR is not yet part of a companys daily business practice, it must act
fast or else theyll lose the trust of the people who are important to their
business.

9 | Page
 Difference between Charity & CSR

Charity means donating money, goods, time or effort for poor and needy. It is
selfless giving toward any kind of social need. CSR is how company align their
value to social cause. It can be people centric or planet centric. It is not self-less
act, company derive long term benefit from CSR. The practice of CSR is subject
to much debate and criticism. Proponents argue that there is a strong business
case for CSR, in that corporations benefit in multiple ways by operating with a
perspective broader and longer than their own immediate, short-term profits.

Critics argue that CSR distracts from the fundamental economic role of
businesses; others argue that it is nothing more than superficial window-
dressing; others argue that it is an attempt to pre- empt the role of governments
as a watchdog over powerful multinational corporations. Critics of CSR as well
as proponents debate a number of concerns related to it. These include CSR's
relationship to the fundamental purpose and nature of business and questionable
motives for engaging in CSR, including concerns about insincerity and
hypocrisy. Critics concerned with corporate hypocrisy and insincerity generally
suggest that better governmental and international regulation and enforcement,
rather than voluntary measures, are necessary to ensure that companies behave
in a socially responsible manner. CSR could prove to be a valuable asset in an
age of Mergers & Acquisitions, as it helps firms spread their brand name.

Forerunners in corporate social responsibility

10 | P a g e
TATA

Considered as pioneers in the area of CSR, the Tata group has played an active
role in nation building and socio-economic development since the early 1900s.
From its inception, the Tata group has taken up a number of initiatives for the
development of society. A unique feature of the group is that 63% of the equity
capital of the parent firm - Tata Sons Limited - is held by Tata trusts, which are
philanthropic in nature.

BIRLA

The Birla groups of companies are also among the pioneers in the field of
corporate social responsibility in India. As part of the Aditya Vikram Birla
Groups Social Reach, the Birla group runs as many as 15 hospitals in India;
includes Adult education and schools conducting as many as 78 schools all over
India; rehabilitates Handicapped persons having touched more than 5000
physically challenged individuals. More than 1, 00,000 patients have been
examined under the Groups medical programmes. Over 15,000 children along
with 2000 pregnant women have been immunized, over 500 cataract patients
operated, 2000 TB patients provided medical care, 100 leprosy-afflicted
attended to, free of cost.

MAHINDRA

Among corporates who have displayed deep commitment to Corporate Social

responsibility over long years is Mahindra & Mahindra. The late Mr K. C.
Mahindra for promoting education among Indians at all levels established the K.
C. Mahindra Education Trust in 1953. Every year the Trust offers up to 30-40
interest-free loan scholarships to post-graduate students going abroad for higher
studies.

Others
11 | P a g e
Similar commitment to CSR has been displayed by several corporates in India.
The list, which at best can be far from complete, includes Arvind Mills, Escorts,
Dabur, Bajaj, Godrej, Hero Honda, DCM Sriram, Ashok Leyland, Ballarpur
Industries, Eicher, Kinetic Group, Kirloskar, Infosys, Reliance, Ranbaxy, Wipro,
each of which has been deeply committed to their communities engaging in
programmes encompassing education, health, education, integrated rural
development. Beyond the private sector, corporate players in Indias public
sector too have been actively involved in corporate social responsibility
initiatives. Most public sector units in the heavy engineering industry have not
only set up a township around the plant, but also established a school, a hospital
and several other civic facilities for its employees and those that live in that
area.

12 | P a g e
 The Four Phases of CSR Development in India
The history of CSR in India has its four phases which run parallel to India's
historical development and has resulted in different approaches towards CSR.

The First Phase

In the first phase charity and philanthropy were the main drivers of CSR.
Culture, religion, family values and tradition and industrialization had an
influential effect on CSR. In the pre-industrialization period, which lasted till
1850, wealthy merchants shared a part of their wealth with the wider society by
way of setting up temples for a religious cause. Moreover, these merchants
helped the society in getting over phases of famine and epidemics by providing
food from their godowns and money and thus securing an integral position in
the society. With the arrival of colonial rule in India from 1850s onwards, the
approach towards CSR changed. The industrial families of the 19th century
such as Tata, Godrej, Bajaj, Modi, Birla, and Singhania were strongly inclined
towards economic as well as social considerations. However it has been
observed that their efforts towards social as well as industrial development were
not only driven by selfless and religious motives but also influenced by caste
groups and political objectives.

The Second Phase

In the second phase, during the independence movement, there was increased
stress on Indian Industrialists to demonstrate their dedication towards the
progress of the society. This was when Mahatma Gandhi introduced the notion
of "trusteeship", according to which the industry leaders had to manage their
wealth so as to benefit the common man. "I desire to end capitalism almost, if
not quite, as much as the most advanced socialist. But our methods differ. My
theory of trusteeship is no make-shift, certainly no camouflage. I am confident
that it will survive all other theories." This was Gandhi's words which highlights
his argument towards his concept of "trusteeship". Gandhi's influence put
pressure on various Industrialists to act towards building the nation and its
socio-economic development. According to Gandhi, Indian companies were
supposed to be the "temples of modern India". Under his influence businesses
established trusts for schools and colleges and also helped in setting up training
and scientific institutions. The operations of the trusts were largely in line with

13 | P a g e
Gandhi's reforms which sought to abolish untouchability, encourage
empowerment of women and rural development.

The Third Phase

The third phase of CSR (196080) had its relation to the element of "mixed
economy", emergence of Public Sector Undertakings (PSUs) and laws relating
labour and environmental standards. During this period the private sector was
forced to take a backseat. The public sector was seen as the prime mover of
development. Because of the stringent legal rules and regulations surrounding
the activities of the private sector, the period was described as an "era of
command and control". The policy of industrial licensing, high taxes and
restrictions on the private sector led to corporate malpractices. This led to
enactment of legislation regarding corporate governance, labour and
environmental issues. PSUs were set up by the state to ensure suitable
distribution of resources (wealth, food etc.) to the needy. However the public
sector was effective only to a certain limited extent. This led to shift of
expectation from the public to the private sector and their active involvement in
the socio-economic development of the country became absolutely necessary. In
1965 Indian academicians, politicians and businessmen set up a national
workshop on CSR aimed at reconciliation. They emphasized upon transparency,
social accountability and regular stakeholder dialogues. In spite of such
attempts the CSR failed to catch steam.

The Fourth Phase

In the fourth phase (1980 until the present) Indian companies started
abandoning their traditional engagement with CSR and integrated it into a
sustainable business strategy. In 1990s the first initiation towards globalization
and economic liberalization were undertaken. Controls and licensing system
were partly done away with which gave a boost to the economy the signs of
which are very evident today. Increased growth momentum of the economy
helped Indian companies grow rapidly and this made them more willing and
able to contribute towards social cause. Globalization has transformed India into
an important destination in terms of production and manufacturing bases of
TNCs are concerned. As Western markets are becoming more and more
concerned about and labour and environmental standards in the developing
countries, Indian companies who export and produce goods for the developed
world need to pay a close attention to compliance with the international
standards.

14 | P a g e
 REASONS FOR CSR
1. Satisfied employees.

Employees want to feel proud of the organization they work for. An employee
with a positive attitude towards the company is less likely to look for a job
elsewhere. It is also likely that you will receive more job applications because
people want to work for you. For ex. Infosys

More choice means a better workforce. Because of the high positive impact of
CSR on employee wellbeing and motivation, the role of HR in managing CSR
projects is significant.

2. Satisfied customers

Research shows that a strong record of CSR improves customers attitude

towards the company. If a customer likes the company, he or she will buy more
products or services and will be less willing to change to another brand.

3. Positive PR

CSR provides the opportunity to share positive stories online and through
traditional media. Companies no longer have to waste money on expensive
advertising campaigns. Instead they generate free publicity and benefit from
worth of mouth marketing.

4. Costs reductions

Yes, you read this correctly. A CSR program doesnt have to cost money. On the
contrary, if conducted properly a company can reduce costs through CSR.

Companies reduce costs by:

More efficient staff hire and retention

Implementing energy savings programs

Managing potential risks and liabilities more effectively

Less investment in traditional advertising

15 | P a g e
5. More business opportunities
A CSR program requires an open, outside oriented approach. The business must
be in a constant dialogue with customers, suppliers and other parties that affect
the organization. Because of continuous interaction with other parties, your
business will be the first to know about new business opportunities.

6. Long term future for your business

CSR is not something for the short term. Its all about achieving long term
results and business continuity. Large businesses refer to: shaping a more
sustainable society".

16 | P a g e
17 | P a g e
 TRIPLE BOTTOM LINE
The phrase the triple bottom line was first coined in 1994 by John
Elkington, the founder of a British consultancy called SustainAbility. His
argument was that companies should be preparing three different (and quite
separate) bottom lines. One is the traditional measure of corporate profitthe
bottom line of the profit and loss account. The second is the bottom line of a
company's people accounta measure in some shape or form of how socially
responsible an organisation has been throughout its operations. The third is the
bottom line of the company's planet accounta measure of how
environmentally responsible it has been. The triple bottom line (TBL) thus
consists of three Ps: profit, people and planet. It aims to measure the
financial, social and environmental performance of the corporation over a
period of time. Only a company that produces a TBL is taking account of the
full cost involved in doing business.

In some senses the TBL is a particular manifestation of the balanced scorecard.

Behind it lies the same fundamental principle: what you measure is what you
get, because what you measure is what you are likely to pay attention to. Only
when companies measure their social and environmental impact will we have
socially and environmentally responsible organisations.

The idea enjoyed some success in the turn-of-the-century zeitgeist of corporate

social responsibility, climate change and fair trade. After more than a decade in
which cost-cutting had been the number-one business priority, the hidden social
and environmental costs of transferring production and services to low-cost
countries such as China, India and Brazil became increasingly apparent to
western consumers. These included such things as the indiscriminate logging of
the Amazon basin, the excessive use of hydrocarbons and the exploitation of
cheap labour.

Growing awareness of corporate malpractice in these areas forced several

companies, including Nike and Tesco, to re-examine their sourcing policies and
to keep a closer eye on the ethical standards of their suppliers in places as far
apart as Mexico and Bangladesh, where labour markets are unregulated and
manufacturers are able to ride roughshod over social and environmental
standards. It also encouraged the growth of the Fair-trade movement, which
adds its brand to products that have been produced and traded in an
environmentally and socially fair way (of course, that concept is open to
18 | P a g e
interpretation). From small beginnings, the movement has picked up steam in
the past five years. Nevertheless, the Fair-trade movement is still only small,
focused essentially on coffee, tea, bananas and cotton, and accounting for less
than 0.2% of all UK grocery sales in 2006.

One problem with the triple bottom line is that the three separate accounts
cannot easily be added up. It is difficult to measure the planet and people
accounts in the same terms as profitsthat is, in terms of cash. The full cost of
an oil-tanker spillage, for example, is probably immeasurable in monetary
terms, as is the cost of displacing whole communities to clear forests, or the cost
of depriving children of their freedom to learn in order to make them work at a
young age.

19 | P a g e
 Calculating the TBL

The 3Ps do not have a common unit of measure. Profits are measured in dollars.
What is social capital measured in? What about environmental or ecological
health? Finding a common unit of measurement is one challenge.

Some advocate monetizing all the dimensions of the TBL, including social
welfare or environmental damage. While that would have the benefit of having
a common unitdollarsmany object to putting a dollar value on wetlands or
endangered species on strictly philosophical grounds. Others question the
method of finding the right price for lost wetlands or endangered species.

Another solution would be to calculate the TBL in terms of an index. In this

way, one eliminates the incompatible units issue and, as long as there is a
universally accepted accounting method, allows for comparisons between
entities, e.g., comparing performance between companies, cities, development
projects or some other benchmark.

An example of an index that compares a county versus the nation's performance

for a variety of components is the Indiana Business Research Center's
Innovation Index. There remains some subjectivity even when using an index
however. For example, how are index components weighted? Would each "P"
get equal weighting? What about the sub-components within each "P"? Do they
each get equal weighting? Is the people category more important than the
planet? Who decides?

Another option would do away with measuring sustainability using dollars or

using an index. If the users of the TBL had the stomach for it, each
sustainability measure would stand alone. "Acres of wetlands" would be a
measure, for example, and progress would be gauged based on wetland creation,
destruction or status quo over time. The downside to this approach is the
proliferation of metrics that may be pertinent to measuring sustainability. The
TBL user may get metric fatigue.

20 | P a g e
 CASE STUDY ON ITC
INTRODUCTION

ITC 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 from Imperial Tobacco
Company of India Limited to India Tobacco Company Limited in 1970 and then
to I.T.C. Limited in 1974. In recognition of the Company's multi-business
portfolio encompassing a wide range of businesses - Fast Moving Consumer
Goods comprising Foods, Personal Care, Cigarettes and Cigars, Branded
Apparel, Education and Stationery Products, Incense Sticks and Safety Matches,
Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and
Information Technology - the full stops in the Company's name were removed
effective September 18, 2001. The Company now stands rechristened 'ITC
Limited'.

ITC is one of India's foremost private sector companies with a market

capitalisation of US $ 45 billion and a turnover of US $ 7 billion. ITC is rated
among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most
Reputable Companies by Forbes magazine and among India's Most Valuable
Companies by Business Today. ITC ranks among India's '10 Most Valuable
(Company) Brands', in a study conducted by Brand Finance and published by
the Economic Times. ITC also ranks among Asia's 50 best performing
companies compiled by Business Week.

ITC has a diversified presence in FMCG, Hotels, Paperboards & Specialty

Papers, Packaging, Agri-Business, and Information Technology. While ITC is
an outstanding market leader in its traditional businesses of Cigarettes, Hotels,
Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share
even in its nascent businesses of Packaged Foods & Confectionery, Branded
Apparel, Personal Care and Stationery.

As one of India's most valuable and respected corporations, ITC is widely

perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this
source of inspiration "a commitment beyond the market". In his own words:
"ITC believes that its aspiration to create enduring value for the nation provides
the motive force to sustain growing shareholder value. ITC practices this
philosophy by not only driving each of its businesses towards international
competitiveness but by also consciously contributing to enhancing the
competitiveness of the larger value chain of which it is a part."
21 | P a g e
ITC's diversified status originates from its corporate strategy aimed at creating
multiple drivers of growth anchored on its time-tested core competencies:
unmatched distribution reach, superior brand-building capabilities, effective
supply chain management and acknowledged service skills in hoteliering. Over
time, the strategic forays into new businesses are expected to garner a
significant share of these emerging high-growth markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products.

The ITC group's contribution to foreign exchange earnings over the last ten
years amounted to nearly US$ 5.4 billion, of which agri exports constituted
56%. The Company's 'e-Choupal' initiative is enabling Indian agriculture
significantly enhance its competitiveness by empowering Indian farmers
through the power of the Internet. This transformational strategy, which has
already become the subject matter of a case study at Harvard Business School,
is expected to progressively create for ITC a huge rural distribution
infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India

Ltd., provides IT services and solutions to leading global customers. ITC
Infotech has carved a niche for itself by addressing customer challenges through
innovative IT solutions.

ITC's production facilities and hotels have won numerous national and
international awards for quality, productivity, safety and environment
management systems. ITC was the first company in India to voluntarily seek a
corporate governance rating.

ITC group directly employs more than 31,000 people and the Company's
Businesses and their value-chains generate over 5 million sustainable
livelihoods. The Company continuously endeavours to enhance its wealth
generating capabilities in a globalising environment to consistently reward more
than 4, 23,000 shareholders, fulfil the aspirations of its stakeholders and meet
societal expectations. This over-arching vision of the company is expressively
captured in its corporate positioning statement: "Enduring Value. For the
Nation. For the Shareholder."

ITCs Policy on Social Investments/Corporate Social

Responsibility:

22 | P a g e
It is ITC's policy:

1. To pursue a corporate strategy that enables realisation of the twin goals of

shareholder value enhancement and societal value creation in a mutually
reinforcing and synergistic manner.

2. To align and integrate Social Investments / CSR programmes with the

business value chains of your Company and make them outcome
oriented. To support creation of on and off-farm sustainable livelihood
sources thereby empowering stakeholder communities to conserve and
manage their resources.

3. To implement Social Investments / CSR programmes primarily in the

economic vicinity of your Company's operations with a view to ensuring
the long term sustainability of such interventions.

4. To contribute to sustainable development in areas of strategic interest

through initiatives designed in a manner that addresses the challenges
faced by the Indian society especially in rural India.

5. To collaborate with communities and institutions to contribute to the

national mission of eradicating poverty and hunger, especially in rural
areas, through agricultural research and knowledge sharing, superior farm
and agri-extension practices, soil and moisture conservation and
watershed management, conservation and development of forest
resources, empowering women economically, supplementing primary
education and participating in rural capacity building programmes and
such other initiatives.

6. To align your Company's operations with the national objective of

inclusive growth and employment generation by leveraging your
Company's diversified portfolio, manufacturing bases, supply chains and
distribution channels, to infuse an appropriate mix of capital and
technology to further social business initiatives such as e-Choupal,
animal husbandry, agarbatti rolling etc. and support organisations /
institutions engaged in building linkages with local, regional and urban
communities and markets.

7. To sustain and continuously improve standards of Environment, Health

and Safety through the collective endeavour of your Company and its
employees at all levels towards attaining world class standards and
support other programmes and initiatives, internal or external, for the
23 | P a g e
 prevention of illness and combating of diseases as may be considered
appropriate from time to time.

8. To encourage the development of human capital of the Nation by

expanding human capabilities through skills development, vocational
training etc. and by promoting excellence in identified cultural fields.

Policy on Human Rights

ITC believes that all its employees must live with social and economic
dignity and freedom, regardless of nationality, gender, race, economic status
or religion. In the management of its businesses and operations therefore,
ITC ensures that it upholds the spirit of human rights as enshrined in existing
international standards such as the Universal Declaration and the
Fundamental Human Rights Conventions of the ILO.

Policy

ITC upholds international human rights standards, does not condone human
rights abuses, and creates and nurtures a working environment where human
rights are respected without prejudice.

Implementation

The Corporate Human Resources function of ITC is responsible for the

Human Rights Policy design, implementation and updating.

The policy is implemented at all locations of ITC through a set of separate

policies and procedures covering each of the main constituents of human
rights applicable at the workplaces.

Monitoring & Audit

The assessment procedures for different constituents of this policy are

defined against each specific policy.

Consideration of Human Rights Impacts across the Supply Chain

As a large and multi-product enterprise whose products are benchmarked

nationally and internationally, ITC's main supply chains can be grouped as
follows:
24 | P a g e
1. For all its operations, technology, machinery and equipment are sourced
from reputed and globally benchmarked suppliers/vendors who are
expected to follow internationally accepted norms and standards on
human rights.

2. ITC's major businesses are vertically integrated across several Divisions.

A substantial part of the supply chain is therefore internal through
strategic backward linkages. Common values relating to human rights
performance are shared across this supply chain.

3. Being a major agri-based company, the agriculture sector is a major

supplier of inputs for its operations. The bulk of agricultural commodities
are procured from state controlled trading platforms and the open market.

4. A very small proportion of ITC's business consists of supply chains

comprising local vendors and suppliers. The policy framework for such
entities is enunciated separately in 'Policy to Ensure Respect for Human
Rights across the Supply Chain'.

Policy to Ensure Respect for Human Rights Policy across the Supply
Chain

ITC provides products and services of superior quality and value by sourcing
its technologies, equipment and inputs from reputed international and Indian
manufacturers and suppliers. Common values, relating to human rights
performance, are shared across the entire supply chain because ITC is
committed to the importance of a socially responsible and accountable
supply chain.

Policy

ITC nurtures an internal working environment which respects human rights

without prejudice. Likewise, it expects its business partners to establish a
human rights compliant business environment at the workplace.

Implementation

The responsibility for implementation of this policy rests with the Divisional
Chief Executive of the concerned business and the Unit Manager. The policy

25 | P a g e
is communicated internally through policy manuals and intranet portals, and
externally by the HR personnel of concerned units to vendors/suppliers.

Monitoring & Audit

ITC has established a policy intent for mapping/monitoring progress and

performance of existing and potential vendors/suppliers on human rights
performance.

Policy to Prevent Discrimination at Workplace

ITC acknowledges that every individual brings a different and unique set of
perspectives and capabilities to the team. A discrimination-free workplace
for employees provides the environment in which diverse talents can bloom
and be nurtured. This is achieved by ensuring that a non-discrimination
policy and practice is embedded across the Company in line with corporate
principles and benchmarked business practices.

Policy

ITC's approach to its human resources is premised on the fundamental belief

in fostering meritocracy in the organisation which, pari passu, promotes
diversity and offers equality of opportunity to all employees. ITC does not
engage in or support direct or indirect discrimination in recruitment,
compensation, access to training, promotion, termination or retirement based
on caste, religion, disability, gender, age, race, colour, ancestry, marital status
or affiliation with a political, religious, or union organization or minority
group.

Implementation

The policy is communicated to all employees through induction

programmes, policy manuals and intranet portals.

The custodian of this policy is the head of each operational unit and
Divisional Chief Executives of the respective business.

ITC's complaints resolution procedure is premised on the freedom of

employees to approach higher officials beyond his/her immediate superior.
For the unionised employees, compliance of the policy is ensured through a
robust grievance handling procedure and the presence of a union that brings
violations to the notice of the unit HR head.
26 | P a g e
Monitoring & Auditing

The accountability for the application of the non-discrimination employment

policy rests with the Unit Head who reviews anti-discriminatory complaints
annually or on a case-by-case basis.

The Corporate Human Resources function conducts non-discrimination

reviews annually on a sample basis with unit heads and through on-site
assessments.

Policy on Freedom of Association

ITC's culture is characterized by cooperative relationships and high

employee involvement that relies on building partnerships and
interdependence. Adhering to these principles has helped build, sustain and
strengthen harmonious employee relations in the organisation.

Policy

ITC respects the employees' right to organize themselves into interest groups
as initiatives of the workers, independent from supervision by the
management. In keeping with the spirit of this Policy, employees are not
discriminated against for exercising this right.

Implementation

The policy is communicated to all employees through induction

programmes, policy manuals and intranet portals.

The custodian of this policy is the HR head of each operational unit who
reports directly to Unit Head on such issues.

The actualisation of this policy is evident from the joint agreements and
minutes that are signed between the union and the management.

Monitoring & Audit

Each ITC Unit has appropriate systems and checks to ensure compliance
with the Policy and statutory provisions, including means for filing of
grievances, collective bargaining agreements and minutes from worker
meetings.
27 | P a g e
Compliance with the Policy is regularly monitored by Divisional and
Corporate HR.

Policy Prohibiting Child Labour and Preventing Forced Labour from

Workplace

The foundation of ITC's "No Child or Forced Labour policy" is based on the
Company's commitment to find practical, meaningful and culturally
appropriate responses to support the elimination of such labour practices. It
thus endorses the need for appropriate initiatives to progressively eliminate
these abuses.

Policy

ITC does not employ any person below the age of eighteen years in the
workplace.

ITC prohibits the use of forced or compulsory labour at all its units. No
employee is made to work against his/her will or work as bonded/forced
labour, or subject to corporal punishment or coercion of any type related to
work.

Implementation

This policy is publicly available throughout the Company and clearly

communicated to all employees in a manner in which it can be understood
through induction programmes, policy manuals and intranet portals.

The responsibility for the implementation of the policy rests with the Units
HR Department and the security staff who do not permit underage persons to
enter the factory as workers.

Employment contracts and other records documenting all relevant details of

the employees, including age, are maintained at all units and are open to
verification by any authorized personnel or relevant statutory body.

Compliance with the policy is evident in the transparent system of

recruitment and the policy of exit interviews which are undertaken by a
manager not directly connected with the employee. For the unionised
28 | P a g e
employees, compliance is also ensured through a robust grievance handling
procedure and the presence of a union that brings violations to the notice of
the unit HR head.

Monitoring & Audit

Sample checks of the records are undertaken annually by Corporate Human

Resources function.

Audit and assessment is undertaken annually by Corporate Internal Audit

and the Environment, Occupation Health and Safety function.

Policy on Information and Consultation on Changes

ITC's core values support an employee engagement process that aligns its
employees with a shared vision and purpose of the Company in the belief
that every individual brings a different perspective and capability to the
team. ITC thus harnesses the creative potential of all its employees by
promoting a culture of partnerships to unleash relevant synergies between
different groups of employees.

Policy

All major changes in operations involving work processes, manning norms

and other productivity linked issues are carried out after discussions with the
employees and the recognized unions at each location.

Implementation

Business plans are shared with employees at all units through a series of
formal communication meetings, and through the intranet portals. Unionised
employees at the concerned units are informed of all major changes well in
advance through their representatives.

The responsibility for the implementation of the policy rests with the Unit's
HR Department in the case of unionized employees and with the concerned
Divisional Management Committees for other employees.

The employees are given enough time to consider the implications of change
and an opportunity to discuss their apprehensions, if any, with the
management.

29 | P a g e
The Policy is actualised through consultative meetings with representatives
of employees, culminating in joint minutes/agreements.

Monitoring & Auditing

Compliance with the Policy is regularly monitored by the Unit Head.

HIV/AIDS: Policy Guidelines

Background

ITC is committed to providing a safe and healthy work environment to all its
employees. These policy guidelines on HIV/AIDS are an endorsement of
this commitment and, in particular, of the Company's commitment to
specific programmes and actions in response to the HIV epidemic.

The Company's position is based on scientific and epidemiological evidence

that people with HIV/AIDS do not pose a risk of transmission of the virus to
co-workers by casual, non-sexual contact in the normal work setting.

Policy Guidelines

1. Compliance
The Company's policies on HIV/AIDS with regard to its employees will,
at a minimum, comply with all relevant Central and State legislation and
the Company will implement all policies and directions of the
Government regarding HIV/AIDS whenever issued.

2. Prevention through Awareness

The Company will provide to all its employees sensitive, accurate and the
latest information about risk reduction strategies in their personal lives,
with the objectives of reducing the stigma of HIV/AIDS, encouraging
safe behaviour and improving understanding of treatment.

3. Safe and Healthy Workplace

30 | P a g e
 The Company is committed to providing a safe and healthy workplace to
all its employees. It is the Company's objective that employees will have
access to health services to prevent and manage HIV/AIDS.

4. Non-discrimination
The Company will not discriminate against any employee infected by
HIV/AIDS with regard to promotions, training and other privileges and
benefits as applicable to all employees.

A HIV positive employee will be allowed to continue to work in

his/her job unless

Medical conditions interfere with the specific job being done, in

which case reasonable alternative working arrangements will be
made; or

The employee is incapacitated to perform his/her duties and is

declared medically unfit by a medical doctor, in which case the
employee will be assisted to rehabilitate himself/herself outside the
Company.

The Company will not make pre-employment HIV/AIDS screening

mandatory as part of its fitness to work assessment. Screening of
this kind refers to direct methods (HIV testing), indirect methods
(assessment of risk behaviour), and questions about HIV tests
already taken.

HIV/AIDS test will not be part of the annual health check-ups

unless specifically requested for by an employee.

5. Confidentiality

31 | P a g e
 Voluntary testing for HIV/AIDS when requested for, by the employee,
will be carried out by private or community health services and not at the
workplace.

There will no obligation on the part of the employees to inform the

Company about their clinical status in relation to HIV/AIDS.

Information on clinical diagnosis of an employees' status in terms of

his/her HIV/AIDS status if advised to the Company, will be kept strictly
confidential.

ITC's EHS policy -

To contribute to sustainable development through the establishment and
implementation of environment standards that are scientifically tested and
meets the requirement of relevant laws, regulations and codes of practice.

To take account of environment, occupational health and safety in

planning and decision-making.

To provide appropriate training and disseminate information to enable all

employees to accept individual responsibility for Environment, Health
and Safety, implement best practices, and work in partnership to create a
culture of continuous improvement.

To instil a sense of duty in every employee towards personal safety, as

well as that of others who may be affected by the employee's actions.

To provide and maintain facilities, equipment, operations and working

conditions which are safe for employees, visitors and contractors at the
Company's premises.

To ensure safe handling, storage, use and disposal of all substances and
materials that are classified as hazardous to health and environment.

To reduce waste, conserve energy, and promote recycling of materials

wherever possible.

32 | P a g e
 To institute and implement a system of regular EHS audit in order to
assure compliance with laid down policy, benchmarked standards, and
requirements of laws, regulations and applicable codes of practice.

To proactively share information with business partners towards

inculcating world-class EHS standards across the value chain of which
ITC is a part.

All employees of ITC are expected to adhere to and comply with the EHS
Policy and Corporate Standards on EHS.

ITC's EHS Policy extends to all sites of the Company. It will be the
overall responsibility of the Divisional/SBU Chief Executives, through
the members of their Divisional Management Committees, General
Managers and Unit Heads, to ensure implementation of this Policy and
Corporate Standards on EHS, including formation of various committees
and designating individuals for specific responsibilities in respect of their
Division/SBU.

The Corporate EHS Department is responsible for reviewing and

updating Corporate Standards on EHS, and for providing guidance and
support to all concerned.

ITC IT E-Waste Policy

33 | P a g e
ITC's achievements across all three dimensions of the Triple Bottom
Line - economic, social and environmental are well known and
recognized globally. Being a pioneer in environmentally sustainable
operations (e.g. Carbon and Water positive, solid waste recycling
positive), we need to meet demanding standards of responsible waste
management in all aspects of our operations.

With pervasive use of electrical and electronic equipment in our daily

operations, disposal of obsolete equipment is increasingly posing a threat
to our environment. There is therefore a need to handle such disposals -
referred to as E-Waste - in a responsible manner in line with emerging
global best practices and standards.

IT E-Waste is a subset of E-Waste and covers the following IT equipment

Sl.
No Category Items
.
1. Computers Server / Desktop computer (CPU,
Monitor, Keyboard and Mouse), Laptop,
Notebook, Dumb terminal or similar
items
2. Printer & Printer, Scanner, Printer Cartridge, Toner,
Accessories etc. or similar items
3. Network Routers, Switches, Patch panel, Modem,
equipment Converter, VSAT equipment, etc.
4. IT TV Tuner box, Floppy, CD and DVD, Pen
Accessories Drive, External Hard disk, External CD /
DVD writer, DAT Drive, Speaker, Laptop
Battery, Hand Held device, VC
equipment, Data Cartridge, etc.
5. Associated Power cable, Data cable, UPS ,etc.
Electrical
items

IT E-WASTE POLICY

34 | P a g e
 The lifecycle of all IT assets spanning from acquisition to disposal shall
be managed in a manner which conforms to sound environmental norms
as detailed in the IT E-Waste guidelines. This includes:

Preferential dealing with IT vendors having sound E-Waste management

processes

Extending the useful life of IT assets to postpone / minimize generation

of E-Waste

Responsible disposal processes conforming to regulatory requirements

and best practices

IT E-WASTE MANAGEMENT GUIDELINES

REGULATORY ENVIRONMENT

Different government bodies have published regulatory framework for

handling E-waste. Similarly, different trade and industry bodies are also
evolving the best practices to deal with IT E-Waste. CIO Office will scan
the evolving code of practice and keep updating this policy document
(supported by Corporate EHS) in line with the best practices for disposal
of IT E-Waste. This will be done once a year or more frequently if
deemed necessary.

The appropriate government bodies, e.g., Ministry of Environments &

Forests / Central or State pollution control boards in India, etc. have
initiated the process of approving and authorizing E-Waste Recyclers.
CIO Office shall identify authorized Recyclers, publish a list of such E-
Waste Recyclers and enter into appropriate agreements covering all
aspects of the E-Waste disposal. The list of authorized Recyclers and the
agreed terms and conditions will be circulated to the DMMs.

IT E-WASTE MINIMIZATION PROCESS

It shall be the endeavour of every user to maximize utilization of all IT

assets to their full productive life. Apart from internal re-use, option to
extend use outside ITC through donation to bonafide philanthropic
institutions will also extend the useful life of IT assets.

35 | P a g e
 Only such IT assets which are non-operational and cannot be reused for
any other alternate purpose should be considered as IT E-waste for
disposal. The DMM will certify this position.

COMPLIANCE REPORTING

As part of Quarterly IT Policy Compliance, the DMM shall report the

Division's compliance to E-Waste Policy to the CIO, who in turn will
present Companywide consolidated status to the Corporate IT Steering
Committee.

36 | P a g e
 ITC Food Products Policy
Policy Framework and Strategies

1. To offer new products that meet the aspiration of the changing

consumer
As the aspiration of the consumer changes, new products will be
developed and launched to meet the taste, nutrition and convenience
expectations of future consumers.

2. To offer products with affordable and appropriate nutrition

Recommendations of the National Institute of Nutrition (NIN), India, will

be referred to, to assess nutritional appropriateness of ITC's food
products. Efforts will be made to offer products with appropriate nutrient
density for mass consumption, including catering to the needs of those
sections of the society who are economically disadvantaged.

3. To offer products with micro-nutrient fortification

ITC's food products will be suitably fortified with micro-nutrients (iron,

calcium, zinc, iodine, folic acid, other vitamins and minerals) wherever
feasible. ITC's R&D will continue to carry out suitable research
programmes to make fortified nutrients more biologically available and
functional.

4. To drive reduction of sodium, sugar and fat in products

ITC's R&D will endeavour to find solutions aimed at reducing fat, sugar
and sodium ("FSS") in food products, without impacting the taste profile
of the product. In addition to scientific solutions, ITC will also adopt the
Adaptation Methodology to reduce these ingredients in a gradual manner.
Guidelines will be made and tangible targets will be set for the new
product development teams to reduce the above ingredients in the new
products. ITC will endeavour to introduce such Reduced FSS products in
the market by year 2013.

37 | P a g e
5. To offer Trans Fat Free Products
To disclose added trans-fats, if any, in all food products. To work towards
not using any hydrogenated oil in all food products by the year 2015.

6. To offer functional food products with focus on India-specific

metabolic disorders

ITC, with well-researched functional ingredients, will endeavour to make

functional food products suitable for consumption by Indians who suffer
from metabolic disorders. ITC will release such functional products to the
consumer, only after fully understanding the mechanism of action of the
functional ingredients at the molecular level. Integrative biology
approaches will be employed to study these ingredients' efficacy.

7. To follow a strict code for making product functional claims

ITC will conduct clinical trials in India by using Indian subjects to study
the efficacy of its functional foods. Experts' opinion will be taken to
design the clinical studies and suitable statistical methods will be
employed to interpret the clinical study data. Indian Council of Medical
Research (ICMR) guidelines will be referred to and followed in all
clinical studies. Functional claims will be made only after statistical
significance is observed.

8. To follow the highest standards in nutrition labelling and reporting

ITC's packaged food products' labelling will be comprehensive with good

clarity on the contents of all macro and micro-nutrients. The nutrient
content will be compared with the NIN recommended Daily Value (DV)
and the percentage in the product will be reported.

9. To follow responsible marketing and consumer communication

practices

Apart from complying with all local laws and regulations, advertisements
of ITC's food products will also adhere to the ASCI Code. All product
communication to the consumer will appropriately represent the products.
Internal audits will be done on marketing practices and, if needed,
corrective action will be taken. Efforts will be made to promote nutritious
foods and educate the rural consumer in food hygiene.

38 | P a g e
10.To create and sustain R&D focus in development of new products
and processes

ITC's R&D organisation is structured to research exploratory subjects and

applied research subjects. ITC's R&D infrastructure is of international
standards, and has been certified with ISO 14001-2004 for EHS and ISO
17025 NABL for analytical processes. There are more than 100 scientists
conducting R&D on several food related platforms. ITC will
continuously strive to contemporise its R&D infrastructure to meet
changing nutrition needs.

11.To follow the highest standards of hygiene and manufacturing

practices in all delivery formats

ITC Hotels R&D endeavours to practice GHP & GMP (Good Hygiene
Practices & Good Manufacturing Practices) along with ISO 22000 food
safety management system implementation with PAS 220 relevant
applications. ITC hotels will stringently follow all applicable regulatory
requirements, with particular focus on risk minimization and elimination.

12.To collaborate with experts and institutions

ITC believes in collaborating with outside experts to upgrade the

knowledge of its personnel with a view to guiding the food business in
developing products with balanced nutrition and functional ingredients.
ITC will continue to collaborate with national and international
institutions for scientific research and specific projects. ITC believes in
using an Open Innovation policy in developing its R&D for food
products.

13.To ensure widespread accessibility of healthy products through

pricing and distribution:

ITC will ensure the widest accessibility to its healthy food products
through ensuring national geographic distribution across both urban and
rural centres, using its FMCG distribution infrastructure and its e-choupal
related rural distribution reach. ITC will also ensure accessibility across
demographics through adopting a portfolio approach across all relevant
price segments.

39 | P a g e
 ITC's Triple Bottom line

ITC has always believed in creating enduring value through its

businesses, and as such, focused on creating sustainable businesses and
livelihood opportunities. Our efforts are to constantly achieve higher
levels of Triple Bottom line performance - measured on our performance
in economic, environmental and social terms.

Economic
ITC is one of India's foremost private sector companies with a market
capitalisation of over US $ 22 billion and a turnover of US $ 6 billion.
ITC is rated among the "World's Best Big Companies", Asia's 'Fab 50'
and the "World's Most Reputable Companies" by Forbes magazine,
among India's "Most Respected Companies" by Business World and
among India's "Most Valuable Companies" by Business Today. ITC ranks
among India's "10 Most Valuable (Company) Brands", in a study
conducted by Brand Finance and published by the Economic Times. ITC
also ranks among Asia's 50 best performing companies compiled by
Business Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards &

Specialty Papers, Packaging, Agri-Business, Packaged Foods &
Confectionery, Information Technology, Branded Apparel, Personal Care,
Stationery, Safety Matches and other FMCG products. While ITC is an
outstanding market leader in its traditional businesses of Cigarettes,
Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining
market share even in its nascent businesses of Packaged Foods &
Confectionery, Branded Apparel, Personal Care and Stationery.
The paid-up share capital of the Company, as on 13th January, 2017 is
Rupees 1212,13,61,981 (Rs. 1212.14 crores) divided into 1212,13,61,981
Ordinary Shares of the face value of Rupee 1/- each. 830,71,30,300
Ordinary Shares of the Company, representing 68.53% of the Company's
paid up capital, as on 13th January, 2017 are held in dematerialised form

Total number of Shareholders as on 13th January, 2017 : 5,62,237.

40 | P a g e
Social
ITC employs over 26,000 people at more than 60 locations across India.
The Company continuously endeavours to enhance its wealth generating
capabilities in a globalising environment to consistently reward more
than 4, 22,223 shareholders, fulfil the aspirations of its stakeholders and
meet societal expectations. This over-arching vision of the company is
expressively captured in its corporate positioning statement: "Enduring
Value".

ITC's businesses generate livelihoods for over 5 million people, and its
globally recognized e-Choupal initiative is the world's largest rural digital
infrastructure benefiting over 4 million farmers. ITC's Watershed
Development initiative brings precious water to nearly 90,000 hectares of
dry lands and moisture-stressed areas.

Environmental:
In this relentless pursuit to create enduring value, ITC has achieved many
milestones - it is the only company of its size and diversity to be:

Carbon Positive 7 years in a row - Sequestering twice as much carbon

as it emits.
Water Positive for 10 consecutive years - Creating more rainwater
harvesting potential than its net consumption.
Solid Waste Recycling Positive - Reusing/Recycling more solid waste
than generated.

The extensive plantations programme - now covering more than a

1,37,000 hectares of land, helps ITC to sequester carbon, while providing
millions of person days of employment to marginal farmers.

41 | P a g e
42 | P a g e
ITC is the only company in the world, of its size and diversity, to be
simultaneously Carbon Positive, Water Positive and Solid Waste Recycling
Positive. ITC PSPD also follows the same strategic direction and constantly
strives to achieve higher levels of eco-responsibility.

This is reflected in the many awards that each of its units receive each year for
Energy Management, Water Management and other environmental initiatives.

ITC enjoys the unique distinction of being the first Indian company to join the
Global Forest & Trade Network (GFTN), WWFs initiative to eliminate illegal
logging and drive improvements in forest management. By joining GFTN-India,
ITC is committed to promoting responsible forest management and trade
practices throughout its global purchasing and forestry operations in India.

As part of our membership with the WWF GFTN, we have declared publicly, a
commitment to supporting responsible forest management, the GFTN stepwise
approach to credible certification and the elimination of timber from illegal and
unwanted sources. As a result, we have developed and are implementing a
policy to increasingly cover a larger volume of our products under credibly
certified schemes like FSC.

43 | P a g e
 Plantations

Over 1, 16,000 hectares of greened land stand testimony to ITC PSPD's

relentless pursuit of sustainability. Not only has our plantations programme
changed landscapes; it has transformed the lives of millions of people who are
benefited by the social and farm forestry programmes. ITC's afforestation
mission goes beyond regenerating wastelands and forests - helping enhance
farm incomes by providing attractive land-use alternatives and generating
employment opportunities.

Under this initiative, superior planting stock that is fast growing, disease
tolerant, and specifically suited to the farmers particular soil type, is supplied to
farmers. A comprehensive package of free technical services is provided, which
covers preparation of site, planting of saplings and maintenance of plantation till
the harvest.

The plantation programme operates on two different models the Farm Forestry
model, and the Social Forestry Model. While the basic tenets remain the same,
the 2 models are targeted at different groups of farmers the farm forestry
group addresses farmers who have cultivable lands, have sufficient funds, and
are already engaged in farming. The Social Forestry model targets marginal
farmers, who have little land, or have uncultivable lands, and few other sources
of income.

Plantations Benefits
Over 100, 000 hectares greened till 2009

More than 419 million saplings planted

Creating over 43 million person days of employment

Helping increase farmers' incomes

Helping ITC sequester more carbon than its operations emit

The benefits of our plantations activities extend beyond procuring consistent,

high-quality pulp for our operations.
These plantations allow farmers to convert previously unusable land into a
44 | P a g e
source of income - while at the same time conferring the many environmental
benefits that come with greening of the lands.

The benefits derived from plantations accrue at many levels - societal,

environmental, and business.

Societal Gains

Our Plantations programme has introduced an alternative means of livelihood

for the rural community. Through this, plantations are playing an increasingly
important role in rural economic development and poverty alleviation in
company's catchment area. The average net income to a farmer from clonal
plantations is about US$ 500 /ha/yr. under rain-fed condition and US $
800/ha/yr. with irrigation on a four-year rotation cycle. This is significantly
higher compared to traditional crops grown in the operational area and at much
lower risks.

The impact of clonal technology can be measured from the fact that since 1992
when a meagre 24 hectares was under cultivation - the situation has drastically
changed with over a 100,000 hectares having been greened. These plantations
provide 46 million person days of employment from tasks such as nursery,
planting, logging and maintenance operations. Social and farm forestry have
already contributed greatly to rural livelihood and created more jobs for local
people.

Our farm and social forestry programmes have resulted in the planting of
419 million saplings covering an area of 102,718 hectares.

The asset in the form of wood generated, amounts to US$ 609 million -
creating employment potential for 46 million person days over the harvest
cycle of four years.

The productivity of clonal plantations is 20 to 58 MT/ha/yr. depending

upon edapho-climatic conditions which is 3 to 6 times higher compared
to ordinary seed origin (6 to 10 MT/ha/yr.) plantations.

An area of 3070 hectares has been registered with the UNFCC as a CDM
project. This project generates 57791 CERs annually. The benefits of this

45 | P a g e
 project will be distributed amongst the 3398 tribal beneficiaries, after
accounting for costs.

Small and large water-harvesting structures were built to provide critical

irrigation to nearly 46000 ha by 916 water user groups involving 46000
beneficiaries. The company contributes 75% of the cost while the water
user groups are mobilizing balance 25%.

Environmental Gains

Clonal plantations have been able to mitigate environmental degradation on

a large scale. Apart from other well-known consequences of such a large-
scale greening efforts, these plantations raised for the last 18 years have the
potential to sequester 7.61 MMT of carbon, reducing 30.44 MMT CO2.
By promoting plantations on such a large scale, the project has increased the
green cover in the country.

Clonal plantations directly contribute to in-situ moisture conservation,

groundwater recharge and significant reduction in topsoil losses due to wind
and water erosion and help in conservation of natural forest resources.
Equally, as a result of the leaf-litter from multi-species plantations and the
promotion of leguminous inter-crops between rows, depleted soil is getting
constantly enriched, making the farmlands more productive. In the near
future, the increase in soil fertility will lead to a decline in fertiliser and
pesticide consumption, thus reducing the pollution of groundwater
sources due to leaching of chemicals into soil.

46 | P a g e
 Wealth Out of Waste
ITC's Wealth Out of Waste is a recycling initiative that works towards spreading
awareness about recycling, and encouraging people to segregate and dispose
waste responsibly. WOW is an internationally recognised initiative by Bureau of
International of Recycling. BIR is a worldwide international trade federation
representing the world's recycling Industry, promoting recycling across the
globe.

In this programme, WOW reaches out to schools, institutions and homes

through its awareness building teams, about source segregation of waste. After a
stipulated period of time, the WOW team goes back to collect the waste kept
aside by schools/institutions/homes, and pays them for the recyclables collected.
While many countries have advanced systems of waste collection and
regulations on source segregation, awareness in India regarding recycling and
its benefits is low. There are basically two types of waste: dry waste and wet
waste. About 40% of the dry waste can be recycled while wet waste can be
converted into compost and can be used as manure.

The WOW programme seeks to not only build awareness, but also to encourage
people to segregate their waste at the source which is their households. This
reduces the amount of waste filling up the landfills - and provides industries
with clean raw materials. For example, ITC's Kovai unit is exclusively
dependent on recycled fibre, as are some machines in Bhadrachalam as well. By
end 2011, ITC PSPD would be using close to 210,000 tonnes of waste paper per
annum. WOW helps ITC collect this raw material from India.

Recycling of waste has huge environmental and economic benefits. Recycling

of one tonne of waste paper saves 17 trees and 7,000 gallons of water. Through
WOW, ITC helps to deal with various issues like environment protection,
reduction of global warming, improving green cover, reducing landfills,
improving ground water quality, general health and hygiene, reducing garbage
handling costs, better civic amenities and providing cost competitive raw
materials to industries.

47 | P a g e
The birth of WOW

While continuing to increase the green cover through its plantations

programme, ITC recognized the need to decrease the pressure on new resources
also - especially when recyclable material is available in India. At our factories,
we adopt the "Reduce-Reuse-Recycle" philosophy in all our operations -
however, we wanted to increase the scope of this philosophy beyond the
boundaries of our factories.

ITC launched its Wealth out of Waste programme to discourage recyclable

waste from going into landfills or getting burnt which pollutes the environment.
WOW has been designed to manage waste from individual households and civic
bodies level. As per a study conducted by ITC, on an average an Indian city
generates around 2,500 tonnes of waste every day. Since there is hardly any
recycling, the waste is used as a landfill, causing large scale air and water
pollution.

The collection of recyclables is predominantly from households, commercial,

corporate offices and educational institutions. There are over 100 corporates
supporting WOW and more than three lac households across South India are
participating in WOW. In order to inculcate the habit of source segregation
among young children, WOW has taken up spreading the idea of recycling in
schools and the immediate plan is to cover at least two lac school children in the
year 2010-11 across south India.

WOW initiative started in a small way in April 2007 with an average monthly
collection of 100 tonnes per month is now spread across South India with an
average monthly collection of 5000 tonnes per month with a potential of
collecting 10,000 tonnes per month by the end of 2012 within South India.

WOW is fast spreading across cities in southern India like Hyderabad, Chennai,
Bangalore, Kochi, Coimbatore, Madurai, Vijayawada, Rajahmundry and
Guntur. Encouraged by its success in southern states, ITC plans to take its
'Wealth Out of Waste' (WOW) program across the country.

The collection of recyclables is predominantly from households, commercial,

48 | P a g e
corporate offices and educational institutions. There are over 100 corporates
supporting WOW and more than three lac households across South India are
participating in WOW. In order to inculcate the habit of source segregation
among young children, WOW has taken up spreading the idea of recycling in
schools and the immediate plan is to cover at least two lac school children in the
year 2010-11 across south India.

OPERATIONS
ITC has always been a frontrunner in adopting eco-responsible processes, much
ahead of legislation - setting benchmarks for the industry to follow.

Some of our accomplishments include:

1. ITC was India's first mill to adopt ECF

technology, ahead of legislation

2. India's first mill to adopt Ozone

bleaching - and 5th in the world. This has
helped us drastically reduce the volume
and toxicity of effluent discharged, as well
reduced the consumption of
certain chemicals in the process.

3. The use of Super batch digesters has helped us reduce specific

power consumption from 35kWh/BD MT to 25kWh/BD MT, while
reducing MP steam consumed from 1480 kg/BD MT of pulp to less than
half of this.

4. Since its inception, the Bhadrachalam unit has won over 85 awards - 52
of which are in the fields of Environment/ Energy and Water
Management

AIR

All ITC units monitor significant air emission parameters such as Particulate
Matter (PM), Nitrogen Oxides (NOx) and Sulphur Dioxide (SO2) on a regular
basis.

49 | P a g e
We made continuous improvements in this area and ensured that emission levels
not only comply with statutory norms but also achieve international
benchmarks. This was achieved through adoption of cleaner technology/fuel
and state of the art pollution control equipment.

Our Bhadrachalam unit, the largest integrated paper/paperboard unit in India,

accounts for a significant portion of ITC's total emissions.

Particulate Matter emissions from Bhadrachalam were 1.75kg per BDMT

(Bone-Dry Metric Ton) whereas large-scale Indian mills typically emit 3.8 kg?
BDMT - 'All About Paper - The life cycle of Indian Pulp and Paper Industry,'
Green Rating Project by the Centre for Science and Environment.

Changes adopt for a cleaner environment

All of ITC's units remain committed to benchmarking against international

standards and to the implementation of state-of -the-art processes and
technologies.

Some of the latest processes employed at Bhadrachalam are:

1. Precipitated Calcium Carbonate Plant: This plant reduces the Carbon

Dioxide emitted by the lime kiln into the air by 50%, by converting it into
PCC

2. Green Boiler - This boiler uses a bio-fuel-coal mix in the ration 70:30.
Not only does it reduce our dependence on fossil fuel by almost a
100,000 tonnes per annum, it also helps find a productive use for bio-
waste generated in the plantations during debarking.

3. Odour Control Initiatives - With the installation of the Super Batch

Cooking process, we have achieved zero emissions from cooking.

Water

ITC has been 'Water Positive' for seven years in a row - creating two times more
Rainwater Harvesting Potential than ITC's net consumption. Water will remain a
very serious sustainability concern globally. India in particular faces a turbulent
water future. With over 16% of the global population having access to less than
50 | P a g e
4% of global fresh water resources, water scarcity in India is likely to worsen
over the years. Efficient water management will therefore be one of the key
imperatives for sustainable growth.

The Bhadrachalam and Kovai mills use river water (83.6% of ITC's total fresh
water usage) from the adjacent rivers while other units of ITC meet their
requirements from ground water (14.8%) and municipal sources (1.6%).All ITC
businesses practice the following sustainability strategies with regard to this
precious resource:

Strategy 1: Water Conservation (through audits, benchmarking and use of best

practices) to achieve the lowest specific water consumption (water per unit of
production).

Strategy 2: Zero Wastewater Discharge: treating and recycling all wastewater.

Strategy 3: Enhancing our 'Water Positive' footprint through Rainwater

Harvesting.

Our Bhadrachalam unit, the largest integrated paper and paperboards mill in
India, accounts for 79.7% of the total fresh water intake in ITC. Although
production in this unit has increased by nearly two and a half times since 1998-
1999, the mill's intake of fresh water till last year had been contained and
remained largely the same as in 1998-99. In our Tribeni mill, where large
quantities of water is required for manufacturing of speciality papers, significant
water conservation initiatives have been implemented to achieve reduction of
54% of specific fresh water intake since 1998 - 99. Water conservation methods
in Kovai unit, since acquisition of the mill in 2004, has led to over 27%
reduction in specific fresh water intake.

Various Initiatives have been undertaken in the mills for conserving water.

OZONE BLEACHING:
Bhadrachalam unit, in 2009, had introduced a cutting edge; high consistency
Ozone delignification process names Ze Trac. Ze Trac Ozone being a stronger
oxidant than chlorine requires smaller reaction systems and apart from being
eco-friendly (it does not produce undesirable by-products, such as AOX), results

51 | P a g e
in improved brightness, pulp strength and cost efficiency.

Bhadrachalam pioneered Elemental Chlorine Free (ECF) technology in India, in

2002. Successful implementation of Ozone Bleaching, the first in India and
second in Asia, demonstrates ITC's commitment to broadening its positive
environmental footprint and achieving higher levels of Triple Bottom Line
performance. The adoption of such contemporary, eco-friendly technologies
have yielded encouraging results which include:

Lower operating costs

Nearly 50% reduction in specific chlorine dioxide consumption

Enhanced pulp quality

Very significant reduction in adsorbable organic halides in the effluents

In last 3 years, units have achieved water savings of 22231 m3 per day through
66 water conservation projects:

1. Ozone scrubber water usage in EOP stage: The unit has a state of art
Ozone plant for its Ozone Bleaching process requirement. The gases
released out from the Ozone plant are scrubbed with the help of a solution
of water and caustic. This has resulted into reduction in chemical
consumption at EOP stage of bleaching as the scrubber water has similar
characteristics.

2. Machine back water usage for tower dilution: Back water is generated
from the paper machines & is collected into a back water tank. This back
water is then used in paper machine again for dilution at various stages.
The benefits of this project are fresh water consumption reduced by 1500
m3/day, effluent load reduction at ETP by effective utilization of back
water after proper treatment at disc filter and reduction in fibre loss.

3. Recirculation of Jet Condenser water: CD filter vapours are condensed

in jet condenser & non condensable are taken out by a vacuum pump.
Cooling water is provided to both jet condenser & vacuum pump
which has led to an annual water consumption reduction of 1, 65,000 m3.

Besides the above projects, back water is recycled in Bhadrachalam for floor
cleaning.

52 | P a g e
Energy

ITC businesses continue to make concerted efforts in energy conservation and

adopt renewable energy to reduce the carbon intensity of ITC's growing
portfolio of products and services. ITC is 98% self-sufficient through co-
generation of energy. ITC has been 'carbon positive' four years in a row
sequestering /storing twice the amount of CO2 that the company emits. Carbon
sequestering is a process by which plants take in the carbon dioxide present in
the atmosphere and synthesises it into oxygen by photosynthesis and releases
it into the atmosphere.

Below is the summary of efforts in the last 3 years for energy conservation:

No. of projects: 77
Annual Electrical Energy Savings: 20.61 Million Units
Annual Thermal Energy Savings: 1.19 Lakh MT of Coal
Total Savings: Rs. 278.86 Million

The payback period for total investment in the energy conversation project is 3
years. The graph below shows that ITC PSPD Bhadrachalam has less energy
consumption in terms of National or International standards.

Renewable Energy is another source which ITC is harvesting in order to

decrease the dependency of the mills on fossil energy. ITC ventured into wind
energy generation with 14 MW capacity to serve the power demand of various
units under its purview. For harnessing this energy 9 windmills were
commissioned. Solar lights are used at the mills which operate from dusk till
dawn with a lumen output of approximately 1200 Lumens per unit, these lights
are environment friendly as they are pollution free and derived out of renewable
energy. Also, solar water heaters are used in all the residential spaces in the
mills.

53 | P a g e
ITC Social Farm Forestry

The CDMEB of the UNFCCC has registered ITCs unique large-scale social
forestry project a first of its kind in India and globally the only
Afforestation/Reforestation project with retrospective credits of 57792 CERs.
UNFCCC issued 2,48,536 CERs from 4 CDM projects registered in
Bhadrachalam till date and realized Rs. 21.03 Crores from CERs sale.

Waste

ITC prides itself on being Solid Waste recycling positive - recycling more waste
than its businesses generate. All ITC units/businesses, apart from minimising
waste generation, are mandated to recycle 100% of waste generated by their
operations. Waste recycling provides solutions for saving natural resources and
energy. It also reduces costs and environmental pollution. Recycling prevents
wastes from reaching landfills and creates significant employment
opportunities.

Waste paper is a key input in the manufacture of recycled paperboards. ITC

PSPD has commenced a strategic initiative for wastepaper recycling
called "WOW" (Wealth Out of Waste). This intervention has established an
efficient collection and recycling chain - targeting larger sources of aggregation
such as schools, offices and residential colonies. Apart from contributing to a
cleaner environment, WOW is an important source of cost competitiveness for
the industry.

ZERO SOLID WASTE MANAGEMENT

Fly Ash: Fly Ash is one of the residues generated in the combustion of coal.
Worldwide, more than 65% of fly ash produced from coal power stations is
disposed of in landfills and ash ponds. In India alone, fly ash landfill covers an
area of 40,000 acres. To prevent this fly ash from ending up in the landfills, ITC
has been using this for constructing building since 1998. 100% of fly ash
generated is converted into bricks and used for construction not only in
Bhadrachalam, but also by builders in nearby states.
54 | P a g e
Plastic Waste: 100 % plastic waste generated at SFT, and 100% of HDPE
generated is recycled by various partners who collect this waste for use in other
industries.

Chipper dust: 40 % of chipper dust is used for steam generation in our coal fed
boiler, thereby reducing the demand for coal. The balance is sent to other
industries as a fuel for their boilers.

Slivers: 100% of slivers generated are distributed for use as a wood fuel
substitute.

ETP Sludge: ETP sludge is converted into thick sun dry board sheets, and these
are utilized as protective packaging in-between packed reels while being
transported to avoid transit damages.

Domestic Waste: Waste collected from the housing colonies is converted into
bio-fertilizers by composting.

55 | P a g e
 CONCLUSION
Organizations are coming to realize the bottom-line benefits of incorporating
sustainability into their DNA. Its beneficial for attraction and retention and its
the right thing to do. HR is a key organizational leader and can take the lead or
partner with other executives to work cross-functionally to integrate CSR
objectives into how business gets conducted. HR practitioners can act as
translators of the organizations CSR commitment vertically and horizontally
across departments. Most will find upon reading this report that they have
many good practices underway. Many will find they have a new structure for
their thinking they can apply practically in the workplace. Some will believe
the current economic downturn will put these ideas on the backburner until the
economy rebounds, while others think that organizations which abandon their
CSR integration in the downturn will lose ground and breed cynicism in
brighter times. Regardless of the point of view, all agree that effective HR
leadership on CSR integration requires Board, CEO and executive commitment
to be successful. Indeed, the roadmap is predicated on the assumption of this
top level commitment. However, more and more organizations are committing
to sustainability and to embedding CSR into all that we do, so it is hoped the
11 steps provide some guidance as to how to go about doing this.

The firm of the future is expected to have undergone significant transformation

such that CSR no longer becomes managed as a separate deliverable, but is part
of the experience of being an employee in an organization that lives its values.

CSR does not come free. It involves a real commitment of resources,

management time and energy. On the other hand, the improvements in human
well-being are incomparable.

Despite criticism of globalisation, business and trade can be a force for good.
This is increasingly recognised in the ways that consumers assign values to
brands.

56 | P a g e
 WEBLIOGRAPHY
www.wikipedia.org

www.itcportal.com/about-itc/policies/policy-on-social-investments-csr.aspx

57 | P a g e