Balance Sheet as at 31st March, 2023

As at As at
Note 31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)
ASSETS
Non-current assets
(a) Property, Plant and Equipment 3A 20491.32 19559.15
(b) Capital work-in-progress 3B 1681.47 2442.34
(c) Investment Property 3C 352.26 364.20
(d) Goodwill 3D 577.20 577.20
(e) Other Intangible assets 3E 2037.42 2007.22
(f) Other Intangible assets under development 3F 15.13 23.84
(g) Right of use assets 3G 715.91 712.84
(h) Financial Assets
(i) Investments 4 16363.55 15657.32
(ii) Loans 5 4.07 5.06
(iii) Others 6 3608.23 19975.85 1572.40 17234.78
(i) Other non-current assets 7 1211.74 47058.30 1228.92 44150.49
Current assets
(a) Inventories 8 10593.90 9997.77
(b) Financial Assets
(i) Investments 9 16357.07 11624.95
(ii) Trade receivables 10 2321.33 1952.50
(iii) Cash and cash equivalents 11 206.88 184.97
(iv) Other Bank Balances 12 3624.38 3692.97
(v) Loans 5 5.95 5.73
(vi) Others 6 705.84 23221.45 2287.97 19749.09
(c) Other current assets 7 1388.09 35203.44 1195.15 30942.01
TOTAL ASSETS 82261.74 75092.50
EQUITY AND LIABILITIES
Equity
(a) Equity Share capital 13 1242.80 1232.33
(b) Other Equity 66351.00 67593.80 60167.24 61399.57
Liabilities
Non-current liabilities
(a) Financial Liabilities
(i) Borrowings 14 3.28 4.54
(ii) Lease Liabilities 15 273.59 259.79
(iii) Other financial liabilities 16 152.49 429.36 96.50 360.83
(b) Provisions 17 201.83 186.87
(c) Deferred tax liabilities (Net) 18 1621.13 2252.32 1667.14 2214.84
Current liabilities
(a) Financial Liabilities
(i) Borrowings 14 1.26 0.74
(ii) Trade payables
Total outstanding dues of micro enterprises
and small enterprises 137.50 100.96
Total outstanding dues of creditors other than
micro enterprises and small enterprises 4213.76 4122.44
(iii) Lease Liabilities 15 46.54 46.09
(iv) Other financial liabilities 16 1730.68 6129.74 1503.59 5773.82
(b) Other current liabilities 19 5446.16 5097.28
(c) Provisions 17 63.59 55.60
(d) Current Tax Liabilities (Net) 20 776.13 12415.62 551.39 11478.09
TOTAL EQUITY AND LIABILITIES 82261.74 75092.50
The accompanying notes 1 to 30 are an integral part of the Financial Statements.
In terms of our report attached On behalf of the Board
For S R B C & CO LLP
Chartered Accountants S. PURI  Chairman & Managing Director
Firm Registration Number: 324982E / E300003
S. DUTTA Director & Chief Financial Officer
Arvind Sethi
Partner R. K. SINGHI Company Secretary
Frankfurt, May 18, 2023 Kolkata, May 18, 2023

146 ITC Limited REPORT AND ACCOUNTS 2023

Statement of Profit and Loss for the year ended 31st March, 2023
For the year ended For the year ended
Note 31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

I Revenue From Operations 21A, 21B 70251.28 59745.56

II Other Income 22 2437.61 2589.97
III Total Income (I + II) 72688.89 62335.53
IV EXPENSES
Cost of materials consumed 19809.83 16064.50
Purchases of Stock-in-Trade 9109.85 10734.48
Changes in inventories of finished goods, Stock-in-Trade,
work-in-progress and intermediates (39.50) (566.46)
Excise duty 4208.01 3404.29
Employee benefits expense 23 3569.46 3061.99
Finance costs 24 41.81 41.95
Depreciation and amortization expense 1662.73 1652.15
Other expenses 25 9649.16 8113.10
Total expenses (IV) 48011.35 42506.00
V Profit before exceptional items and tax (III - IV) 24677.54 19829.53
VI Exceptional Items 27(i) 72.87 –
VII Profit before tax (V + VI) 24750.41 19829.53
VIII Tax expense:
Current Tax 26 6025.32 4833.88
Deferred Tax 26 (28.22) (62.18)
IX Profit for the year (VII - VIII) 18753.31 15057.83
Other Comprehensive Income
A (i) Items that will not be reclassified to profit or loss:
– Remeasurements of the defined benefit plans 27(vi) (21.81) 31.62
– Equity instruments through other comprehensive
income 91.90 545.25
– Effective portion of gains / (losses) on designated
portion of hedging instruments in a cash flow hedge 21.22 (11.90)
(ii) Income tax relating to items that will not be reclassified
to profit or loss 26 (0.34) (4.96)
B (i) Items that will be reclassified to profit or loss:
– Debt instruments through other comprehensive
income (35.01) 3.71
– Effective portion of gains / (losses) on designated
portion of hedging instruments in a cash flow hedge (47.45) 14.78
(ii) Income tax relating to items that will be reclassified to
profit or loss 26 20.75 (4.65)
X Other Comprehensive Income [A (i + ii) + B (i + ii)] 29.26 573.85
XI Total Comprehensive Income for the year (IX + X) 18782.57 15631.68
XII Earnings per equity share (Face Value ` 1.00 each): 27(ii)
(1) Basic (in `) 15.15 12.22
(2) Diluted (in `) 15.11 12.22

The accompanying notes 1 to 30 are an integral part of the Financial Statements.

In terms of our report attached On behalf of the Board
For S R B C & CO LLP
Chartered Accountants S. PURI  Chairman & Managing Director
Firm Registration Number: 324982E / E300003
S. DUTTA Director & Chief Financial Officer
Arvind Sethi
Partner R. K. SINGHI Company Secretary
Frankfurt, May 18, 2023 Kolkata, May 18, 2023

ITC Limited REPORT AND ACCOUNTS 2023 147

148
Statement of changes in equity for the year ended 31st March, 2023
A. Equity Share Capital (` in Crores)

Balance at the beginning Changes in equity share Balance at the end of the
of the reporting year capital during the year reporting year

For the year ended 31st March, 2023 1232.33 10.48 1242.80

ITC Limited
For the year ended 31st March, 2022 1230.88 1.44 1232.33

B. Other Equity  (` in Crores)

Reserves and Surplus Items of other comprehensive income

Debt Equity
Share Instruments Instruments Effective Foreign Total
Options Capital through Other through Other portion of Currency
Capital Securities Outstanding Redemption Contingency General Retained Comprehensive Comprehensive Cash Flow Translation
Reserve Premium Account Reserve Reserve Reserve Earnings Income Income Hedges Reserve

REPORT AND ACCOUNTS 2023

Balance as at 1st April, 2022 2.48 9988.14 1316.33 0.30 363.05 17585.31 30060.39 2.78 793.58 14.33 40.55 60167.24
Profit for the year – – – – – – 18753.31 – – – – 18753.31
Other Comprehensive Income (net of tax) – – – – – – (16.81) (26.20) 91.90 (19.63) – 29.26
Total Comprehensive Income for the year – – – – – – 18736.50 (26.20) 91.90 (19.63) – 18782.57
Issue of equity shares under ITC Employee
Stock Option Schemes – 2466.92 – – – – – – – – – 2466.92
Dividends
– Final Dividend (2021-22 - ` 6.25 per share) – – – – – – (7702.03) – – – – (7702.03)
– Interim Dividend (2022-23 - ` 6.00 per share) – – – – – – (7448.41) – – – – (7448.41)
Dividend distribution tax refund received – – – – – – 20.43 – – – – 20.43
Transfer from Share Options Outstanding
Account on exercise and lapse – 610.56 (635.99) – – – 20.82 – – – – (4.61)
Transferred to initial carrying amount of hedged
items (net of tax) – – – – – – – – – 7.78 – 7.78
Recognition of share based payment – – 61.11 – – – – – – – – 61.11
Balance as at 31st March, 2023 2.48 13065.62 741.45 0.30 363.05 17585.31 33687.70 (23.42) 885.48 2.48 40.55 66351.00
Balance as at 1st April, 2021 2.48 9611.64 1706.52 0.30 363.05 17585.31 28210.63 – 248.33 4.93 40.55 57773.74
Profit for the year – – – – – – 15057.83 – – – – 15057.83
Other Comprehensive Income (net of tax) – – – – – – 23.66 2.78 545.25 2.16 – 573.85
Total Comprehensive Income for the year – – – – – – 15081.49 2.78 545.25 2.16 – 15631.68
Issue of equity shares under ITC Employee
Stock Option Schemes – 290.38 – – – – – – – – – 290.38
 Statement of changes in equity for the year ended 31st March, 2023
B. Other Equity (Contd.)  (` in Crores)
Reserves and Surplus Items of other comprehensive income

Debt Equity
Share Instruments Instruments Effective Foreign Total
Options Capital through Other through Other portion of Currency
Capital Securities Outstanding Redemption Contingency General Retained Comprehensive Comprehensive Cash Flow Translation
Reserve Premium Account Reserve Reserve Reserve Earnings Income Income Hedges Reserve

Dividend –
– Final Dividend (2020-21 - ` 5.75 per share) – – – – – – (7077.59) – – – – (7077.59)
– Interim Dividend (2021-22 - ` 5.25 per share) – – – – – – (6469.48) – – – – (6469.48)
Transfer from Share Options Outstanding
Account on exercise and lapse – 86.12 (423.70) – – – 315.34 – – – – (22.24)
Transferred to initial carrying amount of hedged
items (net of tax) – – – – – – – – – 7.24 – 7.24
Recognition of share based payment – – 33.51 – – – – – – – – 33.51
Balance as at 31st March, 2022 2.48 9988.14 1316.33 0.30 363.05 17585.31 30060.39 2.78 793.58 14.33 40.55 60167.24

The Board of Directors of the Company has recommended Special Dividend of ` 2.75 per Ordinary Share in addition to the Final Dividend of ` 6.75 per Ordinary Share for the financial year ended 31st March, 2023 (previous year - ` 6.25 per
Ordinary Share) to be paid on fully paid Equity Shares amounting to ` 11806.61 Crores. The said Final and Special Dividend is subject to the approval of the shareholders at the Annual General Meeting and has not been included as a liability
in these financial statements.
Together with the Interim Dividend of ` 6.00 per Ordinary Share (previous year - ` 5.25 per Ordinary Share) paid on 3rd March, 2023, the total Equity Dividend for the financial year ended 31st March, 2023 is ` 15.50 per Ordinary Share
(previous year - ` 11.50 per Ordinary Share).
Capital Reserve: This Reserve represents the difference between value of the net assets transferred to the Company in the course of business combinations and the consideration paid for such combinations.
Securities Premium: This Reserve represents the premium on issue of shares and can be utilized in accordance with the provisions of the Companies Act, 2013.
Share Options Outstanding Account: This Reserve relates to stock options granted by the Company to employees under ITC Employee Stock Option Schemes. This Reserve is transferred to Securities Premium or Retained Earnings on
exercise or lapse of vested options.
Capital Redemption Reserve: This Reserve has been transferred to the Company in the course of business combinations and can be utilized in accordance with the provisions of the Companies Act, 2013.
Contingency Reserve: This Reserve has been created out of Retained Earnings, as a matter of prudence, to take care of any unforeseen adverse developments in pending legal disputes.
General Reserve: This Reserve has been created by an appropriation from one component of equity (generally Retained Earnings) to another, not being an item of Other Comprehensive Income. The same can be utilized in accordance with
the provisions of the Companies Act, 2013.
Retained Earnings: This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
Debt Instruments through Other Comprehensive Income: This Reserve represents the cumulative gains (net of losses) arising on revaluation of Debt Instruments measured at Fair Value through Other Comprehensive Income, net of

ITC Limited
amounts reclassified, if any, to profit or loss when those instruments are disposed of.
Equity Instruments through Other Comprehensive Income: This Reserve represents the cumulative gains (net of losses) arising on revaluation of Equity Instruments measured at Fair Value through Other Comprehensive Income, net of
amounts reclassified, if any, to Retained Earnings when those instruments are disposed of.
Effective portion of Cash Flow Hedges: This Reserve represents the cumulative effective portion of changes in Fair Value of hedging instrument that are designated as Cash Flow Hedges. It will be reclassified to profit or loss or included in
the carrying amount of the non-financial asset in accordance with the Company’s accounting policy.
Foreign Currency Translation Reserve: This Reserve contains the accumulated balance of foreign exchange differences arising on monetary items that, in substance, form part of the Company’s net investment in a foreign operation whose
functional currency is other than Indian Rupee. Exchange differences previously accumulated in this Reserve are reclassified to profit or loss on disposal of the foreign operation.

The accompanying notes 1 to 30 are an integral part of the Financial Statements.

In terms of our report attached On behalf of the Board
For S R B C & CO LLP
Chartered Accountants S. PURI  Chairman & Managing Director
Firm Registration Number: 324982E / E300003
S. DUTTA Director & Chief Financial Officer

REPORT AND ACCOUNTS 2023

Arvind Sethi
Partner R. K. SINGHI Company Secretary

149
Frankfurt, May 18, 2023 Kolkata, May 18, 2023
Cash Flow Statement for the year ended 31st March, 2023
For the year ended For the year ended
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)
A. Cash Flow from Operating Activities
PROFIT BEFORE TAX 24750.41 19829.53
ADJUSTMENTS FOR:
Depreciation and amortization expense 1662.73 1652.15
Share based payments to employees 58.50 32.51
Finance costs 41.81 41.95
Interest Income (1434.53) (1004.59)
Dividend Income (556.90) (857.46)
(Gain) / Loss on sale of property, plant and equipment,
lease termination - Net 4.53 (59.05)
Doubtful and bad debts (0.93) 10.64
Doubtful and bad advances, loans and deposits 1.16 1.15
Impairment of investment in joint venture 8.50 –
Net gain arising on financial instruments measured at amortised
cost / mandatorily measured at fair value through profit or loss (416.74) (524.19)
Foreign currency translations and transactions - Net 37.89 (593.98) 11.07 (695.82)
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 24156.43 19133.71
ADJUSTMENTS FOR:
Trade receivables, advances and other assets (603.25) (235.39)
Inventories (596.13) (526.90)
Trade payables, other liabilities and provisions 755.24 (444.14) 946.39 184.10
CASH GENERATED FROM OPERATIONS 23712.29 19317.81
Income tax paid (5800.59) (4510.02)
NET CASH FROM OPERATING ACTIVITIES 17911.70 14807.79
B. Cash Flow from Investing Activities
Purchase of property, plant and equipment, intangibles,
ROU asset etc. (1858.32) (1812.03)
Sale of property, plant and equipment 48.86 137.22
Purchase of current investments (72925.91) (60325.53)
Sale / redemption of current investments 67720.51 63554.78
Payment towards contingent purchase consideration (63.75) (71.25)
Investment in subsidiaries (1184.14) (427.24)
Investment in associate (1.88) (1.87)
Purchase of non-current investments (2349.41) (4777.02)
Sale / redemption of non-current investments 4057.60 2731.24
Redemption of investment in subsidiary 18.00 –
Advance received towards divestment of shares held in joint venture
[Refer Note 27(x)] 56.00 –
Dividend Income 556.90 857.46
Interest received 1216.27 962.97
Investment in bank deposits
(original maturity more than 3 months) (7427.20) (3525.01)
Redemption / maturity of bank deposits
(original maturity more than 3 months) 5476.33 3617.42
Investment in deposit with housing finance company (3500.00) (3011.37)
Redemption / maturity of deposit with housing finance company 5000.00 578.82
Loans given (8.21) (12.51)
Loans realised 8.98 6.86
NET CASH USED IN INVESTING ACTIVITIES (5159.37) (1517.06)

150 ITC Limited REPORT AND ACCOUNTS 2023

Cash Flow Statement for the year ended 31st March, 2023
For the year ended For the year ended
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)
C. Cash Flow from Financing Activities
Proceeds from issue of share capital 2477.39 291.82
Repayment of non-current borrowings (0.74) (0.35)
Principal payment of lease liabilities (51.97) (54.42)
Interest paid (40.04) (42.14)
Net increase in statutory restricted accounts balances 14.94 15.13
Dividend paid (15150.44) (13547.07)
Dividend distribution tax refund received 20.43 –
NET CASH USED IN FINANCING ACTIVITIES (12730.43) (13337.03)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 21.90 (46.30)
OPENING CASH AND CASH EQUIVALENTS 184.98 231.28
CLOSING CASH AND CASH EQUIVALENTS 206.88 184.98

Notes:
1. The above Cash Flow Statement has been prepared under the “Indirect Method” as set out in Ind AS - 7 “Statement of Cash Flows”
2. CASH AND CASH EQUIVALENTS:
Cash and cash equivalents as above 206.88 184.98
Unrealised gain / (loss) on foreign currency cash and cash equivalents … (0.01)
Cash and cash equivalents (Note 11) 206.88 184.97
3. Net Cash Flow from Operating Activities includes an amount of ` 328.80 Crores (2022 - ` 340.96 Crores) spent towards Corporate
Social Responsibility.

The accompanying notes 1 to 30 are an integral part of the Financial Statements.

In terms of our report attached On behalf of the Board
For S R B C & CO LLP
Chartered Accountants S. PURI  Chairman & Managing Director
Firm Registration Number: 324982E / E300003
S. DUTTA Director & Chief Financial Officer
Arvind Sethi
Partner R. K. SINGHI Company Secretary
Frankfurt, May 18, 2023 Kolkata, May 18, 2023

ITC Limited REPORT AND ACCOUNTS 2023 151

Notes to the Financial Statements

1. Significant Accounting Policies

Statement of Compliance cycle and other criteria set out in the Schedule III to the
These financial statements have been prepared in Companies Act, 2013 and Ind AS 1 – Presentation of
accordance with Indian Accounting Standards (Ind AS) Financial Statements based on the nature of products and
notified under Section 133 of the Companies Act, 2013. the time between the acquisition of assets for processing
The financial statements have also been prepared in and their realisation in cash and cash equivalents.
accordance with the relevant presentation requirements of Property, Plant and Equipment – Tangible Assets
the Companies Act, 2013. The Company adopted Ind AS
Property, plant and equipment are stated at cost of
from 1st April, 2016.
acquisition or construction less accumulated depreciation
Basis of Preparation and impairment, if any. For this purpose, cost includes
The financial statements are prepared in accordance with deemed cost which represents the carrying value of
the historical cost convention, except for certain items that property, plant and equipment recognised as at 1st April,
are measured at fair values, as explained in the accounting 2015 measured as per the previous Generally Accepted
policies. Accounting Principles (GAAP).

Fair Value is the price that would be received to sell an asset Cost is inclusive of inward freight, duties and taxes
or paid to transfer a liability in an orderly transaction between and incidental expenses related to acquisition.
market participants at the measurement date, regardless of In respect of major projects involving construction, related
whether that price is directly observable or estimated using pre-operational expenses form part of the value of assets
another valuation technique. In estimating the fair value of capitalised. Expenses capitalised also include applicable
an asset or a liability, the Company takes into account the borrowing costs for qualifying assets, if any. All upgradation /
characteristics of the asset or liability if market participants enhancements are charged off as revenue expenditure
would take those characteristics into account when pricing unless they bring similar significant additional benefits.
the asset or liability at the measurement date. Fair value for An item of property, plant and equipment is derecognised
measurement and / or disclosure purposes in these financial upon disposal or when no future economic benefits
statements is determined on such a basis, except for are expected to arise from the continued use of asset.
share-based payment transactions that are within the scope Any gain or loss arising on the disposal or retirement of an
of Ind AS 102 – Share-based Payment, leasing transactions item of property, plant and equipment is determined as the
that are within the scope of Ind AS 116 – Leases, difference between the sales proceeds and the carrying
and measurements that have some similarities to fair amount of the asset and is recognised in Statement of
value but are not fair value, such as net realisable Profit and Loss.
value in Ind AS 2 – Inventories or value in use in Depreciation of these assets commences when the assets
Ind AS 36 – Impairment of Assets. are ready for their intended use which is generally on
The preparation of financial statements in conformity commissioning. Items of property, plant and equipment
with Ind AS requires management to make judgements, are depreciated in a manner that amortizes the cost (or
estimates and assumptions that affect the application of the other amount substituted for cost) of the assets after
accounting policies and the reported amounts of assets and commissioning, less its residual value, over their useful
liabilities, the disclosure of contingent assets and liabilities lives as specified in Schedule II of the Companies Act, 2013
at the date of the financial statements, and the reported on a straight line basis. Land is not depreciated.
amounts of revenues and expenses during the year. Actual The estimated useful lives of property, plant and equipment
results could differ from those estimates. The estimates of the Company are as follows:
and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised Buildings 30-60 Years
in the period in which the estimate is revised if the revision Leasehold Improvements Shorter of lease period or
affects only that period; they are recognised in the period estimated useful lives
of the revision and future periods if the revision affects both
Plant and Equipment 3-25 Years
current and future periods.
Furniture and Fixtures 8-10 Years
Operating Cycle
Vehicles 8-10 Years
All assets and liabilities have been classified as current
Office Equipment 5 Years
or non-current as per the Company’s normal operating

152 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

1. Significant Accounting Policies (Contd.)

Assets held under finance leases are depreciated over their its cost less accumulated amortization and / or impairment
expected useful lives on the same basis as owned assets losses.
or, where shorter, the term of the relevant lease. The useful lives of intangible assets are reviewed annually to
Property, plant and equipment’s residual values and useful determine if a reset of such useful life is required for assets
lives are reviewed at each Balance Sheet date and changes, with finite lives and to confirm that business circumstances
if any, are treated as changes in accounting estimate. continue to support an indefinite useful life assessment for
assets so classified. Based on such review, the useful life
Intangible Assets
may change or the useful life assessment may change from
Intangible Assets that the Company controls and from indefinite to finite. The impact of such changes is accounted
which it expects future economic benefits are capitalised for as a change in accounting estimate.
upon acquisition and measured initially:
Investment Property
a. for assets acquired in a business combination, at fair
value on the date of acquisition. Properties that are held for long-term rental yields and / or
for capital appreciation are classified as investment
b. for separately acquired assets, at cost comprising
properties. Investment properties are stated at cost of
the purchase price (including import duties and
acquisition or construction less accumulated depreciation
non-refundable taxes) and directly attributable costs to
and impairment, if any. Depreciation is recognised using
prepare the asset for its intended use.
the straight line method so as to amortise the cost of
Internally generated assets for which the cost is clearly investment properties over their useful lives as specified in
identifiable are capitalised at cost. Research expenditure is Schedule II of the Companies Act, 2013. Freehold land and
recognised as an expense when it is incurred. Development properties under construction are not depreciated.
costs are capitalised only after the technical and commercial
Transfers to, or from, investment properties are made at
feasibility of the asset for sale or use has been established.
the carrying amount when and only when there is a change
Thereafter, all directly attributable expenditure incurred to
in use.
prepare the asset for its intended use are recognised as the
cost of such assets. Internally generated brands, websites An item of investment property is derecognised upon
and customer lists are not recognised as intangible assets. disposal or when no future economic benefits are expected
to arise from the continued use of asset. Any gain or loss
The carrying value of intangible assets includes deemed
arising on the disposal or retirement of an item of investment
cost which represents the carrying value of intangible
property is determined as the difference between the sales
assets recognised as at 1st April, 2015 measured as per
proceeds and the carrying amount of the property and is
the previous GAAP.
recognised in the Statement of Profit and Loss.
The useful life of an intangible asset is considered finite
Income received from investment property is recognised
where the rights to such assets are limited to a specified in the Statement of Profit and Loss on a straight line basis
period of time by contract or law (e.g. patents, licences, over the term of the lease.
trademarks, franchise and servicing rights) or the likelihood
of technical, technological obsolescence (e.g. computer Impairment of Assets
software, design, prototypes) or commercial obsolescence Impairment loss, if any, is provided to the extent, the
(e.g. lesser known brands are those to which adequate carrying amount of assets or cash generating units exceed
marketing support may not be provided). If, there are no their recoverable amount.
such limitations, the useful life is taken to be indefinite. Recoverable amount is higher of an asset’s net selling
Intangible assets that have finite lives are amortized over price and its value in use. Value in use is the present value
their estimated useful lives by the straight line method of estimated future cash flows expected to arise from the
unless it is practical to reliably determine the pattern of continuing use of an asset or cash generating unit and from
benefits arising from the asset. An intangible asset with an its disposal at the end of its useful life.
indefinite useful life is not amortized. Impairment losses recognised in prior years are reversed
All intangible assets are tested for impairment. Amortization when there is an indication that the impairment losses
expenses and impairment losses and reversal of impairment recognised no longer exist or have decreased. Such
losses are taken to the Statement of Profit and Loss. Thus, reversals are recognised as an increase in carrying
after initial recognition, an intangible asset is carried at amounts of assets to the extent that it does not exceed the

ITC Limited REPORT AND ACCOUNTS 2023 153

Notes to the Financial Statements

1. Significant Accounting Policies (Contd.)

carrying amounts that would have been determined (net of (i) Fair value hedges
amortization or depreciation) had no impairment loss been Changes in fair value of the designated portion of
recognised in previous years. hedging instruments that qualify as fair value hedges
Inventories are recognised in profit or loss immediately, together
with any changes in the fair value of the hedged asset
Inventories are stated at lower of cost and net realisable
value. The cost is calculated on weighted average method. or liability that are attributable to the hedged risk.
Cost comprises expenditure incurred in the normal course The change in the fair value of the designated portion
of business in bringing such inventories to their present of hedging instrument and the change in fair value of
location and condition and includes, where applicable, the hedged item attributable to the hedged risk are
appropriate overheads based on normal level of activity. recognised in Statement of Profit and Loss in the line
Net realisable value is the estimated selling price less item relating to the hedged item.
estimated costs for completion and sale. Hedge accounting is discontinued when the hedging
Obsolete, slow moving and defective inventories are instrument is derecognised, expires or is sold,
identified from time to time and, where necessary, a terminated, or exercised, or when it no longer qualifies
provision is made for such inventories. for hedge accounting. The fair value adjustment to the
carrying amount of the hedged item arising from the
Foreign Currency Transactions hedged risk is amortised to profit or loss from that date.
The functional and presentation currency of the Company
(ii) Cash flow hedges
is Indian Rupee.
The effective portion of changes in the fair value of
Transactions in foreign currency are accounted for
hedging instruments that are designated and qualify
at the exchange rate prevailing on the transaction date.
as cash flow hedges is recognised in the other
Gains / losses arising on settlement as also on translation
comprehensive income and accumulated as ‘Cash
of monetary items are recognised in the Statement of Profit
Flow Hedge Reserve’. The gains / losses relating to the
and Loss.
ineffective portion are recognised immediately in the
Exchange differences arising on monetary items that, in Statement of Profit and Loss.
substance, form part of the Company’s net investment
Amounts previously recognised and accumulated in
in a foreign operation (having a functional currency other
other comprehensive income are reclassified to profit
than Indian Rupee) are accumulated in Foreign Currency
or loss when the hedged item affects the Statement
Translation Reserve.
of Profit and Loss. However, when the hedged item
Derivatives and Hedge Accounting results in the recognition of a non – financial asset,
Derivatives are initially recognised at fair value and are such gains / losses are transferred from equity (but not
subsequently remeasured to their fair value at the end as reclassification adjustment) and included in the initial
of each reporting period. The resulting gains / losses are measurement cost of the non–financial asset.
recognised in Statement of Profit and Loss immediately Hedge accounting is discontinued when the hedging
unless the derivative is designated and effective as a instrument is derecognised, expires or is sold,
hedging instrument, in which case the resulting gain / loss terminated, or exercised, or when it no longer qualifies
is recognised as per the hedge accounting principles for hedge accounting. Any gains / losses recognised
stated below. in other comprehensive income and accumulated in
The Company complies with the principles of hedge equity at that time remain in equity and is reclassified
accounting where derivative contracts and / or when the underlying transaction is ultimately recognised.
non-derivative financial assets / liabilities that are permitted When an underlying transaction is no longer expected
under applicable accounting standards are designated to occur, the gains / losses accumulated in equity
as hedging instruments. At the inception of the hedge are recognised immediately in the Statement of Profit
relationship, the Company documents the relationship and Loss.
between the hedging instrument and the hedged item,
along with the risk management objectives and its strategy Investment in Subsidiaries, Associates and Joint Ventures
for undertaking hedge transaction, which can be a fair value Investment in subsidiaries, associates and joint ventures
hedge or a cash flow hedge. are carried at cost less accumulated impairment, if any.

154 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

1. Significant Accounting Policies (Contd.)

Financial instruments, Financial assets, Financial unrealised gains and losses arising from changes in the
liabilities and Equity Instruments fair value being recognised in the Statement of Profit
Financial assets and financial liabilities are recognised and Loss in the period in which they arise.
when the Company becomes a party to the contractual Trade Receivables, Advances, Security Deposits, Cash
provisions of the relevant instrument and are initially and Cash equivalents etc. are classified for measurement
measured at fair value except for trade receivables that do at amortised cost while investments may fall under any of
not contain a significant financing component, which are the aforesaid classes. However, in respect of particular
measured at transaction price. Transaction costs that are investments in equity instruments that would otherwise
directly attributable to the acquisition or issue of financial be measured at fair value through profit or loss, an
assets and financial liabilities (other than financial assets irrevocable election at initial recognition may be made to
and financial liabilities measured at fair value through profit present subsequent changes in fair value through other
or loss) are added to or deducted from the fair value on comprehensive income.
initial recognition of financial assets or financial liabilities. Impairment: The Company assesses at each reporting
Purchase or sale of financial assets that require delivery date whether a financial asset (or a group of financial
of assets within a time frame established by regulation assets) such as investments, trade receivables, advances
or convention in the market place (regular way trades) and security deposits held at amortised cost and financial
are recognised on the trade date, i.e., the date when the assets that are measured at fair value through other
Company commits to purchase or sell the asset. comprehensive income are tested for impairment based
on evidence or information that is available without undue
Financial Assets cost or effort. Expected credit losses are assessed and loss
Recognition: Financial assets include Investments, Trade allowances recognised if the credit quality of the financial
Receivables, Advances, Security Deposits, Cash and Cash asset has deteriorated significantly since initial recognition.
equivalents. Such assets are initially recognised at fair value Reclassification: When and only when the business
or transaction price, as applicable, when the Company model is changed, the Company shall reclassify all affected
becomes party to contractual obligations. The transaction financial assets prospectively from the reclassification date
price includes transaction costs unless the asset is being as subsequently measured at amortised cost, fair value
fair valued through the Statement of Profit and Loss. through other comprehensive income or fair value through
Classification: Management determines the classification profit or loss without restating the previously recognised
of an asset at initial recognition depending on the purpose gains, losses or interest and in terms of the reclassification
for which the assets were acquired. The subsequent principles laid down in the Ind AS relating to Financial
measurement of financial assets depends on such Instruments.
classification. Derecognition: Financial assets are derecognised when
the right to receive cash flows from the assets has expired,
Financial assets are classified as those measured at:
or has been transferred, and the Company has transferred
(a) amortised cost, where the financial assets are held substantially all of the risks and rewards of ownership.
solely for collection of cash flows arising from payments Concomitantly, if the asset is one that is measured at:
of principal and / or interest. (a) amortised cost, the gain or loss is recognised in the
(b) fair value through other comprehensive income Statement of Profit and Loss;
(FVTOCI), where the financial assets are held not only (b) fair value through other comprehensive income, the
for collection of cash flows arising from payments of cumulative fair value adjustments previously taken to
principal and interest but also from the sale of such reserves are reclassified to the Statement of Profit and
assets. Such assets are subsequently measured at fair Loss unless the asset represents an equity investment,
value, with unrealised gains and losses arising from in which case the cumulative fair value adjustments
changes in the fair value being recognised in other previously taken to reserves are reclassified within
comprehensive income. equity.
(c) fair value through profit or loss (FVTPL), where the Income Recognition: Interest income is recognised in the
assets are managed in accordance with an approved Statement of Profit and Loss using the effective interest
investment strategy that triggers purchase and sale method. Dividend income is recognised in the Statement
decisions based on the fair value of such assets. Such of Profit and Loss when the right to receive dividend is
assets are subsequently measured at fair value, with established.

ITC Limited REPORT AND ACCOUNTS 2023 155

Notes to the Financial Statements

1. Significant Accounting Policies (Contd.)

Financial Liabilities Accordingly, government grants:

Borrowings, trade payables and other financial liabilities (a) related to or used for assets, are deducted from the
are initially recognised at fair value and are subsequently carrying amount of the asset.
measured at amortised cost. Any discount or premium on (b) related to incurring specific expenditures are taken to
redemption / settlement is recognised in the Statement of the Statement of Profit and Loss on the same basis and
Profit and Loss as finance cost over the life of the liability in the same periods as the expenditures incurred.
using the effective interest method and adjusted to the
(c) by way of financial assistance on the basis of certain
liability figure disclosed in the Balance Sheet.
qualifying criteria are recognised as they become
Financial liabilities are derecognised when the liability is receivable.
extinguished, that is, when the contractual obligation is In the unlikely event that a grant previously recognised is
discharged, cancelled or on expiry. ultimately not received, it is treated as a change in estimate
Offsetting Financial Instruments and the amount cumulatively recognised is expensed in the
Financial assets and liabilities are offset and the net amount Statement of Profit and Loss.
is included in the Balance Sheet where there is a legally Dividend Distribution
enforceable right to offset the recognised amounts and Dividends paid (including income tax thereon) are
there is an intention to settle on a net basis or realise the recognised in the period in which the interim dividends are
asset and settle the liability simultaneously. approved by the Board of Directors, or in respect of the final
Equity Instruments dividend when approved by shareholders.
Equity instruments are recognised at the value of the Employee Benefits
proceeds, net of direct costs of the capital issue. The Company makes contributions to both defined benefit
Revenue and defined contribution schemes which are mainly
administered through duly constituted and approved Trusts.
Revenue is measured at the transaction price that the
Company receives or expects to receive as consideration Provident Fund contributions are in the nature of defined
for goods supplied and services rendered, net of returns contribution scheme. In respect of employees who
and estimates of variable consideration such as discounts are members of constituted and approved trusts, the
to customers. Revenue from the sale of goods includes Company recognises contribution payable to such trusts
Excise Duties and National Calamity Contingent Duty as an expense including any shortfall in interest between
which are payable on manufacture of goods but excludes the amount of interest realised by the investment and
taxes such as VAT and Goods and Services Tax which are the interest payable to members at the rate declared by
payable in respect of sale of goods and services. the Government of India. In respect of other employees,
provident funds are deposited with the Government and
Revenue from the sale of goods and services is recognised
recognised as expense.
when the Company performs its obligations to its customers
and the amount of revenue can be measured reliably and The Company makes contribution to defined contribution
recovery of the consideration is probable. The timing of such pension plan. The contribution payable is recognised as an
recognition in case of sale of goods is when the control over expense, when an employee renders the related service.
the same is transferred to the customer, which is mainly The Company also makes contribution to defined benefit
upon delivery and in case of services, in the period in which pension and gratuity plan. The cost of providing benefits
such services are rendered. under the defined benefit obligation is calculated by
independent actuary using the projected unit credit method.
Government Grant Service costs and net interest expense or income is
The Company may receive government grants that require reflected in the Statement of Profit and Loss. Gain or Loss
compliance with certain conditions related to the Company’s on account of remeasurements are recognised immediately
operating activities or are provided to the Company by way through other comprehensive income in the period in which
of financial assistance on the basis of certain qualifying they occur.
criteria. The employees of the Company are entitled to compensated
Government grants are recognised when there is reasonable leave for which the Company records the liability based on
assurance that the grant will be received upon the Company actuarial valuation computed using projected unit credit
complying with the conditions attached to the grant. method. These benefits are unfunded.

156 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

1. Significant Accounting Policies (Contd.)

Actual disbursements made under the Workers’ Voluntary For cash settled SAR units granted to eligible employees, a
Retirement Scheme are accounted as revenue expenses. liability is initially measured at fair value at the grant date and
is subsequently remeasured at each reporting period, until
Employee Share Based Compensation
settled. The fair value of ESAR units granted is recognised
Stock Options in the Statement of Profit and Loss for employees of the
Stock Options are granted to eligible employees under Company. In case of employees on deputation to group
the ITC Employee Stock Option Schemes (“ITC ESOS”), companies, the Company generally seeks reimbursements
as may be decided by the Nomination & Compensation from the concerned group company. The value of such
Committee / Board. Eligible employees for this purpose payments, net of reimbursements, is considered as capital
include employees of the Company including Directors contribution / investment.
and those on deputation and employees of the
Leases
Company’s subsidiary companies including Managing
Director / Wholetime Director of a subsidiary. The Company assesses at contract inception whether a
Under Ind AS, the cost of ITC Stock Options (Stock Options) contract is, or contains, a lease. A contract is, or contains, a
is recognised based on the fair value of Stock Options as lease if it conveys the right to control the use of an identified
on the grant date. asset for a period of time in exchange for consideration.
While the fair value of Stock Options granted is recognised Company as a Lessee
in the Statement of Profit and Loss for employees of the Right-of-Use (ROU) assets are recognised at inception of
Company (other than those out on deputation), the value a contract or arrangement for significant lease components
of Stock Options, net of reimbursements, granted to at cost less lease incentives, if any. ROU assets are
employees on deputation and to employees of the wholly subsequently measured at cost less accumulated
owned and other subsidiary companies is considered as depreciation and impairment losses, if any. The cost of ROU
capital contribution / investment.
assets includes the amount of lease liabilities recognised,
The Company generally seeks reimbursement of the value initial direct cost incurred and lease payments made at
of Stock Options from such companies, as applicable. It or before the lease commencement date. ROU assets
may, if so recommended by the Corporate Management are generally depreciated over the shorter of the lease
Committee and approved by the Audit Committee, decide term and estimated useful lives of the underlying assets
not to seek such reimbursements from: on a straight line basis. Lease term is determined based
(a) Wholly owned subsidiaries who need to conserve on consideration of facts and circumstances that create
financial capacity to sustain their business and growth an economic incentive to exercise an extension option,
plans and to address contingencies that may arise, or not to exercise a termination option. Lease payments
taking into account the economic and market conditions associated with short-term leases and low value leases are
then prevailing and opportunities and threats in the charged to the Statement of Profit and Loss on a straight
competitive context. line basis over the term of the relevant lease.
(b) Other companies not covered under (a) above, who The Company recognises lease liabilities measured at the
need to conserve financial capacity to sustain their present value of lease payments to be made on the date
business and growth plans and where the quantum of of recognition of the lease. Such lease liabilities do not
reimbursement is not material - the materiality threshold
include variable lease payments (that do not depend on
being ` 5 Crores for each entity for a financial year.
an index or a rate), which are recognised as expense in
Cash Settled Stock Appreciation Linked Reward the periods in which they are incurred. Interest on lease
(SAR) Plan liability is recognised using the effective interest method.
Cash Settled SAR units are granted to eligible employees Lease liabilities are subsequently increased to reflect the
under the ITC Employee Cash Settled Stock Appreciation accretion of interest and reduced for the lease payments
Linked Reward Plan (“ITC ESARP”). The eligible employees made. The carrying amount of lease liabilities is also
for this purpose are such present and future permanent remeasured upon modification of lease arrangement or
employees of the Company, including a Director of the upon change in the assessment of the lease term. The
Company, as may be decided by the CMC / Nomination & effect of such remeasurements is adjusted to the value of
Compensation Committee / Board. the ROU assets.

ITC Limited REPORT AND ACCOUNTS 2023 157

Notes to the Financial Statements

1. Significant Accounting Policies (Contd.)

Company as a Lessor Provisions

Leases in which the Company does not transfer substantially Provisions are recognised when, as a result of a past
all the risks and rewards of ownership of an asset are event, the Company has a legal or constructive obligation;
classified as operating leases. Where the Company is a it is probable that an outflow of resources will be required
lessor under an operating lease, the asset is capitalised to settle the obligation; and the amount can be reliably
within property, plant and equipment or investment property estimated. The amount so recognised is a best estimate
and depreciated over its useful economic life. Payments of the consideration required to settle the obligation at the
received under operating leases are recognised in the reporting date, taking into account the risks and uncertainties
Statement of Profit and Loss on a straight line basis over
surrounding the obligation.
the term of the lease.
In an event when the time value of money is material, the
Taxes on Income provision is carried at the present value of the cash flows
Taxes on income comprise current taxes and deferred estimated to settle the obligation.
taxes. Current tax in the Statement of Profit and Loss is
provided as the amount of tax payable in respect of taxable Operating Segments
income for the period using tax rates and tax laws enacted Operating segments are reported in a manner consistent
during the period, together with any adjustment to tax with the internal reporting provided to the chief operating
payable in respect of previous years. decision-maker (CODM). The CODM, who is responsible
Deferred tax is recognised on temporary differences for allocating resources and assessing performance of the
between the carrying amounts of assets and liabilities and operating segments, has been identified as the Corporate
the amounts used for taxation purposes (tax base), at the Management Committee.
tax rates and tax laws enacted or substantively enacted by Segments are organised based on businesses which
the end of the reporting period. have similar economic characteristics as well as exhibit
Deferred tax assets are recognised for the future tax similarities in nature of products and services offered,
consequences to the extent it is probable that future the nature of production processes, the type and class of
taxable profits will be available against which the deductible customer and distribution methods.
temporary differences can be utilised.
Segment revenue arising from third party customers is
Income tax, insofar as it relates to items disclosed under reported on the same basis as revenue in the financial
other comprehensive income or equity, is disclosed statements. Inter-segment revenue is reported on the basis
separately under other comprehensive income or equity,
of transactions which are primarily market led. Segment
as applicable.
results represent profits before finance charges, unallocated
Deferred tax assets and liabilities are offset when there is corporate expenses and taxes.
legally enforceable right to offset current tax assets and
“Unallocated Corporate Expenses” include revenue and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities expenses that relate to initiatives / costs attributable to the
are offset where the entity has a legally enforceable right to enterprise as a whole.
offset and intends either to settle on net basis, or to realize Financial and Management Information Systems
the asset and settle the liability simultaneously.
The Company’s Accounting System is designed to unify
Claims the Financial and Cost Records and also to comply with the
Claims against the Company not acknowledged as debts relevant provisions of the Companies Act, 2013, to provide
are disclosed after a careful evaluation of the facts and financial and cost information appropriate to the businesses
legal aspects of the matter involved. and facilitate Internal Control.

158 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

2. Use of estimates and judgements

The preparation of financial statements in conformity period and the impact of changes in the estimated
with generally accepted accounting principles requires useful life is considered in the period in which the
management to make estimates and assumptions that estimate is revised.
affect the reported amounts of assets and liabilities and
2. F
 air value measurements and valuation
disclosure of contingent liabilities at the date of the financial
processes:
statements and the results of operations during the
reporting period end. Although these estimates are based Some of the Company’s assets and liabilities
upon management’s best knowledge of current events and are measured at fair value for financial reporting
actions, actual results could differ from these estimates. purposes. In estimating the fair value of an asset or a
liability, the Company uses market-observable data
The estimates and underlying assumptions are reviewed on
to the extent it is available. Where Level 1 inputs
an ongoing basis. Revisions to accounting estimates are
are not available, the Company engages third party
recognised in the period in which the estimate is revised
valuers, where required, to perform the valuation.
if the revision affects only that period, or in the period of
Information about the valuation techniques and
the revision and future periods if the revision affects both
inputs used in determining the fair value of various
current and future periods.
assets, liabilities and share based payments are
A. Judgements in applying accounting policies disclosed in the notes to the financial statements.
The judgements, apart from those involving estimations 3. Actuarial Valuation:
(see note B below), that the Company has made in the
The determination of Company’s liability towards
process of applying its accounting policies and that have
defined benefit obligation to employees is made
a significant effect on the amounts recognised in these
through independent actuarial valuation including
financial statements pertain to useful life of intangible
determination of amounts to be recognised in
assets. The Company is required to determine whether
its intangible assets have indefinite or finite life which is the Statement of Profit and Loss and in Other
a subject matter of judgement. Certain trademarks have Comprehensive Income. Such valuation depends
been considered of having an indefinite useful life taking upon assumptions determined after taking into
into account that there are no technical, technological or account inflation, seniority, promotion and other
commercial risks of obsolescence or limitations under relevant factors such as supply and demand factors
contract or law. Other trademarks have been amortised in the employment market. Information about
over their useful economic life. Refer notes to the financial such valuation is provided in notes to the financial
statements. statements.

B. Key sources of estimation uncertainty 4. Claims, Provisions and Contingent Liabilities:

The following are the key assumptions concerning the The Company has ongoing litigations with various
future, and other key sources of estimation uncertainty at the regulatory authorities and third parties. Where an
end of the reporting period that may have a significant risk outflow of funds is believed to be probable and a
of causing a material adjustment to the carrying amounts of reliable estimate of the outcome of the dispute can
assets and liabilities within the next financial year. be made based on management’s assessment of
specific circumstances of each dispute and relevant
1. U
 seful lives of property, plant and equipment, external advice, management provides for its best
investment property and intangible assets: estimate of the liability. Such accruals are by nature
As described in the significant accounting policies, complex and can take number of years to resolve
the Company reviews the estimated useful lives of and can involve estimation uncertainty. Information
property, plant and equipment, investment property about such litigations is provided in notes to the
and intangible assets at the end of each reporting financial statements.

ITC Limited REPORT AND ACCOUNTS 2023 159

Notes to the Financial Statements
(` in Crores)
Gross Block

As at Withdrawals As at Withdrawals As at
31st March, and 31st March, and 31st March,
Particulars 2021 Additions adjustments 2022 Additions adjustments # 2023

3A. Property, Plant and Equipment *

Land 1 1995.76 56.23 35.26 2016.73 7.17 5.80 2018.10
Buildings 7740.65 745.03 57.03 8428.65 686.84 10.08 9105.41
Leasehold Improvements 11.90 1.40 0.02 13.28 0.10 0.77 12.61
Plant and Equipment 14693.95 1772.87 210.41 16256.41 1712.10 163.45 17805.06
Furniture and Fixtures 810.02 79.51 4.75 884.78 103.54 7.64 980.68
Vehicles 158.71 15.18 18.28 155.61 23.32 22.67 156.26
Office Equipment 26.56 2.87 0.86 28.57 3.21 1.16 30.62
Railway Sidings 1.73 – – 1.73 – – 1.73
Total 25439.28 2673.09 326.61 27785.76 2536.28 211.57 30110.47
3B. Capital work-in-progress 3329.97 1761.73 2649.36 2442.34 1732.59 2493.46 1681.47
3C. Investment Property 5 410.11 – – 410.11 – (0.52) 410.63
3D. Goodwill 2 577.20 – – 577.20 – – 577.20
3E. Other Intangible assets (acquired) 2
Trademarks 1920.35 – – 1920.35 – – 1920.35
Computer Software 224.05 35.84 22.49 237.40 66.30 3.37 300.33
Know How, Business and Commercial Rights 33.85 9.53 – 43.38 0.51 – 43.89
Customer Relationships 35.21 – – 35.21 – – 35.21
Total 2213.46 45.37 22.49 2236.34 66.81 3.37 2299.78
3F. Other Intangible assets under development 3.50 64.48 44.14 23.84 53.98 62.69 15.13
3G. Right of Use Assets ^
Land 499.74 16.89 – 516.63 – – 516.63
Buildings 289.40 40.52 32.87 297.05 71.39 70.85 297.59
Plant and Equipment 48.63 – – 48.63 – – 48.63
Total 837.77 57.41 32.87 862.31 71.39 70.85 862.85

# Includes amounts transferred from Property, Plant and Equipment to Investment Property.
^ Also refer Note 27(vii)
(` in Crores)
* The above includes following assets given on As at 31st March, 2022 As at 31st March, 2023
Depreciation Depreciation
operating lease:
Charge Charge
Accumulated for the year Accumulated for the year
Particulars Gross Block Depreciation Net Block 2021-22 Gross Block Depreciation Net Block 2022-23

Land 1.48 – 1.48 – 1.48 – 1.48 –

Buildings 4.98 1.40 3.58 0.16 4.11 1.22 2.89 0.08
Plant and Equipment 229.25 144.79 84.46 20.49 247.10 166.96 80.14 17.75
TOTAL 235.71 146.19 89.52 20.65 252.69 168.18 84.51 17.83

160 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
(` in Crores)
Depreciation and Amortization Net Book Value

Upto On Withdrawals Upto On Withdrawals Upto As at As at

31st March, For and 31st March, For and 31st March, 31st March, 31st March,
Particulars 2021 the year adjustments 2022 the year adjustments# 2023 2023 2022

3A. Property, Plant and Equipment *

Land 1 – – – – – – – 2018.10 2016.73
Buildings 924.31 220.10 15.17 1129.24 239.88 4.17 1364.95 7740.46 7299.41
Leasehold Improvements 5.99 1.40 0.02 7.37 1.76 0.40 8.73 3.88 5.91
Plant and Equipment 5523.49 1213.29 208.96 6527.82 1210.12 133.07 7604.87 10200.19 9728.59
Furniture and Fixtures 397.74 73.25 3.45 467.54 79.43 6.15 540.82 439.86 417.24
Vehicles 67.54 18.15 11.10 74.59 16.85 14.49 76.95 79.31 81.02
Office Equipment 16.56 3.44 0.86 19.14 4.72 2.07 21.79 8.83 9.43
Railway Sidings 0.78 0.13 – 0.91 0.13 – 1.04 0.69 0.82
Total 6936.41 1529.76 239.56 8226.61 1552.89 160.35 9619.15 20491.32 19559.15
3B. Capital work-in-progress – – – – – – – 1681.47 2442.34
3C. Investment Property 5 33.55 12.36 – 45.91 12.38 (0.08) 58.37 352.26 364.20
3D. Goodwill 2 – – – – – – – 577.20 577.20
3E. Other Intangible assets (acquired) 2
Trademarks 17.30 3.14 – 20.44 3.14 – 23.58 1896.77 1899.91
Computer Software 170.12 31.36 22.44 179.04 21.16 0.41 199.79 100.54 58.36
Know How, Business and Commercial Rights 18.73 3.52 – 22.25 4.95 – 27.20 16.69 21.13
Customer Relationships 2.99 4.40 – 7.39 4.40 – 11.79 23.42 27.82
Total 209.14 42.42 22.44 229.12 33.65 0.41 262.36 2037.42 2007.22
3F. Other Intangible assets under development – – – – – – – 15.13 23.84
3G. Right of Use Assets ^
Land 13.73 7.67 – 21.40 7.83 – 29.23 487.40 495.23
Buildings 86.15 54.57 29.21 111.51 50.59 66.46 95.64 201.95 185.54
Plant and Equipment 11.05 5.51 – 16.56 5.51 – 22.07 26.56 32.07
Total 110.93 67.75 29.21 149.47 63.93 66.46 146.94 715.91 712.84

Notes:
1. Land includes certain lands at Munger with Gross Block - ` 1.16 Crores (2022 - ` 1.16 Crores) which stood vested with the State of Bihar under the Bihar Land Reforms Act, 1950 for which
compensation has not yet been determined.
2. a) Goodwill arising on Business Combination is carried at cost and annually tested for impairment in line with applicable Accounting Standards.
The Company has also considered certain acquired Trademarks aggregating ` 1889.78 Crores (2022 - ` 1889.78 Crores) as having indefinite useful lives. The indefinite useful life for such trademarks
has been assessed considering no technical, technological or commercial risks of obsolescence or any limitations under contract or law. Such assets are also annually tested for impairment.
These assets pertain to the ‘FMCG - Others’ Segment and are related to the Branded Packaged Foods and Personal Care Products businesses of the Company.
Impairment testing for goodwill and intangible assets with indefinite useful lives has been carried out considering their recoverable amounts which, inter-alia, includes estimation of their value-in-use
based on management projections. These projections have been made for a period of five years, or longer, as applicable and consider various factors, such as market scenario, growth trends, growth
and margin projections, and terminal growth rates specific to the business.
For such projections, discount rate of 10% (2022 - 10%) and long-term growth rates ranging between 5% to 6% (2022 - 5% to 6%) have been considered. Discount rate has been determined
considering the Weighted Average Cost of Capital (WACC) of market benchmarks.
Based on the above assessment, no impairment has been recognised during the year.
2. b) Computer software and Customer Relationships are amortized over a period of 5 years and 8 years respectively. Other Intangibles with finite useful life are amortized over a period of 10 years unless
shorter useful life is required based on contractual or legal terms.
3. The amortization expense of intangible assets has been included under ‘Depreciation and amortization expense’ in the Statement of Profit and Loss.
4. The amount of expenditure recognised in the carrying amount of property, plant and equipment in the course of construction is ` 90.50 Crores (2022 - ` 147.39 Crores).
5. The fair value of the investment property is ` 903.04 Crores (2022 - ` 870.11 Crores). The fair value has been determined on the basis of valuation carried out at the reporting date by registered
valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017 and the same has been categorised as Level 2 based on the valuation techniques used and inputs
applied. The main inputs considered by the valuer are government rates, property location, market research & trends, contracted rentals, terminal yields, discount rates and comparable values, as
appropriate.
Amounts recognised in the Statement of Profit and Loss in respect of the investment property is as under:
(` in Crores)
Particulars For the year ended For the year ended
31st March, 2023 31st March, 2022
Rental Income etc. from investment property 124.05 111.94
Direct Operating Expenses arising from investment property that
generated rental income during the year$ 11.42 9.94
Direct Operating Expenses arising from investment property that
did not generate rental income during the year – –
$As per the contractual arrangements, the Company is responsible for the maintenance of common area at its own cost. The expenses arising out of such arrangements are not material.

ITC Limited REPORT AND ACCOUNTS 2023 161

Notes to the Financial Statements
Capital work-in-progress (CWIP) ageing schedule (` in Crores)
As at 31st March, 2022 As at 31st March, 2023
Amount in CWIP for a period of Amount in CWIP for a period of

Less than 1-2 2-3 More than Less than 1-2 2-3 More than
Particulars 1 year years years 3 years Total 1 year years years 3 years Total

Projects in Progress 651.71 685.43 444.17 661.03 2442.34 655.86 345.20 140.10 540.31 1681.47
Projects temporarily suspended – – – – – – – – – –
Total 651.71 685.43 444.17 661.03 2442.34 655.86 345.20 140.10 540.31 1681.47

Completion schedule for Projects in Capital work-in-progress, which are overdue or has exceeded its cost compared to its original plan
(` in Crores)
As at 31st March, 2022 As at 31st March, 2023
To be completed in To be completed in

Less than More than Less than More than

Particulars 1 year 1 - 2 years 2 - 3 years 3 years 1 year 1 - 2 years 2 - 3 years 3 years

MXD - KOL – 542.00 – – 633.54 – – –

H - AHM 440.31 – – – – – – –
F - KHO – 164.42 – – – – – –
F - GNT 69.46 – – – – – – –
ME - MED 62.47 – – – – – – –
ME - PUN 20.01 – – – – – – –

Other Intangible assets under development (IAUD) ageing schedule (` in Crores)

As at 31st March, 2022 As at 31st March, 2023
Amount in IAUD for a period of Amount in IAUD for a period of

Less than 1-2 2-3 More than Less than 1-2 2-3 More than
Particulars 1 year years years 3 years Total 1 year years years 3 years Total

Projects in Progress 23.84 – – – 23.84 15.13 – – – 15.13

Projects temporarily suspended – – – – – – – – – –
Total 23.84 – – – 23.84 15.13 – – – 15.13

Note: There are no projects in Other Intangible assets under development, which are overdue or has exceeded its cost compared to its original plan as at 31st March, 2023 and 31st March, 2022.

162 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

4. Non-current investments (Contd.)

INVESTMENT IN EQUITY INSTRUMENTS

In Subsidiaries (at cost unless stated otherwise)

Unquoted
Gold Flake Corporation Limited 10 1,59,98,385 16.00 1,59,98,385 16.00
Russell Credit Limited
Fully paid 10 59,74,54,177 619.29 59,74,54,177 619.29
` 6.50 per share paid 10 7,54,22,400 39.22 7,54,22,400 39.22
ITC Infotech India Limited 10 8,80,00,000 617.01 8,52,00,000 173.10
Landbase India Limited 10 31,70,00,000 325.57 31,70,00,000 325.57
Surya Nepal Private Limited (Ordinary Shares) Nepalese
Rupee
100 1,18,94,400 10.15 1,18,94,400 10.15
Srinivasa Resorts Limited 10 1,63,20,477 18.53 1,63,20,477 18.53
Fortune Park Hotels Limited 10 4,50,008 0.45 4,50,008 0.45
Bay Islands Hotels Limited 100 11,875 0.12 11,875 0.12
WelcomHotels Lanka (Private) Limited No par value 40,08,47,960 1247.99 13,96,42,260 641.85
Wimco Limited 1 18,50,81,193 3.50 18,50,81,193 3.50
Technico Pty Limited (Ordinary Shares)
( ` 16.29 Crores impaired) No par value 1,00,15,502 31.88 1,00,15,502 31.88
Technico Agri Sciences Limited 10 3,79,62,800 121.00 3,79,62,800 121.00
ITC Integrated Business Services Limited (formerly
known as ITC Investments & Holdings Limited) 10 45,00,000 4.50 45,00,000 4.50
ITC IndiVision Limited 10 12,00,00,000 120.00 12,00,00,000 120.00
North East Nutrients Private Limited 10 5,54,80,000 55.48 5,54,80,000 55.48
Pavan Poplar Limited
(cost ` 5.99 Crores, fully impaired) 10 55,10,004 – 55,10,004 –
Prag Agro Farm Limited
(cost ` 12.82 Crores, fully impaired) 1 1,28,00,020 – 1,28,00,020 –
ITC Fibre Innovations Limited 10 10,000 0.01 – –
In Associates (at cost unless stated otherwise)
Quoted
International Travel House Limited 10 2,87,600 0.65 2,87,600 0.65
Gujarat Hotels Limited 10 17,33,907 1.94 17,33,907 1.94
Unquoted
Delectable Technologies Private Limited 10 100 0.10 100 0.10
Mother Sparsh Baby Care Private Limited
[Refer Note 27(ix)] 10 100 0.96 – –

Carried over 3234.35 2183.33

ITC Limited REPORT AND ACCOUNTS 2023 163

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

4. Non-current investments (Contd.)

Brought forward 3234.35 2183.33
INVESTMENT IN EQUITY INSTRUMENTS (Contd.)
In Joint Ventures (at cost unless stated otherwise)
Unquoted
Espirit Hotels Private Limited [Refer Note 27(x)] 10 4,65,09,200 46.51 4,65,09,200 46.51
Maharaja Heritage Resorts Limited 100 90,000 0.90 90,000 0.90
Logix Developers Private Limited [Refer Note 27(viii)]
[cost ` 41.95 Crores, fully impaired (2022 - ` 33.45
Crores impaired)] 10 77,66,913 – 77,66,913 8.50
In Others (at fair value through other comprehensive
income unless stated otherwise)
Quoted
VST Industries Limited 10 476 0.15 476 0.15
HLV Limited 2 4,99,53,055 45.71 4,99,53,055 45.71
EIH Limited 2 8,56,21,473 1418.32 8,56,21,473 1324.14
Tourism Finance Corporation of India Limited 10 25,000 0.18 25,000 0.15
Unquoted
Bihar Hotels Limited 2 8,00,000 0.04 8,00,000 0.04
Andhra Pradesh Gas Power Corporation Limited 10 8,04,000 – 8,04,000 2.32
Woodlands Multispeciality Hospital Limited 10 13,605 0.01 13,605 0.01
Mirage Advertising and Marketing Limited 10 12,488 – 12,488 –
Mother Sparsh Baby Care Private Limited
(at fair value through profit or loss) [Refer Note 27(ix)] 10 – – 100 0.96
Blupin Technologies Private Limited
(at fair value through profit or loss) 10 400 3.82 – –
INVESTMENT IN PREFERENCE SHARES
In Subsidiaries (at amortised cost unless
stated otherwise)
Unquoted
WelcomHotels Lanka (Private) Limited (at cost)
(Cumulative Non-Convertible Redeemable
Preference Shares) No par value 38,33,73,340 1527.42 38,33,73,340 1527.42
Wimco Limited
(Cumulative Non-Convertible Redeemable
Preference Shares) 100 5,00,000 5.00 5,00,000 5.00
ITC IndiVision Limited
(Cumulative Non-Convertible Redeemable
Preference Shares) 100 1,60,00,000 160.00 30,00,000 30.00

Carried over 6442.41 5175.14

164 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

4. Non-current investments (Contd.)

Brought forward 6442.41 5175.14
INVESTMENT IN PREFERENCE SHARES (Contd.)
In Associates (at cost)
Unquoted
Delectable Technologies Private Limited
(Compulsorily Convertible Cumulative
Preference Shares) 10 7,759 7.40 5,792 5.52
Mother Sparsh Baby Care Private Limited
[Refer Note 27(ix)] (Compulsorily Convertible
Cumulative Preference Shares) 10 2,980 32.50 – –
In Others (at fair value through profit or loss)

Unquoted

Blupin Technologies Private Limited

(Compulsorily Convertible Cumulative
Preference Shares) 100 2,980 35.52 – –
Mother Sparsh Baby Care Private Limited
[Refer Note 27(ix)] (Compulsorily Convertible
Cumulative Preference Shares) 10 – – 1,980 19.04
INVESTMENT IN GOVERNMENT OR TRUST SECURITIES
(at amortised cost)
Quoted
State Development Loans
7.20% Tamil Nadu - 25-Jan-2027 100 – – 20,85,500 21.81
7.41% Uttar Pradesh - 09-Nov-2026 100 – – 20,00,000 21.08
7.51% Maharashtra - 24-May-2027 100 – – 65,00,000 68.49
7.59% Gujarat - 15-Feb-2027 100 – – 1,25,00,000 132.61
7.62% Uttar Pradesh - 15-Feb-2027 100 – – 30,00,000 31.81
7.84% Maharashtra - 13-Jul-2026 100 – – 2,00,00,000 212.59
7.86% Karnataka - 15-Mar-2027 100 – – 50,00,000 53.24
7.96% Maharashtra - 29-Jun-2026 100 – – 25,00,000 26.73
8.03% Uttar Pradesh - 11-May-2026 100 – – 70,00,000 74.77
8.08% Maharashtra - 15-Jun-2026 100 – – 5,00,000 5.36
8.36% Maharashtra - 27-Jan-2026 100 – – 35,00,000 37.76
8.72% Tamil Nadu - 19-Sep-2026 100 – – 10,00,000 10.99
Government of India Zero Coupon Government Stock
Zero Coupon Government Stock - 22-Feb-2025 100 34,00,000 30.62 34,00,000 28.97
Zero Coupon Government Stock - 15-Jun-2025 100 10,20,000 8.97 10,20,000 8.46
Zero Coupon Government Stock - 22-Aug-2025 100 25,35,000 21.94 25,35,000 20.66
Zero Coupon Government Stock - 15-Dec-2025 100 36,34,800 30.93 36,34,800 29.14

Carried over 6610.29 5984.17

ITC Limited REPORT AND ACCOUNTS 2023 165

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

4. Non-current investments (Contd.)

Brought forward 6610.29 5984.17

INVESTMENT IN GOVERNMENT OR TRUST SECURITIES
(Contd.)
Zero Coupon Government Stock - 17-Dec-2025 100 6,02,300 5.10 6,02,300 4.80
Zero Coupon Government Stock - 22-Feb-2026 100 25,35,000 21.17 25,35,000 19.89
Zero Coupon Government Stock - 15-Jun-2026 100 10,20,000 8.35 10,20,000 7.85
Zero Coupon Government Stock - 22-Aug-2026 100 63,54,400 51.19 40,56,000 30.65
Zero Coupon Government Stock - 15-Dec-2026 100 10,20,000 8.05 10,20,000 7.56
Zero Coupon Government Stock - 22-Feb-2027 100 40,11,000 31.10 33,35,000 24.22
Zero Coupon Government Stock - 15-Jun-2027 100 31,17,000 23.73 31,17,000 22.24
Zero Coupon Government Stock - 22-Aug-2027 100 48,54,400 36.20 40,56,000 28.30
Unquoted
Government Securities (cost ` 70000.00) 0.01 0.01
National Savings Certificates (pledged with various
Mandi Samitis) (cost ` 6000.00) … …
INVESTMENT IN BONDS IN THE NATURE OF
DEBENTURES (at amortised cost)
Quoted
Tax Free Bonds - Secured, Redeemable &
Non-Convertible
Housing and Urban Development Corporation Limited
7.07% - Series B - 01-Oct-2025 10,00,000 4,300 433.65 4,300 435.09
7.19% - Series A - 31-Jul-2025 10,00,000 150 15.31 150 15.43
7.39% - Series 2A - 08-Feb-2031 1,000 7,00,696 70.07 7,00,696 70.07
8.20% - Series 2 - 05-Mar-2027 1,000 5,00,000 53.42 5,00,000 54.16
India Infrastructure Finance Company Limited
7.36% - Series II - 22-Jan-2028 1,000 3,00,000 31.69 3,00,000 31.99
8.01% - Series 1A - 12-Nov-2023 1,000 – – 50,000 5.13
8.26% - Series V B - 23-Aug-2028 10,00,000 1,175 122.82 1,175 123.63
8.46% - Series VI B - 30-Aug-2028 10,00,000 1,300 138.65 1,300 139.96
8.48% - Series VII B - 05-Sep-2028 10,00,000 1,780 187.31 1,780 188.71
Indian Railway Finance Corporation Limited
7.07% - Series 102 - 21-Dec-2025 1,000 70,498 7.18 70,498 7.22
7.15% - Series 100 - 21-Aug-2025 10,00,000 250 25.46 250 25.64
7.19% - Series 99 - 31-Jul-2025 10,00,000 2,250 225.38 2,250 225.52
7.34% - Series 86A - 19-Feb-2028 1,000 1,00,000 10.63 1,00,000 10.74
8.23% - Series 91 - 18-Feb-2024 1,000 – – 8,00,000 82.81
8.35% - Series 89 - 21-Nov-2023 10,00,000 – – 100 10.31
8.48% - Series 89A - 21-Nov-2028 10,00,000 1,250 131.09 1,250 131.94
8.55% - Series 94A - 12-Feb-2029 10,00,000 130 13.69 130 13.79

Carried over 8261.54 7701.83

166 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

4. Non-current investments (Contd.)

Brought forward 8261.54 7701.83
INVESTMENT IN BONDS IN THE NATURE OF
DEBENTURES (Contd.)
National Bank for Agriculture and Rural
Development
7.07% - Series 1A - 25-Feb-2026 10,00,000 2,000 204.71 2,000 206.19
National Highways Authority of India
7.11% - Series NHAI - II A - 18-Sep-2025 10,00,000 2,600 260.25 2,600 260.33
7.14% - Series I A - 11-Jan-2026 1,000 8,06,381 81.45 8,06,381 81.70
7.28% - Series NHAI - II B - 18-Sep-2030 10,00,000 2,500 250.00 2,500 250.00
7.35% - Series II A - 11-Jan-2031 1,000 17,49,943 182.10 17,49,943 182.78
8.50% - Series II A - 05-Feb-2029 1,000 5,00,000 55.55 5,00,000 56.33
8.75% - Series II B - 05-Feb-2029 1,000 2,50,000 28.25 2,50,000 28.71
National Housing Bank
8.46% - Series V - 30-Aug-2028 10,00,000 800 83.65 800 84.20
Power Finance Corporation Limited
7.16% - Series 136 - 17-Jul-2025 10,00,000 600 61.11 600 61.57
8.46% - Series 107B - 30-Aug-2028 10,00,000 500 52.28 500 52.63
8.54% - Series 2A - 16-Nov-2028 1,000 3,50,000 39.42 3,50,000 40.07
REC Limited
7.17% - Series 5A - 23-Jul-2025 10,00,000 850 86.51 850 87.12
8.46% - Series 3B - 29-Aug-2028 10,00,000 1,190 127.30 1,190 128.55
8.46% - Series 2A - 24-Sep-2028 1,000 3,50,000 39.20 3,50,000 39.84
8.54% - Series 4B - 11-Oct-2028 10,00,000 50 5.25 50 5.28
Taxable Bonds - Secured, Redeemable &
Non-Convertible
Indian Railway Finance Corporation Limited
7.83% - Series 118 - 21-Mar-2027 10,00,000 – – 1,750 187.83
Taxable Bonds - Unsecured, Redeemable &
Non-Convertible
Export Import Bank of India
5.20% - Series X 01 - 04-Mar-2025
(with Put and Call option on 04-Mar-2024) 10,00,000 – – 2,000 200.00
National Bank for Agriculture and Rural
Development
5.70% - Series 22 D - 31-Jul-2025 10,00,000 1,000 99.45 1,000 99.15
7.69% - Series 20 C - 29-May-2024 10,00,000 4,300 441.85 4,300 451.74
Power Finance Corporation Limited
5.47% - Series 206 - 19-Aug-2023 10,00,000 – – 100 10.05
6.09% - Series BS-212 A - 27-Aug-2026 10,00,000 – – 300 30.09

Carried over 10359.87 10245.99

ITC Limited REPORT AND ACCOUNTS 2023 167

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

4. Non-current investments (Contd.)

Brought forward 10359.87 10245.99
INVESTMENT IN BONDS IN THE NATURE OF
DEBENTURES (Contd.)
6.50% - Series 208 - 17-Sep-2025 10,00,000 – – 1,150 116.68
6.72% - Series 203 A - 09-Jun-2023 10,00,000 – – 900 91.74
6.75% - Series 202 A - 22-May-2023 10,00,000 – – 1,200 122.26
8.03% - Series 147 - 02-May-2026 10,00,000 – – 600 64.04
8.20% - Series 128 - 10-Mar-2025 10,00,000 450 46.75 450 47.59
8.39% - Series 130 C - 19-Apr-2025 10,00,000 200 20.89 200 21.29
REC Limited
5.85% - Series 203 B - 20-Dec-2025 10,00,000 – – 1,100 109.37
Perpetual Bonds - Unsecured, Subordinated &
Non-Convertible#
ICICI Bank
9.15% - Series DMR 18AT
(with first Call option on 20-Jun-2023) 10,00,000 – – 2,647 264.70
9.90% - Series DDE 18AT
(with first Call option on 28-Dec-2023) 10,00,000 – – 3,000 300.00
State Bank of India
7.72% - Series I (with first Call option on 03-Sep-2026) 1,00,00,000 313 313.00 313 313.00
7.72% - Series II (with first Call option on 18-Oct-2026) 1,00,00,000 400 400.00 400 400.00
9.37% - Series II (with first Call option on 21-Dec-2023) 10,00,000 – – 2,350 235.00
9.56% - Series I (with first Call option on 04-Dec-2023) 10,00,000 – – 7,000 700.00
Zero Coupon Bonds - Secured, Redeemable &
Non-Convertible
LIC Housing Finance Limited
Tranche 416 - 25-Apr-2025 10,00,000 10,000 1081.21 10,000 1021.27
INVESTMENT IN DEBT MUTUAL FUNDS

Quoted
Fixed Maturity Plans (at amortised cost)*
Aditya Birla Sun Life Mutual Fund 10 2,19,98,900 23.40 2,19,98,900 22.03
DSP Mutual Fund 10 4,99,97,500 51.36 – –
Nippon India Mutual Fund 10 1,49,99,250 16.06 1,49,99,250 15.08
SBI Mutual Fund 10 23,69,88,151 255.23 23,69,88,151 241.25
Exchange Traded Funds (at fair value through
other comprehensive income) **
Axis Mutual Fund 1 5,50,00,000 59.60 5,50,00,000 58.00
Nippon India Mutual Fund 10 6,50,00,000 726.12 3,60,00,000 389.05

Carried over 13353.49 14778.34

168 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

4. Non-current investments (Contd.)

Brought forward 13353.49 14778.34
INVESTMENT IN DEBT MUTUAL FUNDS (Contd.)
Unquoted
Target Maturity Index Funds (at fair value through
other comprehensive income) **
Aditya Birla Sun Life Mutual Fund 10 84,29,49,728 882.34 35,48,47,210 360.79
Axis Mutual Fund 10 14,37,69,946 148.73 1,98,53,868 20.02
DSP Mutual Fund 10 2,49,40,887 26.04 – –
ICICI Prudential Mutual Fund 10 54,91,10,334 574.27 17,74,37,385 180.27
Kotak Mahindra Mutual Fund 10 42,26,69,978 438.22 2,99,36,233 30.06
Nippon Mutual Fund 10 24,38,33,990 251.24 – –
SBI Mutual Fund 10 54,75,53,778 569.97 19,80,19,704 200.51
INVESTMENT IN ALTERNATIVE INVESTMENT FUNDS
(at fair value through profit or loss)
Unquoted
Chiratae Ventures India Fund IV 1,00,000 1,125 17.33 923 13.98
Fireside Ventures Investments Fund I 1,00,000 1,335 58.06 1,324 51.27
Fireside Ventures Investments Fund II 1,000 1,40,000 17.47 1,00,000 8.67
Fireside Ventures Investments Fund III 1,00,000 300 3.00 – –
India Foundation Fund Series I 100 3,46,463 3.85 1,63,740 2.15
Roots Ventures I 100 9,13,113 19.54 8,13,113 11.26
Aggregate amount of quoted investments 8302.60 10951.37
Aggregate amount of unquoted investments 8060.95 4705.95
Total 16363.55 15657.32

Aggregate market value of quoted investments ` 8340.39 Crores (2022 - ` 11205.72 Crores).
Aggregate amount of impairment in value of investments ` 77.05 Crores (2022 - ` 68.55 Crores).
* Investments in Fixed Maturity Plans (FMPs) that are intended to be held by the Company till maturity are classified as amortised
cost. The underlying instruments in the portfolio of these FMPs have minimal churn and are held to receive contractual cashflows.
** Exchange Traded / Target Maturity Index Funds follow a passive buy and hold investment strategy to receive contractual cashflows
except for meeting redemption and rebalancing requirements. Investment in such funds are classified as FVTOCI as cash flows
from these investments are realised on maturity or upon sale.
# Additional Tier 1 bonds, which are perpetual in nature, are issued by commercial banks under Reserve Bank of India guidelines.
These have been classified as debt instruments by the Company based on the substantive characteristics of the contract.

ITC Limited REPORT AND ACCOUNTS 2023 169

Notes to the Financial Statements
As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

Current Non-Current Current Non-Current

5. Loans

Other Loans - Employees

– Unsecured, considered good 5.95 4.07 5.73 5.06

TOTAL 5.95 4.07 5.73 5.06

6. Other Financial assets

Bank deposits with more than 12 months maturity – 2034.40 – –

Other financial assets
Security Deposits * 25.50 73.27 26.66 71.99
Deposits other than Security Deposits 2.75 1500.56 1510.27 1500.41

Interest accrued on Loans, Deposits, Investments etc. 393.83 – 496.10 –

Other Receivables** 283.76 – 254.94 –

TOTAL 705.84 3608.23 2287.97 1572.40

* Include deposits to Directors and Key Management Personnel ` 0.06 Crore (2022 - ` 0.08 Crore) (Refer Note 29).
** Comprise receivables on account of government grants, claims, rentals, derivatives designated as hedging instrument etc.

170 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

Current Non-Current Current Non-Current

7. Other Assets

Capital Advances – 168.45 – 187.21

Advances other than capital advances
Security Deposits
– With Statutory Authorities 0.35 789.38 0.28 787.46
– Others 0.79 149.86 0.66 134.22
Other Advances (including advances with statutory
authorities, prepaid expenses, employees etc.) 1197.50 104.05 1048.69 120.03
Other Receivables* 189.45 – 145.52 –

TOTAL 1388.09 1211.74 1195.15 1228.92

* Includes receivables on account of Government grants.

As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

8. Inventories*

(At lower of cost and net realisable value)

Raw materials (including packing materials) 6937.54 6442.11
Work-in-progress 263.47 232.70
Finished goods (manufactured) 2063.30 1638.93
Stock-in-trade (goods purchased for resale) 700.11 1150.95
Stores and spares 514.39 453.19
Intermediates - Tissue paper and Paperboards 115.09 79.89

TOTAL 10593.90 9997.77

The above includes goods in transit as under:

Raw materials (including packing materials) 229.89 301.74
Stock-in-trade (goods purchased for resale) 2.37 2.58
Stores and spares 4.37 4.12

TOTAL 236.63 308.44

The cost of inventories recognised as an expense includes ` 20.67 Crores (2022 - ` 17.58 Crores) in respect of write-downs of
inventory to net realisable value. During the year, reversal of previous write-downs of ` 0.81 Crore (2022 - ` 0.91 Crore) have been
made owing to subsequent increase in realisable value.
Inventories of ` 337.08 Crores (2022 - ` 574.71 Crores) are expected to be recovered after more than twelve months. The operating
cycle of the Company is twelve months.
* 
Cash credit facilities are secured by hypothecation of inventories of the Company, both present and future. The quarterly
returns / statements filed by the Company with the bank(s) in respect of such facilities are in agreement with the books of accounts.

ITC Limited REPORT AND ACCOUNTS 2023 171

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

9. 
Current Investments (at fair value through profit or loss, unless
stated otherwise) (Contd.)

INVESTMENT IN BONDS IN THE NATURE OF

DEBENTURES

Quoted

Tax Free Bonds - Secured, Redeemable &

Non-Convertible

Indian Railway Finance Corporation Limited

7.18% - Series 86 - 19-Feb-2023 1,000 – – 10,00,000 101.82

8.23% - Series 91 - 18-Feb-2024 1,000 20,00,000 201.79 20,00,000 211.32

Power Finance Corporation Limited

8.01% - Series 107 A - 30-Aug-2023 10,00,000 1,000 100.26 1,000 103.98

8.18% - Series 1 A - 16-Nov-2023 1,000 12,95,560 130.24 12,95,560 135.79

REC Limited

7.22% - Series 1 - 19-Dec-2022 1,000 – – 30,00,000 304.51

8.01% - Series 3 A - 29-Aug-2023 10,00,000 1,000 100.25 1,000 103.96

Taxable Bonds - Unsecured, Redeemable &

Non-Convertible

Export Import Bank of India

9.15% - Series P16 - 05-Sep-2022 10,00,000 – – 300 30.59

INVESTMENT IN CERTIFICATE OF DEPOSITS

Unquoted

Axis Bank Limited - 19-Jul-2023 5,00,000 42,000 2045.45 – –

Export Import Bank of India - 17-Aug-2023 5,00,000 1,000 48.37 – –

Export Import Bank of India - 29-Aug-2023 5,00,000 1,000 48.23 – –

HDFC Bank Limited - 17-Jul-2023 5,00,000 9,500 462.88 – –

HDFC Bank Limited - 11-Aug-2023 5,00,000 1,600 77.50 – –

HDFC Bank Limited - 14-Aug-2023 5,00,000 8,500 411.43 – –

HDFC Bank Limited - 12-Sep-2023 5,00,000 12,000 576.92 – –

ICICI Bank Limited - 19-Jul-2023 5,00,000 5,000 243.51 – –

ICICI Bank Limited - 07-Aug-2023 5,00,000 1,000 48.48 – –

ICICI Bank Limited - 12-Dec-2023 5,00,000 5,000 235.39 – –

Kotak Mahindra Bank Limited - 19-Jul-2023 5,00,000 6,000 292.21 – –

Carried over 5022.91 991.97

172 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

9. 
Current Investments (at fair value through profit or loss, unless
stated otherwise) (Contd.)
Brought forward 5022.91 991.97
INVESTMENT IN CERTIFICATE OF DEPOSITS (Contd.)

Kotak Mahindra Bank Limited - 27-Jul-2023 5,00,000 1,000 48.61 – –

Kotak Mahindra Bank Limited - 17-Aug-2023 5,00,000 500 24.18 – –

National Bank for Agriculture and Rural

Development - 23-Jan-2024 5,00,000 1,500 69.95 – –

Small Industries Development Bank of

India - 07-Jun-2023 5,00,000 2,000 98.38 – –

Small Industries Development Bank of

India - 29-Aug-2023 5,00,000 1,000 48.23 – –

Small Industries Development Bank of

India - 12-Sep-2023 5,00,000 1,000 48.08 – –

INVESTMENT IN DEBT MUTUAL FUNDS

Quoted

Exchange Traded Funds

Edelweiss Mutual Fund 1,000 30,00,000 368.71 30,00,000 351.13

Nippon India Mutual Fund 10 58,69,560 65.73 58,69,560 63.61

Unquoted
Liquid / Overnight Funds

Nippon India Mutual Fund 100 66,75,451 80.01 87,91,983 100.01

Ultra Short Term Funds

Aditya Birla Sun Life Mutual Fund 100 1,86,63,673 874.86 1,86,63,673 828.81

Kotak Mahindra Mutual Fund 10 23,75,47,122 897.90 23,75,47,122 850.55

SBI Mutual Fund 1,000 2,47,159 127.50 2,47,159 121.04

Low Duration Funds

Aditya Birla Sun Life Mutual Fund 100 87,701 5.36 – –

Axis Mutual Fund 1,000 14,17,525 387.03 14,17,525 367.15

DSP Mutual Fund 10 17,22,63,805 290.89 17,22,63,805 277.37

ICICI Prudential Mutual Fund 100 1,40,07,103 647.96 53,44,324 233.93

Bandhan Mutual Fund

(Formerly IDFC Mutual Fund) 10 7,34,11,386 245.79 7,34,11,386 233.89

SBI Mutual Fund 1,000 19,73,814 604.99 8,30,697 241.68

Carried over 9957.07 4661.14

ITC Limited REPORT AND ACCOUNTS 2023 173

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

9. 
Current Investments (at fair value through profit or loss, unless
stated otherwise) (Contd.)
Brought forward 9957.07 4661.14
INVESTMENT IN DEBT MUTUAL FUNDS (Contd.)
Money Market Funds
Aditya Birla Sun Life Mutual Fund 100 40,95,539 129.50 40,95,539 122.42
Axis Mutual Fund 1,000 20,57,053 250.47 – –
Bandhan Mutual Fund
(Formerly IDFC Mutual Fund) 10 4,22,87,680 155.87 4,22,87,680 147.67
HDFC Mutual Fund 1,000 7,47,666 367.98 2,39,118 111.30
Kotak Mahindra Mutual Fund 1,000 6,53,754 250.28 – –
Nippon India Mutual Fund 1,000 6,60,345 234.26 6,60,345 221.25
SBI Mutual Fund 10 6,33,58,708 238.05 6,33,58,708 225.31
Floating Rate Funds
Aditya Birla Sun Life Mutual Fund 100 1,94,01,569 581.25 1,94,01,569 550.13
HDFC Mutual Fund 10 10,07,90,662 427.05 10,07,90,662 404.13
Nippon India Mutual Fund 10 6,22,64,756 246.04 6,22,64,756 235.01
Short Duration Funds
DSP Mutual Fund 10 – – 3,12,12,253 126.54
IDFC Mutual Fund 10 – – 6,58,03,493 322.42
Nippon India Mutual Fund 10 – – 3,86,19,184 175.83
SBI Mutual Fund 10 5,40,50,081 154.07 5,40,50,081 147.17
Banking & PSU Debt Funds
Axis Mutual Fund 1,000 31,86,227 720.37 31,86,227 689.41
Bandhan Mutual Fund
(Formerly IDFC Mutual Fund) 10 14,17,61,931 296.13 14,17,61,931 283.77
Corporate Bond Funds
Aditya Birla Sun Life Mutual Fund 10 – – 70,15,575 63.27
ICICI Prudential Mutual Fund 10 2,42,40,779 63.09 2,42,40,779 59.60
INVESTMENT IN BONDS IN THE NATURE OF
DEBENTURES (at amortised cost)
Quoted
Taxable Bonds - Unsecured, Redeemable &
Non-Convertible
National Bank for Agriculture and Rural
Development
6.40% - Series 20K - 31-Jul-2023 10,00,000 2,700 268.84 – –

Carried over 14340.32 8546.37

174 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

9. 
Current Investments (at fair value through profit or loss, unless
stated otherwise) (Contd.)
Brought forward 14340.32 8546.37

Current Portion of Non-current investments

INVESTMENT IN PREFERENCE SHARES

(at amortised cost)

In Subsidiaries

Unquoted

North East Nutrients Private Limited

(Cumulative Non-Convertible Redeemable Preference Shares) 100 – – 18,00,000 18.00
INVESTMENT IN BONDS IN THE NATURE OF
DEBENTURES (at amortised cost)

Quoted

Tax Free Bonds - Secured, Redeemable &

Non-Convertible
Housing and Urban Development Corporation
Limited

7.34% - Series 1 - 16-Feb-2023 1,000 – – 3,29,870 33.27

India Infrastructure Finance Company Limited

7.19% - Series I - 22-Jan-2023 1,000 – – 5,00,000 50.34

8.01% - Series 1A - 12-Nov-2023 1,000 50,000 5.05 – –

Indian Railway Finance Corporation Limited

7.18% - Series 86 - 19-Feb-2023 1,000 – – 5,00,000 50.37

8.23% - Series 91 - 18-Feb-2024 1,000 8,00,000 81.36 – –

8.35% - Series 89 - 21-Nov-2023 10,00,000 100 10.13 – –

Taxable Bonds - Unsecured, Redeemable &
Non-Convertible
Export Import Bank of India

5.20% - Series X 01 - 04-Mar-2025

(with Put and Call option on 04-Mar-2024) 10,00,000 2,000 200.00 – –
Housing and Urban Development
Corporation Limited

6.99% - Series E - 11-Nov-2022 10,00,000 – – 700 70.05

7.61% - Series A - 22-Jun-2022 10,00,000 – – 250 25.02

8.40% - Series C - 11-Apr-2022 10,00,000 – – 850 85.00

Carried over 14636.86 8878.42

ITC Limited REPORT AND ACCOUNTS 2023 175

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

9. 
Current Investments (at fair value through profit or loss, unless
stated otherwise) (Contd.)
Brought forward 14636.86 8878.42
INVESTMENT IN BONDS IN THE NATURE OF
DEBENTURES (Contd.)
National Bank for Agriculture and Rural
Development
4.60% - Series 21 E - 29-Jul-2024
(with Put and Call option on 29-Jul-2022) 10,00,000 – – 5,000 499.95
6.70% - Series 20 H - 11-Nov-2022 10,00,000 – – 250 25.00

6.98% - Series 20 G - 19-Sep-2022 10,00,000 – – 2,000 200.00

7.70% - Series 20 D - 13-Jun-2022 10,00,000 – – 500 50.09

7.85% - Series 20 B - 23-May-2022 10,00,000 – – 900 90.13

7.90% - Series 20 A - 18-Apr-2022 10,00,000 – – 600 60.02

Power Finance Corporation Limited

5.47% - Series 206 - 19-Aug-2023 10,00,000 100 10.01 – –

6.72% - Series 203 A - 09-Jun-2023 10,00,000 900 90.25 – –

6.75% - Series 202 A - 22-May-2023 10,00,000 1,200 120.25 – –

7.10% - Series 169 A - 08-Aug-2022 10,00,000 – – 700 70.02

7.35% - Series 191 - 15-Oct-2022 10,00,000 – – 4,500 450.00

8.45% - Series 181 - 11-Aug-2022 10,00,000 – – 250 25.14

REC Limited

7.09% - Series 152 - 17-Oct-2022 10,00,000 – – 300 29.95

7.09% - Series 185 - 13-Dec-2022 10,00,000 – – 2,000 200.00

Zero Coupon Bonds - Secured, Redeemable &

Non-Convertible

LIC Housing Finance Limited

Tranche 378 - 04-May-2022 10,00,000 – – 500 64.78

Perpetual Bonds - Unsecured, Subordinated &

Non-Convertible#

ICICI Bank Limited

9.15% - Series DMR 18AT (with first Call option on

20-Jun-2023) 10,00,000 2,647 264.70 – –

9.90% - Series DDE 18AT (with first Call option on

28-Dec-2023) 10,00,000 3,000 300.00 – –

Carried over 15422.07 10643.50

176 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
Face Value ` As at 31st March, 2023 As at 31st March, 2022
(Fully Paid
unless stated (` in (` in
Number Number
otherwise) Crores) Crores)

9. 
Current Investments (at fair value through profit or loss, unless
stated otherwise) (Contd.)

Brought forward 15422.07 10643.50

INVESTMENT IN BONDS IN THE NATURE OF
DEBENTURES (Contd.)

State Bank of India

9.37% - Series II (with first Call option on 21-Dec-2023) 10,00,000 2,350 235.00 – –

9.56% - Series I (with first Call option on 04-Dec-2023) 10,00,000 7,000 700.00 – –

INVESTMENT IN DEBT MUTUAL FUNDS

Quoted
Fixed Maturity Plans

Aditya Birla Sun Life Mutual Fund 10 – – 11,70,00,000 150.27

HDFC Mutual Fund 10 – – 4,00,00,000 52.17

ICICI Prudential Mutual Fund 10 – – 10,20,00,000 131.07

IDFC Mutual Fund 10 – – 2,20,00,000 27.97

Kotak Mahindra Mutual Fund 10 – – 19,70,00,000 254.79

Nippon India Mutual Fund 10 – – 8,50,00,000 113.61

SBI Mutual Fund 10 – – 19,70,00,000 251.57

Aggregate amount of quoted Investments 3252.57 4467.29

Aggregate amount of unquoted Investments 13104.50 7157.66

Total 16357.07 11624.95

Aggregate market value of quoted investments ` 3253.03 Crores (2022 - ` 4483.77 Crores).
# Additional
Tier 1 bonds, which are perpetual in nature, are issued by commercial banks under Reserve Bank of India guidelines.
These have been classified as debt instruments by the Company based on the substantive characteristics of the contract.

ITC Limited REPORT AND ACCOUNTS 2023 177

Notes to the Financial Statements
As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

10. Trade receivables (Current)

Secured, considered good 55.96 55.09

Unsecured, considered good 2265.37 1897.41
Which have significant increase in credit risk – –
Credit impaired 167.87 170.65
Less: Allowance for Credit impairment 167.87 170.65

TOTAL 2321.33 1952.50

Trade receivables ageing schedule (` in Crores)

Outstanding for following periods from due date of payment as at 31st March, 2023

Less than 6 months- More than

Not Due 6 months 1 year 1-2 years 2-3 years 3 years Total

Undisputed Trade Receivables – considered

good 1566.84 731.95 17.39 0.63 4.52 – 2321.33
Undisputed Trade Receivables – which have
significant increase in credit risk – – – – – – –
Undisputed Trade Receivables – credit impaired – 0.02 7.85 6.74 22.00 20.95 57.56
Disputed Trade Receivables – considered good – – – – – – –
Disputed Trade Receivables – which have
significant increase in credit risk – – – – – – –
Disputed Trade Receivables – credit impaired – – 0.21 0.55 1.75 107.80 110.31
SUB-TOTAL 1566.84 731.97 25.45 7.92 28.27 128.75 2489.20
Less: Allowance for Credit impairment 167.87
TOTAL 2321.33

(` in Crores)
Outstanding for following periods from due date of payment as at 31st March, 2022

Less than 6 months- More than

Not Due 6 months 1 year 1-2 years 2-3 years 3 years Total

Undisputed Trade Receivables – considered

good 1230.08 705.49 11.16 5.31 0.32 0.14 1952.50
Undisputed Trade Receivables – which have
significant increase in credit risk – – – – – – –
Undisputed Trade Receivables – credit impaired – 1.33 4.80 25.85 5.16 19.67 56.81
Disputed Trade Receivables – considered good – – – – – – –
Disputed Trade Receivables – which have
significant increase in credit risk – – – – – – –
Disputed Trade Receivables – credit impaired – – 0.02 2.41 5.92 105.49 113.84
SUB-TOTAL 1230.08 706.82 15.98 33.57 11.40 125.30 2123.15
Less: Allowance for Credit impairment 170.65
TOTAL 1952.50

178 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

11. Cash and cash equivalents@

Balances with Banks

Current accounts 203.19 181.46
Cheques, drafts on hand 1.37 0.89
Cash on hand 2.32 2.62

TOTAL 206.88 184.97

@ Cash and cash equivalents include cash on hand, cheques, drafts on hand, cash at bank and deposits with banks with original
maturity of 3 months or less.

12. Other bank balances

Earmarked balances 239.30 224.36

In deposit accounts* 3385.08 3468.61

TOTAL 3624.38 3692.97

* Represents deposits with original maturity of more than 3 months having remaining maturity of less than 12 months from the
Balance Sheet date.

ITC Limited REPORT AND ACCOUNTS 2023 179

Notes to the Financial Statements
As at As at As at As at
31st March, 2023 31st March, 2023 31st March, 2022 31st March, 2022
(No. of Shares) (` in Crores) (No. of Shares) (` in Crores)

13. Equity Share capital

Authorised
Ordinary Shares of ` 1.00 each 20,00,00,00,000 2000.00 20,00,00,00,000 2000.00
Issued and Subscribed
Ordinary Shares of ` 1.00 each, fully paid 12,42,80,17,741 1242.80 12,32,32,55,931 1232.33

A) Reconciliation of number of
Ordinary Shares outstanding
As at beginning of the year 12,32,32,55,931 1232.33 12,30,88,44,231 1230.88
Add: Issue of Shares on exercise
of Options 10,47,61,810 10.48 1,44,11,700 1.44
As at end of the year 12,42,80,17,741 1242.80 12,32,32,55,931 1232.33

B) Shareholders holding more than 5% of the Ordinary Shares in the Company

As at As at As at As at
31st March, 2023 31st March, 2023 31st March, 2022 31st March, 2022
(No. of Shares) (%) (No. of Shares) (%)

Tobacco Manufacturers (India) Limited 2,97,83,47,320 23.96 2,97,83,47,320 24.17

Life Insurance Corporation of India 1,89,68,61,285 15.26 1,95,02,36,958 15.83
Specified Undertaking of the
Unit Trust of India 97,45,31,427 7.84 97,45,31,427 7.91

C) Shareholding of Promoters: Nil

D) Ordinary Shares allotted as fully paid pursuant to contract(s) without payment being received in cash or as fully paid up
Bonus Shares during the period of five years immediately preceding 31st March : Nil

E) Rights, preferences and restrictions attached to the Ordinary Shares

The Ordinary Shares of the Company, having par value of ` 1.00 per share, rank pari passu in all respects including voting rights and
entitlement to dividend.

F) Shares reserved for issue under Options

As at As at
31st March, 2023 31st March, 2022
(No. of Shares) (No. of Shares)

Ordinary Shares of ` 1.00 each 13,20,94,790 22,76,87,310

Terms and Conditions of Options Granted

Each Option entitles the holder thereof to apply for and be allotted ten Ordinary Shares of the Company of ` 1.00 each upon payment of the exercise
price during the exercise period. The exercise period commences from the date of vesting of the Options and expires at the end of five years from
the date of vesting in respect of Options.
The vesting period for conversion of Options is as follows:
On completion of 12 months from the date of grant of the Options : 30% vests
On completion of 24 months from the date of grant of the Options : 30% vests
On completion of 36 months from the date of grant of the Options : 40% vests
The Options have been granted at the ‘market price’ as defined under the Securities and Exchange Board of India (Share Based Employee Benefits
and Sweat Equity) Regulations, 2021.
Further details of ITC Employee Stock Option Schemes are provided in Note 27(xii).

180 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

Current Non-Current Current Non-Current

14. Borrowings

Unsecured
Deferred payment liabilities
Sales tax deferment loans* 1.26 3.28 0.74 4.54

TOTAL 1.26 3.28 0.74 4.54

*Interest free deferral period of 14 years and repayable by 2025-26.

The repayment schedule is summarised as under:

As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

In the first year 1.26 0.74

In the second year 1.52 1.26
In the third to fifth year 1.76 3.28

TOTAL 4.54 5.28

As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

Current Non-Current Current Non-Current

15. Lease Liabilities *

Lease Liabilities 46.54 273.59 46.09 259.79

TOTAL 46.54 273.59 46.09 259.79

* Refer Note 27(vii)

Movement of Lease Liabilities during the year

Particulars 31st March, 2023 31st March, 2022

Opening Lease Liabilities 305.88 323.72

New Leases recognised 70.96 40.52
Remeasurements and withdrawals (4.74) (3.94)
Interest expense on Lease Liabilities 25.54 26.96
Payment of Lease Liabilities (including interest) (77.51) (81.38)

Closing Lease Liabilities 320.13 305.88

ITC Limited REPORT AND ACCOUNTS 2023 181

Notes to the Financial Statements
As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

16. Other financial liabilities

Non-current
Others
(Includes payable towards employee benefits, retention money payable
towards property, plant and equipment etc.) 152.49 96.50

TOTAL 152.49 96.50

Current
Interest accrued 1.69 1.71
Unpaid dividend * 239.07 224.13
Unpaid matured deposits and interest accrued thereon … …
Unpaid matured debentures / bonds and interest accrued thereon ** 0.30 0.30
Others (Includes payable towards employee benefits, property, plant and
equipment, derivatives designated as hedging instruments, contingent
consideration on business combination etc.) 1489.62 1277.45

TOTAL 1730.68 1503.59

* Represents dividend amounts either not claimed or kept in abeyance in accordance with Section 126 of the Companies Act, 2013
or such amounts in respect of which Prohibitory / Attachment Orders are on record with the Company.
** Represents amounts which are subject matter of a pending legal dispute with a bank for which the Company has filed a suit.

As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

Current Non-Current Current Non-Current

17. Provisions

Provision for employee benefits [Refer Note 27(vi)]

Retirement benefits 55.43 139.45 47.11 126.57
Other benefits 8.16 62.38 8.49 60.30

TOTAL 63.59 201.83 55.60 186.87

182 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

18. Deferred tax liabilities (Net)

Deferred tax liabilities 2074.58 2004.26

Less: Deferred tax assets 453.45 337.12
TOTAL 1621.13 1667.14

(` in Crores)
Recognised Recognised Reclassified
Opening in profit or Recognised directly in to profit or Closing
Movement in deferred tax liabilities / assets balances Balance loss in OCI Equity loss Balance
2022-23
Deferred Tax liabilities / assets in relation to:
On fiscal allowances on property, plant and equipment,
investment property etc. 1642.06 79.55 – – – 1721.61
On Excise Duty / National Calamity Contingent Duty on
closing stock 79.21 38.72 – – – 117.93
On cash flow hedges 4.82 – (34.32) 2.62 27.72 0.84
Other timing differences 278.17 (35.16) (8.81) – – 234.20
Total deferred tax liabilities 2004.26 83.11 (43.13) 2.62 27.72 2074.58
On employees’ separation and retirement etc. 62.59 65.04 5.00 – – 132.63
On provision for doubtful debts / advances 53.11 (0.63) – – – 52.48
On State and Central taxes etc. 69.62 0.45 – – – 70.07
Other timing differences 151.80 46.47 – – – 198.27
Total deferred tax assets 337.12 111.33 5.00 – – 453.45
Deferred tax liabilities (Net) 1667.14 (28.22) (48.13) 2.62 27.72 1621.13

2021-22
Deferred Tax liabilities / assets in relation to:
On fiscal allowances on property, plant and equipment,
investment property etc. 1627.98 14.08 – – – 1642.06
On Excise Duty / National Calamity Contingent Duty on
closing stock 72.25 6.96 – – – 79.21
On cash flow hedges 1.66 – 9.05 2.44 (8.33) 4.82
Other timing differences 312.12 (34.88) 0.93 – – 278.17
Total deferred tax liabilities 2014.01 (13.84) 9.98 2.44 (8.33) 2004.26
On employees’ separation and retirement etc. 59.00 1.09 2.50 – – 62.59
On provision for doubtful debts/advances 50.73 2.38 – – – 53.11
On State and Central taxes etc. 64.36 5.26 – – – 69.62
Other timing differences 112.19 39.61 – – – 151.80
Total deferred tax assets 286.28 48.34 2.50 – – 337.12
Deferred tax liabilities (Net) 1727.73 (62.18) 7.48 2.44 (8.33) 1667.14

As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

19. Other liabilities (Current)

Statutory Liabilities 4039.86 3599. 11

Advances received from customers 1275.96 1382.17
Others (includes deferred revenue, accruals, customer deposits etc.) 130.34 116.00
TOTAL 5446.16 5097.28

ITC Limited REPORT AND ACCOUNTS 2023 183

Notes to the Financial Statements
As at As at
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

20. Current Tax Liabilities (Net)

Current taxation (net of advance payment) 776.13 551.39

TOTAL 776.13 551.39

For the year ended For the year ended

31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

21A. Revenue from operations

Sale of Products 66903.80 57817.10

Sale of Services 2577.09 1283.99
Gross Revenue from sale of products and services* [including Excise
Duty / National Calamity Contingent Duty of ` 4054.16 Crores
(2022 - ` 3376.63 Crores)] 69480.89 59101.09
Other Operating Revenues # 770.39 644.47

TOTAL 70251.28 59745.56

* Net of sales returns, damaged stocks and estimates of variable consideration such as discounts to customers.
# Includes Government grants of ` 300.58 Crores (2022 - ` 258.92 Crores) on account of Fiscal and Export Incentives etc.

21B. Gross Revenue from sale of products and services*

FMCG
– Cigarettes etc. 28206.83 23451.39
– Branded Packaged Food Products 15762.46 13195.84
– Others (Education and Stationery Products, Personal Care Products,
Safety Matches, Agarbattis etc.) 3319.02 2768.91

Hotels
– Income from Sale of Services 2573.22 1279.33

Agri Business
– Unmanufactured Tobacco 2677.69 1797.44
– Other Agri Products and Commodities (Wheat, Rice, Spices,
Coffee, Soya etc.) 9637.17 10328.61

Paperboards, Paper and Packaging

– Paperboards and Paper 6570.82 5586.19
– Printed Materials 733.68 693.38

TOTAL 69480.89 59101.09

* Net of sales returns, damaged stocks and estimates of variable consideration such as discounts to customers.

184 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
For the year ended For the year ended
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

22. Other income

Interest income 1434.53 1004.59

Dividend income 556.90 857.46
Other non-operating income 157.77 141.19
Other gains and losses 288.41 586.73
TOTAL 2437.61 2589.97

Interest income:
a) Deposits with banks etc. - carried at amortised cost 382.73 177.50
b) Financial assets:
– mandatorily measured at FVTPL 206.61 87.96
– measured at amortised cost 719.79 735.32
– measured at FVTOCI 121.02 3.79
c) Others (from statutory authorities etc.) 4.38 0.02
TOTAL 1434.53 1004.59

Dividend income :
a) Equity instruments measured at FVTOCI held at the end of
reporting period 0.01 0.01
b) Other investments 556.89 857.45
TOTAL 556.90 857.46

Other gains and losses:

Net foreign exchange gain / (loss) 13.74 31.94
Net gain / (loss) arising on financial instruments measured at
amortised cost / mandatorily measured at FVTPL (Refer Note 30)* 283.17 554.79
Impairment of investment in joint venture [Refer Note 27(viii)] (8.50) –
TOTAL 288.41 586.73

* Includes ` 141.37 Crores (2022 - ` 186.06 Crores) being net gain / (loss) on sale of investments.

23. Employee benefits expense

Salaries and wages 2905.05 2634.04

Contribution to Provident and other funds 171.87 169.85
Share based payments to employees [Includes cash-settled share
based payments ` 208.62 Crores (2022 - ` 28.68 Crores)] 267.12 61.19
Staff welfare expenses 280.91 238.37
3624.95 3103.45
Less: Recoveries made / reimbursements received 55.49 41.46
TOTAL 3569.46 3061.99

24. Finance costs

Interest expense:
– On Lease Liabilities 25.45 26.87
– On other financial liabilities measured at amortised cost 4.00 2.18
– Others (to statutory authorities etc.) 12.36 12.90
TOTAL 41.81 41.95

ITC Limited REPORT AND ACCOUNTS 2023 185

Notes to the Financial Statements
For the year ended For the year ended
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

25. Other Expenses

Power and fuel 1199.84 864.05

Consumption of stores and spare parts 446.03 353.48
Contract processing charges 941.72 814.41
Rent 239.68 196.00
Rates and taxes 153.02 114.59
Insurance 132.43 122.39
Repairs
– Buildings 104.80 61.11
– Machinery 325.43 263.29
– Others 81.43 55.05
Maintenance and upkeep 312.93 251.89
Outward freight and handling charges 1648.69 1624.97
Warehousing charges 233.72 200.35
Advertising / Sales promotion 1155.71 980.63
Market research 153.38 161.59
Design and product development 48.08 36.17
Hotel reservation / Marketing expenses 56.76 27.14
Retail accessories 224.54 206.54
Brokerage and discount - sales 17.82 23.55
Commission to selling agents 18.92 18.30
Doubtful and bad debts (0.93) 10.64
Doubtful and bad advances, loans and deposits 1.16 1.15
Bank and credit card charges 31.77 18.58
Information technology services 311.31 274.48
Travelling and conveyance 266.31 182.18
Training and development 18.55 13.64
Legal expenses 37.07 30.42
Consultancy / Professional fees 175.52 153.08
Postage, telephone etc. 19.48 18.33
Printing and stationery 16.66 11.80
(Gain) / Loss on sale of property, plant and equipment - Net 4.88 (58.77)
Loss on sale of stores and spare parts - Net 1.45 4.71
Miscellaneous expenses 1271.00 1077.36
TOTAL 9649.16 8113.10
Miscellaneous expenses include :
(1) Auditors’ remuneration and expenses*
Audit fees 3.40 3.40
Tax audit fees 0.70 0.70
Fees for limited review 1.40 1.40
Fees for other services # 0.44 0.58
Reimbursement of expenses 0.22 0.01
(2) Cost auditors’ fees 0.11 0.11

* Excluding taxes.
# Auditors’ remuneration excludes remuneration for services amounting to ` 2.44 Crores (2022 - ` 1.88 Crores) rendered by
network firm / entity which is a part of the network of which auditor is a member firm.

186 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
For the year ended For the year ended
31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

26. Income tax expenses

A. Amount recognised in profit or loss

Current tax
Income tax for the year 6019.69 4803.32
Adjustments / (credits) related to previous years - Net 5.63 30.56
Total current tax 6025.32 4833.88
Deferred tax
Deferred tax for the year (22.59) (31.62)
Adjustments / (credits) related to previous years - Net (5.63) (30.56)
Total deferred tax (28.22) (62.18)
TOTAL 5997.10 4771.70

B. Amount recognised in other comprehensive income

The tax (charge) / credit arising on income and expenses recognised in other comprehensive income is as follows:
On items that will not be reclassified to profit or loss
Remeasurements gains / (losses) on defined benefit plans 5.00 (7.96)
Related to designated portion of hedging instruments in cash flow hedges (5.34) 3.00
(0.34) (4.96)
On items that will be reclassified to profit or loss
Related to designated portion of hedging instruments in cash flow hedges 11.94 (3.72)
Debt instruments through other comprehensive income 8.81 (0.93)
TOTAL 20.41 (9.61)

C. Amount recognised directly in equity

The income tax (charged) / credited directly to equity during the year is as follows:
Deferred tax
Arising on gains / (losses) of hedging instruments in cash flow hedges
transferred to the initial carrying amounts of hedged items 2.62 2.44
TOTAL 2.62 2.44

D. Reconciliation of effective tax rate

The income tax expense for the year can be reconciled to the accounting profit as follows:
Profit before tax 24750.41 19829.53
Income tax expense calculated @ 25.168% (2022 - 25.168%) 6229.18 4990.70
Effect of tax relating to uncertain tax positions 25.29 26.73
Effect of different tax rate on certain items (162.27) (79.46)
Effect of Income not taxable (76.60) (81.95)
Other differences (18.50) (84.32)
Income tax recognised in profit or loss 5997.10 4771.70

The tax rate of 25.168% (22% + surcharge @10% and cess @4%) used for the year 2022-23 and 2021-22 is the corporate tax rate applicable
on taxable profits under the Income-tax Act, 1961.

ITC Limited REPORT AND ACCOUNTS 2023 187

Notes to the Financial Statements

27. Additional Notes to the Financial Statements

(i) Exceptional items represent proceeds received in partial settlement of the insurance claim towards leaf tobacco stocks, which
were destroyed due to fire at a third party owned warehouse in an earlier year.

(ii) Earnings per share: 2023 2022

Earnings per share has been computed as under:

(a) Profit for the year (` in Crores) 18753.31 15057.83
(b) Weighted average number of Ordinary shares outstanding for
the purpose of basic earnings per share 12,38,15,12,709 12,31,65,71,748
(c) Effect of potential Ordinary shares on Employee Stock Options
outstanding 3,28,14,400 54,47,370
(d) Weighted average number of Ordinary shares in computing
diluted earnings per share [(b) + (c)] 12,41,43,27,109 12,32,20,19,118
(e) Earnings per share on profit for the year
(Face Value ` 1.00 per share)
– Basic [(a) / (b)] 15.15 12.22
– Diluted [(a) / (d)] 15.11 12.22

(iii) Amount required to be spent by the Company during the year as per Section 135 read with Section 198 of the Companies Act,
2013 - ` 364.91 Crores (2022 - ` 354.27 Crores) being 2% of the average Net Profit of the Company.
Expenditure incurred during the year is ` 365.50 Crores (2022 - ` 355.03 Crores) comprising employee benefits expense of
` 14.33 Crores (2022 - ` 15.92 Crores) and other expenses of ` 351.17 Crores (2022 - ` 339.11 Crores), of which ` 62.71 Crores
(2022 - ` 26.01 Crores) is accrued for payment as on 31st March, 2023. The above includes an amount of ` 23.10 Crores
(2022 - ` 3.90 Crores) with regard to ongoing project, which has been deposited in the Unspent CSR Account within 30 days from
the end of the financial year. Amount available for set off in succeeding financial years is ` 1.35 Crores (2022 - ` 0.76 Crore).
Such CSR expenditure of ` 365.50 Crores (2022 - ` 355.03 Crores) excludes ` 9.43 Crores (2022 - ` 5.85 Crores) being the
excess of expenditure of salaries of CSR personnel and administrative expenses over the limit of 5% of total CSR expenditure
laid down under Rule 7(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 for such expenses.
CSR activities undertaken during the year pertain to: poverty alleviation; promoting education and skill development; promoting
healthcare including preventive healthcare; providing sanitation and drinking water; ensuring environmental sustainability;
enabling climate resilience; rural development projects; creating livelihoods for people (especially those from disadvantaged
sections of society); protection of national heritage, art and culture; preserving and promoting music; and providing relief and
assistance to victims of disasters and calamities.
(iv) Research and Development expenses for the year amount to ` 161.31 Crores (2022- ` 143.59 Crores).
(v) Contingent liabilities and commitments:
(a) Contingent liabilities
Claims against the Company not acknowledged as debts ` 875.28 Crores (2022 - ` 880.58 Crores), including interest on
claims, where applicable, estimated to be ` 283.62 Crores (2022 - ` 285.07 Crores). These comprise:
Excise duty, VAT / sales taxes, GST and other indirect taxes claims disputed by the Company relating to issues of
applicability and classification aggregating ` 585.19 Crores (2022 - ` 593.95 Crores), including interest on claims, where
applicable, estimated to be ` 261.96 Crores (2022 - ` 267.18 Crores).
Local Authority taxes / cess / royalty on property, utilities, etc. claims disputed by the Company relating to issues of
applicability and determination aggregating ` 239.94 Crores (2022 - ` 236.63 Crores), including interest on claims,
where applicable, estimated to be ` 15.09 Crores (2022 - ` 11.22 Crores).
Third party claims arising from disputes relating to contracts aggregating ` 31.79 Crores (2022 - ` 29.22 Crores),
including interest on claims, where applicable, estimated to be ` 0.17 Crore (2022 - ` 0.10 Crore).
Other matters ` 18.36 Crores (2022 - ` 20.78 Crores), including interest on other matters, where applicable, estimated
to be ` 6.40 Crores (2022 - ` 6.57 Crores).
It is not practicable for the Company to estimate the closure of these issues and the consequential timings of cash flows,
if any, in respect of the above.

188 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

27. Additional Notes to the Financial Statements (Contd.)

(b) Commitments


Estimated amount of contracts remaining to be executed on capital accounts and not provided for ` 1403.04 Crores
(2022 - ` 984.51 Crores).


Uncalled liability on investments is ` 60.71 Crores (2022 - ` 54.89 Crores).

(vi) Employee Benefit Plans

Description of Plans

The Company makes contributions to both Defined Benefit and Defined Contribution Plans for qualifying employees. These
Plans are administered through approved Trusts, which operate in accordance with the Trust Deeds, Rules and applicable
Statutes. The concerned Trusts are managed by Trustees who provide strategic guidance with regard to the management of
their investments and liabilities and also periodically review their performance.

Provident Fund, Pension and Gratuity Benefits are funded and Leave Encashment Benefits are unfunded in nature. The Defined
Benefit Pension Plans are based on employees’ pensionable remuneration and length of service. Under the Provident Fund,
Gratuity and Leave Encashment Schemes, employees are entitled to receive lump sum benefits.

(a) Defined Benefit Plans:

The liabilities arising in the Defined Benefit Schemes are determined in accordance with the advice of independent,
professionally qualified actuaries, using the projected unit credit method. The Company makes regular contributions to
these Defined Benefit Plans. Additional contributions are made to these plans as and when required based on actuarial
valuation. Some Group companies also participate in these Plans. These participating Group companies make contributions
to the Plans for their respective employees on a uniform basis and each entity ascertains their obligation through actuarial
valuation. The net Defined benefit cost is recognised by these companies in their respective Financial Statements.

Risk Management

The Defined Benefit Plans expose the Company to risk of actuarial deficit arising out of investment risk, interest rate risk and
salary cost inflation risk.

Investment Risk: This may arise from volatility in asset values due to market fluctuations and impairment of assets due to
credit losses. These Plans primarily invest in debt instruments such as Government securities and highly rated corporate
bonds – the valuation of which is inversely proportional to the interest rate movements.

Interest Rate Risk: The present value of Defined Benefit Plan liability is determined using the discount rate based on the
market yields prevailing at the end of reporting period on Government securities. A decrease in yields will increase the fund
liabilities and vice-versa.

Salary Cost Inflation Risk: The present value of the Defined Benefit Plan liability is calculated with reference to the future
salaries of participants under the Plan. Increase in salary might lead to higher liabilities.

These Plans have a relatively balanced mix of investments in order to manage the above risks. The investment strategy is
designed based on the interest rate scenario, liquidity needs of the Plans and pattern of investment as prescribed under
various statutes.

The Trustees regularly monitor the funding and investments of these Plans. Risk mitigation systems are in place to ensure
that the health of the portfolio is regularly reviewed and investments do not pose any significant risk of impairment. Periodic
audits are conducted to ensure adequacy of internal controls. Pension obligation of the employees is secured by purchasing
annuities thereby de-risking the Plans from future payment obligation.

ITC Limited REPORT AND ACCOUNTS 2023 189

Notes to the Financial Statements

27. Additional Notes to the Financial Statements (Contd.)

For the year ended For the year ended

31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

Pension Gratuity Leave Pension Gratuity Leave

Encashment Encashment
Funded Unfunded Funded Unfunded
I Components of Employer Expense
– Recognised in the Statement of
Profit and Loss
1 Current Service Cost 41.32 32.14 12.23 44.87 32.93 10.74
2 Past Service Cost – – – – – –
3 Net Interest Cost (1.59) (1.41) 9.18 1.88 (0.95) 7.88
4 Total expense recognised in the
Statement of Profit and Loss 39.73 30.73 21.41 46.75 31.98 18.62
– Remeasurements recognised in
Other Comprehensive Income
5 Return on plan assets (excluding amounts
included in Net interest cost) 13.71 1.15 – (7.07) (5.65) –
6 Effect of changes in demographic
assumptions – – – 4.44 (1.83) 0.12
7 Effect of changes in financial assumptions (10.44) (13.10) (2.80) (3.43) (7.77) 0.07
8 Changes in asset ceiling (excluding
interest income) – – – – – –
9 Effect of experience adjustments (1.31) 26.27 8.33 (35.49) 17.99 7.00
10 Total remeasurements included in
Other Comprehensive Income 1.96 14.32 5.53 (41.55) 2.74 7.19
11 Total defined benefit cost
recognised in the Statement of
Profit and Loss and Other
Comprehensive Income (4 + 10) 41.69 45.05 26.94 5.20 34.72 25.81
The current service cost, past service cost and net interest cost for the year, as applicable, pertaining to Pension and
Gratuity expenses have been recognised in “Contribution to Provident and other funds” and Leave Encashment in
“Salaries and wages” under Note 23. The remeasurements of the net defined benefit liability are included in Other
Comprehensive Income.
(` in Crores)
Pension Gratuity Leave Pension Gratuity Leave
Encashment Encashment
II Actual Returns 44.92 26.71 – 60.36 29.97 –
III Net Asset / (Liability) recognised
in Balance Sheet
1 Present Value of Defined Benefit
Obligation 878.89 439.40 154.53 897.75 416.05 144.48
2 Fair Value of Plan Assets 854.51 423.43 – 882.68 401.92 –
3 Status [Surplus / (Deficit)] (24.38) (15.97) (154.53) (15.07) (14.13) (144.48)
4 Restrictions on Asset Recognised – – – – – –

190 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
27. Additional Notes to the Financial Statements (Contd.)

(` in Crores)
5 Net Asset / (Liability) recognised in
As at 31st March, 2023 As at 31st March, 2022
Balance Sheet

Current Non-current Current Non-current

– Pension (24.38) – (15.07) –
– Gratuity (15.97) – (14.13) –
– Leave Encashment (15.08) (139.45) (17.91) (126.57)

For the year ended For the year ended

31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

Pension Gratuity Leave Pension Gratuity Leave

Encashment Encashment
IV Change in Defined Benefit
Obligation (DBO)
1 Present Value of DBO at the beginning
of the year 897.75 416.05 144.48 933.22 396.43 133.52
2 Current Service Cost 41.32 32.14 12.23 44.87 32.93 10.74
3 Past Service Cost – – – – – –
4 Interest Cost 57.04 26.45 9.18 55.17 23.37 7.88
5 Remeasurement gains / (losses)
a. Effect of changes in
demographic assumptions – – – 4.44 (1.83) 0.12
b. Effect of changes in financial
assumptions (10.44) (13.10) (2.80) (3.43) (7.77) 0.07
c. Changes in asset ceiling (excluding
interest income) – – – – – –
d. Effect of experience adjustments (1.31) 26.27 8.33 (35.49) 17.99 7.00
6 Curtailment Cost / (Credits) – – – – – –
7 Settlement Cost / (Credits) – – – – – –
8 Liabilities assumed in business
combination – – – – – –
9 Effects of transfer In / (Out) (0.06) – – (0.07) – –
10 Benefits Paid (105.41) (48.41) (16.89) (100.96) (45.07) (14.85)
11 Present Value of DBO at the
end of the year 878.89 439.40 154.53 897.75 416.05 144.48

(` in Crores)
V Best Estimate of Employers’ Expected
As at 31st March, 2023 As at 31st March, 2022
Contribution for the next year

– Pension 86.28 70.95

– Gratuity 67.09 58.88

ITC Limited REPORT AND ACCOUNTS 2023 191

Notes to the Financial Statements

27. Additional Notes to the Financial Statements (Contd.)

For the year ended For the year ended

31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

Pension Gratuity Leave Pension Gratuity Leave

Encashment Encashment

VI Change in Fair Value of Assets

1 Plan Assets at the beginning

of the year 882.68 401.92 – 822.53 376.20 –

2 Asset acquired in Business

Combination – – – – – –

3 Interest Income 58.63 27.86 – 53.29 24.32 –

4 Remeasurement Gains / (Losses)

on plan assets (13.71) (1.15) – 7.07 5.65 –

5 Actual Company Contributions 32.38 43.21 – 100.82 40.82 –

6 Benefits Paid (105.41) (48.41) – (100.96) (45.07) –

7 Effects of transfer In / (Out) (0.06) – – (0.07) – –

8 Plan Assets at the end of the year 854.51 423.43 – 882.68 401.92 –

VII Actuarial Assumptions As at 31st March, 2023 As at 31st March, 2022

Discount Rate (%) Discount Rate (%)

1 Pension 7.50 6.75

2 Gratuity 7.50 6.75

3 Leave Encashment 7.50 6.75

The estimates of future salary increases, generally between 4% to 6%, considered in actuarial valuations take account of
inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

VIII Major Category of Plan Assets as a %

As at 31st March, 2023 As at 31st March, 2022
of the Total Plan Assets

1 Government Securities / Special

Deposit with RBI 16.12% 17.96%

2 High Quality Corporate Bonds 11.06% 11.15%

3 Insurer Managed Funds* 63.00% 62.34%

4 Mutual Funds 5.09% 4.39%

5 Cash and Cash Equivalents 4.73% 4.16%

6 Term Deposits – –

* In the absence of detailed information regarding plan assets which is funded with Insurance Companies, the composition
of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has
not been disclosed.

The fair value of Government securities, corporate bonds and mutual funds are determined based on quoted market prices
in active markets. The employee benefit plans do not hold any securities issued by the Company.

192 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

27. Additional Notes to the Financial Statements (Contd.)

IX Basis used to determine the Expected Rate of Return on Plan Assets

The expected rate of return on plan assets is based on the current portfolio of assets, investment strategy and market
scenario. In order to protect the capital and optimize returns within acceptable risk parameters, the plan assets are well
diversified.

For the year ended For the year ended

31st March, 2023 31st March, 2022
(` in Crores) (` in Crores)

Pension Gratuity Leave Pension Gratuity Leave

Encashment Encashment
X Net Asset / (Liability) recognised
in Balance Sheet (including experience
adjustment impact)
1 Present Value of Defined
Benefit Obligation 878.89 439.40 154.53 897.75 416.05 144.48
2 Fair Value of Plan Assets 854.51 423.43 – 882.68 401.92 –
3 Status [Surplus / (Deficit)] (24.38) (15.97) (154.53) (15.07) (14.13) (144.48)
4 Experience Adjustment of
Plan Assets [Gain / (Loss)] (13.71) (1.15) – 7.07 5.65 –
5 Experience Adjustment of
obligation [(Gain) / Loss ] (1.31) 26.27 8.33 (35.49) 17.99 7.00

XI Sensitivity Analysis
The Sensitivity Analysis below has been determined based on reasonably possible change of the respective assumptions
occurring at the end of the reporting period, while holding all other assumptions constant. These sensitivities show the
hypothetical impact of a change in each of the listed assumptions in isolation. While each of these sensitivities holds all
other assumptions constant, in practice such assumptions rarely change in isolation and the asset value changes may
partially offset this impact. For presenting the sensitivities, the present value of the Defined Benefit Obligation has been
calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in
calculating the Defined Benefit Obligation presented above. There was no change in the methods and assumptions used
in the preparation of the Sensitivity Analysis from previous year.

(` in Crores)
DBO as at 31st March, 2023 DBO as at 31st March, 2022

1 Discount Rate + 100 basis points 1392.74 1375.72

2 Discount Rate - 100 basis points 1563.32 1552.14
3 Salary Increase Rate + 1% 1557.24 1543.65
4 Salary Increase Rate – 1% 1395.05 1377.35

(` in Crores)
Maturity Analysis of the Benefit Payments As at 31st March, 2023 As at 31st March, 2022

1 Year 1 216.14 236.75

2 Year 2 214.54 155.17
3 Year 3 197.58 176.96
4 Year 4 182.67 180.08
5 Year 5 115.26 154.62
6 Next 5 Years 499.51 437.59

ITC Limited REPORT AND ACCOUNTS 2023 193

Notes to the Financial Statements

27. Additional Notes to the Financial Statements (Contd.)

(b) Amounts towards Defined Contribution Plans have been recognised under “Contribution to Provident and other funds” in
Note 23: ` 101.41 Crores (2022 - ` 91.12 Crores).
(vii) Leases:
As a Lessee
The Company’s significant leasing arrangements are in respect of operating leases for land, buildings, (comprising licensed
properties, residential premises, office premises, stores, warehouses etc.) and plant & equipment. These arrangements
generally range between 2 years and 10 years, except for certain land and building leases where the lease term ranges up
to 99 years. The lease arrangements have extension / termination options exercisable by either parties which may make the
assessment of lease term uncertain. While determining the lease term, all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option are considered.
The amount of ROU Assets and Lease Liabilities recognised in the Balance Sheet are disclosed in Note 3G and Note 15
respectively. The total cash outflow for leases for the year is ` 412.57 Crores (2022 - ` 359.73 Crores) [including payments
of ` 329.16 Crores (2022 - ` 275.66 Crores) in respect of short-term / low-value leases and variable lease payments of
` 5.90 Crores (2022 - ` 2.69 Crores)].
The sensitivity of variable lease payments and effect of extension / termination options not included in measurement of
lease liabilities is not material.
The undiscounted maturities of lease liabilities over the remaining lease term is as follows:
(` in Crores)
Term As at 31st March, 2023 As at 31st March, 2022

Not later than three years 172.10 166.77

Later than three years and not later than ten years 167.52 158.02
Later than ten years and not later than twenty-five years 216.82 212.58
Later than twenty-five years and not later than fifty years 205.12 210.91
Later than fifty years 192.86 198.24

As a Lessor
The Company has leased out its investment properties etc. under operating lease for periods ranging upto 30 years. Lease
payments are structured with periodic escalations consistent with the prevailing market conditions. There are no variable lease
payments. The details of income from such leases are disclosed under Note 3C and Note 22. The Company does not have any
risk relating to recovery of residual value of investment property at the end of leases considering the business requirements and
other alternatives.

The undiscounted minimum lease payments to be received over the remaining non-cancellable term on an annual basis are
as follows:
(` in Crores)
Term As at 31st March, 2023 As at 31st March, 2022

1st year 1.43 17.18

2nd year 0.89 1.10
3rd year 0.75 0.56
4th year 0.61 0.58
5th year 0.64 0.61
Beyond 5 years 26.31 26.95

(viii) Under the terms of the Joint Venture Agreement (JVA), Logix Developers Private Limited (LDPL) (CIN: U70101DL2010PTC207640)
was to develop a luxury hotel-cum-service apartment complex. However, Logix Estates Private Limited, Noida, the JV partner
communicated its intention to explore alternative development plans to which the Company reiterated that it was committed only
to the project as envisaged in the JVA. The JV partner refused to progress the project and instead expressed its intent to exit
the JV by selling its stake to the Company and subsequently proposed that both parties should find a third party to sell the entire
shareholding in LDPL. The resultant deadlock has stalled the project. The Company’s petition that the affairs of the JV are being
conducted in a manner that is prejudicial to the interest of the Company and the JV entity, as also a petition for winding up of
LDPL filed by Logix Estates, are currently before the Hon’ble National Company Law Tribunal.

194 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

27. Additional Notes to the Financial Statements (Contd.)

New Okhla Industrial Development Authority (NOIDA), vide letter dated 6th July, 2022, cancelled the sub-lease for the land on
which the project was to be constructed on account of non-payment of lease installments and non-fulfilment of the conditions of
the sub-lease, including forfeiture of the amount deposited. Upon cancellation of the sub-lease, LDPL is evaluating all options
to pursue its rights.
The financial statements of LDPL for the year ended 31st March, 2023 are yet to be approved by its Board of Directors.
(ix) The Company on 27th October, 2022 acquired, in the third tranche, 1000 Compulsorily Convertible Preference Shares of ` 10 / -
each of Mother Sparsh Baby Care Private Limited (Mother Sparsh), consequent to which the Company’s shareholding in Mother
Sparsh aggregated 22.00% of its share capital on a fully diluted basis. Accordingly, Mother Sparsh became an associate of the
Company with effect from the aforesaid date and the investment is being carried at cost.
(x) The Company on 7th April, 2023 divested its entire shareholding, i.e., 26.00% of the paid-up share capital, held in Espirit Hotels
Private Limited (Espirit), consequent to which Espirit ceased to be a joint venture of the Company with effect from the said date.
(xi) The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) (Amendment) Rules, 2023
on 31st March, 2023 amending:
Ind AS 1, ‘Presentation of Financial Statements’ - This amendment requires companies to disclose their material accounting
policies rather than their significant accounting policies.

Ind AS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ - This amendment has introduced a definition
of ‘accounting estimates’ and includes guidance to help distinguish changes in accounting policies from changes in
accounting estimates.
Ind AS 12 ‘Income Taxes’ - This amendment has narrowed the scope of the initial recognition exemption so that it does not
apply to transactions that give rise to equal and offsetting temporary differences. The amendments clarify how companies
account for deferred tax on transactions such as leases.
The same are applicable for financial statements pertaining to annual periods beginning on or after 1st April, 2023. Based
on a preliminary evaluation, the Company does not expect any material impact on the financial statements resulting from the
implementation of these amendments.
(xii) Information in respect of Options granted under the Company’s Employee Stock Option Schemes (‘Schemes’):

Sl. ITC Employee Stock Option ITC Employee Stock Option

No. Scheme - 2006 Scheme - 2010
1. Date of Shareholders’ : 22-01-2007 23-07-2010
approval
2. Total number of Options : Options equivalent to 37,89,18,503 Options equivalent to 55,60,44,823
approved under the Schemes Ordinary Shares of ` 1.00 each Ordinary Shares of ` 1.00 each
(Adjusted for Bonus Shares issued
in terms of Shareholders’ approval)
3. Vesting Schedule : The vesting period for conversion of Options is as follows:
On completion of 12 months from the date of grant of the Options : 30% vests
On completion of 24 months from the date of grant of the Options : 30% vests
On completion of 36 months from the date of grant of the Options : 40% vests
4. Pricing Formula : The Pricing Formula, as approved by the Shareholders of the Company, is such price,
as determined by the Nomination & Compensation Committee, which is no lower than the
closing price of the Company’s Share on the National Stock Exchange of India Limited
(‘the NSE’) on the date of grant, or the average price of the Company’s Share in the
six months preceding the date of grant based on the daily closing price on the NSE, or the
‘market price’ as defined from time to time under the Securities and Exchange Board of
India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.
The Options have been granted at ‘market price’ as defined under the aforesaid
Regulations.
5. Maximum term of Options : Five years - the exercise period commences from the date of vesting of the Options
granted granted and expires at the end of five years from the date of vesting.
6. Source of Shares : Primary
7. Variation in terms of Options : None

ITC Limited REPORT AND ACCOUNTS 2023 195

Notes to the Financial Statements

27. Additional Notes to the Financial Statements (Contd.)

Sl. ITC Employee Stock Option ITC Employee Stock Option

No. Scheme - 2006 Scheme - 2010

8. Method used for accounting of : The employee compensation cost has been calculated using the fair value method of
share-based payment plans accounting for Options issued under the Company’s Employee Stock Option Schemes.
The employee compensation cost as per fair value method for the financial year 2022-23
is ` 58.50 Crores (2022 - ` 32.51 Crores); for the group entities, such compensation cost
is ` 2.61 Crores (2022 - ` 1.00 Crore).

9. Nature and extent of employee : In addition to the terms and conditions provided in the table under Serial Nos. (3) to (5)
share based payment plans hereinbefore, each Option entitles the holder thereof to apply for and be allotted
that existed during the period ten Ordinary Shares of the Company of ` 1.00 each upon payment of the exercise price
including the general terms during the exercise period.
and conditions of each plan

10. Weighted average exercise : Weighted average exercise price per Option : ` 3460.70
prices and weighted average Weighted average fair value per Option :` 853.67
fair values of Options whose
exercise price either equals
or exceeds or is less than the
market price of the stock

11. Option movements during : ITC Employee Stock Option ITC Employee Stock Option
the year Scheme - 2006 Scheme - 2010

a) Options outstanding at the : 3,79,976 2,23,88,755

beginning of the year

b) Options granted during : 9,800 13,66,500

the year

c) Options cancelled and : 3,800 4,55,571

lapsed during the year

d) Options vested and : 33,990 6,65,415

exercisable during the year
(net of Options lapsed and
exercised)

e) Options exercised during : 1,00,168 1,03,76,013

the year

f) Number of Ordinary : 10,01,680 10,37,60,130

Shares of ` 1.00 each
arising as a result of
exercise of Options during
the year

g) Options outstanding at the : 2,85,808 1,29,23,671

end of the year (a+b-c-e)

h) Options exercisable at the : 1,95,798 1,05,09,326

end of the year

i) Money realised by exercise : 23.22 2,454.18

of the Options during the
year (` in Crores)

196 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

27. Additional Notes to the Financial Statements (Contd.)

12. Summary of the status of

Options:

Particulars As at 31st March, 2023 As at 31st March, 2022

No. of Options Weighted Average No. of Options Weighted Average

Exercise Prices (`) Exercise Prices (`)

Outstanding at the beginning : 2,27,68,731 2469.30 2,91,81,292 2402.40

of the year

Add: Granted during the year : 13,76,300 3460.70 12,21,600 2333.96

Less: Lapsed during the year : 4,59,371 2477.37 61,92,991 2230.80

Less: Exercised during the year : 1,04,76,181 2364.79 14,41,170 2024.88

Outstanding at the end : 1,32,09,479 2655.20 2,27,68,731 2469.30

of the year

Options exercisable at the end : 1,07,05,124 2603.17 2,08,53,766 2495.72

of the year

13. Weighted average share : The weighted average share price of Shares, arising upon exercise of Options during the
price of Shares arising upon year ended 31st March, 2023 was ` 315.92 (2022 - ` 212.94). This was based on the
exercise of Options closing market price on NSE on the date of exercise of Options (i.e. the date of allotment
of shares by the Securityholders Relationship Committee).

14. Summary of Options outstanding, scheme-wise:

Particulars As at 31st March, 2023 As at 31st March, 2022

No. of Range of Weighted No. of Range of Weighted

Options Exercise average Options Exercise average
Outstanding Prices (`) remaining Outstanding Prices (`) remaining
contractual life contractual life

ITC Employee Stock Option : 2,85,808 1698.00 – 3463.50 3.44 3,79,976 1698.00 – 2885.50 3.61
Scheme - 2006

ITC Employee Stock Option : 1,29,23,671 1698.00 – 3463.50 2.50 2,23,88,755 1698.00 – 2885.50 1.93
Scheme - 2010

15. A description of the method : The fair value of each Option is estimated using the Black Scholes Option Pricing model.
used during the year to estimate
Weighted average exercise price per Option : ` 3460.70
the fair values of Options, the
weighted average exercise Weighted average fair value per Option : ` 853.67
prices and weighted average
fair values of Options granted

The significant assumptions : The fair value of each Option is estimated using the Black Scholes Option Pricing model
used to ascertain the above after applying the following key assumptions on a weighted average basis:

(i) Risk-free interest rate 7.31%

(ii) Expected life 4.61 years

(iii) Expected volatility 25.08%

(iv) Expected dividends 3.32%

(v) The price of the underlying shares in market at the time of Option grant ` 3460.70
(One Option = 10 Ordinary Shares)

ITC Limited REPORT AND ACCOUNTS 2023 197

Notes to the Financial Statements

27. Additional Notes to the Financial Statements (Contd.)

16. Methodology for determination : The volatility used in the Black Scholes Option Pricing model is the annualised standard
of expected volatility deviation of the continuously compounded rates of return on the stock over a period of
time. The period considered for the working is commensurate with the expected life of
the Options and is based on the daily volatility of the Company’s stock price on NSE. The
Company has incorporated the early exercise of Options by calculating expected life on
past exercise behaviour. There are no market conditions attached to the grant and vest.
17. Options granted to : As provided below:-
(a) Directors and Name Designation No. of Options granted
Senior managerial personnel during the financial year
2022-23
1 S. Puri Chairman & Managing Director 1,34,500
2 N. Anand Executive Director 67,250
3 S. Dutta Executive Director & 18,750
Chief Financial Officer
4 B. Sumant Executive Director 67,250
5 S. Kaul Group Head - ITD, MAB, Start-Up 13,050
Ventures, LS & T & Quality
6 H. Malik Divisional Chief Executive - 18,750
Foods Business Division
7 A. K. Rajput President - Corporate Affairs 18,750
8 S. Sivakumar Group Head - Agri Business, IT, EHS, 18,750
Sustainability & CSR
9 R. K. Singhi Executive Vice President & 11,050
Company Secretary

The aforesaid Options were granted at the exercise price of ` 3463.50 per Option, being the ‘market price’ as defined under
the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.
(b) Any other employee who received a grant on any : None
one year of Options amounting to 5% or more of the
Options granted during the year.
(c) Identified employees who were granted Options, : None
during any one year, equal to or exceeding 1% of the
issued capital (excluding outstanding warrants and
conversions) of the Company at the time of grant.

(xiii) Information in respect of Stock Appreciation Linked Reward Plan:

Sl.
Particulars Details
No.
1 Nature and extent of Stock : ITC Employee Cash Settled Stock Appreciation Linked Reward Plan (ITC ESAR
Appreciation Linked Reward Plan Plan).
that existed during the year along Under the ITC ESAR Plan, the eligible employees receive cash on vesting of SAR
with general terms and conditions units, equivalent to the difference between the grant price and the market price
of the share on vesting of SAR units subject to the terms and conditions specified
in the Plan.

2 Settlement Method : Cash – Settled

3 Vesting period and maximum term : Over a period of five years from the date of grant in accordance with the Plan.
of SAR granted

198 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements
27. Additional Notes to the Financial Statements (Contd.)

Sl.
Particulars Details
No.
4 Method used to estimate the fair : Black Scholes Option Pricing model. The said model considers inputs such as
value of SAR granted Risk-free interest rate, Expected life, Expected volatility, Expected dividend,
Market price etc. The number of SAR units outstanding as at 31st March, 2023 is
25,00,251 (2022 - 39,46,719) and the weighted average fair value at measurement
date is ` 712.18 (2022 - ` 217.98) per SAR unit.
5 Total cost recognised in the profit or : The cost has been calculated using the fair value method of accounting for
loss SAR units issued under the ITC ESAR Plan. The employee benefits expense
as per fair value method for the financial year 2022-23 is ` 208.62 Crores
(2022 - ` 28.68 Crores) and ` 7.51 Crores (2022 - ` 1.33 Crores) for group entities
(Refer Note 23). The amount carried in the Balance Sheet as a non – current financial
liability is ` 69.38 Crores (2022 - ` 47.34 Crores) and as a current financial liability is
` 118.80 Crores (2022 - ` 18.47 Crores) (Refer Note 16).

(xiv) Trade Payables ageing schedule: (` in Crores)

Outstanding for following periods from due date of

payment as at 31st March, 2023
Less than More than
Not Due 1–2 years 2–3 years Total
1 year 3 years
MSME 44.01 – – – – 44.01
Others 582.85 20.12 – – – 602.97
Disputed Dues – MSME – – – – – –
Disputed Dues – Others – – – – 0.28 0.28
SUB-TOTAL 626.86 20.12 – – 0.28 647.26
Accrued Payables (not due)
– MSME 93.49
– Others 3610.51
TOTAL 4351.26

(` in Crores)
Outstanding for following periods from due date of
payment as at 31st March, 2022
Less than More than
Not Due 1-2 years 2-3 years Total
1 year 3 years
MSME 32.80 – – – – 32.80
Others 818.93 69.68 0.02 0.01 – 888.64
Disputed Dues – MSME – – – – – –
Disputed Dues – Others – – – – 0.50 0.50
SUB-TOTAL 851.73 69.68 0.02 0.01 0.50 921.94
Accrued Payables (not due)
– MSME 68.16
– Others 3233.30
TOTAL 4223.40

ITC Limited REPORT AND ACCOUNTS 2023 199

Notes to the Financial Statements
27. Additional Notes to the Financial Statements (Contd.)

(xv) Micro, Small and Medium scale business entities:

There are no Micro, Small and Medium Enterprises to whom the Company owes dues, which are outstanding for more than 45
days during the year and also as at 31st March, 2023. This information as required to be disclosed under the Micro, Small and
Medium Enterprises Development Act, 2006 (MSMED Act, 2006) has been determined to the extent such parties have been
identified on the basis of information available with the Company.
(` Crores)
31st March, 2023 31st March, 2022
(a) Principal amount remaining unpaid to any supplier as at the end of the
accounting year
– On account of trade payables 137.50 100.96
– On account of liabilities other than trade payables 33.70 29.03
– Total 171.20 129.99
(b) Interest due thereon remaining unpaid to any supplier as at the end of the – –
accounting year
(c) Amount of interest paid under MSMED Act, 2006 along with the amounts of the – –
payment made to the supplier beyond the appointed day during the accounting year
(d) Amount of interest due and payable for the period of delay in making payment – –
(which has been paid but beyond the appointed day during the year) but
without adding the interest specified under the MSMED Act, 2006)
(e) Amount of interest accrued and remaining unpaid at the end of accounting year – –
(f) Amount of further interest remaining due and payable even in the succeeding – –
year, until such date when the interest dues as above are actually paid to the
small enterprise

(xvi) Financial Ratios:

Ratio Numerator Denominator 31st March, 2023 31st March, 2022
Current Ratio (in times) Current Assets Current Liabilities 2.84 2.70
Return on Equity Ratio Profit for the year (before Average
28.99 25.01
(in %) exceptional items) Shareholder’s Equity
Inventory Turnover Ratio Gross Revenue from sale Average Inventory
6.75 6.07
(in times) of products and services
Trade Receivables Gross Revenue from sale Average
32.51 29.24
Turnover Ratio (in times) of products and services Trade Receivables
Trade Payables Turnover COGS + Other Average
Ratio (in times) Expenses – Non Cash Trade Payables 8.99 8.24
Expenditure
Net Capital Turnover Gross Revenue from sale Working Capital (Current
3.05 3.04
Ratio (in times) of products and services Assets – Current Liabilities)
Net Profit Ratio (in %) Profit for the year (before Gross Revenue from sale
26.91 25.48
exceptional items) of products and services
Return on Capital Profit before exceptional Average
38.72 33.33
Employed (in %) items, interest and taxes Capital Employed
Return on Income from investment Time weighted average
6.79 7.61
Investment (in %) Investment

Debt-Equity Ratio and Debt Service Coverage Ratio are not relevant for the Company as it has negligible debt.

(xvii) Figures presented as “…” are below the rounding off norm adopted by the Company.
(xviii) Figures for the previous year are re-arranged, wherever necessary, to conform to the figures of the current period.
(xix) The financial statements were approved for issue by the Board of Directors on 18th May, 2023.

200 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

28. Segment Reporting

(` in Crores)
2023 2022
External Inter Segment Total External Inter Segment Total
1. Segment Revenue - Gross
FMCG - Cigarettes 28206.83 – 28206.83 23451.39 – 23451.39
FMCG - Others 19081.48 41.02 19122.50 15964.75 29.74 15994.49
FMCG - Total 47288.31 41.02 47329.33 39416.14 29.74 39445.88
Hotels 2573.22 11.81 2585.03 1279.33 5.67 1285.00
Agri Business 12314.86 5857.48 18172.34 12126.05 4070.02 16196.07
Paperboards, Paper and Packaging 7304.50 1776.85 9081.35 6279.57 1362.05 7641.62
Segment Total 69480.89 7687.16 77168.05 59101.09 5467.48 64568.57
Eliminations (7687.16) (5467.48)
Gross Revenue from sale of products and services 69480.89 59101.09
2. Segment Results
FMCG - Cigarettes 17927.06 14869.07
FMCG - Others 1374.18 923.22
FMCG - Total 19301.24 15792.29
Hotels 541.90 (183.09)
Agri Business 1327.74 1031.15
Paperboards, Paper and Packaging 2293.99 1700.00
Segment Total 23464.87 18340.35
Eliminations 22.19 14.01
Total 23487.06 18354.36
Unallocated corporate expenses net of unallocated income 1167.72 874.28
Profit before interest etc. and taxation 22319.34 17480.08
Finance Costs 41.81 41.95
Interest earned on loans and deposits, income from current and
non-current investments, profit and loss on sale of investments etc. - Net 2400.01 2391.40
Exceptional items [Refer Note 27(i)] 72.87 –
Profit before tax 24750.41 19829.53
Tax expense 5997.10 4771.70
Profit for the year 18753.31 15057.83

3. Other Information 2023 2022

Segment Segment Segment Segment
Assets Liabilities Assets Liabilities
FMCG - Cigarettes 7290.67 5056.90 6654.58 4684.28
FMCG - Others 11966.57 2351.99 11444.16 2273.87
FMCG - Total 19257.24 7408.89 18098.74 6958.15
Hotels 6514.91 940.88 6538.40 835.94
Agri Business 4114.31 1649.76 4699.08 1746.29
Paperboards, Paper and Packaging 9201.17 1315.17 8486.49 1326.06
Segment Total 39087.63 11314.70 37822.71 10866.44
Unallocated Corporate Assets / Liabilities 43174.11 3353.24 37269.79 2826.49
Total 82261.74 14667.94 75092.50 13692.93

ITC Limited REPORT AND ACCOUNTS 2023 201

 Notes to the Financial Statements

28. Segment Reporting (Contd.)

(` in Crores)
2023 2022
Capital Depreciation Capital Depreciation
expenditure and amortization expenditure and amortization
FMCG - Cigarettes 173.60 268.60 137.25 263.19
FMCG - Others 418.79 579.79 336.27 525.75
FMCG - Total 592.39 848.39 473.52 788.94
Hotels 195.28 289.72 257.90 261.12
Agri Business 119.86 66.48 113.36 80.63
Paperboards, Paper and Packaging 744.48 347.99 896.72 410.97
Segment Total 1652.01 1552.58 1741.50 1541.66
Unallocated 181.90 110.15 126.94 110.49
Total 1833.91 1662.73 1868.44 1652.15
Non Cash expenditure Non Cash expenditure
other than depreciation other than depreciation
FMCG - Cigarettes 0.34 6.25
FMCG - Others 5.42 6.66
FMCG - Total 5.76 12.91
Hotels 7.31 –
Agri Business 0.56 3.20
Paperboards, Paper and Packaging 7.73 27.59
Segment Total 21.36 43.70

GEOGRAPHICAL INFORMATION
2023 2022
1. Revenue from external customers
– Within India 59074.73 49782.80
– Outside India 10406.16 9318.29
Total 69480.89 59101.09
2. Non-current assets
– Within India 27082.45 26915.71
– Outside India … …
Total 27082.45 26915.71

NOTES:
(1) The Company’s corporate strategy aims at creating multiple drivers of growth anchored on its core competencies. The Company is currently focused on
four business groups : FMCG, Hotels, Paperboards, Paper and Packaging and Agri Business. The Company’s organisational structure and governance
processes are designed to support effective management of multiple businesses while retaining focus on each one of them.
The Operating Segments have been reported in a manner consistent with the internal reporting provided to the Corporate Management Committee, which
is the Chief Operating Decision Maker.
(2) The business groups comprise the following :
FMCG : Cigarettes – Cigarettes, Cigars, etc.
: Others – Branded Packaged Foods Businesses (Staples & Meals; Snacks; Dairy & Beverages; Biscuits &
Cakes; Chocolates, Coffee & Confectionery); Education and Stationery Products; Personal Care
Products; Safety Matches and Agarbattis.
Hotels – Hoteliering.
Paperboards, Paper and Packaging – Paperboards, Paper including Specialty Paper and Packaging including Flexibles.
Agri Business – Agri commodities such as wheat, rice, spices, coffee, soya and leaf tobacco.
(3) The geographical information considered
for disclosure are: – Revenue within India.
– Revenue outside India.
(4) Segment results of ‘FMCG : Others’ are after considering significant business development, brand building and gestation costs of the Branded Packaged
Foods businesses and Personal Care Products business.
(5) As stock options and stock appreciation linked reward units are granted under the ITC ESOS and ITC ESARP respectively to align the interests of
employees with those of shareholders and also to attract and retain talent for the enterprise as a whole, the charge thereof do not form part of the segment
performance reviewed by the Corporate Management Committee.
(6) The Company is not reliant on revenues from transactions with any single external customer and does not receive 10% or more of its revenues from
transactions with any single external customer.

202 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

29. Related Party Disclosures

1. ENTERPRISES WHERE CONTROL EXISTS:

Subsidiaries:
a) Srinivasa Resorts Limited
b) Fortune Park Hotels Limited
c) Bay Islands Hotels Limited
d) WelcomHotels Lanka (Private) Limited, Sri Lanka
e) Landbase India Limited
f) Russell Credit Limited and its subsidiary
Greenacre Holdings Limited
g) Technico Pty Limited, Australia and its subsidiaries
Technico Technologies Inc., Canada
Technico Asia Holdings Pty Limited, Australia and its subsidiary
Technico Horticultural (Kunming) Co. Limited, China
h) Technico Agri Sciences Limited
i) Wimco Limited
j) Pavan Poplar Limited
k) Prag Agro Farm Limited
l) ITC Infotech India Limited and its subsidiaries
ITC Infotech Limited, UK
ITC Infotech (USA), Inc. and its subsidiary
Indivate Inc.
ITC Infotech Do Brasil LTDA., Brazil (w.e.f. 10.10.2022)
ITC Infotech Malaysia SDN. BHD. (w.e.f. 03.02.2023)
ITC Infotech France SAS (w.e.f. 08.02.2023)
ITC Infotech GmbH, Germany (w.e.f. 10.03.2023)
m) Gold Flake Corporation Limited
n) ITC Integrated Business Services Limited
(formerly known as ITC Investments & Holdings Limited) and its subsidiary
MRR Trading & Investment Company Limited
o) Surya Nepal Private Limited
p) North East Nutrients Private Limited
q) ITC IndiVision Limited
r) ITC Fibre Innovations Limited (w.e.f. 03.03.2023)

2. OTHER RELATED PARTIES WITH WHOM THE COMPANY HAD TRANSACTIONS

i) Associates & Joint Ventures:
Associates
a) Gujarat Hotels Limited
b) International Travel House Limited
c) Delectable Technologies Private Limited
– being associates of the Company, and
d) Tobacco Manufacturers (India) Limited (of which the Company is an associate)
and the subsidiaries of its ultimate parent company (British American Tobacco p.l.c.)
Associates of the Company’s subsidiaries
ATC Limited
– being associate of Gold Flake Corporation Limited
Joint Ventures
Maharaja Heritage Resorts Limited
Joint Venture of the Company’s subsidiary
ITC Essentra Limited
– being joint venture of Gold Flake Corporation Limited

ITC Limited REPORT AND ACCOUNTS 2023 203

Notes to the Financial Statements

29. Related Party Disclosures (Contd.)

ii) a) Key Management Personnel (KMP):

S. Puri Chairman & Managing Director
N. Anand Executive Director
S. Dutta Executive Director (w.e.f. 22.07.2022) and Chief Financial Officer
B. Sumant Executive Director
S. Banerjee# Non-Executive Director
H. Bhargava# Non-Executive Director
P. R. Chittaranjan Non-Executive Director (w.e.f. 03.02.2023)
A. Duggal# Non-Executive Director
M. Gupta Non-Executive Director
S. Mukherjee# Non-Executive Director
A. Nayak# Non-Executive Director
S. Panray Non-Executive Director
N. Rao# Non-Executive Director
A. K. Seth# Non-Executive Director
M. Shankar# Non-Executive Director
D. R. Simpson Non-Executive Director
N. Doda Non-Executive Director (up to 19.01.2023)
R. Tandon Executive Director (up to 21.07.2022)
# Independent Directors
Company Secretary
R. K. Singhi
Members - Corporate Management Committee
S. Puri
N. Anand
S. Dutta
B. Sumant
S. Kaul (w.e.f. 01.05.2022)
H. Malik
A. Rajput
S. Sivakumar
R. Tandon (upto 21.07.2022)
S. Rangrass (upto 03.06.2022)
S. K. Singh (upto 26.05.2022)
b) Relatives of KMP:
T. Anand (wife of N. Anand)
N. Singhi (wife of R. K. Singhi)
Y. Singhi (son of R. K. Singhi)
R. Tandon (wife of R. Tandon) (upto 21.07.2022)
c) Entities in which relative of KMP is interested:
Décor & Design
iii) Employee Trusts:
a) IATC Provident Fund
b) ITC Defined Contribution Pension Fund
c) ITC Management Staff Gratuity Fund
d) ITC Employees Gratuity Fund
e) ITC Gratuity Fund ‘C’
f) ITC Pension Fund
g) ILTD Seasonal Employees Pension Fund
h) ITC Platinum Jubilee Pension Fund
i) ITC Bhadrachalam Paperboards Limited Management Staff Pension Fund
j) ITC Bhadrachalam Paperboards Limited Gratuity Fund ‘A’
k) ITC Bhadrachalam Paperboards Limited Gratuity Fund ‘C’
l) ITC Hotels Limited Employees Superannuation Scheme
m) Sunrise Spices Limited Employees Gratuity Fund

204 ITC Limited REPORT AND ACCOUNTS 2023

 Notes to the Financial Statements
29. Related Party Disclosures (Contd.)
3. DISCLOSURE OF TRANSACTIONS BETWEEN THE COMPANY AND RELATED PARTIES AND THE STATUS OF OUTSTANDING BALANCES AS AT 31.03.2023 (` in Crores)
Enterprises where
Key Management Relatives of Employee
RELATED PARTY TRANSACTIONS SUMMARY control exists Associates Joint Ventures Total
Personnel (KMP) KMP^ Trusts
Subsidiaries
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
1. Sale of Goods / Services 356.99 322.83 1849.19 1080.07 93.84 54.19 2300.02 1457.09
2. Purchase of Goods / Services 429.41 394.12 116.79 66.18 438.27 280.30 0.05 – 984.52 740.60
3. Acquisition cost of Property, Plant and Equipment 15.64 10.58 15.64 10.58
4. Sale of Property, Plant and Equipment 0.44 – 0.44 –
5. Investment in Subsidiaries / Associate 1184.14 427.24 1.88 1.87 1186.02 429.11
6. Redemption of Preference Shares 18.00 – 18.00 –
7. Value of Share Based Payment
7A. Capital Contribution for Share Based Payments (4.09) (22.06) (4.09) (22.06)
7B. Reimbursement for Share Based Payments 7.40 1.66 1.83 0.41 0.37 0.08 9.60 2.15
8. Rent Received 24.73 25.60 0.72 0.72 25.45 26.32
9. Rent Paid* 11.58 9.89 4.32 2.51 1.02 1.05 0.32 0.32 17.24 13.77
10. Remuneration of Managers on Deputation reimbursed 2.45 2.41 7.06 5.36 9.51 7.77
11. Remuneration of Managers on Deputation recovered 40.68 36.32 7.95 6.83 1.76 1.43 50.39 44.58
12. Contribution to Employees’ Benefit Plans 115.04 178.43 115.04 178.43
13. Dividend Income 556.54 857.14 0.35 0.31 556.89 857.45
14. Dividend Payments 4434.03 3981.58 6.25 5.70 4440.28 3987.28
15. Interest Income 10.36 2.42 10.36 2.42
16. Expenses Recovered 13.88 10.01 29.10 21.59 0.30 0.11 43.28 31.71
17. Expenses Reimbursed 3.18 2.81 0.25 0.26 0.02 0.05 3.45 3.12
18. Advances Given during the year 0.03 0.45 0.03 0.45
19. Adjustment / Receipt towards Refund of Advances 0.03 0.45 0.03 0.45
20. Advances Received during the year 0.12 85.32 1813.30 1496.60 1813.42 1581.92
21. Adjustment / Payment towards Refund of Advances 120.99 152.01 1786.29 972.02 1907.28 1124.03
22. Deposits Given during the year – … – …
23. Adjustment / Receipt towards Refund of Deposit 0.02 – 0.02 –
24. Remuneration to KMP1
24A. – Short term benefits 46.76 46.85 46.76 46.85
24B. – Other long-term incentives 28.95 22.48 28.95 22.48

ITC Limited
24C. – Other remuneration 13.06 10.51 13.06 10.51
24D. – Share Based Payments 2
25. Outstanding Balances#
i) Receivables 38.61 68.76 46.56 78.17 16.04 14.66 101.21 161.59
ii) Deposits Given 0.60 0.60 0.06 0.08 0.07 0.07 0.73 0.75
iii) Advance Taken 26.96 147.83 719.42 692.41 746.38 840.24
iv) Deposits Taken 0.04 0.04 0.04 0.04
v) Payables 6.25 12.17 6.25 5.91 20.60 13.83 40.35 29.20 73.45 61.11
26. Commitments 0.66 1.51 0.66 1.51
^ includes transactions with entity in which relative of KMP is interested.
* Includes rent pertaining to leases classified as Right of Use Assets.
# The amounts outstanding are unsecured and will be settled in cash.
1 Post employment benefits are actuarially determined on overall basis and hence not separately provided. Payments made on settlement of leave liability upon retirement - ` 2.69 Crores (2022 - ` Nil) has not been included in the above;

REPORT AND ACCOUNTS 2023

2 During the year, the Company granted Stock Options to eligible employees, including Executive Directors and KMPs, under its Employee Stock Option Schemes at ‘market price’ [within the meaning of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021]. The Company has also granted Employee Stock Appreciation Linked Reward Units (ESAR Units) to the aforesaid persons in the previous years under the ‘ITC Employee Cash Settled Stock Appreciation Linked Reward Plan’. Since such Stock Options and ESAR
Units are not tradeable, no perquisite or benefit is immediately conferred upon the employee by grant of such Stock Options / ESAR Units, and accordingly the said grants have not been considered as ‘remuneration’. However, in accordance with Ind AS -102, the Company has recorded

205
employee benefits expense by way of share based payments to employees at ` 267.12 Crores for the year ended 31st March, 2023 (2022 - ` 61.20 Crores), of which ` 35.43 Crores (2022 - ` 23.14 Crores) is attributable to Executive Directors and KMPs.
206
Notes to the Financial Statements
29. Related Party Disclosures (Contd.)

4. INFORMATION REGARDING SIGNIFICANT TRANSACTIONS / BALANCES

(Generally in excess of 10% of the total transaction value of the same type)

RELATED PARTY TRANSACTIONS SUMMARY 2023 2022 RELATED PARTY TRANSACTIONS SUMMARY 2023 2022 RELATED PARTY TRANSACTIONS SUMMARY 2023 2022

ITC Limited
1. Sale of Goods / Services 12. Contribution to Employees’ Benefit Plans 24B. Other long-term incentives
British American Tobacco (GLP) Limited 1352.17 985.49 ITC Pension Fund 21.02 96.02 S. Puri 10.08 6.52
JSC ‘British American Tobacco-SPb’ 446.96 – IATC Provident Fund 39.47 37.07
N. Anand 4.47 3.26
Surya Nepal Private Limited 328.58 308.47 ITC Management Staff Gratuity Fund 21.04 20.19
R. Tandon (related party up to 21.07.2022) 0.82 3.26
2. Purchase of Goods / Services ITC Employees Gratuity Fund 11.70 10.90
ITC Essentra Limited 438.11 280.19 B. Sumant 5.04 3.26
13. Dividend Income
North East Nutrients Private Limited 176.19 167.68 24C. Other remuneration
ITC Infotech India Limited 149.60 451.56
ITC Infotech India Limited 183.00 166.90 S. Banerjee 1.13 1.04
Surya Nepal Private Limited 383.24 346.84
3. Acquisition cost of Property, Plant and Equipment A. Duggal 1.12 1.03
14. Dividend Payments
ITC Infotech India Limited 14.38 9.96 A. Nayak 1.11 1.01
Tobacco Manufacturers (India) Limited 3648.48 3276.18
4. Sale of Property, Plant and Equipment
Myddleton Investment Company Limited 595.73 534.94 M. Shankar 1.09 1.01
S. K. Singh 0.20 –
15. Interest Income H. Bhargava 1.10 0.70

REPORT AND ACCOUNTS 2023

R. K. Singhi 0.12 –
ITC IndiVision Limited 9.81 0.17 25. Outstanding Balances
S. Sivakumar 0.12 –
North East Nutrients Private Limited 0.10 1.80 (i) Receivables
5. Investment in Subsidiaries / Associate
Wimco Limited 0.45 0.45 British American Tobacco (GLP) Limited 36.35 59.75
WelcomHotels Lanka (Private) Limited 606.14 327.24
ITC Infotech India Limited 448.00 – 16. Expenses Recovered Surya Nepal Private Limited 24.48 59.60
ITC IndiVision Limited 130.00 100.00 British American Tobacco (GLP) Limited 21.97 14.26
ITC Essentra Limited 14.78 12.50
6. Redemption of Preference Shares B.A.T (U.K. and Export) Limited – 4.95
(ii) Deposits Given
North East Nutrients Private Limited 18.00 – British American Tobacco Exports Limited 5.76 –
Russell Credit Limited 1 0.36 0.36
7. Value of share based payment ITC Infotech India Limited 3.74 3.54
Greenacre Holdings Limited 2 0.24 0.24
7A. Capital Contribution for Share Based Payments 17. Expenses Reimbursed
ITC Infotech India Limited (4.09) (21.96) Wimco Limited 1.84 2.11 (iii) Advance Taken

7B. Reimbursement for Share Based Payments Srinivasa Resorts Limited 0.46 0.46 British American Tobacco (GLP) Limited 520.52 692.33
ITC Infotech India Limited 2.36 0.38 Indivate Inc. 0.57 – JSC ‘British American Tobacco-SPb’ 198.80 –
WelcomHotels Lanka (Private) Limited 0.06 0.37 18. Advances Given during the year Surya Nepal Private Limited 26.96 147.83
Fortune Park Hotels Limited 2.23 0.34 Wimco Limited 0.03 0.45 (iv) Deposits Taken
International Travel House Limited 1.46 0.32 19. Adjustment / Receipt towards Refund of Advances International Travel House Limited 0.04 0.04
Surya Nepal Private Limited 0.61 0.28 Wimco Limited 0.03 0.45 (v) Payables
Technico Agri Sciences Limited 1.04 0.17 20. Advances Received during the year
Employee Trust - Pension Funds 24.38 15.07
8. Rent Received British American Tobacco (GLP) Limited 1152.95 1494.26
ITC Infotech India Limited 20.20 20.97 Employee Trust - Gratuity Funds 15.97 14.13
JSC ‘British American Tobacco-SPb’ 650.55 –
Surya Nepal Private Limited 3.08 3.23 ITC Essentra Limited 20.60 13.83
21. Adjustment / Payment towards Refund of Advances
9. Rent Paid North East Nutrients Private Limited 3.83 6.47
British American Tobacco (GLP) Limited 1324.76 967.97
Bay Islands Hotels Limited 2.48 1.31 26. Commitments
JSC ‘British American Tobacco-SPb’ 451.75 –
Landbase India Limited 6.87 6.35 ITC Infotech India Limited 0.66 1.51
Surya Nepal Private Limited 120.87 152.01
Technico Agri Sciences Limited 1.46 1.46
22. Deposits Given during the year # In accordance with Ind AS - 102, the Company has recognised employee benefits expense by way
Gujarat Hotels Limited 4.32 2.51
R. Tandon (related party up to 21.07.2022) – … of share based payments [refer Note 29.3], of which ` 35.43 Crores (2022 - ` 23.14 Crores) is
10. Remuneration of Managers on Deputation reimbursed
23. Adjustment / Receipt towards Refund of Deposit attributable to Executive Directors & KMPs:
Gujarat Hotels Limited 7.06 5.36
R. Tandon (related party up to 21.07.2022) 0.02 – S. Puri ` 9.96 Crores (2022 - ` 6.41 Crores), N. Anand ` 5.07 Crores (2022 - ` 4.15 Crores),
Bay Islands Hotels Limited 1.76 1.30
Fortune Park Hotels Limited 0.69 1.10 24. Remuneration to KMP # R.  Tandon (related party upto 21.07.2022) ` 2.26 Crores (2022 - ` 5.04 Crores),
11. Remuneration of Managers on Deputation recovered 24A. Short term benefits B. Sumant ` 4.58 Crores (2022 - ` 2.15 Crores), S. Dutta ` 2.51 Crores (2022 - ` 0.53 Crore) and
ITC Infotech India Limited 10.66 9.17 S. Puri 12.09 10.66 R. K. Singhi ` 0.72 Crore (2022 - ` 0.57 Crore).
Srinivasa Resorts Limited 5.86 5.77 N. Anand 5.96 5.37 1 The maximum indebtedness during the year was ` 0.36 Crore (2022 - ` 0.36 Crore).

Fortune Park Hotels Limited 6.35 5.35 R Tandon (related party up to 21.07.2022) 1.62 4.84 2 The maximum indebtedness during the year was ` 0.24 Crore (2022 - ` 0.24 Crore).

Technico Agri Sciences Limited 4.62 4.56 B. Sumant 5.35 4.84

Notes to the Financial Statements

30. Financial Instruments and Related Disclosures

1. Capital Management
 he Company’s financial strategy aims to support its strategic priorities and provide adequate capital to its businesses for growth
T
and creation of sustainable stakeholder value. The Company funds its operations through internal accruals and aims at maintaining
a strong capital base to support the future growth of its businesses.
During the year, the Company issued 10,47,61,810 Ordinary Shares (2022 - 1,44,11,700 Ordinary Shares) of ` 1.00 each
amounting to ` 10.48 Crores (2022 - ` 1.44 Crores) towards its employee stock options. The securities premium stood at
` 13065.62 Crores as at 31st March, 2023 (2022 - ` 9988.14 Crores).
2. Categories of Financial Instruments
 (` in Crores)
As at 31st March, 2023 As at 31st March, 2022
Particulars Note Carrying Fair Carrying Fair
Value Value Value Value
A. Financial assets
a) Measured at amortised cost
i) Cash and cash equivalents 11 206.88 206.88 184.97 184.97
ii) Other Bank Balances 12 3624.38 3624.38 3692.97 3692.97
iii) Investment in Bonds /
Debentures, Preference
Shares & Government or
Trust Securities 4, 9 8154.48 8174.92 10985.36 11232.53
iv) Investment in Mutual Funds 4 346.05 337.99 278.36 277.12
v) Loans 5 10.02 9.35 10.79 9.75
vi) Trade receivables 10 2321.33 2321.33 1952.50 1952.50
vii) Other financial assets 6 4282.01 4234.05 3829.83 3784.58
Sub-total 18945.15 18908.90 20934.78 21134.42
Measured at Fair value
b)
through OCI
i) Investment in Equity shares 4 1464.41 1464.41 1372.52 1372.52
ii) Investment in Mutual Funds 4 3676.53 3676.53 1238.69 1238.69
Sub-total 5140.94 5140.94 2611.21 2611.21
c) Measured at Fair value through
Profit or Loss
i) Investment in Mutual Funds 9 8711.14 8711.14 8535.85 8535.85
ii) Investment in Bonds / Debentures,
Certificate of Deposit 9 5360.34 5360.34 991.97 991.97
iii) Investment in Venture
Capital Funds 4 119.25 119.25 87.33 87.33
iv) Investment in Equity &
Preference Shares 4 39.34 39.34 20.00 20.00
Sub-total 14230.07 14230.07 9635.15 9635.15
d) Derivatives measured
at fair value
i) Derivative instruments not
designated as hedging instruments 6 2.68 2.68 3.27 3.27
ii) Derivative instruments designated
as hedging instruments 6 29.38 29.38 27.27 27.27
Sub-total 32.06 32.06 30.54 30.54
Total financial assets 38348.22 38311.97 33211.68 33411.32

ITC Limited REPORT AND ACCOUNTS 2023 207

Notes to the Financial Statements

30. Financial Instruments and Related Disclosures (Contd.)

(` in Crores)
As at 31st March, 2023 As at 31st March, 2022
Particulars Note Carrying Fair Carrying Fair
Value Value Value Value
B. Financial liabilities
a) Measured at amortised cost
i) Sales tax deferment loans 14 4.54 3.66 5.28 3.86
ii) Trade payables 4351.26 4351.26 4223.40 4223.40
iii) Lease Liabilities 15 320.13 320.13 305.88 305.88
iv) Other financial liabilities 16 1863.50 1834.49 1513.68 1502.05
Sub-total 6539.43 6509.54 6048.24 6035.19
b) Measured at fair value
i) Derivative instruments not
16 2.68 2.68 0.45 0.45
designated as hedging instruments
ii) Derivative instruments designated
16 4.34 4.34 9.56 9.56
as hedging instruments
iii) Contingent Consideration 16 12.65 12.65 76.40 76.40
Sub-total 19.67 19.67 86.41 86.41
Total financial liabilities 6559.10 6529.21 6134.65 6121.60
3. Financial risk management objectives
 he Company has a system-based approach to risk management, anchored to policies and procedures and internal financial
T
controls aimed at ensuring early identification, evaluation and management of key financial risks (such as market risk, credit risk
and liquidity risk) that may arise as a consequence of its business operations as well as its investing and financing activities.
Accordingly, the Company’s risk management framework has the objective of ensuring that such risks are managed within
acceptable and approved risk parameters in a disciplined and consistent manner and in compliance with the applicable regulations.
It also seeks to drive accountability in this regard.
Liquidity Risk
 he Company’s Current assets aggregate ` 35203.44 Crores (2022 - ` 30942.01 Crores) including Current Investments, Cash
T
and cash equivalents and Other Bank Balances of ` 20188.33 Crores (2022 - ` 15502.89 Crores) against an aggregate Current
liability of ` 12415.62 Crores (2022 - ` 11478.09 Crores). As part of its surplus liquidity management operations, the Company
may sell instruments that are held at amortised cost. Such sales may be infrequent (even if significant in value) or insignificant
in value both individually and in aggregate (even if frequent). During the year, the net loss arising on such sale amounted to
` 49.13 Crores (2022 - Nil) (Refer Note 22).
Other Non-current liabilities other than lease liabilities due between one year to three years amounted to ` 154.16 Crores
(2022 - ` 94.99 Crores) and Other Non-current liabilities due after three years amounted to ` 1.61 Crores (2022 - ` 6.05 Crores)
on the reporting date. The maturity analysis of undiscounted lease liabilities are disclosed under Note 27(vii).
 urther, while the Company’s total equity stands at ` 67593.80 Crores (2022 - ` 61399.57 Crores), it has non-current borrowings
F
of ` 3.28 Crores (2022 - ` 4.54 Crores). In such circumstances, liquidity risk or the risk that the Company may not be able to settle
or meet its obligations as they become due does not exist.
Market Risk
 he Company is not an active investor in equity markets; it holds certain investments in equity for long term value accretion
T
which are accordingly measured at fair value through Other Comprehensive Income. The value of investments in such equity
instruments as at 31st March, 2023 is ` 1464.41 Crores (2022 - ` 1372.52 Crores). Accordingly, fair value fluctuations arising from
market volatility is recognised in Other Comprehensive Income.
As the Company is virtually debt-free and its deferred payment liabilities do not carry interest, the exposure to interest rate risk
from the perspective of financial liabilities is negligible. Further, treasury activities, focused on managing investments in debt
instruments, are centralised and administered under a set of approved policies and procedures guided by the tenets of safety,
liquidity and returns. This ensures that investments are made within acceptable risk parameters after due evaluation.
 he Company’s investments are predominantly held in bonds / debentures, fixed deposits, certificate of deposits and debt mutual
T
funds. Mark to market movements in respect of the Company’s investments in bonds / debentures that are held at amortised cost

208 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

30. Financial Instruments and Related Disclosures (Contd.)

are temporary and get recouped through coupon accruals. Other investments in bonds / debentures, certificate of deposits are
fair valued through the Statement of Profit and Loss to recognise market volatility, which is not considered to be significant. Fixed
deposits are held with highly rated banks and companies and have a short tenure and are not subject to interest rate volatility.
The Company also invests in mutual fund schemes of leading fund houses. Such investments are susceptible to market price
risks that arise mainly from changes in interest rate which may impact the return and value of such investments. However, given
the relatively short tenure of underlying portfolio of the mutual fund schemes in which the Company has invested, such price risk
is not significant.
For select agricultural commodities primarily held for trading, futures contracts are used to hedge price risks till positions in
the physical market are matched. Such activities are managed by the business team within an approved policy framework.
The carrying value of inventories is adjusted to the extent of fair value movement of the risk being hedged. Such hedges are
generally for short time horizons and recognised in profit or loss within the crop cycle. Accordingly, the Company’s net exposure
to commodity price risk is considered to be insignificant.
Foreign currency risk
The Company undertakes transactions denominated in foreign currency (mainly US Dollar, Pound Sterling, Euro and
Japanese Yen) which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign
currency, including the Company’s net investments in foreign operations (with a functional currency other than Indian Rupee), are
also subject to reinstatement risks.
The carrying amounts of foreign currency denominated financial assets and liabilities including derivative contracts, are as follows:
 (` in Crores)

As at 31st March, 2023 USD Euro GBP JPY Others Total

Financial Assets 694.77 87.30 18.42 0.27 14.88 815.64

Financial Liabilities 99.88 22.16 2.42 8.24 3.46 136.16

As at 31st March, 2022 USD Euro GBP JPY Others Total

Financial Assets 565.80 75.16 40.00 0.01 0.98 681.95

Financial Liabilities 71.69 51.34 2.16 18.26 4.00 147.45

 he Company uses foreign exchange forward, futures and options contracts to hedge its exposures in foreign currency arising
T
from firm commitments and highly probable forecast transactions.

a. Forward exchange contracts that were outstanding on respective reporting dates:

 (In Million)

Designated under Hedge

As at 31st March, 2023 As at 31st March, 2022
Accounting

Currency Cross Currency Buy Sell Buy Sell

US Dollar Indian Rupee 47.55 125.68 22.38 586.94

Euro US Dollar 41.94 – 14.09 –
CHF US Dollar – – 1.16 –
GBP US Dollar – – 0.01 –
SEK US Dollar – – 1.36 –
SGD US Dollar – – 0.04 –
JPY US Dollar 123.81 – 324.36 –

The aforesaid hedges have a maturity of less than 1 year from the year end.

ITC Limited REPORT AND ACCOUNTS 2023 209

Notes to the Financial Statements

30. Financial Instruments and Related Disclosures (Contd.)

(In Million)
Not designated under Hedge
As at 31st March, 2023 As at 31st March, 2022
Accounting
Currency Cross Currency Buy Sell Buy Sell
US Dollar Indian Rupee 30.52 78.33 5.00 39.54
Euro US Dollar – 7.25 – 9.15
AUD US Dollar – – 0.04 –
CAD US Dollar – 2.49 – –
CHF US Dollar 0.66 0.20 0.34 –
GBP US Dollar 0.08 2.74 – 8.59
KWD US Dollar – – 0.19 –
JPY US Dollar 232.72 – 53.90 –
b. Currency options that were outstanding on respective reporting dates (Designated under Hedge Accounting):
(In Million)
Currency Cross Currency Buy Sell Buy Sell
US Dollar Indian Rupee – 8.00 – 17.00
Hedges of foreign currency risk and derivative financial instruments
 he Company has established risk management policies to hedge the volatility in cashflows arising from exchange rate fluctuations
T
in respect of firm commitments and highly probable forecast transactions, through foreign exchange forward, futures and options
contracts. The proportion of forecast transactions that are to be hedged is decided based on the size of the forecast transaction
and market conditions. As the counterparty for such transactions are highly rated banks or recognised exchange(s), the risk of
their non-performance is considered to be insignificant.
The Company uses derivatives to hedge its exposure to foreign exchange rate fluctuations. Where such derivatives are not
designated under hedge accounting, changes in the fair value of such hedges are recognised in the Statement of Profit and Loss.
The Company may also designate certain hedges which are entered to manage the volatility in cashflows as a cash flow hedge
under hedge accounting. The currency, amount and tenure of such hedges are generally matched to the underlying transaction(s).
Changes in the fair value of the effective portion of cash flow hedges are recognised as cash flow hedging reserve in Other
Comprehensive Income. While the probability of such hedges becoming ineffective is very low, the ineffective portion, if any, is
immediately recognised in the Statement of Profit and Loss.
The movement in the cash flow hedging reserve in respect of designated cash flow hedges is summarised below:
(` in Crores)

Particulars 2023 2022

At the beginning of the year 14.33 4.93
Add: Changes in the fair value of effective portion of matured
cash flow hedges during the year (154.16) 16.71
Add: Changes in fair value of effective portion of outstanding
cash flow hedges 17.81 19.27
Less: Amounts transferred to the Statement of Profit and Loss on
occurrence of forecast hedge transactions during the year (81.93) 30.07
Less: Amounts transferred to the Statement of Profit and Loss
due to cash flows no longer expected to occur (28.19) 3.03
Less: Amounts transferred to initial cost of non-financial assets (10.40) (9.68)
Less: Net gain / (loss) transferred to the Statement of Profit and Loss
on Ineffectiveness – –
(Less) / Add: Deferred tax 3.98 (3.16)
At the end of the year 2.48 14.33
Of the above, balances remaining in cash flow hedge reserve for matured
hedging relationships (11.20) 2.46

210 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

30. Financial Instruments and Related Disclosures (Contd.)

Once the hedged transaction materialises, the amount accumulated in the cash flow hedging reserve will be included in the initial
cost of the non-financial hedged item on its initial recognition or reclassified to profit or loss, as applicable, in the anticipated
timeframes given below:
 (` in Crores)

Outstanding balance in Cash Flow Hedge As at As at

Reserve to be subsequently recycled from OCI 31st March, 2023 31st March, 2022

Within one year 2.47 10.80

Between one and three years 0.01 3.53
Total 2.48 14.33

Foreign Currency Sensitivity

 or every percentage point increase / decrease in the underlying exchange rate of the outstanding foreign currency denominated
F
assets and liabilities, including derivative contracts, holding all other variables constant, the profit before tax for the year ended
31st March, 2023 would decrease / increase by ` 2.85 Crores (2022 - ` 2.22 Crores) and other equity as at 31st March, 2023 would
decrease / increase by ` 2.68 Crores (2022 - ` 42.87 Crores) on a pre-tax basis.

Credit Risk

Company’s deployment in debt instruments are primarily in Government securities, fixed deposits with highly rated banks and
companies, bonds issued by government institutions, public sector undertakings, mutual fund schemes of leading fund houses and
certificate of deposits issued by highly rated banks and financial institutions. Of this, investments that are held at amortised cost
stood at ` 15420.01 Crores (2022 - ` 17732.33 Crores). With respect to the Company’s investing activities, mutual fund schemes
and counter parties are shortlisted and exposure limits determined on the basis of their credit rating (by independent agencies),
financial statements and other relevant information. As these counter parties are Central / State Government, Government
institutions / public sector undertakings with investment grade / sovereign credit ratings and taking into account the experience of
the Company over time, the counter party risk attached to such assets is considered to be insignificant.

The Company’s customer base is large and diverse limiting the risk arising out of credit concentration. Further, credit is extended
in business interest in accordance with guidelines issued centrally and business-specific credit policies that are consistent with
such guidelines. Exceptions are managed and approved by appropriate authorities, after due consideration of the counterparty’s
credentials and financial capacity, trade practices and prevailing business and economic conditions. The Company’s exposure to
trade receivables on the reporting date, net of expected loss provisions, stood at ` 2321.33 Crores (2022 - ` 1952.50 Crores).

The Company’s historical experience of collecting receivables and the level of default indicate that credit risk is low and generally
uniform across markets; consequently, trade receivables are considered to be a single class of financial assets. All overdue
customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the
counterparty etc. Loss allowances and impairment is recognized, where considered appropriate by responsible management.

 he movement of the expected loss provision (allowance for bad and doubtful loans, advances and receivables etc.) made by the
T
Company are as under:
 (` in Crores)

Expected Loss Provision

Particulars
31st March, 2023 31st March, 2022
Opening Balance 214.05 205.11
Add: Provisions made (net) (0.25) 11.71
Less: Utilisation for impairment / de-recognition 3.36 2.77
Effects of foreign exchange fluctuation – –
Closing Balance 210.44 214.05

ITC Limited REPORT AND ACCOUNTS 2023 211

Notes to the Financial Statements

30. Financial Instruments and Related Disclosures (Contd.)

4. Fair value measurement

The following table presents the fair value hierarchy of financial assets and liabilities measured at fair value on a recurring basis:
 (` in Crores)
Fair Value
As at As at
Particulars Hierarchy
31st March, 2023 31st March, 2022
(Level)
A. Financial assets
a) Measured at amortised cost
i) Investment in Bonds / Debentures,
Preference Shares & Government or
Trust Securities 2 8174.92 11232.53
ii) Investment in Mutual Funds 1 337.99 277.12
iii) Loans* 3 3.40 4.02
iv) Other Financial assets* 3 3560.27 1527.15
Sub-total 12076.58 13040.82
b) Measured at Fair value through OCI
i) Investment in Equity shares – Quoted 1 1464.36 1370.15
ii) Investment in Equity shares –
Unquoted 3 0.05 2.37
iii) Investment in Mutual Funds 1 3676.53 1238.69
Sub-total 5140.94 2611.21
c) Measured at Fair value
through Profit or Loss
i) Investment in Mutual Funds 1 8711.14 8535.85
ii) Investment in Bonds / Debentures,
Certificate of Deposit 2 5360.34 991.97
iii) Investment in Venture Capital Funds 2 119.25 87.33
iv) Investment in Equity & Preference Shares 3 39.34 20.00
Sub-total 14230.07 9635.15
d) Derivatives measured at fair value
i) Derivative instruments not designated
as hedging instruments 2 2.68 3.27
ii) Derivative instruments designated as
hedging instruments 2 29.38 27.27
Sub-total 32.06 30.54
Total financial assets 31479.65 25317.72
B. Financial Liabilities
a) Measured at amortised cost
i) Sales tax deferment loans* 3 2.40 3.12
ii) Lease liabilities* 3 273.59 259.79
iii) Other Financial liabilities* 3 123.48 84.87
Sub-total 399.47 347.78
b) Measured at fair value
i) Derivative instruments not designated
as hedging instruments 2 2.68 0.45
ii) Derivative instruments designated as
hedging instruments 2 4.34 9.56
iii) Contingent Consideration 3 12.65 76.40
Sub-total 19.67 86.41
Total financial liabilities 419.14 434.19
* Represents Fair value of Non-current Financial Instruments.

212 ITC Limited REPORT AND ACCOUNTS 2023

Notes to the Financial Statements

30. Financial Instruments and Related Disclosures (Contd.)

Reconciliation of fair value movement of financial assets and liabilities measured at fair value on a recurring basis and categorised
within Level 3 of the fair value hierarchy is as under:
(` in Crores)
31st March, 2023 31st March, 2022
Financial Financial Financial Financial Financial Financial
Assets Assets Liabilities Assets Assets Liabilities
at FVTPL at FVTOCI at FVTPL at FVTPL at FVTOCI at FVTPL

Opening Balance 20.00 2.37 76.40 – 2.37 139.51

Additions during the year 39.34 – – 20.00 – –
Sale / Transfer / Settlement during the year 20.00 – 63.75 – – 71.25
Gain / (Loss) during the year recognised in
Other Income – – – – – (8.14)
Gain / (Loss) during the year recognised in
Other Comprehensive Income – (2.32) – – – –
Closing Balance 39.34 0.05 12.65 20.00 2.37 76.40

Fair value hierarchy

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Quoted prices (unadjusted) in active market or Net Asset Value (NAV) for identical assets or liabilities.
Level 2: Inputs other than quoted price included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
 he fair value of financial instruments that are not traded in an active market is determined using market approach and valuation
T
techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant
inputs required to fair value an instrument are observable, the instrument is included in Level 2.
 erivatives are valued using valuation techniques with market observable inputs such as foreign exchange spot rates and forward
D
rates at the end of the reporting period, yield curves, risk free rate of returns, volatility etc., as applicable. The fair value of
investment in Bonds / Debentures, Certificate of Deposits, Venture Capital funds etc. and financial liabilities, where applicable, is
determined using market observable inputs such as quotes from market participants, value published by the issuer etc.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally
accepted methodologies such as discounted cash flow analysis, with the most significant inputs being the discount rate that
reflects the credit risk of counterparty.
 he fair value of trade receivables, trade payables and other current financial assets and liabilities is considered to be equal to the
T
carrying amounts of these items due to their short – term nature. Where such items are non-current in nature, the same has been
classified as Level 3 and fair value determined using discounted cash flow basis. Similarly, unquoted equity instruments where
most recent information to measure fair value is insufficient, or if there is a wide range of possible fair value measurements, cost
has been considered as best estimate of fair value.
There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has not classified any
material financial instruments under Level 3 of the fair value hierarchy. The sensitivity of change in the unobservable inputs used
in fair valuation of Level 3 financial assets and liabilities does not have a significant impact on their value. There were no transfers
between Level 1, Level 2 and Level 3 during the year.

On behalf of the Board

S. PURI Chairman & Managing Director

S. DUTTA Director & Chief Financial Officer
R. K. SINGHI Company Secretary

ITC Limited REPORT AND ACCOUNTS 2023 213

INDEPENDENT AUDITOR’S REPORT
To the Members of ITC Limited
Report on the Audit of the Standalone Ind AS Financial Institute of Chartered Accountants of India together with
Statements the ethical requirements that are relevant to our audit
Opinion of the financial statements under the provisions of the
Act and the Rules thereunder, and we have fulfilled our
We have audited the accompanying standalone Ind AS other ethical responsibilities in accordance with these
financial statements of ITC Limited (“the Company”), which requirements and the Code of Ethics. We believe that
comprise the Balance Sheet as at March 31, 2023, the the audit evidence we have obtained is sufficient and
Statement of Profit and Loss, including the statement of appropriate to provide a basis for our audit opinion on the
Other Comprehensive Income, the Cash Flow Statement standalone Ind AS financial statements.
and the Statement of Changes in Equity for the year
Key Audit Matters
then ended, and notes to the standalone Ind AS financial
statements, including a summary of significant accounting Key audit matters are those matters that, in our professional
policies and other explanatory information. judgement, were of most significance in our audit of the
standalone Ind AS financial statements for the financial year
In our opinion and to the best of our information and
ended March 31, 2023. These matters were addressed in
according to the explanations given to us, the aforesaid
the context of our audit of the standalone Ind AS financial
standalone Ind AS financial statements give the information
statements as a whole, and in forming our opinion thereon,
required by the Companies Act, 2013, as amended
and we do not provide a separate opinion on these matters.
(“the Act”) in the manner so required and give a true
For each matter below, our description of how our audit
and fair view in conformity with the accounting principles
addressed the matter is provided in that context.
generally accepted in India, of the state of affairs of the
Company as at March 31, 2023, its profit including other We have determined the matters described below to be
comprehensive income, its cash flows and the changes in the key audit matters to be communicated in our report.
equity for the year ended on that date. We have fulfilled the responsibilities described in the
Auditor’s responsibilities for the audit of the standalone
Basis for Opinion
Ind AS financial statements section of our report, including
We conducted our audit of the standalone Ind AS financial in relation to these matters. Accordingly, our audit included
statements in accordance with the Standards on Auditing the performance of procedures designed to respond to
(SAs), as specified under section 143(10) of the Act. our assessment of the risks of material misstatement of
Our responsibilities under those Standards are further the standalone Ind AS financial statements. The results of
described in the ‘Auditor’s Responsibilities for the Audit our audit procedures, including the procedures performed
of the Standalone Ind AS Financial Statements’ section to address the matters below, provide the basis for our
of our report. We are independent of the Company audit opinion on the accompanying standalone Ind AS
in accordance with the ‘Code of Ethics’ issued by the financial statements.

Key audit matters How our audit addressed the key audit matter

Revenue recognition

Revenue from the sale of goods (hereinafter referred Our audit procedures included the following:
to as “Revenue”) is recognised when the Company  
Assessed the Company’s revenue recognition
performs its obligation to its customers and the amount accounting policies in line with Ind AS 115 (“Revenue
of revenue can be measured reliably and recovery of the from Contracts with Customers”) and tested thereof.
consideration is probable. The timing of such revenue
recognition in case of sale of goods is when the control  
Evaluated the integrity of the general information
over the same is transferred to the customer, which is and technology control environment and testing the
mainly upon delivery. operating effectiveness of key IT application controls
over recognition of revenue.
The timing of revenue recognition is relevant to
the reported performance of the Company. The  Evaluated the design, implementation and operating
management considers revenue as a key measure for effectiveness of Company’s controls in respect of
revenue recognition.

214 ITC Limited REPORT AND ACCOUNTS 2023

 Independent Auditor’s Report

Key audit matters How our audit addressed the key audit matter

evaluation of performance. There is a risk of revenue  Tested the effectiveness of such controls over revenue
being recorded before control is transferred. cut off at year-end.
Refer Note 1 to the Standalone Ind AS Financial  On a sample basis, tested supporting documentation
Statements - Significant Accounting Policies and Note for sales transactions recorded during the year which
21A / 21B. included sales invoices, customer contracts and
shipping documents.
 Performed an increased level of substantive testing
in respect of sales transactions recorded during the
period closer to the year end and subsequent to the
year end.
 Compared revenue with historical trends and where
appropriate, conducted further enquiries and testing.
 Assessed disclosures in financial statements in
respect of revenue, as specified in Ind AS 115.

Impairment assessment of investment in WelcomHotels Lanka (Private) Limited (‘WLPL’), a wholly owned
subsidiary

WLPL is developing a mixed-use project in Colombo, Our audit procedures included the following:
Sri Lanka which includes a hotel and a residential  
Evaluated the key judgements / assumptions
apartment complex. At March 31, 2023, the carrying underlying management’s assessment of potential
value of Company’s investment in WLPL is INR 2,775.41 indicators of impairment.
crores. The Company’s investments in subsidiaries
 Obtained and read the projections / estimated selling
are assessed annually by management for potential
price / future cashflows along with sensitivity analysis
indicators of impairment.
thereof of the underlying PPE and inventory at WLPL.
In view of the deterioration in the macro-economic
 Discussed and obtained assessment of recoverable
scenario in Sri Lanka, the Company has assessed the
value of PPE and inventory from component auditor
carrying value of investments basis evaluation of the
of WLPL.
recoverable value of the capital work in progress of the
hotel (PPE) and inventory of the residential apartments  Evaluated management’s methodology, assumptions
being developed by WLPL. The said determination is and estimates used in these calculations.
based on assumptions, that by their nature imply the  
Involved valuation specialist to review the
use of the management’s judgement, in particular with appropriateness of methodology and key assumptions
reference to forecast of future cash flows, selling price, considered by management to determine discounted
balance cost to complete the project, selling costs, future cash flows.
terminal value, long-term growth rates and discount
 
Performed sensitivity analysis around impact on
rates applied to such forecasted cash flows. Considering
future cash flows due to changes in key assumptions
the judgement required for estimating the cash flows
considered by management.
and the assumptions used, this is considered as a key
audit matter.  Verified the arithmetical accuracy of the future cash flow
model including comparison with approved budgets.
Refer Note 1 – Significant Accounting Policies and Note
2 – Use of estimates and judgements to the Standalone  Assessed the recoverability of investment with regard
Ind AS Financial Statements to underlying value in use of PPE and net realisable
value of inventory in WLPL.

ITC Limited REPORT AND ACCOUNTS 2023 215

Independent Auditor’s Report

We have determined that there are no other key audit In preparing the standalone Ind AS financial statements,
matters to communicate in our report. management is responsible for assessing the Company’s
Information Other than the Financial Statements and ability to continue as a going concern, disclosing, as
Auditor’s Report Thereon applicable, matters related to going concern and using the
going concern basis of accounting unless management
The Company’s Board of Directors is responsible for the either intends to liquidate the Company or to cease
other information. The other information comprises the operations, or has no realistic alternative but to do so.
information included in the Annual Report, but does not
Those Board of Directors are also responsible for
include the standalone Ind AS financial statements and
overseeing the Company’s financial reporting process.
our auditor’s report thereon.
Auditor’s Responsibilities for the Audit of the
Our opinion on the standalone Ind AS financial statements
Standalone Ind AS Financial Statements
does not cover the other information and we do not
express any form of assurance conclusion thereon. Our objectives are to obtain reasonable assurance about
whether the standalone Ind AS financial statements as
In connection with our audit of the standalone Ind AS
a whole are free from material misstatement, whether
financial statements, our responsibility is to read the other
due to fraud or error, and to issue an auditor’s report that
information and, in doing so, consider whether such other
includes our opinion. Reasonable assurance is a high
information is materially inconsistent with the financial
level of assurance, but is not a guarantee that an audit
statements or our knowledge obtained in the audit or
conducted in accordance with SAs will always detect a
otherwise appears to be materially misstated. If, based on
material misstatement when it exists. Misstatements can
the work we have performed, we conclude that there is
arise from fraud or error and are considered material if,
a material misstatement of this other information, we are
individually or in the aggregate, they could reasonably be
required to report that fact. We have nothing to report in
expected to influence the economic decisions of users
this regard.
taken on the basis of these standalone Ind AS financial
Responsibilities of Management for the Standalone statements.
Ind AS Financial Statements
As part of an audit in accordance with SAs, we exercise
The Company’s Board of Directors is responsible for professional judgement and maintain professional
the matters stated in section 134(5) of the Act with skepticism throughout the audit. We also:
respect to the preparation of these standalone Ind AS
• 
Identify and assess the risks of material misstatement
financial statements that give a true and fair view of the
of the standalone Ind AS financial statements, whether
financial position, financial performance including other
due to fraud or error, design and perform audit
comprehensive income, cash flows and changes in
procedures responsive to those risks, and obtain audit
equity of the Company in accordance with the accounting
evidence that is sufficient and appropriate to provide a
principles generally accepted in India, including the
basis for our opinion. The risk of not detecting a material
Indian Accounting Standards (Ind AS) specified under
misstatement resulting from fraud is higher than for one
section 133 of the Act read with the Companies (Indian
resulting from error, as fraud may involve collusion,
Accounting Standards) Rules, 2015, as amended. This
forgery, intentional omissions, misrepresentations, or
responsibility also includes maintenance of adequate
the override of internal control.
accounting records in accordance with the provisions of
the Act for safeguarding of the assets of the Company and • 
Obtain an understanding of internal control relevant
for preventing and detecting frauds and other irregularities; to the audit in order to design audit procedures that
selection and application of appropriate accounting policies; are appropriate in the circumstances. Under section
making judgements and estimates that are reasonable and 143(3)(i) of the Act, we are also responsible for
prudent; and the design, implementation and maintenance expressing our opinion on whether the Company has
of adequate internal financial controls, that were operating adequate internal financial controls with reference
effectively for ensuring the accuracy and completeness of to financial statements in place and the operating
the accounting records, relevant to the preparation and effectiveness of such controls.
presentation of the standalone Ind AS financial statements • 
Evaluate the appropriateness of accounting policies
that give a true and fair view and are free from material used and the reasonableness of accounting estimates
misstatement, whether due to fraud or error. and related disclosures made by management.

216 ITC Limited REPORT AND ACCOUNTS 2023

 Independent Auditor’s Report

• 
Conclude on the appropriateness of management’s use 2. As required by Section 143(3) of the Act, we report that:
of the going concern basis of accounting and, based (a) We have sought and obtained all the information
on the audit evidence obtained, whether a material and explanations which to the best of our knowledge
uncertainty exists related to events or conditions that and belief were necessary for the purposes of
may cast significant doubt on the Company’s ability our audit;
to continue as a going concern. If we conclude that
(b) In our opinion, proper books of account as required
a material uncertainty exists, we are required to
by law have been kept by the Company so far as it
draw attention in our auditor’s report to the related
appears from our examination of those books;
disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our (c) The Balance Sheet, the Statement of Profit and Loss
conclusions are based on the audit evidence obtained including the Statement of Other Comprehensive
up to the date of our auditor’s report. However, future Income, the Cash Flow Statement and Statement
events or conditions may cause the Company to cease of Changes in Equity dealt with by this Report are
to continue as a going concern. in agreement with the books of account;

• 
Evaluate the overall presentation, structure and (d) In our opinion, the aforesaid standalone Ind AS
financial statements comply with the Accounting
content of the standalone Ind AS financial statements,
Standards specified under Section 133 of the
including the disclosures, and whether the standalone
Act, read with Companies (Indian Accounting
Ind AS financial statements represent the underlying
Standards) Rules, 2015, as amended;
transactions and events in a manner that achieves fair
presentation. (e) On the basis of the written representations
received from the directors as on March 31, 2023
We communicate with those charged with governance
taken on record by the Board of Directors, none of
regarding, among other matters, the planned scope and
the directors is disqualified as on March 31, 2023
timing of the audit and significant audit findings, including
from being appointed as a director in terms of
any significant deficiencies in internal control that we
Section 164 (2) of the Act;
identify during our audit.
(f) With respect to the adequacy of the internal
We also provide those charged with governance with financial controls with reference to these standalone
a statement that we have complied with relevant Ind AS financial statements and the operating
ethical requirements regarding independence, and effectiveness of such controls, refer to our separate
to communicate with them all relationships and other Report in “Annexure 2” to this report;
matters that may reasonably be thought to bear on our
(g) In our opinion, the managerial remuneration for the
independence, and where applicable, related safeguards.
year ended March 31, 2023 has been paid / provided
From the matters communicated with those charged with by the Company to its directors in accordance with
governance, we determine those matters that were of the provisions of section 197 read with Schedule V
most significance in the audit of the standalone Ind AS to the Act;
financial statements for the financial year ended March
(h) With respect to the other matters to be included in
31, 2023 and are therefore the key audit matters. We
the Auditor’s Report in accordance with Rule 11 of
describe these matters in our auditor’s report unless law the Companies (Audit and Auditors) Rules, 2014,
or regulation precludes public disclosure about the matter as amended in our opinion and to the best of our
or when, in extremely rare circumstances, we determine information and according to the explanations
that a matter should not be communicated in our report given to us:
because the adverse consequences of doing so would
i. 
The Company has disclosed the impact of
reasonably be expected to outweigh the public interest
pending litigations on its financial position in its
benefits of such communication.
standalone Ind AS financial statements – Refer
Report on Other Legal and Regulatory Requirements Note 27(v)(a) to the standalone Ind AS financial
1. As required by the Companies (Auditor’s Report) Order, statements;
2020 (“the Order”), issued by the Central Government ii. 
The Company did not have any long-term
of India in terms of sub-section (11) of section 143 of contracts including derivative contracts for
the Act, we give in the “Annexure 1” a statement on the which there were any material foreseeable
matters specified in paragraphs 3 and 4 of the Order. losses;

ITC Limited REPORT AND ACCOUNTS 2023 217

Independent Auditor’s Report

iii. 
There has been no delay in transferring or provide any guarantee, security or the like
amounts, required to be transferred, to the on behalf of the Ultimate Beneficiaries; and
Investor Education and Protection Fund by the c) 
Based on such audit procedures performed
Company that have been considered reasonable and
iv. a) 
The management has represented that, appropriate in the circumstances, nothing has
to the best of its knowledge and belief, no come to our notice that has caused us to believe
funds have been advanced or loaned or that the representations under sub-clause (a)
invested (either from borrowed funds or and (b) contain any material misstatement.
share premium or any other sources or kind v. The final dividend paid by the Company during
of funds) by the Company to or in any other the year in respect of the same declared for the
person or entity, including foreign entities previous year is in accordance with section 123
(“Intermediaries”), with the understanding, of the Act to the extent it applies to payment of
whether recorded in writing or otherwise, dividend.
that the Intermediary shall, whether, directly
or indirectly lend or invest in other persons or The interim dividend declared and paid by the
entities identified in any manner whatsoever Company during the year and until the date of
by or on behalf of the Company (“Ultimate this audit report is in accordance with section
Beneficiaries”) or provide any guarantee, 123 of the Act.
security or the like on behalf of the Ultimate As stated in Note B of Statement of changes
Beneficiaries; in equity to the standalone Ind AS financial
b) 
The management has represented that, statements, the Board of Directors of the
to the best of its knowledge and belief, no Company have proposed final dividend for
funds have been received by the Company the year which is subject to the approval of
from any person or entity, including foreign the members at the ensuing Annual General
entities (“Funding Parties”), with the Meeting. The dividend declared is in accordance
understanding, whether recorded in writing with section 123 of the Act to the extent it applies
or otherwise, that the Company shall, to declaration of dividend.
whether, directly or indirectly, lend or invest vi. 
As proviso to Rule 3(1) of the Companies
in other persons or entities identified in any (Accounts) Rules, 2014 is applicable for the
manner whatsoever by or on behalf of the Company only w.e.f. April 1, 2023, reporting
Funding Party (“Ultimate Beneficiaries”) under this clause is not applicable.

For S R B C & CO LLP

Chartered Accountants
ICAI Firm Registration Number: 324982E / E300003

per Arvind Sethi

Partner
Membership Number: 89802
Place of Signature: Frankfurt
Date: May 18, 2023 UDIN: 23089802BGYPWJ5272

218 ITC Limited REPORT AND ACCOUNTS 2023

Annexure 1 referred to in paragraph 1 under the heading “Report
  

on Other legal and Regulatory Requirements” of our report of even date

Re: ITC Limited (the “Company”)
In terms of the information and explanations sought by us and given by the Company and the books of account and records
examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:
(i) (a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation
of property, plant and equipment.
(B) The Company has maintained proper records showing full particulars of intangibles assets.
(b) The property, plant and equipment 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 property, plant
and equipment at reasonable intervals. According to the information and explanations given to us, no material
discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management, the title deeds of all the immovable
properties (other than properties where the Company is the lessee and the lease agreements are duly executed in
favour of the lessee) are held in the name of the Company.
(d) The Company has not revalued its Property, Plant and Equipment (including Right of use assets) or intangible assets
during the year ended March 31, 2023.
(e) There are no proceedings initiated or are pending against the Company for holding any benami property under the
Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of
verification by the management is reasonable and the coverage and procedure for such verification is appropriate.
Inventories lying with third parties have substantially been confirmed by them as at year end. No discrepancies of
10% or more in aggregate for each class of inventory (including inventories lying with third parties) were noticed.
(b) As disclosed in note 8 to the financial statements, the Company has been sanctioned working capital limits in excess of
` 5 crores in aggregate from banks during the year on the basis of security of inventories of the Company. Based on
the records examined by us in the normal course of audit of the financial statements, the quarterly returns / statements
filed by the Company with such banks are in agreement with the books of account of the Company.
(iii) (a) During the year the Company has not provided loans, advances in the nature of loans, stood guarantee or provided
security to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the requirement to
report on clause 3(iii)(a) of the Order is not applicable to the Company.
(b) During the year the investments made by the Company is not prejudicial to the Company’s interest. The Company
has not provided guarantees or security and has not granted loans and advances in the nature of loans to companies,
firms, Limited Liability Partnerships or any other parties and hence not commented upon.
(c) The Company has not granted loans and advances in the nature of loans to companies, firms, Limited Liability
Partnerships or any other parties. Accordingly, the requirement to report on clause 3(iii)(c) to 3(iii)(f) of the Order is
not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us, provisions of section 185 and 186 of the
Companies Act, 2013 in respect of loans to directors including entities in which they are interested and in respect of
loans and advances given, investments made and, guarantees, and securities given have been complied with by the
Company.
(v) According to the information and explanations given to us, the Company has not accepted any deposit from the public
nor accepted any amounts which are deemed to be deposits during the year within the meaning of Sections 73 and 76 of
the Companies Act, 2013. In respect of unclaimed deposits, the Company has complied with the provisions of Sections
74 and 75 or any other relevant provisions of the Companies Act, 2013. We are informed by the management that no
order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any
Court or any other Tribunal.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central
Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the

ITC Limited REPORT AND ACCOUNTS 2023 219

 manufacture of specified products of the Company and are of the opinion that prima facie, the specified accounts and
records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including Goods and
Services Tax, provident fund, employees’ state insurance, income-tax, duty of custom, duty of excise, cess and
other statutory dues applicable to it.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Goods
and Services Tax, provident fund, employees’ state insurance, income-tax, duty of custom, duty of excise, cess
and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they
became payable.
(c) The dues of income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other
statutory dues have not been deposited on account of any dispute, are as follows:

Name of Nature of Amount Period to which Forums where the dispute

the statute the dues (` in Crores)* the amount relates is pending
(Financial Year)

Sales Tax and Sales Tax 38.93 1987-2020 Appellate Authority –

Value Added and VAT upto commissioners’ /
Tax Laws Revisional Authorities Level
33.69 2006-2018 Appellate Authority –
Tribunal Level
229.78 1979-2017 High Court

Customs Act, Customs 0.87 2012-2021 Appellate Authority –

1962 Duty upto commissioners’ /
Revisional Authorities Level
8.53 2015-2021 Appellate Authority –
Tribunal Level
5.21 2006-2009 High Court
Central Excise Excise Duty 0.33 1996-2017 Appellate Authority –
Act, 1944 upto commissioners’ /
Revisional Authorities Level
57.69 1973-2018 Appellate Authority –
Tribunal Level
4.46 2004-2012 High Court
Finance Act, Service Tax 3.04 2007-2017 Appellate Authority –
1994 upto commissioners’ /
Revisional Authorities Level
79.75 2003-2017 Appellate Authority –
Tribunal Level
5.40 2005-2017 High Court
Entry Tax Laws Entry Tax 0.15 2005-2017 Appellate Authority –
upto commissioners’ /
Revisional Authorities Level
18.32 2011-2018 Appellate Authority –
Tribunal Level
68.49 1999-2018 High Court

220 ITC Limited REPORT AND ACCOUNTS 2023

 Name of Nature of Amount Period to which Forums where the dispute
the statute the dues (` in Crores)* the amount relates is pending
(Financial Year)

Luxury Tax Laws Luxury Tax 54.95 1999-2004 Supreme Court

Goods and Goods and 4.76 2017-2019 Appellate Authority –

Services Tax Services Tax upto commissioners’ /
Revisional Authorities Level
0.01 2017 High Court

Mandi Laws Mandi Fees 2.03 2010-2022 Mandi Board

& Cess
1.80 2001-2023 High Court

Municipal, Local Municipal, 3.44 2014-2021 Appellate Authority –

Bodies and Local upto commissioners’ /
Property Tax Bodies and Revisional Authorities
Laws Property Level / Municipal Council
Taxes & 2.40 2004 Appellate Authority –
Charges Tribunal Level
31.43 2001-2018 High Court

Stamp Duty Stamp Duty 4.22 2004-2016 Registrar /

Laws Appellate Authority
0.03 1987-2008 High Court

The Employees’ Provident 0.49 2012-2020 Appellate Authority- Tribunal

Provident Fund Level
Funds and
Miscellaneous
Provisions Act,
1952 1.52 1982-1990 High Court

Employees’ Employees’ 0.08 2007-2014 Principal Labour Court

State Insurance State
Act, 1948 Insurance
0.06 1995-1996 High Court

 O
 ut of the total disputed dues aggregating ` 661.86 Crores as above, ` 559.14 Crores pertain to matters which have
been stayed for recovery by the relevant authorities.
*Net of amount paid under protest.
(viii) The Company has not surrendered or disclosed any transaction, previously unrecorded in the books of account, in the
tax assessments under the Income Tax Act, 1961 as income during the year. Accordingly, the requirement to report on
clause 3(viii) of the Order is not applicable to the Company.
(ix) (a) The Company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to
any lender.
(b) The Company has not been declared wilful defaulter by any bank or financial institution or government or any
government authority.

ITC Limited REPORT AND ACCOUNTS 2023 221

 (c) The Company did not have any term loans outstanding during the year hence, the requirement to report on clause
(ix)(c) of the Order is not applicable to the Company.
(d) The Company did not raise any funds during the year hence, the requirement to report on clause (ix)(d) of the Order
is not applicable to the Company.
(e) On an overall examination of the financial statements of the Company, the Company has not taken any funds from
any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures. Hence,
the requirement to report on clause (ix)(e) of the Order is not applicable to the Company.
(f) The Company has not raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures
or associate companies. Hence, the requirement to report on clause (ix)(f) of the Order is not applicable to the
Company.
(x) (a) According to the information and explanations given by the management, the Company has not raised any money
during the year by way of initial public offer / further public offer (including debt instruments) hence, reporting under
clause 3(x)(a) is not applicable to the Company and hence not commented upon.
(b) The Company has not made any preferential allotment or private placement of shares / fully or partially or optionally
convertible debentures during the year under audit and hence, the requirement to report on clause 3(x)(b) of the
Order is not applicable to the Company.
(xi) (a) No fraud by the Company or no material fraud on the Company has been noticed or reported during the year.
(b) During the year, no report under sub-section (12) of section 143 of the Companies Act, 2013 has been filed by
cost auditor / secretarial auditor or by us in Form ADT – 4 as prescribed under Rule 13 of Companies (Audit and
Auditors) Rules, 2014 with the Central Government.
(c) We have taken into consideration the whistle blower complaints received by the Company during the year while
determining the nature, timing and extent of audit procedures.
(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) (a) to (c) of the Order
are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in
compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed
in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) (a) The Company has an internal audit system commensurate with the size and nature of its business.
(b) The internal audit reports of the Company issued till the date of the audit report, for the period under audit have
been considered by us.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-
cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.
(xvi) (a) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of
India Act, 1934 are not applicable to the Company.
(b) The Company is not engaged in any Non-Banking Financial or Housing Finance activities. Accordingly, the
requirement to report on clause (xvi)(b) of the Order is not applicable to the Company.
(c) The Company is not a Core Investment Company as defined in the regulations made by Reserve Bank of India.
Accordingly, the requirement to report on clause 3(xvi) of the Order is not applicable to the Company.
(d) There is no Core Investment Company as a part of the Group, hence, the requirement to report on clause 3(xvi)(d)
of the Order is not applicable to the Company.

222 ITC Limited REPORT AND ACCOUNTS 2023

(xvii) The Company has not incurred cash losses in the current year and in the immediately preceding financial year.
(xviii) There has been no resignation of the statutory auditors during the year and accordingly requirement to report on
Clause 3(xviii) of the Order is not applicable to the Company.
(xix) On the basis of the financial ratios disclosed in note 27 (xvi) to the financial statements, ageing and expected dates
of realization of financial assets and payment of financial liabilities, other information accompanying the financial
statements, our knowledge of the Board of Directors and management plans and based on our examination of the
evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material
uncertainty exists as on the date of the audit report that Company is not capable of meeting its liabilities existing at the
date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however,
state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based
on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities
falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when
they fall due.
(xx) (a) In respect of other than ongoing projects, there are no unspent amounts that are required to be transferred to a
fund specified in Schedule VII of the Companies Act (the Act), in compliance with second proviso to sub section 5
of section 135 of the Act. This matter has been disclosed in note 27 (iii) to the financial statements.
(b) All amounts that are unspent under section (5) of section 135 of Companies Act, pursuant to any ongoing project,
has been transferred to special account in compliance of with provisions of sub section (6) of section 135 of the
said Act. This matter has been disclosed in note 27 (iii) to the financial statements.

For S R B C & CO LLP

Chartered Accountants
ICAI Firm Registration Number: 324982E / E300003

per Arvind Sethi

Partner
Membership Number: 89802
Place of Signature: Frankfurt
Date: May 18, 2023 UDIN: 23089802BGYPWJ5272

ITC Limited REPORT AND ACCOUNTS 2023 223

Annexure 2 to the Independent Auditor’s Report of even date on
  

the Standalone Financial Statements of ITC Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act,
2013 (“the Act”)

We have audited the internal financial controls with reference to standalone financial statements of ITC Limited (“the
Company”) as of March 31, 2023 in conjunction with our audit of the standalone financial statements of the Company for
the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal
control over financial reporting criteria established by the Company considering the essential components of internal control
stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of
Chartered Accountants of India (“ICAI”). These responsibilities include the design, implementation and maintenance of
adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its
business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of
frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial
information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls with reference to these standalone
financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal
Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, as specified under
section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by ICAI. Those
Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether adequate internal financial controls with reference to these standalone financial
statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls
with reference to these standalone financial statements and their operating effectiveness. Our audit of internal financial
controls with reference to standalone financial statements included obtaining an understanding of internal financial controls
with reference to these standalone financial statements, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion
on the Company’s internal financial controls with reference to these standalone financial statements.

Meaning of Internal Financial Controls With Reference to these Standalone Financial Statements

A company’s internal financial controls with reference to standalone financial statements is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal financial controls with reference

224 ITC Limited REPORT AND ACCOUNTS 2023

to standalone financial statements includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets
that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls With Reference to Standalone Financial Statements

Because of the inherent limitations of internal financial controls with reference to standalone financial statements, including
the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may
occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to standalone
financial statements to future periods are subject to the risk that the internal financial control with reference to standalone
financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to standalone
financial statements and such internal financial controls with reference to standalone financial statements were operating
effectively as at March 31, 2023, based on the internal control over financial reporting criteria established by the Company
considering the essential components of internal control stated in the Guidance Note issued by the ICAI.

For S R B C & CO LLP

Chartered Accountants
ICAI Firm Registration Number: 324982E / E300003

per Arvind Sethi

Partner
Membership Number: 89802
Place of Signature: Frankfurt
Date: May 18, 2023 UDIN: 23089802BGYPWJ5272

ITC Limited REPORT AND ACCOUNTS 2023 225