The Statutory Audit Report of ITC Ltd

The Statutory Audit Report of ITC Ltd.Year end: Mar '13

Master of Management Studies (MMS)

Mumbai University

Academic Year: 2013-2014

Submitted By

Nikhil D. Gavande

Roll No. 11

Chetana’s R.K. Institute of Management & Research

Bandra (East), Mumbai 400051.

Audit Report (ITC) Year End : Mar '13

1. Following is the audit report of ITC LIMITED (the Company) accompanying financial statements, which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. Managements Responsibility for the Financial Statements

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

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

(i) In respect of its fixed assets:

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

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

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

(ii) In respect of its inventory:

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

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

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

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

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

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

(vi) The Company has an internal audit system commensurate with the size of the Company and the nature of its business.

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

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

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

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

Name of the statute

Nature of the dues

Amount (Rs. in crores)

Period to which the amount relates (various years covering the period)

Forum where pending

Sales Tax and VAT Laws

Sales tax and VAT 104.02 1987-2013

Appellate Authority- upto Commissioners/Revisional authorities level

5.29 1994-2007 Appellate Authority- Tribunal level

165.83 1994-2008 High Court

Customs Act, 1962Customs duty 0.05 2008-2010



Central Excise Act, 1944 Excise duty 9.7 1996-2012


86 1973-2012 Appellate Authority- Tribunal level

1.43 2005-2010 High Court

0.31 1991-1996 Supreme Court

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


Income Tax Act, 1961 Income tax 1.34 1990-2006


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

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

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

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

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

(xiii) According to the information and explanations given to us, no fraud by the Company and no significant fraud on the Company has been noticed or reported during the year.

Balance Sheet of ITC in Rs. Cr. Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 790.18 781.84 773.81 381.82 377.44

Equity Share Capital 790.18 781.84 773.81 381.82 377.44

Share Application Money 0 0 0 0 0

Preference Share Capital 0 0 0 0 0

Reserves 21,497.67 17,957.00 15,126.12 13,628.17 13,302.55

Revaluation Reserves 0 53.05 53.34 54.39 55.09

Networth 22,287.85 18,791.89 15,953.27 14,064.38 13,735.08

Secured Loans 0 1.77 1.94 0 11.63

Unsecured Loans 66.4 77.32 97.26 107.71 165.92

Total Debt 66.4 79.09 99.2 107.71 177.55

Total Liabilities 22,354.25 18,870.98 16,052.47 14,172.09 13,912.63 Mar '13 Mar '12 Mar '11 Mar '10 Mar '09


Application Of Funds

Gross Block 16,679.17 13,926.34 12,765.82 11,967.86 10,558.65

Less: Accum. Depreciation 5,469.83 4,819.66 4,420.75 3,825.46 3,286.74

Net Block 11,209.34 9,106.68 8,345.07 8,142.40 7,271.91

Capital Work in Progress 1,487.79 2,572.06 1,333.40 1,008.99 1,214.06

Investments 7,060.29 6,316.59 5,554.66 5,726.87 2,837.75

Inventories 6,600.20 5,637.83 5,267.53 4,549.07 4,599.72

Sundry Debtors 1,163.34 986.02 907.62 858.8 668.67

Cash and Bank Balance 3,615.00 140.5 98.77 120.16 68.73

Total Current Assets 11,378.54 6,764.35 6,273.92 5,528.03 5,337.12

Loans and Advances 2,881.47 1,952.54 2,173.89 1,929.16 2,150.21

Fixed Deposits 0 2,678.43 2,144.47 1,006.12 963.66

Total CA, Loans & Advances 14,260.01 11,395.32 10,592.28 8,463.31 8,450.99

Deffered Credit 0 0 0 0 0

Current Liabilities 6,404.43 6,108.60 5,668.10 4,619.54 4,121.59

Provisions 5,258.75 4,411.07 4,104.84 4,549.94 1,740.49

Total CL & Provisions 11,663.18 10,519.67 9,772.94 9,169.48 5,862.08

Net Current Assets 2,596.83 875.65 819.34 -706.17 2,588.91

Miscellaneous Expenses 0 0 0 0 0

Total Assets 22,354.25 18,870.98 16,052.47 14,172.09 13,912.63

Contingent Liabilities 2,122.83 2,533.61 2,228.40 258.73 261.36

Book Value (Rs) 28.21 23.97 20.55 36.69 36.24

Profit & Loss account of ITC in Rs. Cr.

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09


Income

Sales Turnover 29,901.27 35,247.25 30,633.57 26,399.63 23,247.84

Excise Duty 0 10,157.14 9,512.74 7,832.18 8,262.03

Net Sales 29,901.27 25,090.11 21,120.83 18,567.45 14,985.81

Other Income 938.7 761.25 775.76 545.05 426.21

Stock Adjustments 935.83 149.3 308.42 -447.54 630.3

Total Income 31,775.80 26,000.66 22,205.01 18,664.96 16,042.32

Expenditure

Raw Materials 12,531.44 9,933.19 8,601.13 7,140.69 6,864.96

Power & Fuel Cost 550.11 453.19 421.68 387.34 394.12

Employee Cost 1,387.01 1,265.41 1,178.46 1,014.87 903.37

Other Manufacturing Expenses 0 634.8 560.57 413.79 402.88

Selling and Admin Expenses 0 2,691.41 2,408.03 2,093.87 1,684.41

Miscellaneous Expenses 5,741.03 1,339.60 1,120.89 1,008.91 516.9

Preoperative Exp Capitalised 0 0 -60.54 -71.88 -72.55

Total Expenses 20,209.59 16,317.60 14,230.22 11,987.59 10,694.09



Operating Profit 10,627.51 8,921.81 7,199.03 6,132.32 4,922.02

PBDIT 11,566.21 9,683.06 7,974.79 6,677.37 5,348.23

Interest 86.47 87.02 78.11 90.28 47.65

PBDT 11,479.74 9,596.04 7,896.68 6,587.09 5,300.58

Depreciation 795.56 698.51 655.99 608.71 549.41

Other Written Off 0 0 0 0 0

Profit Before Tax 10,684.18 8,897.53 7,240.69 5,978.38 4,751.17

Extra-ordinary items 0 2.51 35.21 48.65 81.52

PBT (Post Extra-ord Items) 10,684.18 8,900.04 7,275.90 6,027.03 4,832.69

Tax 3,265.79 2,737.08 2,287.69 1,965.43 1,565.13

Reported Net Profit 7,418.39 6,162.37 4,987.61 4,061.00 3,263.59

Total Value Addition 7,678.15 6,384.41 5,629.09 4,846.90 3,829.13

Preference Dividend 0 0 0 0 0

Equity Dividend 4,148.46 3,518.29 3,443.47 3,818.18 1,396.53

Corporate Dividend Tax 705.03 570.75 558.62 634.15 237.34

Per share data (annualised)

Shares in issue (lakhs) 79,018.33 78,184.24 77,381.44 38,181.77 37,744.00

Earning Per Share (Rs) 9.39 7.88 6.45 10.64 8.65

Equity Dividend (%) 525 450 445 1,000.00 370

Book Value (Rs) 28.21 23.97 20.55 36.69 36.24

Cash Flow of ITC in Rs. Cr.



Net Profit Before Tax 10684.18 8897.53 7268.16 6015.31 4825.74

Net Cash From Operating Activities 6709.89 6015.59 5264.24 4630.65 3279.03

Net Cash (used in)/from

-3580.78 -2210.19 -616.22 -3531.56 -1260.74Investing Activities

Net Cash (used in)/from Financing Activities -3232.55 -3246.55 -3551.64 -1009.86 -1556.15

Net (decrease)/increase In Cash and Cash Equivalents -103.44 558.85 1096.38 89.23 462.14

Opening Cash & Cash Equivalents 259.34 2178.92 1082.93 993.7 570.25

Closing Cash & Cash Equivalents 155.9 2737.77 2179.31 1082.93 1032.39

Source: Dion Global Solutions Limited

Documents

The Statutory Audit Report of ITC Ltd