Report on the Standalone Financial Statements
Independent Auditor’s Report to the Members of ITC Limited
1. We have audited the accompanying standalone Ind AS financial statements of ITC LIMITED ("the Company”), which comprise the Balance Sheet as at 31st March, 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management’s Responsibility for the Standalone Ind AS Financial Statements
2. The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
3. Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.
5. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2017, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by Section 143(3) of the Act, based on our audit we report, to the extent applicable that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.
(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements in accordance with the generally accepted accounting practice - also refer Note 27 (v)
(a) (i) to the standalone Ind AS financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in the standalone Ind AS financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated the 8th November, 2016 of the Ministry of Finance, during the period from 8th November 2016 to 30th December 2016. Based on audit procedures performed and the representations provided to us by the management we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management. Also refer Note - 27 (viii) to the standalone Ind AS financial statements.
8. As required by the Companies (Auditor’s Report) Order, 2016 ("the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)
We have audited the internal financial controls over financial reporting of ITC Limited ("the Company”) as of 31st March, 2017 in conjunction with our audit of the standalone Ind AS 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. 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 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 over financial reporting 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”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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 over financial reporting 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 system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, 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 system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company’s internal financial control over financial reporting 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 control over financial reporting 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 authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized 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 Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, 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 over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting 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, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, 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.
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.
(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) With respect to immovable properties of acquired land and buildings that are freehold, according to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed / transfer deed / conveyance deed / court orders approving schemes of arrangements/amalgamations provided to us, we report that, the title deeds of such immovable properties are held in the name of the Company as at the balance sheet date.
(ii) 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 and no material discrepancies were noticed on such physical verification.
(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.
(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year and accordingly the question of complying with Sections 73 and 76 of the Companies Act, 2013 does not arise. 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. 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 maintenance of cost records has been prescribed by the Central Government under Section 148(1) of the Companies Act, 2013 in respect of specified products of the Company. For such products, we have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has been regular in depositing undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-tax, Sales tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities.
(b) Details of dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, and Value Added Tax which have not been deposited as on 31st March, 2017 on account of disputes are given below:
Name of statute
|
Nature of dues
|
Amount (Rs, in Crores)
|
Period to which the amount relates
|
Forum where dispute is pending
|
|
|
|
Various years covering the period
|
|
Sales Tax and Value Added Tax
|
Sales tax and VAT
|
78.96
|
1987-2017
|
Appellate Authority -up to Commissioners’/ Provisional authorities level
|
Laws
|
|
26.30
|
1994-2015
|
Appellate Authority -Tribunal level
|
|
|
231.25
|
2005-2015
|
High Court
|
Customs Act, 1962
|
Customs
duty
|
0.12
|
2010-2016
|
Appellate Authority -up to Commissioners’/ Provisional authorities level
|
|
|
0.55
|
2005-2007
|
Appellate Authority -Tribunal level
|
Central Excise Act, 1944
|
Excise duty
|
45.56
|
1996-2015
|
Appellate Authority -up to Commissioners’/ Provisional authorities level
|
|
|
55.44
|
1973-2015
|
Appellate Authority -Tribunal level
|
|
|
3.94
|
2005-2010
|
High Court
|
Finance Act, 1994
|
Service tax
|
5.96
|
2010-2016
|
Appellate Authority -up to Commissioners’/ Provisional authorities level
|
|
|
56.70
|
2003-2014
|
Appellate Authority -Tribunal level
|
Out of the total disputed dues aggregating '''' 504.78 Crores as above, '''' 406.79 Crores pertain to matters which have been stayed for recovery by the relevant authorities.
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government and dues to debenture holders.
(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause (ix) of the Order is not applicable.
(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013. In respect of two directors, aggregate remuneration of '''' 4.10 Crores paid/provided during the year, is subject to the approval of the Members at the forthcoming Annual General Meeting.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Sections 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the Standalone Ind AS financial statements etc. as required by the applicable Indian accounting standards.
(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or directors of its holding, subsidiary or associate company or person connected with them and hence provisions of Section 192 of the Companies Act, 2013 are not applicable.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm’s Registration No. 302009E)
P. R. Ramesh
Kolkata Partner
26th May, 2017 (Membership No. 70928)
1. We have audited the accompanying standalone financial statements of
ITC LIMITED ("the Company"), which comprise the Balance Sheet as at
31st March, 2016, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended, and a summary of the significant
accounting policies and other explanatory information.
Management''''s Responsibility for the Standalone Financial Statements
2. The Company''''s Board of Directors is responsible for matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these standalone 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 principles
generally accepted in India, including the Accounting Standards
prescribed under Section 133 of the Act, as applicable. This
responsibility also includes maintenance of adequate accounting records
in accordance with the provisions of the Act for safeguarding the
assets of the Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and
prudent; and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records,
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.
Auditor''''s Responsibility
3. Our responsibility is to express an opinion on these standalone
financial statements based on our audit. We have taken into account
the provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made thereunder and the Order under
Section 143(11) of the Act. We conducted our audit of the standalone
financial statements in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company''''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating
the appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the Company''''s
Directors, as well as evaluating the overall presentation of the
financial statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
6. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid standalone financial
statements give the information required by the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India,of the state of
affairs of the Company as at 31st March, 2016, and its profit and its
cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit.
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books.
(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
(d) In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards prescribed under Section 133 of
the Act, as applicable.
(e) On the basis of the written representations received from the
directors as on 31st March, 2016 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2016
from being appointed as a director in terms of Section 164(2) of the
Act.
(f) With respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating effectiveness
of such controls, refer to our separate Report in "Annexure A". Our
report expresses an unmodified opinion on the adequacy and operating
effectiveness of the Company''''s internal financial controls over
financial reporting.
(g) With respect to the other matters to be included in the Auditor''''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements in accordance with the
generally accepted accounting practice ? also refer Note 31(iv) to the
financial statements.
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
8. As required by the Companies (Auditor''''s Report) Order, 2016 ("the
Order") issued by the Central Government in terms of Section 143(11) of
the Act, we give in "Annexure B" a statement on the matters specified
in paragraphs 3 and 4 of the Order.
(Referred to in paragraph 8 under ''''Report on Other Legal and Regulatory
Requirements'''' section of our report of even date)
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of 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) With respect to immovable properties of acquired land and buildings
that are freehold, according to the information and explanations given
to us and the records examined by us and based on the examination of
the registered sale deed/transfer deed/conveyance deed/court orders
approving schemes of arrangements/amalgamations provided to us, we
report that, the title deeds of such immovable properties are held in
the name of the Company as at the balance sheet date. In respect of
immovable properties of land and buildings that have been taken on
lease and disclosed as fixed asset in the financial statements, the
lease agreements are in the name of the Company, where the Company is
the lessee in the agreement.
(ii) 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 and
no material discrepancies were noticed on such physical verification.
(iii) The Company has not granted any loans, secured or unsecured, to
companies, firms, Limited Liability Partnerships or other parties
covered in the Register maintained under Section 189 of the Companies
Act, 2013.
(iv) In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
185 and 186 of the Companies Act, 2013 in respect of grant of loans,
making investments and providing guarantees and securities, as
applicable.
(v) According to the information and explanations given to us, the
Company has not accepted any deposit during the year and accordingly
the question of complying with Sections 73 and 76 of the Companies Act,
2013 does not arise. 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. 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 maintenance of cost records has been prescribed by the Central
Government under Section 148(1) of the Companies Act, 2013 in respect
of specified products of the Company. For such products, we have
broadly reviewed the cost records maintained by the Company pursuant to
the Companies (Cost Records and Audit) Rules, 2014, as amended, and are
of the opinion that, prima facie, the prescribed cost records have been
made and maintained. We have, however, not made a detailed examination
of the cost records with a view to determine whether they are accurate
or complete.
(vii) According to the information and explanations given to us, in
respect of statutory dues:
(a) The Company has been regular in depositing undisputed statutory
dues including Provident Fund, Employees'''' State Insurance, Income-tax,
Sales tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax,
Cess and other material statutory dues applicable to it with the
appropriate authorities.
(b) Details of dues of Income-tax, Sales Tax, Service Tax, Customs
Duty, Excise Duty, and Value Added Tax which have not been deposited as
on 31st March, 2016 on account of disputes are given below:
Name of Nature of Amount Period to which
the statute the dues (Rs. in Crores) the amount relates
Various years
covering the period
Sales Tax Sales tax 40.37 1987-2015
and Value and VAT
Added Tax
Laws 41.25 1994-2014
221.27 2005-2015
Customs Customs 0.10 2010-2014
Act, 1962 duty
0.51 2005-2007
Central Excise duty 32.96 1996-2015
Excise
Act, 1944
83.67 1973-2015
3.58 2005-2010
Finance Act, Service tax 0.35 2008-2014
1994
53.40 2003-2011
Income-tax Income-tax 2.31 1999-2006
Act, 1961
Name of the Statute Forum where dispute is pending
Sales Tax and Value
Added Tax Laws Appellate Authority - upto Commissioners''''/
Revisional authorities level
Appellate Authority - Tribunal level
High Court
Customs Act, 1962 Appellate Authority - upto Commissioners''''/
Revisional authorities level
Appellate Authority - Tribunal level
Central Excise Act, 1944 Appellate Authority - upto Commissioners''''/
Revisional authorities level
Appellate Authority - Tribunal level
High Court
Finance Act, 1994 Appellate Authority - upto Commissioners''''/
Revisional authorities level
Appellate Authority - Tribunal level
Income-tax Act, 1961 Appellate Authority - Tribunal level
Out of the total disputed dues aggregating Rs. 479.77 Crores as above,
Rs. 379.90 Crores pertain to matters which have been stayed for
recovery by the relevant authorities.
(viii) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of loans or
borrowings to financial institutions, banks and government and dues to
debenture holders.
(ix) The Company has not raised moneys by way of initial public offer
or further public offer (including debt instruments) or term loans and
hence reporting under clause (ix) of the Order is not applicable.
(x) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company by its officers or employees has been noticed or
reported during the year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has paid / provided managerial remuneration in
accordance with the requisite approvals mandated by the provisions of
Section 197 read with Schedule V to the Companies Act, 2013. In respect
of two whole-time directors, aggregate remuneration of Rs. 1.22 Crores
paid/provided during the year, is subject to the approval of the
Members at the forthcoming Annual General Meeting.
(xii) The Company is not a Nidhi Company and hence reporting under
clause (xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations
given to us the Company is in compliance with Sections 177 and 188 of
the Companies Act, 2013, where applicable, for all transactions with
the related parties and the details of related party transactions have
been disclosed in the financial statements etc. as required by the
applicable accounting standards.
(xiv) During the year the Company has not made any preferential
allotment or private placement of shares or fully or partly convertible
debentures and hence reporting under clause (xiv) of the Order is not
applicable to the Company.
(xv) In our opinion and according to the information and explanations
given to us, during the year the Company has not entered into any
non-cash transactions with its directors or directors of its holding,
subsidiary or associate company or person connected with them and hence
provisions of Section 192 of the Companies Act, 2013 are not
applicable.
(xvi) The Company is not required to be registered under Section 45-IA
of the Reserve Bank of India Act, 1934.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm''''s Registration No. 302009E)
Shyamak R Tata
Kolkata Partner
20th May, 2016 (Membership No. 38320)
1. We have audited the accompanying standalone financial statements of
ITC LIMITED ("the Company"), which comprise the Balance Sheet as at
31st March, 2015, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended, and a summary of the significant
accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
2. The Company's Board of Directors is responsible for matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these standalone 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 principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
3. Our responsibility is to express an opinion on these standalone
financial statements based on our audit. We have taken into account
the provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made thereunder. We conducted our
audit in accordance with the Standards on Auditing specified under
Section143 (10) of the Act. Those Standards
require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
6. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid standalone financial
statements give the information required by the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state of
affairs of the Company as at 31st March, 2015, and its profit and its
cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government in terms of Section 143(11) of
the Act,
we give in the Annexure a statement on the matters specified in
paragraphs 3 and 4 of the Order.
8. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit.
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books.
(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
(d) In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under Section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the
directors as on 31st March, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2015
from being appointed as a director in terms of Section 164(2) of the
Act.
(f) With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements in accordance with the
generally accepted accounting practice ? also refer Note 31(iv)(a)(i)
to the financial statements.
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure to the Independent Auditors' Report (Referred to in paragraph
7 under 'Report on Other Legal and Regulatory Requirements' section of
our report of even date)
(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.
(ii) In respect of its inventory:
(a) As explained to us, the inventories other than material lying with
third parties (which have substantially been confirmed) were physically
verified during the year by the Management at reasonable intervals.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory
followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
(iii) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the Register maintained
under Section 189 of the Companies Act, 2013.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
major weakness in such internal control system.
(v) According to the information and explanations given to us, the
Company has not accepted any deposit during the year and accordingly
the question of complying with section 73 and 76 of the Companies Act
2013 does not arise. 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. 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) We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Records and Audit) Rules, 2014,
as amended and prescribed by the Central Government under sub-section
(1) of Section 148 of the Companies Act, 2013, and are of the opinion
that, prima facie, the prescribed cost records have been made and
maintained. We have, however, not made a detailed examination of the
cost records with a view to determine whether they are accurate or
complete.
(vii) 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, Employees' State Insurance, Income-tax, Sales
tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added
Tax, Cess and other material statutory dues as applicable with the
appropriate authorities.
(b) As at 31st March, 2015, the following are the particulars of dues
on account of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs
Duty, Excise Duty, Value Added Tax and Cess matters that have not been
deposited on account of any dispute:
Name of Nature of Amount
the statute the dues (Rs. in Crores)
Sales Tax Sales tax 37.58
and Value and VAT
Added Tax
Laws 18.36
221.83
Customs Customs 0.09
Act, 1962 duty
1.74
Central Excise duty 29.85
Excise
Act, 1944
88.23
4.10
Finance Act, Service tax 1.32
1994
46.88
Income-tax Income-tax 89.61
Act, 1961
26.61
Name of
the statute Period to which Forum where pending
the amount relates
Various years
covering the period
Sales Tax
and Value
Added Tax
Laws 1987-2015 Appellate Authority -
upto Commissioners'/
Revisional
authorities level
1994-2014 Appellate Authority -
Tribunal level
2000-2011 High Court
Customs
Act, 1962 2010-2014 Appellate Authority -
upto Commissioners'/
Revisional
authorities level
2005-2007 Appellate Authority -
Tribunal level
1996-2014 Appellate Authority -
Central
Excise
Act, 1944 upto Commissioners'/
Revisional authorities
level
1973-2014 Appellate Authority -
Tribunal level
2005-2010 High Court
Finance Act,
1994 2006-2012 Appellate Authority -
upto Commissioners'/
Revisional authorities
level
2004-2011 Appellate Authority -
Tribunal level
Income-tax
Act, 1961 2005-2011 Appellate Authority -
upto Commissioners'/
Revisional authori
-ties level
1999-2007 Appellate Authority -
Tribunal level
Out of the total disputed dues aggregating Rs. 566.20 Crores as above, Rs.
355.67 Crores has been stayed for recovery by the relevant authorities.
(c) The Company has been regular in transferring amounts to the
Investor Education and Protection Fund in accordance with the relevant
provisions of the Companies Act, 1956 (1 of 1956) and Rules made
thereunder within time.
(viii) The Company does not have accumulated losses at the end of the
financial year and the Company has not incurred cash losses during the
financial year covered by our audit and in the immediately preceding
financial year.
(ix) According to the information and explanations given to us, the
Company has not defaulted in repayment of dues to any financial
institution, bank or to debenture holders during the year.
(x) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company for loans taken by others from banks and financial institutions
are not, prima facie, prejudicial to the interests of the Company.
(xi) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained.
(xii) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no significant
fraud on the Company has been noticed or reported during the year.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 302009E)
Shyamak R Tata
Kolkata Partner
22nd May, 2015 (Membership No. 38320)
