MIRA INFORM REPORT

Report Date :

6^th May, 2006

IDENTIFICATION DETAILS

Name :	OBEROI FLIGHT SERVICES - PROP. ITC LIMITED
Registered Office :	Virginia House, 37, Jawaharlal Nehru Road, Kolkata - 700 071, West Bengal, India
Date of Incorporation :	24^th August, 1910
Com. Reg. No.:	21-1985
TAN No.: (Tax Deduction & Collection Account No.)	CALI01571D/CALI01969C/CALI01837D
PAN No.: (Permanent Account No.)	AAACI5950L
Line of Business :	Manufacturer of Cigarettes and Tobacco. It is also engaged in Hotel Business.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 300000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	ITC is a reputed group of companies, having multi products and multi business operations. Available information indicates high financial responsibility of the company and its management. Financial position of the company is good. Payments are usually correct and as per commitments. The company has been faring well. Its’ trade relations are fair. The company can be considered good for normal business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	Virginia House, 37, Jawaharlal Nehru Road, Kolkata - 700 071, West Bengal, India
Plants :	Cigarette Factories ˜ P. O. Pulikeshinagar, Bangalore -560 005, Karnataka ˜ Sardar Patel Marg, P. O. Box No. 25, Saharanpur - 247 001, Uttar Pradesh ˜ 93/1, Karl Marx Sarani, P. B. No. 17203, Kolkata - 700 043, West Bengal ˜ Meenakunte Village, Jallahobli, Bangalore (North) - 562 157, Karnataka ˜ Basdeopur P. O., District Munger - 811 202, Munger Green Leaf Threshing Plants ˜ East Godavari District, Anaparti - 533 342, Andhra Pradesh ˜ P. B. No. 1, Chirala - 523 157, Andhra Pradesh Packaging & Printing Plants ˜ Basdeopur P. O., District Munger, Munger - 811 202 ˜ P. O. Box No. 2277, Tiruvottiyur, Chennai - 600 019, Tamilnadu Tel. No. 91-44-2434 5298 / 3585 / 7092 Fax No. 91-44-2434 0294 ˜ Tribeni Mill, P. O. Chandrahati, District Hooghly, West Bengal - 712 504 Paper & Paperboard Mills ˜ Anrich Industrial Estate, Village Bollarum, Medak District, Andhra Pradesh – 502 325 ˜ P. O. Chandrahati, District Hooghly - 712 504, West Bengal ˜ Sarapaka, Khammam District - 507 128, Andhra Pradesh Cast Coating Plant Anrich Industrial Estate, Village Bollarum, Medak District - 502 325, Andhra Pradesh Lifestyle Retailing Design & Technology Centre 86, Industrial Estate, Phase I, Udhyog Nagar, Gurgaon - 122 016, Haryana Wills Lifestyle Stores ˜ A-6, Sadar Bazar, Agra Cantt., Agra – 282 001, Uttar Pradesh ˜ Shop No. 3, Time Square Building, C. G. Road, Ahmedabad – 386 006, Gujarat ˜ 171/12, Rama Building, Sadar Bazar Road, Ambala Cantt., Ambala – 133 001 ˜ 1381/13-4, Madan Mohan Malviya Road, Amritsar – 143 001, Punjab ˜ Motiwala Trade Centre, Shop No. B-10 & N-11, Nirala Bazar, Aurangabad – 431 001, Maharashtra ˜ No. 6, Brigade Road, Bangalore – 560 001, Karnataka ˜ Shop No. 42-44, Siddharth Complex, R. C. Dutt Road, Alkapur, Baroda – 243 001, Gujarat ˜ 48-A, Civil Lines, Bareilly – 243 001, Uttar Pradesh ˜ 1675, Kirloskar Road, Belgaum – 462 001, Karnataka ˜ 138/42, Usha Preet Building, Malviya Nagar, Bhopal – 462 001, Madhya Pradesh ˜ 794, Shaheed Nagar, Janpath, Bhubaneshwar – 751 001, Orissa ˜ SCO – 14, Sector – 17E, Chandigarh – 160 017 ˜ No. 19, Ground Floor, Quaiser Tower, Khader Nawaz Khan Road, Nungambakkam, Chennai – 600 034, Tamilnadu ˜ Plot No. 4676, No. AA/11, Ground Floor, Anna Nagar, Chennai – 600 040, Tamilnadu ˜ Aishwareya Commercial Centre, 196/13, T. V. Samy Road (West), R. S. Puram, Coimbatore – 641 002 ˜ 56, Rajpur Road, Dehradun – 248 001, Uttar Pradesh ˜ Ground Floor No. 40/7182, M. G. Road, Ernakulam – 682 035, Karnataka ˜ No. 3293, Ground Floor, M. G. Road, Panjim, Goa – 403 001, Maharashtra ˜ Shop No. G 4 & 5, G. S. Chambers, Negarjuna Circle, Hyderabad – 500 082, Andhra Pradesh ˜ Shop No. 8 & 9, Bansi Trade Centre, 581, M. G. Road, Indore – 452 001, Madhya Pradesh ˜ Gulab Niwas, M. I. Road, Jaipur – 302 001, Rajasthan ˜ 540-R, Rainbow Road, model Town, Jalandhar – 144 003, Punjab ˜ 5 & 6 Residency Road, Jammu – 180 001 ˜ Rave 3, Parvati Bagla Road, Kanpur – 208 002, Uttar Pradesh ˜ 19 B, Shakespeare Sarani, Ground Floor, Kolkata – 700 071, West Bengal ˜ 17/1491, A-4 Malabar Gate, Rammohan Road, Kozhikode – 673 004 ˜ 85/4A, The Mall, Ludhiana – 141 001, Punjab ˜ No. 36, Jwala Sahoy Trivedi Building, Hazratganj, Lucknow – 226 001, Uttar Pradesh ˜ Shop No. 1 & 2, 14-2-99/1, Ward No. 14, Balmatta Road, Mangalore – 575 001, Karnataka ˜ Plot No. 386, Ground Floor, Durga Chambers, Linking Road, Khar (West), Mumbai – 400 052, Maharashtra ˜ Shop No. 7 & 8, Ground Floor, Prema Building, Plot No. 67, J. P. Road, Lokhandwala, Andheri (West), Mumbai – 400 058, Maharashtra ˜ No. 6 & 6A, Tirupati Apartment, Bhulabai Desai Road, Mumbai – 400 027, Maharashtra ˜ Shop No. 2, 3 & 32, Ruki Mahal Co-operative Housing Society Limited, Plot No. 46, 44, Sector 17, Vashi, Navi Mumbai – 400 705, Maharashtra ˜ 3, 4, 61 & 62, Chadda Crescent Co-operative Housing Society Limited, Plot No. 46, 55, Sector 17, Vashi, New Mumbai – 400 705, Maharashtra ˜ No. 27-29, Poonam Chambers, Byramij Town, Nagpur – 440 013 ˜ F-41, South Extension – 1, New Delhi – 110 049 ˜ No. 10208, Padam Singh Road, Karol Bagh, New Delhi – 110 005 ˜ E-2, Connaught Place, New Delhi – 110 005 ˜ M-12, Greater Kailash – I, New Delhi – 110 048 ˜ No. M-14 a & M-15, a, b, c, d, Plot No. 331, Block E, Sector – 27, Noida, G. B. Nagar, Uttar Pradesh – 201 301 ˜ No. 1204/22, Ground Floor, Shivaji Nagar, Junglee Maharaj Road, Pune – 411 004, Maharashtra ˜ 119, Jawaharlal Nehru Street, Pondicherry – 605 001 ˜ 1^st & 2^nd Floor, GEL Church-Commercial Complex, Main Building, Main Road, Ranchi – 834 001 ˜ 1-7-293/2/A/1, M. G. Road, Secunderabad – 500 003, Andhra Pradesh ˜ UG-2, Manav Mandir, Athawa Lines, Parle Point Circle, Surat – 395 07, Gujarat ˜ Shop No. 1, Pan African Plaza, M. G. Road, Thiruvananthapuram – 695 001, Tamilnadu ˜ C-56, P.L.A.S. Tower, 4^th Cross, Thillai Nagar, Main Road, Trichy – 620 018, Kerala ˜ Shop No. 1, Rednam Manor, Dwarka Nagar, Near Diamond Park, Vishakhapatnam – 530 016, Andhra Pradesh Club Stores Bangalore Karnataka Golf Association Bangalore Golf Club Gurgaon Classic Golf Resort Jamshedpur Beldih Club Kolkata Tollygunge Club Royal Calcutta Golf Club Mumbai United Services Club
Hotels :	ITC Hotel Sonar Bangla Sheraton & Towers, 1, JBS Haldane Avenue, Kolkata – 700 046, West Bengal ITC Hotel Grand Maratha Sheraton & Towers Sahar, Mumbai - 400 099, Maharashtra ITC Hotel Maurya Sheraton & Towers Diplomatic Enclave, New Delhi - 110 021 Chola Sheraton 10, Cathedral Road, Chennai - 600 086, Tamilnadu WelcomeHotel Mughal Sheraton Taj Ganj, Agra - 282 001, Uttar Pradesh

DIRECTORS

Name :	Mr. Yogesh Chander Deveshwar
Designation :	Chairman
Name :	Mr. Sahibzada Syed Habib-ur-Rehman
Designation :	Executive Director
Name :	Mr. Anup Singh
Designation :	Executive Director
Name :	Mr. Krishnamoorthy Vaidyanath
Designation :	Executive Director
Name :	Mr. Charles Richard Green
Designation :	Non-Executive Director
Name :	Mr. Ajeet Prasad
Designation :	Non-Executive Director
Name :	Mr. Pillappakkam Bahukutumbi Ramanujam
Designation :	Non-Executive Director
Name :	Mr. Basudeb Sen
Designation :	Non-Executive Director
Name :	Mr. John Benedict Stevens
Designation :	Non-Executive Director
Name :	Mr. Ram S. Tarneja
Designation :	Non-Executive Director
Name :	Mr. Balakrishnan Vijayaraghavan
Designation :	Non-Executive Director
Name :	Mr. Yash Pall Gupta
Designation :	Non-Executive Director

Other Personnel:-	Designation
Mr. Bishwa Behari Chatterjee	Executive Vice President & Company Secretary
Managements :-
Audit Committee :-
Mr. P. B. Ramanujam	Chairman
Mr. Y. P. Gupta	Member
Mr. J. B. Stevens	Member
Mr. B. Vijayaraghavan	Member
Mr. K. Vaidyanath	Permanent Invitee
Mr. S. Basu	Permanent Invitee
Mr. B. B. Chatterjee	Secretary
Compensation Committee :-
Mr. B. Sen	Chairman
Mr. C. R. Green	Member
Mr. Y. P. Gupta	Member
Mr. J. B. Stevens	Member
Mr. Ram S. Taneja	Member
Investor Services Committee :-
Mr. B. Sen	Chairman
Mr. P. B. Ramanujam	Member
Mr. A. Singh	Member
Mr. B. B. Chatterjee	Secretary
Nominations Committee :-
Mr. Y. C. Deveshwar	Chairman
Mr. C. R. Green	Member
Mr. Y. P. Gupta	Member
Mr. Ajeet Prasad	Member
Mr. P. B. Ramanujam	Member
Mr. B. Sen	Member
Mr. J. B. Stevens	Member
Mr. Ram S. Tarneja	Member
Mr. B. Vijayaraghavan	Member
Corporate Management Committee:-
Directors:-
Mr. Y. C. Deveshwar	Chairman
Mr. S. S. H. Rehman	Member
Mr. A. Singh	Member
Mr. K. Vaidyanath	Member
Executives :-
Mr. K. S. Vaidyanathan	Member
Mr. A. Nayak	Permanent Invitee
Mr. R. Srinivasan	Permanent Invitee
Mr. B. B. Chatterjee	Secretary

MAJOR SHAREHOLDERS

Category	No. of shares	% of shareholding
Banks, Financial Institutions, Insurance Companies and Mutual Funds	83,907,272	33.80 %
Foreign Companies	80,435,870	32.40 %
Foreign Institutional Investors	43,403,640	17.49%
NRIs / OCBs / Foreign Nationals	1,487,196	0.60 %
Shares Underlying Global Depository Receipts	7,390,034	2.98 %
Indian Public & others	31,597,317	12.73%
Total	248,221,329	100.00%

Top Ten Shareholders of the Company as on 31^st March, 2005

Names of Shareholders	No of shares	% of shareholding
Tobacco Manufacturers (India) Limited	6,61,85,496	26.74 %
Life Insurance Corporation of India	2,63,26,794	10.61 %
Unit Trust of India	2,77,44,763	11.18 %
Myddleton Investment Company Limited	1,08,06,932	4.35%
Citibank N.A. New York, ADR Department	73,90,034	2.98 %
The New India Assurance Company Limited	65,83,777	2.65 %
The Oriental Insurance Company Limited	50,88,091	2.05 %
General Insurance Corporation of India	48,99,186	1.97 %
National Insurance Company Limited	46,63,674	1.88 %
Rothmans International Enterprises Limited	34,43,442	1.39 %

BUSINESS DETAILS

Line of Business :

Manufacturer of Cigarettes and Tobacco. It is also engaged in Hotel Business.

PRODUCTION STATUS

The company's production status for the year ended 31^st March, 2005 was as under :

Class of Goods	Unit	Licensed Capacity	Installed Capacity	Actual Production
Cigarettes	Million	1,23,547	94,597	55,641
Smoking Tobaccos	Tonne	N.A.	N.A.	72
Printing / Packaging (Tiruvottiyur)	Tonne	12,600	16,175	20,916
Printing (Munger)	Million (Standard Sheet Impression)	385	482	85
Redried Tobacco	Tonne	N.A.	N.A.	96,432
Pulp	Tonne	N.A.	1,00,000	95,672
Paperboards and Paper	Tonne	N.A.	3,52,500	3,08,962

GENERAL INFORMATION

No. of Employees :

5000

Bankers :

˜ State Bank of India, 38, Chowringhee Lane, Kolkata - 700 071, West Bengal

˜ Standard Chartered Grindlays Bank Limited, 41, Chowringhee Lane, Kolkata - 700 071, West Bengal

˜ United Bank of India, 10 Netaji Subhas Road, Kolkata - 700 001, West Bengal

˜ Citibank N.A., Kolkata, West Bengal

˜ Facilities : Cash / Export Credit of Rs. 363.7 millions secured by charge over certain current assets of the company, both present and future.

Financial Institutions:

˜ Industrial Development Bank of India

Facility : Loan : Rs. 150.0 millions secured by equitable mortgage of certain immovable of the company and charge over certain movable assets, both present and future, of the company, subject prior to charges created / to be created in favour of bankers for securing working capital requirement.

˜ The Industrial Finance Corporation of India

Facility : Loan : Rs. 50.0 millions secured by hypothecation over certain movable fixed assets of the company.

Facilities :

Secured Loans :-	31.03.2005	31.03.2004
Loan and Advances from Banks	886.900	315.600
Cash / Export Credit Facilities * * Secured by charge over current assets of the Company, both present and future
Total	886.900	315.600
Unsecured Loans:-
Short Term Loans
From Banks
Temporary overdraft in cash credit account	802.200	241.500
Other Loans
From other than Banks – Sales tax deferment loan (interest free)	764.500	651.400
Total	1566.700	892.900

Banking Relations :	Good
Auditors :	A. F. Ferguson & Company Chartered Accountants
Address :	Kolkata, West Bengal
Associates/Subsidiaries :	˜ Ansal Hotels Limited ˜ Gujarat Hotels Limited ˜ Megatop Financial Services and Leasing Limited ˜ Newdeal Finance and Investment Limited ˜ Peninsular Investments Limited ˜ Russell Investments Limited ˜ Asia Tobacco Company Limited ˜ Maharaja Heritage Resorts Limited ˜ Classic Infrastructure & Development Limited ˜ International Travel House Limited ˜ Tobacco Manufacturers (India) Limited, UK ˜ ITC Filtrona Limited ˜ King Maker Marketing Inc., USA SUBSIDIARIES ˜ Bay Islands Hotels Limited ˜ BFIL Finance Limited ˜ BFIL Securities Limited ˜ Fortune Park Hotels Limited ˜ Gold Flake Corporation Limited ˜ Greenacre Holdings Limited ˜ ITC Hotels Limited ˜ ITC Infotech (USA) Inc ˜ ITC Infotech India Limited ˜ ITC Infotech Limited ˜ Landbase India Limited ˜ MRR Trading & Investment Company limited ˜ Surya Nepal Private Limited ˜ Russell Credit Limited ˜ Srinivasa Resorts Limited ˜ Wills Corporation Limited ˜ ITC Global Holdings Pte. Limited, Singapore ˜ Hup Hoon Traders Pte. Limited, Singapore ˜ Hup Hoon Shipping Pte. Limited, Singapore ˜ Chai Fu Trading Pte. Limited, Singapore ˜ AOZT "Hup Hoon", Moscow ˜ Hup Hoon Impex srl, Romania ˜ Fortune Tobacco Company Limited, Cyprus ˜ Fortune Tobacco Company Inc., U.S.A.

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
30,00,00,000	Ordinary Shares	Rs 10/- each	Rs. 3000.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
24,82,21,329	Ordinary Shares	Rs 10/- each	Rs. 2482.200 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2005	31.03.2004	31.03.2003
SHAREHOLDERS FUNDS
1] Share Capital		2482.200	2476.800	2475.100
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		76461.800	61623.800	51181.100
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		78944.000	64100.600	53656.200
LOAN FUNDS
1] Secured Loans		886.900	315.600	465.200
2] Unsecured Loans		1566.700	892.900	704.600
TOTAL BORROWING		2453.600	1208.500	1169.800
DEFERRED TAX LIABILITIES		3760.900	877.400	0.000
TOTAL		85170.600	66186.500	54826.000
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		39507.600	32983.100	30065.500
Capital work-in-progress		1861.500	3137.400	1634.200
INVESTMENT		38746.800	30539.600	16088.600
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	20029.900	15342.100	12522.200
	Sundry Debtors	5277.600	2301.500	2187.000
	Cash & Bank Balances	556.600	340.400	3788.400
	Other Current Assets	1425.200	8171.800	0.000
	Loans & Advances	8103.600	8697.700	20527.500
Total Current Assets		35392.900	34853.500	39025.100
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	19256.400	28498.300	25718.600
	Provisions	11081.800	6828.800	6268.800
Total Current Liabilities		30338.200	35327.100	31987.400
Net Current Assets		5054.700	(473.600)	7037.700
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		85170.600	66186.500	54826.000

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Sales Turnover [including other income]	78752.600	66953.200	111944.700
Profit/(Loss) Before Tax	26730.700	23190.600	20561.900
Provision for Taxation	48167.700	7262.100	6848.400
Profit/(Loss) After Tax	21914.000	15928.500	13713.500
Export Value	12686.500	10775.100	12940.100
Import Value	5970.900	4123.700	3691.300
Total Expenditure	52021.900	43762.600	91206.800

QUARTERLY RESULTS

Particulars	30.06.2005 1^st Quarter	30.09.2005 2^nd Quarter	31.12.2005 3^rd Quarter
Sales Turnover	22668.800	21831.500	25560.400
Other Income	845.200	780.600	488.800
Total Income	23514.000	22612.100	26049.200
Total Expenditure	14401.200	13633.100	17231.400
Operating Profit	9112.800	8979.000	8817.800
Interest	10.800	(3.200)	15.200
Gross Profit	9102.000	8982.200	8802.600
Depreciation	800.600	829.800	831.200
Tax	2718.400	2429.100	2603.100
Reported PAT	5583.000	5723.300	5368.300

200506 Quarter - Decrease in Stock in Trade Rs (1629.70) million Consumption of Raw Materials etc Rs 10380.00 million Staff Cost Rs 1237.40 million Other Expenditure Rs 4413.50 million Tax indicates Provision for Taxation (including prior year adjustments) EPS is Basic Status of Investor Complaints for the quarter ended June 30, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 06 Complaints disposed off during the quarter 06 Complaints unresolved at the end of the quarter Nil 1. The above results were reviewed by the Audit Committee and approved at the meeting of the Board of Directors of the Company held on July 29, 2005. 2. Figures for corresponding quarter last year have been re-stated to incorporate the impact of the amalgamation of the erstwhile ITC Hotels Ltd (ITCHL) and erstwhile Ansal Hotels Ltd (AHL) with the Company effective April 01, 2004. 3. Gross Income comprises Segment Revenue and Other Income. 4. Consequent to purchase of 3,84,82,281 equity shares of Wimco Ltd (Wimco) by Russell Credit Ltd (Russell Credit), a wholly owned investment subsidiary of the Company, Wimco and its four subsidiary companies became subsidiaries of Russell Credit and thereby subsidiaries of the Company, effective July 01, 2005. 5. Provision for Taxation includes Rs 43.20 million (corresponding previous quarter Rs. Nil) for Fringe Benefit Tax. 6. The above is as per Clause 41 of the Listing Agreement. Limited Review The Limited Review, as required under Clause 41 of the Listing Agreement has been completed and the related Report forwarded to the Stock Exchanges. This Report does not have any impact on the above 'Results and Notes' for the Quarter ended June 30, 2005 which needs to be explained.

200509 Quarter 2 - Expenditure Includes (Increase) / Decrease in Stock in Trade Rs 37.80 million Consumption of Raw Materials etc Rs 8054.10 million Staff Cost Rs 1364.50 million Other Expenditure Rs 4176.70 million Tax indicates Provision for Taxation (including prior year adjustments) EPS is Basic Status of Investor Complaints for the quarter ended September 30, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 04 Complaints disposed off during the quarter 04 Complaints unresolved at the end of the quarter Nil 1. The above results were reviewed by the Audit Committee and approved at the meeting of the Board of Directors of the Company held on October 28, 2005. 2. Figures for corresponding quarter and half year ended September 30, 2004 have been re-stated to incorporate the impact of the amalgamation of erstwhile ITC Hotels Ltd and erstwhile Ansal Hotels Ltd with the Company effective April 01, 2004. 3. Gross Income comprises Segment Revenue and Other Income. 4. During the quarter, 9,08,382 Ordinary Shares of Rs 10/- each (post split 90,83,820 Ordinary Shares of Re 1/- each) were issued and allotted under the ITC Employee Stock Option Scheme. Consequently, the issued and paid-up share capital of the Company as on September 30, 2005 stands increased to 250,34,24,580 Ordinary Shares of Re 1/-each. 5. Pursuant to the approval of the Shareholders at the 94th Annual General Meeting of the Company held on July 29, 2005; (a) The Ordinary Shares of the Company of the face value of Rs 10/- each were sub-divided into Ordinary Shares of Re. 1/- each with effect from September 28, 2005, the Record Date fixed by the Board of Directors for the purpose. Accordingly, the earnings per share for the corresponding quarter and half-year ended September 30, 2004 and twelve months ended March 31, 2005 have been recast to make them comparable with EPS of the current quarter. (b) The Authorised Share Capital of the Company has been increased from Rs 300,00,00,000/- to Rs 500,00,00,000/-, divided into 500,00,00,000 Ordinary Shares of Re 1/- each, with effect from September 28, 2005. (c) On October 05, 2005 the Company issued and allotted 125,17,12,290 Ordinary Shares, as fully paid-up Bonus Shares in the proportion of 1 Bonus Share for every 2 fully paid-up Ordinary Shares held on the Record Date. i.e. September 28, 2005. The issued and paid-up share capital of the Company accordingly stands increased to Rs 375,51,36,870/- divided into 375,51,36,870 Ordinary Shares of Re 1/-each. 6. In the computation of Basic and Diluted earnings per share as disclosed above, 125,17,12,290 Bonus Shares allotted after September 30, 2005 but before the date of approval of the results for the quarter and half-year ended September 30, 2005 have been included in the denominator to conform to the requirements of the Accounting Standard 20 on Earnings per Share issued by the Institute of Chartered Accountants of India. Prior to allotment of such Bonus Shares, the Earning Per Share (Basic) for the quarter and half year ended September 30, 2005 would be Rs 2.29 and Rs 4.53 respectively. 7. Provision for Taxation includes Rs 52.00 million and Rs 95.20 million for Fringe Benefit Tax for the quarter and half year ended September 30, 2005 respectively. (Corresponding previous quarter and half year ended September 30, 2004 Rs Nil). 8. The above is as per Clause 41 of the Listing Agreement. Limited Review The Limited Review, as required under Clause 41 of the Listing Agreement has been completed and the related Report forwarded to the Stock Exchanges. This Report does not have any impact on the above 'Results and Notes' for the Quarter and Half Year ended September 30, 2005 which needs to be explained.

200512 Quarter 3 - Tax indicates Provision for Taxation (including prior year adjustments) EPS is Basic Status of Investor Complaints for the quarter ended December 31, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 2 Complaints disposed off during the quarter 2 Complaints unresolved at the end of the quarter Nil 1. The above results were reviewed by the Audit Committee and approved at the meeting of the Board of Directors of the Company held on January 20, 2006. 2. Figures for corresponding quarter and Nine months ended December 31, 2004 have been restated to incorporate the impact of the amalgamation of erstwhile ITC Hotels Ltd and erstwhile Ansal Hotels Ltd with the Company effective April 01, 2004. 3. Gross Income comprises Segment Revenue and Other Income. 4. Provision for Taxation includes Rs 52.20 million and Rs 147.40 million for Fringe Benefit Tax for the quarter and Nine months ended December 31, 2005 respectively (Corresponding previous quarter & Nine months ended December 31, 2004 Rs Nil) 5. Exceptional Items (Net of Tax) represents once of assistance to contract manufactures in view of the retrospective withdrawal of Central Excise exemption on cigarettes manufactured in the North Eastern States during the year 2000. 6. The above is as per Clause 41 of the Listing Agreement. 7. The Limited Review, as required under Clause 41 of the Listing Agreement has been completed and the related Report forwarded to the Stock Exchanges. This Report does not have any impact on the above results and Notes for the Quarter and Nine months ended December 31, 2005 which needs to be explained.,

KEY RATIOS

PARTICULARS	31.03.2005	31.03.2004	31.03.2003
Debt Equity Ratio	0.03	0.02	0.04
Long Term Debt Equity Ratio	0.01	0.01	0.03
Current Ratio	0.97	1.06	1.24
TURNOVER RATIOS
Fixed Assets	2.58	2.66	2.82
Inventory	7.55	8.48	9.06
Debtors	34.24	51.28	53.35
Interest Cover Ratio	52.84	68.85	52.09
Operating Profit Margin (%)	22.45	21.96	21.17
Profit Before Interest and Tax Margin (%)	20.11	19.92	19.02
Cash Profit Margin (%)	15.90	15.53	14.59
Adjusted Net Profit Margin (%)	13.56	13.48	12.44
Return on Capital Employed (%)	36.89	39.58	41.69
Return on Net Worth (%)	25.52	27.34	28.41

STOCK PRICES

Face Value	Rs. 10.00
High	Rs. 139.65
Low	Rs. 134.25

LOCAL AGENCY FURTHER INFORMATION

History:

The company was incorporated on 24^th August, 1910 at Kolkata in West under the name of The Imperial Tobacco Company of India Limited having Company Registration Number 1985.

Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the company’s existence. The company celebrated its 16^th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, Kolkata, for the sum of Rs. 0.310 million. This decision of the company was historic in more ways than one. It was to mark the beginning of a long and eventful journey into India’s future. The company’s headquarter building, ‘Virginia House’, which came up on that plot of land two years later, would go on to become one of Kolkata’s most venerated landmaks. The company’s ownership progressively undiagnosed and the name of the company was changed to ITC Limited in 1974. Currently British American Tobacco Company (U.K.) controls 31.7% equity stake in company.

Though the first six decades of the company’s existence were primarily devoted to the growth and consolidation of the Cigarette and Leaf Tobacco businesses, the Seventies witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the company.

In 1975, the company launched its hotels business with the acquisition of a hotel in Chennai, which was rechristened "Hotel Chola". It chose the hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure, and generate large scale direct and indirect employment. Since then the company's hotels business has grown to occupy a position of leadership, with 40 owned and managed properties spread across India. It also has a marketing and reservation arrangement with the Sheraton Corporation, the reputed international hotel chain.

In 1979, the company entered the paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India.

In 1985, it set Surya Tobacco Company in Nepal as a joint venture with the reputed Soaltee Group. In 1990, it acquired Tribeni Tissues Limited, a speciality paper manufacturing company and a major supplier of tissue paper to the cigarette industry. In 1992, leveraging its agri-sourcing competency, the company set up the International Business Division (IBD) for export of agri-commodities. This division is today one of India's largest exporters.

Recently, the company's packaging and printing business has launched a line of high quality greeting cards under the brand name "Expressions". It has also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women.

During 2002, ITC Bhadrachalam Paperboards Limited, a subsidiary company was merged with the company. The shareholders of ITCPBL were allotted one equity share of the company for every sixteen shares held.

ITC Bhadrachalam Paperboards (ITCBPL) incorporated in July, 1975 commenced business in October, 1979. Part of the ITC group, in 1986, ITCBPL came out with a right issue of 15.90 millions equity shares (premium : Rs. 90) aggregating to Rs. 1590 millions on 3:10 basis, to part finance its expansion plans. It manufactures a wide range of baseboards, papers and paperboards for packing cigarettes, safety matches, detergents, etc. Its product range also includes superior quality cultural paper, coated and speciality papers and boards.

During the year 2000-2001 the company developed superior products for critical applications like liquid packaging and premium quality graphics printing. It also embarked on a modernisation-cum-upgradation project of the pulp mill with an outlay of Rs. 2260 millions.

The company was merged with ITC, its group company during the year 2002. The shareholders of the company were allotted one equity share of ITC for every 16 shares held.

The company has pioneered the manufacture of cigarettes in India and has, since 1910, maintained its leadership position in the industry. It has diversified brands across product categories. Its successful brands include Gold Flake, Wills, Classic, Bristol and Scissors. It also sells two luxury filter brands of its parent company, Benson & Hedges and 555.

The Scheme of Amalgamation of the erstwhile ITC Bhadrachalam Paperboards (ITC Bhadrachalam) with company was sanctioned by the Honourable High Court at Kolkata and the Honourable High Court of Judicature of Andhra Pradesh at Hyderabad, on 24^th January, 2002 and 8^th February, 2002, respectively. Upon completion of the requisite formalities, the Scheme became effective on 13^th March, 2002, and operative from 1^st April, 2001. ITC Bhadrachalam thus became a Division of company under the nomenclature ‘Bhadrachalam Paperboards Division.’

In consideration of the amalgamation, 20,96,982 fully paid-up ordinary shares of Rs. 10/- each of company were issued and allotted on 6^th May, 2002 to the members of ITC Bhadrachalam. The new ordinary shares rank pari passu with the existing ordinary share of the company. The paid up share capital of the company has consequently increased from Rs. 2454.100 millions to Rs. 2475.100 millions.

Milestones

1996

Flat 10 packs launchced

1997

10s hinged-lid packs introduced for regular size filters

1999

New factory at Bangalore commenced operations

2000

Brownfield project at Saharanpur factory completed

Entry into Lifestyle Retailing business with first store in Delhi

2001

Regular size filters offered in 5s packs

‘Wills Lifestyle’ chain rapidly scaled upto 29 stores

Engry into the foods Business with lauch of ‘Kitchens of India’.

‘Expressions valued Customer’ programme started

2002

Beveled edge packs introduced

‘mint-o’ trademark acquired relaunched in lemon and mint flavours, ‘Candyman’ added to confectionery rang, ‘ Aashirvaad’ atta rolled out

Chain expanded to 48 stores; Master Design Facility established; ‘Wills Classic’ formal wear launched; ‘John Players’ introduced in the mid-priced popular segment.

Entry into Greeting Cards business

‘Expressions Paperkraft’ premium paper products launched

Entry into marketing of safety matches

2003

‘India Kings’ marketed in contour packs; ‘Insignia’ lauched in shoulder box

Integrated Group Research & Development Centre established ‘Aashirvaad’ Salt introduced; ‘Candyman’ range expanded to deposited candies and eclaris; ‘Sunfeast’ biscuits lauched; Aashirvaad Ready Meals’ offered; ‘mint-o’ in lemon mint flavour.

‘Wills Clublife’ evening wear launched.

‘Expressions Classmate’ mass market notebooks for schools and colleges introduced.

Entry into marketing of Agarbatties

2004

Long – Size filters offered in wave packs

‘Kitchens of India’ extended to cooking pastes

‘Mangaldeep’ brand of Agarbatties added to portfolio.

Directors Profile:

Y. C. Deveshwar

Y. C. Deveshwar, Chairman of ITC Limited since January 1, 1996, is respected for the deep insight with which he steers a multi-business corporation like ITC, and is credited with several key strategic interventions which have positioned ITC as a well managed, well governed, value creating, top league Company in India.

An engineering graduate from NT, Delhi, Deveshwar was handpicked by the Government in 1991 to head the national carrier, Air India, as Chairman and Managing Director. He had a successful stint in this assignment till 1994, during which period he was also a member on the Boards of Indian Airlines, International Airports Authority of India, Airports Authority of India and Air Mauritius Limited. Deveshwar is the President of the Confederation of Indian Industry, India's premier industry body. He also serves on the Executive Committees of other prominent trade and industry bodies. He is a member of the Board of Governors of the Indian School of Business, Hyderabad. The Government of India has nominated him the Chairman of the Society and Board of Governors of the Indian Institute of Management, Calcutta. He is also a member of the National Manufacturing Competitiveness Council.

Deveshwar has been honoured with severalrecognitions within India/ including the Honorary Fellowship of the All India Management Association, the Distinguished Alumni Award of the Indian Institute of Technology, Delhi, the Meridien Hotelier of the Year Award and the Marketing Man of the Year from A&M, the country's leading marketing publication. Deveshwar has also been honoured with the Manager Entrepreneur of the Year Award 2001, by Ernst & Young.

Other Directorships

Name of the Company	Position
Surya Nepal Private Limited*	Chairman & Director
International Travel House Limited	Director
HT Media Limited	Director
Woodlands Medical Centre Limited	Director
West Bengal Industrial Development Corporation Limited	Director

Committee Memberships of other Companies: Nil

S. S. H. Rehman

S. S. H. Rehman was appointed a Director on the Board of ITC on November 21, 1997. He began his career with the Indian Army, moving over to the hospitality industry in 1975 and joining ITC in 1979. Since then Rehman has been General Manager of Welcomgroup's premier hotels across India as also its Regional Director, Vice President- Operations and President. Rehman was appointed Managing Director of the erstwhile ITC Hotels Limited in 1994 and continued in that position till July, 2003. He is currently in charge of the Hotels, Travel & Tourism and Foods businesses of the Company.

Other Directorships

Name of the Company	Position
ITC Infotech India Limited	Chairman & Director
ITC Infotech Limited*	Chairman & Director
ITC Infotech (USA), Inc.*	Chairman & Director
Asia Tobacco Company Limited	Chairman & Director
Surya Nepal Private Limited*	Director
West Bengal Industrial Development Corporation Limited	Director
The Tollygunge Club Limited	General Committee Member

Committee Memberships of other Companies: Nil

Anup Singh

Anup Singh was appointed a Director on the Board of ITC on November 21, 1997. He joined ITC in 1968 after receiving a Bachelor's degree in Electrical Engineering from NT, Kharagpur. He was a key participant in the Company's major strategic initiative in the mid seventies to implement the concept of 'Management by Objectives (MBO)'.

Singh has had a long stint in ITC's Cigarette business, including heading it as the Chief Executive. He has also been the Chief Executive of the erstwhile Specialty Papers Division. He is currently in charge of the Cigarettes, Information Technology and Lifestyle Retailing businesses of the Company.

He is immediate Past President and a Committee member of the Indian Chamber of Commerce. He is also a Director of The Tobacco Institute of India.

Name of the Company Committee Position

Other Directorships

Name of the Company	Position
ITC Infotech India Limited	Chairman & Director
ITC Infotech Limited*	Chairman & Director
ITC Infotech (USA), Inc.*	Chairman & Director
Asia Tobacco Company Limited	Chairman & Director
Surya Nepal Private Limited*	Director
West Bengal Industrial	Director
Development Corporation	General Committee
Limited	Member
The Tollygunge Club Limited	Committee Memberships of other Companies: Nil

K. Vaidyanath

K. Vaidyanath was inducted into the ITC Board on January 1 7, 2001. He holds responsibility for the Company's Finance & IT functions, its investment subsidiary, Agri Business and Corporate Communications. Before his elevation to the Board, he was the Company's Chief Financial Officer. An MBA from XLRI, Jamshedpur, Vaidyanath has been with ITC for the past 29 years. He has held various positions in the Company's Finance function including that of Head of Finance of ITC's Packaging, Hotels and International Businesses. He has also been Head of Corporate Planning & Treasury, as well as Internal Audit. Vaidyanath is a Committee member of the Bengal Chamber of Commerce and Industry. He was adjudged one of the best CFOs in the country in a survey conducted by Business Today magazine in 2005.

Other Directorships

Name of the Company	Position
Russell Credit Limited	Chairman & Director
Gold Flake Corporation Limited	Chairman & Director
Wills Corporation Limited	Chairman & Director
Greenacre Holdings Limited	Chairman & Director
ITC Infotech India Limited	Director
Agro Tech Foods Limited	Director
Classic Infrastructure & Development Limited	Director

Committee Memberships of other Companies

Russell Credit Limited	Audit Committee	Chairman
Gold Flake Corporation Limited	Audit Committee	Chairman
Greenacre Holdings Limited	Audit Committee	Chairman
ITC Infotech India Limited	Audit Committee	Member

J. P. Daly

J. P. Daly joined the ITC Board as a representative of BAT on January 21, 2005. His academic qualifications include a Master of Business Administration from the University of Dublin and a Diploma in Marketing from the Institute of Marketing, UK. Daly was appointed Director, Asia Pacific, BAT in October 2004. He has occupied senior positions for nearly 20 years in the tobacco and pharmaceutical industries. Prior to the merger of British American Tobacco and Rothmans International in 1999, Daly was the Strategic Planning Director - EU in Rothmans Europe and the Managing Director - Japan and Korea in Rothmans Asia. After the completion of the merger he was appointed Regional Manager – Middle East, South and Central Asia and then as Area Director - Middle East.

Other Directorships

Name of the Company	Position
British-American Tobacco Middle East FZ-LLC*	Director
British American Tobacco (Australasia Holdings) Pty. Limited*	Director

Committee Memberships of other Companies: Nil

C. R. Green

C. R. Green has represented BAT on the ITC Board from April 16, 1999. He joined BAT in 1993 after a long and distinguished career in the oil industry. He has spent over 18 years with Texaco,, the US oil major in a variety of roles including Director of Texaco, Brazil and its Regional Manager for Latin America.

In the tobacco industry, Green has worked with Brown & Williamson, where he was Vice President

P. B. Ramanujam

P. B. Ramanujam has represented the General Insurance Corporation of India (GIC) and its

erstwhile subsidiaries on the Board of ITC since October 30, 1998. He has held several

responsibilities in GIC covering finance, accounts / investments, reinsurance, information

technology etc. He was General Manager and Director with the National Insurance Company Limited and the Managing Director of GIC till July 31, 2004.

Ramanujam has served as a faculty member at the National Insurance Academy, Pune. He was also the Chairman of the committee appointed by the interim Insurance Regulatory Authority (IRA) for prescribing norms, rules and regulations in the area of finance. He has also been a member of two other IRA committees on technical issues and investment matters, and Insurance Regulatory Information System. He has recently been appointed

Chairman of FICCI's Reinsurance Sub-Committee. He is also a Member of the Insurance Tariff Advisory Committee and the Finance Committee of Insurance Regulatory and Development Authority (IRDA).

Other Directorships

Name of the Company	Position
Nicco Corporation Limited	Director
BOC India Limited	Director

Committee Memberships of other Companies: Nil

Basudeb Sen

Basudeb Sen has been on the Board of ITC since March 23, 1995, first as a nominee, then as a representative of UTI, and from July 28, 2000 as an Independent Non-Executive Director. Sen has over 32 years of management experience in different areas of commercial banking, development banking and investment management. He is an M.A. in Economics and a Ph.D. from Indian Statistical Institute, besides being an alumnus of the Harvard Business School. He has contributed several articles in academic / professional journals and financial papers on a wide range of issues related to management, economics, banking,

financial markets and energy.

He has served as Chairman and Managing Director of the Industrial Investment Bank of India Limited and as Executive Director of UTI. He has managed critical business responsibilities in various areas including strategic planning, risk management system, investment portfolio management and fund marketing and credit and project appraisal.

In the last two decades, Sen has served as Chairman and / or Member of various working groups / committees set up by SEBI, RBI, Indian financial institutions and industry associations on suth issues as consortium lending, corporate governance, institutional disinvestment, overseas investment by mutual funds, money markets and corporate debt restructuring, as also on the Boards of several companies in sectors like infrastructure, engineering, petrochemicals, electronics and financial services.

Other Directorships

Name of the Company Position

Gujarat NRE Coke Limited Director

South Asian Petrochem Limited Director

Srei Venture Capital Limited Director

Committee Memberships of other Companies

Name of the Company Committee Position

Gujarat NRE Coke Limited Audit Committee Member

South Asian Petrochem

Limited Shareholders' Member

Grievance Committee

Audit Committee Member

Ram S. Tarneja

Ram S. Tarneja joined the ITC Board as an Independent Non-Executive Director on November 25, 1996. His present Chairmanships include, among others, that of Jolly Board Limited, Nissin ABC Logistics Pvt. Limited and the Pan Asian Management & Rural Research Organisation. Tarneja was Managing Director - Bennett, Coleman & Co. Limited, until May 1991 and continues to be on the Board of that company. He is past President, Indian Merchants Chamber, All India Management Association, Indian Newspaper Society, Indian Institute of Personnel Management, Asian Association of Management Organisations and others.

Other Directorships

Name of the Company	Position
jolly Board Limited	Chairman & Director
Transcorp International Limited	Director
Nesco Limited	Director
Bharat Gears Limited	Director
Bennett, Coleman & Co. Limited	Director
Housing Development Finance Corporation Limited	Director
Ballarpur Industries Limited	Director
Rallis India Limited	Director
Otis Elevator Company (India) Limited	Director
Phillips Carbon Black Limited	Director
Gati Limited	Director
Phoenix Township Limited	Director
SOWiL Limited	Director

Committee Memberships of other Companies

Name of the Company	Committee	Position
Bharat Gears Limited	Audit Committee	Chairman
Bennett, Coleman & Co. Limited	Audit Committee	Chairman
Housing Development Finance Corporation Limited	Shareholders / Investors Grievance Committee	Chairman
Ballarpur Industries Limited	Shareholders / Investors Grievance Committee	Chairman
Rallis India Limited	Audit Committee Shareholders / Investors Grievance Committee	Member
Otis Elevator Company (India) Limited	Audit Committee Member	Member

B. Vijayaraghavan

B. Vijayaraghavan joined the ITC Board as an Independent Non-Executive Director on November 25, 1996. Vijayaraghavan was in the Indian Administrative Service from 1957 to

1993, when he retired in the rank of Chief Secretary to the Government of Tamil Nadu. He has served as Secretary to the Tamil Nadu Government in the Public Works, Forests &

Fisheries, Prohibition and Excise and Home departments. He has been the Chairman of the

Tamil Nadu Electricity Board, Member – Board of Revenue and Commissioner of Commercial Taxes, Tamil Nadu, Chairman and President - Tuticorin Alkali Chemicals and Fertilisers Limited, Chairman and Managing Director – State Industries Promotion Corporation of Tamil Nadu and Vigilance Commissioner and Commissioner for Administrative Reforms, Tamil Nadu.

After his retirement from Government service, Vijayaraghavan was a Member of the Syndicates of Alagappa University and Bharathidasan University, Member of the Governing Council, Salim AN Centre for Ornithology and Natural History and Member of the Committee for Economic Reforms, jammu and Kashmir and a Trustee of the Indian Bank Mutual Fund. Vijayaraghavan is currently Chairman, Chennai Snake Park Trust. He does not hold directorship or committee membership of any other company.

Notes:

1. Other Directorships and Committee Memberships of Directors are as on 31st March, 2005.

2. Other Directorships exclude Directorships in Indian Private Limited Companies, Memberships of Managing Committees of Chambers

of Commerce / Professional Bodies and Alternate Directorships.

3. Committee Memberships are in respect of Audit Committee and Investors Grievance Committee of Indian Companies.

* Denotes foreign Company.

Business:

Subject is engaged in the business as manufacturers of Cigarettes and Unmanufactured Tobacco. It is also engaged in Hotel Business.

Subject is one of the most valuable companies India. It is a market leader in India in Cigarettes and Tobacco and also operates business like Hotels, Packaging, Speciality Papers and Paperboards. It has recently entered the Lifestyle Retailing business with the launch of the ‘Wills Sport’ range of relaxed wear. It has also spun off its’ information Technology business into a wholly owned subsidiary of Indian agri-commodities.

India is the third largest tobacco producer in the world, after the U.S.A. and China. The country produces an estimated 550 millions kg of tobacco annually. It is also one of the world’s biggest market for tobacco. The company has pioneered the manufacture of cigarettes in India and has, since 1910, maintained its leadership position in the industry. It has diversified its brand across product categories. Its successful brands include Gold Flake, Wills, Classic, Bristol and Scissors. It also sells two luxury filter brands of its parent company, Benson and Hedges and 555.

Generic Names of Principal Products / Services of the company are :

Item Code No (ITC Code)	Product Description
24.02	Cigarettes
24.01	Unmanufactured Tobacco
48.10	Paper & Paperboard coated one or both sides with Kaolin

Awards

· Golden Peacock Global Award;

• Greentech Environment Excellence Gold Award;
• Highest Green Rating from Centre for Science and Environment;
• Cll ENCON Award;
• CAPEXIL Top Export Award; Indira
• Priyadarshini Vrikshamitra Award;
• Cll Vantech Industry Rolling Trophy;
• Rajiv Gandhi Parti Bhoomi Mitra Award;
• National Award for Energy Conservation;
• Gold Award for Safety from the Royal Society for Prevention of Accidents (UK).

Company Performance

The Company posted yet another year of stellar performance, testifying to the robustness of the corporate strategy of pursuing multiple drivers of growth. The performance is even more heartening when viewed in the context of the challenging environment of the cigarette industry, impact of the absorption of incubation costs of the new business initiatives and the gestation cost of new investments in the hotels and paperboards businesses.

Gross Turnover for the year 2004-05 grew by 13% to Rs.133500.000 millions, driven by good topline growth across all businesses of the Company. Pretax profit (before exceptional items) increased by 15.3% to Rs.26730.000 millions, while Post-tax profit (before exceptional items) at Rs.18370.000 millions registered a growth of 15.3%. The financials for the year include Rs.6920.000 millions representing net income from exceptional items, most of which relate to past litigation. Inclusive of these exceptional items net of tax, the Company's Profit after Tax stands at Rs.21910.000 millions.

Earnings Per Share (before exceptional items) for the year stands at Rs.73.74. Cash flows from Operations were Rs.26350.000 millions during the year. The financial results for the year ended 31 st March, 2005 include those of the erstwhile ITC Hotels Limited and Ansal Hotels Limited which were amalgamated with the Company with effect from 1 st April, 2004.

In order to strike a balance between the need to sustain strategic investments for a secure future and the annual expectation of shareholders for growing income, the Directors are pleased to recommend a dividend of Rs.31.00 per share (previous year Rs.20.00 per share) for the year ended 31 st March, 2005. The cash outflow in this regard will be Rs.8817.000 millions (previous year Rs.5601.000 millions) including Dividend Tax of Rs.108.45 crores (previous year Rs.647.400 millions). The Board further recommends a transfer to General Reserve of Rs.11000.000 millions (previous year Rs.10000.000 millions). Consequently, the Board recommends leaving an unappropriated balance in the Profit and Loss Account of Rs.6114.100 millions (previous year Rs.3878.400 millions). Proposed dividend for the financial year ended 31st March, 2005 includes dividend payable on the new Ordinary Shares of the Company, issued and allotted to the shareholders of erstwhile ITC Hotels Limited and Ansal Hotels Limited, which rank pari passu in all respects with the Ordinary Shares of the Company, in accordance with the Scheme of Amalgamation of ITC Hotels Limited and Ansal Hotels Limited with the Company.

Foreign exchange earnings

The Company continues to view foreign exchange earnings as a key priority. All businesses in the ITC portfolio are mandated to engage with overseas markets in a bid to test competitiveness and seek growth opportunities. The ITC Group's contribution to foreign exchange earnings over the last decade amounted to nearly USD 2.2 billion, of which agri exports accounted for about USD 1.6 billion. Earnings from agri exports is an indicator of the Company's contribution to the rural economy through effectively linking small farmers with international markets.

During the financial year 2004-05, the Company, its subsidiaries and the ITC Welcomgroup hotel chain together earned Rs.13780.000 millions in foreign exchange. Direct foreign exchange earned by the Company amounted to Rs.12690.000 millions. The Company's expenditure in foreign currency amounted to Rs.655 crores, comprising purchase

of raw materials, spares and other expenses at Rs. 5310.000 millions, and import of capital goods at Rs.1240.000 millions.

Branded packaged foods

The Company rapidly scaled up the Branded Packaged Foods business during the year in the 4 chosen categories viz. Snack Foods, Staples, Confectionery and Ready-to-Eat. The year saw the launch of a number of differentiated and innovative products leveraging the in-house capability of the ITC Group Research & Development Centre at Bangalore. Significant progress was made in enhancing supply chain efficiencies, depth and width of distribution and achieving world class hygiene standards in the outsourced manufacturing process. The Company's commitment to delivering superior and consistent quality products benchmarked to international standards would enable realising the goal of becoming the 'most trusted provider of food products in the Indian Market'. 

 The 'Aashirvaad' brand - comprising packaged Atta, Salt, Cooking Pastes and Ready-to-Eat meals - continued to gain increasing consumer franchise during the year. 'Aashirvaad' Atta established itself as the clear market leader amongst national branded players. Significant improvement in operating performance was achieved through a combination of efficient wheat sourcing leveraging the e-Choupal network, driving down logistics costs and an enriched sales mix. Plans are on the anvil to extend the 'Aashirvaad' assurance of quality to Branded Spices in the ensuing year. 

Lifestyle retailing

The Company's Lifestyle Retailing business continues to strengthen its portfolio of offerings in. both premium and popular segments of the branded apparel market. 

 In the premium segment, the 'Wills Lifestyle' apparel brand has established a strong market standing and loyalty among discerning consumers leveraging high fashion imagery and superior product quality and styling. Product availability was extended during the year by opening new stores in high potential malls and increasing presence in high profile Large Format Retailers in the country. Across its portfolio - 'Wills Sport', 'Wills Clublife', and the 'Classic' range - the brand is now recognised as offering an internationally contemporary, high fashion range. 

 In the popular segment, the 'John Players' brand further strengthened its position among its young male consumer base with its distinct 'Comfort Dressing' proposition - which is fashionable and vibrant. The year witnessed expansion of the product range covering Denims, T-shirts, Shirts, Trousers, Cargos and Outerwear. Distribution reach was strengthened through increased availability in key Multi-Brand outlets as well as setting up new Exclusive Brand outlets. The brand is also available in the Canteen Service Department stores (CSD) of the Ministry of Defence - a first in the apparel Industry. 

 Effective operating strategies enabled the business to shrink market response time resulting in a decrease in the obsolescence levels of finished goods. The state-of-the-art Master Facility in Gurgaon continues to engage in R&D activities to offer superior products to the consumer in terms of fit, construction and finishing of the garments, besides facilitating prototyping of designs. The business is engaged in addressing the challenge of gearing up the supply chain to cater to significantly higher scale of operations, in terms of both product range and outlet coverage. An industry specific ERP system was implemented during the year with a view to enhancing supply chain efficiencies and sharpening business analytics. 

 Dismantling of the quota regime is widely viewed as a positive discontinuity, which can result in India's exports of apparel multiplying several fold over the next decade. the Company is gearing up to tap the emerging growth opportunities and is in dialogue with several customers for sustainable long-term partnerships. 

 The business' internationally benchmarked quality continues to earn industry recognition with 'John Players' winning the 'Rising Star of the Year Brand' at the Images Fashion Awards 2004. 

Greeting, gifting and stationery

The Greeting Cards Industry world-wide has been impacted by the growth of mobile communication technology and messaging services. Greeting card manufacturers are responding to this challenge by offering value added, keepsake products that differentiate paper cards from electronic substitutes. Despite challenging market conditions, brand 'Expressions' continued to grow its market share in the greeting cards segment to touch 25% in 200405, consolidating its position as the second largest player in the Indian market. The year saw the launch of 'Expressions Regalia' - a premium collection of greeting cards for the connoisseur. A slew of paper based greeting and gifting products under the 'Regalia' and 'Paperkraft' sub-brands will drive growth in the domestic market. In the stationery segment, the 'Classmate' brand of notebooks for students made rapid progress. Besides growing its retail presence, the business also executed customised orders for a number of leading schools. The 'Classmate Young Authors Contest' - a creative story writing competition was conducted across 2000 schools in 12 cities, making it a much sought after literary event in the school calendar. 

 Growing levels of literacy and improving quality consciousness are expected to drive demand for the Company's 'Paperkraft' and 'Classmate' range of branded notebooks. Also, the implementation of VAT across the country is expected to provide a level playing field for branded players in the Rs.50000.000 millions writing & printing papers and notebooks market. Accordingly, the business plans to scale up the stationery business significantly on the back of a superior and differentiated product range and a strong distribution network. 

 During the year, the business was awarded the ISO 9001:2000 standard by M/s. Det Norske Veritas as a recognition of its quality products and processes. 

Hotels

The year 2004-05 marked the amalgamation of the erstwhile ITC Hotels Limited and Ansal Hotels Limited with the Company. The Scheme of Amalgamation was sanctioned by the Hon'ble High Court at Calcutta and the Hon'ble High Court of Delhi at New Delhi on 24th January, 2005 and 2nd February, 2005, respectively. Upon completion of requisite formalities, the Scheme became effective on 23rd March, 2005 and operative from 1st April, 2004. The amalgamation would facilitate better alignment of investment and incomes, besides promoting fiscal efficiencies, rationalising operating structures & costs and facilitating clear visibility of the totality of the Company's hotels business. 

 In consideration of the amalgamation, 12,12,747 fully paid-up Ordinary Shares of Rs.10/- each of the Company were issued and allotted on 9th May, 2005 to the members of erstwhile ITC Hotels and Ansal Hotels. The new Ordinary Shares rank pari passu with the existing Ordinary Shares of the Company. Consequent to issue of the aforesaid Shares, the Issued and Subscribed Share Capital of the Company increased from Rs.2482.200 millions to Rs.2494.300 millions. The Directors take pleasure in welcoming the shareholders, employees and all other stakeholders of ITC Hotels and Ansal Hotels into the ITC family. 

 The hotel industry continued on its growth path during the year on the back of strong economic growth. Foreign tourist arrivals continued to be buoyant, registering a robust growth of 23.5% during the calendar year 2004 to touch 3.36 million. Consequently, foreign exchange earnings from the tourism sector touched Rs.210000.000 millions during 2004 representing a growth of 36% over the previous year. Besides earning valuable foreign exchange, the tourism industry has a large economic multiplier impact and provides significant employment opportunities. The potential of the tourism industry to contribute to India's economic growth is increasingly being recognised in several policy initiatives. These include the healthy increase of budgetary allocation for the Ministry of Tourism and a 55% increase in overseas promotion budget to Rs.1400.000 millions for 2005-06. Adoption of the 'open skies' policy to augment airline capacity and the announcement of upgradation projects covering 30 airports across the country stand testimony to the Government's commitment to this sector. It is evident from macro-economic indicators that the tourism sector has huge growth potential and the Company, with its ability to sustain the impact of capital intensity through the strength of its balance sheet, is well poised to not only sustain its leadership position in the industry, but also to emerge as the largest hotel chain in the country over the next few years. 

 ITC Grand Central, the Company's second property in Mumbai was commissioned during the year, marking yet another significant step towards the strategic objective of establishing the ITC Welcomgroup chain in the super deluxe segment in key business locations. The hotel has become very popular in a short span of time with its architectural design receiving all round critical acclaim. The business also progressed a product upgradation programme during the year with a view to maintaining the contemporariness of the Company's properties. Key initiatives during the year include lobby and coffee shop renovation at the ITC Maurya Sheraton, New Delhi, renovation of guest rooms and suites in ITC Mughal Sheraton, Agra, ITC Windsor Manor Sheraton, Bangalore and ITC Grand Kakatiya Sheraton, Hyderabad. The business also implemented Six Sigma Quality initiatives in select areas at the ITC Maurya Sheraton, New Delhi with a view to further enhancing the service edge. 

 During 2004-05, the Company's hotels business posted impressive financial performance with Segment Revenues growing by 124% to touch Rs.5770.000 millions driven by improved occupancies/realisations across properties and the impact of the amalgamation of ITC Hotels and Ansal Hotels. Gross Operating Profits (PBDIT) trebled over the previous year to touch Rs.2000.000 millions during 2004-05, while Segment Results (PBIT) at Rs.1410.000 millions grew more than 4 times over 2003-04, despite absorbing the gestation impact of its new properties and projects. 

 Buoyed by the impressive performance and the emerging opportunities in this industry as discussed herein, the Company is embarking on an aggressive investment led growth plan. Planning is already underway for the Company's proposed hotels at Bangalore and Chennai while a suitable location at Hyderabad is being identified. The amalgamated ITC Welcomgroup chain with its globally benchmarked levels of product and service excellence and superior hoteliering capabilities is well positioned to sustain industry leadership. 

Paperboards, paper and packaging

The Paperboards, Specialty Paper and Packaging segment recorded strong growth during the year both in terms of sales and operating profits. As set out in the Segment Report annexed as Schedule 20 to the Accounts, Segment Revenue grew by 24.9% to touch Rs.15650.000 millions while Segment Results improved by 21.8% to Rs.2800.000 millions. This strong performance is particularly heartening, as the same has been achieved despite pressure on margins arising from a steep increase in raw material prices and the costs associated with stabilisation of the Kovai unit and capacity expansion at the Bhadrachalam unit. The Segment generated strong operating cash flow of Rs.3840.000 millions. 

Paperboards and Speciality Papers

The year marked significant capacity augmentation in the recycled paperboards segment with the successful integration of the Kovai facility and the commissioning of the 75000 TPA paperboard machine at the Company's Bhadrachalam mill. Production during the year touched 308962 MT as compared to 234663 MT during the previous year while overall sales (including inter-divisional sales) at 301034 MT grew by 30% over last year. In line with the Company's value led strategy, sales of Value Added Paperboard grades grew by 34% over last year to touch 90573 MT. Sales of Specialty Papers also registered strong growth driven by the decor and insulating segment. 

 The business recorded significant gains on the exports front with sales growing by 70% over 2003-04 to touch Rs.1640.000 millions. The Company's internationally benchmarked paperboards and specialty paper products now command a presence in several countries in Europe and the Afro-Asian region including Turkey, Greece, Bulgaria, Sri Lanka, Bangladesh, Malaysia, South Africa, UAE, UK and Iran. The full capacity utilisation of the pulp mill at the Company's facility at Bhadrachalam also enabled the conservation of foreign exchange in excess of Rs.2000.000 millions. 

The company has joint venture with the following :

˜ ITC Filtrona Limited

ITC Filtrona maintained its market leader in the Indian Cigarette filter industry with nearly 58% value share.

˜ King Maker Marketing Inc., USA

King Maker Marketing Inc. (KMM), a company registered in the State of New York, USA, has been enabling company’s foray into the US tobacco and FMCG market. KMM also provides market research services for several clients.

˜ Maharaja Heritage Resorts Limited

˜ CLI3L e-Services Limited

The company has entered into Agreements with Ardath Tobacco Company Limited, U.K., and Benson & Hedges (Overseas) Limited, U.K. both subsidiaries of British American Tobacco (Holdings) Limited. U.K. also a signatory to the said Agreements, for licensing, including manufacturing and sale in India, of certain BAT’s International Brands to the Company.

The group employs 12000 persons at over 60 locations across India.

The company's fixed assets of important value include trademarks and goodwill, freehold land, freehold building, leasehold property, licensed property-building improvement, railway sidings etc, plant & machinery, furniture & fixtures and motor vehicles.

MEMBERSHIP

˜ Confederation of Indian Industry

Press Release:

ITC Shareholders overwhelmingly approve merger proposal

Nov 20, 2004

The Calcutta High Court-convened meeting of the Shareholders of ITC Limited took place on the 19th November, 2004 at the Science City, Kolkata, under the Chairmanship of Justice G. N. Ray (Retd.), appointed by the Hon'ble Court, to consider a resolution for the amalgamation of ITC Hotels Limited and Ansal Hotels Limited with ITC Limited. The result of the poll was overwhelmingly in favour of the amalgamation with 99.99 per cent voting in favour of the resolution.

The poll results are appended below:

		Number of Members	Number of Votes	Percentage of Votes
A	In favour of the Resolution	726	17,51,91,474	99.99 %
B.	Against the Resolution	28	10,859	0.01 %
	Total:	754	17,52,02,333	100.00%

The Chairman of the meeting declared that the resolution was passed with the requisite majority.

(S H Venkatramani)
Head - Corporate Communications

ITC Centre, Gurgaon achieves Platinum Rating from the US Green
  Building Council

Nov 16, 2004  

ITC Centre, the futuristic office complex that ITC Limited is building in Sector 32, Gurgaon, has been awarded the Platinum Green Building rating by USGBC-LEED ( US Green Building Council - Leadership in Energy and Environmental Design ). This is the highest rating in this category and ITC Centre is the largest Platinum rated building in the world.

ITC is the first corporate house in India to have achieved this unique international distinction.

The ITC Centre complex is being constructed on a 2-acre plot of land. Its total built-up area is about 1,80,000 sq ft. It has a ground and three upper floors and two basements.

A few of the salient green features incorporated in the building are; zero water discharge, 53% energy savings over conventional building, 40% reduction in potable water use, use of treated gray water for flushing & landscaping, Use of fly-ash in bricks & concrete, high efficiency equipment, eco-friendly housekeeping practices and well designed green education program.

In order to achieve the highest LEED Rating for ITC Centre, extensive research and simulation studies were conducted by the project team in consultation with CII, TERI, USGBC, Architects, Engineering Consultants, Independent Commissioning Agency and the Shriram Research & Test Centre.The design concept, scope & technical specifications for the ITC Centre were developed to meet the unique and overall intents of the green building. Accordingly, the building envelope, energy, indoor air quality & water efficiency, materials & sustainability measures were evaluated on the basis of simulation studies and optimised. In addition, innovative ideas like green education and eco-friendly housekeeping practices have been implemented.The building, which has been envisaged as exemplifying modern classic architecture, will have a well articulated facade, roof & specialised glazing with contemporary interiors and services, all of which comply with relevant international standards.

In keeping with ITC's thrust on protection of the environment and enrichment of ecology, the Company decided to seek Green Building Certification for this project by an international certification agency of stature. ITC then identified USGBC - LEED as the leading certification authority.The building rating system of USGBC-LEED was established in USA in 1993. It focuses on design and construction practices that significantly reduce or eliminate the negative impact of buildings on their occupants and on the environment on certain parameters like energy efficiency and renewable energy, the quality of the indoor environment, conservation of materials & resources, safeguarding water and water efficiency, sustainable site planning and innovation & design processes. The ratings are four: Platinum, which is the highest and the best, followed by Gold, Silver and Certified. Out of the 150 projects around the world that USGBC-LEED has certified so far by, only 7 have been awarded this prestigious platinum rating. The actual rating process is based on the submission of all design documents, simulation, construction and operating intent followed by an audit & review process. The entire process took over a year.The facility measuring 1,81,000 sq.ft at Gurgaon has been built on a two-acre plot to accommodate various businesses of ITC and the Welcomgroup Management Institute. ITC has played a trail-blazing role in India's corporate sector in preserving and enriching the environment through sustained induction of environment-friendly technology and work habits. The construction of this sustainable infrastructure is yet another demonstration of the Company's continued thrust on environment management.

ITC is the first corporate organisations in India to launch 'Triple Bottom Line' reporting. The Company now reports performance on not only its financial capital, but also environmental and social capital.The USGBC-LEED Award was given to ITC during the international Green Building Convention held in Portland, Oregon, USA on the 11th of Nov 2004. The convention was attended by more than 6000 building professionals from 15 countries.

Oberoi Flight Services – New Delhi & Mumbai, India

A category company that uses Prol’IFIC

Manned by highly trained and skilled staff, Oberoi Flight Services caters to airlines such as British Airways, KLm and Northwest.

Its full-fledged delicatessen production unit, which uses computerized equipment for curing, cooking and smoking of meats is the only one of its kind in this part of the world.

Oberoi Flight Services has received ISO 9002/HACCP certification by the British Standards Institution, U.K.

Oberoi Flight Services uses a private labeled version of Prol’IFIC – called O’asis – to manage it’s back office operation

CMT REPORT [Corruption, Money laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 45.30
UK Pound	1	Rs. 78.45
Euro	1	Rs. 54.88

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	9
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	9
--LEVERAGE	1~10	8
--RESERVES	1~10	9
--CREDIT LINES	1~10	8
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		75

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions