ITC’s businesses and associated value chains support 5 million livelihoods

The only company in the world to be carbon positive, water positive &

solid waste recycling positive

Transforming Lives and Landscapes

E C O N O M I C

E N V I R O N M E N T A L

S O C I A L

We believe that our corporate strategy which embraces societal development as an integral part of our mission of wealth creation for our stakeholders ensures the long term sustainability of our business enterprise.

‘‘‘‘Going forward, competitiveness and profitability will be increasingly linked to the ability of business to make carbon reduction and the creation of sustainable livelihoods an integral part of their value proposition to consumers.

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Y C DeveshwarChairman, ITC Limited

Inspired by the opportunity to contribute to a more secure and sustainable future, ITC Limited has structured innovative business models that leverage its brands, technological capability, agri-sourcing strengths and an unmatched trade distribution network to create unique opportunities for sustainable livelihoods.

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An Exemplary Contribution to the Triple Bottom Line

• A portfolio of businesses of tomorrow encompassing FMCG, Paperboards & Packaging, Agri & Foods Business, Hotels and Information Technology.

• A turnover of over US $ 7 billion and a market capitalisation of over US $ 45 billion.

• Total Shareholder Returns, measured in terms of increase in market capitalisation and dividends, grew at a compound rate of around 27% per annum over the last 17 years.

• The new FMCG businesses support the competitiveness, technology upgradation and market reach of over 150 Small and Medium Enterprises (SMEs).

• ITC Group provides direct employment to nearly 30,000 people.

• ITC has been ‘Carbon Positive’ 8 years in a row (sequestering/storing 1.5 times the amount of CO2 that the Company emits).

• ‘Water Positive’ for 11 consecutive years (creating over 2 times more Rainwater Harvesting potential than ITC’s net consumption).

• ‘Solid Waste Recycling Positive’ for the last 6 years.

• All Environment, Health and Safety Management Systems in ITC conform to international standards.

• ITC’s businesses generate livelihoods for over 5 million people.

• ITC’s globally recognised ITC e-Choupal initiative is the world’s largest rural digital infrastructure benefiting over 4 million farmers.

• ITC Choupal Social & Farm Forestry initiative has greened over 1,60,000 hectares, creating over 70 million person-days of employment among the disadvantaged.

• ITC Choupal Watershed Development initiative brings precious water to over 1,26,000 hectares of drylands and moisture-stressed areas.

• ITC’s Sustainable Community Development initiatives include women’s empowerment, supplementary education, integrated animal husbandry programmes.

ITC’s aspiration to create enduring value for the nation and its stakeholders is manifest in its robust portfolio of traditional and greenfield businesses encompassing Fast Moving Consumer Goods (FMCG), Hotels, Paperboards & Specialty Papers, Packaging, Agri Business, and Information Technology. This diversified presence in the businesses of tomorrow is powered by a strategy to pursue multiple drivers of growth based on its proven competencies, enterprise strengths and strong synergies between its businesses.

The competitiveness of ITC’s diverse businesses rests on the strong foundations of institutional strengths derived from its deep consumer insights, brand-building capability, cutting-edge Research & Development, world-class manufacturing infrastructure, quality and innovation, extensive rural linkages, efficient trade marketing and distribution network and dedicated human resources. ITC’s ability to leverage internal synergies residing across its diverse businesses lends a unique source of competitive advantage to its products and services.

Today, ITC is the country’s leading FMCG marketer, the clear market leader in the Indian Paperboard and Packaging industry, a globally acknowledged pioneer in farmer empowerment through its wide-reaching Agri Business, the second largest Hotel Chain in India and a trailblazer in ‘green hoteliering’. ITC Infotech, a wholly-owned subsidiary, is one of India’s fast-growing IT companies in the mid-tier segment. This portfolio of rapidly growing businesses considerably enhances ITC’s capacity to generate growing value for the Indian economy.

Acknowledged as a global exemplar in sustainability, ITC is also the only enterprise in the world, of comparable dimensions to be carbon positive, water positive, and solid waste recycling positive for several years in a row. As a testimony to its commitment to a low carbon growth path, over 41% of the total energy requirements of ITC are met from renewable sources. ITC’s businesses and value chains generate sustainable livelihoods for over 5 million people, many of whom live at the margin in rural India.

The World of ITC

FMCGBranded Packaged Foods

Personal Care Products

Cigarettes & Cigars

Lifestyle Apparel

Education & Stationery Products

Agarbattis & Safety Matches

Creating world-class Indian brands

Paperboards & Specialty Papers

An icon of environmental stewardship

Packaging & Printing

India’s largest convertor of paperboards into packaging

Agri Business

Pioneering rural transformation

Hotels

The greenest luxury hotel chain in the world

Information Technology

One of India’s fastest growing mid-tier IT companies

R&D

Creating tomorrow’s game changers

The ITC e-Choupal initiative is a powerful illustration of a unique business model that delivers large societal value by co-creating markets with rural communities. A network of village internet kiosks – e-Choupals – enable even small and marginal farmers in rural India, who are de-linked from the formal market, to access real-time weather and price information, and relevant knowledge and services to enhance farm productivity, quality and command better prices – improving their competitiveness and capacity to manage risk.

Complementing this digital infrastructure is Choupal Pradarshan Khet – customised agri-extension services, demonstration plots and training programmes that enable farmers to access best practices and diversify crop portfolios.

The ITC e-Choupal initiative has emerged as an efficient two-way channel for a variety of goods and services, and raised farmer incomes, creating sustainable livelihoods.

ITC e-Choupal rural digital-physical infrastructure

ITC e-Choupal – the world’s largest rural digital infrastructure

Empowering over 4 million farmers

Catalysed by the ITC e-Choupal network, ITC’s Farm to Food Products value chain has emerged as a very successful example of value chain augmentation. Supported by the ITC Choupal Integrated Watershed Development and ITC Choupal Livestock Development Programmes, the Farm to Food Products value chain has brought a new vibrancy to rural economies by making farming a sustainable livelihood – even for the smallest Indian farmer.

Eliminating intermediaries and multiple handling, farmers gain from a transparent and efficient procurement channel, substantially higher incomes and crucial market linkages. Effective soil and moisture conservation strengthens farming systems, increases productivity and thus farm incomes. ITC, for its part, is able to directly source high quality, identity-preserved agri-products providing it with a strong foundation for its agri-based FMCG businesses.

By drawing on ITC’s business synergies and expertise, coupled with its branding and distribution strengths, its growing portfolio of branded packaged foods is able to offer differentiated products to customers across the country. Linking farmers to ITC’s world-class brands like Aashirvaad, Bingo!, Yippee! and Sunfeast ensures that a larger part of consumer spends reaches them.

ITC’s Farm to Food Products Value Chain

ITC’s Farm to Food Products Value Chain

Building competitiveness throughout the agri value chain

ITC Choupal Social & Farm Forestry

The ITC Choupal Social & Farm Forestry Programme innovatively converges business needs and social purpose – growing renewable plantations that simultaneously provide a viable livelihood option for wasteland owners, create a sustainable raw material source for ITC’s Paper & Paperboards Business and bring multiple environmental benefits. To ensure commercial viability of these plantations, ITC invested in extensive R&D to develop fast-growing clonal saplings that are disease resistant and have a higher rate of survival in harsh conditions. Tribals and marginal farmers are assisted with loans, subsidised clonal stock and extension services through Social Forestry, while Farm Forestry targets farmers with investible incomes. ITC offers a buy-back guarantee for their produce, though growers are free to sell to the highest bidder in the open market.

ITC could have chosen the easier route of importing pulp, rather than the more difficult option of mobilising tribals and marginal farmers which involved long gestation and substantial investment exposure. However, adopting this more challenging route has not only created a source of sustainable livelihoods for a large number of poor families, but has generated large-scale green cover that contributes significantly to groundwater recharge, soil conservation and carbon sequestration.

ITC has introduced an agro-forestry model that combines tree growing with crop production. This model ensures both food and wood security and helps in the conservation of precious natural resources. ITC’s afforestation programme has been conferred the Forest Management certification from the Forest Stewardship Council, in line with ITC’s commitment to achieving internationally benchmarked standards for responsible wood sourcing.

ITC Choupal Social & Farm Forestry Programme

Greening over 1,60,000 hectares & providing over 70 million

person - days of employment

ITC’s Tree to Textbook Value Chain

With the ITC Choupal Social & Farm Forestry Programme as its bedrock, ITC’s Tree to Textbook value chain is an exemplary model of linked prosperity that delivers on all three dimensions of the triple bottom line.

While the programme beneficiaries profit from their previously unproductive assets, for marginal and tribal wasteland owners, ITC’s Social Forestry Programme has played a transformational role by bringing them out of the vicious cycle of poverty. ITC benefits from a renewable and secure source of pulpwood for its Paper & Paperboards Business which in turn provides strategic sourcing to its packaging and other FMCG businesses. A key plank in ITC’s climate change mitigation strategy, the large-scale green cover created by the plantations has brought significant environmental benefits and has played a vital role in ITC’s carbon positive status.

Along with clean processes like elemental chlorine free and ozone bleaching technologies employed by ITC’s Paper & Paperboards Business, the Programme has contributed to the Company’s green credentials. As a result, ITC’s Education & Stationery Products Business has been able to strengthen its brand value by offering eco-friendly Classmate notebooks made by small and medium enterprises, and Paperkraft business stationery, as well as enabled ITC’s Packaging Business to offer green options to its clients.

ITC’s Tree to Textbook Value Chain

Delivering on all three dimensionsof the triple bottom line

Recognising the vital role of water and irrigation in the rural economy, ITC supports watershed development projects in water-stressed areas, providing precious water resources for agriculture, rural communities and livestock. The focus is on building, reviving and maintaining water harvesting structures as well as implementing other measures which help to reverse land degradation, provide critical irrigation and increase agricultural productivity. Adopting a participatory approach, ITC works with NGOs to mobilise local communities to form water user groups. These groups are trained to carry out the entire spectrum of activities from planning to execution and maintenance of water harvesting structures. The groups are also trained to formulate regulations and fix water user charges which go towards creating a fund used to maintain existing structures and build new ones.

ITC has also entered into public-private partnerships with several state governments and NABARD, bringing together government and corporate resources to undertake watershed development projects with considerably greater scale and impact. Currently, these projects are targeting to cover nearly 1,45,000 hectares in some of India’s most drought-prone regions.

ITC Choupal Integrated Watershed Development

ITC Choupal Integrated Watershed Development Initiative

Bringing over 1,26,000 hectares under soil & moisture conservation

Livestock plays an important role in the economy of rural India with over 70% of households owning milch animals. The ITC Choupal Livestock Development Programme aims at assisting cattle-owners to upgrade their low-yielding indigenous stock through cross-breeding by artificial insemination. Comprehensive animal husbandry services are provided right at the doorstep through Cattle Development Centres managed by trained local community members. Cross-bred yields are significantly higher than indigenous stock, generating substantial supplementary incomes from surplus milk sales and paving the way for dairying to emerge as a viable livelihood option.

Taking the next step in this direction, ITC has recently launched Project Gomukh in Munger – an integrated dairy management programme that aims at providing customised services and solutions at every stage of the dairy value chain. As part of the Project, a state-of-the-art milk processing plant is being constructed to process 2,00,000 litres per day.

ITC Choupal Dairy Development

ITC Choupal Dairy Development Initiative

Animal husbandry services to over 8,00,000 cattle

ITC believes that economic empowerment of women strengthens families and societies. It has therefore launched the ITC Choupal Women’s Empowerment Programme to provide sustainable economic opportunities to poor women in rural areas. ITC assists them to form micro-credit self-help groups so that they can build up small savings and finance self-employment and micro-enterprises. A large number of women earn incomes as self-employed workers or as partners in micro-enterprises. In particular, incense stick rolling projects have emerged as profitable micro-enterprises as a result of the linkage with ITC’s incense sticks brand, Mangaldeep. The project in Munger is showing the way – with focused business development services from ITC, women rollers have set up a co-operative to manage production of raw incense sticks and a producer’s company to run a scenting-cum-packaging unit.

Enabling women to earn independent incomes has a positive impact on their families and communities as it is spent largely on children’s education, health and nutrition, and is a catalyst for gendering development.

ITC Choupal Women’s Empowerment Programme

ITC Choupal Women’s Empowerment Programme

Economically empowering over 40,000 women

The ITC Choupal Supplementary Education Programme addresses the lack of quality primary education in rural communities. Aiming to strengthen the government primary schools’ vast network by stemming drop-outs, increasing enrolments and enabling more children to complete school, ITC has set up Supplementary Learning Centres that offer additional coaching to back up learning and help children to keep up in class. The Programme also provides infrastructural assistance to Government schools such as furniture, books, teaching aids, classrooms and toilets.

ITC also supports outreach projects, including mobile libraries that foster the reading habit and a ‘roaming laptop’ programme that promotes computer skills and interactive learning.

ITC Choupal Supplementary Education Programme

ITC Choupal Supplementary Education Programme

Educating over 3,00,000 rural children

Reflecting its commitment to a green growth strategy, ITC has been in the vanguard of the green building movement in India. Its first environmentally efficient construction – the ITC Green Centre in Gurgaon, headquarters of ITC’s Hotels Division – was one of the first and largest commercial buildings in the world to receive Platinum LEED* certification from the US Green Building Council ( USGBC ) in 2004. It was hailed as “a monument to the future” by Hillary Rodham Clinton, former US Secretary of State, on her visit to the ITC Green Centre during her first official trip to India in 2009. During its re-certification in 2012, the USGBC identified it as the highest Platinum certified green building in the world.

Green buildings continue to be a vital plank in ITC’s agenda for positive environmental action. Every new ITC construction is designed in accordance to internationally benchmarked green building norms. All its premium luxury hotels are LEED Platinum certified and several factories have received Platinum Green Factory Building certification.

ITC Green Centre

* Leadership in Energy & Environmental Design

ITC Green Centre – ‘a monument to the future’

Pioneering the Green Building movement in India

ITC has redefined the fine art of hospitality in myriad ways through its hotel chain that spans a network of more than 90 hotels in over 70 locations. The group’s super-premium luxury hotels – the iconic ‘ITC Hotels’ – not only offer unmatched hospitality but have also set new standards of excellence in cuisine, guest experiences and environmental performance.

The world’s first and largest green hotel chain, ITC Hotels’ signature properties have created new benchmarks in responsible hoteliering by delivering a unique value proposition, ‘Responsible Luxury’ that integrates international green best practices with contemporary design, harnessing every element of nature in an inspired setting to create a footprint that contributes to being planet positive.

Every hotel in the ITC Hotels luxury chain is LEED* Platinum certified Today, all ITC Hotels are certified ‘green buildings’, having received the US Green Building Council’s prestigious LEED Platinum certification, further reinforcing their commitment to perform to the highest standards of energy, water and waste efficiency. ITC Grand Chola in Chennai is the world’s largest LEED Platinum certified Green Hotel.

The ‘Responsible Luxury’ commitment of ITC Hotels is manifested in its own carbon, water and waste sensitive operations and by its contributions to ITC’s larger social investments in afforestation, water harvesting and waste recycling, providing sustainable livelihoods to many.

ITC Hotels – the world’s Greenest Luxury Hotel chain

* Leadership in Energy & Environmental Design

ITC Hotels

Redefining Hospitality with ‘Responsible Luxury’

Renewable Energy at ITCIn line with its conscious strategy to lower its carbon footprint, ITC has steadily enlarged its clean energy portfolio. Currently, renewable sources and carbon neutral fuels provide more than 41% of the Company’s total energy consumption. ITC aims to raise this to 50% in the near future.

Several of the Company’s factories and premium luxury hotels, including its new iconic property in Chennai, ITC Grand Chola, as well as the ITC Infotech Park are 100% powered by wind energy.

Renewable energy sources in ITC comprise the following:

Black liquor waste from the pulping process and waste wood biomass from chipping operations in the Bhadrachalam Unit of ITC’s Paperboards & Specialty Papers Business.

Locally sourced chip/sawdust and deoiled bran as boiler fuel in the Kovai Unit.

Wind Energy farms for Packaging & Printing, FMCG, Hotels and Paperboards & Specialty PapersBusinesses.

Improved utilisation of carbon neutral biofuels in the Paperboards & Specialty Papers Business and the full year operations of wind power projects in Maharashtra and Tamil Nadu contributed to increased utilisation of renewable energy.

Renewable Energy at ITC

Over 41% of ITC’s total energy consumption is met

from renewable sources

In line with its commitment to creating larger environmental and societal value through collaborative action, ITC launched its Wealth Out of Waste (WOW) initiative a few years ago to promote resource conservation and recycling. WOW creates awareness about the importance of “Reduce-Reuse-Recycle” in protecting and restoring the environment among the general public, school children, corporates and people from every walk of life. It also inculcates the habit of source segregation and provides recyclables for a number of industries, eg. paper, glass, plastic, etc.

Today WOW is operational in Hyderabad, Chennai, Bangalore, Cochin, Coimbatore, Trichy, Erode, Madurai, Vijayawada, Rajahmundry and Guntur. Over 3 million citizens, 5,00,000 school children, 350 corporates, more than 1,000 commercial establishments and about 200 industries across South India are supporting WOW, which helps augment green cover, conserves scarce natural resources, makes surroundings clean and healthy. The initiative has also created livelihood opportunities for over 4,000 underprivileged people, including rag pickers and municipal workers.

WOWWealth Out of Waste

Creating a Positive Environmental Footprint through Waste Recycling

ITC’s Wealth Out of Waste ( WOW ) Initiative

A unique manifestation of ITC’s credo of putting ‘India First’ finds expression in the ITC Sangeet Research Academy. Established in 1977 to carry on the rich tradition of Hindustani Classical music, the Academy is a one-of-a-kind institution preserving a priceless national heritage.

Recognised as the finest repository of this musical genre, it is the world’s first and only professionally managed modern Gurukul.

ITC Sangeet Research Academy –A corporate tribute to the rich tradition of Hindustani Classical music

Empowering the differently abled

When provided with opportunities to work and become self-sufficient, people who are differently abled can contribute to the workplace, their families and the community. ITC’s Hotels Division has taken a positive step in this direction by employing differently abled people across their hotels. Committed to the principle that everyone should be treated with sensitivity and empathy, ITC Hotels has created models which have been effective and have succeeded in sensitising other employees to the needs of those differently abled. Keeping in mind their specific skills, a large number of differently abled people have been employed in diverse functions like housekeeping, teleworking, bakeries and as musicians.

Special badges for the visually impaired, whistles for hearing impaired employees to use in an emergency and sign language classes for the other staff to communicate with them are just a few examples of how ITC Hotels has created an atmosphere of sensitivity and caring. For its substantial contribution to the cause of promoting employment opportunities for differently abled people over an extended period of time, the NCPEDP Shell Helen Keller Award was conferred on ITC Hotels.

Ranked top among companies ‘Most Active in CSR’ in the Nielsen Corporate Image Monitor 2012-13 and among the top 5 ‘Most Admired Companies’ in India

World Business and Development Award 2012 for ITC’s Social and Farm Forestry Programmes, presented at the Rio + 20 United Nations Summit

AIM Asian CSR Award for ITC’s contribution in creating sustainable livelihoods and fostering economic growth for rural communities

CII Water Excellence Award for ITC’s Integrated Watershed Development Programme

CII Best Environmental Practices Award for ‘ITC’s WOW’(Wealth Out of Waste) initiative

SAM/SPG Sustainability Leadership Award conferred on Mr Y C Deveshwar, Chairman, ITC Limited

12th Businessworld FICCI Corporate Social Responsibility Award in the Large Enterprise category for ITC’s Social Investment initiatives

FICCI Outstanding Vision Triple Impact Corporate Award, presented by the Hon’ble Prime Minister of India, Dr Manmohan Singh

Select National & Global Recognition for ITC’s Sustainability Initiatives

FICCI Award for Outstanding Achievement in Rural & Community Development, presented by the then Hon’ble Finance Minister of India, Shri Pranab Mukherjee

Development Gateway Award for ITC e-Choupal’s contribution to Information & Communication Technologies for Development

Stockholm Challenge Award for the ITC e-Choupal initiative

Inaugural World Business Award in recognition of ITC’s significant efforts to create sustainable livelihood opportunities and enduring wealth in a developing country

UNESCO-Water Digest Corporate Social Responsibility Crown Award for Water Practices

TERI Corporate Social Responsibility Award for the ITC e-Choupal initiative

Asian CSR Award for Environmental Excellence

ITC was ranked 2nd among the top companies in India and 7th in Asia in the Asian Sustainability Rating released by CSR Asia

UNIDO Award at the International Conference on Sharing Innovative Agribusiness Solutions

ITC is the first Indian company to gain membership to the World Wildlife Fund Global Forestry & Trade Network ( WWF-GFTN ) for its responsible forestry initiatives

NCPEDP ( National Centre for Promotion of Employment for Disabled People ) Shell-Helen Keller Award for the ITC-Welcomgroup chain

Download ITC’s Sustainability App from the ITC Portal ( www.itcportal.com ),

iTunes or Google Play Store.

Visit us at : www.itcportal.com

Janu

ary

2014