ITC Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2017

1. The audited Financial Results and Segment Results were reviewed by the Audit Committee and approved at the meeting of the Board of Directors of the Company held on 26th May, 2017. The Company confirms that its statutory auditors, M/s Deloitte Haskins & Sells have Issued audit report with unmodified opinion on the Standalone and Consolidated Financial Results.

2. The launch and rollout costs of the Company's brands 'Fiama', 'Vivel', 'Superia', 'Engage', 'Savlon' and 'Shower to Shower' covering the range of personal care products of soaps, face washes, shower gels, skin care, deodorants, handwash and ayurvedic talc, and the continuing significant brand building costs of the Foods businesses are reflected under 'Other expenses' stated above and in Segment Results under ‘FMCG-Others’.

3. a) During the quarter ended 30th September, 2016, the Company issued and alloted 402,66,57,100 Ordinary Shares of Rs. 1/- each, as fully paid-up Bonus Shares in the proportion of 1 (One) Bonus Share of Rs. 1/- each for every existing 2 (Two) Ordinary Shares of Rs. 1/- each. Pursuant to the issue and allotment of Bonus Shares, the Earnings Per Share (Basic and Diluted) have been adjusted for all the periods stated above.

b) During the quarter ended 31st March, 2017, 2,60,21,090 Ordinary Shares of Rs. 1/- each were issued and allotted under the Company’s Employee Stock Option Schemes. Consequently, the issued and paid-up Share Capital of the Company as on 31st March, 2017 stands increased to Rs. 1214,73,83,071.

4. The Company does not have any exceptional item to report for the above periods.

5. Reconciliation of the financial results to those reported under previous Generally Accepted Accounting Principles (GAAP) are summarised as follows: (For Table, kindly refer Corporate Announcements on www.bseindia.com)

B. Reconciliation of equity as reported under previous GAAP is summarised as follows: (For Table, kindly refer Corporate Announcements on www.bseindia.com)

(i) Exemptions applied at transition

Ind AS 101 (First-time Adoption of Indian Accounting Standards) provides a suitable starting point for accounting In accordance with Ind AS and Is required to be mandatory followed by first-time adopters. Ind AS 101 allows first-time adopters exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions In Its financial results:

a. Property, plant and equipment and intangible assets were carried in the statement of financial position prepared under previous GAAP as at 31st March, 2015. The Company has elected to regard such carrying amount as deemed cost at the date of transition i.e. 1st April, 2015.

b. Under previous GAAP, investment in subsidiaries, joint ventures and associates were stated at cost and provisions made to recognise the decline, other than temporary. Under Ind AS, the Company has elected to regard such carrying amount as at 31st March, 2015 as deemed cost at the date of transition.

c. As per the previous GAAP, , the cost of stock options granted under ITC Employee Stock Option Scheme (ITC ESOS) [equity-settled] was recognised using the intrinsic value method. Under this method, no expenses were recognised in the statement of profit and loss as the fair value of shares on the date of grant equalled the exercise price. Under Ind AS, the cost of options granted under ITC ESOS is recognised based on the fair value of the options as on the grant date. In terms of the exemptions, the fair value of unvested options as at the date of transition have been accounted for as part of reserves. The fair value of options vesting after the transition date have been recognised in profit or loss.

The cost of options under ITC ESOS applicable to employees of group companies, net of reimbursements, have been considered as capital contribution.

(ii) Under previous GAAP, current investments were stated at lower of cost and fair value. Under Ind AS, these financial assets have been classified as FVTPL on the date of transition and fair value changes after the date of transition has been recognised in profit or loss.

(iii) Under previous GAAP, non current investments were stated at cost. Where applicable, provision was made to recognise a decline, other than temporary, In valuation of such Investments. Under Ind AS, financial assets In equity instruments [other than those in (I) (b)] have been classified as Fair Value through Other Comprehensive Income (FVTOCI) through an irrevocable election at the date of transition.

(iv) Under previous GAAP, the net mark to market losses on derivative financial Instruments, other than those designated as cash flow hedges, as at the Balance Sheet date, were recognized in profit or loss, and the net gains, if any, were ignored. Under Ind AS, such derivative financial instruments are to be recognised at fair value and the movement Is recognised in profit or loss.

(v) Under previous GAAP, dividend payable (including the tax thereon) is recognised as a liability in the period to which it relates. Under Ind AS, dividends (Including the tax thereon) to shareholders are recognised when declared by the members In a genera! meeting.

(vi) Under previous GAAP, Trademarks were necessarily amortized. Under Ind AS, certain trademarks have been determined to be of indefinite useful life. This has been recognized in the current quarter. Accordingly, the amortization thereof considered in the previous year has been eliminated. As a consequence, the amortization charge of Rs. 23,48 Crores for the 9 months period ended 31st December 2016 (Rs. 7,85 Crores for the quarter ended 31st December, 2016) has been eliminated in the quarter ended 31st March, 2017.

(vii) Under previous GAAP, Non Controlling interest was shown separately. Under Ind AS, the same has been included in "Total Equity"

(viii) Under previous GAAP, Joint ventures were consolidated using "proportionate consolidation" method. Under Ind AS, joint ventures have been accounted using "equity method".

(ix) Under previous GAAP, biological assets were carried at cost. Under Ind AS, the same have been valued at fair value less costs to sell.

6. The Board of Directors of the Company has recommended a dividend of Rs. 4.75 per Ordinary Share of Rs. 1/- each for the financial year ended 31st March, 2017 and the dividend, if declared, will be paid on 31st July, 2017 to those members entitled thereto.

7. The Register of Members of the Company shall remain closed for the purpose of dividend from 7th June, 2017 to 9th June, 2017, both days inclusive.

8. The 106th Annual General Meeting of the Company has been convened for 28th July, 2017.

9. The Board of Directors of the Company, in the context of splitting the role of the Executive Chairman between Chairman and Chief Executive Officer (CEO), appointed Mr. S. Puri, Wholetime Director, also as CEO of the Company with effect from 5th February, 2017 to take independent charge of the executive leadership of the Company. Mr. Y. C. Deveshwar, as Chairman and Non-Executive Director assumed the role of Mentor to the CEO and Corporate Management Committee with effect from the said date.

10. This statement is as per Regulation 33 of the SEBl (Listing Obligations and Disclosure Requirements) Regulations, 2015.