A Decade of Transformation

Dear Shareholder,
It has been my privilege to have provided leadership to your Company over the last decade. The Vision of sustaining ITC’s position as one of India’s most valuable corporations through world-class performance has been our inspiration throughout this decade. We made the more difficult strategy choice of creating multiple drivers of growth by matching proven internal capabilities with emerging market opportunities. It is a matter of great pride and deep satisfaction for Team ITC that during this period we have not only grown the Company to a significant size, but also created enormous shareholder value.

During this period, despite substantial investments to support competitiveness, efficiency in terms of Return on Capital Employed improved significantly from 28.4% in 1995-96 to 34.5% in 2005-06. Total Shareholder Returns, measured in terms of increase in market capitalisation and dividends, grew at a compound rate of 30% per annum during this period placing your Company among the foremost in the country in terms of efficiency of servicing financial capital. Amongst listed companies in the private sector, your Company ranked 4th in terms of Gross Turnover and 3rd in terms of pre-tax profits for the Financial Year ended March 31, 2006. Your Company ranked 6th amongst listed private sector companies in the country in terms of market capitalisation as at March 31, 2006.

Over the last ten years, your Company has made substantial investments in technology, processes and systems, innovation and brand building towards acquiring international competitiveness in terms of cost and quality in each of its businesses. Equally, the strategy of organisation based on the governance principle of distributed leadership has enabled unleashing the entrepreneurial energies of your Company’s world-class human resources.