Prevention of Corruption at Workplace

ITC believes that corporations like itself have a responsibility to set exemplary standards of ethical behaviour, both within the organisation as well as in their external relationships. The Company believes that unethical behaviour corrupts organisational culture and undermines shareholder value.

Policy: All employees of ITC have the obligation to conduct themselves in an honest and ethical manner and act in the best interest of the Company at all times. They are expected to demonstrate exemplary personal conduct. All employees of ITC must avoid situations in which their personal interest could conflict with the interest of the Company. Conflict, if any, must be disclosed to the higher management for guidance and action. All employees must ensure that their actions in the conduct of business are totally transparent.

Implementation: The strong corporate governance process of the Company creates the environment for the formulation of robust internal systems and procedures in a structured manner for the conduct of the Company's business. An effective policy for prevention of corruption is actualised through appropriate policies, systems and processes such as the delegated authority structure as per Corporate Governance policies, segregation of duties, tiered approval mechanisms, the involvement of more than one manager in key decisions and maintenance of supporting records.

All ITC managers are provided with adequate training inputs to be aware of the systems and procedures and to ensure compliance.

The custodian of this policy is the Corporate Management Committee, the Divisional Chief Executives/SBU Heads and Heads of departments. A core responsibility of the DMCs is to put in place appropriate control and risk management mechanisms to ensure that businesses are conducted as per the Governance Policy and the Company's Code of Professional Conduct. The CEOs/SBU Heads provide confirmation of compliance with the laid down systems and procedures.

Monitoring & Audit: The Company remains committed to ensuring an effective internal control environment that provides assurance on potential risks. ITC's well-established and robust internal audit processes continuously monitor the adequacy and effectiveness of the internal control environment across the Company. Weaknesses or non-compliance, if any, are identified during the audit process for rectification, thereby providing crucial inputs for continuous improvements in the systems and procedures. Significant issues, if any, are brought to the notice of the Audit Committee together with the progress made for resolution. Confirmations given by the businesses to the Board are independently verified by Internal Audit as per the directions of the Audit Committee.

Compliance during 2005-06: A booklet on ITC's Code of Conduct, that also contains the policy against corruption, exists and is periodically circulated to all managers. In addition, it is posted on the corporate intranet sites and the ITC Portal. The Audit Committee of the Board met nine times during the year to review, inter alia, the adequacy and effectiveness of the internal control environment and monitored implementation of internal audit recommendations, including those relating to strengthening of the Company's risk management policies and systems.

Instances of corruption involving employees or business partners were cognised for and suitable action was taken. ITC has a zero-tolerance approach to proven cases of corruption, resulting in immediate termination of services.