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ITC Limited

One of Indias Most Admired and Valuable Companies

ITC Performance Track Record


Rs crs 1995-96 Net Revenue PBDIT PBIT PBT PAT Capital Employed ROCE % Market Capitalisation Total Shareholder Returns %
Market Cap and TSR based on FY-end prices

2012-13 29,606 11,566 10,771 10,684 7,418 23,569 45.7 244246

17-yr Cagr 95-96 to 12-13 15.6% 19.2% 19.3% 20.4% 21.8% 16.0% 24.9% 26.4%

2,536 584 536 452 261 1,886 28.4 5,571

Sensex (CAGR 95-96 to 12/13) : 10.7%


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ITCs ranking
Amongst all listed private sector cos. PBT: No. 5 PAT: No. 5 Market Capitalisation: No. 3

ITC ranked 6th amongst global consumer goods companies in sustainable value creation during 2005-09

(Boston Consulting)

One of Indias most valuable and admired companies


One of the foremost in the private sector in terms of :

Sustained value creation (BT-Stern Stewart survey) Operating profits Cash Profits

Only Indian FMCG Company to feature in Forbes 2000 List

A comprehensive ranking of worlds biggest companies measured by a composite of sales, profits, assets & market value

Awards & Accolades (1)


Mr. Y C Deveshwar has been ranked by HBR as the 7th Best CEO in the World and No.1 amongst all Indian CEOs. ITC Grand Chola, the worlds largest LEED Platinum rated hotel in the New Construction category, launched in September 2012 ITC was awarded the prestigious World Business and Development award 2012 for its transformational rural initiatives in social and farm forestry programmes in India. It was the only Indian company to receive this honour at the historic Rio+20 UN Summit 2012. ITC Chairman Mr. Y C Deveshwar conferred the Padma Bhushan Mr. Y C Deveshwar conferred the Global Leadership Award by the US India Business Council of the US Chamber of Commerce The only Green Luxury Hotel chain in the world with all premium hotels under ITC Hotels brand LEED (Leadership in Energy and Environmental Design) Platinum Rated

ITCs Sustainability Report adjudged as one of the best global reports in the Carbon Disclosure category in Corporate Responsibility Reporting Award 10
ITC featured in Forbes 2011 Asia Fab 50 among Asia-Pacifics 50 biggest listed companies ITC conferred the ICC (Indian Chamber of Commerce) Sustainability Vision Award in the category Environmental Sustainability Excellence The FE-EVI Green Business Leadership Awards has adjudged ITC PSPD the best performer in the Paper & Pulp category
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Awards & Accolades (2)


ITC awarded the Best Hotel Chain in the country by Business World FICCI Outstanding Vision Corporate Triple Impact Award 2007 for invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation.

Sustainability Leadership Award 2007 conferred on Chairman Y C Deveshwar by the Sustainability Forum, Zurich and SAM/SPG at the International Sustainability Leadership Symposium
Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum In the first of its kind S&P Environmental, Social and Corporate Governance (ESG) ratings released recently, ITC ranked second among top Indian companies. Corporate Social Responsibility Crown Award for Water Practices from UNESCO and Water Digest for its distinguished work carried out in the water sector in India. Top UNIDO award at the International Conference on Sharing Innovative Agribusiness Solutions 2008 at Cairo in recognition for its initiatives in agri business. ICAI Award for Excellence in Financial Reporting with its Annual Report and Accounts, adjudged as a commendable entry under the Manufacturing and Trading Enterprises category. The Best Corporate Social Responsibility Practice Award 2008 jointly instituted by the Bombay Stock Exchange, Times Foundation and the NASSCOM Foundation
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Accolades & Awards (3)


e-Choupal initiative wins global recognition:
World Development Report 2008 published by World Bank Stockholm Challenge Award 2006 in the Economic Development category which recognises initiatives that leverage Information Technology to improve living conditions and foster economic growth in all parts of the world.

First Indian Company and second in the world to win the Development Gateway
Award 2005 for its trail-blazing e-Choupal initiative Corporate Social Responsibility Award from The Energy and Resources Institute (TERI) World Business Award 2004: International Chamber of Commerce & the HRH Prince of Wales & International Business forum Harvard University case study Applauded by the then President of India Dr APJ Kalam in his special address during the national symposium to commemorate 60th year of independence
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ITCs Vision

Sustain ITCs position as one of Indias most valuable and admired corporations through world class performance, creating growing value for the Indian economy and the Companys stakeholders

ITCs Vision
Make a significant and growing contribution towards : mitigating societal challenges enhancing shareholder rewards

By

creating multiple drivers of growth while sustaining leadership in tobacco and


focusing on Triple Bottom Line Performance
Enlarge contribution to the Nations
- Financial capital - Environmental capital - Social capital

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Key Corporate Strategies


Focus on the chosen business portfolio
FMCG; Hotels; Paperboards, Paper & Packaging; Agri Business, Information Technology

Blend diverse core competencies residing in various businesses to enhance the competitive power of the portfolio Position each business to attain leadership on the strength of world class standards in quality and costs Craft appropriate strategy of organisation and governance process to :
Enable focus on each business and Harness diversity of portfolio to create unique sources of competitive advantage

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ITC Business Portfolio


FMCG
Cigarettes Foods Personal Care Lifestyle Retailing

Education & Stationery

Matches

Incense Sticks

Hotels

Paperboards, Paper & Packaging

Agri Business

Information Technology

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Strategy of Organisation to manage diversity of Portfolio

Formal 3-tiered governance structure:


Board of Directors : Comprising executive (4) and non-executive directors (14) Strategic supervision Corporate Management Committee : Comprising executive directors and senior managers Strategic management Divisional Chief Executive & Divisional Management Committee : Executive management

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FMCG - Cigarettes

ITCs Cigarettes Business


Market leadership
Leadership across all segments - geographic & price Extensive FMCG distribution network

Direct servicing of 1,00,000 markets & 2 million retail outlets


World-class state-of-the-art technology and products

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Cigarette Industry in India


Cigarettes account for less than 15% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation

Cigarettes (15% of tobacco consumption) contribute the bulk of Revenue to


the Exchequer from tobacco sector 48% of adult Indian males consume tobacco. Only 10% of adult Indian males smoke cigarettes as compared to 16% who smoke biris and 33% who use smokeless tobacco (Source: Global Adult Tobacco Survey India 2010) Biri : Cigarettes ratio = 8 : 1 Annual per capita adult cigarette consumption in India is appx. one tenth world average Future growth depends on relative rates of growth of per capita income and moderation in taxes
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Per Capita Consumption of Tobacco in India (gms per year)

1256 1145

743 438 461 468

China

USA

Pakistan

Nepal

India

World

Source:World Cigarettes ERC Statistics, Tob Board & Industry Estimates gms/Yr

Per Capita consumption is ~ 60% of World Average


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Per Capita Cigarette Consumption per annum


2786

1841

Per capita no. of cigarettes per annum


1711

1028
468 420 154

96 India

Russian Federation

Japan

China

USA

Pakistan

Nepal

Bangladesh

Source: The Tobacco Atlas - 4th Edition (American Cancer Society), 2012

Per Capita consumption in India < 11% of World average

Drivers of Growth & Value Capture


New FMCG Initiatives

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Strategic Rationale

Blend multiple competencies residing within the ITC Group to create new avenues of growth Best fit between internal capabilities and emerging market opportunities Each segment enhances the depth and width of ITCs FMCG distribution capability Business model retains critical elements of value chains within ITC with other elements outsourced Contributing to the competitiveness of SMEs

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Branded Packaged Foods

Biscuits, Staples, Snacks, Confectionery, Ready to Eat & Noodles

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Branded Packaged Foods


Amongst one of the fastest growing Foods business in the

country
Bakery and Confectionery Foods - Biscuits, Confectionery Snack Foods - Savoury Snacks, Noodles and Pasta Staples, Spices and Ready to Eat Foods - Atta, Salt, Spices, Ready to Eat (RTE)

Driven by strong brands Sunfeast Biscuits, Noodles and Pasta Aashirvaad Staples (Wheat flour, Salt, Spices), Ready to Eat Ready Meals, Instant Mixes Bingo! Yumitos Potato Chips, Finger Snacks Mad Angles, Tedhe Medhe, Tangles mint-o & Candyman Confectionery Kitchens of India Ready Meals, Premium conserves, chutneys & Cooking sauces

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Branded Packaged Foods


Atta (wheat flour) #1 in Branded packaged Atta among national players Biscuits

#3 All India
Noodles #2 All India Savoury Snacks #2 All India Confectionery

#3 in Sugar Confectionery
Ready-to-Eat Gourmet & popular cuisines - leveraging cuisine expertise of Hotels business Premium Conserves & Chutneys a first in India
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Education & Stationery


Products

Notebooks

Writing Instruments (Pen, Pencils etc)


Scholastic products
Brands

Classmate Paperkraft

Comprehensive portfolio approach with new variant/category launches

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Education & Stationery Products Business


Leverages print and paper know-how to address suitable opportunities in the stationery market. An emerging (currently `12000 crs Stationery) market in India - growth driven by increasing cross-cultural exposure, government spending on

education
Mostly commoditised. Offers opportunity for branding

Robust distribution network in place to scale up the Stationery business

significantly
Classmate and Paperkraft continue to gain consumer franchise

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Lifestyle Retailing

2 major brands:

Wills Lifestyle - a fashion destination, offers a choice of Wills Signature designer wear, Wills Classic work wear, Wills Classic Luxuria super-premium formals for men, Wills Sport relaxed wear, Wills Clublife evening wear & fashion accessories John Players - offers a complete fashion wardrobe to the youth
Wills Lifestyle - the title partner of Indias most premium fashion event Wills Lifestyle

India Fashion Week


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Lifestyle Retailing
Leverages trademark and services expertise of hotels Upmarket product range available in exclusive Wills Lifestyle stores (94) across 40 cities and more than 500 shop-in-shops in leading departmental stores and multi-brand outlets. Strong distribution network in place for the mid-market brand John Players availability in more than 400 Exclusive Branded outlets, 1500 multi branded

outlets and departmental stores


Wills Lifestyle rated amongst the top 5 Luxury brands in the country (Global Luxury Survey conducted by TIME Magazine). John Players was rated amongst

the Top 10 Most Trusted Apparel Brands 2012 by The Economic Times.
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Matches, Incense Sticks

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Safety Matches & Incense sticks (Agarbattis)


Current Safety Matches & Incense sticks industry consumer spend

estimated at ~ `5000 crores


AIM Indias largest selling Safety Matches brand Mangaldeep : Indias second largest selling Incense sticks brand Fragmented supply base arising from policy of reservation for small scale industry ITC markets its brands with value added products across price points Support SMEs with complementary marketing strengths Matches & Incense sticks businesses provide livelihood opportunities to more than 18000 people

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Personal Care
Our brands: Essenza Di Wills Fiama Di Wills Vivel Superia Engage Product portfolio: Fine fragrances Soaps

Shower Gels
Fairness Cream Lip Balm Body Lotion Face Wash Shampoos Conditioners Hair Serum Talc Deodorant

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Personal Care Products


Current market size estimated at over ` 40,000 crores (growing at 12% p.a.)
Portfolio approach straddling all consumer segments with 4 umbrella brands

Essenza Di Wills Fiama Di Wills Vivel Superia

Launch of deodorants with an exclusive brand Engage

These products are receiving encouraging consumer response


Laboratoire Naturel A state-of-the-art consumer and product interaction

centre leveraged to launch unique and differentiated products

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Hotels & Tourism

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Hotels & Tourism industry


Foreign arrivals into India: ~6.5 million Vs. ~56 million in China The two nations were on par 2 decades ago Today, Beijing alone has as many hotel rooms as the whole of India Indias luxury rooms availability lower than even smaller East Asian countries Huge potential driven by Indias diversity and economic growth
80000 70000 60000 50000 40000 30000 20000 10000 0
HongKong Bangkok Singapore Malaysia India

Source: Compendium of Tourism statistics, WTO

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Indian Hotel Industry


Current supply ~140,000 rooms of which 5 Star category

accounts for about 25%


India needs an additional 50,000 rooms in the next 2/3 years to service projected tourist arrivals

Present mismatch between supply and demand expected to


persist over the short term As infrastructure for trade & commerce improves - growing potential for leisure tourism

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Hotels

No 2 in Size

No 1 in Profitability Margin

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Hotels

Residents Lounge

Caf Mercara Express

ITC-Welcomgroup: fastest growing Hospitality chain in India


Over 93 properties across 64 locations
4 Brands ITC Hotels, WelcomHotel, Fortune & WelcomHeritage 15 5-Star Deluxe/ 5-Star Properties with over 3800 rooms 39 Fortune Hotels with over 3000 rooms 39 WelcomHeritage Properties with nearly 1000 rooms

Exclusive tie up with Starwoods Luxury Collection for 10 Hotels. First hotel chain in the world to have all its premium luxury hotels certified at the highest LEED (Leadership in Energy and Environmental Design) Platinum Rating ITC Grand Chola - First 5 Star 'Green Rating for Integrated Habitat Assessment' (GRIHA) rated luxury hotel by the Ministry of New and Renewable Energy 36

Paperboards, Paper & Packaging

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Paperboards & Packaging Business

No 1 in Size No 1 in Profitability

No 1 in Environmental Performance

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Indian Paperboard market

Annual paperboard demand appx. 2.9 million tonnes# Fragmented capacity & obsolete technology

Low per capita usage of paper at around 9 kgs p.a. (world average over
55 kgs p.a.)# Indian paperboard market growing at 7.5% p.a. Value Added Coated board - the fastest growing segment (12% p.a.) in India driven by the growing sophistication of the consumer
# (Source: Crisil estimate)

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ITCs Paperboards Business


Market leader in growth segment - value added coated boards
World-class contemporary technology Ozone bleached Pulp Mill fully operational one of its kind in Asia

meeting world-class environmental standards


Fully integrated with in-house pulping capacity at ~3 lakh MT Internationally competitive quality and cost

Social farm forestry in mill command area to improve access to cost


effective fibre & to attain self-sufficiency Biotech research based high yielding Clones effectiveness tested in approx. 146000 hectares

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ITCs Paperboards & Packaging businesses


Capacity expansion projects installed optimum capacity utilization Commissioned 100,000 TPA Paperboards machine running well

ITCs packaging SBU - Indias largest converter of Paperboard into high


quality printed packaging Leading supplier to Indian FMCG and Consumer Electronic segments

Provides superior packaging solutions to the cigarettes and new FMCG


businesses Fully integrated packaging unit at Haridwar operationalised.

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Agri Businesses - Leaf Tobacco - Agri Commodities

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Agri Business

No. 1 in Leaf Tobacco No 2 in Agri commodities Pioneer in rural transformation

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Indian Leaf Tobacco industry


India the second largest producer of tobacco However, Indias share is only 8% in world tobacco trade Up gradation of tobacco consumption from other formats to cigarettes will enable: growing domestic base & larger opportunities for value added exports ITC Indias largest buyer, processor, consumer & exporter of cigarette

tobaccos
5th largest leaf tobacco exporter in the world Pioneering cultivation of flavorful Flue-cured, superior Burley and Oriental tobaccos in India Export business - robust growth in export volumes in recent years with improvement in realizations
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ITCs Agri Commodity Business


Farm linkages in 17 States covering Soya, Wheat, Marine products, Potato, Coffee etc.

Unique Customer Relationship Management programme in commodity exports & for domestic customers
Leveraging Information Technology for the transformational e-Choupal initiative

Rural Indias largest Internet-based intervention

Over 40000 villages linked through around 6100 e-Choupals servicing over 4 million farmers

Distinctive sourcing capability for ITCs Foods business

e-choupal: Strategic Thrust


Procurement: cost & quality optimisation strategic sourcing support to the Foods business (support creation of verticals in wheat, potato etc.) cost-effective sourcing for exports/domestic external business Rural retail 24 Choupal Saagars operational
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Triple Bottom Line Performance

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ITC - Key Financials 2012/13

` crs

FY 12/13 Actuals 41810 29606 11566 10771 10684 7418

FY 11/12 Goly % Actuals 34872 24798 9674 8975 8898 6162 19.9 19.4 19.6 20.0 20.1 20.4

Gross Revenue Net Revenue PBDIT PBIT PBT PAT

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2012/13: Segment Revenues


` crores

FY 13 Segment Revenue (Net) a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : Inter segment revenue Net sales / income from operations 13970 6983 20953 1074 7201 4237 33464 3859 29606

FY 12 12324 5526 17850 1006 5695 3923 28475 3676 24798

Goly% 13.4 26.4 17.4 6.8 26.4 8.0 17.5 5.0 19.4

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2012/13: Segment Results


` crores

FY 13 Segment Results a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less: i) Interest (Incl other Finance Cost) ii) Other net un-allocable expenditure/ income Profit Before Tax 8326 (81) 8245 138 731 964 10078 86 (693) 10684

FY 12 6908 (195) 6712 279 643 937 8571 78 (404) 8898

Goly% 20.5 58.4 22.8 (50.7) 13.7 2.9 17.6 11.0 71.6 20.1

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2012/13: Segment Capital Employed


` crores

FY 13 Capital Employed a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Segment Capital Employed 4953 2532 7485 3460 1257 4958 17160

FY 12 3599 1989 5588 3238 1702 4354 14881

Goly% 37.6 27.3 33.9 6.9 (26.2) 13.9 15.3

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ITC - Key Financials Q1 2013/14

` crs

Q1 13/14 10727 7339 2994 2779 2762 1891

Q1 12/13 9457 6652 2545 2350 2337 1602

Goly % 13.4 10.3 17.7 18.2 18.2 18.1

Gross Revenue Net Revenue PBDIT PBIT PBT PAT

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Q1 2013/14: Segment Revenues


` crores

Q4 2012-13 Segment Revenue (Net) 3623 2036 5659 315 1854 1058 8887 707 8180 a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : Inter segment revenue Net sales / income from operations

Q1 2013-14 3537 1745 5282 250 2189 1163 8884 1546 7339 2012-13 3304 1473 4777 232 1691 1059 7760 1108 6652

GOLY(%)

7.1 18.4 10.6 7.5 29.4 9.9 14.5 39.5 10.3

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Q1 2013/14: Segment Results


` crores

Q4 2012-13 2112 12 2124 41 128 188 2481 24 (273) 2729 Segment Results a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less: i) Interest (Incl other Finance Cost) ii) Other net un-allocable expenditure/ income Profit Before Tax

Q1 2013-14 2242 (19) 2223 9 199 252 2683 17 (97) 2762 2012-13 1900 (39) 1861 26 171 265 2323 14 (27) 2337
GOLY(%)

18.0 51.3 19.4 (65.9) 16.3 (5.0) 15.5 23.2 257.2 18.2

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Social Impact
Direct employment ITC Group : 30,000 Indirect employment across the value chain : 5 million e-choupal: worlds largest rural digital infrastructure serving over 4 million farmers Social and Farm forestry initiative has greened nearly 146,000 hectares & provided approx. 64 million person-days of employment among tribals & marginal farmers Significant thrust on social sector investments
Natural resource management Sustainable livelihoods Community development programmes in the economic vicinity of operating locations

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Environmental Impact
Carbon positive enterprise 8th year in a row
Sequestering/storing more than thrice the amount of CO2 that the company emits

Water positive - 11th year in a row


Creating over twice rainwater harvesting potential than ITCs net consumption

Solid waste recycling positive 6th year in a row Over 41% of total energy consumed is from renewable sources

Only Company in the world to achieve all 3 key indices of environmental sustainability

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Forward-looking Statements
Statements in this presentation describing the Companys objectives, future prospects, estimates, expectations etc. may be forward looking statements within the meaning of applicable securities laws and regulations. Investors are cautioned that forward looking statements are based on certain assumptions of future events over which the Company exercises no control. Therefore there can be no guarantee as to their accuracy. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be projected or implied by these forward looking statements. Such risks and uncertainties include, but are not limited to: growth, competition, acquisitions, domestic and international economic conditions affecting demand, supply and price conditions in the various businesses in the Companys portfolio, changes in Government regulations, tax regimes and other statutes, and the ability to attract and retain high quality human resource.

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