Company profile :

Type

Public (BSE: 500875)

Industry

Conglomerate

Founded

24 August 1910

Headquarters:

Kolkata, India

Key people

Yogesh Chander Deveshwar, Chairman K. Vaidyanath, Director, Kurush Grant, Director, Rajiv Tandon (CFO)

Products

Cigarettes Hotels Apparel Tobacco Foods Stationery Personal Care Paperboard and specialty papers Printing and packaging Matches and Agarbattis Infotech

Revenue

US$ 9 billion (2011)

Employees

35000 + (2011)

Company Background

ITC is one of India's foremost private sectors companies with a market capitalization of nearly US $ 15 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today. ITC also ranks among India's top 10 `Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri- Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Greeting Cards, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards. As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. Chairman Y C

Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practices this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part." ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brandbuilding capabilities, effective supply chain management and acknowledged service skills in hotelier. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India. ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach. ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is aggressively pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services and business process outsourcing. ITC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management systems. ITC was the first company in India to voluntarily seek a corporate governance rating.

ITC employs over 21,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 3, 95,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations. This over-arching vision of the company is expressively captured in its corporate positioning statement: ITC was established on August 24, 1910 as the Imperial Tobacco Company in Kolkata. Initially, the company was involved in the trading of imported of cigarettes. In 1925,in a backward integration move, the company started a packing and printing business. The name of company was changed to Indian Tobacco Company Limited (ITC Ltd.) in 1974. In 1975, ITC Ltd., through ITC-Welcome group, tied up with the US-based Sheraton Corporation to enter the hospitality industry. It acquired the first hotel in Madras (later renamed Channai) in Tamil Nadu and called it the Welcome group Chola Sheraton. ITC Ltd established ITC Bhadrachalam Paperboards Ltd (IBPL) in 1975. The company started production at its integrated pulp and paper/board manufacturing facility at Bhadrachalam, Andhra Pradesh, in 1979. In 1990, ITC Ltd. set up International Business Division (IBD) for export of agri-commodities. ITC started a greeting cards business under the brand name Expressions in the year 2000. In the same year, ITC also entered the fashion retailing business by extending its well known cigarette brand Wills. The retail outlets were called Wills Lifestyle and offered premium leisure wear for men and women under the Wills Sport brand.

 In September 2001, the company was renamed ITC Ltd (without full stops, and with no meaning attributed to the alphabets). In 2001, ITC made an entry into foods business. In 2004, the company launched another clothing brand, John Players, which targeted the urban youth. In 2004, ITC was one of eight Indian companies to make it to the Forbes A List8 which featured 400 of the worlds best big companies. In Oct 2005, ITC has launched an exclusive line of prestige fine fragrances and personal care products under the Essenza Di Wills brand. In late 2007, ITC launched Fiama Di Wills soaps and shampoos following the success of Essenza Di Wills. In Dec 2007, ITC launched ECF (Elemental Chlorine Free). ITC is the first and only Company in India using the ECF technology.

Products:

ITC's Vision

 Sustain ITC's position as one of India's most valuable corporations through world-class performance. Create growing value for the Indian economy and the Company's stakeholders.

ITC's Mission To enhance the wealth generating capability of the enterprise in a globalizing environment Deliver superior and sustainable stakeholder value.

ITC's Core Values

The companys Core Values are aimed at developing a performanceoriented organization that is highly customer focused and also creates value for those holding stake in it. It fully understands that it has a commitment to its stakeholders to act as a guardian of the company from stakeholders point of view and deliver results in a manner that actualizes stakeholders interest on a long-term basis. It also delivers on the commitment to its customers by consistently addressing their needs on product quality, value and overall satisfaction. It respects the values of people and also encourages individuals to pursue their dreams, values their differences and helps them to experiment in the pursuit of various opportunities. ITC firmly believes in the concept of Excellence with their mantra being, we do what is right, do it well and win. We will strive for excellence in whatever we do. It is constantly in the pursuit of better and newer products, processes, services and management practices. Apart from the interest of shareholders they also address their commitment to the nation to generate economic value, at the same time ensuring that in achieving these goals no compromises are made whatsoever in complying with rules and regulations as specified by law.

ITCs Philosophy

ITC believes in practicing ethical behaviour among the corporate citizen. The company follows an HR policy that is regulated by Teamwork, Trust, Collaboration, Mutuality, Meritocracy, Objectivity, Collaboration, Self-respect and Human-dignity. It is also deeply committed to make the company a gender friendly place for each individual while also ensuring enhancement of equal opportunities for men and women, preventing sexual harassment of any form and the adherence to good employment practices. It is ensured that the interest of the company is foremost and in this context acceptance of any kind of gifts or payments from suppliers or customers is viewed as a serious breach of company discipline. And such acts are also considered as damaging to the reputation of the company. High standards of house keeping and hygiene are followed to ensure excellent physical working conditions. It is understood that all the directors, senior management and employees shall conduct themselves in an honest manner and avoid any conflict of interest. The top officials and employees of ITC believe that ITC provides them freedom at work and resources to experiment. Employees take pride in working for ITC for its work culture, environment, and the way people are treated. They are consulted before a new project\system is introduced and their concerns and suggestions addressed. ITC also gives a lot of input to develop their skill and career. They give utmost importance to equal opportunities, better work environment.

Structure
ITC has a three-tier management structure At the top are Chairman and Board of Directors, who are responsible for the strategic supervision of ITC, its wholly owned subsidiaries and their wholly owned subsidiaries. The ITC board is a balanced board comprising Executive and Non-Executive Directors. The Board ensures that the Company has clear goals relating to shareholder value and its growth. It sets strategic goals and seeks accountability for their fulfilment. There are four board committees, namely, the Audit Committee, the Nominations Committee, the Compensation Committee and the Investor Services Committee. At the second level is the Corporate Management Committee, which is responsible for the strategic management of the company's businesses within Board-approved direction/framework. It comprises all the Executive Directors and three or four key senior members of management. Third level consists of divisional CEOs of each business assisted by their own divisional management committees. Corporate Functions of the Executive Management Team includes Planning and Treasury, Accounting, Legal, Secretarial, Human Resources, Communications, Internal Audit and Information Technology.

Areas of Diversification ITC has transformed itself from a leading cigarette manufacturer to an umbrella group that offers a diversified product mix to enhance its brand image and reduce dependency on tobacco related products. It has forayed into the hospitality service industry and has become a major player in the hotels segment. Its position in the FMCG (fast moving consumer goods) business is also on a growth curve; especially its confectionery and biscuits which are slated to achieve the top ranks among its peers. It has made heavy investments to strengthen its IT (information technology) segment and to compete with the big players like Infosys and Wipro. Although the ITC group is marketing its image as an ideal corporate citizen and a company that takes its social responsibility seriously, it still earns 80% of revenues from selling cigarettes and other tobacco related products. The major areas in which ITC has diversified are: FMCG Cigarettes Food Lifestyle Retailing Greetings and stationery Safety Matches Incense sticks Hotels Paperboards and Packaging Paperboards and specialty papers packaging Agri-Business Agri- exports E-choupal Information Technology

Distribution Network of ITC in INDIA: 18 factories. 60 Branches.

600 distributors & 15000 Retailers.

EXTERNAL ANALYSIS
GENERAL ANALYSIS (PEST MODAL)

(i)

POLITICAL ENVIRONMENT
Government policies have affected the growth of cigarette industry in India in various stages. The control on cigarette for a long time and then partial decontrol and then total decontrol has contributed to the gradual opening up of the market for cigarette producers. The following are the various political factors which influence the Cigarette industry. a) Huge burden of VAT b) Excise duty rise by govt. in Union budget by 5% c) Ban on Communication & Advertisement d) 100& FDI allowed.

(ii)

ECONOMICAL ENVIRONMENT

The consumption and demand for cigarette is a sign of a countries progress and economic development. Almost every country in the world, committed to industrialization and sound economic development, generates an ever increasing demand for cigarette. The following are the various economical factors which influence the Cigarette industry. a) Bidee :cigarette ratio = 10:1 b) Profit margin is high c) Other forms of cheap tobaccos

(iii) SOCIOCULTURAL ENVIRONMENT

The following are the various socio cultural factors which influence and favor the Cigarette industry. a) Becoming the status symbol b) Companions mounted by WTO c) Changing attitude towards tobacco

(iv) TECHNOLOGICAL ENVIRONMENT

The following are the various socio cultural factors which influence and favor the Cigarette industry:

a) b)

Cheap labour supply Adapting other concepts like QC, TQM, 5 S, 6 Sigma etc..

Michael Porter FIVE FORCE Model:

Threat of new entrants:

Due to 100% F.D.I allowed by the government there is a entry of many new international brands in the Indian market.

Bargaining power of suppliers:

The major inputs are tobaccos are done by farmers. The prices of both tobaccos are determined by the farmers. The company has to pay the high price as demanded by the farmers. .

Rivalry among existing competitors:

Previously the rivalry was strong among the players, as the industry was not consolidated. During the last few years the industry has become more consolidated with the top 3 players having a combine market share of 49% in 2008-2009 as compared to 32% in 2007-2008.

Bargaining power of buyers:

The customers are demanding new and international branded cigarettes and FMCG products at a cheap costs.

Threat of substitutes:
The substitute of cigarette is Bides and thery many other substitutes for FMCG products.

COMPETATIVE ANALYSIS:
TOP 10 FMCG COMPANIES IN INDIA

1. Hindustan Unilever Ltd. 2. ITC (Indian Tobacco Company) 3. Nestl India 4. GCMMF (AMUL) 5. Dabur India 6. Asian Paints (India) 7. Cadbury India 8. Britannia Industries 9. Procter & Gamble Hygiene and Health Care 10. Marico Industries

TOP 10 INDIAN FMCG COMPANIES COMPETATIVE ANALYSIS

APR-SEP 2011 COMPANY SALES RS CR HINDUSTANUNILEVER 8703 DABUR INDIA MARICO GLAXOSMITHKLINE CONSUMER COLGATE POLMOLIVE 955 INDIA GODREJCONSUMER EMAMI ARGO TECH FOODS JYOTHY LABS 1014 400 305 250 94 75 31 14 9.3 18.7 10.1 5.5 141 14.7 1591 1389 964 A&P SPENDRSCR 1132 234 176 156

A&P/SALES% 3YRS AGO

APR-SEP 2011 13.0 14.7 12.7 16.2

8.9 11.9 12.1 13.1

17.5

10.3 2.5 1.3 8.0

RELATED TO TWO COMPANIES HUL & ITC HUL (Hindustan Unilever Ltd.) This Company is earlier known as Hindustan Lever Ltd. This is Indias largest FMCG sector company with all type of household products available with it. It has Home & Personal Care products, and also food and Water Purifier available with it. According to Brand Equity, HUL has largest no of brands in most trusted brands list. 16 of HULs brands featured in ACNielson Brand Equity list of 100 most trusted brands in 2010 in an annual survey. For the entire year ending March - 2011 net turnover of company is Rs. 20239.33 Crore which is 47.99% higher than 31st December 2009s Rs. 13675.43 Crore driven mainly by domestic FMCGs with net profit stood at Rs. 2496.45 Crore. Products of HUL are: Annapurna; Ayush; Axe; Breeze; Bru; Brooke bond; Clinic; Dove; Fair & Lovely; Hamam; Liril; Lux; Pears; Ponds; Pepsodent; Pureit; Rexona; Rin; Sunlight; Surfexcel; Vaseline; Wheel. ITC Limited This Company was earlier known as Imperial Tobacco Company of India Ltd. It is Currently headed by Yogesh Chander Deveshwar. Company mainly operates in the industry like Tobacco, Foods, Hotels, Stationary and Greeting Cards with the major products constitutes Cigarettes, packed foods, hotels, and apparels. For the entire year ending Mar2011 the turnover of company is at Rs. 15388 Crore which is 10.3% higher than previous years Rs. 13947.53 Crore, driven mainly by robust 20% growth in non cigarette FMCG business with net profit stood at Rs. 3324 Crore.

INTRENAL ANALYSIS

SWOT Analysis
SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues

Strengths
ITC leveraged it traditional businesses to develop new brands for new segments. For example- ITC used its experience of transporting and distributing tobacco products to remote and distant parts of India to the advantage of its FMCG products. ITC master chefs from its hotel chain are often asked to develop new food concepts for its FMCG business. ITC is a diversified company trading in a number of business sectors including cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel, personal care, greetings cards, Information Technology, safety matches, incense sticks and stationery.

Weaknesses
The company's original business was traded in tobacco. ITC stands for India Tobacco Company of Limited. It is interesting that a business that is now so involved in branding continues to use its original name, despite the negative connection of tobacco with poor health and premature death. To fund its cash guzzling FMCG start-up, the company is still dependent upon its tobacco revenues. Cigarettes account for 47 per cent of the company's turnover, and that in itself is responsible for 80% of its profits.

So there is an argument that ITC's move into FMCG (Fast Moving Consumer Goods) is being subsidized by its tobacco operations. Its Gold Flake tobacco brand is the largest FMCG brand in India - and this single brand alone hold 70% of the tobacco market.

Opportunities
Core brands such as Aashirvaad, Mint-o, Bingo! And Sun Feast (and others) can be developed using strategies of market development, product development and marketing penetration. ITC is moving into new and emerging sectors including Information Technology, supporting business solutions. e-Choupal is a community of practice that links rural Indian farmers using the Internet. This is an original and well thought of initiative that could be used in other sectors in many other parts of the world. It is also an ambitious project that has a goal of reaching 10 million farmers in 100,000 villages. This concept is tremendously difficult for competitors to emulate. Chairman Yogi Deveshwar's strategic vision is to turn his Indian conglomerate into the country's premier FMCG business. Per capita consumption of personal care products in India is the lowest in the world offering an opportunity for ITC's soaps, shampoos and fragrances under their Wills brand.

Threats
The obvious threat is from competition, both domestic and international. The laws of economics dictate that if competitors see that there is a solid profit to be made in an emerging consumer society that ultimately new products and services will be made available. Western companies will see India as an exciting opportunity for themselves to find new market segments for their own offerings.

DIFFERENT LEVEL STRATEGIES

The strategic can be broadly divided into three levels they are as follows

Corporate strategy Business strategy Functional strategy

The above three levels can be diagrametically rapresent are as follows,

CEO, MD

Corporate

HOD SUPERVISORS, WORKERS, EMPOYEES

Business strategy

Functional strategy

The above levels of management is explain as follows..

CORPORATE STRATEGY:[CEO,MD] It describe the companies over all direction in terms of its general attitude towards growth and the management of its various businesses and the product line. Corporate strategy refers to the principle strategy of the diversified firm. It is also concerned with selection of businesses. It is also called as highest level of strategy Business strategy:[HOD] It is usually occurs at the strategic business unit level or product levels. It emphasis improvement of the competitive position of a firms product or services in a specified industry Business strategy includes mktg strategy`s, H.R strategy`s, financial strategy`s, legal strategy`s and information technology development strategies. This level is based on short and medium term plan and each department functional responsibilities. FUNCTIONAL STRATEGY:[SUPERVISORS,WORKERS,STAFFS] It relates to the functional areas such as production, mktg, financing, personal, etc. The functional strategy aims at achieving functional objectives. This level is also called as operation strategy level or departmental strategy level. It is lowest level of strategy management. It is deal with day to day operation level of the business.

MARKETING STRATEGY:
Sustain multiple drivers of growth, matching internal capabilities with emerging market opportunities Pursue World class competitiveness in all businesses and across the entire value chain

Best-in-class in terms of: Internal Vitality Market Standing Profitability Strategy of Organisation and Governance processes geared to manage multiple businesses Blend core competencies and leverage ITC umbrella strengths to create new avenues of growth

Market segmentation.

INTRODUCTION-BCG MATRIX
BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970s. According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share. THE BCG GROWTH-SHARE MATRIX It is a portfolio planning model which is based on the observation that a companys business units can be classified in to four categories: Stars Question marks Cash cows Dogs It is based on the combination of market growth and market share relative to the next best competitor.

Limitations

Assumes market growth rate. A firm may grow the market. A Dog may be helping other products. High market share/Growth is not the only success factor. Linkage between market share and profitability is questionable

STARS-High growth, High market share

Stars are leaders in business. They also require heavy investment, to maintain its large market share. It leads to large amount of cash consumption and cash generation. Attempts should be made to hold the market share otherwise the star will become a CASH COW.

CASH COWS-Low growth , High market share

They are foundation of the company and often the stars of yesterday. They generate more cash than required. They extract the profits by investing as little cash as possible They are located in an industry that is mature, not growing or declining.

DOGS-Low growth, Low market share Dogs are the cash traps. Dogs do not have potential to bring in much cash. Number of dogs in the company should be minimized. Business is situated at a declining stage.

QUESTION MARKS-High growth , Low market share Most businesses start of as question marks. They will absorb great amounts of cash if the market share remains unchanged, (low). Why question marks? Question marks have potential to become star and eventually cash cow but can also become a dog. Investments should be high for question marks.