ITC Limited

One of Indias Most Admired Companies

Performance Track Record - Snapshot

Rs crores

Rs Crs Gross Turnover Net Turnover Market Capitalisation PBDIT PBIT PBT PAT (After Exceptional Items) EPS Rs (Equalised for 95-96) Net Worth Capital Employed ROCE% Total Shareholders Returns %
Rs. 1 crore= Rs. 10 million

95-96 5115 2536 5571 584 536 452 261 0.7 1121 1886 28.4

09-10 26,260 18,153 100,475 6,677 6,069 6,015 4,061 10.73 14,064 14,957 40.6

Cagr 95-96 to 09-10 12.4% 15.1% 22.9% 19.0% 18.9% 20.3% 21.7% 21.4% 19.8% 15.9% 24.3%

ITC - Key Financials 2009/10

Rs crs Gross Turnover External Net Turnover External PBDIT PBIT PBT PAT

09/10 Actuals 26260 18153 6677 6069 6015 4061

08/09 Actuals 23144 15612 5393 4844 4826 3264

Goly % 13.5 16.3 23.8 25.3 24.7 24.4

2009/10: Segment Revenues

2009-10 1. Segment Revenue (Gross) a) FMCG - Cigarettes - Others Total FMCG 17,283 3,642 20,925 911 3,862 3,234 28,931 2,672 26,260 2009-10 9,321 3,634 12,955 851 3,862 3,108 20,776 2,622 18,153 15,115 3,014 18,129 1,020 3,846 2,822 25,817 2,674 23,144 2008-09 7,781 3,006 10,786 935 3,846 2,647 18,215 2,603 15,612 14.3 20.8 15.4 (10.7) 0.4 14.6 12.1 (0.1) 13.5 Goly 19.8 20.9 20.1 (9.1) 0.4 17.4 14.1 0.8 16.3 Full Year 2008-09 Goly

b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : Inter segment revenue Gross sales / income from operns. 2. 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 operns.

2009/10: Segment Results

2009-10 3. Segment Results a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : i) Interest (Net) ii) Other net un-allocable expenditure/ income Total PBT 4,938 (350) 4,589 217 436 684 5,926 53 (143) 6,015 Full Year 2008-09 4,184 (483) 3,700 316 256 509 4,781 18 (63) 4,826 Goly 18.0 27.7 24.0 (31.5) 70.3 34.5 23.9 191.2 127.6 24.7

2009/10: Segment Capital Employed

Full Year 2008-09 2,936 2,101 5,037 2,189 1,039 3,771 12,035 542.86

2009-10 4. Capital Employed a) FMCG - Cigarettes * - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Segment Capital Employed * Local Tax Provision not incl. 2,998 1,719 4,717 2,457 1,580 3,711 12,465 628.64

Goly 2.1 (18.2) (6.4) 12.3 52.1 (1.6) 3.6 15.8

ITC - Key Financials Q1 2010/11

Rs Crs

Q1 10/11 Actuals 7043 4817 1736 1576 1570 1070

Q1 09/10 Actuals 6131 4148 1475 1323 1317 879

Goly % 14.9 16.1 17.7 19.1 19.2 21.8

Gross Turnover External Net Turnover External PBDIT PBIT PBT PAT

Q1 2010/11: Segment Revenues

Rs. crores

2010-11 1. Segment Revenue (Gross) a) FMCG - Cigarettes - Others Total FMCG 4670 1006 5675 225 1350 829 8079 1036 7043 2010-11 2484 1001 3485 210 1350 794 5838 1022 4817

Q1 2009-10 4161 759 4920 186 941 731 6777 646 6131 2009-10 2210 758 2968 173 941 703 4784 636 4148

Goly(%) 12.2 32.4 15.4 21.2 43.5 13.5 19.2 60.4 14.9 Goly(%) 12.4 32.2 17.4 21.5 43.5 13.0 22.0 60.6 16.1

b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : Inter segment revenue Gross sales / income from operns. 2. 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 operns.

Q1 2010/11: Segment Results

2010-11 Segment Results a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : i) Interest (Net) ii) Other net un-allocable expenditure/ income Total PBT 1305 (89) 1216 39 123 188 1566 6 (10) 1570 Q1 2009-10 1125 (100) 1026 31 100 128 1284 6 (39) 1317 Goly(%) 16.0 10.5 18.5 25.9 23.2 47.5 22.0 (0.7) (74.4) 19.2

Segment Capital Employed

2010-11 4. Capital Employed a) FMCG - Cigarettes * - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Segment Capital Employed * Local Tax Provision not incl. 3032 1888 4920 2511 1441 3636 12507 657 Q1 2009-10 2632 1929 4561 2272 1389 3707 11930 554 Goly(%) 15.2 (2.1) 7.9 10.5 3.7 (1.9) 4.8 18.6

One of Indias most valuable and admired companies

One of the 8 Indian Companies to feature in Forbes A-list for 2004

ITC

Featuring 400 of the Worlds best big companies with M-cap. > USD 5 bln. & are
rated as the most attractive companies for investors

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

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

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

Cash Profits

Ranks No. 4 among Indian listed Private Sector Companies by market cap. No. 1 in FMCG Sector Rated as one of Indias Most Respected Companies (IMRB-Businessworld Survey 2006)
11

Awards & Accolades (1)

ITC received the 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. Global Leadership Award conferred on Chairman Y C Deveshwar by the US India Business Council of the US Chamber of Commerce

Sustainability Leadership Award 2007 conferred on Chairman Y C Deveshwar by the Sustainability Forum, Zurich and SAM/SPG at the International Sustainability Leadership Symposium
Business Today Award for the Best Managed Company Retail and Consumer Products, has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment. 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. The Company has won the 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. ITC Limited won the top UNIDO award at the International Conference on Sharing Innovative Agribusiness Solutions 2008 at Cairo in recognition for its initiatives in agri business. ITC has been conferred the 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. 12

Accolades & Awards (2)

e-Choupal initiative wins global recognition:
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 to win the Development Gateway Award 2005 for the most exemplary contribution in the field of Information & Communication Technologies (ICT) for development during the last 10 years World Business Award 2004: International Chamber of Commerce & the HRH Prince of Wales & International Business forum Harvard University case study Recognised in World Development Report 2008 published by World Bank Applauded by President of India Dr APJ Kalam in his special address during the national symposium to commemorate 60th year of independence
13

ITC Business Portfolio

FMCG
Cigarettes Foods Personal Care Lifestyle Retailing

Education & Stationery

Matches

Incense Sticks

Hotels

Paper & Packaging

Agri Business

Information Technology

Strategy of Organisation to manage diversity of Portfolio

Formal 3-tiered governance structure:
Board of Directors :

Comprising executive (3) and non-executive directors (11) Strategic supervision

Corporate Management Committee : Comprising executive directors and senior managers Strategic management Divisional Chief Executive & Divisional Management Committee : Executive management
15

Corporate Strategies
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
16

FMCG - Cigarettes

17

ITCs Cigarettes Business

Market leadership Powerful brands across segments Leadership in 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 Investment - Rs.10 billion in six years

Exciting long term growth potential

18

Cigarettes: Growth potential

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 nearly 85% of

Revenue to the Exchequer from tobacco sector Of the 58% of adult Indian males who consume tobacco, barely

15% can afford cigarettes

Biri : Cigarettes ratio = 10 : 1 Annual per capita adult cigarette consumption in India is appx. one

tenth world average : 85

Future growth depends on relative rates of growth of per capita income and moderation in taxes
19

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

3000 2500

2920

Per Capita Cigarette Consumption

No Of Cigarettes

2000

1886

1771

1500
1000 618 500 488 303 243 85
World Average
21

844

0
Bangladesh Japan Pakistan China
Nepal Sri Lanka

Countries

Per Capita consumption in India ~ 10% of World average

India

USA

Cigarettes: Challenges
Competitive context
Competition including international majors becoming more active

Domestic illegal volumes still very strong. Along with smuggled

contraband, has emerged as substantive segment

Regulatory & Taxation

Pictorial Graphic warnings in place w.e.f. June 09. VAT hikes in Maharashtra, Delhi, Rajasthan & Pondicherrythreatening the concept of the Indian Common Market

Cost table increasing with increase in leaf costs

22

Hotels & Tourism

23

Hotels & Tourism industry

Foreign arrivals into India: 5 million appx. Vs. 35 million in China The two nations were on par 2 decades ago at 750,000 arrivals Today, Beijing alone has as many hotel rooms as the whole of India Indias luxury rooms availability lower than even smaller East Asian

countries
80000 70000 60000 50000 40000 30000 20000 10000 0
HongKong Bangkok Singapore Malaysia India

Source: Compendium of Tourism statistics, WTO

24

Indian Hotel Industry

Current supply appx. 110,000 rooms of which 5 Star category

accounts for appx. 30%

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

25

ITCs Hotel Business

ITC-Welcomgroup : a leading hotel chain in India Established presence in key business locations Over 6000 rooms under 4 distinct brands

Category
Luxury Upper upscale Upscale - mid-scale Heritage

Brand
ITC Hotel: Luxury Collection WelcomHotel: Sheraton Fortune Hotels WelcomHeritage

Positioning
"Mansions of Luxury" "Passion for Quality" "Promise of True Value" "Unique Experiences"

Bangalore 292 room luxury hotel launched in October 09

Capacity expansion underway at Chennai & Kolkata; plans for other locations also
being progressed. Fastest growing hotel chain with highest operating efficiency (PBDIT/Net Income @ 40%) amongst the 3 leading chains Leverages unique service proposition and international alliance with Starwood Hotels & Resorts - Luxury Collection / Sheraton
26

ITCs Hotel Business

Manages 34 full service mid-market properties (2000 + rooms ) under the Fortune Hotels brand 21 more hotels in pipeline; room inventory- 4800 appx. 100% subsidiary company : Fortune Park Hotels Ltd. Also operates 60 properties under the WelcomHeritage brand in 19 states - Maharaja Heritage Resorts Ltd. 50% JV with
Marudhar Hotels (P) Ltd.

27

Paperboards, Paper & Packaging

28

Indian paperboard market

Annual paperboard demand appx. 2 million tonnes

Fragmented capacity & obsolete technology

Low per capita usage at around 7 kgs p.a. (world average over 55 kgs p.a.)

Indian paperboard market growing at 7% p.a.

Value Added Coated board - the fastest growing segment (15% p.a.) in India driven by the growing sophistication of the consumer

29

ITCs Paperboards Business

Market leader in growth segment - value added coated boards
World-class contemporary technology Ozone bleached Pulp Mill fully operational only one of its kind in Asia meeting world-class environmental standards 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 > 1,00,000 hectares
Fully integrated operations with in-house pulping capacity at appx. 2.80 lac MT

30

ITCs Paperboards & Packaging businesses

Capacity expansion projects installed at optimum capacity utilization 120000 TPA Pulp Mill Machine stabilised 100000 TPA paper machine (to support Education & Stationery business growth plans) Machine stabilized

Investment in 100,000 TPA paperboards machine underway

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
31

Agri Businesses - Leaf Tobacco - Agri Commodities

32

Indian Leaf Tobacco industry

India the third largest producer of tobacco However, Indias share is only 7% in world tobacco trade

Upgradation 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 6th largest leaf tobacco exporter in the world Pioneering cultivation of flavourful Flue-cured, superior Burley and Oriental tobaccos in India Export business - robust growth in export volumes with improvement in realization over the last 2 years
33

ITCs Agri Commodity Business

Farm linkages in 14 states covering Soya, Wheat, Marine products, Coffee etc. Focus on value added agri commodities
Unique CRM programme in commodity exports Leveraging initiative

IT

for

the

transformational

e-Choupal

Rural Indias largest Internet-based intervention

Over 40000 villages linked through around 6500 e-Choupals servicing over 3.5 million farmers

Distinctive sourcing capability for ITCs Foods business

34

e-choupal: Strategic Thrust

Procurement: cost & quality optimisation strategic sourcing support to the Foods business (support creation of verticals in wheat, soya, corn, potato etc.) cost-effective sourcing for exports/domestic external business Rural Distribution last mile connectivity: 100 partnering companies diverse range of goods/services: FMCG, consumer durables, agri-inputs, paid extension services etc. Financial Services insurance (focus: weather) credit (focus: Kisan Credit Card scheme) Rural retail
24 Choupal Saagars operational

35

Future Growth & Value Capture

New FMCG Initiatives

36

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

37

Branded Packaged Foods

Leverages: Unique Agri sourcing skills ITC Welcomgroups specialist cuisine & bakery knowledge FMCG distribution synergies ITC R&D Centre, Bangalore 5 chosen categories: Staples Aashirvaad Atta, Salt, Spices Biscuits Sunfeast Salty Snacks Potato chips, Bridge products : Bingo! Confectionery Candyman, mint-o Ready to Eat Kitchens of India (Ready to Eat, Conserves & Chutneys and Frozen Foods), Aashirvaad (Instant Mixes & Cooking Pastes), Sunfeast Pasta
38

Branded Packaged Foods

Aashirvaad Atta: Current market leader amongst national branded players; leverages the echoupal network for cost-quality optimisation and region specific offerings

Sunfeast Biscuits:
Differentiated & innovative products; continues to build consumer franchise; distributed & outsourced supply chain being ramped up Targeted cost management actions shore up margins Number of innovative products in the pipeline leveraging the capabilities of the ITC R&D Centre
39

Lifestyle Retailing
Leverages trade mark and services expertise of hotels Relaxed wear market growth > 20% p.a Upmarket product range available in exclusive Wills Lifestyle stores (56) and multi-branded outlets/ large format retail stores across the country Premium segment comprising the Classic range of formal wear, Wills Sport relaxed wear and Wills Clublife evening wear Designer association with leading Indian designers Wills Signature line Strong distribution network in place for the mid-market brand John Players

availability in 225 Exclusive Branded outlets, 200 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)

40

Education & Stationery Products Business

Leverages print and paper know-how. Forward linkages with new paper

capacity (already commissioned).

An emerging (currently Rs 9000 cr stationery) market in India - growth driven by increasing cross-cultural exposure, govt. spending on education
Mostly commoditized. Offers opportunity for branding

Robust distribution network in place to scale up the Stationery business significantly

Classmate brand already the most widely distributed brand in India. Scholastic
products launched Branded Copier Paper Paperkraft footprint being enhanced. Enthusiastic customer response based on green credentials.

Comprehensive portfolio approach with new variant/category launches

41

Safety Matches
Current industry consumer spend estimated at Rs. 1250 crores p.a. for 24 billion match boxes Fragmented supply base arising from policy of reservation for small scale industry Mass market moving from 0.50 p price point to Re 1.00. ITC markets its brands with value added products across each price point Support SMEs with complementary marketing strengths AIM Indias largest selling Safety Matches brand Successful acquisition of WIMCO Ltd. by Russell Credit Key brands: Homelites, Ship, Cheetah Fight etc.

42

Incense sticks (Agarbattis)

Current industry consumer spend estimated at over Rs. 900 crores p.a.
Fragmented supply base arising from policy of reservation for small scale industry ITC markets its brands with value added products across each price point Mangaldeep : second largest national brand in the country Support cottage sector with complementary marketing strengths Provides livelihood opportunities to more than 8000 under privileged women

43

Personal Care Products

Current market size estimated at over Rs. 29000 crores (growing at 12% p.a.)
ITC presence established in Body Wash (Soaps, shower gels), Hair Care

(Shampoos, conditioner).
Product portfolio enlarged with the launch of Fairness cream.

Portfolio approach straddling all consumer segments with 4 umbrella brands

Essenza Di Wills (Prestige) Fiama Di Wills (Premium) Vivel Di Wills and Vivel (Mid)

Superia (Popular)

Products well received in the market, gaining customer acceptance Supported by investments in brands celebrity endorsements Investments being made in Research & Development and strategic tax

incentivised manufacturing sites

44

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.
45