ITC Limited

One of Indias Most Admired and Valuable Companies

2
ITC Performance Track Record
Sensex (CAGR 95-96 to 13-14) : 11.1%
Rs. cr.
1995-96 2013-14
18-yr Cagr
95-96 to 13-14
Net Revenue 2,536 32,883 15.3%
PBDIT 584 13,562 19.1%
PBIT 536 12,662 19.2%
PBT 452 12,659 20.3%
PAT 261 8,785 21.6%
Capital Employed 1,886 27,626 16.1%
ROCE % 28.4 45.8
Market Capitalisation 5,571 280708 24.3%
Total Shareholder Returns % 25.9
Market Cap and TSR based on FY-end prices
3
Consistent performance over 18 year, 10 year, 5 year and 3 year horizons
In terms of Revenue, Profits, TSR Vs. Sensex
Consistency of Performance
95-96 to
13-14
03-04 to
13-14
08-09 to
13-14
10-11 to
13-14
18 years 10 years 5 years 3 years
NTO 15.3% 17.7% 16.1% 15.8%
PAT 21.6% 18.6% 21.9% 20.8%
TSR 25.9% 28.7% 33.7% 26.4%
Sensex 11.1% 14.9% 18.2% 4.8%
CAGR
TSR and Sensex returns based on Mar-end of each FY
4
ITCs ranking
Amongst all listed private sector cos.
PBT: No. 6
PAT: No. 5
Market Capitalisation: No. 3
Note: Based on Published Results for FY14, Market Capitalisation based on 30
th
Jun 2014
5
ITC is the only Indian Company to be ranked
amongst the Top 10 global FMCG companies in
value creation during the period 2008-12
(Boston Consulting)
6
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
Also ranked amongst the Top 10 global FMCG companies in terms of value
creation during the period 2005-2009 by Boston Consulting Group. Is the only
Indian company to feature consistently amongst the Top 10 global FMCG
companies.
One of Indias most valuable and admired companies
7
Awards & Accolades (1)
Harvard Business Review ranked
ITC Chairman Y C Deveshwar as
the 7th Best Performing CEO in
the World
ITC conferred
the prestigious
World
Business and
Development
Award 2012
at the Rio+20
UN Summit for
its Social and
Farm Forestry
Initiatives
Chairman Y C
Deveshwar was
conferred the
Padma Bhushan by
the Government of
India (2011)
ITC Grand Chola,
the worlds largest
LEED Platinum
rated hotel in the
New Construction
category, launched
in September 2012
8
Awards & Accolades (2)
Businessworld
FICCI CSR
award in Large
Enterprise
category
Best Overall Corporate
Social Responsibility
Performance : Institute
of Public Enterprise
AIM Asian CSR
Award by the
Asian Forum
on Corporate
Social
Responsibility
Rainforest Alliance
awarded ITC's
Bhadrachalam Unit,
the Forest
Stewardship
Council Forest
Management
certification
ITC Hotels
awarded the
Most Trusted
Hotel brand in
the Public
Choice Honours
category at the
Times Travel
Honours
9
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
10
Accolades & Awards 2013/14
ITC was ranked 3rd among 40 leading companies in the Nielsen Corporate Image Monitor 2013-
14, and was featured among the top 5 most admired companies in India. ITC was also perceived
to be the Company most active in CSR for the third year in a row.
ITC voted among the top two Buzziest Brands in the Corporate category by afaqs, one of
the worlds largest marketing and advertising portals.
The ITC Green Centre at Manesar was awarded the 5 Star rating by the Bureau of Energy
Efficiency, Government of India.
ITC Hotels was recognised as the Most Respected Company in the Hospitality category by the
Business World Magazine.
ITCs Paperboards and Specialty Papers Business has been
conferred the Green Product of the Year award at the India
Green Business Summit 2014.
ITCs Agri Business has bagged the Rural Marketing
Association of India (RMAI) Flame Award 2013 in the
category of excellence in Brand Promotion.
11
ITCs Vision
12
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 BottomLine Performance
Enlarge contribution to the Nations
- Financial capital
- Environmental capital
- Social capital
13
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
14
ITC Business Portfolio
FMCG
Paperboards, Paper
& Packaging
Hotels
Agri Business
Information
Technology
Cigarettes Personal Care
Foods
Lifestyle Retailing
Education & Stationery
Safety Matches & Incense Sticks
15
Strategy of Organisation
Strategic Supervision
Board of Directors
Corporate Management
Committee
Strategic Management
Divisional Management
Committees
Executive Management
Enabling Focus
Harnessing Diversity
16
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
State-of-the-art technology and world class products
17
Cigarette Industry in India
Cigarettes account for less than 12% of tobacco consumed in India unlike
world pattern of 85%due to prolonged punitive taxation
Cigarettes (<12% of tobacco consumption in India) 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)
Annual per capita adult cigarette consumption in India is appx. one
ninth of world average
18
Per Capita Consumption of Tobacco in India (gms per year)
Source:World Cigarettes ERC Statistics, Tob Board & Industry Estimates gms/Yr
Per Capita consumption is ~60% of World Average
China USA Pakistan Nepal India World
1145
1256
438
461
468
743
Per Capita Cigarette Consumption per annum
Source: The Tobacco Atlas - 4
th
Edition (American Cancer Society), 2012
Russian Federation Japan China USA Pakistan Nepal Bangladesh India
2786
1841
1711
1028
468
420
154
96
No. of cigarettes per capita per annum
Although India accounts for 17% of world population, its share of world cigarette consumption is just 1.8%
Per Capita consumption in India ~11% of World average
20
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
563
1013
1704
2511
3014
3642
4482
5545
7012
8122
Rs. crs
Rapid scale up of FMCG businesses
21
Creating world-class brands for Indian Consumers
22
Branded Packaged Foods
Biscuits, Staples, Snacks, Noodles & Pasta, Confectionery & Ready to Eat
23
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)
Aashirvaad Staples (Wheat flour, Salt,
Spices), Ready to Eat Ready Meals, Instant
Mixes
Sunfeast Biscuits
Sunfeast Yippee Noodles and Pasta
Bingo! Potato Chips Yumitos, Finger
Snacks Mad Angles, Tedhe Medhe, Tangles,
Galata Masti
mint-o & Candyman Confectionery
Kitchens of India Ready Meals, Premium
conserves, chutneys & cooking sauces
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 - Leveraging expertise of
Hotels business. Premium
Conserves/Chutneys first in India
Driven by strong brands-
24
Products
Notebooks
Writing
Instruments
(Pen, Pencils etc)
Scholastic
products
Education & Stationery
Brands
Classmate
Paperkraft
25
Education & Stationery Products Business
Leverages print and paper know-how to address suitable opportunities in
the stationery market.
An emerging (currently `12000 cr. Stationery) market in India - growth
driven by increasing cross-cultural exposure, government spending on
education
Classmate and Paperkraft continue to gain consumer franchise
Classmate : Market leader in Notebooks segment
26
Personal Care Products
Brands:
Essenza Di Wills
Fiama Di Wills
Vivel
Superia
Engage
Product portfolio:
Personal Wash
(Soaps, Shower Gel)
Deodorants
Skin Care
(Skin Cream, Face Wash
etc.)
Hair Care
(Shampoo, Conditioner)
Talc
27
Personal Care Products
Current market size estimated at over ` 57000 crores
Portfolio approach straddling all consumer segments with 4 umbrella brands
Essenza Di Wills
Fiama Di Wills
Vivel
Superia
Recently launched Engage brand in the fast
growing deodorants segment well received
Laboratoire Naturel A state-of-the-art consumer and product interaction
centre leveraged to launch unique and differentiated products
Products continue to receive encouraging consumer response
28
Lifestyle Retailing
Enhanced lustre & premiumness to brand Wills to a position of eminence
Offering a Lifestyle proposition with portfolio straddling multiple genres
- Wills Lifestyle - a fashion destination, offers a choice of super-premium formals, designer,
work, relaxed & evening wear and fashion accessories
- John Players embodies the spirit of the modern youth that is playful, fashionable and cool
29
Lifestyle Retailing
Upmarket product range available in exclusive Wills Lifestyle stores (92) across 40
cities and more than 700 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, 1600 multi branded
outlets and departmental stores
Club ITC a pan-ITC consumer loyalty programme with over 1.8 Lakh members,
serves as a platform for creating superior bonding with premium consumers and
leverages synergies between Wills Lifestyle and ITC Hotels
30
Safety Matches & Incense sticks (Agarbattis)
Current Safety Matches & Incense sticks industry consumer spend
estimated at ~ ` 6,700 crores
AIM Indias largest selling Safety Matches brand
Mangaldeep : Indias second largest selling Incense sticks brand
ITC markets its brands with value-added products across price points
ITCs Matches & Incense sticks businesses provide livelihood opportunities
to more than 18000 people
31
ITC Hotels
No. 2 in Size
No. 1 in Profitability Margin
32
Hotels & Tourism industry
Source: Compendium of Tourism statistics, WTO
Foreign arrivals into India: ~6.6 million Vs. ~57.7 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
0
10000
20000
30000
40000
50000
60000
70000
80000
Hong Kong Bangkok Singapore Malaysia India
33
Indian Hotel Industry
Current supply ~183,000 rooms of which 5 Star category represents
nearly 50,000 of total inventory
India needs an additional 50,000 rooms in the next 3/5 years to
service projected tourist arrivals
Present high levels of room inventory in key Indian cities leading to a
relatively weak pricing scenario to persist over the short term
As infrastructure for trade & commerce improves - potential for
leisure tourism to grow
34
100 properties across 70 locations
4 Brands ITC Hotels, WelcomHotel, Fortune & WelcomHeritage
20 Five-Star Deluxe/ Five-Star Properties with over 4500 rooms
43 Fortune Hotels with nearly 3600 rooms
37 WelcomHeritage Properties with over 900 rooms
Added four new hotels under Management Contract at New Delhi,
Chandigarh, Kollam and Kozhikode in 2013/14.
ITC Hotels rated as greenest luxury hotel chain in the world
ITC Grand Chola - First 5 Star 'Green Rating for Integrated Habitat Assessment'
(GRIHA) rated luxury hotel by the Ministry of New and Renewable Energy.
Projects underway at Kolkata, Classic Golf Resort (near Gurgaon) and
Hyderabad.
ITC Hotels
Responsible Luxury ethos weaved into the Brand Identity
ITC Hotels: Worlds Greenest Luxury Hotel Chain
All ITC Luxury Hotels LEED Platinum certified
36
Paperboards & Packaging Business
No. 1 in Size
No. 1 in Profitability
No. 1 in Environmental Performance
37
Indian Paperboard market
Annual paperboard demand over 2 million tonnes
Low per capita usage of paper at around 9 kgs p.a. (world average
over 55 kgs p.a.)
Indian paperboard market growing at 6% p.a.
Value-added Paperboards- the fastest growing segment (12% p.a.)
in India driven by :
Increasing demand for branded packaged products
Rising Income table and growing consumer base
Increasing proliferation of organised retail
38
Market leader in growth segment Value-Added Paperboards
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. 165000
hectares
Newly commissioned 1 lakh MT per annum Paperboard machine running well
ITCs packaging SBU - Indias largest converter of Paperboard into high quality printed
packaging
Provides superior packaging solutions to the cigarettes and new FMCG businesses
Leading supplier to Indian FMCG industry
Fully integrated packaging unit at Haridwar operationalised and running well
ITCs Paperboards, Paper & Packaging businesses
39
Agri Business
No. 1 in Leaf Tobacco
No. 2 in Agri commodities
Pioneer in rural transformation
40
Indian Leaf Tobacco industry
India the second largest producer of tobacco
However, Indias share is only at 8% of world tobacco trade
ITC Indias largest buyer, processor, consumer & exporter of cigarette
tobaccos
5
th
largest leaf tobacco exporter in the world
Pioneering cultivation of flavourful Flue-cured and superior Burley
tobaccos in India
Robust growth in exports in recent years with improvement in realizations
41
ITCs Agri Commodity Business
Distinctive sourcing capability for ITCs Foods businesses
Farmlinkages in 17 States covering Wheat, Soya, Potato, Coffee etc.
Unique Customer Relationship Management programme for commodity customers
in both domestic and international markets
Leveraging Information Technology for the transformational e-Choupal initiative
Rural Indias largest Internet-based intervention
Over 35000 villages linked through around 6100 e-Choupals servicing around 4
million farmers
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
42
ITC - Key Financials 2013/14
Rs. Cr.
2013-14 2012-13
Goly %
Gross Turnover 46713 41810 11.7
Net Turnover 32883 29606 11.1
PBDIT 13562 11566 17.3
PBIT 12662 10771 17.6
PBT 12659 10684 18.5
PAT 8785 7418 18.4
43
Segment Revenue - 2013/14
Rs. Cr.
2013-14 2012-13
%
Segment Revenue (Net)
a) FMCG - Cigarettes 15456 13970 10.6
- Others 8099 6983 16.0
Total FMCG 23555 20953 12.4
b) Hotels 1133 1074 5.5
c) Agri Business 7752 7201 7.7
d) Paperboards, Paper & Packaging 4861 4237 14.7
Total 37301 33464 11.5
Less : Inter segment revenue 4418 3859 14.5
Net sales / income from operations 32883 29606 11.1
Full Year
GOLY(%)
44
Segment Results - 2013/14
Rs. Cr.
2013-14 2012-13
Segment Results
a) FMCG - Cigarettes 9858 8326 18.4
- Liab. no longer reqd. written 158 0
FMCG - Cigarettes 10016 8326 20.3
- Others 22 (81)
Total FMCG 10038 8245 21.7
b) Hotels 140 138 1.5
c) Agri Business 835 731 14.2
d) Paperboards, Paper & Packaging 892 964 (7.4)
Total 11905 10078 18.1
Less: i) Finance Costs 38 86 (56.4)
Liab. no longer reqd. written back (35) 0
Finance Costs 3 86 (96.6)
ii) Other Unallocable Exp/(Inc.) - Net (757) (693) 9.3
Profit Before Tax 12659 10684 18.5
Full Year
GOLY(%)
45
Segment Capital Employed - 2013/14
2013-14 2012-13
Capital Employed
a) FMCG - Cigarettes 5705 4953
- Others 3384 2532
Total FMCG 9089 7485
b) Hotels 3625 3460
c) Agri Business 2052 1257
d) Paperboards, Paper & Packaging 5319 4958
Total Segment Capital Employed 20086 17160
FY14
Rs. Cr.
46
ITC - Key Financials Q1 2014/15
Rs. Cr.
Q1 14/15
Q1 13/14 Goly %
Net Revenue 9164 7339 24.9
PBDIT 3512 2994 17.3
PBIT 3281 2779 18.0
PBT 3266 2762 18.2
PAT 2186 1891 15.6
47
Segment Revenue - Q1 2014/15
` Crs.
Q4
2013-14 2014-15 2013-14
Segment Revenue (Net)
4079 a) FMCG - Cigarettes 4201 3537 18.8
2315 - Others 1935 1745 10.9
6393 Total FMCG 6136 5282 16.2
321 b) Hotels 249 250 (0.5)
2004 c) Agri Business 3296 2189 50.6
1261 d) Paperboards, Paper & Packaging 1288 1163 10.8
9979 Total 10969 8884 23.5
834 Less : Inter segment revenue 1804 1546 16.8
9145 Net sales / income from operations 9164 7339 24.9
Q1
GOLY(%)
Rs. Cr.
48
Segment Results - Q1 2014/15
` Crs.
Q4
2013-14 2014-15 2013-14
Segment Results
2552 a) FMCG - Cigarettes 2722 2242 21.4
43 - Others (16) (19) 17.6
2595 Total FMCG 2706 2223 21.7
60 b) Hotels (12) 9 NA
145 c) Agri Business 202 199 1.6
188 d) Paperboards, Paper & Packaging 275 252 9.3
2989 Total 3171 2683 18.2
10 Less: i) Finance Costs 15 17 (10.6)
(244) ii) Other Unallocable Exp/(Inc.) - Net (109) (97) 13.3
3223 Profit Before Tax 3266 2762 18.2
Q1
GOLY(%)
Rs. Cr.
49
ITCs Economic Contribution to the Nation
10 year Value addition ~ Rs. 1.9 lakh crore (US$ 39 billion)
~75% of value addition accrued to the Exchequer
Among the top tax payers in the nation (Private sector)
Excise payments represent ~ 7% of Indias total Excise collection
Foreign exchange earnings in the last 10 years: USD 6 bln
Of which agri exports constituted ~60%
50
Social Performance
Direct employment ITC Group : 30,000
Supported creation of 6 million sustainable livelihoods
e-choupal: worlds largest rural digital infrastructure serving around 4
million farmers
Social and Farm forestry initiative has greened nearly 164,500
hectares & provided over 73 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
51
Environmental Performance
Carbon positive enterprise 9 years in a row
Sequestering one and half times the amount of CO
2
that the company emits
Water positive - 12 years in a row
Creating twice the rainwater harvesting potential
than ITCs net water consumption
Solid waste recycling positive 7 years in a row
Over 38% of total energy consumed is from
renewable sources
Only Company in the world of comparable dimensions to have achieved the global
environmental distinction of being Carbon positive, Water positive and Solid
waste recycling positive
52
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. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. 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.