ITC Limited

One of India’s Most Admired Companies

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Performance Track Record - Snapshot
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Rs Crs
Rs. 1 crore= Rs. 10 million 2

ITC - Key Financials – 2009/10

2009/10: Segment Revenues

1. Segment Reven

Segment Res .2009/10: Segment Results 3.

2009/10: Segment Capital Employed 4. Capital Emplo .

Key Financials – Q1 2010/11 .ITC .

Q1 2010/11: Segment Revenues 1. Segment Reven .

7) (74.0 10.Cigarettes .2 47.0 (0.5 22.5 18.Others Total FMCG b) Hotels c) Agri Business d) Paperboards.5 25. 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(%) 16.2 .9 23.4) 19.Q1 2010/11: Segment Results 2010-11 Segment Results a) FMCG .

Capital Emplo .Segment Capital Employed 4.

One of India’s most valuable and admired companies  One of the 8 Indian Companies to feature in ‘Forbes A-list’ for 2004  ITC Featuring 400 of the World’s ‘best big companies’ with M-cap. > USD 5 bln. 1 in FMCG Sector  Rated as one of India’s Most Respected Companies (IMRB-Businessworld Survey 2006) 11 . 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. profits. 4 among Indian listed Private Sector Companies by market cap. & are rated as the ‘most attractive companies for investors’  Only Indian FMCG Company to feature in Forbes 2000 List  A comprehensive ranking of world’s biggest companies measured by a composite of sales. • No.

ITC ranked second among top Indian companies. • • • • • • • • • . 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. has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment. The Best Corporate Social Responsibility Practice Award 2008 jointly instituted by the Bombay Stock 12 Exchange.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. ITC has been conferred the ICAI Award for Excellence in Financial Reporting with its Annual Report and Accounts. Zurich and SAM/SPG at the International Sustainability Leadership Symposium Business Today Award for the Best Managed Company – Retail and Consumer Products. Times Foundation and the NASSCOM Foundation. Social and Corporate Governance (ESG) ratings released recently. Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum In the first of its kind S&P Environmental. 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. social and natural capital for the nation. adjudged as a commendable entry under the “Manufacturing and Trading Enterprises” category. 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.

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 .

Education & Stationery Matche s Incense Sticks Hotels Paper & Packaging Agri Business Information Technology .ITC Business Portfolio FMCG Cigarettes Foods Personal Care Lifestyle Retailing .

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 .

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 .Corporate Strategies  Sustain multiple drivers of growth.

FMCG .Cigarettes 17 .

000 markets & 2 million retail outlets  World-class state-of-the-art technology and products  Investment .ITC’s Cigarettes Business  Market leadership  Powerful brands across segments  Leadership in all segments .00.geographic & price  Extensive FMCG distribution network  Direct servicing of 1.10 billion in six years  Exciting long term growth potential 18 .Rs.

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. one tenth world average : 85  Future growth depends on relative rates of growth of per capita income and moderation in taxes 19 . barely 15% can afford cigarettes  Biri : Cigarettes ratio = 10 : 1  Annual per capita adult cigarette consumption in India is appx.

o o rd &In u tryE timte ds s a s –g s r m/Y Per Capita consumption is ~ 60% of World Average .Per Capita Consumption of Tobacco in India (gms per year) 1256 1145 743 438 461 468 China USA Pakistan Nepal India World Su e o o rc :Wrld C a tte –E CS tis s T bB a ig re s R ta tic .

3000 2500 2000 1500 s t e r a g i C f O o N 2920 Per Capita Cigarette Consumption 1886 1771 1000 500 0 A S U a n i h C 844 618 488 303 243 85 n p a J l a p e N a i d n I n t s i k a P Countries k n a L i r S  Per Capita consumption in India ~ 10% of World average h s e d l g n a B d l r o W g a r e v A 21 .

f. Delhi.threatening the concept of the ‘Indian Common Market’  Cost table increasing with increase in leaf costs 22 . has emerged as substantive segment  Regulatory & Taxation • Pictorial Graphic warnings in place w.e. Along with smuggled contraband.Cigarettes: Challenges  Competitive context • Competition including international majors becoming more active • Domestic illegal volumes still very strong. Rajasthan & Pondicherry. • VAT hikes in Maharashtra. June 09.

Hotels & Tourism 23 .

WTO 24 .000 arrivals  Today. Vs. 35 million in China • The two nations were on par 2 decades ago at 750.Hotels & Tourism industry  Foreign arrivals into India: 5 million appx. Beijing alone has as many hotel rooms as the whole of India  India’s 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.

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 . 110.growing potential for leisure tourism 25 .000 rooms of which 5 Star category accounts for appx. 30%  India needs an additional 50.Indian Hotel Industry  Current supply – appx.

ITC’s Hotel Business  ITC-Welcomgroup : a leading hotel chain in India • Established presence in key business locations • Over 6000 rooms under 4 distinct brands Brand ITC Hotel: Luxury Collection WelcomHotel: Sheraton Fortune Hotels WelcomHeritage Category Luxury Upper upscale Upscale .  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 . plans for other locations also being progressed.‘Luxury Collection’ / ‘Sheraton’ 26 .mid-scale Heritage 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.

– 100% subsidiary company : Fortune Park Hotels Ltd. room inventory.4800 appx. 27 . • Also operates 60 properties under the ‘WelcomHeritage’ brand in 19 states . 50% JV with Marudhar Hotels (P) Ltd.Maharaja Heritage Resorts Ltd.ITC’s Hotel Business • Manages 34 full service mid-market properties (2000 + rooms ) under the Fortune Hotels brand – 21 more hotels in pipeline.

Paperboards. Paper & Packaging 28 .

the fastest growing segment (15% p.)  Indian paperboard market growing at 7% p. (world average – over 55 kgs p.Indian paperboard market  Annual paperboard demand – appx.  Value Added Coated board .a.a.a.) in India driven by the growing sophistication of the consumer 29 .a. 2 million tonnes  Fragmented capacity & obsolete technology  Low per capita usage at around 7 kgs p.

80 lac MT 30 . 2.00.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 > 1.000 hectares  Fully integrated operations with in-house pulping capacity at appx.ITC’s Paperboards Business  Market leader in growth segment .

000 TPA paperboards machine underway  ITC’s packaging SBU -India’s 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 .ITC’s 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.

Agri Commodities 32 .Leaf Tobacco .Agri Businesses .

robust growth in export volumes with improvement in realization over the last 2 years 33 .Indian Leaf Tobacco industry  India – the third largest producer of tobacco  However. processor. superior Burley and Oriental tobaccos in India  Export business . consumer & exporter of cigarette tobaccos  6th largest leaf tobacco exporter in the world  Pioneering cultivation of flavourful Flue-cured. India’s 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 – India’s largest buyer.

Coffee etc. Marine products.ITC’s Agri Commodity Business  Farm linkages in 14 states covering Soya.5 million farmers  Distinctive sourcing capability for ITC’s Foods business 34 . Focus on value added agri commodities  Unique CRM programme in commodity exports  Leveraging IT for the transformational ‘e-Choupal’ initiative • • Rural India’s largest Internet-based intervention Over 40000 villages linked through around 6500 e-Choupals servicing over 3. Wheat.

paid extension services etc. corn. agri-inputs.  Financial Services • insurance (focus: weather) • credit (focus: Kisan Credit Card scheme)  Rural retail • 24 Choupal Saagars operational 35 . potato etc.e-choupal: Strategic Thrust  Procurement: cost & quality optimisation • strategic sourcing support to the Foods business (support creation of verticals in wheat. soya. consumer durables.) • cost-effective sourcing for exports/domestic external business  Rural Distribution • ‘last mile connectivity’: 100 partnering companies • diverse range of goods/services: FMCG.

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 ITC’s FMCG distribution capability  Business model retains critical elements of value chains within ITC with other elements outsourced • Contributing to the competitiveness of SMEs 37 .

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

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 .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.

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. 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 . ‘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.

govt.growth driven by increasing cross-cultural exposure.  An emerging (currently Rs 9000 cr stationery) market in India . Scholastic products launched • Branded Copier Paper ‘Paperkraft’ footprint being enhanced.Education & Stationery Products Business  Leverages print and paper know-how. 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. Enthusiastic customer response based on green credentials. spending on education • Mostly commoditized. Forward linkages with new paper capacity (already commissioned).  Comprehensive portfolio approach with new variant/category launches 41 .

 ITC markets its brands with value added products across each price point • Support SMEs with complementary marketing strengths  ‘AIM’ – India’s largest selling Safety Matches brand  Successful acquisition of WIMCO Ltd.00. 42 . for 24 billion match boxes  Fragmented supply base arising from policy of reservation for small scale industry  Mass market moving from 0. Ship. Cheetah Fight etc.50 p price point to Re 1.Safety Matches  Current industry consumer spend estimated at Rs.a. 1250 crores p. by Russell Credit • Key brands: Homelites.

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 . 900 crores p.Incense sticks (Agarbattis)  Current industry consumer spend estimated at over Rs.

gaining customer acceptance  Supported by investments in brands – celebrity endorsements  Investments being made in Research & Development and strategic tax incentivised manufacturing sites 44 .  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.)  ITC presence established in Body Wash (Soaps.Personal Care Products  Current market size estimated at over Rs. conditioner). 29000 crores (growing at 12% p.  Product portfolio enlarged with the launch of Fairness cream. Hair Care (Shampoos. shower gels).a.

Such risks and uncertainties 45 . may be “forward looking statements” within the meaning of applicable securities laws and regulations. expectations etc. These statements involve a number of risks. estimates. Investors are cautioned that “forward looking statements” are based on certain assumptions of future events over which the Company exercises no control. 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. future prospects. Therefore there can be no guarantee as to their accuracy.Forward-looking Statements Statements in this presentation describing the Company’s objectives.

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