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Corporate Presentation
1
Performance Track Record - Snapshot
Rs crores
Cagr 95-96
Rs Crs 95-96 09-10
to 09-10
Gross Turnover 5115 26,260 12.4%
N et Turnover 2536 18,153 15.1%
Market Capitalisation 5571 100,475 22.9%
PBDIT 584 6,677 19.0%
PBIT 536 6,069 18.9%
PBT 452 6,015 20.3%
PAT (After Exceptional Items) 261 4,061 21.7%
EPS Rs (Equalised for 95-96) 0.7 10.73 21.4%
N et Worth 1121 14,064 19.8%
Capital Employed 1886 14,957 15.9%
ROCE% 28.4 40.6
Total Shareholders Returns % 24.3%
09/10 08/09
Rs crs Goly %
Actuals Actuals
Full Year
2009-10 2008-09 Goly
4. Capital Employed
a) FMCG - Cigarettes * 2,998 2,936 2.1
- Others 1,719 2,101 (18.2)
Total FMCG 4,717 5,037 (6.4)
b) Hotels 2,457 2,189 12.3
c) Agri Business 1,580 1,039 52.1
d) Paperboards, Paper & Packaging 3,711 3,771 (1.6)
Total Segment Capital Employed 12,465 12,035 3.6
Rs Crs
Q2 10/11 Q2 09/10
Goly %
Actuals Actuals
Rs. crores
Q2
2010-11 2009-10 Goly(%)
2. Segment Revenue (Net)
a) FMCG - Cigarettes 2550 2259 12.9
- Others 1056 864 22.2
Total FMCG 3606 3123 15.5
b) Hotels 209 174 20.1
c) Agri Business 1250 1028 21.6
d) Paperboards, Paper & Packaging 919 790 16.4
Total 5983 5115 17.0
Less : Inter segment revenue 922 763 20.9
Net sales / income from operns. 5061 4352 16.3
Q2 2010/11: Segment Results
Rs. crores
Q2
2010-11 2009-10 Goly(%)
3. Segment Results
a) FMCG - Cigarettes 1458 1252 16.5
- Others -67 -85 21.3
Total FMCG 1391 1167 19.3
b) Hotels 40 32 26.3
c) Agri Business 202 174 16.2
d) Paperboards, Paper & Packaging 246 186 31.9
Total 1879 1559 20.6
Less : i) Interest (Net) 5 18
ii) Other net un-allocable expenditure/ (income) 44 48
Total PBT 1830 1492 22.7
H1 2010/11: Segment Revenues
Rs. crores
H1
2010-11 2009-10 Goly(%)
2. Segment Revenue (Net)
a) FMCG - Cigarettes 5034 4469 12.6
- Others 2057 1621 26.9
Total FMCG 7091 6090 16.4
b) Hotels 419 347 20.8
c) Agri Business 2599 1969 32.0
d) Paperboards, Paper & Packaging 1713 1493 14.7
Total 11822 9899 19.4
Less : Inter segment revenue 1944 1399 38.9
Net sales / income from operns. 9878 8500 16.2
H1 2010/11: Segment Results
Rs. crores
H1
2010-11 2009-10 Goly(%)
3. Segment Results
a) FMCG - Cigarettes 2763 2377 16.2
- Others -156 -185 15.5
Total FMCG 2607 2192 18.9
b) Hotels 78 62 26.1
c) Agri Business 325 274 18.8
d) Paperboards, Paper & Packaging 434 314 38.2
Total 3445 2842 21.2
Less : i) Interest (Net) 11 24
ii) Other net un-allocable expenditure/ (income) 34 9
Total PBT 3400 2810 21.0
Segment Capital Employed
Rs. crores
Q2
2010-11 2009-10 Goly(%)
4. Capital Employed
a) FMCG - Cigarettes * 3709 2898 28.0
- Others 1765 1708 3.4
Total FMCG 5474 4606 18.9
b) Hotels 2553 2335 9.3
c) Agri Business 997 859 16.0
d) Paperboards, Paper & Packaging 3646 3607 1.1
Total Segment Capital Employed 12670 11407 11.1
13
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. 14
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”
15
ITC Business Portfolio
FMCG
Cigarettes Foods Personal Care Lifestyle Retailing
17
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
18
FMCG - Cigarettes
19
ITC’s 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
20
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
48% of adult Indian males consume tobacco. Only 10.3% 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 = 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 21
Per Capita Consumption of Tobacco in India
(gms per year)
1256
1145
743
Source:World Cigarettes – ERC Statistics, Tob Board & Industry Estimates – gms/Yr
2500
No Of Cigarettes
2000 1886
1771
1500
1000 844
618
488
500 303 243
85
0
Bangladesh
Average
Japan
Pakistan
India
USA
China
Nepal
Sri Lanka
World
Countries
Per Capita consumption in India ~ 10% of World average
23
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
25
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
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
27
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
ITC Royal Gardenia, a 292 room luxury hotel launched in October ’09 in Bangalore
– Rated amongst the ‘50 Best New Hotels in the World’ by Conde Nast
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
28
Hotels & Resorts - ‘Luxury Collection’ / ‘Sheraton’
ITC’s Hotel Business
29
Paperboards, Paper
&
Packaging
30
Indian paperboard market
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
31
ITC’s Paperboards Business
32
ITC’s Paperboards & Packaging businesses
• 100000 TPA paper machine (to support Education & Stationery business
growth plans) Machine stabilized
• Investment in 100,000 TPA paperboards machine underway
34
Indian Leaf Tobacco industry
India – the third largest producer of tobacco
However, 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, 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
35
ITC’s Agri Commodity Business
36
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
37
Future Growth & Value Capture
38
Strategic Rationale
39
Branded Packaged Foods
Leverages:
• Unique Agri sourcing skills
• ITC Welcomgroup’s specialist cuisine & bakery knowledge
• FMCG distribution synergies
• ITC R&D Centre, Bangalore
6 chosen categories:
• Staples
– Aashirvaad Atta, Salt, Spices
• Biscuits
– Sunfeast
• Salty Snacks
– Potato chips, Bridge products : Bingo!
• Confectionery
– Candyman, mint-o
• Noodles: Launched ‘Sunfeast Yippee’ Noodles in Sept ’10 in Karnataka and
Tamil Nadu markets
• Ready to Eat
– Kitchens of India (Ready to Eat, Conserves & Chutneys and Frozen Foods),
Aashirvaad (Instant Mixes & Cooking Pastes), Sunfeast Pasta 40
Branded Packaged Foods
• Aashirvaad Atta:
– Current market leader amongst national branded players; leverages the e-
choupal 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
42
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
43
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’ – India’s largest selling Safety Matches brand
Successful acquisition of WIMCO Ltd. by Russell Credit
• Key brands: Homelites, Ship, Cheetah Fight etc.
44
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
45
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 – Vivel Active Fair
Investments being made in Research & Development and strategic tax incentivised
manufacturing sites
46
Forward-looking Statements
Statements in this presentation describing the Company’s
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 Company’s 47