ITC Limited

One of India’s Most Admired Companies

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%

Rs. 1 crore= Rs. 10 million

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 ITC - Key Financials – 2009/10

09/10 08/09
Rs crs Goly %
Actuals Actuals

Gross Turnover External 26260 23144 13.5

Net Turnover External 18153 15612 16.3
PBDIT 6677 5393 23.8
PBIT 6069 4844 25.3
PBT 6015 4826 24.7
PAT 4061 3264 24.4
 2009/10: Segment Revenues
Full Year
2009-10 2008-09 Goly
1. Segment Revenue (Gross)
a) FMCG - Cigarettes 17,283 15,115 14.3
- Others 3,642 3,014 20.8
Total FMCG 20,925 18,129 15.4
b) Hotels 911 1,020 (10.7)
c) Agri Business 3,862 3,846 0.4
d) Paperboards, Paper & Packaging 3,234 2,822 14.6
Total 28,931 25,817 12.1
Less : Inter segment revenue 2,672 2,674 (0.1)
Gross sales / income from operns. 26,260 23,144 13.5
2009-10 2008-09 Goly
2. Segment Revenue (Net)
a) FMCG - Cigarettes 9,321 7,781 19.8
- Others 3,634 3,006 20.9
Total FMCG 12,955 10,786 20.1
b) Hotels 851 935 (9.1)
c) Agri Business 3,862 3,846 0.4
d) Paperboards, Paper & Packaging 3,108 2,647 17.4
Total 20,776 18,215 14.1
Less : Inter segment revenue 2,622 2,603 0.8
Net sales / income from operns. 18,153 15,612 16.3
 2009/10: Segment Results
Full Year
2009-10 2008-09 Goly
3. Segment Results
a) FMCG - Cigarettes 4,938 4,184 18.0
- Others (350) (483) 27.7
Total FMCG 4,589 3,700 24.0
b) Hotels 217 316 (31.5)
c) Agri Business 436 256 70.3
d) Paperboards, Paper & Packaging 684 509 34.5
Total 5,926 4,781 23.9
Less : i) Interest (Net) 53 18 191.2
ii) Other net un-allocable expenditure/ income (143) (63) 127.6
Total PBT 6,015 4,826 24.7
 2009/10: Segment Capital Employed

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

* Local Tax Provision not incl. 628.64 542.86 15.8

 ITC - Key Financials – Q2 2010/11

Rs Crs

Q2 10/11 Q2 09/10
Goly %
Actuals Actuals

Gross Turnover External 7362 6309 16.7

Net Turnover External 5061 4352 16.3
PBDIT 1999 1659 20.5
PBIT 1835 1510 21.5
PBT 1830 1492 22.7
PAT 1247 1010 23.5
 Q2 2010/11: Segment Revenues

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

* Local Tax Provision not incl. 690 565 22.0

 ITC
One of India’s most valuable and admired companies
 Rated by BCG amongst top 10 Consumer Goods companies in the world in terms of
Total Shareholder Returns (TSR) during 2005-09
 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
 Only Indian FMCG Company to feature in Forbes 2000 List

A comprehensive ranking of world’s biggest companies measured by a composite of
sales, profits, assets & market value
 Rated as one of India’s Most Respected Companies (IMRB-Businessworld Survey 2006)

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 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”

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 ITC Business Portfolio
FMCG
Cigarettes Foods Personal Care Lifestyle Retailing

Education & Stationery Matches Incense Sticks

Paper & Agri Information

Hotels Packaging Technology
Business
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

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 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
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FMCG - Cigarettes

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 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

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 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

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

 2920
Per Capita Cigarette Consumption
3000

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
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 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, Punjab, Haryana,
Gujarat - threatening the concept of the ‘Indian Common Market’

 Cost table increasing with increase in leaf costs

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Hotels & Tourism

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

Source: Compendium of Tourism statistics, WTO 26

 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

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 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

Category Brand Positioning

Luxury ITC Hotel: Luxury Collection "Mansions of Luxury"
Upper upscale WelcomHotel: Sheraton "Passion for Quality"
Upscale - mid-scale Fortune Hotels "Promise of True Value"
Heritage WelcomHeritage "Unique Experiences"

 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
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Hotels & Resorts - ‘Luxury Collection’ / ‘Sheraton’
 ITC’s 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.

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Paperboards, Paper
&
Packaging

30
 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

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 ITC’s 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

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 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 100,000 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
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 Agri Businesses
- Leaf Tobacco
- Agri Commodities

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 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
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 ITC’s 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 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 3.5 million farmers
 Distinctive sourcing capability for ITC’s Foods 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

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Future Growth & Value Capture

New FMCG Initiatives

38
 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

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

• Number of innovative products in the pipeline leveraging the capabilities

of the ITC R&D Centre
41
 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 (67)
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)

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
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 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

 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
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