PROJECT REPORT ON
1. 1. 2. 3.
Executive Summary Introduction Background Market & Competition • Ready to Eat • Confectionary • Staples • Biscuits • Snacks Financial Data Strategy Structure Culture • Vision • Mission • Core Values • Philosophy • Design Effectiveness Contribution Bibliography
4 5 7 8
4. 5. 6. 7.
14 19 22 25
8. 9. 10.
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Staples and Snacks Food segments. paper boards. an effort has been made to project ITC’s future prospects. through our report we have tried to study the environment in which ITC foods operate. We have also studied the various strategies adopted by company to achieve its goals and the structure and the culture developed within ITC to support its objective.C.EXECUTIVE SUMMARY
ITC was established on Aug 24. Here. 1910 as the Imperial Tobacco Company of India Ltd in Kolkata and its name was changed to I. They launched KoI brand under Ready to Eat segment .
. If the company maintains its standard or increases it in the near future it surely will attain the no. Also.They expanded with brand launches in the Confectionery. foods and confectionery. packaging and hotel businesses.T. We have also analyzed the market of ITC foods and the competition involved. 1 position in the market. sales and profits. apparel. Limited in 1974 and finally they changed it to ITC Ltd in 2001. They entered in this business in 2001. ITC has fulfilled all needs and requirements of the people. The Foods Division is the most recent diversification of the ITC group. ITC has diversified presence in tobacco.
several new and innovative products are under development in ITC's state-of-the-art Product Development facility located at Bengaluru. A more broad-based entry has been made since June 2002 with brand launches in the Confectionery. the packaged foods is an ideal business to utilize ITC's proven strengths in the areas of hospitality. ITC has stood for quality products for over 98 years to the Indian consumer and several of its brands are today internationally benchmarked for quality. nurtured by the Company's Hotels business. ITC has over the last 98 years established a very close business relationship with the farming community in India and is currently in the process of enhancing the Indian farmer's ability to link to global markets. The unwavering commitment to internationally benchmarked quality standards enabled ITC to rapidly gain market standing in all its 6 brands:
. Staples and Snack Foods segments. All products of ITC's Foods business available in the market today have been crafted based on consumer insights developed through extensive market research. and produce the quality demanded by its customers. These are: 1. Apart from the current portfolio of products. The Foods business is today represented in 4 categories in the market. branded cuisine. 4. This long-standing relationship is being utilized in sourcing best quality agricultural produce for ITC's Foods business. 2. contemporary packaging and sourcing of agricultural commodities. ITC's world famous restaurants like the Bukhara and the Dum Pukht. through the e-Choupal initiative. ITC is engaged in assisting outsourced manufacturers in implementing world-class hygiene standards through HACCP certification. Ready To Eat Foods Staples Confectionery Snack Foods
In order to assure consumers of the highest standards of food safety and hygiene. 3.INTRODUCTION
ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of the Kitchens of India brand. For ITC. demonstrate that ITC has a deep understanding of the Indian taste and the expertise required to translate this knowledge into delightful dining experiences for the consumers.
Kitchens of India Aashirvaad Sunfeast mint-o
5. maize and skimmed milk powder. in addition to the soaring fuel prices. ITC Foods has drawn up plans to extend its Kitchen of India brand to frozen foods. 4. vegetable oil. on Aug 1. Candyman 6. the business has had to contend with the recent economic slowdown and severe cost increases in input commodities including wheat. Apart from the development costs of new products. Having acquired reasonable scale in a relatively short span of time. the business is progressively focusing on consolidating the portfolio in certain categories. ITC’s Branded Packaged Foods business continues to expand with sales growing by 23% over the previous year. improving market servicing and driving supply chain efficiencies.
.1. 3. Bingo! Recently. 2008. 2.
T.T. Ltd. ITC has launched an exclusive line of prestige fine fragrances and personal care products under the Essenza Di Wills brand. tied up with the US-based Sheraton Corporation to enter the hospitality industry. In the same year. set up an International Business Division (IBD) for export of agricommodities. ITC made an entry into the foods business. which targeted the urban youth.C. John Players. In 2001.C. the company launched another clothing brand. the company started a packaging and printing business. Ltd. The company started production at its integrated pulp and paper/board manufacturing facility at Bhadrachalam.C. In September 2001. also entered the fashion retailing business by extending its well known cigarette brand Wills.C. In 2004. Ltd established ITC Bhadrachalam Paperboards Ltd. The retail outlets were called Wills Lifestyle and offered premium leisure wear for men and women under the Wills Sport brand. I. Initially.T. started a greeting cards business under the brand name Expressions in the year 2000. and with no meaning attributed to the alphabets). 1910 as the Imperial Tobacco Company of India Limited in Kolkata. the company was renamed ITC Ltd (without full stops. I.T. In late 2007. The name of the company was changed to India Tobacco Company Limited (I. In 1990. I.) in 1974. In 1975. In Oct 2005. It acquired its first hotel in Madras (later renamed Chennai) in Tamil Nadu and called it the Welcomgroup Chola Sheraton. In 2002. the company was involved in the trading of imported cigarettes. In 1925. through ITC-Welcomgroup.T.. (IBPL) in 1975. I.C.C.
. in a backward integration move. ITC launched Fiama Di Wills soaps and shampoos following the success of Essenza Di Wills. Ltd.BACKGROUND NOTE (ITC)
ITC was established on August 24. ITC was one of eight Indian companies to make it to the “Forbes ‘A’ List”8 which featured 400 of “the world’s best big companies”. in 1979. I.T. Andhra Pradesh.
The KoI cooking pastes. However. ITC exported 40-50% of KoI brand products (in terms of volumes) to the US. In 2004. some new products have been launched under Ready To Eat category like chutneys. Priced at Rs. 98.
Market and Competition
Indian Foods market is a monopolistic market. though ITC had captured a 35% market share in the ready-to-eat segment.In Dec 2007 ITC launches ECF (Elemental Chlorine Free). the UK. By early 2006. The manufacturing of these products was outsourced to contract manufacturers for saving the operating cost. 35 to Rs. 700 million. 10 for 80g pack. conserves. biryanis (Noor Mahal. curries. 70. were developed jointly with Karen Anand. As on April 2006. Canada. the company launched KoI brand fruits and spice conserves and cooking pastes.30 for a 100g pack. they are trying to prove themselves different through their marketing strategies. the total turnover in the Indian ready-toeat and ready-to-cook segments was only around Rs. MTR was the clear market leader with close to 60% in market share. Bhori Biryani and some new range of products under Gharana (Paneer Malai. The fruits and spice conserves. Keema Mutter). After launching all these products ITC FOODS is looking to share 50 to 60% of market by 2008-2009.
READY TO EAT ITC entered into the branded and packaged foods business in with the launch of Kitchens of India brand. ITC is the first and only Company in India using the ECF technology. and Australia. Multi-purpose cooking pastes were also launched under the Aashirvaad brand and these were priced at Rs. a food expert. In May 2006.Following are the major competitors ITC is competing with in Ready to Eat category: 7
. entry to this business is easy and ITC has utilized this fact very efficiently to their benefit as they entered into the several categories among this Foods business. ITC planned to introduce ten more varieties under the KoI brand within a price range of Rs. both under the Aashirvaad Brand. Switzerland. In 2007. but it continued to post an annual growth of 20%. which were priced at Rs. also targeted the highend market. There are many competitors in all the categories and although they all have similar products available at similar prices. these were targeted at the premium segment. ITC entered the branded spices market in 2005 and the Instant Mix segment in 2006.
Alu Tikki. Priya has a range of popular traditional recipes starting from Dal Makhani. Bhelpuri. MTR foods currently comprise twenty-two delicious and completely authentic Indian curries.Brands Gits
Description Gits produces the selected range of popular ready to cook and instant foods that cover a range of ethnic Indian cuisine-and where the recipes have "Global pallete acceptance". Dhokla among others Offers packaged sweets. Paneer Butter Masala.namkeens. Samosa. Gongura Dal. Kajui Ladoo and many more items.syrups. Pakoras. Navaratan Kurma to Palak Paneer. Bhujia. Gol Gappa. Chana Dal.
Ethnic Kitchens MTR
. Chana Masala. aloo Masala. Punjabi Chhole and Rajma Masala along with true southern delicacies like Andhra Veg Pulav. Offers packaged Bhel puri chats such as Sev Puri. Pao Bhaji. cookies. pickles. gravies and rice. Mango Dal.
Market Share . 7.)
as on June. ITC’s Mint-O fresh secured a 17% share of Indian cough lozenges market ahead of former leader Perfetti which only achieved 14. 2. MTR Kohinoor
Others(Gits. 6. Hard boiled candies Toffies Eclairs Chewing gum Bubble gum Mints lozenges
ITC has currently in market with its two brands “Mint-o” and “Candyman”. Nestle Cadbury
.Ready To Eat
9% 8% 48%
ITC Ltd. 3.3% with chloromint.2500 crore. Priya Foods etc. The Indian giant marked the confectionary sector in 2002 and has only two brands “mint-o fresh” and “Candyman”. It is loosely divided into seven categories: 1. 5. Perfetti van melle ITC Ltd. 2008 CONFECTIONERY Confectionary market in India is about Rs. 4. But in overall confectionary market they are lagging behind having just 3% market share as compared to market leader Perfetti with more than 37% market and providing larger number of brands.
Polo Power mint . Kit Kat . Éclairs
Bubbaloo Dairymilk Eclairs % Star Gems Perk Halls
Market Share . Milky Bar . Perfetti Van Melle 42% 37% Cadbury Nestle 7% 11% Others(Parle. 4 billion organized salt market (as of 2006). By early 2006. Joyco. The market was growing at 12%.Confectionery
ITC Ltd. ITC had a 40% market share in the Rs.)
as on June. Its closest competitor HLL’s Annapurna brand was trailing behind with a market share of 18%. Fun Bar . In 2003. HUL etc. Polo . Kit Kat Lite . Tata Salt was
. Munch Pop Choc . ITC extended the Aashirvaad brand to edible salt. ready to cook pastes. mixers. Munch . 6 billion packaged flour business. Milk Chocolate . In the Rs.Alpenliebe Alpenliebe Creamfills Alpenliebe Lollipop Big Babol Center Fresh Center Fruit Center Shock Chatar Patar Chlor-mint Chocotella Cofitos Fruittella Happydent White Protex Happydent Marbels Mentos Chocoliebe
. Under its Aashirvad brand ITC FOODS also launched salt. 2008 STAPLES ITC entered the staples market in 2002 with wheat flour under the Aashirvaad brand.
24% 42% Pillsbury 13% Others(Sri Lal Mahal. etc. Local Brands etc. Within few years. Britannia Tiger Nutrichoice Junior Good Day. ITC Ltd (Sunfeast) Marie Dream cream Milky Magic Fit kit Choco Nut Butter Nut Parle Parle-g Krack-Jack Monaco Kreams Hide and Seek Milk Shakti Priyagold Butter Bite Classic Cream Butter Lite Big Boss Marie Lite Magic Gold
. 50 50. 2008 BISCUITS: Indian biscuit market is estimated to be around 5000 crore. Treat Pure Magic.)
as on June. they are able to get 12% share of the market.Staples
ITC Ltd. SUNFEAST. Marico Industries (Saffola).the market leader with a 28% market share. Other players in this business are HLL (Knorr Annapurna). ITC with its premium product. the balance 40% being contributed by the unorganized bakeries. is acquiring a big share of market. Nirma (Shudh). Milk Bikis Good Morning. ITC had only a 5% share of the market. Biscuit industry in India in the organized sector produces around 60% of the total production.
Market Share .
Product Price (ITC Ltd)
Product Price (Frito Lay)
Product Price (Haldiram)
. out of which potato chips holds the major market share of around 85%. and growing at 10% is one of the largest markets in the world. 2008
SNACKS: Snacks industry overview Snacks industry in India is worth 1800 Crores of Rs.)
as on June. Priyagold Britannia Parle
Others(Bonn.Market Share . Anmol etc.
which they are using for their tobacco product. Their investment has increased year by year considering the scope of food market. 20
Lays Rs. started their food division in the year 2001. but for this market they already had strong distribution market.Snacks
16% ITC Ltd.
FritoLay India Haldiram's Others 45%
as on June. 20
Namkeen Rs. 5 Rs. surprisingly they did good job. Moreover they entered in a whole new market of food. surveys. Ready to Eat and staples market. So considering all these factors and short span of time period. they could not sustain the constantly increasing profit margins. mainly because of their valuable investment in market research. R&D. 2008
ITC Ltd. Since then the growth has been fantabulous. 20
Market Sahre .Bingo Rs. 5 Rs. 10 Rs. 10 Rs. 5 Rs.
. 5 Rs. particularly in snacks. 5 Rs. However. 10 Rs. 10 Rs. 20 Kurkure Rs. costly advertisements and expansion plan. biscuits. 20 Lehar Namkeen Rs.
81% 18.46 1.639.226.88% -72.85
18.3 2007 4 12.15 Mar ' 06 286.572.19% 15.33%.938.90 541.55% -8.3 Projection for 2009 3 2005
18.124.88 2.837.08 4.35 733.61 438.26 416.52 332.35
1.78 467.49 5.16% -71.34 988.644.01 20.84% -17. with net turnover at 3900 crores registered a growth of 18.92 1.34 630. for sales is projected to be at growth rate of 21.610.397.82 2.48
Other income Raw material Employee expenses
Other expenses Provisions made Depreciation Taxation Net profit / loss
4.40 2.9 8
raw material 10.31 16.191. which grew by 29% due to new investments in FMCG market.15 18.235.90 11.67%
employ ee cost 12.21%
1.1 2006 6 26.699.51% 40.32 Mar ' 07 336.62 726.7 2008 6 21.38% 36.10
The selling of 13544 crores.176.81 224.120.5 6 18.04 241.Annual Results (ITC)
ACTORS AFFECTING NET PROFIT
Rate of Increase
Net profit / loss 37.451.73 2.88 362. Crores
Annual results in details Mar ' 08 610.7 9 15.08 312.310.00 2.5 8 2.29% 45.87% 16.37% 15.0 7 28.21 1.90 4.30 19.592.
. Overall projection for the year 2009.67 3.40
1.40 Mar ' 05 Mar ' 04 235.87 836.39% 16.4% driven by the non-cigarette business.
Indian middle class is price sensitive. Even Indian Government is looking to develop this sector. With that wheat.SALES OF FOOD SECTOR AND ITS PROJECTION: Sales (crores) 2006 1230.54 2007 1698.53 2008 2526.
ITC’S NEW CHALLENGES: This food industry is the industry with very less profit margins. Also. Different types of restrictions imposed by the government are also playing a vital role in reducing profit margins. That’s the reason central Government has already passed several projects for
. For example. Sales in RTE grew by 35% ITC Food is looking to expand its RTE category to maximize its profit. This range of product includes more than 150 different products. one can say that it is one of the toughest market to compete in as all the market giants are already there. The growth of this sector in terms of product categorization is as follows. Sales in staples category grew by 52% Sales in confectionary grew by 51%. After analyzing the food sector. petrol and labor cost is increasing day by day. Sales in biscuits category grew by 55%. ITC is looking to launch its brand of chocolate in collaboration with an American company.
GROWTH AND INVESTMENT PLANS: This food sector is the most promising field and has already overtaken IT and PHARMACEUTICALS Sector of India. So low operation cost is the key. exporting non-vegetarian foods out of India is restricted. ITC is trying to reduce cost of its biscuits by acquiring mass production of wheat directly from farmers through its Echaupal initiatives.60 2009(projected) 3410
The foods business is expanding rapidly with sales growth of 35% in the year 2007. Also in this way ITC is able to reduce the price of its staples. In this area international. As far as Confectionary market is concerned. To cover this up. national and also regional competition is very tough.
ITC has decided to make an investment of 300 crores over a period of 5 years.07 28.16 26. This will help ITC to be competitive in the market. Also in late 2007 ITC has acquired one Australian Plant and seed technology industry. Recently ITC has started exporting packaged food from its Bangalore plant.15 18.92
Net Profit/loss 37. Thus looking at all the strategy of ITC future investment and planning.76 21. 10.2 billion in year 2006-2007.30 19. It is also planning to open one more new plant in Calcutta for Indian market. Through this they will provide highly valuable seeds and other solutions to farmers in India.56 18.34 12.01 20.31 16.79 15. Also government in its 2006 budget has reduced custom duty from 16% to 8% on packaged food and also excises duty on instant food mixes. They are looking to add several products in their RTE list which will be exported as well. which ultimately will increase the productivity and cost effectiveness for their staples and biscuits business.98
. Its turnover in the foods business was around Rs.food parks. The future investment plan is as follows
Rate of Increase 2005 2006 2007 2008 2009(Projected)
Sales 18. In this way FDI in this sector is possible.58 2. ITC Foods has also decided not to make heavy investments in manufacturing unless volumes pick up.90 11.33
Operating Profits 18. As of today ITC has invested 20 crores in R & D and planning to invest further 15 crores to produce new products in different categories. 8 billion in 2005-06 which further increased to Rs.
26.15 18.00 5.90 16.34 21.00 5.00 10.Rate of Increase of Sales with Projection for 2009
Rate of Increase of Operating Profit with Projection for 2009
25.31 18.00 10.92
.00 15.00 2005 2006 2007 ye ars 2008 Projection for 2009 18.00 percent increase 25.00 2005 2006 2007 Ye ars 2008 Projection for 2009 11.00 Percent Increase 20.00 0.00 20.07 12.00 0.30 19.76 28.00 15.
. Staples. Recently ITC has announced its desire to forge in the frozen foods category in the domestic market. hikes in the excise duty for cigarettes.00 20.98
2.00 35. and anti tobacco campaigns. tobacco.56
18. Also.79 15.Rate of Increase of Net Profit/Loss with Projection for 2009
40. Wafers): When ITC entered into the foods business in 2001. While ITC’s core business. it focused on unleashing the areas where the competition is very less or there is no competition. ITC planned to deploy its surplus in the packaged food business where it saw huge business potential.e.00 30. although the competition is tough but there is only one player with whom ITC has to compete i. was under pressure owing to several factors like government bans on advertising and on smoking in public places. This strategy has helped ITC to quickly establish itself in the above mentioned businesses.00 25. in Bingo. It started with packaged ready to eat food and later extended that to Aashirvaad brand of edible salt and Atta.00
37. Frito Lay.00 10.58
20.00 0. Following are some of the strategies that ITC adopted to make its food business a success:
Entering into less competitive or unexplored markets (Ready to eat. Players in this category are limited and ITC hope to exploit this fact.01 2005 2006 2007 years 2008 Projection for 2009
Major Strategies Adopted by ITC Foods
Entering the foods business was itself a strategic decision for ITC.00 5.
Extensive advertising (Biscuit. wafers): Just like a Bollywood movie needs good publicity to be a super hit.
Cost control strategy (all products): When ITC started the foods division. Same is the case with Ready to Eat food category and Biscuits.•
Distribution Network: ITC already had a huge distribution network due to its tobacco business. This strategy has helped ITC to attract a wide range of market. ITC’s printing and packaging business provided high-quality. Biscuits): ITC started packaged foods business with the KoI brand of ready-to cook products. chilli flakes in a biscuit and even honey flavor under the Sunfeast brand. To overcome this challenge. This helped ITC to compete with the best. its main challenge was to compete with the players who were already there. Diversification of products (Biscuits. ITC realized that they have to offer products at a price which is either equal or less than what the competitors are offering. and innovative packaging. and Ready to Eat): One of the ITC’s successful strategies has been the method of diversifications among its various products. This not only provided a good launch to their products but also helped in boosting sales. ITC Foods launched Sunfeast Pasta. Wafers. In Biscuits also. It was expected to compete with products like Nestle’s Maggie noodles. it introduced an Orange Marie. In March 2005.8 million outlets whereas Parle is available at only 1. they planned to capitalize by leveraging the strength of the group’s other businesses. ITC also enjoyed cost advantages over its competitors owing to its electronic procurement system called e-Choupal. For e. a butterscotch cream biscuit. costeffective. They were positioned as premium products with target groups including tourists. ITC has come up with 16 flavors in comparison to its competitor ‘Lays’ of ‘Frito Lay’ which has only 4 major flavors. ITC used this network to distribute their biscuits and wafers.g. NRIs. Market differentiation (Ready to eat. With this strategy ITC built for itself new markets. a whole wheat based product targeted at children. ITC’s Bingo and Sunfeast are available at nearly 1. confectionary. every new product launched in the market needs to be known to the consumers before it is launched. ITC launched differentiated products in each and every segment. To do this. Today. Advertising is
.5 million outlets. If we talk just about Bingo.
Therefore. Same is the case with Ready to Eat and Kitchen of India. the company strove to minimize the transit time by regulating the shippers to maintain company-specific transit norms. to remain in the competition it had to introduce new products regularly. ITC was innovative in identifying the market or niche for all its products. ITC shifted its focus on to the innovation. According to industry estimates.where ITC made the difference in comparison to its competitors.
Maintenance of freshness and hygiene (all products): ITC positioned its wheat flour on the health & hygiene and value for money terms. To maintain freshness of the product. Innovation (all products): When the need to introduce new products arrived. This kind of promotion of products helped ITC to make its products known to everyone and now it was not difficult to attract consumers. On television. it is launching new products or flavors week after week. the company booked 10 to 15 spots per channel per day on youth channels such as MTV and Star World. mass Hindi channels like Zee and Star TV. ITC attempted to ensure that the supply chain was responsive. The tagline "Jab Laila ko karna tha impress to majnu ne khayi mint o fresh" has stood the test of times and is still widely known and remembered. ITC spent close to Rs 100 crore on marketing. and news channels. Also. It also had around 20 spots on a variety of radio channels and advertised in most leading national dailies.
. They hired the best professionals and the best ambassadors in the country to make their products famous. and laid emphasis on making accurate sales forecasts using inputs from distributors. depended on two factors – an effective distribution network and the quality of the product. Success in the staples business. especially in the branded and packaged wheat flour business. In biscuits and wafers range. In the top-30 cities. This is evident form the award winning marketing campaign for Bingo and Minto Fresh. ITC realized that.000 outdoor hoardings advertised the product. Hiring the best people from the film industry and sports (Sharukh Khan and Sachin Tendulkar for Biscuits.
Regular introduction of new products (all products): Having acquired reasonable scale in a relatively short span of time. over 1. Rakhi Sawant for Minto Fresh) showed ITC’s urge to be the best. ITC has been expanding its distribution network aggressively and also their product range. sales personnel and a well-managed MIS system. The physical aspects of the supply chain like warehouses and trucks were closely monitored to maintain cleanliness.
But. imitating and emulating the leader that was Britannia. and cream. it started to manufacture flavors which were never heard of. This was the result of ITC’s desire to exploit new product and market opportunities.•
From Analyzers to Prospectors (Biscuits): When ITC entered the biscuits market with Sunfeast in 2003. ITC finally tasted success in its food business in 2008 when it became a profitable business for the first time since its launch in 2001
ITC has a three-tier management structure.
All the above strategies and with the help of launch of Bingo in 2007.
. with three varieties of biscuits . Their strategy was to manufacture those products which are already a success in the market.glucose. marie. as ITC got hold of the market. they did what any new player in the market does.
its wholly owned subsidiaries and their wholly owned subsidiaries. At the second level is the Corporate Management Committee. Secretarial. Corporate Functions of the Executive Management Team includes Planning and Treasury. It sets strategic goals and seeks accountability for their fulfillment. Communications. the Audit Committee. who are responsible for the strategic supervision of ITC. Internal Audit and Information Technology. the Compensation Committee and the Investor Services Committee." This three-tier governance structure ensures that: For and on behalf of the shareholders the company believes in incorporating strategic governance in its work culture so as to ensure that despite being free from involvement in
. It comprises all the Executive Directors and three or four key senior members of management. which is responsible for the strategic management of the company's businesses within Board-approved direction/framework.At the top are Chairman and Board of Directors. Human Resources. The Board ensures that the Company has clear goals relating to shareholder value and its growth. The company’s organizational structure and governance processes are designed to support effective management of multiple businesses while retaining focus on each of them. The ITC board is a balanced board comprising Executive and Non-Executive Directors. the Nominations Committee. namely. There are four board committees. Accounting. Legal. Third level consists of divisional CEOs of each business assisted by their own divisional management committees.
viz. is applicable to all Directors. The Code
. it can be conducted by the Board with objectivity. ITC is of the firm belief that the governance process being followed should ensure that these resources are used optimally to meet the aspirations of its stakeholders and society. The most visible evidence is that of specialization and departmentation. the structure of ITC has high complexity because of horizontal differentiation within the organization.the task of strategic management of the Company. This is further reflected in the deep commitment of the company to contribute to the ‘Triple Bottom Line’. control and ethical corporate citizenship. With mundane tasks of everyday executive management being delegated the management remains focused on issues of immediate importance. good corporate governance. empowerment and accountability. This Code is derived from three interlinked fundamental principles. good corporate citizenship and exemplary personal conduct. ecological and social resources. The Executive management of the individual businesses that are free of handling strategic management responsibilities of ITC as a whole is then able to channelize their energies and time in enhancing the effectiveness and overall growth of their individual units. The company believes in empowering the executive management. But corporate governance ensures a system of checks and balances to ensure that these powers that are bestowed upon the executive management are used in a responsible manner so as to meet shareholder and societal expectations. senior management and employees of the Company. thereby sharpening and ensuring accountability of management. as adopted by the Board of Directors. Complexity also increases because of spatial differentiation. A company employs vast sums of societal resources during this process of wealth generation.
Corporate Governance as defined by ITC is a systemic process by which companies are directed and controlled to enhance their wealth-generating capacity. The core strengths of ITC's governance philosophy are trusteeship. The ITC Code of Conduct. The practice of each of these creates the right corporate culture that fulfils the true purpose of Corporate Governance.
Overall. transparency. which is the development of the nation’s economic.
a gender friendly workplace. concern for occupational health. formalization is also there in ITC. Decision-making is decentralized. transparency and auditability. as the company believes in giving executive freedom to the management to drive the enterprise forward without undue restraints but this freedom of management should be exercised within a framework of effective accountability.
. Since non-adherence to the code is brought to the attention of the immediate reporting authority.covers ITC's commitment to sustainable development. safety and environment. and the philosophy of leading by personal example. legal compliance.
It fully understands that it has a commitment to its stakeholders to act as a guardian of the company from stakeholder’s point of view and deliver results in a manner that actualizes stakeholder’s interest on a long-term basis. Trust. Apart from the interest of shareholders they also address their commitment to the nation to generate economic value. It is also deeply committed to make the company a gender friendly place for each individual while also ensuring enhancement of equal opportunities for men and women. at the same time ensuring that in achieving these goals no compromises are made whatsoever in complying with rules and regulations as specified by law. Meritocracy.
ITC’s Philosophy ITC believes in practicing ethical behavior among the corporate citizen. The company follows an HR policy that is regulated by Teamwork. values their differences and helps them to experiment in the pursuit of various opportunities. Mutuality. Collaboration. do it well and win. “we do what is right. It is constantly in the pursuit of better and newer products. It also delivers on the commitment to its customers by consistently addressing their needs on product quality. It respects the values of people and also encourages individuals to pursue their dreams.ITC's Vision • • Sustain ITC's position as one of India's most valuable corporations through worldclass performance.
ITC's Mission • • To enhance the wealth generating capability of the enterprise in a globalizing environment Deliver superior and sustainable stakeholder value. value and overall satisfaction. Objectivity. Create growing value for the Indian economy and the Company's stakeholders. ITC firmly believes in the concept of Excellence with their mantra being. processes. Collaboration. We will strive for excellence in whatever we do”. It is ensured 25
. Self-respect and Human-dignity. services and management practices.
ITC's Core Values The company’s Core Values are aimed at developing a performance-oriented organization that is highly customer focused and also creates value for those holding stake in it. preventing sexual harassment of any form and the adherence to good employment practices.
senior management and employees shall conduct themselves in an honest manner and avoid any conflict of interest. High standards of house keeping and hygiene are followed to ensure excellent physical working conditions.e. i. ITC also gives a lot of input to develop their skill and career. It is understood that all the directors. the board and corporate management committee. ITC has a diversified presence in different industries and each of its businesses act as an autonomous unit which are coordinated by the top level. strategic decision making is done at the top level
. better work environment. It acts as an external overseer. The top management provides support services to the divisions. The top officials and employees of ITC believe that ITC provides them freedom at work and resources to experiment.that the interest of the company is foremost and in this context acceptance of any kind of gifts or payments from suppliers or customers is viewed as a serious breach of company discipline. we can say that its design is based more or less on the Divisional Structure. They are consulted before a new project\system is introduced and their concerns and suggestions addressed. environment. and the way people are treated. They give utmost importance to equal opportunities. Hence the top management is free from being concerned with the day-to-day operating details so they can pay attention to the long term. And such acts are also considered as damaging to the reputation of the company. Employees take pride in working for ITC for its work culture.
Looking at the structure and culture of ITC. Big picture. The divisional managers are responsible for performance and hold complete strategic and operating decision-making authority. evaluating and controlling performance.
acquisition of an Australian firm for new improved seeds. 9 Launch of various new products in diverse categories in accordance to the demand of the consumer market. set up new plant in Haridwar. Also their selling has increased considerably at an average rate of 20-25% in last 6 yrs. In 2007. At their Haridwar plant they are able to get the more production with the limited technology and machine utility which they had in 2006. where there is no tax for first 5 years. Expanding size of work force by expanding target market Goals are clear and well understood as they are clear about the markets they want to enter in and the markets they do not want to enter. Timely operations are carried out to maintain freshness of the inputs (Transporters are fined in case of delay) ITC leverage human capital for competitiveness by nurturing knowledge.(they didn’t enter into chocolates. entrepreneurship and creativity It has a no. of training programs which helps the employees gain exposure to the latest technologies and developments. Outsourcing manufacturing of confectionary items.
2 Acquisition of resources
Productivity and efficiency
Availability of information
7 Skilled work force
. Employees are always consulted before a new project/system is introduced. milk products) Combining various facilities to improve efficiency (manufacturing along with printing and packaging) Prices of almost all the products are at par with the competitors.Effectiveness
Organizational Effectiveness criteria 1 Flexibility
Rating Remarks Entered into food business because of the various constraints in cigarette industry.
they are conducting various surveys and also they are launching their products only after a brief research of the market and trials. ITC’s distribution network. Leadership in ITC foods division is rational as the leader is functioning logically in accordance to the market forces.
. the current design of their organization is rational but as the environment is highly uncertain and intense. they need high flexibility within the organization and hence should move towards an adhocratic structure. For example. but again as the environment is highly uncertain and intense. To do this. ITC Foods’ aggressive effort to capture market share and heavy investments in manufacturing and infrastructure suggests that they are focusing mainly on both of their short and mid term goals. The structure of the ITC Foods’ division is ‘market oriented’ because of the same reason that they are focusing into the market deeply. Thus. Also. they need to move towards a ‘Developmental’ design.Competing Values Framework
Environment Uncertainty Intensity Culture Design Structure Leadership Leader’s role
Rational Current Framework Favorable Framework
Environment in which ITC foods division is operating is highly uncertain because of the immense competition that they are facing in each category and due to the launch of new products and flavors in each category every other day. he is an expert as he has made optimal use of ITC Ltd’s resources in ITC Foods’ division. It is also highly intense as the organization’s main strategy to achieve their goals is through extensive marketing and for that they need to know how their products are received in the market.
kitchensofindia.wikipedia.nestle.com www.com www.itcportal.perfettivanmelle.rediff.google.org www.com www.com www.com www.com www.sunfeastharabanao.mycandymanclub.Bibliography:
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