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Presented by GROUP NO.10
Sumit Roy Anamika singh Akansha Kashish Arora Tarun Dutt Minaz humdule
ITC. Touching your life. Everyday
FLOW OF PRESENTATION
COMPANY PROFILE VISION & MISSION VALUE POSITIONING OF ITC DISTRIBUTION NETWORK SUPPLY CHAIN ANALYSIS OF FMCG PRODUCT(CIGARATTE) & PEST AND SWOT ANALYSIS OF ITC. SYNERGIES FOR ITC EFFICIENCIES IN E-CHOUPAL NETWORK COMPARISON WITH HARYALI KISAN BAZAR FUTURE OF E-CHOUPAL CONCLUSION
ITC. Touching your life. Everyday
ITC is one of India's foremost private sector companies Has a diversified presence in Cigarettes, Hotels, Paperboards &Specialty Papers, Packaging, Agri-Business, Packaged Foods &Confectionery, Branded Apparel, Greeting Cards and other FMCG products. ITC is one of the country's biggest foreign exchange earners (US $2 billion in the last decade). April 09) No. 1 in FMCG Sector Rated as one of India‟s Most Respected Companies (IMRB-Business world Survey 2006). Diversified group of companies with operations in various industry segments from cigarettes to apparels. Annual turnover is of the order US$2.4 billion
Ranks No. 4 among Indian listed Private Sector Companies by market cap. (@
ITC. Touching your life. Everyday
VISION & MISSION
• Vision: Sustain ITC‟s position as one of India‟s most
valuable corporations through world class performance, creating growing value for the Indian economy and the Company‟s stakeholders.
• Mission: To enhance the wealth generating capability
of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.
ITC. Touching your life. Everyday
• ITC's Core Values are aimed at developing a customerfocused, high-performance Organisation. • Customer Focus we are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction.
ITC. Touching your life. Everyday
POSITIONING OF ITC ITC. Touching your life. Everyday .
PRODUCT PROFILE Branded Apparel Hotel Stationery Cigarett es Package d Foods Incense Sticks Paperbo ards Personal Care Informat ion Safety Matches Technolo Agricult gy ITC. Everyday your Industry . Touchingural life.
Everyday .PRODUCT LINE ITC. Touching your life.
ITC Distribution network in India ITC. Everyday . Touching your life.
ITC. Everyday . Touching your life.ITC’s Distribution channel ITC‟s Distribution channel is as follows:COMPANY HUB FACTORY Carried and forward agent Wholesale dealer small Wholesale dealer Retailer consumer .
Touching your life.HI-TECH SUPPLY SOLUTIONS Thousands of small retailers in India who sell cigarettes and confectionery supplied by ITC Ltd. Place orders through mobile phones Vans go without knowing actual demand so after using this they can save cost as well as time. Everyday . and who have thus far had to wait for the next arrival of the company‟s delivery van. Mobility based applications can bring down the cost of operation by 2030% from the manual basis of operation ITC.
cost effective ITC.5m SFT around 55+ Locations Products manufactured at 45+ plants More than 650 trucks moved every day Direct distribution from factories to Distributors. Indirect movement through RDCs Combination of Rail/Road/Sea movement within the country depending on the product type. Everyday .ITC FMCG Supply chain • • • • • • • • • • • • Consists of diverse categories with different priorities More than 1000+ SKUs Buying Value $68 MM Warehousing space of more than 3. (Target is Safer. Touching your life. Faster.
Gold Flake.Indian Tobacco Division (ITD) Market leaders in Cigarettes and Tobacco business & is among India‟s most profitable companies Brands owned by ITC Ltd are Wills Classic. Bristol and Scissors ITD also sells two luxury filter brands of its parent company Benson & Hedges and 555 Four manufacturing units for cigarettes at Bangalore. Everyday . Kidder pore. Wills Navy Cut. Touching your life. Saharanpur. Munger ITC.
Touching your life. KSS. Changing attitudes towards tobacco May 31 is no tobacco day Change in life style .PEST ANALYSIS • • • • • • • • • Huge burden of VAT Excise duty raised by union budget by 5 % Ban on communication Luxury tax in 10 states Smuggling 100% FDI allowed Bidee : cigarette ratio-10:1 Profit margin is high Other forms of cheap tobacco intake POLITIC AL ECONO MICAL SOCIO CULTUR AL TECHNICAL • • • • • • • • • State-of-the-art factories Cheap labour supply Development of IQMS Adapting other concepts like QC.O. 5 S. Everyday Becoming status symbol Companions mounted by W.TQM.H. 6 sigma ITC.
Everyday •Ban on smoking .000 cr and ITC has lion’s share in it •Strong brand recognition and product portfolio •Distribution network •Management Opportunity •Low per capita consumption Of personal care products •Rural Market •E-Choupal • Filter cigarette segment of less than 60mm size Weakness •Dependence on tobacco revenues • Negative Connection of Tobacco Threat •Competition both Domestic & International •Increasing Tax on cigarettes •Excise duty on unfiltered cigarettes less than 60mm in length was increased 387% last year •Hike was 142% for those between 61mm and 70mm long. •Regulatory restrictions on cigarettes ITC.SWOT ANALYSIS Strength •Cigarette market is 22. Touching your life.
Everyday Classic Ultra Mild 4% .CONFRONTATION NAVY CUT.GOLD FLAKE.CAPSTEN.SILK CUT.INDIA KINGS.BERKELEY Panama Plain Red & White Super 4% 4% Four Square Premier 5% Four Square Specia 5% GOLD FLAKE PREMIUM 29% Cavender Magna 4% Select Filter 5% Marlboro Regular 6% Silk Cut Premium 11% Wills Navy Cut 7% Silk Cut Kings 5% GOLD FLAKE KINGS 4% IK Regular (Rich Gold) 1% B&H Light 2% Classic Regular 4% ITC.BRISTOL. Touching your life.INSIGNIA.CLASSIC.SISSORS.
• The agriculture division continues to provide a strong support as an excellent raw material sourcing base. Everyday . ITC. • With the paperboard division coming out of a major capex cycle and a reduction in losses from FMCG-others division from FY10E. hotels and paper. Hotels segment though is likely to register slower growth in FY10E due to economic slowdown and terror attacks. Touching your life. we expect the non-cigarette businesses to become self-sufficient.Diversification • ITC over the years has been investing cash flows from its cigarette business into various lucrative segments like foods. personal care.
Per Capita Adult Cigarette Consumption (Sticks) 1662 1753 1190 561 488 141 USA China Pakistan Nepal India World Avg. Everyday 18 .ERC Group plc. Touching your life. Source : Based on Cigarette consumption data(2003) from “World Cigarettes”. ITC.
Everyday .CONT…. (RCTI) • Asian Tobacco Company (ATC )Hyderabad Deccan Cigarette Industries(HDC) • Huge distribution network with 19 marketing branches and 33 Godowns across nation • Also caters to the exports mainly in United States and Middle-Eastern countries ITC. • It has 3 contract manufacturers (OCMs)Reliable Cigarette and Tobacco IndustriesPrivate Ltd. Touching your life.
) Bangalore Calcutta Saharanpur Munger Factories (4) GODOWNS (19) BRANCHES (19) WHOLESALE DISTRIBUTORS (60 PER BRANCH) Information Goods RETAILERS SECONDARY WHOLESALERS ITC. Touching your life.DISTRIBUTION NETWORK(Tobacco Div. Everyday .
Role of Each Member Factories – Supply to 18 godowns Godowns & Branches Manage by C&F agents getting monthly remuneration No rent paid by ITC one branch – 60 WDs . 5 AMs and 20 Area Executives Wholesale Distributors(WDs) Margin – 2% of sales Appoints secondary Wholesalers ITC. Touching your life. Everyday .
Touching your life.PHYSICAL DISTRIBUTION Demand Estimation – collaborative forecasting( Sales force with dealers) Forecast based on last month sales Production plan made according to forecast Delivery to C & F agents within 7 days CFAs deliver goods to dealers on the basis of the branch office route plan Factory CFAs.Trucks CFAs Dealers – Small Vehicles ITC. Everyday .
Everyday . Touching your life.ITC.
and Comparison with HKB Future Scope Company Logo . Stake holder Analysis Comparison of status of Supply Chain before and after ITC e-Choupal Critical Analysis.FLOW FOR E-CHOPAL 1 2 3 4 ITC e-Choupal : An Introduction.
ITC e-Choupal : An Introduction • Started in the year 2000 • Target Area so far 38. 2.000 villages. Fragmented farms Weak institutions Involvement of intermediaries Information Asymmetry . 4. 3. 6500 kiosks. 9 states • Wholly owned by ITC Why it become a success ? • Only initiative to attempt to combine Services and an Effective Business Model successfully Designed to address the issues such as: 1.
000 villages linked through 6500 e-Choupals servicing over 4 million farmers Distinctive sourcing capability for ITC‟s Foods business .ITC’S AGRI COMMODITY DIVISON Farm linkages in 14 states covering Soya. 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 40. Marine products. Wheat.
THE PREDICAMENT OF INDIAN FARMERS Low Risk Appetite Low Margins Caught in a vicious cycle of underdevelopment Low Investment Low Value Addition Weak Market Orientation Low Productivity .
ITC’S SUPPLY CHAIN OF SOYA BEAN BEFORE E-CHOUPAL INITIATIVE Company Logo .
VLW (of Dept of Agriculture) Kaccha Adtiya (Un-Registered Dealer) Company Logo Processor Money Lender Farmer .SUPPLY CHAIN FOR E-CHOPAL Pakka Adtiya (Registered Dealer) Agri-Input Companies Dealer/ Stockiest Retailer Trader Broker ITC-IBD Agril University. Insurance Co. Met Dept.
Why ITC thought of e-Choupal The Tactical Imperative ITC’s distance from Farmer Daily price inflation The Strategic Imperative Horizontal spread The Social Imperative Vertical presence Capture of Intraday Price shifts Seasonal price Inflation Risk management Company Logo .
ITC’S SUPPLY CHAIN OF SOYA BEAN after e-Choupal Initiative .
assesses quality and gives farmer a conditional quote and a note (name/village/quality tests/approx. if farmer decides to sell to ITC Company Logo . quantity/conditional price).Supply chain post re-engineering Weighing and Payment Pricing Inbound Logistics Inspection Grading Hub Logistics Technologic al support • Pricing – Previous day‟s closing price used as benchmark price for next day – Mandi prices communicated to sanchalak through e-Choupal portal – Sanchalak inspects the sample.
others are purely warehouse operations – ITC‟s aim is to have a processing centre within 30-40 km radius of its farmers Company Logo .Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technologic al support • Inbound Logistics – Farmer proceeds to the nearest ITC procurement hub with the note – Some procurement hubs are ITC factories.
ITC is developing lab tests to reward farmers with reward points for better quality supply Company Logo .Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technologi cal support • Inspection and Grading – At the ITC procurement hub. laboratory tests are conducted on a sample of farmer‟s produce – To change farmer‟s attitude and appreciating produce quality.
laboratory tests are conducted on a sample of farmer‟s produce – To change farmer‟s attitude and appreciating produce quality.Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technologi cal support • Inspection and Grading – At the ITC procurement hub. ITC is developing lab tests to reward farmers with reward points for better quality supply Company Logo .
Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technologi cal support • Weighing and Payment – Farmer‟s produce is weighed on electronic weighbridge – He is then given full cash payment – Freight expenses are reimbursed – Appropriate documentation at each stage and farmer is given a copy of that – Samyojaks handle cash operations Company Logo .
Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technologi cal support • Hub Logistics – Farmer transports his produce to the nearest processing centre or storage hub – ITC incurs the transportation cost – The farmer bears the risk of transportation until produce is delivered and the sale is completed Company Logo .
Insurance.Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technological support • Technological support – Nodal platform catering to commodity blending. Rural Distribution. Aqua Processing & Commodity blending – Support for 8 local languages Company Logo . echoupal &rural distribution – 24.000 personalized business function points – 110. agricultural trading. Exports. e-Choupal Management.000+ pre-built business function points – Integrated Business Systems for Direct Agriculture Procurement.
A win-win Deal Farmers gain ITC gains • Better information Content • Better info timing • Less transportation Cost • Transaction duration • Weighing accuracy • Professionalism • Disintermediation savings • Freight costs • Quality control • Risk management Company Logo .
24.Transaction cost in Mandi Chain (before e-Choupal) Source: Seminar on Bottom of the Pyramid and CSR. IIM-K. Sept. 2008 .
Transaction cost in Mandi Chain (after e-Choupal) .
Traceability Access to the Underserved Rural Markets Through a Virtuous Cycle created by “Larger Incomes”. Entertainment. Quality. and founded on “Trust” that is built New ITES Business Opportunities Health. Education. eGovernance Company Logo .SYNERGIES FOR ITC Generation of Goodwill & positive public opinion Better supply chain for ITC‟s Food & Agri Businesses Costs.
VPN providing SCM. ERP & CRM capability F e-choupal rural two-way fulfillment A capability R M Cigarette Trade Marketing capability E R Expanded FMCG distribution capability S Branded Foods Lifestyle retailing Education Stationery Matches & Agarbattis M A R K E T S A basis for strategic partnerships with other FMCG brand owners Company Logo .
OTHER E-CHOUPAL INITIATIVE Company Logo .
Companies using e-Choupal network Source: Seminar on Bottom of the Pyramid and CSR. 2008 . IIM-K. Sept. 24.
Critical Analysis of ITC’s Supply Chain Company Logo .
Stake holder Analysis Primary Stakeholders Farmer Community Interest Access to information – Empowered decisions – Improved agriculture Economic benefits through lower transaction costs and process efficiencies Served with dignity Knowledge bundled sale of goods and services Co-opted in product design Hope for a brighter future ITC Commission Agents Lower procurement costs Direct interaction with farmers .Control on quality & supply security Low cost distribution channel Access to market intelligence Gain access to global markets through ITC and commission to compensate some of the loss revenue (Kachha Adatiyas) & Pakka .
Efficiencies in e-Choupal network Last mile low cost solution Full Service approach Demand aggregation Third party seller Extensive use of technology Access to information about customers Pull based strategy .
Drivers of Supply Chain Information Who are in problems Local Mandi Risk associated with e-Choupal Eroded dominance of Commission agent Authenticity of information Logistics at hub Transportation Mandi laborers Market near Mandi Small processors Storage facilities at hub Problem of Power and internet connectivity Company Logo .
Hariyali Kisaan Bazaar Other companies Loan for pass through to farmers Hariyali kisaan bazaar Extension service ICICI Bank Repayment of loan with interest Farmers Produce procurement DSCL .
Comparison with Haryali Kisaan Bazar E-choupal Main objective Benefit to the computer application to provide farmers Synergies market information Synergies with products which ITC is manufacturing Procurement Haryali Kisaan Bazaar Rural Retail provide better method of cultivation by trained agronomist Synergies with what DSCL is selling(inputs to agriculture plus other services Economies of 25-30 km area coverage scale 20-25 km area coverage Procurement centre near small town Strategically placed near petrol pump mainly .
FUTURE OF E-CHOUPAL Company Logo .
Touching your life. Everyday .e-Choupal 3. MORE INTERACTION: Through Choupal Saagars and Haats and via mobile phones NEW TECHNOLOGY: Use of especially enabled mobile phones.0 The Deepening NEW BUSINESSES: 1) Rural jobs and employability 2) Personalised agri services. new partner ITC. . analytics.
0 Cmpany Logo .e-Choupal 2.
ITC e-Choupal Footprint .
exiting offers and long credit period to retailers and wholesalers. so they are applying new concept to overcome their weaknesses. because people don‟t know about their brands very well. • ITC knows their strength and weakness in the personal care market. • ITC now offering more margins.CONCLUSION • ITC promoting their brands through advertisement campaign as well as door to door promotion. • ITC is also focusing on Retailers and Wholesalers to promote their brand. Touching your life. . • The demand of their product in very low. Everyday . ITC.
THANK YOU ????? .THINK BEFORE SMOKING…….