Insights of ITC

Analysis and Comments on Financial Statements

Submitted to:
Prof. Vandana Gupta

Submitted by:
Abhas Agarwal- 211181 Anurag Sengar- 211174 Ankit Kothari- 211175 Durgendra Singh- 211172 Lavi Agarwal- 211170 Subhendu Bagchi- 211137

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The analysis performed by the group on various sections is written in Brown Colored Italic font. The data used for analysis is collected from www.moneycontrol.com & ITC financial report handouts.

Table of Contents Chapter 1: Introduction on Company      Profile Line of Businesses Board of Directors Shareholding patterns Recent events page 3 page 3 page 4 page 5 page 5 Chapter 2: Operating Performance  Analysis of Sales Mix  Pee-Comparison  Export Sales Chapter 3: Financial Statement Analysis  Ratio Analysis  Trend Analysis  Profit/Loss & Balance Sheet Analysis Chapter 4: Cash Flow Analysis Chapter 5: SWOT Analysis page 12 page 14 page 17 page 18 page 19 page 6 page 10 page 10 2 .

Mathur P.Dhobale K.Anand . Ramanujam B.N. unlike their primitive business of cigarettes. Grant A. butter.H. Baijal S.Ruys Directors (3) K.B. toiletries.B. Powell Executive A.V. cheese and other products.Banerjee A. Paper and Packaging Agri Business (The company is gradually moving to various new sectors. of Directors Chairman 25 P. West Bengal Annual Turnover-$7 Billion Market Capitalization-$34 Billion Chairman-Yogesh Chander Deveshwar 100 Years completion on 24 August 2010 Line of business:    FMCG (Mainly Cigarettes and then confectionaries.Vijayaraghavan S. this may be because of the governmental norms growing against promotion of cigarettes.H. Headquarter-Kolkata.G.) Board of directors:Percentage to total Major Responsibility no.V.C.Khan NonExecutive Independent Directors (9) S. Girija Kumar D. The latest announcement that the company has made is regarding their entry to diary sector serving society with milk.vaidyanath Total 16 19 100 3 56 Looks after Hotels Business Looks after Paper & Packaging Business Looks after FMCG sector Category Executive Directors (4) Name Y. Deveshwar N.ITC (Indian Tobacco Company) Introduction:      Indian public conglomerate company.K. Mehrotra Other Non.Sen B. cosmetics etc) Hotels Paperboards.

0.(The appointment of executive directors for various responsibilities shows that the company is managing all its sectors well and is very considerate about them.31 Public and Others. This shows that company is always cash-rich) 4 . 0. Mutual Funds and Insurance Companies which generally hold the shares for a very long time.4 (The shareholding pattern holding shows that the company has nearly all the equity from public.54 Shares underlying Global Depository Receipts.87 Banks.76 NRIs And Foreign Nationals. 30. the share of promoters is plenty.87 Foreign Institutional Investors.) Shareholding Pattern (%):- Bodies Corporate. 10.25 Foreign Companies. Insurance Companies and Mutual Funds. 17. Financial Institutions. 5. Financial Institutions. Also majority shareholders are Banks. 34.

79.48.157 12.960 16.98.42.15 2.03.1 1.40.71 Total Percentage Covered (The figure shows that top ten shareholders of the company hold for nearly 63% of the company’s equity.818 % 25.590 32.442 89. of Shares held 1.01 11.22.85 1.02.Top Ten Shareholders as on March 31.880 93.No. 2012 S.82.39 12.55. 1 2 3 4 5 6 7 8 9 10 Name of the Shareholder Tobacco Manufacturers (India) Limited Life Insurance Corporation of India Specified Undertaking of the Unit Trust of India Myddleton Investment Company Limited The New India Assurance Company Limited General Insurance Corporation of India The Oriental Insurance Company Limited National Insurance Company Limited Rothmans International Enterprises Limited ICICI Prudential Life Insurance Company Limited No.07. these proves that company has a good image among their shareholders) 5 .91.260 9.220 10.87.072 14.65 1.47 4.56.61 1. and the names of these shareholders are well-known to all.32 1.70.33.67.72.513 12.42.64.16 62.67.

cookies etc) 6 .22%) Visualizing the performance of each sector now Here.86 (The chart above shows that the Total Revenue of the company including all the sectors is growing every year.27 2011 30527. Growth in FY2011-12 was 14. (The latter includes confectionary.32 2010 28931. It is sub-divided into Cigarettes and other FMCG sector. toiletries.88 2012 34871. instead of analysing FMCG as one sector.Analysis of Sales Mix Total revenue 40000 35000 30000 Axis Title 25000 20000 15000 10000 5000 0 Total revenue 2009 25817.

despite there was a drop in share of cigarettes in total revenue.54% 20000 Axis Title 15000 10000 5000 0 ciggrates 2009 15115.07 (The figure above shows Cigarettes holds the majority of share in total revenue of the company. which is remarkable) 7 .67% 12.24%) Other FMCG Products Other FMCG 6000 5000 4000 Axis Title 3000 2000 1000 0 Other FMCG 2009 3014.88% 14. also the revenue of this section is also continuously growing. Excluding FY2011-12. Also. For FY2011-12 the volume growth was 23.03 2011 19821. the share has always risen.68 2011 4480.04 2010 3641.16 2012 22248.12 2012 5539.07 2010 17283.65%. still the revenue from share has risen by12.74% 58.Cigarettes Cigarettes 25000 63.93% 59.58% 11.67% (The figures above shows a continuous increase in the share of other FMCG products in the total revenue of the company.79% 64.93 15.

89 % 13.Hotels Hotels 1040 1020 1000 980 960 940 920 900 880 860 840 hotels 3. 8 . this is because a majority of farming is dependent on monsoons.47 2012 996. and year 2010.85 14. due to some internal conflicts and mismanagement.15% 2009 1020. There was a sharp downfall in FY2009-10. planning to but their branch of Delhi. recently it is in talks with TAJ Hotels. as it provided accommodations to my players participating in Commonwealth Games) Agri Business Agri 4500 4000 3500 3000 Axis Title 2500 2000 1500 1000 500 0 Agri 2009 3845.55 2012 3507.86% Axis Title 3.81 2011 991.3 (Though this sector contributes just 2-3% in the total revenue. This sector however does not shows a significant growth in the share.24% 2.98 2010 3862.8% in FY2010-11.27 2010 910. but still the company predicts a high level of growth in this sector.14 2011 2919.06% 9.98% 3. but the sector grew 8.2011 had missed monsoons.35 % 10.56 % (This sector provides a share of nearly 10-12% in the total revenue of the company.

58 % (The share of this sector is regarding 7-10%.71 11.96 2010 3233.4% in FY2011-12) 9 . This sector grew by 11.17 % 10.However. Tube well. the total revenue got dropped in FY2011-12 because of a significant increase in their operating expenses. this helps in irrigating the land even in absence of monsoons. Also the company has now started planting tobacco.61 2011 2315. viz. so that they can cut down their dependence on suppliers for tobacco The company has also started many initiative to educate farmers. Their program like e-chaupal is helping farmers to get the environmental conditions.58 2012 2579. tips regarding farming and also the current price of the crop Another initiative is Chaupal-Sagar which also is regarding the welfare of the farmers and the rural people) Paperboards Paperboards 3500 3000 2500 Axis Title 2000 1500 1000 500 0 paper 2009 2821.93 % 7. the company has installed various scientific equipments to enhance the productivity of the land.39 % 7.

In all the categories.Peer Comparison (The figures above show that ITC dominates over all its peers in the cigarettes sector.) Sales as per Geographic Divisions ITC exports only Cigarettes in various parts of the world. ITC is at the top.6 Within India 24020.1 30000 25000 20000 15000 10000 5000 0 2009 2010 2011 2012 21381.72 (The sales for the company has steeply risen within the country for cigarettes segments) 10 . The growth of the sales within the country and outside that is given below Within India 35000 32619.27 28140.

due to increase in excise duty in the countries where ITC used to trade. saying they would try to work in exporting that.93 1500 1000 500 0 2009 2010 2011 2012 Outside India 2463.33 2000 1761.67 2252. However.Outside India 3000 2500 2239. Director focuses on “Aashirwaad Aata”. as per the Director’s Statement ITC is planning to export their other FMCG products too to various parts of the world.) 11 .76 (The sales in FY2011-12 has fallen.

005 59.76 11.92 2010 0.11 0.08 2010 1. There is also stability in the quick ratio of the company. following points can be made  Company is very conservative as its current ratio is nearly 1. which is a good sign. Shows good “Supply-Chain-Management”.007 63. which is again a good sign. 12 .01 0.52 2012 1. There is hardly any borrowing.61 2011 1.45 10. “Inventory Turnover days” has gradually fallen from nearly 70 in 2009 to nearly 58 in 2012. Also there has been a marginal downfall on this no.006 57.01 . instead is able to sell them.95 2012 0. this figure has marginally increased.012 69.47 2011 0.45 10. which is nearly same for this sector. In FY2011-12.01 .07 0.49 9. There have not been any significant changes in the figures. the company uses generally its own funds.68 Following are the points that can be made by looking at the solvency ratio   The” D/E” and “Debt ratio” both are too thin.01 .01 . The “debtors’ payment days” is also in the range of 9-11 days. indicating that company depends on its own funds. shows that management of the company is good.   Solvency Ratios: Year / Ratio Debt/Equity Debt/Asset Inventory Turnover Days 2009 0. on FY2011-12.73 0. showing that company isn’t piling up the inventory.79 By looking at their liquidity ratio.Financial Ratio Analysis Liquidity Ratios: Year / Ratio Current ratio Quick Ratio Debtors Payment Days 2009 1.

thus attracting new shareholders. Assets Turnover ratio is also increasing or nearly stable.35 16% 2012 24.3% 2011 24% 2.87 29. also from the balance sheet and P/L account.Profitability Ratios: Year / Ratio Operating profit margin Assets Turnover ROE Net Profit margin 2009 21. income has risen significantly but expenses hadn’t. This increase is appreciable for any company.03 33.33 18.77 25.01 35. Also Net margin is gradually increasing. ROE is increasing at a significant rate.    13 . expect in FY2010-11.8% 2010 24% 1.5% 2.58 17% Following are the points that can be made after visualizing these data  Operating Profit margin has gradually increased. this downfall is due to high taxes implemented by Governments. shows that utilitisation of assets is done properly and this management is gradually improving. which is remarkable.42 16.6% 1. this shows that company is adopted new techniques to cut -down their prices and maintain the same level of production. the net profit margin has grown from 16% to 17%. it was clear that. Still in FY2011-12.

64 Gross Income 31399. There has been a significant increase in sales of sector like cigarettes. The growth in FY2011-12 is 14. other FMCG and Agri Business.8%.59 (The gross income of the company is increasing in every fiscal year.1 36072.) PBDIT 12000 10000 8000 6000 4000 2000 0 2009 2010 2011 2012 6688.53 9673.47 PBDIT 7992.Trend Analysis Gross Income 40000 35000 30000 25000 20000 15000 10000 5000 0 2009 2010 2011 2012 26814.32 23593.77 5393.96 14 .

Also company has increased the price of cigarettes once a year. and this sector contributes a major section for their growth.(There has been an increase in Income of the company from all the sectors while the percentage growth in expenditure is marginal. thereby making that PBDIT rise continuously.58 1003.78 Equity (There has been marginal growth in equity from 2009 to 2011.07 Long-term Liablity 1072.54 28128.16 31906.) Equity 40000 35000 30000 25000 20000 15000 10000 5000 0 2009 2010 2011 2012 27470.76 37583.93 1053.) 15 . which is mainly due to Deferred tax liability.68 (The long term liability is growing with a moderate rate. The company has however made some repayment of the loans in FY2009-10. but the equity has increased in FY2011-12. as company has issued some shares) Long-term Liablity 1100 1050 1000 950 900 850 800 2009 2010 2011 2012 921.

42 Net worth per share 24.83 (The current liability is not a great issue to focus on.62 18. the latter giving good signals to the shareholders.Current liability 10000 8000 6000 4000 2000 0 2009 2010 2011 2012 4695. and can make shareholder happy) 16 . because a majority of share in these figures are of Tax payable and Dividends payable.2 18.) Net worth per share 30 25 20 15 10 5 0 2009 2010 2011 2012 20.03 8477.55 Current liability 8019.04 (The growth in Net worth per share is proportional to the growth of the company.48 9101.

58 181. The data is recorded on April 1.5 per share to all their shareholders.) 12 10 8 Dividends 5.15 (The increasing growth of the share price of the company is shown above.5 (ITC has always been kind to their shareholders.65 per share) 17 . Company got its 100 years completed and provided an special dividend worth Rs 5.4 131.2012.5 6 4 2 0 2009 2010 Dividend Special 2011 2012 3. and current value is pertaining to Sept 11. There has been a remarkable growth in the value of the shares.Share price 300 250 226. company has also given interim dividend worth Rs 1.7 4.85 200 150 100 50 0 2009 2010 2011 2012 Current Value 92. they provide annual dividends. of the corresponding year. also in 2010. also since there was a remarkable growth in company’s performance in half-yearly reports of 2011.65 4.8 1.45 share price 268.5 2.

But there is always a significant inflow of cash from the issue of share capital. this is a good sign as it makes trust in the minds of the investors that the company is growing. Also it supports many of its subsidiaries. Cash from financing activities is also generally seen to be negative. Distribution of dividends is always a good sign for shareholders. For FY2011-12 Growth rate is 14. this is because company regularly believes in purchasing fixed assets and a huge amount of Current investments. following points are concluded: Cash from operating activities of the company is growing at a very significant rate.26%. Cash from investing activities is seen to be negative in almost all the year.Cash Flow Analysis Cash Flow Analysis Operating Activity Investing Activity Financing Activity 6015 4630 3279 -1260 -3531 -1556 2009 -1009 2010 -3551 2011 -3246 2012 5264 -616 -2210 After visualising the graph and data above.   18 . This is because company pays a huge amount of dividends to its equity shareholders and Income tax for dividends.

Sahara Q. viz. Subsidy in their Agriculture business by government. This bounds the company to raise the price of this segment which contributes more than 50% of their business. Delhi. so the expenses of the company will be low. Their majority of Agriculture Business is still dependent on monsoons. Threats  Their Cigarettes division is always on target. If FDI in retail gets permitted there will also be many foreign players entering Indian Market. Opportunity    The company is planning to expand their FMCG sector.    19 . Easy Day etc. The company has planned to rely on renewable sources of energy for their almost sectors specially Hotels. nearly 60% of the price of cigarettes constitute for taxes. thus introduction of new FMCG products to the market is not very tough as same distribution channel is required to meet the retailers. Governments both state and central.SWOT Analysis Strengths  They are into Cigarettes from so long. logistics and Hotels segments in the next 5-7 years. The company is planning to buy Hotel Ashok. Currently States like U. This will help them in cutting down their operating expenses. and Karnataka has imposed VAT of 50% on tobacco products. thus any absence of monsoon results in overall loss for this sector. In its FMCG.   Weakness  High taxation in their cigarettes segment. impose new tax and duties every now and then. Due to this Company cannot maintain a uniform price across the country. Entries of new players in FMCG sector.P. recently they have announced to enter into Dairy Sector. The company is ready to invest 25000 Cr.