ITC's EHS Policy

ITCs mission is to sustain and enhance the wealth-generating capacity of

its portfolio of businesses in a progressively globalizing environment. As one of
Indias premier corporations employing a vast quantum of societal resources, ITC
seeks to fulfill a larger role by enlarging its contribution to the society of which it
is a part. The trusteeship role related to social and environmental resources,
aligned to the pursuit of economic objectives, is the cornerstone of ITCs
Environment, Health and Safety philosophy. ITCs EHS philosophy cognizes for the
twin needs of conservation and creation of productive resources.
In the multi-business context of ITC, Corporate Strategies are designed to create
enduring value for the nation and the shareholder, through leadership in each
business and the attainment of world-class competitive capabilities across the
value chain. The objective of leadership extends to all facets of business
operations including Environment, Health and Safety.

PRODUCTS:--

1.

6.

11.

16.

2.

7.

12.

17.

3.

8.

13.

18.

4.

9.

14.

19.

5.

10.

15.

20.

GOALS at the Enterprise Level:

1. Sustaining ITCs position as one of Indias most valuable

corporations.
2. Achieving leadership in each of the business segments within a
reasonable time frame.
3. Achieving a Return On Capital Employed (ROCE) in excess of the
Companys cost of capital, at all times.

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 Organization and Governance processes geared to
manage multiple businesses

 Blend core competencies and leverage ITC umbrella strengths to

create new avenues of growth

Corporate philanthropy :
ITC Echoupal creatively leverages information technology to set up a meta-market in favor
of India's small and poor farmers, who would otherwise continue to operate and transact in
'un-evolved' markets.
As of July 2007, ITC Echoupal services, through 6400 Echoupal across 8 states, reach more
than 4 million farmers in about 40,000 villages. ITC intends scaling up the initiative with
20,000 choupals and 700 saagars to reach 10 million farmers in 100,000 villages by 2010.
Free access to Internet is also opening windows of rural India to the world at large. ITC
eChoupal is now being regarded as a reliable delivery mechanism for resource development
initiatives. Its potential is being tested through pilot projects in healthcare, educational
services, water management and cattle health management with the help of several service
providers including non-governmental organizations.

ITCs strategic intent is to create multiple drivers of business

growth by leveraging its diverse competencies in agri
sourcing, world-class manufacturing, branding, packaging,
hospitality, trade marketing and distribution.
ITC introduces each product with a strategy. The
following gives details of the strategy that ITC had
kept in mind, while launching the product.

1. Though the first six decades of the Company's existence were primarily devoted to the
growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the
Seventies witnessed the beginnings of a corporate

transformationthat would

usher in momentous changes in the life of the Company.

2. ITC's Packaging & Printing Business was set up in 1925 as a strategic backward
integration for ITC's Cigarettes business. It is today India's most sophisticated packaging
house.

3. In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai
which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into
the hotels business was rooted in the concept of

creating value for the

nation. ITC chose the hotels business for its potential to:
earn high levels of foreign exchange,
create tourism infrastructureand
generate large scale direct and indirect employment.
Since then ITC's Hotels business has grown to occupy a position of leadership, with over 90
owned and managed properties spread across India.

4. In 1979, ITC entered the Paperboardsbusiness by promoting ITC Bhadrachalam

Paperboards Limited, which today has become the market leader in India. Bhadrachalam

Paperboards amalgamated with the Company effective March 13, 2002 and became a
Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this
division merged with the Company's Tribeni Tissues Division to form the Paperboards &
Specialty Papers Division. ITC's paperboards' technology, productivity, quality and
manufacturing processes are comparable

to the best in the world. It has also

made an immense contribution to the development of Sarapaka, an economically backward

area in the state of Andhra Pradesh. It is directly involved in education, environmental
protection and community development. In 2004, ITC acquired the paperboard
manufacturing facility of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil
Nadu. The Kovai Unit allows ITC to improve customer service with reduced lead

time and a wider product range.

5. In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and
a major supplier of tissue paper to the cigarette industry. The merged entity was named the
Tribeni Tissues Division (TTD). To harness strategic

and operational

synergies, TTD was merged with the Bhadrachalam Paperboards Division to form the
Paperboards & Specialty Papers Division in November 2002.

6. Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division
for export of agri-commodities. The Division is today one of India's largest exporters.
ITC's unique and now widely acknowledged e-Choupal initiative began in 2000 with soya
farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers.
ITC's first

rural mall, christened 'ChoupalSaagar' was inaugurated in August 2004 at

Sehore. On the rural retail front, 24 'ChoupalSaagars' are now operatonal in the 3 states of
Madhya Pradesh, Maharashtra and Uttar Pradesh.

7.

In 2000, ITC launched a line of high quality greeting cards under the brand name
'Expressions'. In 2002, the product range was enlarged with the introduction of Gift
wrappers, Autograph books and Slam books. In the same year, ITC also
launched'Expressions Matrubhasha', a vernacular range of greeting cards in eight
languages and 'Expressions Paperkraft', a range of premium stationery products. In 2003,
the company rolled out 'Classmate', a range of notebooks in the school stationery segment.
This way it established itself as a brand for students and is performing excellently due to its

quality and price strategy.

8. ITC also entered the Lifestyle Retailing business with the Wills Sport range of international
quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive
stores later expanded its range to include Wills Classic formal wear (2002) and Wills
Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its
men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the
country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained
recognition from buyers and retailers as the single largest B-2-B platform for the

Fashion Design industry. To mark the occasion, ITC launched a special 'Celebration
Series', taking the event forward to consumers. In 2007, the Company introduced 'Miss
Players'- a fashion brand in the popular segment for the young woman.

9. In 2000, ITC spun off its information technology business into a wholly owned subsidiary,
ITC Infotech India Limited, to more aggressively pursue emerging opportunities in
this area. Today ITC Infotech is one of Indias fastest growing global IT and IT-enabled
services companies and has established itself as a key player in offshore outsourcing,

providing outsourced IT solutions and services to leading global customers across key

focus verticals- Manufacturing, BFSI (Banking, Financial Services & Insurance), CPG&R
(Consumer Packaged Goods & Retail), THT (Travel, Hospitality and Transportation) and
Media & Entertainment.

ITC Business Model

1. During 2002-03, ITC crossed significant milestones both in the range of FMCG products
launched as well as the breadth of distribution. Investment in people systems, trade
marketing expertise and product development enabled the launch and national rollout
of several FMCG products spanning Apparel, Packaged Foods, Greeting Cards and
Stationery, Safety Matches and Incense Sticks (Agarbatti). The business model in each of
these product categories envisages retaining core competency-based elements of each
value chain in-house. Manufacturing is outsourced largely to small and medium
enterprises (SMEs). Such a model enables ITC to participate effectively in strengthening
the capability of these SMEs, thereby enhancing the competitiveness of the entire value
chain. ITC is engaged in further expanding its distribution and delivery bandwidth to
serve as a springboard to cater to a much wider range of FMCG products.
2. In a country where 200 million people are
engaged in farming or related activities, ITC is
developing its internationally competitive agricultural
business by empowering, not eliminating, the
independent small farmer. Its business model centers
around the deployment of a network of Internetconnected kiosks, known as e-Choupals, throughout
agricultural areas in India. An e-Choupal is a high-tech

version of the traditional "choupal," or "village gathering place" in Hindi, where farmers
are provided with the latest weather reports, local and international produce prices, and
farming best practices. Costing US$ 3,000 - 6,000 each to set up, they also serve as
procurement and purchase points, allowing farmers not only to sell their produce to ITC,
but also to buy agricultural inputs and consumer goods for daily household use. The
premise of ITC's expanded business model is backward integration, a form of virtual
vertical integration that involves the direct purchase of produce from farmers, thereby
reducing ITC's dependence on middlemen. The e-Choupal network, by deploying IT
innovatively, reorganizes the roles of these intermediaries by leveraging their strengths
in physical transmission of goods; yet disinter mediating them in the flow of information
along the chain. In the process several non-value-adding activities in the traditional farm
to factory leg of the value chain, such as redundant transportation, bagging, handling
and labor, are eliminated.
This reorganization of the role of middlemen results in lower procurement costs for ITC,
despite having to pay higher prices to the farmers. Transaction costs are also minimized
for the farmer by buying output at the farmers' doorstep, and through transparent
pricing and weighing practices. On the marketing front, ITC is able to maintain and grow
the trust of its farmers by enhancing their productivity and wealth. ITC leverages this
position of trust among farmers, as well as its distribution capabilities, to market its own
consumer good brands and those of partner companies offering products and services
that ITC does not. Sales of consumer goods through the e-Choupals have been
particularly successful because the cost-savings associated with dealing directly with the
manufacturer allow Sanchalaks to offer goods at lower prices than other village-level
traders or retailers can afford to do.

INTERNAL ANALYSIS:

Boston Consulting Growth Matrix [BCG]

The BCG matrix (aka B.C.G. analysis, BCG-matrix, Boston Box, Boston Matrix, Boston
Consulting Group analysis) is a chart that had been created by Bruce Henderson for the
Boston Consulting Group in 1970 to help corporations with analyzing their business
units or product lines. This helps the company allocate resources and is used as an
analytical tool in brand marketing, product management, strategic management, and
portfolio analysis.

ANALYSIS:

Stars

Hotels

FMCG- Others

Paperboards/

ITC Infotech

Packaging.

Agri business.

Cows

Dogs
FMCG-Cigarettes

ITC`s cigarette 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

Growth Potential:
Cigarettes account for only 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
Of the 58% of adult Indian males who consume tobacco, barely 15% can afford
cigarettes
Biri : Cigarettes ratio = 10 : 1
Annual per capita adult cigarette consumption in India is appx. one tenth world
average : 141
Future growth depends on relative rates of growth of per capita income and
moderation in taxes

ITC`s Paperboard Industries:

 Market leader in growth segment - value added coated boards

World-class contemporary technology

Elemental Chlorine Free (ECF) Pulp Mill fully operational only one of its
kind in India 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

nearly 68,000 hectares

Fully integrated operations with in-house pulping capacity at appx. 1.10 lac MT

Expansion programme underway; source of sustainable competitive

advantage

ITC`s Agri commodity Business:

Farm linkages in 14 states covering Soya, Wheat,

Rice, Marine products, Coffee etc.
Unique CRM programme in commodity exports
Leveraging IT for the transformational e-Choupal initiative
Rural Indias largest Internet-based intervention
Over 38000 villages linked through around 6400 e-Choupals servicing over
3.5 million farmers
Distinctive sourcing capability for ITCs Foods business

ITC`s Hotel Business:

ITC-Welcomgroup : a leading hotel chain in India

Strategy to establish presence in key business locations to complete the

chain achieved in end 2004

Over 5200 rooms under 4 distinct brands

CATEGORY

BRAND

POSITIONING

Luxury

ITC Hotel: Luxury

Mansions of Luxury

Collection
Upper Scale

Welcome Hotel:

Passion for Quality

Sheraton
Upper- mid- scale

Fortune Hotels

Promise of True Value

Heritage

Welcome Heritage

Unique Experiences

Capacity expansion underway at Bangalore and Chennai; plans for other locations
also being progressed

 Fastest growing hotel chain with highest operating efficiency (PBDIT/Net Income
@ 45%) amongst the 3 leading chains
Leverages unique service proposition and international alliance with Starwood
Hotels & Resorts

Luxury Collection / Sheraton

SWOT Analysis----ITC.
ITC is one of India's biggest and best-known private sector companies. In fact it is one of
the World's most high profile consumer operations. Its businesses and brands are
focused almost entirely on the Indian markets, and despite being most well-known for
its tobacco brands such as Gold Flake, the business is now diversifying into new FMCG
(Fast Moving Consumer Goods) brands in a number of market sectors - including
cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded
apparel, personal care, greetings cards, Information Technology, safety matches,
incense sticks and stationery. Examples of its successful new FMCG products include:
Aashirvaad - India's most popular atta brand with over 50% market share. It is also
present in spices and instant mixes.
Mint-o - Mint-0 Fresh is the largest cough lozenge brand in India.
Bingo! - a new introduction of finger snacks.
Kitchens of India - pre-prepared foods designed by ITC's master chefs.

Sunfeast - is ITC's biscuit brand (and the sub-brand is also used on some pasta
products).
STRENGTHS

WEAKNESSES

Well known brand name

Respected company

with a tobacco brand

Good distribution network

which is related with poor

and skills

health and premature

Good product quality(business

death.

has been awarded

Still the company is

with ISO 9001:2000 by Det

dependent on tobacco

Norske Veritas.)

for its revenue

Diversified company trading

generation.

in a number of business
sectors

Still people connect ITC

New Brands for New

segements.

OPPORTUNITIES

New product

Making use of

the existing product line (new

distribution channels to

ITC is moving into

designs and look of products)

provide the products as

sectors including
Information
Technology,
supporting business
solutions
Per capita
consumption of
personal care
products in India is
the lowest in the
world offering an
opportunity for ITC's
soaps, shampoos and
fragrances under
their Wills brand.
e-Choupal- project
that has a goal of
reaching 10 million
farmers in 100,000
villages.

Adding innovative products to

W-O strategies

discoveries

new and emerging

S-O strategies

Further Diversification in this

business

and when need arises

Providing offers with
products
More investment in
advertising and
promotional activities

THREATS

Changing customer
needs and preferences

Threats from rival

S-T strategies
Producing quality product
using core competencies

W-T strategies
targeting government
offices in rural areas.

Working out measures to over

firms- domestic and

take the rival company

international.

products, in this case of HUL.

Western companies
see India as an
exciting opportunity
for themselves to find
new market segments
for their own
offerings

PORTERS FIVE FORCES- FMCG SECTOR OF ITC

BUYER POWER:- HIGH- UNFAVOURABLE.

*Low switching cost
*Buyers are numerous and fragmented
*Considering buyer power retailers , they are
able to negotiate the price with the company.

THREAT OF SUBSTITUTES :HIGH- MODERATELY

UNFAVORABLE

SUPPLIER POWER:-LOW-FAVOURABLE
*Large number of suppliers in the country

Numerous substitutes are

available

*Cost of switching suppliers is low

*Prices of substitutes are low

PORTERS
FIVE
FORCES:

DEGREE OF RIVALRY:-HIGHMODERATELY UNFAVOURABLE

*Consumer in this category enjoy

THREAT OF NEW ENTRANTS:-HIGHUNFAVOURABLE

*To

many small firms

multitude of choices.

*No dominating firm

*It does not cost anything for a consumer

to buy one brand of shampoo instead of
another, making the industry quite
competitive.

*Little product differentiation

DID YOU KNOW???????

*Customer switching costs are

low

The following are some articles that we have picked up from

the Economic Times which makes the strategic decisions of ITC
even more clear.

ITC up on ahead of quarterly numbers(19 Jan 2009, 1335 hrs IST, ET

Bureau)
MUMBAI: Shares of FMCG major ITC Ltd were trading 0.7% higher at Rs 173.50 on
expectations of appreciable quarterly numbers.

Analysts are expecting ITC to register a top line growth (YoY) in the range of 18 to 20%
for the quarter ended Dec. 31, 2008. PAT (net profit) is expected to rise in the range of 10%
and 14% during the considered quarter.

Hotels business is expected to report decline in sales. FMCG losses are likely to decline, as
the company benefits from the decline in palm oil price, a key ingredient in toilet soaps.
Paper and paperboard division will gain from stabilization of the pulp facility although
increase in input costs in previous quarters will limit gains.
"Operating margins will still be under pressure for ITC. The company is expected to be
under pressure as a result of losses arising out of non-FMCG businesses. We maintain a
neutral view on the stock," said Angel Broking's FMCG analyst Anand Shah.

ITC looking for acquisition of hotels (11 Dec 2008, 1639 hrs IST,
PTI)
With the global downturn throwing up opportunities to take over valuable assets
at attractive price, diversified conglomerate ITC
Limited on Thursday said it is considering acquisitions, mainly in the hospitality
sector.
"We are looking for operations to buy assets, particularly in hotel area. We will buy
where asset prices are feasible and we are looking at all categories ranging from
three to seven star hotels," ITC Chairman Y C Deveshwar said on the sidelines of a
CII summit here.
He said the company has resources to expand and will take the opportunity of
economic slowdown to acquire assets as asset value at present is very attractive.
"In fact, we are looking this (economic slowdown)as an opportunity to grow. In
every adversity there is an opportunity," Deveshwar added.
Asked if the slowdown had impacted the company's expansion plans, he said,
"There are no plans to cut back on investments. We will stick to our capex plan
because we would not sacrifice our long-term focus. We are going to accelerate
our investment."
Last year, the company had said it plans to invest about Rs 15,000 crore in the next
five to seven years in areas such as hotels, agri-business and FMCG.
Deveshwar, however, conceded the economic slowdown has affected the
company.
"We are also impacted of course as we are not insulated from the economy. But we are
not sacrificing our long-term goals," he said.

ITC mulls more lifestyle stores, ties up with design cos (27 Feb 2008, 0223 hrs IST,
TNN)
KOLKATA: ITC Ltds lifestyle retailing business division is planning to expand its retail footprint further
by setting up more Wills Lifestyle, John Players and Miss Players stores across the country. It has also
embarked on an active exercise to create a stronger brand and retail identity for Wills Lifestyle, which
it wants to position as a more international and inspirational brand.
Towards this end, ITC has piloted a new concept with FRCH Design of the US, a specialist in store and
mall design. Three concept stores have already been launched, two in Mumbai and one in Delhi. It is
also working with the UKs Elemental Design and The Friedman Group from the US in areas like
product presentation, visual merchandising and retail training.
We want to make the Wills Lifestyle brand more upscale, international and personalise the
experience for the customer, Atul Chand, V-P, sales and marketing, ITCs lifestyle retail business
division, told ET.
As per Mr Chand, plans are on to increase the number of Wills Lifestyle stores from 250 to 400 by the
end of 2008-09. These stores will come up on the lines of the concept store, which has been
designed taking the cultural context, customer profile, etc, in mind, he said.

CONCLUSION:

Chairman Yogi Deveshwar's

strategic vision is to turn his
Indian conglomerate into the
country's premier FMCG
business.

BLENDING DIVERSE SKILLS AND LEVERAGING ITS DISTRIBUTION

MUSCLE, THE TOBACCO GIANT IS UNLEASHING A WELTER OF NEW
BUSINESSES. AN INSIDE ACCOUNT OF THE SILENT REVOLUTION
These are the words from the mouth of the editor of business today Sanjoy Narayan. This is
very true in the context of ITC. ITC has been a leader in the tobacco business, but it realize from
the upcoming trends that remaining with a single business is not a noble thought, moreover the
company was threatened of the anti-tobacco campaign. Therefore the company decided to
venture into InfoTech with ITC InfoTech, foods via Kitchens of India, greeting cards through
Expressions and lifestyle retailing through Wills Sport. The revenue generation also is very high
from each of these products. .ITC was a cash rich company with a liquidity of Rs.8816 million in
the cigarette business, even though the company understood the need and usefulness of
diversification.ITC by spreading its wings in the lifestyle segments has opened forty-five stores
in 34 cities in just under a year, selling an expensive fashion brand of relaxed-wear. This way it
has gained a victory lap through its Wills Sport Brand.