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A project report Submitted By BHARATHESH


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Fast Moving Consumer Goods (FMCG) are products that are sold quickly at relatively low cost. Though the absolute profit made on FMCG products is relatively small, they generally sell in large quantities, so the cumulative profit on such products can be large. FMCG Products are generally replaced of fully used up over a short period of days weeks, or months, and within one year. This contrasts with durable goods or major appliances such as kitchen appliances, which are generally replaced over a period of several years. FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against FMCG products is also very high. The competition among FMCG manufacturers is also growing and as a result of this, investment in FMCG industry is also increasing. The industry has a good market potentiality because of low operating cost and strong distribution networks. Population growth is another factor which is responsible behind the success of this industry. It creates a wide range of job opportunities. This industry is a stable, diverse, challenging and high profile industry providing a wide range of job categories like sales, supply chain, finance, marketing, operations, purchasing, human resources, product development and general management. FMCG industry is characterized as, a defensive sector with relative inelastic demand, time lag between expansion of income and impact on industry, low technological barriers in terms of technology or investments, imagery and price premium central to FMCG marketing, new customer acquisition through smaller-sized packaging and low unit prices, high competition at various price points especially at the regional levels, enhanced bribing of customers through freebies, focus on increasing reach. Household care products are a major segment of the FMCG industry. Household care comprises household cleaners, laundry care, toilet cleaners, air fresheners, insecticides, Mosquito repellents, polishes and other products related to household care.


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INDIAN OVERVIEW: The Indian FMCG sector is the fourth largest in the economy in globally. As per The Federation of Indian Chambers of Commerce and Industry (FICCI) the estimated market size of the FMCG segment in India is Rs 113,000-crore. Industry projections estimate growth at 30% in 2009-10. The industry recorded 17-18% volume growth in the last financial year. The FMCG industry in India was worth around US$ 16.03 billion in August 2008.The middle class and the rural segments of the Indian population are the most promising market for FMCG, and give brand makers the opportunity to convert them to branded products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as well as low penetration level, but the potential for growth is huge. The Indian FMCG industry is divided into five primary segments personal care products, household care products, packaged food products, branded spirit and tobacco products as well as health care products.

GLOBAL OVERVIEW: Even as the Indian FMCG is governed by local, regional and national undercurrents, it worked as a subset of the global FMCG industry as well. The global FMCG market was valued at USD 230 billion. Almost 70% of the global FMCG market was accounted for by developed geographies like the USA, Europe and Australia.


6% 31%

Western Europe Africa/Middle East

10% 2% 25% 4%

Australia Asia Pacific Latin America North America Eastern Europe


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Scope of the Sector:

There is a huge growth potential for all the FMCG companies as the per capita consumption of almost all products in the country is amongst the lowest in the world. Again the demand or prospect could be increased further if these companies can change the consumer's mindset and offer new generation products. Earlier, Indian consumers were using non-branded apparel, but today, clothes of different brands are available and the same consumers are willing to pay more for branded quality clothes. It's the quality, promotion and innovation of products, which can drive many sectors. Marketing, operations, purchasing, human resources, product development, general management.

Growth Prospects:
With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something no one can overlook. Increased focus on farm sector will boost rural incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. It is expected that the rural income will rise in 2007, boosting purchasing power in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%. However, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care, household care and feminine hygiene, will keep growing at relatively attractive rates.


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Personal Care:
The Indian personal care industry is estimated at Rs 170 billion. The industry is divided into fabric wash, personal wash, hair care, oral cares, skin care, colored cosmetics, mens toiletries and fragrances. Most segments of this industry are going through a decline in 2002 with several leading players reporting lower sales in 2002 due to lower volumes as well as lower realization. The next phase of growth has to come from the rural market as the urban markets are near saturation levels in terms of penetration. The industry has a low entry barrier and competition is severe. Besides the large multinational players, there are some leading domestic players as well as the huge unorganized players. Though most of the market share is with the larger players, companies vie for the marginal market share. Cheaper imports and duplicate products are also affecting the major players. Companies have been adopting promotion schemes to dole out freebies and repackaging products in smaller packages to cater to a wider consumer base are some recent trends. The way ahead for the personal care companies is to introduce new and better product, improve penetration, and make the consumer trade up in price and quality. Rural marketing will be a major thrust area for all companies. Indian Market of personal care products

Hair crae 46% 31% Skin care 16% Colour cosmetics Fragrances Bath & shower products



Each of these segments exhibits unique trends and growth patterns. For example, the largest segment of personal hygiene products is largely dominated by bar soaps. The second largest segment being hair care products. The skin care market is relatively smaller and is growing at a high rate while moving away from basic creams and moisturizers to specialized products such as anti-wrinkle dark circle removing creams.


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ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the Company's ownership progressively Indianised, the name of the Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agri-business, Foods, Lifestyle Retailing, Education & Stationery and Personal Care - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'. The Companys beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more ways than one. It was to mark the beginning of a long and eventful journey into India's future. The Company's headquarter building, 'Virginia House', which came up on that plot of land two years later, would go on to become one of Kolkata's most venerated landmarks. History Year 1910 Events ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. 1925 ITC's Packaging & Printing Business was set up in as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house.


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the name of the Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited.

1974 1975

Again the name changed to I.T.C. Limited. the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomegroup Hotel Chola'.




the Paperboards

business by



Bhadrachalam Paperboards Limited 1985 ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. 1990 ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry. 1990 ITC set up the Agri Business Division for export of agricommodities 2000 ITC forayed into the Greeting, Gifting and Stationery products business with the launch of Expressions range of greeting cards 2000 ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women. In 2000, ITC spun off its information technology business into a wholly owned subsidiary. 2001 ITC's foray into the Foods business with the introduction of Kitchens of India' ready-to-eat Indian gourmet dishes.


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ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery

and Aashirvaadatta (wheat flour). In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative. 2003 ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sectors. 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment. 2005 ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body care products for men and women. 2007 Continuing with its tradition of bringing world class products to Indian consumers the Company launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October and December 2007 respectively. 2007 ITC's entered the fast growing branded snacks category with Bingo! . The Company also launched the 'Superia' range of Soaps and Shampoos in the mass-market segment at select markets. 2008 Vivel De Wills & Vivelrange of soaps in February and Vivel range of shampoos in June 2008. 2010 ITC entered the fairness cream segment by launching product Vivel active fair.



ITC Ltd is an Indian conglomerate founded on 24 August 1910. It has diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, AgriBusiness, Packaged Foods & Confectionery, Information Technology, Branded Apparels, Personal Care , Stationary, Safety Matches and other FMCG products, while ITC is an outstanding market leader in its traditional business of cigarettes, Hotels, Paperboards, Packaging and agri exports, it is rapidly gaining market share even in its nascent business of Packaged Food& Confectionery , Branded Apparel , Personal Care and Stationary.

ITC Business Portfolio




c. The ITC Vision and Mission:


The ITC 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 Companys stakeholders.

The ITC Mission: To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.

This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. For the Nation. For the Shareholder."

Core Values:


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ITC's Core Values are aimed at developing a customer-focused, high-performance organization which creates value for all its stakeholders: Trusteeship As professional managers, we are conscious that ITC has been given to us in "trust" by all our stakeholders. We will actualize stakeholder value and interest on a long term sustainable basis. Customer Focus We are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction. Respect for People We are result oriented, setting high performance standards for ourselves as individuals and teams. We will simultaneously respect and value people and uphold humanness and human dignity. We acknowledge that every individual brings different perspectives and capabilities to the team and that a strong team is founded on a variety of perspectives. We want individuals to dream, value differences, create and experiment in pursuit of opportunities and achieve leadership through teamwork. Excellence We do what is right, do it well and win. We will strive for excellence in whatever we do. Innovation We will constantly pursue newer and better processes, products, services and management practices.

Nation Orientation


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We are aware of our responsibility to generate economic value for the Nation. In pursuit of our goals, we will make no compromise in complying with applicable laws and regulations at all levels. Quality Policy: ITC's development of its Integrated Quality Management System (IQMS) is based on its strong foundation of implementing ISO 9001:2000, ISO 14001, OHSAS 18001, SA 8000, HACCP (for Foods) and IQRS (performance rating and benchmarking of the quality management system). Likewise, ITC's strategic initiatives for developing its people have been based on participative management concepts like QC (Quality Control), TQM (Total Quality Management), KSS (Kaizen Suggestion Scheme), 5S, Six Sigma. All ITC manufacturing units have ISO quality certification. Almost all contract manufacturing units in the Foods Business and all large hotels have food safety and quality systems certified by accredited 'third party' in accordance with 'Hazard Analysis Critical Control Points' (HACCP) standards. Additionally, the quality of all FMCG products of the Company is regularly monitored through 'Product Quality Rating System' (PQRS). The Leaf Tobacco and Printing & Packaging businesses have achieved worldclass ratings in the 'International Quality Rating System' (IQRS) for business excellence in which key processes are rated against international benchmarks and certified by accredited 'third party' independent assurance providers

d.Product profile:

It is ITC's strategic intent to secure long-term growth by synergizing and blending the diverse pool of competencies residing in its various businesses to exploit emerging opportunities in the FMCG sector. The Companys institutional strengths deep understanding of the Indian consumer, strong trademarks, deep and wide distribution network, agri-sourcing skills, packaging know-how and cuisine expertise continue to be effectively leveraged to rapidly grow the new FMCG businesses. Over the last few years, ITC has rapidly scaled up presence in its newer FMCG businesses comprising Branded Packaged Foods, Lifestyle Retailing, Education and Stationery products, Personal Care products, Safety Matches and Incense Sticks (Agarbatti) with Segment Revenues growing at an impressive compound annual growth rate of 38% during the last 5 years. The Companys unwavering focus on quality, innovation and differentiation backed by deep consumer insights, world-class R&D and an efficient and responsive supply chain will further strengthen its leadership position in the Indian FMCG industry.

ITCs product portfolio comprises:


ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, it has a leadership position in every segment of the market. It's highly popular portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.

The Company has been able to build on its leadership position because of its single minded focus on value creation for the consumer through significant investments in product design, innovation, manufacturing technology, quality, marketing and distribution. ITC's cigarettes are produced in its state-of-the-art factories at Bangalore, Munger, Saharanpur and Kolkata. These factories are known for their high levels of quality, contemporary technology and work environment.

ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of the Kitchens of India brand. A more broad-based entry has been made since June 2002 with brand launches in the Confectionery, Staples and Snack Foods segments. The packaged foods business is an ideal avenue to leverage ITC's proven strengths in the areas of hospitality and branded cuisine, contemporary packaging and sourcing of agricultural commodities. ITC's world famous restaurants like the Bukhara and the Dum Pukht, nurtured by the Company's Hotels business, demonstrate that ITC has a deep understanding of the Indian palate and the expertise required to translate this knowledge into delightful dining experiences for the consumer. ITC has stood for quality products for over 100 years to the Indian consumer and several of its brands are today internationally benchmarked for quality.


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Lifestyle Retailing:

ITC's Lifestyle Retailing Business Division has established a nationwide retailing presence through its Wills Lifestyle chain of exclusive specialty stores. Wills Lifestyle, the fashion destination, offers a tempting choice of Wills Classic work wear, Wills Sport relaxed wear, Wills Club life evening wear, fashion accessories and Essenza Di Wills - an exclusive range of fine fragrances and bath & body care products and Fiama Di Wills - a range of premium shampoos and shower gels. Wills Lifestyle has also introduced Wills Signature designer wear, designed by the leading designers of the country. With a distinctive presence across segments at the premium end, ITC has also established John Players as a brand that offers a complete fashion wardrobe to the male youth of today. With its brands, ITC is committed to build a dominant presence in the apparel market through a robust portfolio of offerings.

Personal Care:


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ITC forayed into the Personal Care business in July 2005. In the short period since its entry, ITC has already launched an array of brands, each of which offers a unique and superior value proposition to discerning consumers. Anchored on extensive consumer research and product development, ITC's personal care portfolio brings world-class products with clearly differentiated benefits to quality-seeking consumers. ITC's Personal Care portfolio under the 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel Di Wills' 'Vivel UltraPro', 'Vivel' and 'Superia' brands has received encouraging consumer response and is being progressively extended nationally.

Education and Stationery:

ITC made its entry to the education and stationery business with its Paperkraft brand in the premium segment in 2002; and later expanded into the popular segment with its Classmate brand in 2003. By 2007, Classmate became the largest Notebook brand in the country. Together, Classmate and Paperkraft offer a range of products in the Education & Stationery space to the discerning consumer, providing unrivalled value in terms of product & price. Classmate and Paperkraft have become a natural extension of the consumer. Meticulous understanding of consumer needs helped creating a relevant and comprehensive portfolio satisfying the needs of different sets of consumers. Paperkraft Business paper and the papers used in Classmate and Paperkraft notebooks are superior in quality and environment-friendly. Other offerings available in education and Stationery range are safe and certified non-toxic.

Safety Matches:


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As part of its strategic initiative to create multiple drivers of growth in the FMCG sector, ITC commenced marketing safety matches sourced from the small-scale sector. The Matches business leverages the core strengths of ITC in marketing and distribution, brand building, supply chain management and paperboard & packaging to offer Indian consumers high quality safety matches.ITCs range of Safety matches include popular brands like Kno, Mangaldeep, Aim, Aim Mega and Aim Metro. With differentiated product features and innovative value additions, these brands effectively address the needs of different consumer segments.


ITC Welcomgroup, India's premier chain of luxury hotels was launched on October 18, 1975, with the opening of its first hotel - Chola Sheraton in Chennai. Since then the ITC-Welcomgroup brand has become synonymous with Indian hospitality. With over 100 hotels in more than 80 destinations, ITC-Welcomgroup has set new standards of excellence in the hotel industry in Accommodation, Cuisine, Environment and Guest Safety. A leader in the premium hospitality segment, ITCWelcomgroup Hotels have had the privilege of hosting world leaders, Heads of State and discerning guests from across the world and within.



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ITC is one of India's most diversified consumer goods companies having increasingly reduced its dependence on its core cigarette business. It was initially in the cigarette and tobacco business and later diversified into multiple businesses including hotels, paperboards and specialty papers, packaging, agri-business, packaged foods and confectionery, branded apparel, greeting cards and other FMCG products. ITC Limited operates its business nationally as well as globally. It has a well established distribution network and the companys products are manufactured at multiple production facilities across the country. It distribute its products across the globe i.e. India,

Americas, Europe, Middle East, Asia Pacific, Africa etc. Its distribution reach is one of the largest in India the FMCG business has a retail network over2 million retailers in the country, ranging from premium outlets in the metros to small shops in the interiors of rural India. ITC also sells mens range of apparel under the brand name John Players through exclusive brand outlets as well as more than 1500multi-brand outlets. ITC has one of India's finest hotel chains under the brand name ITC-Welcomgroup with 60 hotels and approximately. 5200 rooms in India. ITC has launched its rural hypermarkets in the year 2004 under the name Choupal Saagar these malls would serve as part of the core infrastructure to support ITC's rural distribution strategy. 10Choupal Saagars are now operational in the 3states of Madhya Pradesh, Maharashtra and Uttar Pradesh while 9 more are in an advanced stage of construction.


ITC Limited (BSE: 500875) public conglomerate company headquartered in Kolkata, India. Total No. of Shareholders as on 25th March, 2011 is 4, 15,230 its turnover is $6 billion and a market capitalization of over $30 Billion. The Company's shares are listed with 3 Stock Exchanges:
Kolkata (10000018*) Mumbai (500875*) National Stock Exchange (ITC*)

Key Management Personnel:

CHAIRMAN Y C Deveshwar

EXECUTIVE DIRECTORS Nakul Anand P V Dhobale K N Grant

NON-EXECUTIVE DIRECTORS A Baijal S Banerjee AV Girija Kumar

S H Khan

S B Mathur

D K Mehrotra

H G Powell

P B Ramanujam

Anthony Ruys

Basudeb Sen

K Vaidyanath

B Vijayaraghavan

g. Competitors Information:

Hindustan Unilever Limited (HUL):

Is India's largest fast moving consumer

goods company. The Anglo-Dutch company Unilever owns a 52% majority stake.HUL was formed in 1933 as Lever Brothers India Limited and came into being in 1956 as Hindustan Lever Limited through a merger of Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India and has employee strength of over 15,000 employees and contributes to indirect employment of over 52,000 people. The company was renamed in June 2007 as Hindustan Unilever Limited. HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian consumers using its products. The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands. Its brands include Kwality Wall's ice cream, Knorr soups& meal makers, Lifebuoy, Lux, Pears, Breeze, Liril, Rexona, Hamam and Moti soaps, Pureit water purifier, Lipton tea, Brooke Bond (3 Roses, Taj Mahal, Taaza, Red Label) tea, Bru coffee, Pepsodent and Close Up toothpaste and brushes, and Surf, Rin and Wheel laundry detergents, Kissan squashes and jams, Annapurna salt and atta, Pond's talcs and creams, Vaseline lotions, Fair and Lovely creams, Lakm beauty products, Clear, Clinic Plus, Clinic All Clear, Sunsilk and Dove shampoos, Vim dishwash, Ala bleach, Domex disinfectant, Modern

Bread, Axe deosprays and Comfort fabric softeners.

Nestl: It is one of the largest food and nutrition companies in the world, founded and
headquartered in Vevey, Switzerland. Nestl originated in a 1905 merger of the AngloSwiss Milk Company, which was established in 1866 by brothers George Page and Charles Page, and the Farine Lacte Henri Nestl Company, which was founded in 1866 by Henri Nestl. Nestl has 6,000 brands,[9] with a wide range of products across a number of markets including coffee (Nescaf), bottled water, other beverages (including Aero (chocolate) & Skinny Cow), chocolate, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food.


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Britannia Industries Limited: Is an Indian company based in Bangalore that is

famous for its Britannia and Tiger brands of biscuit, which are highly recognized throughout the country. Britannia is one of Indias leading biscuit firms, with an estimated 38% market share. The Company's principal activity is the manufacture and sale of biscuits, bread, Rusk, cakes and dairy products.

Procter & Gamble Co. (P&G): Is an American company based in Cincinnati, Ohio
that manufactures a wide range of consumer goods. In India Proctor & Gamble has two subsidiaries: P&G Hygiene and Health Care Ltd. and P&G Home Products Ltd. P&G Hygiene and Health Care Limited is one of India's fastest growing Fast Moving Consumer Goods Companies with a turnover of more than Rs. 500 crores. It has in its portfolio famous brands like Vicks & Whisper. P&G Home Products Limited deals in Fabric Care segment and Hair Care segment. It has in its kitty global brands such as Ariel and Tide in the Fabric Care segment, and Head & Shoulders, Pantene, and Rejoice in the Hair Care segment.

Marico: It is a leading Indian group providing consumer products and services in the
areas of Health and Beauty based in Mumbai. Marico's own manufacturing facilities are located at Goa, Kanjikode, Jalgaon, Pondicherry, Dehradun, Baddi, Paonta Sahib and Daman. In Bangladesh, Marico operates through Marico Bangladesh Limited, a wholly owned subsidiary Manufacturing facility at Mouchak, near Gazipur. The organisation holds a number of brands viz. Parachute, Saffola, Sweekar, Hair&Care, Nihar, Shanti, Mediker, Revive, Manjal, Kaya Skin Clinic, Aromatic, Fiancee, HairCode, Caivil, Code 10 and Black Chic.Maricos brands and their extensions occupy leadership positions with significant market shares in a number of health and beauty areas.


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h. Global Honors:
ITC received the FICCI Outstanding Vision Corporate Triple Impact Award 2007 for invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation. Global Leadership Award conferred on Chairman Y C Deveshwar by the US India Business Council of the US Chamber of Commerce Sustainability Leadership Award 2007 conferred on Chairman Y C Deveshwar by the Sustainability Forum, Zurich and SAM/SPG at the International Sustainability Leadership Symposium Business Today Award for the Best Managed Company Retail and Consumer Products, has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment. Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum In the first of its kind S&P Environmental, Social and Corporate Governance (ESG) ratings released recently, ITC ranked second among top Indian companies. The Company has won the Corporate Social Responsibility Crown Award for Water Practices from UNESCO and Water Digest for its distinguished work carried out in the water sector in India. ITC Limited won the top UNIDO award at the International Conference on Sharing Innovative Agribusiness Solutions 2008 at Cairo in recognition for its initiatives in agri business. ITC has been conferred the ICAI Award for Excellence in Financial Reporting with its Annual Report and Accounts, adjudged as a commendable entry under the Manufacturing and Trading Enterprises category. The Best Corporate Social Responsibility Practice Award 2008 jointly instituted by the Bombay Stock Exchange, Times Foundation and the NASSCOM Foundation.


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i. Work Flow Model of ITC Ltd:


Carrier and forward agent

Whole sale dealer

Small Whole sale dealer



Positioning of ITC a leading FMCG player

SCM, ERP and CRM capability


- E-Choupal rural two-way fulfillment capability Cigarette trade marketing capability Expanded FMCG distribution capability


Branded food Lifestyle retailing Education stationary Matches & agarbattis

Personal care products


Well-established distribution networks, intense competition between the organized and unorganized segments characterize the FMGC sector. It is expected to grow by over

60% by 2010. That will translate into an annual growth of 10% over a 5-year period. It has been estimated that FMCG sector will rise from around Rs 56,500 crores in 2005 to Rs 92,100 crores in 2010. Hair care, household care, male grooming, female hygiene, and the chocolates and confectionery categories are estimated to be the

fastest growing segments, says an HSBC report. Though the sector witnessed a slower growth in 2002-2004, it has been able to make a fine recovery since then. For example, Indian Tobacco Company Limited (ITC) has shown a healthy growth in the last quarter. An estimated double-digit growth over the next few years shows that the good times are likely to continue. With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something no one can overlook. Increased focus on farm sector will boost rural incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. It is expected that the rural income rise in 2011, boosting purchasing power in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption. From the above report we can see that there is a huge scope for growth and prospect for the company ITC ltd.

3) MCKENSEYS 7S FRAME WORK The 7-s framework of MCKENSY S is a value based management (VAM) model that describes how one can effectively organize the company. Together these factors determine the way in which a corporation operates.

ITC is a board-managed professional company, committed to creating enduring value for the shareholder and for the nation. It has a rich organizational culture rooted in its core values of respect for people and belief in empowerment. Its philosophy of all-round value creation is backed by strong corporate governance policies and systems. ITCs corporate strategies are:

Create multiple drivers of growth by developing a portfolio of world class businesses that best matches organizational capability with opportunities in domestic and export markets.

Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards & Packaging, Agri Business and Information Technology.

Benchmark the health of each business comprehensively across the criteria of Market Standing, Profitability and Internal Vitality.

Ensure that each of its businesses is world class and internationally competitive. Enhance the competitive power of the portfolio through synergies derived by blending the diverse skills and capabilities residing in ITC are various businesses.


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Create distributed leadership within the organisation by nurturing talented and focused top management teams for each of the businesses.

Continuously strengthen and refine Corporate Governance processes and systems to catalyze the entrepreneurial energies of management by striking the golden balance between executive freedom and the need for effective control and accountability.

Flowing from the concept and principles of Corporate Governance adopted by the Company, leadership within ITC is exercised at three levels. The Board of Directors at the apex, as trustee of shareholders, carries the responsibility for strategic supervision of the Company. The strategic management of the Company rests with the Corporate Management Committee comprising the whole time Directors and members drawn from senior management. The executive management of each business division is vested with the Divisional Management Committee (DMC), headed by the Chief Executive. Each DMC is responsible for and totally focused on the management of its assigned business. This three-tiered interlinked leadership process creates a wholesome balance between the need for focus and executive freedom, and the need for supervision and control.

Board of Directors

Audit Committee



Nomination Committee

Investor Service Committee

Sustainability Committee

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Corporate Management Committee

Divisional/ Strategic Business Unit (SBU) Management Committees, each headed by a divisional/ SBU Chief Executive Business includes: FMCG, Hotels, Paperboards, Specialty Papers & Packaging, Agri Business and Information Technology

Corporate Functions, each headed by a HOD Corporate Functions include: Planning and Treasury, Accounting, Taxation, Risk Management, Legal, Secretarial, EHS, Human Resources, Corporate Communications, Corporate Affairs, Internal Audit and Research & Development.

Marketing management Structure:








ITC believes that employee base is a key competitive advantage. The senior management team has a breadth of experience in the FMCG industry. The skills and diversity of employees gives the flexibility to respond to the needs of our customers and


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customers. The company dedicated to development of expertise and know-how of the employees and continues to invest in them through training and skills. ITCs well-qualified and experienced management team has played a key role in the development of good corporate governance, effective internal controls and accounting policies, strong employee relations, and stable supply chain relationships. The organization provides different types of training for the employees in the different jobs.

The organization has a Top down style of management. It also has a Participative style of management where the orders flow from the superior to the subordinate. It has a two-way communication from both the direction in the organization. The management gives more importance to the employees views while the decision is to be taken it also considers the farmers views while taking some decision as it is a co-operative society.

INFORMATION TECHNOLOGY SYSTEM Information technology systems are important to the business. ITC is heavily reliant on information technology system in connection with Order booking Procurement of raw material Accounting Production Distribution Disaster recovery systems

Information technology system is a very efficient system which helps ITC to work more effectively and faster as much accurate in the operations, quality control, finance, marketing and all in the business activities. Information technology system is very sensible so any failure in IT systems could result in business interruption, adversely impacting the reputation and weakening if our competitive position and could have a


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material adverse effect on the financial condition and results of operation but ITC have many experienced employees to maintain the information technology systems very smoothly, so the information technology system is very effectively applicable in ITC.

The success of ITC is dependent on the expertise and services of the management team it includes all employees and staffs in the organization. It employs over 26,000 people at more than 60 locations across India. The organization has established a distribution network across India with a sales staff of over 1,500 people serving approximately 2,500 distributers.The sales force headed by four general managers included 36 state managers, 165 area officers.

SHARED VALUES ITC's Core Values are aimed at developing a customer-focused, high-performance organization which creates value for all its stakeholders. The basic philosophy of ITC Limited is to achieve business excellence and to create and enhance the value for its share holders, Customers, Employees and Business Associates and thereby to make a significant contribution to the Economy. The company endeavors to achieve the highest level of transparency, accountability, integrity and responsibility by following the best practices in Industry.

4) SWOT ANALYSIS OF ITC LIMITED: ITC Ltd. is one of the Indias largest multinational corporate enterprises. SWOT analysis of this organisation.

The organisation has some major strength that gives it a competitive advantage over its

rivals. 1. Strong Financial Performance: On 31st march, 2010, ITCs market cap was Rs. 114000 crores with a Gross income of Rs. 26,863 crores and Profit after tax of Rs. 4061 crores. The company continues its impressive record of financial performance. 2. Products Portfolio: ITCs portfolio of products and services is represented by over 50 energetic Brands in a range of more than 650 stock keeping units (SKUs). 3. Distribution Network: ITCS products are available in over 6 million retail outlets in the country. Its formidable Distribution organisation directly services more than 2 million of these retail outlets. It used its experience of transporting and distributing tobacco products to remote and distant parts of India to the advantage of its FMCG products. 4. Environmental Friendly: ITC has a status of being Water Positive for the 8th consecutive year, Carbon Positive for the 5th year in succession and solid waste recycling positive for 3 years in a row. As consumers and investors become more environment friendly, these considerations will provide the organisation an opportunity to create USPs and stronger brand loyalty and brand equity. 5. Research & Development: ITC recognises that cutting edge R&D can foster breakthrough innovation and create powerful sources of sustainable competitive advantage. This vision has led to the establishment of a state of the art R&D centre at Bangalore with over 50 world- class scientists. Its R&D program will create new game changing business opportunities.

6. Socially Responsibility: ITCs initiatives to build social capital through extensive community engagement have led to the creation of sustainable livelihood opportunities for over 5 million people. ITC has helped create more than 20,000 rural women entrepreneurs. ITCs supplementary education initiative has reached out to over 200000 school children in rural areas. ITCs value chain supports over million livelihoods. 7. Brand Equity:

ITC is one of the best known brands in India. The above factors definitely make the company a strong corporate organisation.

In spite of several strengths, there remain some areas of weakness and concern for the organisation.

1. Dependency on the tobacco business: To fund its cash guzzling FMCG start-up, the company is still dependent upon its tobacco revenue. Cigarettes account for 47% of the companys turnover and for 80% of its profits. So there is an argument that ITCs move into FMCG is being subsidised by its tobacco operations. 2. Not present in many important sectors: Although ITC is a diversified company trading in a number of business sectors such as cigarettes, hotels, paper, agriculture, packaged foods and confectionary, personal care and other FMCG products, safety matches, incense sticks and stationery etc. Yet, it does not have presence in many important sectors such as insurance, infrastructure, banking and financial services, BPO, telecom, automotive etc. and thus become comparatively weak when compared with other conglomerates like the Bharti group, the Tata group and the Ambani groups. 3. Local Company: ITC is a local company. It does not have a large portfolio of exports in either products or services. This makes the company comparatively weak in terms of being able to leverage global opportunities, talent & financing.

1. Leveraging its brand equity: ITCs products & services are of high quality. If ITC enter into any business or launch any product, consumer know its ITCs product, consumers shall trust these to be of good quality. ITCs brand equity would make ITC successful in most sectors.


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2. Right size at the right time: A corporate must have the right organizational and investment capability and this must coincide with a growth stage in the economy in which it operates. This seems to be a perfect setting for ITC. Given the consumption of most products and services in India at a level far below the global standards and that the Indian economy is on a roll make it a perfect platform for a company like ITC which already is at a fairly strong stage in its own growth with the necessary organizational and financial muscle. 3. Synergies across businesses and leveraging domain expertise for growth in other sectors: ITCs fast growing Information Technology subsidiary is founded on a strong base of domain knowledge derived from ITCs multiple businesses. It will continue to add significant value to ITCs business by providing solution and by enabling them to leverage Information Technology as a source of superior competitive advantage. Similarly, ITCs agri-business with its deep rural linkage is well poised as a supply chain partner to create value for ITCs Food and Tobacco businesses. Its large presence in rural India, with the unique e-choupal infrastructure, will be progressively leveraged to widen ITCs FMCG distribution network. ITC uses the network to source and create the raw material from the farmers. 4. The unique reach and distribution network of E-choupal: E-choupal is a community of practice that links rural Indian farmers using the internet. It is also an ambitious project that has a goal of reaching 10 million farmers in 100000 villages. It has already benefited 4 million farmers in 40000 villages. This platform provides ITC an opportunity, virtually unmatchable, to ride the rural growth that India in witnessing for the current sets of products and services and additional ones that can be offered from the same network.

1. Competition: The obvious threat is from competition, both domestic and international. The law of economies dictates that if competitors see that there is a solid profit to be made in an emerging economy, more and new products and services will be made available. Global companies will see India as an exciting opportunity for themselves to find new market


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segment for their own offerings. This will put ITC under constant and sustained competitive pressure from international offerings with deep pockets for a long battle. 2. Pressure groups and Government Policy: Tobacco and allied product businesses, a major cash cow for ITC, will remain under public, anti-tobacco, health lobbies and governments through higher excise duties, advertising restrictions, and packaging guidelines, point of sale restrictions, cancer and TB campaigns with even a remote possibility of complete ban.

3. General threats: Wide income disparities leading to social tensions, terror acts, political risks, legislation changes, tiffs with taxation and excise authorities and public outrage from negative impacts of products d services remain general treats for the company.

In summary, ITC will need to overcome its weaknesses, leverage the opportunities through its multiple strengths and be wary of the threats to march into another 100 years of its glorious journey.

5) Financial Statement analysis:

Current ratio:
PARTICULARS CURRENT ASSETS CURRENT LIABILITIES 2009-10 2008-09 8127.08 8159.73 8048.24 4703.63 1.01 1.73 CURRENT RATIO


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The above table depicts the trend of the current ratio and it is clear from the above table that the ratio is showing the increasing trend. The standard current ratio is 2:1 but We can see that ITCs ratio for the year 09-10 1.01 which has decreased by 41.62% from 200809.It means that the company is very aggressive which may be problematic for its short term solvency in the year 2009-10. Thus it is below the standard ratio which is 2:1. Here we can say that the liquidity position of the firm is not satisfactory.

Net Profit Ratio:

It establishes a relationship between net profit and sales and indicates mgt efficiency in manufacturing, administering and selling the products. This ratio is the overall measure of firms ability to turn each rupees sale into profit.
YEAR 2009-10 2008-09 NET PROFIT
4061 3263.59

18153.19 15611.92


The above table depicts that there is an Increase in net profit ratio by 0.01% this is due to increase in net sale by 2541.27.

Net Worth Ratio:

PARTICULARS 2009-10 2008-09 SHAREHOLDER'S FUNDS 14064.38 13735.08 TOTAL ASSETS 23005.34 19483.45 NET WORTH 0.61 0.70

The above table shows the shareholders net worth ratio. It is clear that the ratio has decreased from the year 2008-09 to 2009-10 by 12.86%. It shows that out of the total assets 61% is owners fund.


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