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Assignment On Entreprenureship management Topic- Case Study on ITC

Department Of Management Studies Indian School Of Mines, Dhanbad

Date:- 13-09-2011

Submitted To :
Dr.Niladri Das

Submitted By :
Sitaram Paul (2010MB0025) Sonali Ghosh (2010MB0026) Md. Sharafat Ansari (2010MB0027) Manish Kr Singh (2010MB0028) Akanksha Dubey (2010MB0029)

Kumar Satvik (2010MB0030)

The ITC Profile

ITC is one of India's foremost private sector companies with a market capitalization of over US $ 22 billion and a turnover of US $ 6 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today. ITC ranks among India's `10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by Business Week. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery. As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practices this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part." ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India. ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Ltd, provides IT services and solutions to leading global customers. ITC Infotech has carved a niche for itself by addressing customer challenges through innovative IT solutions. ITC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management systems. ITC was the first company in India to voluntarily seek a corporate governance rating. ITC employs over 26,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 3, 77,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations. This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. For the Nation. For the Shareholder."

List of products & brands

FMCG: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. In FMCG, ITC has a strong presence in:

Cigarettes:- W. D. & H. O. Wills, Gold Flake Kings, Gold Flake Premium, Navy Cut, Insignia, India Kings, Classic (Verve, Menthol, Menthol Rush, Regular, Mild & Ultra Mild), 555, Benson & Hedges, Silk Cut, Scissors, Capstan, Berkeley, Bristol, Lucky Strike, Players and Flake.

Foods:- Kitchens of India, Ashirvaad, Minto, Sunfeast, Candyman, Bingo, Yippee, Sunfeast Pasta brands in Ready to Eat, Staples, Biscuits, Confectionery, Noodles and Snack Foods. Apparel: - Wills Lifestyle and John Players brands. Personal care:- Fiama di Wills, Vivel, Essenza di Wills, Superia, Vivel di Wills brands of products in perfumes, haircare and skincare. Stationery:- Classmate and Paperkraft brands. Safety Matches and Agarbattis:- Ship (through ownership of WIMCO), iKno, Mangaldeep, Aim brands

Hotels ITC Hotels, 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 Hotels brand has become synonymous with Indian hospitality. With over 100 hotels in more than 90 destinations, ITC Hotels has set new standards of excellence in the hotel industry in Accommodation, Cuisine, Environment and guest safety. A leader in the premium hospitality segment, ITC Hotels have had the privilege of hosting world leaders, Heads of State and discerning guests from across the world and within. In 2007, ITC Hotels entered a new phase in its collaboration with Starwood Hotels & Resorts. ITC Hotels now has an exclusive tie-up with Starwood in bringing its premium brand, the 'Luxury Collection', to India. These are super deluxe and premium hotels located at strategic business and leisure locations. The seven hotels which are part of this collection are: ITC Maurya in Delhi, ITC Maratha in Mumbai, ITC Sonar in Kolkata, ITC Grand Central in Mumbai, ITC Windsor & ITC Gardenia in Bengaluru, ITC Kakatiya in Hyderabad and ITC Mughal in Agra. Paperboards and Specialty Papers ITC's Paperboards and Specialty Papers Division is India's largest, technologically advanced and most eco-friendly, paper and paperboards business. The business caters to a wide spectrum of packaging, graphic, communication, writing, printing and specialty paper requirements through its four world-class manufacturing units, 6 sales offices and a network of more than 50 dealers in India, along with an international trade network of 18 distributors / agents and 4 finishing operations close to the market for providing faster service to the customers. Some of ITC's prominent paperboard brands are: Folding Box Boards: Cyber XLPac, Cyber Cypak, Cyber Propac, Cyber XL Premium, Pearl Graphik, Pearl XL Pac Solid Bleached Sulphate Boards: Safire Graphik, Art Maestro, Carte Persona, Carte Lumina, Safire XL Pac Poly coated boards: Indobev, Indobarr PLA Coated boards: Omegabev, Omegabarr, Omegawrap

Recycled boards: Eco Blanca, Eco Natura Fine Papers: ECF AlfaZap, Alfa Plus, Hi Brite, Paperkraft

ITC's Agri Business Division is the country's second largest exporter of agri-products. It currently focuses on exports and domestic trading of:

Feed Ingredients - Soyameal Food Grains - Rice (Basmati), Wheat Marine Products - Shrimps and Prawns Processed Fruits - Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit Products, Fresh Fruits Coffee & Spices - Coffee, Black Pepper, Chilly, Turmeric, Ginger, Celery and other Seed Spices

Information Technology Formed in 2000, ITC Infotech has today carved a niche for itself in the arena of global IT services and solutions. A robust outsourcing model, comprehensive suite of differentiated solutions & services and focus on excellence in execution has provided the company a leadership position in chosen domains. ITC Infotechs customer centric go-to-market approach is organized by industry verticals. The company services industries including, Banking Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG), Retail, Manufacturing, Engineering Services, Media & Entertainment, Travel, Hospitality, Life Sciences and Transportation & Logistics. ITC InfoTech provides IT solutions by addressing customer pain points through innovative solutions, optimizing their IT landscape and maximizing returns from IT investments. The company focuses on developing deep and differentiated capabilities to enhance expertise in specific industry domains, business solutions and technologies. This steadfast focus on delivering enduring value to customers has formed the bedrock of the ITC InfoTechs growth strategy. The company has been successful in attaining differentiation in niches and continues to gain competitive advantage and strengthen market standing. ITC InfoTechs leadership capabilities also accrue from business critical engagements with leading organizations across five continents, and a service delivery footprint spanning over 140 countries. ITC Infotech conforms to the highest standards in international process quality, with ISO 27001, ISO 9001, CMMi Level 3 and BS 7799 accreditations. These reflect the company's ongoing enterprise-wide focus to ensure that every engagement, program and project delivers international quality consistently.

Group Companies:-

Global and other Honours ITC is the first from India and among the first 10 companies in the world to publish its Sustainability Report in compliance (at the highest A+ level). ITC is the first Indian company and the second in the world to win the prestigious Development Gateway Award. It won the $100,000 Award for the year 2005 for its trailblazing ITC e-Choupal initiative which has achieved the scale of a movement in rural India.

ITC has won the inaugural 'World Business Award', the worldwide business award recognising companies who have made significant efforts to create sustainable livelihood opportunities and enduring wealth in developing countries. The award has been instituted jointly by the United Nations Development Programme (UNDP), International Chamber of Commerce (ICC) and the HRH Prince of Wales International Business Leaders Forum (IBLF).

ITC is the first Corporate to receive the Annual FICCI Outstanding Vision Corporate Triple Impact Award in 2007 for its invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation.

ITC has won the Golden Peacock Awards for 'Corporate Social Responsibility (Asia)' in 2007, the Award for CSR in Emerging Economies 2005 and Excellence in Corporate Governance' in the same year. These Awards have been instituted by the Institute of Directors, New Delhi, in association with the World Council for Corporate Governance and Centre for Corporate Governance.

ITC Hotel Royal Gardenia, Bengaluru is the first Indian Hotel and world's largest, to get the LEED Platinum rating - the highest green building certification globally.

The Stockholm Challenge 2006 for the e-Choupal initiative. This award is for using Information Technology for the economic development of rural communities.

United Nations Industrial Development Organisation (UNIDO) Award at the international conference on Sharing Innovative Agribusiness Solutions 2008 at Cairo for ITC's exemplary initiatives in agri business through the e-Choupal.

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 also received the National Award for Excellence in Water Management 2007 in the 'beyond the fence' category from the CII Sohrabji Godrej Green Business Centre for its leadership role in implementing water and watershed management practices.

The watershed programme also won the Asian CSR Award 2007 for Environmental Excellence given by the Asian Institute of Management. The Award recognizes and honours Asian companies for outstanding, innovative and world-class projects.

The Corporate Award for Social Responsibility 2008 from The Energy and Resources Institute (TERI) in recognition of its exemplary initiatives in implementing integrated watershed development programmes across 7 states in India. The company also won the award in 2004 for its e-Choupal initiative. The Award provides impetus to sustainable development and encourages ongoing social responsibility processes within the corporate sector.

The 'Enterprise Business Transformation Award' for Asia Pacific (Apac), instituted by Infosys Technologies and Wharton School of the University of Pennsylvania for its celebrated e-Choupal initiative.

The Best Corporate Social Responsibility Practice Award 2008 jointly instituted by the Bombay Stock Exchange, Times Foundation and the NASSCOM Foundation.

The NASSCOM CNBC IT User Award 2008 in the Retail & Logistics category.

The Business Today Award for the Best Managed Company in recognition of its outstanding initiatives in the consumer products segment.

Ranked no.63 in The Brand Trust Report published by Trust Research Advisory in 2011.

Indian Rural Market: An Invitation To FMCG Sector

The Fast Moving Consumer Goods (FMCG) sector is a corner stone of the Indian economy. This sector touches every aspect of human life. The FMCG producers now realize that there is a lot of opportunity for them to enter into the rural market. The sector is excited about the rural population whose incomes are rising and the lifestyles are changing. There are as many middle income households in the rural areas as there are in the urban. Thus the rural marketing has been growing steadily over the years and is now bigger than the urban market for FMCGs. Globally, the FMCG sector has been successful in selling products to the lower and middle income groups and the same is true in India. Over 70% of sales is made to middle class households today and over 50% of the middle class is in rural India. The sector is excited about a burgeoning rural population whose incomes are rising and which is willing to spend on goods designed to improve lifestyle. Also with a near saturation and cut throat competition in urban India, many producers of FMCGs are driven to chalk out bold new strategies for targeting the rural consumers in a big way. But the rural penetration rates are low. This presents a tremendous opportunity for makers of branded products who can convert consumers to buy branded products. Many companies including MNCs and regional players started developing marketing strategies to lure the untapped market. While developing the strategies, the marketers need to treat the rural consumer differently from their counterparts in urban because they are economically, socially and psychographically different to each other.

Impulse to go Rural
There are many reasons that has urged the FMCG companies to enter the uncharted territory of rural India. Some of the attractions are discussed below; 1. Large Population The rural Indian population is large and its growth rate is also high. Over 70% Indias one billion plus population lives in around 627,000 villages in rural areas. This simply shows the great potentiality rural India has to bring the much needed volumes and help the FMCG companies to bank upon the volume driven growth.

2. Rising Rural Prosperity India is now seeing a dramatic shift towards prosperity in rural households. To drive home the potential of rural India just consider some of these impressive facts about the rural sector. As per the National Council for Applied Economic Research (NCAER) study, there are as many middle income and above households in the rural areas as there are in the urban areas. There are almost twice as many lower middle income households in rural areas as in the urban areas. According to NCAER projections, by 2006 07, the lowest income class (i.e.Rs.2500 and below) will shrink by more than 60%. The higher income classes are likely to double by 2006 07. This apparently is the result of development work, which happened under the five years plans and other special programmes such as land reforms, rural electrification rural communication, and rural credit facilities, etc. The absolute size of the rural market is thus expected to double that of urban India. But despite the high rural share in these categories, the rural penetration rates are low, thus offering tremendous potential for growth. According to Mr. D. Shivakumar, Business Head (Hair), Personal Products Division, Hindustan Lever Limited, the money available to spend on FMCG (Fast Moving Consumer Goods) products by urban India is Rs. 49,500 crores as against is Rs. 63,500 crores in rural India. 3. Growth in Market The purchasing power in rural India is on steady rise and it has resulted in the growth of the rural market. The market has been growing at 3-4% per annum adding more than one million new consumers every year and now accounts for close to 50% of volume consumption of FMCG. The growth rates of lot of FMCG are higher in rural markets than urban markets. In product categories like toilet soaps, talcum powder, cooking iol, vanaspati ghee, tea, cigarettes and hair oil, the share of rural market is more than 505. The table above indicates the projected market size of FMCG products in 2001 02 and 2006 07 based on the annual growth rates mpounded for 1994 99 period.The estimated annual business from rural markets was Rs 1,23,000 crore, comprising Rs 65,000 crore of FMCG, Rs 5,000 crore of durables, Rs 45,000 crore of agricultural inputs including tractors and Rs 8,000 crore of two-wheelers and fourwheelers. Twenty nine per cent of the rural people own cars, 27 per cent own colour televisions, 24 per cent own refrigerators and 10 per cent own washing machines, which points to the untapped potential in the rural areas. "We therefore have to look at the rural market very seriously for future expansion," said Mr Nandakumar while inaugurating the Business Line Club and delivering the keynote address on the topic, `Brand Building Beyond the Urban' under the auspices of the Departments of Business Management and Commerce of the Auxilium College here on Friday.

4. Effectiveness of Communication An important tool to reach out to the rural audience is through effective communication.``A rural consumer is brand loyal and understands symbols better. This also makes it easy to sell look

-alike", says Mr. R.V Rajan, CMD, Anugrah Madison Advertising. The rural audience has matured enough to understand the communication developed for the urban markets, especially with reference to FMCG products. Television has been a major effective communication system for rural mass and, as a result, companies should identify themselves with their advertisements. Advertisements touching the emotions of the rural folks, it is argued, could drive a quantum jump in sales. 5. IT Penetration in Rural India Today there are over 15 million villagers in India who are aware of the Internet and over 300,000 villagers have used it! Ten years back, history was created with Public Call Office phone booths (essentially manually operated payphone facilities), opening in every corner of the country. This experiment was an instant success and contributed to hundreds of thousands of jobs. Over the next two years, WorldTel is expected to provide 1000 centres in Tamil Nadu with 2 to 20 terminals in each centre. If successful, this experiment can be replicated easily to all 27 states leading to over half a million Internet users through this experiment alone! The existing 600,000 public call offices in India will soon be transformed into public 'tele-info-centres' offering a variety of multimedia information services. The rural consumers spend time and money to access higher level information. Studies have indicated that if the content has direct relevance and will result in commercial gains, people in rural areas are willing to pay for information services. Consumerism has altered rural buying behavior in recent years. Spending patterns of those who spend are now adapting to face the technology bug. Today's rural children and youth will grow up in an environment where they have 'information access' to education opportunities, exam results, career counseling, job opportunities, government schemes and services, health and legal advice and services, worldwide news and information, land records, mandi prices, weather forecasts, bank loans, livelihood options. If television could change the language of brand communication in rural India, affordable Web connectivity through various types of communication hubs will urely impact the currency of information exchange. As the electronic ethos and IT culture moves into rural India, the possibilities of change are becoming visible. 6. Impact of Globalization The impact of globalization will be felt in rural India as much as in urban. But it will be slow. It will have its impact on target groups like farmers, youth and women. Farmers, today 'keep in touch' with the latest information and maximize both ends. Animal feed producers no longer look at Andhra Pradesh or Karnataka. They keep their cell phones constantly connected to global markets. Surely, price movements and products' availability in the international market place seem to drive their local business strategies. On youth its impact is on knowledge and information and while on women it still depends on the socio-economic aspect. The marketers who understand the rural consumer and fine tune their strategy are sure to reap benefits in the coming years. In fact, the leadership in any product or service is linked to leadership in the rural India except for few lifestyle-based products, which depend on urban India mainly.

Rural initiatives
The Big Picture: ITC's Agri Business Division, one of India's largest exporters of agricultural commodities, has conceived e-Choupal as a more efficient supply chain aimed at delivering value to its customers around the world on a sustainable basis. The e-Choupal model has been specifically designed to tackle the challenges posed by the unique features of Indian agriculture, characterised by fragmented farms, weak infrastructure and the involvement of numerous intermediaries, among others. The Value Chain - Farm to Factory Gate:

'e-Choupal' also unshackles the potential of Indian farmer who has been trapped in a vicious cycle of low risk taking ability > low investment > low productivity > weak market orientation > low value addition > low margin > low risk taking ability. This made him and Indian agribusiness sector globally uncompetitive, despite rich & abundant natural resources. Such a market-led business model can enhance the competitiveness of Indian agriculture and trigger a virtuous cycle of higher productivity, higher incomes, enlarged capacity for farmer risk management, larger investments and higher quality and productivity. Further, a growth in rural incomes will also unleash the latent demand for industrial goods so necessary for the continued growth of the Indian economy. This will create another virtuous cycle propelling the economy into a higher growth trajectory.

The Model in Action: Appreciating the imperative of intermediaries in the Indian context, 'e-Choupal' leverages Information Technology to virtually cluster all the value chain participants, delivering the same benefits as vertical integration does in mature agricultural economies like the USA. 'e-Choupal' makes use of the physical transmission capabilities of current intermediaries aggregation, logistics, counter-party risk and bridge financing -while disintermediating them from the chain of information flow and market signals. With a judicious blend of click & mortar capabilities, village internet kiosks managed by farmers - called sanchalaks - themselves, enable the agricultural community access ready information in their local language on the weather & market prices, disseminate knowledge on scientific farm practices & risk management, facilitate the sale of farm inputs (now with embedded knowledge) and purchase farm produce from the farmers' doorsteps (decision making is now informationbased). Real-time information and customised knowledge provided by 'e-Choupal' enhance the ability of farmers to take decisions and align their farm output with market demand and secure quality & productivity. The aggregation of the demand for farm inputs from individual farmers gives them access to high quality inputs from established and reputed manufacturers at fair prices. As a direct marketing channel, virtually linked to the 'mandi' system for price discovery, 'e-Choupal' eliminates wasteful intermediation and multiple handling. Thereby it significantly reduces transaction costs. 'e-Choupal' ensures world-class quality in delivering all these goods & services through several product / service specific partnerships with the leaders in the respective fields, in addition to ITC's own expertise. While the farmers benefit through enhanced farm productivity and higher farm gate prices, ITC benefits from the lower net cost of procurement (despite offering better prices to the farmer) having eliminated costs in the supply chain that do not add value.

The Status of Execution: Launched in June 2000, 'e-Choupal', has already become the largest initiative among all Internetbased interventions in rural India. 'e-Choupal' services today reach out to over 4 million farmers growing a range of crops - soyabean, coffee, wheat, rice, pulses, shrimp - in over 40,000 villages through 6500 kiosks across ten states (Madhya Pradesh, Haryana, Uttarakhand, Karnataka, Andhra Pradesh, Uttar Pradesh, Rajasthan, Maharashtra, Kerela and Tamil Nadu).

The problems encountered while setting up and managing these 'e-Choupals' are primarily of infrastructural inadequacies, including power supply, telecom connectivity and bandwidth, apart from the challenge of imparting skills to the first time internet users in remote and inaccessible areas of rural India. Several alternative and innovative solutions - some of them expensive - are being deployed to overcome these challenges e.g. Power back-up through batteries charged by Solar panels, upgrading BSNL exchanges with RNS kits, installation of VSAT equipment, Mobile Choupals, local caching of static content on website to stream in the dynamic content more efficiently, 24x7 helpdesk etc. Going forward, the roadmap includes plans to integrate bulk storage, handling & transportation facilities to improve logistics efficiencies. As India's 'kissan' Company, ITC has taken care to involve farmers in the designing and management of the entire 'e-Choupal' initiative. The active participation of farmers in this rural initiative has created a sense of ownership in the project among the farmers. They see the 'eChoupal' as the new age cooperative for all practical purposes. This enthusiastic response from farmers has encouraged ITC to plan for the extension of the 'eChoupal' initiative to altogether 15 states across India over the next few years. On the anvil are plans to channelise other services related to micro-credit, health and education through the same 'e-Choupal' infrastructure. Another path-breaking initiative - the 'Choupal Pradarshan Khet', brings the benefits of agricultural best practices to small and marginal farmers. Backed by intensive research and knowledge, this initiative provides Agri-extension services which are qualitatively superior and involves pro-active handholding of farmers to ensure productivity gains. The services are customised to meet local conditions, ensure timely availability of farm inputs including credit, and provide a cluster of farmer schools for capturing indigenous knowledge. This initiative, which has covered over 70,000 hectares, has a multiplier impact and reaches out to over 1.6 million farmers.

ITC's e-Choupal has won numerous awards:

United Nations Industrial Development Organisation (UNIDO) Award at the international conference on Sharing Innovative Agribusiness Solutions 2008at Cairo for ITC's exemplary initiatives in agri business through the e-Choupal. The Ashoka - Changemakers 'Health For All' Award 2006 for the Rural Health Services model for delivery of health services through the e-Choupals.

The Stockholm Challenge 2006. This award is for using information technology for the economic development of rural communities. Innovation for India Award 2006 for ITC e-Choupal in the Social Innovations category for business organizations. The first of its kind in India, based on parameters of number of lives impacted, degree of impact on organization and environment, uniqueness, leverage of resources and whether it was scalable and sustainable, e-Choupal was declared as one of 'India's Best Innovations'. The Development Gateway Award 2005 (previously known as the Petersberg Prize) for the trailblazing e-Choupal initiative. ITC is the first Indian company and the second in the world to win this prestigious award. The 'Golden Peacock Global Award for Corporate Social Responsibility (CSR) in Emerging Economies for 2005'. The Company received this award for its eChoupal and social and farm forestry initiatives that are impactfully transforming lives and landscapes in rural India. The Corporate Social Responsibility Award 2004 from The Energy and Resources Institute(TERI) for its e-Choupal initiative. The inaugural 'World Business Award', instituted jointly by the International Chamber of Commerce (ICC), the HRH Prince of Wales International Business Leaders Forum (IBLF) and the United Nations Development Programme (UNDP). The 'Enterprise Business Transformation Award' for Asia Pacific (Apac), instituted by Infosys Technologies and Wharton School of the University of Pennsylvania. PC Quest's IT Implementation Award in the 'Best Project' category. The Golden Peacock Innovation Award 2004. The NASSCOM award for 'Best IT User in FMCG' in 2003. The Seagate Intelligent Enterprise of the Year 2003 Award, for the most innovative usage of Information Technology.

Ratio Current Ratio Quick Ratio Debt Equity Ratio Mar '11 1.08 0.50 0.01 Mar '10 0.92 0.39 0.01 Mar '09 1.42 0.61 0.01 Mar '08 1.36 0.56 0.02 Mar '07 1.33 0.58 0.02

Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio

6.05 23.91 6.05 1.69 1.34

6.04 24.31 6.04 1.58 1.33

5.26 21.32 5.26 1.44 1.09

5.51 20.43 5.51 1.59 1.16

3.76 20.79 6.05 2.42 1.17

Hindustan Unilever Limited (HUL)
HUL is India's largest fast moving consumer goods company owned by the European company Unilever. 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. Hindustan Unilever's distribution covers over 1 million retail outlets across India directly and its products are available in over 6.3 million outlets in the country, nearly 80% of all retail outlets in India. The company claims that two out of three Indians use its many home and personal care products, food and beverages. 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. Sixteen of HULs brands featured in the ACNielsen Brand Equity list of 100 Most Trusted Brands Annual Survey (2008). According to Brand Equity, HUL has the largest number of brands in the Most Trusted Brands List. It has consistently had the largest number of brands in the Top 50, and in the Top 10 (with 4 brands). 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. HLL Launches I-Shakti Rural Information Service :The i-Shakti service is an extension of HLLs Project Shakti, which creates income-generating capabilities for underprivileged rural women by providing a sustainable micro enterprise opportunity, and to improve rural living standards through health and hygiene awareness. Started in Andhra Pradesh in 2001, Project Shakti has already been extended to about 20000 villages in 196 districts in Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Tamil Nadu, Chattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan, and Maharashtra. HLL's vision for Project Shakti is to scale it up across the country by 2005, creating about 25000 Shakti entrepreneurs, covering 100,000 villages, and touching the lives of 100 million rural consumers. Speaking at the inauguration, Mr. Sehgal said, A key factor that has inhibited the socioeconomic development of rural India has been lack of access to critical information and services. Given Indias large geography and weak infrastructure, it is often difficult to reach out to the rural areas. i-Shaktis strengths lies in the unparalleled reach it offers in reaching out to the rural populace. The need for such services across most of Indias villages is beyond doubt and the benefits immense. i-Shakti is an IT-based rural information service network that has been developed to provide information and services to meet rural needs in medical health and hygiene, agriculture, animal husbandry, education, vocational training and employment and women's empowerment. The premise of the i-Shakti model is to catalyze overall rural development by providing need-based, demand-driven information and services across a large variety of sectors that impact the daily livelihood opportunities and living standards of the village community. HLL expects that the information provided would improve the productivity of the rural community and unlock economic and social progress. The kiosks offer information in a voice-based interactive system, covering a wide range of topics including, medical, general health and hygiene, agriculture, horticulture, veterinary, animal husbandry, fisheries, children and adult Education, employment, legal, entertainment, computer games and women's related topics. The information provided is specially developed based on extensive research to understand the needs of the rural community. All content is in the local language and is culled out from the best available resources with the help of local experts in the respective areas. In addition, HLL has also appointed a panel of experts who are available to the villagers through a specially developed online query mailing system. This allows villagers to post questions to the experts in their local language. The experts answer all questions, taking additional care to ensure that information is locally relevant and

making it available to the user on the kiosk when they return the next day. This means that a farmer from a village can obtain a quick solution to a pest problem with his crops from an expert on Agriculture. Or a worried mother could get hygiene tips for her new-born infant from a medical expert, however remote her village is. Information is updated on a regular basis and new sections are added from time to time. The kiosks remain open from 9 a.m. to 7 p.m., six days of the week. In developing the content for i-Shakti, HLL has collaborated with a number of mainstream institutions, both corporate and not-for-profit organizations that are experts in agriculture, health, insurance, financial services and education. Some of the partnerships include tie-ups with the Azim Premji Foundation for children education, Tata Adult Literacy for adult education, and with CARE Indias CASHE micro finance programme. Other strategic partnerships with Dabur Ayurvet, ICICI Bank, Times of India and Mahindra and Mahindra will work to provide a new delivery channel for rural India through the i-Shakti kiosks to offer a multitude of products and services to the rural customer. HLL is deploying iShakti through its partnership with Yonearth Interactive, a Mumbai based Interactive Technology and Online Marketing Company. Hindustan Lever Limited (HLL) is India's largest Fast Moving Consumer Goods company, touching the lives of two out of three Indians. HLLs mission is to add vitality to life" through its presence in over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. The company meets everyday needs for nutrition, hygiene, and personal care, with brands that help people feel good, look good and get more out of life.

Name Last Price 197.65 3,467.95 1,302.95 Market Cap. (Rs. cr.) Sales Turnover Net Profit Total Assets 16,052.47 1,015.78

ITC Godfrey Phillip VST

153,205.12 21,167.58 3,606.25 2,012.00 1,631.95 584.57

4,987.61 166.03 95.01


Kothari Product Golden Tobacco





560.08 152.53





Rural Vs Urban Consumers Challenges

The biggest mistake a FMCG company can make while entering the rural India is to treat it as an extension to the existing urban market. But there is a vast difference in the lifestyles of the rural and urban consumers. The rural Indian consumer is economically, socially, and psychographically different from his urban counterpart. The kind of choices that an urban customer takes for granted is different from the choices available to the rural counterparts. The difference in consumer behavior in essence stems from the way of thinking with the fairly simple thought process of the rural consumer in contrast to a much more complex urban counterpart. On top of this there has hardly been any research into the consumer behavior of the rural areas, whereas there is considerable amount of data on the urban consumers regarding things like - who is the influencer, who is the buyer, how do they go and buy, how much money do they spend on their purchases, etc. On the rural front the efforts have started only recently and will take time to come out with substantial results. So the primary challenge is to understand the buyer and his behavior. Even greater challenge lies in terms of the vast differences in the rural areas which severely limits the marketers ability to segment, target and position his offerings. The population is dispersed to such an extent that 90% of the rural population is concentrated in villages with population of less than 2000. So the geographical spread is not as homogeneous as it is with the urban areas owing to vast differences culture and education levels. Also with agriculture being the main business of rural sector the purchasing power of rural consumer is highly unpredictable which can lead to high variations in demand patterns. One more gray area that needs to be probed into is the importance of retailer in rural trade. Rural consumers brand choices are greatly restricted and this is where the retailer comes into the picture. The rural customer generally goes to the same retailer to buy goods. Naturally theres a very strong bonding in terms of trust between the two. Also with the low education levels of rural sector the rural buying behavior is such that the consumer doesn't ask for the things explicitly by brand but like "laal wala sabun dena" or "paanch rupey waali chai dena". Now in such a scenario the brand becomes subservient to the retailer and he pushes whatever brand fetches him the greatest returns. Thus, as there is a need to understand the rural consumer, similarly need is there to study the retailer as he is a chief influencer in the buying decision. Developing effective rural marketing strategy Till recently most FMCG companies used to treat rural markets as adjuncts to their urban strongholds and rural consumers as a homogeneous mass without segmenting them into target markets and positioning brands appropriately. However it is beyond doubt that the treat rural markets are not dumping grounds for low-end products basically designed for an urban audience.

The winning strategy instead is to focus on their core competency such as technological expertise to design specific products for the rural economy. The most remarkable example in this context is the launch of sachets which has transformed the rural market considerably as packaging in smaller units and lesser-priced packs increases the products affordability. Also companies like HLL and Nestle who have adopted this strategy have benefited tremendously. Another case is of Britannia with its Tiger brand of low priced and conveniently packaged biscuits becoming a great success story in rural markets. Companies also need to change the profile of their brand managers as they are usually urban-bred MBAs, fed on a staple diet of western marketing principles and are alien to the rural India. A step in this direction like hiring managers from the Institute of Rural Management Anand (IRMA) could probably go a long way in improving the situation. Along with the cultural dynamics, the needs and latent feelings of the rural people have to be well understood before launching products in rural segments. Marketers would do well to first understand this and then designing products accordingly. For example, Cadburys has launched ChocoBix, a chocolate flavored biscuit which is based on the consumer insight that rural mothers opt for biscuits rather than chocolates for their children. Another very important factor that needs to be looked at is the proliferation of spurious products. Rural masses are illiterate people and they identify a product by its packaging (color, visuals, size etc.). So it becomes very easy for counterfeit products to eat into the market share of established reputed brands. The retailer also gets a larger profit on selling the counterfeits rather than the genuine products and hence is biased towards the fakes. Brands such as "Jifeboy", "Bonds Talcum", "Funny & Lovely" etc., which are doing the rounds of rural markets, pose considerable challenge to rural marketers. Companies would also do well to have a proper sales and distribution network. In terms of sheer reach the companies can gain significant competitive advantages as the rural market is highly fragmented and a brand needs to be on the shop shelf before it can be sold. Companies should also make sure that the prices of their products are not pushed up because of a channel of middlemen who are neither required nor add any value to the product. The rural market remains quite price-sensitive and thus squeezing costs at every stage is of vital importance. Some FMCG giants like HLL are in process of enhancing their control on the rural supply chain through a network of rural sub-stockists, who are based in the villages only. Apart from this to acquire further edge in distribution HLL has started Project Shakti in partnership with Self Help groups of rural women. However not all traditional strategies need to work and the need is to generate creative ideas. A very significant step for change could be an effort to directly tap the haats, mandis, melas and local bazaars which provide an opportunity of promoting the brand in front of a large congregation of rural consumers. Finally an effective rural strategy for FMCG companies must include the use of traditional media for creating awareness about their products in the rural markets. The need for unconventional media arises as the mass media is too glamorous, interpersonal and unreliable for a rural consumer. The traditional media on the other hand with its effective reach, powerful input and personalized communication system will help in realizing the goal. Besides this when the

advertisement is couched in entertainment it goes down easily with the villager. The advantages of traditional media which make it a powerful marketing communication channel are: accessibility is high, it involves more then one sense, interest arousal capability is high and minimum cost. There are few companies which have used traditional media effectively and reaped rich dividends. Brooke Bond Lipton India Ltd (BBLIL) markets its rural brands through magic shows and skits. Reckitt and Colemen uses NGO's in rural areas to educate customers about product benefits which establishes one to one communication channels.

Swot analysis
STRENGTHS Well Known Brand name Respected Company Good Distribution Network Good Product Quality Diversified company in a number of business sector New Brands for new Segments Lion in Cigarette market

WEAKNESSES People connect ITC with Tobacco brand which is related to poor health and premature Death Still the company is dependent on Tobacco for its revenue Generation.

OPPORTUNITIES New product Discoveries Moving into new and emerging sectors like IT and supporting business solutions E-Choupal Project Per Capita consumption of Personal care products in India is the lowest in the world which offer an opportunity for ITCs soaps and shampoos

THREATS 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 Ban on smoking


? Hotels Paperboards & Packaging Agri Business

FMCG (Others) ITC Infotech

CASH COWS FMCG (Cigarettes)


CONCLUSION: ITC is widely perceived to be dedicatedly nation-oriented. ITC has fulfilled the aspirations of its stakeholders and meet societal expectations. As India's 'kissan' Company, ITC has taken care to involve farmers in the designing and management of the entire 'e-Choupal' initiative. Project Shakti is enabling families to live with dignity and in better health & hygiene, education of the children and an overall betterment in living standards. It creates a win-win partnership between HUL and the rural consumers for mutual benefit and growth.