ITC Limited

One of India’s Most Valuable Corporations
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HISTORY
ITC was incorporated on August 24,1910 under the name of IMPERIAL

TOBACCO COMPANY of India ltd’.

In 1974 company’s name was changed to INDIAN TOBACCO COMPANY LTD. From September 18,2001, company’s name has effectively become ITC Ltd.

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About ITC
Founded Headquarters Chairman Industry

August 24,1910 Virginia House, Kolkata Mr. Y.C.Deveshwar Tobacco, foods, hotels, stationery, greeting personal Rs 16200 crores 25,000 app.

cards, care, IT etc. Net Sales Employees
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Mr. Y.C.Deveshwar Chairman ITC Ltd.
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ITC

One of India’s most valuable corporations
 One of the 8 Indian Companies to feature in ‘Forbes A-

list’ for 2004
 Only Indian FMCG Company to feature in Forbes 2000

List
 Top in :

Sustained value creation (BT-Stern Stewart survey) Operating profits Cash Profits

 Ranks No. 9 among Indian listed Private Sector Companies

by market cap. (@ 31/03/08)
 No. 1 in FMCG Sector
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Awards & Accolades
 ITC features on FORBES GLOBAL 2000 rankings for 2007  ‘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.
 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.
 The

Company’s watershed program also won the Asian CSR Award for Environmental Excellence from the Asian Institute of Management. released in India, makes a special mention of ITC’s e-Choupal initiative as “an innovative use of Information Technology to link farmers to markets in India”.

 The World Development Report 2008 of the World Bank, which was recently

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Accolades & Awards
 e-Choupal initiative wins global recognition:
 Stockholm Challenge Award 2006 in the Economic Development category which

recognizes initiatives that leverage Information Technology to improve living conditions and foster economic growth in all parts of the world.
 First Indian Company to win the Development Gateway Award 2005 for the most

exemplary contribution in the field of Information & Communication Technologies (ICT) for development during the last 10 years
 World Business Award 2004: International Chamber of Commerce & the HRH Prince of

Wales & International Business forum
 Harvard University case study  Recognized in World Development Report 2008 published by World Bank  Applauded by President of India Dr APJ Kalam in his “special address during

the national symposium to commemorate 60th year of independence”

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ITC - Business Portfolio ITC

FMCG: Cigarettes Other FMCG

Hotels

Agri Business Leaf Tobacco Agri Commodities

Paperboard Paper & Packaging

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Strategy of Organisation to manage diversity of Portfolio
Formal 3-tiered governance structure:
 Board of Directors :

Comprising executive (4) and non-executive directors (11)  Strategic supervision

 Corporate Management Committee : Comprising executive directors and senior managers  Strategic management

 Divisional Chief Executive & Divisional Management Committee :

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Executive management

Corporate Strategies
 Sustain

multiple drivers of growth, matching internal capabilities with emerging market opportunities World class competitiveness in businesses and across the entire value chain
 Internal Vitality  Market Standing  Profitability

 Pursue

all

 Best-in-class in terms of :

 Blend

core competencies and leverage ITC umbrella strengths to create new avenues of growth

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FMCG Cigarettes

ITC’s Cigarettes Business
 Market leadership in all segments - geographic &

price
 Powerful brands across segments  Extensive FMCG distribution network  Direct servicing of 1,00,000 markets & 2 million retail

outlets
 World-class

state-of-the-art

technology

and

products  Investment - Rs.10 billion in six years
 Exciting long term growth potential

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Cigarettes: Growth potential
 Cigarettes account for only 15% of tobacco consumed in

India unlike world pattern of 85% due to prolonged punitive taxation
 Cigarettes (15% of tobacco consumption) contribute nearly

85% of Revenue to the Exchequer from tobacco sector
 Of the 58% of adult Indian males who consume tobacco,

barely 15% can afford cigarettes
 Biri : Cigarettes ratio = 10 : 1  Annual per capita adult cigarette consumption in India

is app.. one tenth of world average : 141
 Future growth depends on relative rates of growth of

per capita income and moderation in taxes
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Per Capita A

Source : Based on Cigarette consumption data(2003) from “World Cigarettes”,ERC Group plc.
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1662

1753

Hotels & Tourism
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ITC’s Hotel Business
 ITC-Welcomgroup : a leading hotel chain in India • Established presence in key business locations • Over 6000 rooms under 4 distinct brands
Category
Luxury Upper upscale Upscale - mid-scale Heritage

Brand
ITC Hotel: Luxury Collection WelcomHotel: Sheraton Fortune Hotels WelcomHeritage

Positioning
"Mansions of Luxury" "Passion for Quality" "Promise of True Value" "Unique Experiences"

 Capacity expansion underway at Bangalore and Chennai; plans for

other locations also being progressed
 Fastest growing hotel chain with highest operating efficiency

(PBDIT/Net Income @ 45%) amongst the 3 leading chains
 Leverages

unique

service

proposition

and

international

alliance with Starwood Hotels & Resorts
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• ‘Luxury Collection’ / ‘Sheraton’

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Paperboards, Paper & Packaging

ITC’s Paperboards Business
 Market leader in growth segment - value added coated boards  World-class contemporary technology •

Ozone bleached Pulp Mill operations commenced – only one of its kind in India meeting world-class environmental standards

 Internationally competitive quality and cost  Social farm forestry in mill command area to improve access to cost

effective fibre & to attain self-sufficiency

Biotech research based high yielding Clones – effectiveness tested in nearly 80,000 hectares

 Fully integrated operations with in-house pulping capacity at appx.

2.20 lac MT

Expansion completed; source of sustainable competitive advantage

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ITC’s Paperboards & Packaging businesses
 Capacity expansion projects underway • 120000

TPA Pulp Mill – commissioning commenced; being

stabilised
• 100000 TPA

paper machine (to support Stationery business

growth plans) – trial commissioning commenced

 ITC’s packaging SBU -India’s largest converter of paperboard

into high quality printed packaging
• Leading supplier to Indian FMCG segment • Provides superior packaging solutions to the cigarettes and new
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FMCG businesses

Agri Businesses - Leaf Tobacco
- Agri Commodities
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Indian Leaf Tobacco industry
 India – the third largest producer of tobacco  However, India’s share is only 7% in world tobacco trade  Upgradation of tobacco consumption from other formats to

cigarettes will enable: • growing domestic base • larger opportunities for value added exports
 ITC – India’s largest buyer, processor, consumer & exporter

of cigarette tobaccos
 Pioneering cultivation of flavourful Flue-cured, superior

Burley and Oriental tobaccos in India

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ITC’s Agri Commodity Business
 Farm linkages in 14 states covering Soya, Wheat, Rice, Marine

products, Coffee etc.
 Unique CRM programme in commodity exports  Leveraging IT for the transformational ‘e-Choupal’ initiative
 

Rural India’s largest Internet-based intervention Over 38000 villages linked through around 6400 e-Choupals servicing over 3.5 million farmers

 Distinctive sourcing capability for ITC’s Foods business

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The eChoupal Services
 Relevant & Real-time Information  Commodity prices, Local Weather, News  Customised Knowledge  Farm Management, Risk Management  Supply Chain for Farm Inputs  Screened for Quality, Demand Aggregation for Competitive Prices & Efficient Logistics  Direct Marketing Channel for Farm

Produce

 Lower Transaction Costs, Better Value through

Traceability

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Other Services through e-Choupal
 Distribution of Products and Services to Rural

Markets

 Micro marketing  Product/Services Demos  Marketing and Brand Building activities  Pilots  Bhoomi  eHealth with Private Health Service Providers  eEducation  Rural BPO

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Reasons For Diversification
 Tobacco Business is facing an increasingly stringent tax &

regulation regime.
• In 2001 taxes were raised by 15%; Revenue collection sub

optimized ( cigarette sales fell disproportionately as forcing consumers to shift to cheaper alternatives, but overall tobacco consumption increased )
• Last year 5% increase in excise + 12.5 %VAT leading to

unprecedented 30% increase in tax (volume of illegal cigarettes has doubled )
• This year excise on non-filter cigarettes was increased (20 % of its
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portfolio for ITC) as a result ITC has discontinued production of non filter cigarettes.

Strategic Rationale
 Blend multiple competencies residing within the ITC Group to

create new avenues of growth
 Best fit between internal capabilities and emerging market

opportunities
 Each segment enhances the depth and width of ITC’s FMCG

distribution capability
 Business

model retains critical elements of value chains

within ITC with other elements outsourced
• Contributing to the competitiveness of SMEs

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Future Growth & Value Capture

New FMCG Initiatives

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FMCG Business Initiatives Branded Packaged Foods
 Leverages:  Unique Agri sourcing skills  ITC Welcomgroup’s specialist cuisine & bakery knowledge  FMCG distribution synergies  ITC R&D Centre, Bangalore  5 chosen categories:  Staples – Aashirvaad Atta, Salt, Spices  Biscuits – Sunfeast  Salty Snacks – Potato chips, Bridge products : Bingo!  Confectionery – Candyman, Mint-o  Ready to Eat – Kitchens
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of India, Aashirvaad ReadyMeals, Aashirvaad Instant Mix, Sunfeast Pasta

FMCG Business Initiatives Branded Packaged Foods
 Aashirvaad Atta:  Current

market

leader

amongst

national

branded

players;

leverages the e-choupal network for cost-quality optimisation and region specific offerings
 Sunfeast Biscuits:  Differentiated & innovative products; continues to build consumer

franchise; distributed & outsourced supply chain being ramped up
 Number of innovative products in the pipeline leveraging the

capabilities of the ITC R&D Centre

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FMCG Business Initiatives Lifestyle Retailing

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FMCG Business Initiatives Lifestyle Retailing
 Leverages trade mark and services expertise of hotels  Relaxed wear market growth > 25% p.a  Upmarket product range available in exclusive Wills Lifestyle stores

(> 50) and multi-branded outlets/ large format retail stores across the country
 State-of-the-art Master Facility aids speed of execution  Product and brand range being expanded •

Premium segment comprising the ‘Classic’ range of formal wear, ‘Wills Sport’ relaxed wear and ‘Wills Clublife’ evening wear Strong distribution network in place for the mid-market brand ‘John Players’

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FMCG Business Initiatives Personal Care Products
 Current industry consumer spend estimated at over Rs.

21000 crores p.a. (growing at 12%)
 Brand wise Highlights

 Essenza Di Wills (Super Premium) – Portfolio’s premium

imagery augmented with launch of ‘Aqua’ for men in fine fragrances and grooming range Di Wills (Premium) – Launched Shampoos/Soaps/Shower Gels/Conditioners

 Fiama

with

 Vivel Di Wills and Vivel (Mid) – Soaps and Shampoos  Superia (Popular) – Soaps and Shampoos  Products well received in the market, rapidly gaining

customer acceptance by endorsements

 Supported
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investments

in

brands

celebrity

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FMCG Business Initiatives Education & Stationery Products Business
 Leverages print and paper know-how. Forward linkages

with new paper capacity.
 An emerging market in India - growth driven by increasing

cross-cultural exposure
 Robust

distribution network in place to scale up the

Stationery business significantly
• •

‘Classmate’ brand already the most widely distributed brand in India Scholastic products launched

 Serves to expand the width of ITC’s FMCG distribution

capability with negligible incremental investment

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 Current industry consumer spend estimated at Rs. 1250

FMCG Business Initiatives Safety Matches

crores p.a. for 24 billion match boxes
 Fragmented supply base arising from policy of reservation

for small scale industry
 ITC markets its brands with value added products across

each price point
• Support SMEs with complementary marketing strengths  ‘AIM’ – India’s largest selling Safety Matches brand  Successful acquisition of WIMCO Ltd. by Russell Credit

(shareholding as at 31/03/08: 96.82%)
• Key brands: Homelite, •

Ship,

• Cheetah Fight etc.
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FMCG Business Initiatives Incense sticks (Agarbattis)
 Current industry consumer spend estimated at over Rs. 900 crores p.a.  Fragmented supply base arising from policy of reservation for small scale

industry
 ITC markets its brands with value added products across each price point  Support cottage sector with complementary marketing strengths  ‘Mangaldeep’ : the only National brand in the country

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FMCG business initiatives…….
 Concurrently,

ITC’s

IT

subsidiary

assists

in

web-

enabling business processes
  

CRM initiatives ERP transaction processing systems SCM including the e-choupal capability

 … hosted on ITC’s Virtual Private Network  ITC awarded the best IT user in FMCG category by

Nasscom

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Positioning of ITC
A leading FMCG player in India
F e-choupal rural two-way A fulfillment capability R M Cigarette Trade Marketing capability E RExpanded FMCG distribution capability S
Brande d Foods Lifestyl e retailin g Educatio n Stationer y Matches & Agarbat ti Personal Care Product s

VPN providing SCM, ERP & CRM capability

M A R K E T S

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A basis for strategic partnerships with other FMCG brand owners

THANK YOU
Parul Agarwal Saloni Jain Vibha Porwal
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