Indian Tobacco Company(ITC)

in FMCG
Presented by group 8
Saurabh Srivastava(WMP10034)
Shirish Agarwal(WMP10036)
Shubhank Rathour(WMP10037)
Anshul Verma(WMP10055)
Syed Fuzal Hasan(WMP10087)

ITC - Overview
ITC Limited, a multi-business conglomerate, has diversified presence in FMCG, Hotels, Paperboards and
Packaging, Agri Business and Information Technology.
ITC was incorporated on August 24, 1910 under the nameImperial Tobacco Company of India

Limited and I.T.C. Limited in 1974.

Fast Moving Consumer Goodscomprising Foods, Personal Care, Cigarettes and Cigars, Branded

Apparel, Education and Stationery Products, Incense Sticks and Safety Matches,Hotels, Paperboards
& Specialty Papers, Packaging, Agri-Business and Information Technology.
ITC Position
The fast movingconsumer goods(FMCG) segment is the fourth largest sector in the Indian economy.
The market size of FMCG in India is estimated to grow from US$ 30 billion in 2011 to US$ 74 billion in
2018.
Food products is the leading segment, accounting for 43 per cent of the overall market share.
Personal care (22 per cent)
fabric care (12 per cent)
Consumer durables market is expected to double at 14.7 per cent CAGR to US$ 12.5 billion in FY15
from US$ 6.3 billion in FY10.
Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the
sector.

ITC: Vision, Mission & Strategic Intent

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 Company's stakeholders.
Mission

To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering
superior and sustainable stakeholder value.
Strategic Intent

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.

Core Values at ITC

Trusteeship ITC actualizes stakeholder value and interest on a longterm sustainable

basis.
Customer Focus- ITC is always customer focused and deliver what the customer needs in
terms of value , quality and satisfaction.
Respect for people ITC is result oriented, setting high performance standards for ourselves
as individuals and teams ,simultaneously respect and value people and uphold humanness
andhuman dignity.
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 - We are aware ofour responsibility to generate economic value for the
Nation. In pursuit of ourgoals, we will make nocompromise incomplying with applicable
laws and regulations at all levels.

Key characteristics of Culture at ITC

Individual Initiative - ITC provides high freedom, less responsibility due to set procedures.
Direction Organisational objectives are very well defined and practiced.
Management Support Highly supportive management towards employees and their

families.
Identity High degree of identification towards organization by employees.
Conflict Tolerance ITC offers high tolerance whereas newer division averse to conflict
tolerance.
Risk Tolerance
Integration
Control
Reward System
Communication Patterns

Corporate Strategy

Focus on the chosen business portfolio

FMCG

Hotels

Paperboards

Paper & Packaging

Agri Business

Information Technology

Blend diverse core competencies residing in various Businesses to enhance the competitive power of
the portfolio

Position each business to attain leadership on the strength of world-class standards in quality and
costs

Craft appropriate Strategy of Organisation and governance processes to :

Enable focus on each business and
Harness diversity of portfolio to create unique sources of competitive advantage

ITCs Business Portfolio

FMCG
Cigarette
s

Foods

Lifestyle
Retailing

Safety Matches & Incense

Sticks

Education &
Stationery

Hotels

Personal
Care

Paperboards,
Paper &
Packaging

Agri
Business

Information
Technology

Brands

Major Awards & Accolades 2014/15

'Sunfeast' and 'Vivel' voted as the 'Buzziest

Brands' in the Foods and Personal Care
categories, respectively by Afaqs one of the
world's largest marketing and advertising
portals

ITC Grand Bharat, ranked No. 4 amongst the

Top 100 Hotels & Resorts of the World on the
coveted Conde Nast Traveler U.S. Readers
Choice Awards 2015

ITC Hotels won the 'Best Luxury Hotel Chain

of the Year' award at the 10th Hospitality
India
and Explore the World Annual
International Awards

John Players ranked 4th Most Exciting Brand

in the Apparel Category by Brand Equity,
Economic Times.

'Classmate' was voted the "Most Popular

School Accessories Brand" at the 'Child Most
Popular Awards' 2014.

Major Awards & Accolades 2014/15

ITC's Karnataka Green Leaf

Threshing
Project
at
Mysore received
the 'Gold'
rating from the Indian
Green Building Council.

The Kovai Unit of ITC's

Paperboards and Specialty
Papers Business received
the
Tamil
Nadu
state
award for Green
Initiatives
and Environmental Best
Practices.

ITC's
Packaging
&
Printing Business won 4
'World Star Awards' from
the
World Packaging
Organisation, 4 'Asia Star
Awards' from the Asian
Packaging
Federation
and
17
'India
from
the
Indian Star
Awards'
Institute
of
Packaging for
excellence in
packaging solutions.

10

Key success factors of the industry

Changing customer preference
Health and wellness is a mega trend shaping consumer preferences and shopping habits
According to the PwC-FICCI report Winds of change, 2013: the wellness consumer, nutrition

foods, beverages and supplements comprise a INR 145 billion to 150 billion market in India, is
growing at a CAGR of 10 to 12%.

Major drivers of FMCG Sales

Availability : Given the Indian FMCG consumers preference for traditional trade outlets, its

understandable that availability is the biggest driver of FMCG sales.

Awareness: While the extent of the impact is smaller, yet, the effect of lower television

gross rating points (GRP) has affected sales.

Macro factors: Growing economy has helped increase consumers purchasing power.
Sachet (Low volume packs): New product launches through sachets have fuelled growth

over the years. The growth in the number of low-volume packs hit 31.1% from 2009 to 2010.

External Environment Analysis of the Firm

Macro-Environmental Factors affecting firm continued..

Negative GDP growth rate shows the decreasing trend during the year 2011-12 because of

economic policy and fall in production.

Inflation rate refers to a general rise in prices measured against a standard level of purchasing

power.

The Government of India (GOI) has recently approved 51 per cent FDI in multi-brand retail, which

will boost the nascent organised retail market in the country. It has also allowed 100 per cent FDI in
the cash and carry segment and in single-brand retail.

Interest rates on deposits growth rate was 1.08 per cent which shows the fluctuating trend from 7.5

to 9.5 during this period. The Interest rate is increased which helps to encourage the saving habit
of an individual.

Reduction in purchasing power

Market share can decrease
Decrease in consumer spending

Macro-Environmental Factors affecting firm continued..

Year
20102011
20112012
20122013
20132014
20142015
Compou
nd
Annual
Growth
Rate (%)

Analysis of the macro -environmental factors on FMCG Industry

Total Income Total Expenses Total Sales
(in Cr.)
(in Cr.)
(in Cr.)

PAT
(in Cr.)

GDP
(%)

Inflation Interest Rate

(%)
(%)

Exchange Rate
(Rs/$)

22309.35

14316.82

21458.98

4987.61

8.40

8.87

9.50

45.57

26064.75

16390.79

25173.82

6162.37

6.50

9.30

9.30

47.95

31.86.32

19520.11

29901.27

7418.39

5.10

10.92

9.00

54.15

34474.15

20912.17

33238.70

8785.21

6.90

6.37

8.75

58.5

38265.06

23248.38

36507.40

9607.73

7.30

5.69

8.5

66.00

10.43

10.44

10.53

10.34

-6.49

1.67

1.08

2.66

Macro-Environmental Factors affecting firm continued..

Industry Performance Trends

The overall fast moving consumer goods (FMCG) market is expected to increase at compound annual

growth rate (CAGR) of 14.7 per cent , with the rural FMCG market expected to increase at a CAGR of
16.3 per cent
Rising incomes and growing youth population have been key growth drivers for the sector. Brand

Consciousness has also aided demand. It is estimated that First Time Modern Trade Shoppers spend
has reached $ 1 billion by 2015.
The industry has witnessed healthy foreign direct investment (FDI) inflow, as the sector accounted for

2 per cent of the countrys total FDI inflow over April 2000 to March 2013. Organised retail share is
expected to double to 14-18 per cent of the overall retail market by 2015.
Rural demand growth is expected to occur mainly with consumers moving up towards premium

products.

Internal Analysis of the Firm

Rs. In Crs
Total net Economic value
Inventory
Current
income(In added (EVA) (In
turnover
ratio
Cr)
Cr)
ratio

Year

No. Of
Employees

EPS

Mfg facility

ROCE(%)

2014-15

25,787

11.99

26

45.74

38,050

9264.96

2.05

6.43

2013-14

25,917

11.05

25

48.21

34,346

7699.28

2.10

4.52

2012-13

25,962

9.39

23

48.29

30.840

3349.59

1.70

4.53

2011-12

25,165

7.88

21

47.69

25,973

3124.52

1.58

4.47

2010-11

24,027

6.45

20

45.88

22,039

2938.46

1.09

5.85

Year

%
change

Employee Cost

Beta

Rf %

Rm %

COC
%

NPBT

Tax

NOPAT

COC

EVA

%
Change

2010-11

745

0.29

0.04

0.85

0.27

4571.77

1480.97

3090.8

152.33

2938.46

2011-12

903.37

21.25

1.18

0.06

0.15

0.11

4825.74

1565.13

3260.61

136.08

3124.52

6.33

2012-13

1014.87

12.34

-2.51

0.07

-0.25

0.80

6015.31

1965.43

4049.88

700.28

3349.59

7.20

2013-14

1178.46

16.11

-3.25

0.09

0.29

-0.66

7268.16

2287.69

4980.47

-431.12

7699.28

129.85

2014-15

1265.41

7.37

3.38

0.08

-0.08

-0.57

8897.53

2737.08

6160.45

-367.43

9264.96

20.33

ITC Performance Track Record

1995-96

Rs.
cr.
2014-15

Gross Revenue
Net Revenue
PBT
PAT
Capital Employed
ROCE %

5,115
2,536
452
261
1,886
28.4

49,965
36,083
13,998
9,608
32,420
43.4

Market Capitalisation
Total Shareholder Returns %

5,571

2,60,865

19-yr Cagr
95-96 to 1415
12.7%
15.0%
19.8%
20.9%
16.1%
22.4%
24.3%

Market Cap and TSR based on FY-end prices for FY96 and FY15

Sensex (CAGR 95-96 to 14-15) :

11.8%
1

Segment Revenue - 2014/15

Rs. cr.

Full Year
2014-15

2013-14

16805
9011
25816
1187
8380
4974
40357
4274
36083

15456
8099
23555
1133
7752
4861
37301
4418
32883

Goly(%)

Segment Revenue (Net)

a)FMCG

- Cigarettes
- Others
Total FMCG

b)Hotels
c)Agri Business
d)Paperboards, Paper & Packaging
Total
Less : Inter segment revenue
Net sales / income from operations

8.7
11.3
9.6
4.8
8.1
2.3
8.2
(3.3)
9.7

Net Sales up 9.7%

Non-Cigarette FMCG segment registers a healthy growth of 11.3% amidst

subdued demand conditions
20

ITC Sales Revenue (Segmented)

Sales Revenue 2015

15%

3%

9%
2%
16%

55%

FMCG-Cigarattes
FMCG-Others
Hotels
Paperboard &
Packaging
Agri-Business
Others

Sales Revenue 2014

14%

2%

10%
2%
15%

57%

FMCG-Cigarattes
FMCG-Others
Hotels
Paperboard &
Packaging
Agri-Business
Others

ITC Segment Profit(Segmented)

Profit Before Tax 2015

7%
0%

FMCG-Cigarattes
FMCG-Others
Hotels
Paperboard &
Packaging
Agri-Business
Others

7%2%

84%

Sales Revenue 2014

FMCG-Cigarattes
FMCG-Others
Hotels
Paperboard &
Packaging
Agri-Business
Others

1%
7%
7%
0%
1%

83%

ITCs Economic Contribution to the Nation

10 year Value addition ~ Rs. 2.2 lakh crore (US$ 43 billion)

~75% of value addition accrued to the Exchequer
Among the top tax payers in the nation (Private sector)
Excise payments represent ~ 7% of Indias total Excise collection

Foreign exchange earnings in the last 10 years: US$ 6.6 bln

Of which agri exports constituted ~57%

23

Competitors - Key Financial Ratio

ITC Competitors Key Financial Ratios Comparison
Profitability Ratios
Operating Profit Margin(%)

Profit Before Interest And Tax Margin(%)

Gross Profit Margin(%)

Net Profit Margin(%)

ITC
HUL
Nestle
Dabur
Britania

ITC
HUL
Nestle
Dabur
Britania

ITC
HUL
Nestle
Dabur
Britania

ITC
HUL
Nestle
Dabur
Britania

Year
2015
36.9
16.9
20.7
17.27
10.75

32.88
15.66
17.12
15.66
9

34.27
15.97
17.27
16.06
9.11

26.31
14
12.02
14.04
8.67

year
2014
37.47
15.97
21.39
16.95
9.45

33.64
14.71
17.61
15.49
8.4

34.76
15.04
17.77
15.84
8.45

26.43
13.8
12.27
13.8
5.86

Year
2013
35.54
15.51
22.29
17.34
6.61

31.88
14.26
18.89
15.35
5.54

32.88
14.59
18.96
15.66
5.59

24.8
14.7
12.81
13.58
4.16

Year
2012
35.15
14.88
20.97
17.47
5.61

31.34
13.72
18.87
15.49
4.6

32.37
13.89
18.93
15.72
4.66

24.47
12.16
12.79
12.32
3.75

Year
2011
34.54
13.57
19.91
19.06
5.48

30.65
12.28
17.77
17.76
4.37

31.48
12.45
17.87
17.91
4.42

23.24
11.68
13
14.39
3.44

Competitors Analysis

Key success factors of the industry

Rural set to rise
Rural areas expected to be the major driver for FMCG, as growth continues to be high in these

regions.
Rural areas saw a 16 per cent, as against 12 per cent rise in urban areas.
The Government of India has also been supporting the rural population with higher minimum
support prices (MSPs), loan waivers, and disbursements through the National Rural
Employment Guarantee Act (NREGA) programme. This has has helped in reducing poverty
inrural Indiaand given a boost to rural purchasing power.
Hence rural demand is set to rise with rising incomes and greater awareness of brands.
Urban trends
With rise in disposable incomes, mid- and high-income consumers in urban areas have shifted

their purchasing trend from essential to premium products. In response, firms have started
enhancing their premium products portfolio.

Porters 5 force analysis

Porter's forces
Threat of new entrants - Low

Threat of substitutes - High

Measures
1. Economics of scale
2. Product Differentiation
3. Capital Requirement
4. Access to Distribution Channels
1. There are scarce customers because the industry saturated and the
competitors try to snatch their share of market.
2. Market players use all sorts of tactics and activities from intensive
advertisement campaigns to promotional stuff and price wars etc.
3. Products with improving price/performance tradeoff relative to
present industry products.

1. Market players use all sorts of tactics and activities from intensive
advertisement campaigns to promotional stuff and price wars etc.
Rivalry among competitors - High 2. Using price competition
3. Making new product introduction

Porters 5 force analysis

Porter's forces

Measures

1. There is large number of supplier available and the raw materials

are also readily available.
Bargaining power of suppliers 2. There is no monopoly situation in the supplier side because the
High
suppliers are also competing among themselves.
3. Buyer is not an important customer to supplier
1. Low switching cost
2. Buyers are numerous and fragmented
Bargaining power of buyers - High 3. There is no threat of buying one product over other.

Value Chain

Primary Activities

Source ITC Sustainability report 2015

Value chain activities Inbound logistics

Raw material and inventory cost almost 60% of the production cost.
ITC has close knit mutual understanding with its suppliers in all the tier cities.
Triple Bottom Line philosophy for creating value that encompasses the economic, environmental and

social dimensions.

Value chain activities Operations

The firm uses high degree of renewable sources of energy, recycling of solid waste generated and

pursues unwavering focus on quality, cost consciousness, integrated operations, customer service and
ability to create new market segments to negate the impact of the cost escalations.
Capitalizing R &D efforts on varietal improvement in collaboration with Central Tobacco Research institute

and the Tobacco Board of India. This leads to proof of concepts which gives valuable insights in several
technical aspects of plant breeding and genetics of these species.
Important CSR initiatives to promote sports and tourism under the Surya Nepal Khelparyatan programme,

in collaboration with Nepal Tourism Board.

Value chain activities Outbound logistics

Well established delivery channels from all the plants.

The firm is increasingly capturing the North Indian Market and setting up new manufacturing facilities like

state of the art cigarette factory in Pokhara in May 2014 by adopting the EHS strategies by optimizing
natural resources usage and providing a safe and healthy workplace.

Value chain activities Marketing & sales

Company has unique strengths in marketing & distribution and uses marketing communications

strategies like advertising, sponsorships and promotions.

ITCs various initiatives like e-Choupal in Rural India and ITC was voted the Buzziest Brand in the

Corporate category by afaqs, one of the worlds largest marketing and advertising portals.
Campaigns like Made for Each other for its Wills Brand, branding for the Sunfeast with Sharukh Khan

as the Ambassador and increasing the visibility by becoming the official sponsors of Sunfeast Open in
WTA championships have helped them to attract new customer base while maintaining the existing one.

Value chain activities Services

ITC Hotels is acknowledged worldwide for its fine art of hospitability, ITC InfoTech is regarded

as a specialized global scale full service provider for BFSI, Airlines and Hospitability sectors.
ITC has continued focus on providing services in rural areas towards enhancing the

competitiveness of Indian agriculture and plays a critical enabling role in integrating the
farmers, input vendors and government agencies.
ITC endeavors to integrate sustainability in the procurement process for its products and

services across its diversified business portfolio . The policy followed is Responsible Sourcing
encourages resource efficiency with a Code of Conduct for Vendors and Service Providers so
that they can adopt sustainable practices.

Arena (Product categories)

2010-11
1. Cigarettes
2. Hotels
3. Paperboards &
Specialty Papers
4. Packaging
5. Agri-Business
6. Packaged foods &
Confectionary
7. Information
Technology
8. Branded Apparel
9. Personal Care
10. Stationary
11. Safety Matches
12. FMCG Products
. Launch of Hand
rolled cigar
Armenteros
. Sunfeast Dark

2011-12

2012-13

1. Cigarettes
2. Hotels
3. Paperboards &
Specialty Papers
4. Packaging
5. Agri-Business
6. Packaged foods &
Confectionary
7. Information
Technology
8. Branded Apparel
9. Personal Care
10. Stationary
11. Safety Matches
12. FMCG Products
. Launch of Bingo
Tangles
. Sunfeast Dream
Cream & Candiman

1. Cigarettes
2. Hotels
3. Paperboards &
Specialty Papers
4. Packaging
5. Agri-Business
6. Packaged foods &
Confectionary
7. Information
Technology
8. Branded Apparel
9. Personal Care
10. Stationary
11. Safety Matches
12. FMCG Products
. Engage Deodorant
. Color Crew art
stationary

2013-14
1. Cigarettes
2. Hotels
3. Paperboards &
Specialty Papers
4. Packaging
5. Agri-Business
6. Packaged foods &
Confectionary
7. Information
Technology
8. Branded Apparel
9. Personal Care
10. Stationary
11. Safety Matches
12. FMCG Products
. Kwiknic nicotine
gums

2014-15
1. Cigarettes
2. Hotels
3. Paperboards &
Specialty Papers
4. Packaging
5. Agri-Business
6. Packaged foods &
Confectionary
7. Information
Technology
8. Branded Apparel
9. Personal Care
10. Stationary
11. Safety Matches
12. FMCG Products
. Health biscuit
Sunfeast farmlite
. Variants of
Cigarettes like Gold

FMCG
products
Cigarette

Arena
(Market
Segments
2010-15)
Brands

Ready to eat
foods
Staples
Confectionery
Snack foods
Lifestyle
retailing

Greeting cards
Notebooks
Safety matches

Domestic market - India Kings, Gold Flake, Navy Cut, Scissors,

Capstan, Berkeley and Bristol (Mid Segment)
USA - Checkers, Hi-Val, Royale Classic and Gold Crest (Super
Premium Segment)
Middle East - Royale Classic, Gold Cut and Scissors Filter King
(Premium Segment)
Kitchens of India (Mid Segment)
Aashirvaad (Mid Segment)
Mint-O, Candy man (Mid Segment)
Sun feast (Mid Segment)
Relaxed Wear - Wills Sport (Mid Segment)
Formal Wear - Wills Classic (Mid Segment)
Evening Wear and Designer Accessories - Wills Club life
(Premium Segment)
Branded mens apparel - John Players ( Premium Segment)
English cards Expressions (Mid Segment)
Vernacular cards Matrubhasha (Mid Segment)
School notebooks Classmate (Mid Segment)
College and office notebooks Paperkraft (Mid Segment)
iKno, Mangal Deep,VaxLit, Delite, Aim (Mid Segment)

Arena (Geographical Area 2010-15)

Cigarettes
Foods & agriproducts

Paper &
packaging

Safety matches
Incense sticks

Has launched its own brands in the US and Middle East

Largest company in Nepal
Packaged foods brand Kitchens of India exported to US, Canada,
UK and Switzerland
Branded sea foods exported to US, Europe and Japan
Supply chain partner of several leading international customers for
agri products- Coke, Abudhabi Flour Mill, Mitsubishi
Supplies tobacco to customers in 37 countries
Exports of coated boards to Malaysia, Sri Lanka, Bangladesh, Iran,
Australia, UAE, Saudi Arabia, Singapore, UK, Italy, Netherlands
and China
Exports of cigarette tissues and dcor paper for laminates to Iran,
Indonesia, Philippines, Nepal, Bhutan and Bangladesh
Supplies packaging for 15 billion cigarette sticks a year for the
export market
Export of premium brands of safety matches to Europe, Africa and
the USA
Exported to US, Europe and south-east Asia

Vehicle & Staging

2010-11: ITC is the market leader in cigarettes in India and has also established its
Lifestyle retailing business and branded packaged food business.

2011-12: Establishing best practices by following Triple Bottom Line by striking a

harmonious balance between economy, ecology and society.

2012-13: Made in India global- ITC has leveraged in its global initiatives and has
contributed significantly to Indias foreign exchange earnings ( more than USD 2 billion
in the last decade).

2013-14: Continued with same best practices and has achieved the distinction of one
of the largest Indian exporter of agri-products with exports of over USD 150 million.

2014-15: Continued with same best practices ITC has prudently employed the cash
generated by its business to grow its business by product extensions & building brand
recognition for the international community.

Differentiators
Rural Area Market - ITCs major initiatives in rural area s are e-Choupal trading and
information system. This is worlds largest rural digital infrastructure serving more than 4
million farmers. It is an initiative to link directly with rural farmers via the Internet for
procurement of agricultural and aquaculture products like soybeans, wheat, coffee, and
prawns.
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.

Differentiators continued
Choupal Pradarshan Khet: Another path-breaking initiative - 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.
Social and Farm forestry initiative has greened nearly 200,000 hectares and generated
nearly 90 million person-days of employment for rural households, including poor tribal and
marginal farmers.
Unique Customer Relationship Management programme for commodity customers in
both domestic and international markets.
Significant thrust on social sector investments under Mission Sunehra Kal
initiatives Natural resource management Sustainable livelihoods Community
development programmes in the economic vicinity of operating locations
Creating over twice the rainwater harvesting potential than ITCs net water
consumption
Over 43% of total energy consumed is from renewable sources

Economic Logic
Blend diverse core competencies residing in various Businesses to enhance the

competitive power of the portfolio.

Purchase of raw materials direct from farmers through e-Choupal.
Also it nominates the source of supply for raw materials and sets the standards and fixes

the price of the product at every stage of the value chain.

ITC closely control the specification and price of the products.
Over 35000 villages linked through around 6100 e-Choupals servicing around 4 million

farmers
Use of world class technology to reduce cost and maintain quality.

Economic Logic continued..

Fully integrated with in-house pulping capacity in paperboard segment.
Over 43% of total energy consumed is from renewable sources
ITC collaborates with local NGOs and other organizations which work with SHGs, and the

company in thus indirectly able to access cheap capital and other benefits.
ITC identified small-scale suppliers which manufacture the final product.

Internal/External factors alignment

Top-down approach
The company's "top-down" approach is to cracking categories in the FMCG business. It's a strategy the
company perfected in its mainstay cigarette business and has replicated in the personal care, food and
stationery operations. Under this approach, ITC enters any new category at the premium end, builds its
brands, and then rolls out the mass range.
Triple Bottom Line' approach
Triple Bottom Line commitment of the Company to simultaneously build economic, social and
environmental capital has spurred innovation to orchestrate a symphony of efforts that address some of
the most challenging societal issues including widespread poverty and environmental degradation.
Diversification is one of the main key factor of ITC which they started in early 70s by entering into
Hotels business and since then ITC has been constantly making efforts to de-emphasize its tobacco
business. Its corporate strategy aimed at creating multiple drivers of growth based on its core
competencies.

Internal/External factors alignment continued..

ITC is a diversified company trading in a number of business sectors including cigarettes,

hotels, paper, agriculture, packaged foods and confectionary, branded apparel, personal
care, greetings cards, Information Technology, safety matches, incense sticks and stationery.
ITC leverages e-Choupal in a novel way.
Per capita consumption of personal care products in India is the lowest in the world offering

an opportunity for ITCs soaps, shampoos and fragrances under their Wills brand.
ITCused its experience of transporting and distributing tobacco products to remote and

distant parts of India to the advantage of its FMCG products. ITC master chefs from its hotel
chain are often asked to develop new food concepts for its FMCG business.
Multiple drivers of growth & unmatched distribution reach, superior brand building

capabilities, effective supply chain management into new businesses are expected to garner
a significant share of their emerging high growth market in India.

Social Impact

Direct employment ITC Group : over 32,000

Supported creation of 6 million sustainable livelihoods

e-Choupal: Worlds largest rural digital infrastructure serving more than 4 million farmers

Social and Farm forestry initiative has greened nearly 200,000 hectares and generated nearly 90
million person-days of employment for rural households, including poor tribal and marginal farmers.

Significant thrust on social sector investments under Mission Sunehra Kal initiatives
Natural resource management
Sustainable livelihoods
Community development programmes in the economic vicinity of operating
locations

Environmental Impact

Carbon positive enterprise 10 years in a row

Sequestering
over twice
the
amount of
company emits

CO2 that the

Water positive - 13 years in a row

Creating over twice the rainwater harvesting potential than ITCs net
water consumption
Solid waste recycling positive 8 years in a row
Over 43% of total energy consumed is from renewable sources

Only Company in the world of comparable dimensions to have achieved

and
sustained the 3 key global indices of environmental sustainability of
being Carbon positive, Water positive and Solid waste recycling

46

International Strategy
Globalisation at a glance
Contribution of more than US$ 2 billion to India's exports in the last decade
ITC's International Business Division is one of the largest Indian exporters of agri-products and
is a preferred supply chain partner to companies like Coca Cola, Mitsubishi etc
Markets its own bran of cigarettes in the US and Middle East
Largest exporter of coated boards from India
Largest exporter of cigarette tobaccos from India
Surya Nepal Private Limited (SNPL) is an Indo-Nepal-UK joint venture, which started operations

in Nepal in 1986. SNPL, a subsidiary of ITC Ltd, India, is the largest private sector enterprise in
Nepal.
Welcom Hotels Lanka (Private) Limited ('WLPL'), a wholly-owned subsidiary of ITC Ltd., India, was
incorporated in Sri Lanka with the objective of constructing, building and operating a mixed use
development project ('Project') including a luxury hotel at Colombo.
ITC Infotech has established offices across 18 countries, with 10 global development centers and
client engagements in 35+ countries.
Presence mostly in Indian sub continent with IT arms presence across the globe.
Not aggressive in Internationalization rather focus on diversification leveraging existing operations.

Corporate Social Responsibility

E-Choupal in Agri Business A more efficient supply chain aimed at

delivering value to its customers around the world on sustainable basis.ITC

realized that by owning the agri-product procurement value chain, they
could serve the needs of the end customer better andreduce their "true
cost of contract.

The Value chain Farm to Factory Gate

Total Spend on CSR in last 4 years

2012

2013

2014

2015

Total Spend on
CSR

58

78

107

214.06

Avg. Net Profit

6003

7320

8847

9607.7

CSR spends as
a % of Average
Net Profits

0.96%

1.06%

1.20%

2.22%

Core challenges Faced by ITC

Restructuring the Companys Business Portfolio and investment.
Diversification of the business.
Issue with customer loyalty due to substitutes.
Large MNC entering Indian market
Illegal FMCG sales

Recommendations
-ITC should try to penetrate the e-cigarettes and non-tobacco smoking market being a
established well-known cigarette brand.
-ITC should try to focus more on paperboard and packaging industry as it is the most
profitable industry after FMCG-Cigarette.
-Increase customer loyalty by rapid product innovation.
-The company can come up with the concept of retail branding of food products across all
over India as it follows the marketing strategy of Umbrella branding.
-The company can approach the government or distribute their products in Military canteens
and can sell them to organization that provides the afternoon meals to the children as part
of mid-day meal scheme.

Thank you