Flexibility is the key of success

Team members:Neeraj Tripathi Anjani Kumar Arun Kumar Awanindra Pratap Singh Ashish Khetal Aastha Johri Nidhi Bhanot

1910 1953 1954 1970 1972 1973 1978 1986 1987 1988

Imperial Tobacco Co. of India incorporated as a private Ltd company Imperial acquires the manufacturing business of Tobacco Manufacturers Ltd Imperial converted into a public limited company Change in name from Imperial Tobacco Co. of India Ltd to India Tobacco Co. Ltd Enters hotel business Name changed to I T C Ltd Name of the co. s chain of hotels changed from Welcome Hotels to Welcome group JV agreement with MP Audyogik Vikas Nigam for setting up four hotels over the next five years. New Brands, Wills Flake Premium Filter & Scissors Filter, introduced Formation of a new division called Agribusiness Division for carrying out research and development on production, distribution and export of high yielding agricultural produce. Different varieties of oilseeds under the brand name of Adarsh and cooking oil under Sundrop launched. Refined mustard oil under the brand name Real Gold introduced. A wholly owned subsidiary ITC Infotech Ltd, incorporated in UK.

1990 1992

1993 1994 1996 1998 1999 2000

Two new cigarette brands, Classic Milds and Hero launched in the premium and small-length ends respectively. smallProposes to sell various edible oil brands to ITC Agro Tech Ltd for a consideration of Rs.250 million. Launch of Classic ultra Milds and Wills Natural Lights brands. Signs an agreement with National Securities Depository Ltd to get its securities dematerialized. Raises its stake in paper and paperboards subsidiary, ITC Bhadrachalam Paperboards,from 37% to 51%. Launch of e-Choupal in Bhopal to web-enable farmers to undertake ewebagricultural e-trade. eEnters retailing business by launching branded leisurewear apparel as part of its diversification strategy and sets up the Lifestyle Retailing Business Division. A SBU for greeting cards business set up under the Packaging and Printing Division. Merger of ITC Ltd and ITC Bhadrachalam Paperboards Ltd. Acquires over 14% in EIH Ltd, owner of the Oberoi chain of hotels.

2001 2002

ITC s PRODUCT 

Cigarette Branded Wear Market Greeting Cards Branded Atta Market Confectionery market Safety Matches market     

Cigarette 

Sales of cigarette (in Billion sticks) (in sticks)

Year

9696-97 97-98 98-99 99-00 00-01 01-02 9798990001102.2 104.2 102.2 98.43 97.8 87.8

Sales

There is a continuous declination in sales of cigarette    Ban on advertising Increasing anti-tobacco campaigns Rise in excise duties 

Major Players 
ITC  Godfrey Phillips India Ltd (GPIL)  Vazir Sultan Tobacco (VST) Market Share in % 9595-96 96-97 9675.23

97-98 9775.38

98-99 99-00 00-01 98990076.62 76.83 78.53

ITC GPIL VST

71.96

12.74

12.27

12.07

11.46

11.07

9.41

10.44

8.2

8.08

7.42

7.31

7.27

Branded Wear Market
Clothing market is about Rs 870 bn Readymade garments business is about Rs 191 bn   

 
    

Major Players:Players:
Madura Garments Raymond Bombay Dyeing Arvind Mills Pantaloons Zodiac Acme clothing

Greeting Cards 



Social expression industry worth is Rs 2.5 bn Annual growth of industry is 20% 

Major Players:Players:Archies Gifts and Greetings 35%  

Vintage Cards and Creations 12% ITC Expressions Cards 10% 

Confectionery market 

Confectionery market in India is about Rs 1.1 bn  

      

Major Players:Players:Nutrine Parry s Parle Candico Perfetti Ravalgon Wrigleys Jocyo India 26% 10% 12% 8% 7% 6%

Branded Atta Market
‡ Major Players: Hindustan Uniliver (Annapurna)  Godrej Pillsbury (Pillsbury)  Agro tech foods (Healthy world)  Cargill (Nature Fresh)

Safety Matches market  

Major Players:Players:
Wimco Asia Match Small Scale Sector Tiny Sector 16% 9% 58% 12%   

Needs for Diversification 
 

Govt rules and regulations To improve brand image To grasp new opportunities

Mckinesy s suggestions 


To concentrate on core business Disinvestment incurring losses businesses

Enter in Retail sector Greeting Cards Branded Packaged Foods

ITC diversified into various region but not able to get desired revenue. ITC invested around 5 billion in non-tobacco& expected increase investment non20 billion next time.

CHALLENGES  

Life style stores
Heavy startup cost. Greeting cards & gifts Existing big player in the market. Confectionary market Many competitor in market. Food Competition from unorganized sector.  

Q1. ITC has been constantly making efforts to de-emphasize its detobacco business and to create multiple avenues of growth based on its core competencies. What according to you is ITC¶s core competency? How did ITC create multiple avenues of growth based on its core competencies? ‡ Reasons for de-emphasizing from tobacco business:‡ 1. Diversification in Branded Garment aimed to improve brand image. ‡ 2. There is a continuous declination in tobacco industry, so further investment in this was not profitable.

ITC·s Core Competency 
Strong Distribution Channel

Q2. ITC had diversified into areas which were both related and
unrelated to its core business. Why did ITC venture into unrelated areas such as lifestyle retailing and foods?

Ans:
ITC recently diversified its business across three products groups: Lifestyle retailing  Greeting cards and gifts  Packaged foods 

Because the company aimed at generating 40% of its total revenues
from its diversified businesses.  To achieve this ITC planned to invest especially in branded garments and foods areas aimed at improving its brand image.  Because foods and clothing were the fastest growing industries in India.

WHY IN FOODS ?

1: To penetrate the market for their food products. 2: To take the leverage of its core competency As ITC had its strong distribution channels. 3: One an other reason may be that is ITC s brand image was very good that leads to its good will in the market.

WHY IN WILLS LIFESTYLE ?

The market researchers suggested two things:things:1: The market lacked strong branding and most brands were being mass distributed due to limited outlets. 2: Most brand were category specific or catered to a single use.

Q3.ITC s diversified businesses contribute little towards the co. s
profitability. Of the various businesses the co. has diversified into, which business do you think has the potential to contribute to ITC s revenue? Explain. 

Its 85% revenue comes from tobacco business  

Potential Profitable market:market:Wear market. Greeting Cards market.