ITC Limited

One of India’s Most Valuable Corporations

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 Performance Track Record- Snapshot
Rs crores

Cagr 95-96
95-96 07-08
to 07-08
Gross Turnover 5115 21,356 12.6%
Net Turnover 2536 13,948 15.3%
Market Capitalisation 5571 77,765 24.6%
PBDIT 584 5,015 19.6%
PBIT 536 4,576 19.6%
PBT 452 4,572 21.3%
PAT 261 3,120 23.0%
EPS Rs 0.7 8.3 22.7%
Net Worth 1121 12,025 21.9%
Capital Employed 1886 12,817 17.3%
ROCE% 28.4 35.7
Total Shareholders Returns % 25.8

Rs. 1 crore= Rs. 10 million

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 Headline Financials: 2007/08

Rs. Crs.
GTO 21356  10.7
NTO 13948  14.7
PBT 4572  16.4
PAT 3120  15.6
Balance Sheet Size 12817  15.4

Non Cigarettes Business 52.4% of NTO

(51.5% LY)

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 ITC - Key Financials – 07/08

YTD Q4 YTD Q4
Rs crs Goly %
Actuals LY

Gross Turnover External 21356 19300 10.7

Net Turnover External 13948 12164 14.7
PBDIT 5015 4293 16.8
PBIT 4576 3930 16.4
PBT 4572 3927 16.4
PAT 3120 2700 15.6
Capital Employed 12817 11111 15.4

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Segment Revenues & Results: FY 07/08
Rs. crores
Full Year
2007-08 2006-07 Goly
Segment Revenue (Net)
a) FMCG - Cigarettes 6635 5895 12.6
- Others 2510 1689 48.5
Total FMCG 9145 7584 20.6
b) Hotels 1012 906 11.7
c) Agri Business 3868 3501 10.5
d) Paperboards, Paper & Packaging 2158 1911 12.9
Total 16183 13902 16.4
Less : Inter segment revenue 2236 1738 28.6
Net sales / income from operns. 13948 12164 14.7
2007-08 2006-07 Goly
Segment Results
a) FMCG - Cigarettes 3634 3172 14.6
- Others (264) (202) (30.5)
Total FMCG 3371 2970 13.5
b) Hotels 411 351 17.1
c) Agri Business 129 124 4.6
d) Paperboards, Paper & Packaging 453 417 8.7
Total 4364 3861 13.0
Less : i) Interest (Net) 5 3 40.2
ii) Other un-allocable expenditure net of (213) (69) (209.6)
Total PBT 4572 3927 16.4
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 Segment Capital Employed: FY 07/08

Rs. crores
Full Year
2007-08 2006-07 Goly
Capital Employed
a) FMCG - Cigarettes * 2315 1997 15.9
- Others 1827 962 89.8
Total FMCG 4141 2959 40.0
b) Hotels 1865 1466 27.2
c) Agri Business 1469 1480 (0.7)
d) Paperboards, Paper & Packaging 3264 2559 27.5
Total Segment Capital Employed 10740 8465 26.9

* Local Tax Provision not incl. 598 536 11.7

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 ITC - Key Financials – Q1 08/09

Q1 08/09 Q1 07/08
Rs crs Goly %
Actuals Actuals

Gross Turnover External 5845 5147 13.6

Net Turnover External 3900 3294 18.4
PBDIT 1241 1229 1.0
PBIT 1115 1128 -1.1
PBT 1114 1129 -1.3
PAT 749 783 -4.4
Capital Employed 13718 11992 14.4

 Underlying PAT degrowth at 1% (w/o considering impact of tax refunds (CY 2.3
crs, LY 29.3 crs)

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Segment Revenues & Results: Q1 08/09
Rs. crores
Q1
2008-09 2007-08 Goly(%)
Segment Revenue (Net)
a) FMCG - Cigarettes 1739.7 1637.7 6.2
- Others 691.4 542.2 27.5
Total FMCG 2431.1 2179.9 11.5
b) Hotels 239.0 203.9 17.2
c) Agri Business 1834.5 1386.7 32.3
d) Paperboards, Paper & Packaging 605.9 478.8 26.6
Total 5110.4 4249.2 20.3
Less : Inter segment revenue 1210.7 955.4 26.7
Net sales / income from operns. 3899.7 3293.8 18.4
2008-09 2007-08 Goly(%)
Segment Results
a) FMCG - Cigarettes 961.4 939.1 2.4
- Others (122.6) (44.6) (174.6)
Total FMCG 838.8 894.5 (6.2)
b) Hotels 85.3 64.3 32.7
c) Agri Business 76.5 54.5 40.5
d) Paperboards, Paper & Packaging 123.4 86.6 42.6
Total 1124.0 1099.8 2.2
Less : i) Interest (Net) 1.4 (0.8) NA
ii) Other net un-allocable expenditure 8.7 (28.3) NA
Total PBT 1114.0 1128.9 (1.3)

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 Segment Capital Employed: Q1 08/09

Rs. crores
Q1
2008-09 2007-08 Goly(%)
Capital Employed
a) FMCG - Cigarettes * 2602.8 2059.2 26.4
- Others 2381.1 1556.9 52.9
Total FMCG 4983.9 3616.1 37.8
b) Hotels 1917.4 1512.5 26.8
c) Agri Business 1286.2 1441.3 (10.8)
d) Paperboards, Paper & Packaging 3434.0 2699.6 27.2
Total Segment Capital Employed 11621.5 9269.4 25.4

* Local Tax Provision not incl. 616.8 560.3 10.1

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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

Featuring 400 of the World’s ‘best big companies’ with M-cap. > USD 5 bln. & are
rated as the ‘most attractive companies for investors’
 Only Indian FMCG Company to feature in Forbes 2000 List

A comprehensive ranking of world’s biggest companies measured by a composite of
sales, profits, assets & market value
 Among 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
 Rated as one of India’s Most Respected Companies (IMRB-Businessworld Survey
2006)
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 Awards & Accolades (1)
• ‘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.
• In the first of its kind S&P Environmental, Social and Corporate Governance
(ESG) ratings released recently, ITC ranked second among top Indian
companies.
• The Company has won the Corporate Social Responsibility Crown Award for
Water Practices from UNESCO and Water Digest for its distinguished work
carried out in the water sector in India.
• The Company’s watershed programme also won the Asian CSR Award for
Environmental Excellence from the Asian Institute of Management.
• The World Development Report 2008 of the World Bank, which was recently
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”.
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 Accolades & Awards (2)
• e-Choupal initiative wins global recognition:
– Stockholm Challenge Award 2006 in the Economic Development category which
recognises 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
– Recognised 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: Agri Business Paperboard

Cigarettes Hotels Leaf Tobacco Paper &
Other FMCG Agri Commodities 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 :

 Executive management

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 Corporate Strategies
 Sustain multiple drivers of growth, matching internal capabilities
with emerging market opportunities
 Pursue World class competitiveness in all businesses and across
the entire value chain
 Best-in-class in terms of:
 Internal Vitality
 Market Standing
 Profitability
 Strategy of Organisation and Governance processes geared to
manage multiple businesses
 Blend core competencies and leverage ITC umbrella strengths to
create new avenues of growth
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FMCG - Cigarettes

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 ITC’s Cigarettes Business

 Market leadership
 Powerful brands across segments
 Leadership in all segments - geographic & price
 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 appx. one
tenth world average : 141
 Future growth depends on relative rates of growth of per capita
income and moderation in taxes
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 P er C apita A dult C igarette C onsum ption
(S ticks)

1753
1 662

11 90

561
48 8

141

USA C hin a P akistan N epal India W orld A vg.

Source : Based on Cigarette consumption data(2003) from

“World Cigarettes”,ERC Group plc.

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Hotels & Tourism

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 Hotels & Tourism industry
 Foreign arrivals into India: 5 million appx. Vs. 35 million in China
• The two nations were on par 2 decades ago at 750,000 arrivals
 Today, Beijing alone has as many hotel rooms as the whole of India
 India’s luxury rooms availability lower than even smaller East Asian
countries
80000
70000
60000
50000
40000
30000
20000
10000
0
HongKong Singapore India

Source: Compendium of Tourism statistics, WTO

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 Indian hotel industry

 Current supply – appx. 110,000 rooms of which 5 Star category

accounts for appx. 30%
 India needs an additional 50,000 rooms in the next 2/3 years to service
projected tourist arrivals
 Present mismatch between supply and demand expected to persist over
the short term
 As infrastructure for trade & commerce improves - growing potential
for leisure tourism

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Economic impact of the Travel & Tourism Sector

Travel & Tourism Travel & Tourism

% Share of World Economy as % Economy Jobs as
Travel & Tourism of Total % of Total
Demand GDP Employment

WORLD 10.1 9.9 8.4

South Asia 6.5 6.1 5.9
India 6.5 6.1 6.4

Full potential yet to be harnessed in the Indian context

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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 Brand Positioning
Luxury ITC Hotel: Luxury Collection "Mansions of Luxury"
Upper upscale WelcomHotel: Sheraton "Passion for Quality"
Upscale - mid-scale Fortune Hotels "Promise of True Value"
Heritage WelcomHeritage "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
• ‘Luxury Collection’ / ‘Sheraton’

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 ITC’s Hotel Business

• Manages 24 full service mid-market properties (1700 +

rooms ) under the Fortune Hotels brand
– 100% subsidiary company : Fortune Park Hotels Ltd.
• Also operates 52 properties under the ‘WelcomHeritage’
brand
– Maharaja Heritage Resorts Ltd. 50% JV with Marudhar
Hotels (P) Ltd.

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Paperboards, Paper
&
Packaging

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 Indian paperboard market

 Annual paperboard demand – appx. 1.1 million tonnes

 Fragmented capacity & obsolete technology

 Low per capita usage at around 6 kgs p.a. (world average – over 50 kgs
p.a.)
 Indian paperboard market growing at 9% p.a.

 Value Added Coated board - the fastest growing segment (20% p.a.) in
India driven by the growing sophistication of the consumer

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 Paperboard Demand Projections - Asia

 Asian region demand (excluding Japan) growing by 0.5

million tonnes per annum
 Significant export opportunities for high quality Indian
manufacturers
• ITC paperboards exports - Rs. 2 billion appx.

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 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 FMCG

businesses
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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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 e-choupal:Strategic Thrust
 Procurement: cost & quality optimisation
• strategic sourcing support to the Foods business (support creation of
verticals in wheat, soya, corn, potato etc.)
• cost-effective sourcing for exports/domestic external business
 Rural Distribution
• ‘last mile connectivity’: 100 partnering companies
• diverse range of goods/services : FMCG, consumer durables,agri-inputs,
paid extension services etc.
 Financial Services
• insurance (focus: weather)
• credit (focus: Kisan credit card scheme)
 Rural retail
• 23 Choupal Saagars operational
• Rapid expansion planned in identified rural markets and Tier 2, 3 & 4 towns

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Future Growth & Value Capture

New FMCG Initiatives

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 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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 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 of India, Aashirvaad ReadyMeals, Aashirvaad Instant Mix,
Sunfeast Pasta
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 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
 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
 Outsourced JIT plant for ‘quick response’ manufacturing
 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
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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 FMCG Business Initiatives
Safety Matches
 Current industry consumer spend estimated at Rs. 1250 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: Homelites, 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
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
– Fiama Di Wills (Premium) – Launched with Shampoos/Soaps/Shower
Gels/Conditioners
– Vivel Di Wills and Vivel (Mid) – Soaps and Shampoos
– Superia (Popular) – Soaps and Shampoos
 Products well received in the market, rapidly gaining customer
acceptance
 Supported by investments in brands – celebrity endorsements
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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

VPN providing SCM, ERP & CRM capability

F M
A e-choupal rural two-way fulfillment A
R capability R
M K
Cigarette Trade Marketing capability E
E
R Expanded FMCG distribution capability T
S S

Branded Matches Personal

Lifestyle Education
Foods & Care
retailing Stationery
Agarbattis Products

A basis for strategic partnerships with other FMCG brand owners

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 Forward-looking Statements
Statements in this presentation describing the Company’s objectives, future
prospects, estimates, expectations etc. may be “forward looking statements”
within the meaning of applicable securities laws and regulations. Investors
are cautioned that “forward looking statements” are based on certain
assumptions of future events over which the Company exercises no control.
Therefore there can be no guarantee as to their accuracy. These statements
involve a number of risks, uncertainties and other factors that could cause
actual results to differ materially from those that may be projected or implied
by these forward looking statements. Such risks and uncertainties include, but
are not limited to: growth, competition, acquisitions, domestic and
international economic conditions affecting demand, supply and price
conditions in the various businesses in the Company’s portfolio, changes in
Government regulations, tax regimes and other statutes, and the ability to
attract and retain high quality human resource.

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