ITC LIMITED

Presented by:Izhar Ansari m5-12 Kalyan Chakravarthi m5-12 Surya Prakash m5-56 Prashant singh m5-24

Strategy of Organisation to manage diversity of Portfolio

Formal 3-tiered governance structure:
Board of Directors : Comprising executive (4) and non-executive directors (8) Strategic supervision Corporate Management Committee : Comprising executive directors and senior managers Strategic management CEO & Divisional Management Committee : Executive management

ITC - Business Portfolio

ITC

FMCG: Cigarettes Other FMCG

Hotels

Agri Business Leaf Tobacco Agri Commodities

Paperboard Paper & Packaging

Brands under ITC

ITCs FMCG portfolio comprises:

ITCs Cigarettes Business

 Market leadership  Powerful brands across segments  Leadership in all segments - geographic & price  Extensive distribution network
Over 900 wholesale dealers serving more than 1 million retail outlets

 World-class products

state-of-the-art

technology

and

Investment - Rs.10 billion in six years

 Exciting long term growth potential

Cigarettes
Insignia India Kings Classic Gold Flake Silk Cut Navy Cut Scissors Capstan Berkeley Bristol Flake.

P er C apita A dult C igarette C onsum ption (S ticks)

1662 1753

1190

561

488 141

USA

C h in a

P a k is ta n

N epal

In d ia

W o rld A v g .

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

Cigarettes: Growth potential

 Cigarettes account for only 14% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation Cigarettes (14% 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

Awards
'Best Manufacturer of Cigarettes' for the year 2008 & 2007 and Best Exporter of Cigarettes for 2008 by the Tobacco Board based on previous three years' performance. Occupational Health and Safety Award 2007 for Excellence in Safety Management to the Bengaluru, Saharanpur and Kolkata factories from the Royal Society for Prevention of Accidents (ROSPA), U.K. Greentech Gold Award for Excellence in Environment Management 2007 to the Bengaluru, Kolkata and Munger factories.

Foods

Foods
ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of the Kitchens of Indian brand. The Foods business is today represented in 4 categories in the market. These are: Ready To Eat Foods Staples Confectionery Snack Foods

offerings.

Lifestyle Retailing

 ITC's Lifestyle Retailing Business Division has established a nationwide retailing presence through its Wills Lifestyle chain of exclusive specialty stores. They offers Classic work wear, Wills Sport relaxed wear, Wills Clublife evening wear, fashion accessories Wills Lifestyle has also introduced Wills Signature designer wear, designed by the leading designers of the country.

Awards
2009: Most admired Fashion Brand of the year - Fashion Forward - Wills Lifestyle 2007: Most Admired Fashion Campaign - John Players 2005: Most Admired Shirt Brand of the Year - John Players 2004: Rising Star Brand of the Year - John Players 2003: Most Admired Exclusive Brand Retail Chain of the Year - Wills Lifestyle 2002: Most Admired Women's Wear Brand of the Year - Wills Sport

Education and Stationery

 ITC made its entry to the education and stationery business with its Paperkraft brand in the premium segment in 2002; and later expanded into the popular segment with its Classmate brand in 2003. By 2007, Classmate became the largest Notebook brand in the country. ITC is the manufacturer of Indias first Ozone treated environment friendly Elemental Chlorine Free (ECF) pulp, paper and paperboard.

Safety Matches

 ITCs range of Safety matches include popular brands like i Kno, Mangaldeep, Aim, Aim Mega and Aim Metro. The Aim brand is the largest selling brand of Safety Matches in India. ITC also exports regular and premium safety matches brands to markets such as Middle East, Africa and the USA

Agarbattis

 As part of ITC's business strategy of creating multiple drivers of growth in the FMCG sector, the Company commenced marketing Agarbattis (Incense Sticks) sourced from small-scale and cottage units in 2003. Available in a wide range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Durbar, Tarangini, Anushri, Ananth and Mogra. The premium range from ITC, Mangaldeep Spriha has two offerings, Pratiti and Sarvatra and are specially hand rolled by Cottage Industries, Sri Aurobindo Ashram, Puducherry.

Hotels

ITCs hotel business

 ITC-Welcomgroup : a leading hotel chain in India
 Strategy to establish presence in key business locations to complete the chain achieved in end 2004  Over 5200 rooms under 4 distinct brands

 Fastest growing hotel chain with highest operating efficiency (PBDIT/Net Income @ 41%) amongst the 3 leading chains  Leverages unique service proposition and international alliance with Sheraton  Attractive medium / long term prospects

ITCs Hotel Business

Manages 15 full service mid-market properties under the Fortune Hotels brand
100% subsidiary company : Fortune Park Hotels Ltd.

Also operates 35 properties WelcomHeritage brand

under

the

Maharaja Heritage Resorts Ltd. 50% JV with Marudhar Hotels (P) Ltd.

List of hotels
ITC Hotel Maurya Sheraton & Towers, New Delhi ITC Hotel Grand Maratha Sheraton & Towers, Mumbai ITC Hotel Sonar Bangla Sheraton, Kolkata ITC Hotel Grand Central, Mumbai ITC Hotel Windsor Sheraton & Towers, Bangalore ITC Hotel Kakatiya Sheraton & Towers, Hyderabad (thru a 68% holding in Srinivasa Resorts Ltd.)

Cont..
Welcom Hotel Rajputana Palace Sheraton, Jaipur Welcom Hotel Chola Sheraton, Chennai Welcom Hotel Mughal Sheraton, Agra Welcom Hotel, New Delhi Welcom Hotel Rama International, Aurangabad Welcom Hotel Vadodara (thru associate company)

Awards
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. ITC Welcomgroup was named the Best Premier Hotel Brand at the Galileo-Express Travel World Awards 2008 & 2006. ITC Welcom Heritage won the Best Heritage Hotel Brand award in 2006. ITC Hotel The Maurya received the award for 'Best Luxury Hotel' at the Star Hospitality Awards 2007-08 and the NATIONAL TOURISM AWARD 2007 for 'Best Eco-Friendly Hotel' from Ministry of Tourism. Sheraton, New Delhi won the Golden peacock Award 2008 for Environment Management. It was also conferred the '6th Annual Greentech Safety Award' in the Service Sector for the year 2006.

Paperboards, Paper & Packaging

ITCs Paperboards Business

 Market leader in growth segment - value added coated boards  World-class contemporary technology  Elemental Chlorine Free (ECF) Pulp Mill fully operational 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 about 41,000 hectares  Fully integrated operations with in-house pulping capacity at appx. 1.10 lac MT
 Expansion programme underway; source of sustainable competitive advantage

ITCs Paperboards & Packaging businesses

 Capacity expansion in recycled segment
Acquisition of Kovai Unit in March 2004: +65000 TPA Another 75000 TPA commissioned in Jan. 05

 ITCs packaging SBU -Indias 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

Agri Businesses - Leaf Tobacco

- Agri Commodities

ITCs Agri Commodity Exports

 Farm linkages in 14 states covering Soya, Wheat, Rice, Marine products, Edible nuts, Coffee  Unique CRM Programme in commodity exports  Leveraging IT for the transformational e-Choupal initiative
Rural Indias largest Internet-based intervention Over 36000 villages linked through 6000 e-Choupals servicing over 3.5 million farmers 10 Choupal Sagars operational; 9 more to be launched shortly

 Distinctive sourcing capability for ITCs Foods business

e-Choupal Recognition
World Business Award ICC-UNDP Enterprise Business Transformation Award -Wharton Infosys Harvard Business School case study Showcased at ICT4D*, Geneva UN

Accolades & Awards (1)

Golden Peacock Global Award for Corporate Social Responsibility in Emerging economies for 2005 by World Council for Corporate Governance for the e-choupal and social & farm forestry initiatives 2005 Golden Peacock Award for Excellence in Corporate Governance ITC Centre,Gurgaon awarded Platinum Green building rating by US Green Building Council -Leadership in Energy and Environmental Design
largest Platinum rated building in the world; 7th such building in the world

Bhadrachalam paperboard unit : adjudged Greenest paper mill in India by The Centre for Science & Environment; won the Greentech Environment Excellence Gold Award John Players adjudged the Most Admired Shirt Brand of the Year at the Lycra Images Fashion Awards (LIFA) awards in Jan06

Accolades & Awards (2)

e-choupal initiative continues to win 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

SWOT Analysis

Strengths
ITC leveraged it traditional businesses to develop new brands for new segments. For example, ITC used 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. 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.

Weaknesses
The company's original business was traded in tobacco. ITC stands for Imperial Tobacco Company of India Limited. It is interesting that a business that is now so involved in branding continues to use its original name, despite the negative connection of tobacco with poor health and premature death. To fund its cash guzzling FMCG start-up, the company is still dependant upon its tobacco revenues. Cigarettes account for 47 per cent of the company's turnover, and that in itself is responsible for 80% of its profits. So there is an argument that ITC's move into FMCG (Fast Moving Consumer Goods) is being subsidised by its tobacco operations. Its Gold Flake tobacco brand is the largest FMCG brand in India - and this single brand alone hold 70% of the tobacco market.

Opportunities
Core brands such as Aashirvaad, Mint-o, Bingo! And Sun Feast (and others) can be developed using strategies of market development, product development and marketing penetration. ITC is moving into new and emerging sectors including Information Technology, supporting business solutions. e-Choupal is a community of practice that links rural Indian farmers using the Internet. (10 million farmers in 100,000 villages). ITC leverages e-Choupal in a novel way. The company researched the tastes of consumers in the North, West and East of India of atta (a popular type of wheat flour), then used the network to source and create the raw materials from farmers and then blend them for consumers under purposeful brand names such as Aashirvaad Select in the Northern market, Aashirvaad MP

Threats
The competition, both domestic and international. Western companies will see India as an exciting opportunity for themselves to find new market segments for their own offerings. ITC's opportunities are likely to be opportunities for other companies as well. Therefore the dynamic of competition will alter in the medium-term. Then ITC will need to decide whether being a diversified conglomerate is the most competitive strategic formation for a secure future.

Promotions strategy
Advertisement Banners Hoarding Sponsorship of polo Sponsorship of cricket

PEST Analysis

Political
Huge burden of VAT Excise duty raised by union budget by 5 % Ban on communication Luxury tax in 10 states Smuggling 100% FDI allowed

Economical
Bidee: cigarette ratio-10:1 Profit margin is high Other forms of cheap tobacco intake

Socio culture
Becoming status symbol Companions mounted by W.H.O. Changing attitudes towards tobacco May 31 is no tobacco day change in life style

Technical
State-of-the-art factories Cheap labor supply Development of IQMS Adapting other concepts like QC,TQM, KSS, 5 S, 6 sigma

Current scenario
Currently ITC is focusing on export of 1. Feed Ingredients 2. Food grains 3. Edible Nuts 4. Marine Products 5. Processed Fruits 6. Coffee & Spices ITC moves into health and education now

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 Ensure that each of its businesses is world class and internationally competitive contd..

Contd..
Strategy of Organization and Governance processes geared to manage multiple businesses Blend core competencies and leverage ITC umbrella strengths to create new avenues of growth.

Future plan
ITC aims for 14 per cent share in the biscuits market. Aashirvaad has been expanding the range and the latest offering includes its combo packs of rice and gravies. ITC Foods has been quick to extend its range to unique offerings such as the Sunfeast Orange Marie apart from the usual fare of glucose and Marie Light variants.

Competitor analysis
Godfrey Phillips India (GPI) Vazir Sultan Tobacco (VST) Golden Tobacco Company (GTC) Domestic competitors Kanhayya tobacco MR tobacco Sapna enterprises Sudarshan tobacco

HRM policy
Social and economic dignity and freedom International human rights standards ITC does not employ any person below the age of eighteen years in the workplace Issues are carried out after discussions with the employees Providing a safe and healthy work environment

OPERATIONS AND LOGISTICS

Operation management emphasis the current programs of an organizations and planning which essentially deals with the future and two intimately related activities. A distinction should be made between planning and forecasting. Planning departments are key in critiquing strategies, crystallizing goals, setting objectives, maintain control.

CONCLUSION
ITC is promoting their brands through advertisement campaign as well as door to door promotion. ITC is also focusing on Retailers and Wholesalers to promote their brand. The demand of their product is very low, because people dont know about their brands very well. ITC knows their strength and weakness in the personal care market, so they are applying new concept to overcome their weaknesses. Now ITC is offering more margins, exiting offers and long credit period to retailers and wholesalers.