Anjuman-I-Islam’s Allana Institute of Management Studies and Research

A Project Report On

“Indian Tobacco Company Limited”

Subject: Strategic Management

Presented to:

Prof. Y. V. KAMAT

Prepared by:

SANA CHOWDHARY

(M.M.S – 2nd Year Roll No. 3)

Specialization: Human Resources

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TABLE OF CONTENTS

Sr. No. Topics Page No.

1 Company Profile 3

2 Business Portfolio:

Cigarette Business

FMCG Business

Hotel Business

Information & Technology Business

Agri-Business

Paperboard Business

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5

6

7

7

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3 Strategic Intent of ITC Ltd.:

Vision

Mission

Core Values

Corporate Strategies

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9

10

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4 Growth Performance of ITC Ltd.:

Profit & Loss A/c

Balance Sheet

ITC: All Round Growth

ITC: Growth Pains

ITC: Future Growth Plans

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13

14

16

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5 Conclusion 18

6 Bibliography 19

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INDIAN TOBACCO COMPANY LIMITED

COMPANY PROFILE

ITC is one of the India's foremost private sector companies with a market capitalization of nearly US $ 15 billion and a turnover of over US $ 4.75 billion. ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the Company's ownership progressively Indianised, the name of the Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agri-business, Foods, Lifestyle Retailing, Education & Stationery and Personal Care - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'.

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house.

In 1975, the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation.

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India.

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture.

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry. The merged entity was named the Tribeni Tissues Division (TTD). Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities. The Division is today one of India's largest exporters.

In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the launch of Expressions range of greeting cards. A line of premium range of notebooks under brand “Paperkraft” was launched in 2002. To augment its offering and to reach a wider student population, the popular range of notebooks was launched under brand “Classmate” in 2003.

In 2008, ITC repositioned the business as the Education and Stationery Products Business and launched India's first environment friendly premium business paper under the “Paperkraft” Brand.

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ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000.

In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging opportunities in this area.

ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes.

In 2002, ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC's entered the fast growing branded snacks category with Bingo! in 2007. In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative.

ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector.

ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body care products for men and women in July 2005.

Continuing with its tradition of bringing world class products to Indian consumers the Company launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October and December 2007 respectively. The Company also launched the 'Superia' range of Soaps and Shampoos in the mass-market segment at select markets in October 2007 and Vivel De Wills & Vivel range of soaps in February and Vivel range of shampoos in June 2008.

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ITC – BUSINESS PORTFOLIO

ITC’s Cigarettes Business:

Started in 1910 As ITC’s Core Business.

ITC’s cigarette business is the market leader in India.

It has powerful brands across segments.

Highly popular portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.

It has extensive FMCG distribution network

Direct servicing of 85000 markets & nearly 2 million retail outlets.

About 71% of the total turnover depends upon this business.

ITC’s FMCG Business:

Foods:

ITC made its entry into the branded & packaged Foods business in August 2001.

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Famous brands in this section are:

Kitchens of India

Aashirvaad

Sunfeast

Mint-o

Candyman

Bingo!

Lifestyle retailing

ITC made its presence through its Wills Lifestyle chain of exclusive specialty stores

Famous brands in this section are: Wills Sport, Essenza Di Wills, Wills Signature , John Players, Miss Players

Greeting Gifting & Stationary:

ITC's stationery brands Paper Kraft & Classmate are the most widely distributed brands across India.

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For every Classmate notebook purchased by a consumer, ITC contributes Re. 1 to its rural development initiative that supports among other projects, primary education in villages.

Famous brands in this section are: Paper Kraft, Classmate, Expressions Greeting Cards.

ITC’s Hotel Business:

ITC made its entry into the HOTELS business in 1975 from Chennai.

It consists of over 70 hotels across India.

These include super deluxe and five star hotels, heritage palaces, havelis and resorts and full service budget hotels.

The 440-room ITC Maurya, Delhi has played host to a galaxy of world dignitaries, including Bill Clinton and Bill Gates.

Its Restaurant Bukhara voted the Best Restaurant in Asia and is the only. Indian restaurant to feature in the list of 50 Best Restaurants in the World.

ITC’s Information & Technology Business:

ITC InfoTech, a global IT services company, is today one of India’s fastest growing IT and ITES service providers.

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ITC’s Restaurant Bukhara

Providing outsourced IT solutions and services to leading global customers.

ITC InfoTech has a strength of over 2,000 employees and delivery centers across North America, Europe and Asia-Pacific that serve Fortune-listed companies in 42 countries.

ITC InfoTech conforms to the highest standards in international process quality.

ITC’s Agri-Business:

ITC's International Business Division (IBD) is the country's second largest exporter of agri-products with exports of over Rs. 1000 Crores (Rs. 10 billion).

IBD domestic sales of agri-products are in excess of Rs. 1500 Crores (Rs. 15 billion).

IBD currently focuses on exports of :

Feed Ingredients – Soyameal

Foodgrains - Rice (Basmati & Non Basmati), Wheat, Pulses

Edible Nuts - Sesame Seeds, HPS Groundnuts, Castor oil

Marine Products - Shrimps and Prawns

Processed Fruits - Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit Products, Fresh Fruits

Coffee & Spices - Coffee, Black Pepper, Chilly, Turmeric, Ginger, Celery and other Seed Spices

IBD starts e-choupal for the Indian formers:

Over 38000 villages linked through around 6400 e-Choupals

E-Choupals are servicing over 3.5 million farmers.

Farmers sell their products directly to the company.

12 ‘Choupal Saagars’ operational; 8 more to be launched shortly (40 nos. over the next 18 months)

ITC’s Paperboard business:

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ITC's Paperboards business has a manufacturing capacity of over 360,000 tones per year.

India's market leader across all carton-consuming segments including cigarettes, foods, beverages and many more.

ITC's Paperboard products include :

packaging boards - coated folding box boards,

solid bleached sulphate boards,

white lined chipboards,

liquid packaging boards,

poly extruded coated boards for food and barrier packaging

cast coated papers and boards.

The Company's full range of products is depicted in the chart below:

STRATEGIC INTENT OF ITC Ltd.

ITC has a diversified presence in FMCG, Hotels, Paperboards & Packaging, Agri Business and Information Technology. It is ITC’s strategic intent to create multiple drivers of business growth

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by leveraging its diverse competencies in agri sourcing, world-class manufacturing, branding, packaging, hospitality, trade marketing and distribution. By blending internal competencies to meet the emerging business opportunities of a growing economy, ITC has forayed into Lifestyle Retailing, Branded Packaged Foods, Personal Care products, Education & Stationery products, Incense Sticks and Safety Matches, apart from consolidating its traditional businesses of Cigarettes and Leaf Tobacco, Hotels, Paperboards & Packaging and Agri Business.

ITC’s strategic intent is to develop e-Choupal as a significant two-way multidimensional delivery channel, efficiently carrying goods and services out of and into rural India. By progressively linking the digital infrastructure to a physical network of rural business hubs and agro-extension services, ITC is transforming the way farmers do business, and the way rural markets work.

The strategic intent of ITC Ltd. can be enunciated through its vision, mission, core values and corporate strategies.

ITC’s VISION:

ITC’s MISSION:

ITC’s CORE VALUES:

ITC's Core Values are aimed at developing a customer-focused, high-performance organization which creates value for all its stakeholders:

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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.

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

Trusteeship: As professional managers, we are conscious that ITC has been given to us in "trust" by all our stakeholders. We will actualize stakeholder value and interest on a long term sustainable basis.

Customer Focus: We are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction.

Respect For People: We are result oriented, setting high performance standards for ourselves as individuals and teams. We will simultaneously respect and value people and uphold humanness and human dignity. We acknowledge that every individual brings different perspectives and capabilities to the team and that a strong team is founded on a variety of perspectives. We want individuals to dream, value differences, create and experiment in pursuit of opportunities and achieve leadership through teamwork.

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 of our responsibility to generate economic value for the Nation. In pursuit of our goals, we will make no compromise in complying with applicable laws and regulations at all levels.

ITC’s CORPORATE STRATEGIES:

ITC is a board-managed professional company, committed to creating enduring value for the shareholder and for the nation. It has a rich organizational culture rooted in its core values of respect for people and belief in empowerment. Its philosophy of all-round value creation is backed by strong corporate governance policies and systems.

ITC’s corporate strategies are:

Create multiple drivers of growth by developing a portfolio of world class businesses that best matches organizational capability with opportunities in domestic and export markets.

Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards & Packaging, Agri Business and Information Technology.

Benchmark the health of each business comprehensively across the criteria of Market Standing, Profitability and Internal Vitality.

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

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Enhance the competitive power of the portfolio through synergies derived by blending the diverse skills and capabilities residing in ITC’s various businesses.

Create distributed leadership within the organization by nurturing talented and focused top management teams for each of the businesses.

Continuously strengthen and refine Corporate Governance processes and systems to catalyse the entrepreneurial energies of management by striking the golden balance between executive freedom and the need for effective control and accountability.

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GROWTH PERFORMANCE OF ITC Ltd.

PROFIT AND LOSS ACCOUNT OF ITC: (Rs. in Crores)

Particulars Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

INCOME :Sales Turnover 30,604.3

926,259.6

023,143.5

321,355.9

419,300.0

416,224.4

3Excise Duty 9,436.81 8,106.41 7,531.61 7,435.18 7,206.16 6,438.09Net Sales 21,167.5

818,153.1

915,611.9

213,920.7

612,093.8

89,786.34

Other Income 848.08 636.55 557.48 635.24 349.96 295.02Stock Adjustments 254.29 -175.24 136.35 32.46 266.30 145.86Total Income 22,269.9

518,614.5

016,305.7

514,588.4

612,710.1

410,227.2

2EXPENDITURE :Raw Materials 8,380.79 6,832.02 6,094.22 6,022.39 5,390.67 4,124.90Power & Fuel Cost 421.68 387.34 394.12 309.90 253.00 245.17Employee Cost 1,161.30 1,002.39 886.57 728.51 628.00 539.40Other Manufacturing Expenses 949.62 820.77 813.48 320.22 276.23 235.32Selling and Administration Expenses 2,830.19 2,388.60 2,273.23 1,705.17 1,408.81 1,110.88Miscellaneous Expenses 584.65 540.96 493.88 567.00 490.29 409.72Less: Pre-operative Expenses Capitalised

60.54 71.88 72.55 112.75 42.52 15.78

Total Expenditure 14,267.69

11,900.20

10,882.95

9,540.44 8,404.48 6,649.61

Operating Profit 8,002.26 6,714.30 5,422.80 5,048.02 4,305.66 3,577.61Interest 78.11 90.28 47.65 37.79 16.04 21.10Gross Profit 7,924.15 6,624.02 5,375.15 5,010.23 4,289.62 3,556.51Depreciation 655.99 608.71 549.41 438.46 362.92 332.34Profit Before Tax 7,268.16 6,015.31 4,825.74 4,571.77 3,926.70 3,224.17Tax 2,263.96 2,036.87 1,215.31 1,355.48 1,062.48 1,020.12Fringe Benefit tax -0.25 -0.38 24.72 23.97 16.08 20.03Deferred Tax 16.84 -82.18 322.12 72.22 148.17 -51.33Reported Net Profit 4,987.61 4,061.00 3,263.59 3,120.10 2,699.97 2,235.35Extraordinary Items 64.06 7.93 12.91 10.36 4.66 -40.44Adjusted Net Profit 4,923.55 4,053.07 3,250.68 3,109.74 2,695.31 2,275.79Adjst. below Net Profit 0.60 0.60 3.97 0.00 0.00 -0.02P & L Balance brought forward 61.31 858.14 724.45 647.53 562.06 611.41Statutory Appropriations 0.00 0.00 0.00 0.00 0.00 0.00Appropriations 4,500.85 4,858.43 3,133.87 3,043.18 2,614.50 2,284.68P & L Balance carried down 548.67 61.31 858.14 724.45 647.53 562.06Dividend 3,443.47 3,818.18 1,396.53 1,319.01 1,166.29 995.12Preference Dividend 0.00 0.00 0.00 0.00 0.00 0.00Equity Dividend % 445.00 1,000.00 370.00 350.00 310.00 265.00Earnings Per Share-Unit Curr 5.72 8.98 8.02 7.68 6.65 5.58Earnings Per Share(Adj)-Unit Curr 5.72 4.49 4.01 3.84 3.33 2.79Book Value-Unit Curr 20.55 36.69 36.24 31.85 27.59 23.97

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Source: http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/ITC-Ltd/ 500875

BALANCE SHEET OF ITC: (Rs. in Crores)

Particulars Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

SOURCES OF FUNDS :Share Capital 773.81 381.82 377.44 376.86 376.22 375.52Reserves Total 15,179.46 13,682.56 13,357.64 11,680.81 10,060.86 8,685.96Total Shareholders Funds

15,953.27 14,064.38 13,735.08 12,057.67 10,437.08 9,061.48

Secured Loans 1.94 0.00 11.63 5.57 60.78 25.91Unsecured Loans 97.26 107.71 165.92 208.86 140.10 93.82Total Debt 99.20 107.71 177.55 214.43 200.88 119.73Total Liabilities 16,052.47 14,172.09 13,912.63 12,272.10 10,637.96 9,181.21APPLICATION OF FUNDS :Gross Block 12,765.82 11,967.86 10,558.65 8,959.70 7,134.31 6,227.17Less : Accumulated Depreciation

4,420.75 3,825.46 3,286.74 2,790.87 2,389.54 2,065.44

Less:Impairment of Assets

0.00 0.00 0.00 0.00 0.00 0.00

Net Block 8,345.07 8,142.40 7,271.91 6,168.83 4,744.77 4,161.73Lease Adjustment 0.00 0.00 0.00 0.00 0.00 0.00Capital Work in Progress 1,333.40 1,008.99 1,214.06 1,126.82 866.14 243.40Investments 5,554.66 5,726.87 2,837.75 2,934.55 3,067.77 3,517.01Current Assets, Loans & AdvancesInventories 5,267.53 4,549.07 4,599.72 4,050.52 3,354.03 2,636.29Sundry Debtors 926.42 873.35 680.55 748.96 648.11 559.02Cash and Bank 2,243.24 1,126.28 1,031.01 570.25 900.16 855.82Loans and Advances 1,765.58 1,594.50 1,860.33 1,661.57 1,398.84 1,121.83Total Current Assets 10,202.77 8,143.20 8,171.61 7,031.30 6,301.14 5,172.96Less : Current Liabilities and ProvisionsCurrent Liabilities 4,476.74 3,514.42 2,986.00 2,799.00 2,396.17 2,200.09Provisions 4,104.84 4,549.94 1,729.51 1,645.33 1,472.84 1,389.04Total Current Liabilities

8,581.58 8,064.36 4,715.51 4,444.33 3,869.01 3,589.13

Net Current Assets 1,621.19 78.84 3,456.10 2,586.97 2,432.13 1,583.83Miscellaneous Expenses not written off

0.00 0.00 0.00 0.00 0.00 0.00

Deferred Tax Assets 408.31 336.23 289.88 287.72 255.41 223.16Deferred Tax Liability 1,210.16 1,121.24 1,157.07 832.79 728.26 547.92

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Net Deferred Tax -801.85 -785.01 -867.19 -545.07 -472.85 -324.76Total Assets 16,052.47 14,172.09 13,912.63 12,272.10 10,637.96 9,181.21Contingent Liabilities 281.57 285.13 292.00 314.53 190.35 163.14

Source: http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/ITC-%20%20Ltd/500875

ITC: ALL ROUND GROWTH:

Gross Turnover for the year grew by 16.5% to Rs. 30604.39 crores. Net Turnover at Rs. 21167.58 crores grew by 16.6% primarily driven by a 23.1% growth in the non-cigarette FMCG businesses, 22.9% growth in Agri business and 17.6% growth in the Hotels segment. Pre-tax profits increased by 20.8% to Rs. 7268.16 crores while Post-tax profits at Rs. 4987.61 crores registered a growth of 22.8%. Earnings Per Share for the year stands at Rs. 6.49 (previous year - adjusted for Bonus Issue - Rs.5.34). Cash flows from Operations stood at Rs. 7460 crores compared to Rs.6632 crores in the previous year.

Over the last fifteen years, company has created multiple drivers of growth by developing a portfolio of world class businesses. During this period, company’s Gross Turnover and Post-tax profits recorded an impressive compounded growth of 12.7% and 21.7% per annum respectively. Profitability, as measured by Return on Capital Employed improved substantially from 28.4% to 43.4% during this period. Total Shareholder Returns, measured in terms of increase in market capitalization and dividends, grew at a compounded rate of 25.6% during this period, placing ITC amongst the foremost in the country in terms of efficiency of servicing financial capital. It is indeed a matter of pride that ITC was ranked, by The Boston Consulting Group, an international management consultancy firm, amongst the top 10 global consumer goods companies in terms of sustained shareholder value creation for the period 2005 - 2009. ITC today is one of India’s most admired and valuable corporations with a market capitalization in excess of Rs. 140000 crores and has consistently been, over the last fifteen years, amongst the top 10 private sector companies in terms of market capitalization.

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ITC has reported a 21.4 per cent growth in net profit during the third quarter against the corresponding period in the previous year.

In absolute term it registered a PAT of Rs 1,389.08 crore (Rs 1,144.17 crore). The net sales stood at Rs 5,453.49 crore (Rs 4,599.56 crore).

The net sales growth by 19 per cent was primarily driven by foods, agri and paperboards divisions of ITC.

The agribusiness segment of the company posted a stronger performance during the quarter. The segment revenues and profits improved by 18 per cent and 36 per cent, respectively. The performance was underlined by higher soya and coffee trading volumes and improved performance in leaf tobacco exports. According to market analysts, the company got the full benefit of the food and agro commodity inflation that raged during the quarter.

The company said the branded packaged foods business clocked an improved performance with sales growing by 24 per cent during the quarter.

It further said: “The hotels industry continues to make gradual recovery from the loss witnessed in 2008-09 and 2009-10. ITC's hotel business leveraged the relatively improved business environment to record a robust performance during the quarter with segment revenues and segment profits growing by 15 per cent and 16 per cent, respectively.

ITC's Re 1 shares were down 1.5 per cent on the NSE at Rs 169.10.

ITC’s cigarettes business continues to face challenges like flat and lower single-digit volume growth, courtesy price rise in response to duty hikes by various governments and competition from cigarettes on which duty has not been paid. However, being a market leader, the company has relatively better pricing power.

Strong performance amongst peers: ITC's performance in FY11 was strong with a revenue growth of 16.8% y-o-y and a bottom line growth of 22.8% y-o-y. Despite the inflation in the raw material prices the operating profit margin (OPM) of the company stood at around 35% in FY11.

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ITC has reported a 21.4 per cent growth in net profit during the third quarter against the corresponding period in the previous year.

In absolute term it registered a PAT of Rs 1,389.08 crore (Rs 1,144.17 crore). The net sales stood at Rs 5,453.49 crore (Rs 4,599.56 crore).

The net sales growth by 19 per cent was primarily driven by foods, agri and paperboards divisions of ITC.

Sustenance of strong dividend pay-out: This is the second consecutive year of a strong dividend pay-out by the company. Its dividend pay-out ratio stood at 82.6% (which was way ahead of the average 50% dividend pay-out between FY06 and FY09). With the profits expected to improve significantly in future the company is likely to continue the strong dividend pay-out in the coming years.

Improvement in return ratios: The return ratios showed a strong improvement in FY11 with the return on net worth (RoNW) and return on capital employed (RoCE) up from 29.2% and 38.3% in FY2010 to 33.2% and 42.7% respectively in FY11.

ITC: GROWTH PAINS

Higher losses in the FMCG segment result in a fall in operating profit margins.

The Rs. 13,948 crore ITC's margins for the March 2008 quarter slipped 100 basis points to 26.5 per cent as higher start-up costs for non-cigarette FMCG products resulted in bigger losses than levels seen a year ago, though sales were up a smart 50 per cent.

The stock was down 4 per cent on Friday with the losses from the non-cigarette FMCG business somewhat higher than the street's expectations at Rs. 118 crore compared with Rs. 48 crore in FY07.

As ITC focuses on newer businesses— especially in the foods and the consumer lifestyle space— revenues from cigarette came down as a percentage of net sales (pre-inter segment adjustments): in the March-quarter they contributed 39 per cent down from 42 per cent a year ago.

ITC: FUTURE GROWTH PLANS

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ITC is eyeing major investment opportunities over the next decade to spur growth in the area of FMCG. Its growth mantra: Innovation.

"Innovation should be a source for creating consumer delight as well as triple bottom line performance so as to generate greater value for the shareholder and the society at large," ITC Chairman Y.C. Deveshwar told the company's 29,000 employees across the country through a webcast at its centenary event from Kolkata on Tuesday.

“Aspiration of ITC Ltd. is to be the No 1 FMCG company. Towards this, we are constantly evaluating new categories in our existing businesses. On the one hand, we are looking at market opportunities in terms of both size and growth that would make for a meaningful engagement for ITC. On the other hand, we are also looking for opportunities where we can leverage our institutional strengths. At the current moment, we see an opportunity to invest significantly in our existing portfolio of businesses that include paper & paperboards, hotels, agri-business and information technology,” ITC Chairman Y.C. Deveshwar.

The Rs. 26,863 crore company is eyeing investment prospects of Rs. 8,000 crore over the next seven to 10 years in the FMCG sector, spanning apparel, branded packaged foods, education, stationery products, safety matches and incense sticks and more recently personal care products.

The hospitality business also carries significant investment opportunity, and this segment will be nurtured to fuel growth. [ITC] hotels also aim to be exemplars in green design and environmental excellence.  Already, ITC Royal Gardenia [in Bangalore] is the world's largest LEED -- Leadership in Energy & Environmental Design -- Platinum-rated hotel. ITC Sonar [in Kolkata] is the only hotel in the world to earn carbon credits. In the future, all [ITC] hotel properties will achieve the highest green standards in their categories.

The company also expects to have up to 60 new hotel properties operational in the next three to four years. At the firm's AGM last month, Deveshwar had stated that the Indian hospitality sector offered investment opportunity of up to Rs. 9,000 crore in next seven to 10 years.

India's consumption of paper, paperboards & packaging is one of the lowest in the world. Per capita consumption is around 5 kg per person per year, compared to nearly 300 kg in U.S., 200

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kg in U.K., and 45 kg in China. With the spread of education and economic growth, demand is expected to grow manifold. ITC has invested significantly in enhancing capacity in this business. In addition, the rapid expansion and growth of the branded consumer goods sector in India will be a strong driver for the packaging industry. Innovations in this segment can create superior customer delight and is therefore an integral part of the product's value proposition. ITC will continue to invest in and grow this business as well.

ITC's agri-business, with the unique e-choupal infrastructure — a web based information and procurement tool for farmers — will be progressively leveraged to widen the company's FMCG network. The Harvard Business School had taken up e-Choupal as a case study in 2004.

Slower growth in cigarettes business with the global anti-tobacco movement gaining momentum and the heavy taxation policy followed by the government for cigarettes prompted ITC to diversify into other businesses.

CONCLUSION

ITC, which completed 100 years, has come a long way from being a pure tobacco company to become a well-diversified, fast-moving-consumer-goods company (FMCG) and is planning for major investment opportunities in the areas of FMCG, paper & paperboards, hotels, agri-business and information technology. Innovation is used by the ITC Ltd. as a prime focus in order to create customer delight, increase its profitability and market share which will there by lead to an all-round development of ITC Ltd.

Over the years there has been a vast improvement in the performance of ITC’s agri-business and FMCG sector. It is transforming the way farmers do the business and the rural markets work. The hotel industry of ITC Ltd. is also progressing thus making a recovery from the loss suffered in the previous years. Also there has been a growth in the ITC’s paper & paperboard and Information Technology business. ITC’s performance in the FY11 was strong with the high revenue growth, strong dividend pay-out and a strong improvement in its return ratios.

In order to become the No. 1 FMCG company, ITC is continuously trying to exploit new business opportunities and thereby occupy the position as one of India’s most valuable corporations through world class performance, creating growing value for the Indian

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economy, stakeholders and the customers. Its philosophy of all-round value creation is backed by strong corporate governance policies and systems.

BIBLIOGRAPHY

www.itcportal.com

www.indiainfoline.com

http://www.hindustantimes.com/Innovation-to-drive-ITC-growth/Article1-591284.aspx

http://www.business-standard.com/india/news/itc-growth-pains/323915/

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