i.t.c ppt (1)

ITC. Touching your life. Everyday

Imperial Tobacco Company of India Limited (ITC).

Presented byAnuja Jain

Arihant DardaArun ChaharAshwini JainCharu PahwaMohit Rathi


INTRODUCTION

• ITC Limited which previously stood for ‘Imperial Tobacco Company one of India's foremost private sector companies with a market capitalization of nearly US $ 18 billion and a turnover of over US $ 4.75 billion.

• ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering.

• continues in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is gaining market share in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.


Contd..

• ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services and business process outsourcing.

• ITC's Agri-Business is one of India's largest exporters of agricultural products.

• ITC's Agri-Business is one of India's largest exporters of agricultural products.

http://en.wikipedia.org/wiki/IT-enabled_services

http://en.wikipedia.org/wiki/Business_process_outsourcing

Hotel

Cigarettes

Incense Sticks

Personal Care

Safety Matches

Agricultural IndustryInformation Technology

Paperboards

Packaged Foods

Stationery

Branded Apparel



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


Board of directors

ChairmanY.C Deweshwar

Executive Director Anup Singh K.vaidyanath

Non Executive DirectorAnil Baijal, R.K.Kaul,s.H Khan, S.B.Mathur, D.K Mehrotra, H.G.

Powell, P.B Ramanujam, Anthony , B Vijayraghwan, Basudev Sen

Key persons of tobacco divison• Kurush N Grant, T.V Ramaswamy, Hemant

Malik, R Tandon


• 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.

VISION & MISSION


Values

• ITC's Core Values are aimed at developing a customer-focused, high-performance organisation

• Customer Focus we are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction.ITC. WORKING FOR YOU. WORKING FOR

INDIA.


ENDURING VALUE

• Expressing concern and desire to help, is the spirit of ITC’s rural development initiatives. A social mission reaching out to join hands, convert old relationships into new partnerships, put on the ground solutions that bring lasting benefits to society.

• .• ITC regards corporations as critical tools of social

development, and considers public - private - people partnerships – bringing together community, government and business– as the only sustainable basis for social sector and infrastructure development.


Corporate Social Responsibility•Environmental1. ITC has been Carbon Positive 3 years in a row.

2. Water Positive 6years in a row.

3. 100% solid waste recycling

• Social1. ITC's businesses generate livelihoods for over 5 million people.

2. ITC's globally recognised e-Choupal initiative is the world's largest rural digital infrastructure benefiting over 4 million farming families.

3. ITC's Social and Farm Forestry initiative has greened over 80,000 hectares creating an estimated 35 million person days of employment among the disadvantaged.

4. ITC's Watershed Development Initiative brings precious water to nearly 35,000 hectares of dry lands and moisture-stressed areas.

5. ITC's Sustainable Community Development initiatives include women empowerment, supplementary education, integrated animal husbandry programmes.

6. The first ITC Sangeet Sammelan showcasing the best in Indian classical music was held in Delhi in 1971


CORPORATE SOCIAL RESPONSIBILITY

Healthcare services have been provided to over 45,000 mothers-at-risk and children below 5Women join their ITC supported self-help

cow artificially inseminated at ITC’s cattle development

centreITC assists rural families

to construct low cost sanitary units for their

homes

develop water and forest resources to enhance soil

fertility,adopt soil and water

management practices,the teachers at village

ITC Supplementary Learning Centre

persuaded parents to send children to evening coaching classes at the

Centre

ITC offers facilitation to farmers to form agri-

business societies, pool knowledge and

resources, improve productivity and qualityOver 8 years, ITC has assisted nearly 2,700 families to construct

their own sanitary units.apply superior farming

methods to improve quality and quantity of

farm yields.


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 -CULTURAL

• 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 labour supply•Development of IQMS•Adapting other concepts like QC,TQM, KSS, 5 S, 6 sigma


SWOT AnalysisStrength•Cigarette market is 22,000 cr and ITC has lion’s share in it•Strong brand recognition and product portfolio •Distribution network•Management

Weakness•Dependence on tobacco revenues• Negative Connection of Tobacco

Opportunity•Low per capita consumptionOf personal care products•Rural Market •E-Choupal• Filter cigarette segment of less than 60mm size

Threat•Competition both Domestic & International•Increasing Tax on cigarettes•Excise duty on unfiltered cigarettes less than 60mm in length was increased 387% last year •Hike was 142% for those between 61mm and 70mm long. •Regulatory restrictions on cigarettes•Ban on smoking


TOWS MATRIX• • Strengths • Weaknesses

•Opportunities

• Market expansion• Promotion• Awareness• Affordability

• Emphasize on personal care

•Threats

• Diversification• Strategic alliances

with international players


Future SWOT of ITCStrength•Brand•More advanced distribution network(ERP,SCM)•Management:- CRM•Increase in disposable income

Weakness•Entry of other players•Health awareness

Opportunity•Increasing retail market•Rural market•Increasing e-commerce

Threat•Bargaining power of suppliers•Bargaining power of customers•Smuggling•Ban on smoking


Porters 5 forces

moderate bargaining power of customer

High bargainng power of supplier

High threats of new entrants

High rivalry

Low substitutes due to strict laws


Market share of ITC Ltd.

Outstanding market leader • Cigarettes, Hotels, Paperboards,

Packaging and Agri-Exports.Gaining market share

• Nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.

Source: Annual Accounts/Equity research


H1 Segment Revenue

Rs crs

Half Year Half Year Golyended ended (%)

30.09.2008 30.09.2007

1. Segment Revenue (Net)a) FMCG - Cigarettes 3552 3211 10.6%

- Others 1449 1126 28.7%Total FMCG 5001 4337 15.3%

b) Hotels 467 412 13.4%c) Agri Business 2699 2127 26.8%d) Paperboards, Paper & Packaging 1306 1038 25.8%

Total 9473 7915 19.7%Less : Inter-segment revenue 1810 1351 34.0%

Net sales / Income from operations 7663 6564 16.7%


Segment Dominance Contribution %Revenue PBIT

Cigarettes 70% share 77.0% 87.7%

Paper & Packg.

Packaging board – No. 1 in Asia

7.3% 10.7%

Agri business

1of the largest xporters from India

7.0% 3.7%

Hotels ITC Group ranks No.2 4.3% 5.4%

FMCG(Others)

20% share of greeting cards market, 'Aashirvaad' atta is No.1 in branded segment

4.4% -7.5%

Source: Equity research reports


CAGR during FY 2005-2008

Category CAGR Growth parameters

Cigarettes 10.9 % Pricing power

Hotels 22.7% Inward traffic, occupancy

Paper 17.2 % Capacity utilization, value added products

Agri business

34.3 % E-choupal, choupal sagar,

FMCG-Others

60.2 % Fast track, decent share.

Source: Equity research reports


The BCG Matrix for ITC Ltd.StarsHotelsPaperboards/ Packaging.Agri business.

?FMCG- OthersITC Infotech

CowsFMCG-Cigarettes

Dogs •Branded apparel•Packaged foods


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

Corporate Strategies


GOVERNANCE, COMMITMENTS & ENGAGEMENTS

• Our Corporate Governance processes are designed to support effective management of multiple businesses while retaining focus on each one of them. The practice of Corporate Governance in ITC takes place at three interlinked levels –

• Strategic supervision- by the Board of Directors• Strategic management- by the Corporate Management Committee• Executive management- by the Divisional/Strategic Business Unit (SBU) Chief

Executive assisted by the respective Divisional/SBU Management Committee

• The role, powers and composition of the Board of Directors, Board Committees, Corporate Management Committee and Divisional Management Committees are articulated and available on the Company’s corporate website.


Critical Success Factor

•SITE AND LOCATION•POSITIONING AND GUEST PROFILE•FINANCIAL STRENGTH•BRAND RECOGNITION•YIELD MANAGEMENT•DIFFERENTIAL PRICING


Positioning of ITC

•TOUCHING YOUR

LIFE EVERYDAY.


SPANCOP

• S:- Suspect who can buy our product• P:- Prospect the chances and needs for which

customers may buy the product• A:- Approach the prospect with the USP’s of our

product• N:- Negotiate the deal for the product • C:- Closing of deal• O:- Get the order• P:- Payment follow up


Cigarettes • ITC, 32% owned by British American

Tobacco Plc., raised prices of its Gold Flake and Classic cigarette brands

• ITC commands around 70% of India's Rs 130 bn domestic cigarette market (value terms). Out of the top 10 cigarette brands in India, 6 belong to ITC.


OBJECTIVES• Cigarette revenues to increase by 9% during FY09

as a result of the full impact of price hikes and improved realizations on account of favourable product mix.

• The company expect to register 17% CAGR in net profit over FY09-11. At the current market price of Rs175, the stock is trading at EPS of Rs12.1.

Cigarettes Sizes Prices

Insignia (Wills) 97mm 100/-

KSFT- 84mm

IK Regular (Rich Gold) 84mm 88/-

IK Crystal Blue 84mm 88/-

Ocean Blue 84mm 88/-

IK Menthol 84mm 88/-

B&H Special 84mm 100/-

B&H Light 84mm 100/-

Classic Regular 84mm 88/-

Classic Mild 84mm 88/-

Classic Ultra Mild 84mm 88/-

Classic Menthol 84mm 88/-

Gold Flake Kings 84mm 54/-

Gold Flake Light 84mm 44/-

Silk Cut Kings 84mm 44/-

555 84mm

Wills Navy Cut 74mm 24/-

Wills Navy Cut Light 74mm 34/-

Gold Flake Premium 69mm

Silk Cut Premium 69mm

Wills Flake 69mm

Wills Capstan 69mm


Places


ITC’s Distribution channelITC’s Distribution channel is as follows:-

ITC. WORKING FOR YOU. WORKING FOR INDIA.

COMPANY HUB FACTORY

Retailer

small Wholesale dealer

Wholesale dealer

Carried and forward agent

consumer


Promotion

Direct marketing:- Sign boards, posters at shops on point of sale

Delivery vans

Sales force

ITC has just packed a classic punch (Jazz,Blues,Rocks)

Bann on T.V commercial


S T P Segmentation Geographic:• Rural• Urban Demographic:• Age• Gender• Occupation Psychographic:• Lifestyle


Targeting

M1 M2 M3

P1

P2

P3


P O S I T I O N I N G In 70’s they have positioned themselves by

saying:-• “For the gracious people”• “A touch of Gold”• "A tribute to the gracious people” It is still differentiating itself on the purity

and quality of its experience. • The brand stands for a celebratory attitude.

“Celebrate the feeling” is the new message


COMPETITOR ANALYSIS The cigarette market in India has 3 players• Godfrey Phillips India (GPI), a Philip Morris affiliate,13%

of market share • Vazir Sultan Tobacco (VST), a BAT affiliate, 13% of the

total market share• Golden Tobacco Company (GTC) with 8% of the market

share. Domestic competitors• Kanhayya tobacco• MR tobacco• Sapna enterprises• Sudarshan tobacco

ITC still attains a gigantic market share of 66%


7’S OF ITC

• STRATEGY• STRUCTURE• SYSTEM• STYLE• SKILLS• STAFF• SHARED VALUES


CONFRONTATION

NAVY CUT,CLASSIC,INSIGNIA,INDIA KINGS,CAPSTEN,GOLD FLAKE,SISSORS,SILK CUT,BRISTOL,BERKELEY

GOLD FLAKE PREMIUM29%

GOLD FLAKE KINGS

4%

IK Regular (Rich Gold)1%

B&H Light2%

Classic Regular4%

Classic Ultra Mild4%

Silk Cut Kings5%

Wills Navy Cut7%

Silk Cut Premium11%

Marlboro Regular6%

Select Filter 5%

Four Square Specia

5%

Four Square Premier

5%

Panama Plain 4%

Red & White Super4% Cavender Magna

4%


Diversification

• ITC over the years has been investing cash flows from its cigarette business into various lucrative segments like foods, personal care, hotels and paper.

• With the paperboard division coming out of a major capex cycle and a reduction in losses from FMCG-others division from FY10E, we expect the non-cigarette businesses to become self-sufficient.

• The agriculture division continues to provide a strong support as an excellent raw material sourcing base. Hotels segment though is likely to register slower growth in FY10E due to economic slowdown and terror attacks.

ITC. Touching your life. Everyday 40

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

Per Capita Adult C igarette Consumption (Sticks)

16621753

561 488

141

1190

USA China Pakistan Nepal India W orld Avg.


FINANCIAL ANALYSIS

Gold flake

Profit Before Tax 28083757

Provision For Taxi ncluding Tax 141700

Profit After Tax 27942057

Add:profit Brought ForwardFrom Previous Year

15605975

Surplus Available For Appropration 43548032

Tranffered To General Reserve --------

Balance Carried Forward 43548032


FINANCIAL ANALYSIS

Wills

Profit Before Tax 3506186

Provision For Taxincluding Tax 116810

Profit After Tax 3389376

Add:profit Brought ForwardFrom Previous Year

6251604

Surplus Available For Appropration 9640980

Tranffered To General Reserve ---------

Balance Carried Forward 9640980


Financial analysis ratios Amount As per date

P.E Ratio 22.54 27-03-09

Eps 8.28 Mar08

Sales 3858.65 Dec 08

Face Value Rs 1

Net Profit Margin 21.50% Mar08

Last Bonus 1:2 23/05/08

Last Dividend 350% 23/05/08

Return On Average Equity

25.99 Mar08

27th mar 186.65

Market capitalization 70340.92 cr

52 weeks high/low 232.40-132.05


HRM POLICY

• ITC believes that all its employees must live with social and economic dignity and freedom, regardless of nationality, gender, race, economic status or religion.

• ITC upholds international human rights standards, does not condone human rights abuses, and creates and nurtures a working environment where human rights are respected without prejudice.

• The Corporate Human Resources function conducts non-discrimination reviews annually on a sample basis with unit heads and through on-site assessments.

• ITC Unit has appropriate systems and checks to ensure compliance with the Policy and statutory provisions, including means for filing of grievances, collective bargaining agreements and minutes from worker meetings.


CONTD..

• ITC does not employ any person below the age of eighteen years in the workplace. ITC prohibits the use of forced or compulsory labour at all its units. No employee is made to work against his/her will or work as bonded/forced labour.

• All major changes in operations involving work processes, manning norms and other productivity linked issues are carried out after discussions with the employees and the recognized unions at each location.

• ITC is committed to providing a safe and healthy work environment to all its employees. These policy guidelines on HIV/AIDS are an endorsement of this commitment and, in particular, of the Company's commitment to specific programmes and actions in response to the HIV epidemic.


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.• NEEDS FOR STRATEGY:

1) resources are finite

2) uncertainty about competitive strength and behavior

3)when commitment is irreversible


Contd…

• Logistic/supply chain management enabling technologies cover a wide spectrum of technology that facilitates smooth flow of goods and services and related information as well as integration of business processes.

• The overall competitiveness of industry would increase by having proper operations and logistic managements.


Research and development

• ITC is committed to delivering world class product and services. this requires clear focus on continuously striving to create a higher value to customers by achieving excellence in all companies operations.

• ITC development of its integrated quality management system (IOMS) is based on its strong foundation of implementing ISO9001:2000,ISO14001,OHSAS18001,SA8000,HACCP(for foods) and IQRS(Performance rating and benchmarking of the quality management system.

• ITC R&D centre are at bengalure,hyderabad,bhadrachalam,rajamundry,the company has assembled a pool of world class scientist focused on providing the requiste R&D support system.


Contd…

• ITC research and developed facilities Rajahmundry in AP cover all aspects of tobacco crop cultivation. its collaboration with the central tobacco board research institute and tobacco board ITC pioneered FCV tobacco cultivation in India and introduced the burley and HDBRG varieties.


Information system in ITC

• IT plays a very critical role in driving the ITC business strategies.

• IT is an enabler of the business process to ensure business growth through efficient management of operations in the value chain.

• IT creates new business process or restructure the current business process to enhance customer service availability , efficient manufacturing / supply chain operations etc


HI-TECH SUPPLY SOLUTIONS

• Thousands of small retailers in India who sell cigarettes and confectionery supplied by ITC Ltd, and who have thus far had to wait for the next arrival of the company’s delivery van.

• Place orders through mobile phones• Vans go without knowing actual demand so after using this

they can save cost as well as time.• Mobility based applications can bring down the cost of

operation by 20-30% from the manual basis of operation


FUTURE OF CIGARETTES

• An average of 2,800 people die every day in India with tobacco-related diseases.

• Cancer of lungs, lips, tongue, oral cavity, throat and larynx, uterus and urinary bladder are some of the common tobacco-related diseases.

• Adding some 184 million people consume cigarettes, beedis and gutka every day.

• ITC researchers are continuously doing research on ayurvedic cigarette which would be harmless.


ITC CAN BE A FOLLOWER

Guardian pharmacy has launched a herbal cigarette named HONEYROSE which is 100% harmless.

• Nicotine-free, tobacco-free” cigarette seemed like an oxymoron

• Cigarettes are made with naturally grown Marshmallow herb, Red Clover and Rose

• As ITC has got more experience and brand image it can improve its quality and thus can tab the health consious people FORTRESS STRATEGY


CERTIFICATIONS, HONOURS & AWARDS

• All the Environment, Health and Safety (EHS) Management systems & Sustainability Reporting in ITC conform to the best international standards.

• SA 8000 - Social AccountabilityLeaf processing plants at Chirala and Anaparti, Cigarette factory at Kolkata and SNPL factory at Simra have achieved this certification.

• OHSAS 18001- Occupational Health & Safety Management Systems All the manufacturing units of ITC and Corporate EHS Department have achieved this certification.

• ISO 14001- Environment Management SystemsAll manufacturing units of ITC, all the major hotels, Corporate EHS Department & ITC R&D Centre at Bengaluru have achieved this certification.


Recommendation

•Improved security for hotel guests.•Floor access control in hotels through key card system.•Precision analysis of products in Food Business.•Process optimisation for product development in Food Business.•Automation of lighting controls.•Use of Solar energy for hot water generation and outside area illumination.•Installation of PNG (Piped Natural Gas) fuelled generator sets and PNG fired calendar and tumbler drier machines in hotel laundries.• Improvements to reduce heat gain/cooling losses from building envelops in hotels.•Impact of measures for reduction of energy consumption and consequent impact on the cost of production of goods.


CONCLUSION

• ITC 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 in very low, because people don’t 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.

• ITC now offering more margins, exiting offers and long credit period to retailers and wholesalers.

ITC. WORKING FOR YOU. WORKING FOR INDIA.


THANK YOU

i.t.c ppt (1)

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