Transcript
ITC Limited One of India’s Valuable Ind ia’s Most Valuable Corporations 1
HISTORY ITC
was incorporated on August 24,1910 under the name of IMPERIAL TOBACCO COMPANY of India ltd’. In 1974 company’s name was changed to INDIAN TOBACCO COMPANY LTD. From September 18,2001, company’s name has effectively become ITC Ltd.
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About ITC Founded
August 24,1910
Head Headqua quart rters ers
Virg Vi rgini inia a House House,, Kolka Kolkata ta Mr. Y.C.Deveshwar Tobacco, foods, hotels, stationery, greeting personal
Chairman Industry
cards, care, IT etc. Net Sales Employees 3
Rs 16200 crores 25,000 app.
Mr. Y.C.Deveshwar Chairman ITC Ltd. 4
One of India’s most valuable corporations
One of the 8 Indian Companies to feature in ‘Forbes Alist’ for 2004
Only Indian FMCG Company to feature in Forbes 2000 List
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)
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No. 1 in FMCG Sector
Awards & Accolades
ITC features on FORBES GLOBAL 2000 rankings for 2007
‘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, Products, has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment. Company’s watershed program also won the Asian CSR Award for Environmental Excellence from the Asian Institute of Management. 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”.
The
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Accolades & Awards e-Choupal
initiative wins global recognition:
Stockholm Challenge Award 2006 in the Economic Development category which recognizes 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
Recognized 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: Cigarettes Other FMCG
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Hotels
Agri Business Leaf Tobacco Agri Commodities
Paperboard Paper & 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 :
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Executive management
Corporate Strategies
Sustain multiple drivers of growth, matching internal capabilities with emerging market opportunities
Pursue World class competitiveness in businesses and across the entire value chain
Best-in-class in terms of :
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Internal Vitality
Market Standing
Profitability
all
Blend core competencies and leverage ITC umbrella strengths to create new avenues of growth
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FMCG Cigarettes
ITC’s Cigarettes Business
Market leadership in all segments - geographic & price
Powerful brands across segments
Extensive FMCG distribution network
World-class products
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Direct servicing of 1,00,000 markets & 2 million retail outlets
state-of-the-art
technology
Investment - Rs.10 billion in six years
Exciting long term growth potential
and
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 app.. app.. one tenth of world world average average : 141
Future growth depends on relative rates of growth of per capita income and moderation in taxes
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Per Capita
1662
1753
Source Source : Based on on Cigarette Cigarette consumption consumption data(2003) data(2003) from from “World Cigarettes”,ERC Group plc. 15
Hotels & Tourism 16
ITC’s Hotel Business
ITC-Welcomgroup : a leading hotel chain in India India • Established Established presence in key business locations • Over 6000 rooms under 4 distinct brands
Category
Brand
Positioning
Luxury Upper upscale Upscale - mid-scale Heritage
ITC Hotel: Luxury Collection WelcomHotel: Sheraton Fortune Hotels WelcomHeritage
"Mansions of Luxury" "Passion for Quality" "Promise of True Value" "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
alliance with Starwood Hotels & Resorts • ‘Luxury Collection’ / ‘Sheraton’
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and
international
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Paperboards, aperboards, Paper & Packaging
ITC’s Paperboards Business
Market leader in growth segment - value added coated boards
World-class contemporary technology •
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 •
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Ozone bleached Pulp Mill operations commenced – only one of its kind in India meeting world-class environmental standards
Expansion completed; source of sustainable competitive advantage
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
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FMCG businesses
Agri Businesses - Leaf Tobacco - Agri Commodities 21
Indian Leaf Tobacco industry
India – the third largest producer of tobacco t obacco
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 In dia
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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
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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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The eChoupal Services Relevant
& Real-time Information
Commodity
prices, Local Weather, News
Customised Farm
Knowledge
Management, Risk Management
Supply
Chain for Farm Inputs
Screened
for Quality, Demand Aggregation for Competitive Prices & Efficient Logistics
Direct
Marketing Channel for Farm Produce Lower
Transaction Costs, Better Value through Traceability
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Other Services through e-Choupal Distribution
of Products and Services to Rural
Markets Micro
marketing
Product/Services
Demos Marketing and Brand Building activities Pilots Bhoomi eHealth
with Private Health Service Providers eEducation Rural BPO
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Reasons For Diversification Business is facing an increasingly stringent tax & regulation regime.
Tobacco
• In 2001 taxes were raised by 15%; Revenue collection sub
optimized ( cigarette sales fell disproportionately as forcing consumers to shift to cheaper alternatives, but overall tobacco consumption increased ) • Last year 5% increase in excise + 12.5 %VAT leading to
unprecedented 30% increase in tax (volume of illegal cigarettes has doubled ) • This year excise on non-filter cigarettes was increased (20 % of its 28
portfolio for ITC) as a result ITC has discontinued production of non filter cigarettes.
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 wit h other elements outsourced • Contributing to the competitiveness of SMEs
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Future Growth & Value Capture
New FMCG Initiatives
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FMCG Business Initiatives Branded Packaged Foods
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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
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
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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
Product and brand range being expanded •
Premium segment comprising the ‘Classic’ range of formal wear, ‘Wills Sport’ relaxed wear and ‘Wills Clublife’ evening wear
•
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Strong distribution network in place for the mid-market brand ‘John Players’
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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 Shampoos/Soaps/Shower Gels/Conditioners
Vivel
with
Di Wills and Vivel (Mid) – Soaps and Shampoos Shampoos
Superia
(Popular) – Soaps and Shampoos
Products well received in the market, rapidly gaining customer acceptance
Supported by endorsements
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investments
in
brands
–
celebrity
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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
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‘Classmate’ brand already the most widely distributed brand in India
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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: Homelite, •
Ship,
• Cheetah Fight etc. 46
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
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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
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 e-choupal rural two-way A fulfillment capability R M Cigarette Trade Marketing capability E R Expanded FMCG distribution capability S Brande d Foods
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Lifestyl Lifestyl e retailin g
Educatio n Stationer y
Matches & Agarbat ti
Personal Care Product s
A basis for strategic partnerships with other FMCG brand owners
M A R K E T S
THANK YOU
Parul Agarwal Saloni Jain Vibha Porwal 50
