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Abhishek bansal report



Report on Itc Ltd.

Report on Itc Ltd.



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Abhishek bansal report Document Transcript

  • 1. Introduction About ITCITC Ltd. is a board-managed professional company, committed to creating enduring valuefor the shareholder and for the nation. It has a rich organizational culture rooted in its corevalues of respect for people and belief in empowerment. Its philosophy of all-round valuecreation 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.  Enhance the competitive power of the portfolio through synergies derived by blending the diverse skills and a capability 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 catalyze the entrepreneurial energies of management by striking the golden balance between executive freedom and the need for effective control and accountability. 1
  • 2. History of ITC Ltd.ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company ofIndia Limited. As the Companys ownership progressively Indianised, the name of theCompany was changed from Imperial Tobacco Company of India Limited to India TobaccoCompany Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of theCompanys multi-business portfolio encompassing a wide range of businesses - Fast MovingConsumer Goods comprising Foods, Personal Care, Cigarettes and Cigars, Branded Apparel,Education and Stationery Products, Incense Sticks and Safety Matches, Hotels, Paperboards& Specialty Papers, Packaging, Agri-Business and Information Technology - the full stops inthe Companys name were removed effective September 18, 2001. The Company now standsrechristened ITC Limited.The Companys beginnings were humble. A leased office on Radha Bazar Lane, Kolkata,was the centre of the Companys existence. The Company celebrated its 16th birthday onAugust 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamedJ.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company washistoric in more ways than one. It was to mark the beginning of a long and eventful journeyinto Indias future. The Companys headquarter building, Virginia House, which came up onthat plot of land two years later, would go on to become one of Kolkatas most veneratedlandmarks.Though the first six decades of the Companys existence were primarily devoted to thegrowth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventieswitnessed the beginnings of a corporate transformation that would usher in momentouschanges in the life of the Company.ITCs Packaging & Printing Business was set up in 1925 as a strategic backward integrationfor ITCs Cigarettes business. It is today Indias most sophisticated packaging house.In 1975, the Company launched its Hotels business with the acquisition of a hotel in Chennaiwhich was rechristened ITC-Welcomgroup Hotel Chola (now renamed My Fortune, 2
  • 3. Chennai). The objective of ITCs entry into the hotels business was rooted in the concept ofcreating value for the nation. ITC chose the Hotels business for its potential to earn highlevels of foreign exchange, create tourism infrastructure and generate large scale direct andindirect employment. Since then ITCs Hotels business has grown to occupy a position ofleadership, with over 100 owned and managed properties spread across India under fourbrands namely, ITC Hotels - Luxury Collection, WelcomHotels, Fortune Hotels andWelcomHeritage.In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam PaperboardsLimited. Bhadrachalam Paperboards amalgamated with the Company effective March 13,2002 and became a Division of the Company, Bhadrachalam Paperboards Division. InNovember 2002, this division merged with the Companys Tribeni Tissues Division to formthe Paperboards & Specialty Papers Division. ITCs paperboards technology, productivity,quality and manufacturing processes are comparable to the best in the world. It has also madean immense contribution to the development of Sarapaka, an economically backward area inthe state of Andhra Pradesh. It is directly involved in education, environmental protectionand community development. In 2004, ITC acquired the paperboard manufacturing facilityof BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The KovaiUnit allows ITC to improve customer service with reduced lead time and a wider productrange.In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture.In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name waschanged to Surya Nepal Private Limited (Surya Nepal). In 2004, the company diversifiedinto manufacturing and exports of garments.In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing companyand a major supplier of tissue paper to the cigarette industry. The merged entity was namedthe Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD wasmerged with the Bhadrachalam Paperboards Division to form the Paperboards & SpecialtyPapers Division in November 2002. 3
  • 4. Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri BusinessDivision for export of agri-commodities. The Division is today one of Indias largestexporters. ITCs unique and now widely acknowledged e-Choupal initiative began in 2000with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 millionfarmers. Also, through the Choupal Pradarshan Khet initiative, the agri services vertical hasbeen focusing on improving productivity of crops while deepening relationship with thefarming community.ITC launched line of premium range of notebooks under brand Paperkraft in 2002. Toaugment its offering and to reach a wider student population, the Classmate range ofnotebooks was launched in 2003. Classmate over the years has grown to become Indiaslargest notebook brand and has also increased its portfolio to occupy a greater share of theschool bag. Years 2007- 2009 saw the launch of Practical Books, Drawing Books, GeometryBoxes, Pens and Pencils under the Classmate brand. In 2008, ITC positioned the business asthe Education and Stationery Products Business and launched Indias first environmentfriendly premium business paper under the Paperkraft Brand. Paperkraft offers a diverseportfolio in the premium executive stationery and office consumables segment. In 2010,Colour Crew was launched as a new brand of art stationery.ITC also entered the Lifestyle Retailing business with the Wills Sport range of internationalquality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusivestores later expanded its range to include Wills Classic formal wear (2002) and WillsClublife evening wear (2003). ITC also initiated a foray into the popular segment with itsmens wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of thecountrys most premier fashion event - Wills Lifestyle India Fashion Week - that has gainedrecognition from buyers and retailers as the single largest B-2-B platform for the FashionDesign industry. To mark the occasion, ITC launched a special Wills Signature, taking theevent forward to consumers.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. 4
  • 5. Today ITC Infotech is one of Indias fastest growing global IT and IT-enabled servicescompanies and has established itself as a key player in offshore outsourcing, providingoutsourced IT solutions and services to leading global customers across key focus verticals -Banking Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG), Retail,Manufacturing, Engineering Services, Media & Entertainment, Travel, Hospitality, LifeSciences and Transportation & Logistics.ITCs foray into the Foods business is an outstanding example of successfully blendingmultiple internal competencies to create a new driver of business growth. It began in August2001 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 andCandyman confectionery and Aashirvaad atta (wheat flour). 2003 witnessed the introductionof Sunfeast as the Company entered the biscuits segment. ITC entered the fast growingbranded snacks category with Bingo! in 2007. In 2010, ITC launched Sunfeast Yippee! toenter the Indian instant noodles market. In just over a decade, the Foods business has grownto a significant size under seven distinctive brands, with an enviable distribution reach, arapidly growing market share and a solid market standing.In 2002, ITCs philosophy of contributing to enhancing the competitiveness of the entirevalue chain found yet another expression in the Safety Matches initiative. ITC now marketspopular safety matches brands like iKno, Mangaldeep and Aim.ITCs foray into the marketing of Agarbattis (incense sticks) in 2003 marked themanifestation of its partnership with the cottage sector. Mangaldeep is a highly establishednational brand and is available across a range of fragrances like Rose, Jasmine, Bouquet,Sandalwood, Madhur, Sambrani and Nagchampa.ITC entered the Personal Care Business in 2005. In seven years, the Personal Care portfoliohas grown under Essenza Di Wills, Fiama Di Wills, Vivel and Superia brands which havereceived encouraging consumer response and are also being progressively extendednationally. 5
  • 6. In 2010, ITC launched its handrolled cigar, Armenteros, in the Indian market. Armenteroscigars are available exclusively at tobacco selling outlets in select hotels, fine diningrestaurants and exclusive clubs.Bombay Stock ExchangeITC Ltd listed no. in Bombay Stock Exchange is BSE: 500875 Vision of ITC Ltd.Sustain ITCs position as one of Indias most valuable corporations through world classperformance, creating growing value for the Indian economy and the Company‟sstakeholders. 6
  • 7. Mission of ITC Ltd.To enhance the wealth generating capability of the enterprise in a globalizing environment,delivering superior and sustainable stakeholder value. Core ValueITCs Core Values are aimed at developing a customer-focused, high-performanceorganization which creates value for all its stakeholders: TrusteeshipAs professional managers, we are conscious that ITC has been given to us in "trust" by allour stakeholders. We will actualize stakeholder value and interest on a long term sustainablebasis. Customer FocusWe are always customer focused and will deliver what the customer needs in terms of value,quality and satisfaction.Respect For PeopleWe are result oriented, setting high performance standards for ourselves as individuals andteams. We will simultaneously respect and value people and uphold humanness and humandignity. We acknowledge that every individual brings different perspectives and capabilitiesto the team and that a strong team is founded on a variety of perspectives.We wantindividuals to dream, value differences, create and experiment in pursuit of opportunities andachieve leadership through teamwork.ExcellenceWe do what is right, do it well and win. We will strive for excellence in whatever we do. 7
  • 8. InnovationWe will constantly pursue newer and better processes, products, services and managementpractices.Nation OrientationWe are aware of our responsibility to generate economic value for the Nation. In pursuit ofour goals, we will make no compromise in complying with applicable laws and regulations atall levels. ITC Corporate Social ResponsibilityIt is ITCs policy: 1. To pursue a corporate strategy that enables realization of the twin goals of shareholder value enhancement and societal value creation in a mutually reinforcing and synergistic manner. 2. To align and integrate Social Investments / CSR programmes with the business value chains of your Company and make them outcome oriented. To support creation of on and off-farm sustainable livelihood sources thereby empowering stakeholder communities to conserve and manage their resources. 3. To implement Social Investments / CSR programmes primarily in the economic vicinity of your Company‟s operations with a view to ensuring the long term sustainability of such interventions. 4. To contribute to sustainable development in areas of strategic interest through initiatives designed in a manner that addresses the challenges faced by the Indian society especially in rural India. 5. To collaborate with communities and institutions to contribute to the national mission of eradicating poverty and hunger, especially in rural areas, through agricultural 8
  • 9. research and knowledge sharing, superior farm and agri-extension practices, soil and moisture conservation and watershed management, conservation and development of forest resources, empowering women economically, supplementing primary education and participating in rural capacity building programmes and such other initiatives. 6. To align your Company‟s operations with the national objective of inclusive growth and employment generation by leveraging your Company‟s diversified portfolio, manufacturing bases, supply chains and distribution channels, to infuse an appropriate mix of capital and technology to further social business initiatives such as e-Choupal, animal husbandry, agarbatti rolling etc. and support organisations / institutions engaged in building linkages with local, regional and urban communities and markets. 7. To sustain and continuously improve standards of Environment, Health and Safety through the collective endeavor of your Company and its employees at all levels towards attaining world class standards and support other programmes and initiatives, internal or external, for the prevention of illness and combating of diseases as may be considered appropriate from time to time. 8. To encourage the development of human capital of the Nation by expanding human capabilities through skills development, vocational training etc. and by promoting excellence in identified cultural fields.AwardsThe Padma Bhushan, one of the highest civilian awards in the country by the Government ofIndia in recognition of his distinguished service of a high order to the Nation, in 2011.2012 Business Leader of the Year Award conferred by the All India ManagementAssociation (AIMA), Indias apex body of professional management.2010 The U.S.-India Business Council (USIBC) Award for Global Leadership.2007 SAM/SPG Sustainability Leadership Award conferred at the InternationalSustainability Leadership Symposium, Zurich. 9
  • 10. 2006 Business Person of the Year from UK Trade & Investment, the UK Governmentorganization that supports overseas businesses in that country.2006 Inducted into the Hall of Pride by the 93rd Indian Science Congress.2005 Honored with the Teachers Lifetime Achievement Award.2001 Manager Entrepreneur of the Year from Ernst & Young. Retail Visionary of the Yearfrom Images, Indias only fashion and retail trade magazine.1998 Honorary Fellowship from the All India Management Association 1996 DistinguishedAlumni Award from IIT, Delhi.1994 Marketing Man of the Year from A&M, the leading marketing magazine.1986 Meridian Hotelier of the Year.Working Area of ITC Ltd.An inspiring Vision. A challenging corporate strategy. World-class execution. Unmatchedinvestments in technology, brands, people. These expressions best define ITC Limited. Theresult: market capitalization of US$ 33 billion and turnover of over US$ 7 billion. ITC todayis a leading FMCG marketer in India, the second largest Hotel chain, the clear market leaderin the Indian Paperboard and Packaging industry and the countrys foremost Agri-businessplayer. Additionally, its wholly owned subsidiary is one of Indias fastest growingInformation Technology companies in the mid-tier segment.As each of ITCs businesses is vastly different from the other in its type, the state of itsevolution and the basic nature of its activity, the challenge of governance for ITC thereforelies in fashioning a model that addresses the uniqueness of each of its businesses and yetstrengthens the unity of purpose of the Company as a whole. 10
  • 11. ITCs diversification is powered by a robust corporate strategy designed to unleash multipledrivers of growth. Its time tested core competencies, namely unmatched distribution reach,superior brand building, effective supply chain management and acknowledged skills inhoteliering have provided ITC the springboard to create new epicenters of growth. Inspiredby the overarching vision of making a contribution to the national goals of sustainabledevelopment and inclusive growth, ITC has innovatively crafted unique business models thatsynergies long-term shareholder value creation with enhancing societal capital.In FMCG(1) Cigarettes and Cigars:- ITC is the market leader in cigarettes in India. With its widerange of invaluable brands, ITC has a leadership position in every segment of the market.ITC‟s highly popular portfolio of brands includes Insignia, India Kings, Lucky Strike,Classic, Gold Flake, Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut,Duke, Hero & Royal. The Company has been able to consolidate its leadership position with 11
  • 12. single minded focus on continuous value creation for consumers through significantinvestments in creating & bringing to market innovative product designs, maintainingconsistent & superior quality, state-of-the-art manufacturing technology, & superiormarketing and distribution. With consumers & consumer insights driving strategy, ITC hasbeen able to fortify market standing in the long-term, by developing & deliveringcontemporary offers relevant to the changing attitudes & aspirations of the constantlyevolving consumer.(2) Foods:- ITC made its entry into the branded & packaged Foods business in August 2001with the launch of the Kitchens of India brand. A more broad-based entry has been madesince June 2002 with brand launches in the Confectionery, Staples and Snack Foodssegments.(3) Lifestyle retailing:- ITCs Lifestyle Retailing Business Division has established anationwide retailing presence through its Wills Lifestyle chain of exclusive specialty stores.Wills Lifestyle, the fashion destination, offers a tempting choice of Wills Classic work wear,Wills Sport relaxed wear, Wills Clublife evening wear, fashion accessories and Essenza DiWills - an exclusive range of fine fragrances and bath & body care products and Fiama DiWills - a range of premium shampoos and shower gels. Wills Lifestyle has also introducedWills Signature designer wear, designed by the leading designers of the country. With adistinctive presence across segments at the premium end, ITC has also established JohnPlayers as a brand that offers a complete fashion wardrobe to the male youth of today. Withits brands, ITC is committed to build a dominant presence in the apparel market through arobust portfolio of offerings.(4) Personal Care: - ITCs Personal Care portfolio under the Essenza Di Wills, Fiama DiWills, Vivel Ultra Pro, Vivel and Superia brands has received encouraging consumerresponse and is being progressively extended nationally. ITCs state-of-the-art manufacturingfacility meets stringent requirements of hygiene and benchmarked manufacturing practices.Contemporary technology and the latest manufacturing processes have combined to producedistinctly superior products which rank high on quality and consumer appeal. Extensiveinsights gained by ITC through its numerous consumer engagements have provided the 12
  • 13. platform for its R&D and Product Development teams to develop superior, differentiatedproducts that meet the consumers stated and innate needs. The product formulations useinternationally recognized safe ingredients, subjected to the highest standards of safety andperformance.(5) Education & Stationery:- ITC made its entry to the education and stationery businesswith its Paperkraft brand in the premium segment in 2002; and later expanded into thepopular segment with its Classmate brand in 2003. By 2007, Classmate became the largestNotebook brand in the country. Together, Classmate and Paperkraft offer a range of productsin the Education & Stationery space to the discerning consumer, providing unrivalled valuein terms of product & price. Classmate and Paperkraft have become a natural extension of theconsumer. Meticulous understanding of consumer needs helped creating a relevant andcomprehensive portfolio satisfying the needs of different sets of consumers.(6) Safety Matches: - ITCs range of Safety matches includes popular brands like Aim, AimSpecial, Aim Premium and i Kno. With differentiated product features and innovative valueadditions, these brands effectively address the needs of different consumer segments. ITCalso exports regular and premium safety matches brands to markets such as Middle East,Africa and the USA. The successful acquisition of Wimco Ltd., a subsidiary of ITC hasconsolidated the market standing of the Companys Matches business through synergybenefits derived through combined portfolio of offerings, improved servicing of proximalmarkets and freight optimization. Through its participation, ITC aims to enhance thecompetitiveness of the small and medium scale sectors through its complementary R&Dbased product development and marketing strengths, especially the breadth and depth of theCompanys trade marketing and distribution.(7) Agarbattis :- ITCs business strategy of creating multiple drivers of growth in the FMCGsector, the Company commenced marketing Agarbattis (Incense Sticks) sourced from small-scale and cottage units in 2003. This Business leverages the core strengths of ITC in nation-wide distribution and marketing, brand building, supply chain management, manufacture of 13
  • 14. high quality paperboards and the creation of innovative packaging solutions to offer Indianconsumers high quality Agarbattis. With its participation in the business, ITC aims toenhance the competitiveness of the small and medium scale sectors through itscomplementary R&D based product development and strengths in trade marketing anddistribution. Other Business of ITC Ltd.Hotels:-ITC Hotels, Indias premier chain of luxury hotels was launched on October 18, 1975, withthe opening of its first hotel - Chola Sheraton (now rechristened as My Fortune) in Chennai.Since then the ITC Hotels brand has become synonymous with Indian hospitality. With over100 hotels in more than 90 destinations, ITC Hotels has set new standards of excellence inthe hotel industry in Accommodation, Cuisine, Environment and Guest Safety.A leader in the premium hospitality segment, ITC Hotels have had the privilege of hostingworld leaders, Heads of State and discerning guests from across the world and within.As one of Indias most dynamic hospitality chains, ITC Hotels has set standards forexcellence in the hotel industry by pioneering the concept of branded accommodation. Thechain has developed three brands of accommodation ITC One, Towers and the ExecutiveClub to differentiate between the needs of various travelers and provide high levels ofservice. First to introduce branded cuisine, its restaurants Bukhara, Dakshin and DumPukhtare renowned for their delicious and authentic Indian cuisines from the different regions ofIndia. ITC Hotels also showcases international cuisine in its specialty restaurants West Viewand Pan Asian.Paperboard and specialty papers:-ITCs Paperboards and Specialty Papers Division is Indias largest, technologically advancedand most eco-friendly, paper and paperboards business. The business caters to a widespectrum of packaging, graphic, communication, writing, printing and specialty paperrequirements through its four world-class manufacturing units, 7sales offices and a networkof more than 50 dealers in India, along with an international trade network of 18 distributors / 14
  • 15. agents and 4 finishing operations close to the market for providing faster service to thecustomers. Having pioneered many specialty applications, ITCs Paperboards and SpecialtyPapers business enjoys market leadership in the value-added paperboards segment, and alsohas a significant share of the Indian fine papers market. It is the largest exporter of coatedboards from India.Packaging:-ITCs Packaging & Printing Business is the largest value added converter of paperboardpackaging in South Asia. It converts over 70,000 tonnes of paper, paperboard and laminatesper annum into a variety of value-added packaging solutions for the food & beverage,personal products, cigarette, liquor and consumer goods industries. The Division, which wasset up in 1925 as a strategic backward integration for ITCs Cigarettes business, is todayIndias most sophisticated packaging house. State-of-the-art technology, world-class qualityand a highly skilled and dedicated team have combined to position ITC as the first-choicesupplier of high value added packaging. The Division supplies value-added packaging toITCs various FMCG businesses. Its client list includes several well-known national andinternational companies like Nokia, Colgate Palmolive, Pernod Ricard, Diageo, BritishAmerican Tobacco, Philip Morris International, Agio Cigars, UB Group, Tata Tetley, TataTea, Reckitt Benckiser, Radico Khaitan, Akbar Brothers, Surya Nepal, VST Industries, etc.Information Technology:-Formed in 2000, ITC Infotech has today carved a niche for itself in the arena of global ITservices and solutions. The company has established technology Centers of Excellence (CoE)to deepen capabilities and incubate cutting-edge technical competencies. A robustoutsourcing model, comprehensive suite of differentiated solutions & services and focus onexcellence in execution has provided the company a leadership position in chosen domains.ITC Infotech‟s customer centric go-to-market approach is organized by industry verticals.The company services industries including, Banking Financial Services & Insurance (BFSI),Consumer Packaged Goods (CPG), Retail, Manufacturing, Engineering Services, Media &Entertainment, Travel, Hospitality, Life Sciences and Transportation & Logistics. 15
  • 16. Agriculture sectorITCs unique strength in this business is the extensive backward linkages it hasestablished with the farmers. This networking with the farming community has enabledITC to build a highly cost effective procurement system. ITC has made significantinvestments in web-enabling the Indian farmer. Christened e-Choupal, ITCs web plan forthe farmer centers around providing internet kiosks in villages.Farmer use this technology infrastructure to access on- line information from ITC‟s farmerfriendly website. Data access by the farmers related to the weather, crop condition, bestpractices in farming, ruling international prices and a host of other relevant information.ITC‟s International Business Division, one of India‟s largest exporters of agriculturalcommodities, has conceived e-Choupal as a more efficient supply chain aimedat delivering value to its customers around the world on a sustainable basis.ITC’s E- choupal 16
  • 17. The e-Choupal model has been specifically designed to tackle the challenges posed by theunique features of Indian agriculture, characterized by fragmented farms, weakinfrastructure and the involvement of numerous intermediaries, among others.„e-Choupal‟ also unshackles the potential of Indian farmer who has been trapped in aFurther, a growth in rural incomes will also unleash the latent demand for industrialgoods so necessary for the continued growth of the Indian economy goods . This willcreate another virtuous cycle propelling the economy into a higher growth trajectory my.This will create another virtuous cycle propelling the economy into a higher growthtrajectory.Create multiple drivers of growth by developing a portfolio of world class businessesthat best matches organizational capability with opportunities in domestic andexport markets.vicious cycle of low risk taking ability > low investment > low productivity > weakmarket orientation > low value addition > low margin > low risk taking ability. This madehim and Indian agribusiness sector globally uncompetitive, despite rich & abundantnatural resources. Group Companies Subsidiaries  ITC Infotech  Landbase  Srinivasa Resorts Ltd.  Wimco Limited  Fortune Parks hotel Ltd.  King Maker Marketing Inc, USA  Bay Islands Hotels Ltd.  Technico Pty Limited., Australia  Gold Flake Corporation Ltd  Russell Credit Limited  Surya Nepal Private Limited Joint Ventures  Maharaja Heritage Resorts Ltd.  ITC Filtrona 17
  • 18.  Associate companies  Gujarat Hotels Ltd  International Travel House Forbes RankingITC features on the Forbes Global 2000 rankings for 2007 at position 1256.ITC is the only Indian FMCG company that features on the Forbes Global 2000 rankings for2009 at position 987.ITC also featured on the Forbes World‟s most reputable Companies List at position 95. SWOT ANALYSISSTRENGTHS:1. ITC is one of Indias foremost private sector companies.2. ITC leveraged it traditional businesses to develop new brands for new segments. . Forexample, ITC used its experience of transporting and distributing tobacco products toremote and distant parts of India to the advantage of its FMCG products. ITC master chefsfrom its hotel chain are often asked to develop new food concepts for its FMCG business.3. ITC ranks among Indias top 10 Most Valuable (Company) Brands.4. It has market capitalization of nearly Rs.198427.86 Crore.5. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products.6. ITCs Agri-Business is one of Indias largest exporters of agricultural products. 18
  • 19. 7. ITC is a diversified company trading in a number of business sectors includingcigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel,personal care, greetings cards, Information Technology, safety matches, incense sticksand stationery.WEAKNESSES:1. The company‟s original business was traded in tobacco. ITC stands for ImperialTobacco Company of India Limited. It is interesting that a business that is now soinvolved in branding continues to use its original name, despite the negative connection oftobacco with poor health and premature death.2. To fund its cash guzzling FMCG start-up, the company is still dependent upon its tobaccorevenues. Cigarettes account for 47 per cent of the companys turnover, and that in itself isresponsible for 80% of its profits. So there is an argument that ITCs move into FMCG (FastMoving Consumer Goods) is being subsidized by its tobacco operations. Its Gold Flaketobacco brand is the largest FMCG brand in India - and this single brand alone holds 70% ofthe tobacco market.OPPORTUNITIES:1. Core brands such as Aashirvaad, Mint-o, and Bingo! And Sun Feast (and others) can bedeveloped using strategies of market development, product development and marketingpenetration.2. ITC is moving into new and emerging sectors including Information Technology,supporting business solutions.3.E- Choupal is a community of practice that links rural Indian farmers using the Internet.This is an original and well thought of initiative that could be used in other sectors in manyother parts of the world. It is also an ambitious project that has a goal of reaching 10 millionfarmers in 100000 villages. 19
  • 20. 4. The company researched the tastes of consumers in the North, West and East of India ofatta (a popular type of wheat flour), then used the network to source and create the rawmaterials from farmers and then blend them for consumers under purposeful brand namessuch as Aashirvaad Select in the Northern market, Aashirvaad MP Chakki in the Westernmarket and Aashirvaad in the Eastern market. This concept is tremendously difficult forcompetitors to emulate.5. Chairman Yogi Deveshwars strategic vision is to turn his Indian conglomerate into thecountrys premier FMCG business. Per capita consumption of personal products in India isthe lowest in the world offering an opportunity for ITC‟s soaps, shampoos and fragrancesunder their Wills brand.THREATS:1. The obvious threat is from competition, both domestic and international.2. ITC‟s opportunities are likely to be opportunities for other companies as well. Thereforethe dynamic of competition will alter in the medium-term. Then ITC will need to decidewhether being a diversified conglomerate is the most competitive strategic formation for asecure future.3. The laws of economics dictate that if competitors see that there is a solid profit to be madein an emerging consumer society that ultimately new products and services will be madeavailable. Western companies will see India as an exciting opportunity forthemselves to find new market segments for their own offerings.4. Duplicate items are available in abundance at much lesser rates. This affects thecompany financially and adversely affects its goodwill. 20
  • 21. Sources of Finance --------------- in Rs. Cr. -----------ITC Ltd - Mar 12 Mar 11 Mar 10 12 mths 12 mths 12 mthsSources Of FundsTotal Share Capital 781.84 773.81 381.82Equity Share Capital 781.84 773.81 381.82Share Application Money 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00Reserves 17,957.00 15,126.12 13,628.17Revaluation Reserves 53.05 53.34 54.39Networth 18,791.89 15,953.27 14,064.38Secured Loans 1.77 1.94 0.00Unsecured Loans 77.32 97.26 107.71Total Debt 79.09 99.20 107.71Total Liabilities 18,870.98 16,052.47 14,172.09 Financial statement Analysis Mar Mar 11 Mar 10 Mar 09 12Profitability RatiosOperating Profit Margin(%) 35.55 34.08 33.02 32.84Profit Before Interest And Tax 31.99 30.05 28.97 28.37Margin(%)Gross Profit Margin(%) 32.77 30.97 29.74 29.17Cash Profit Margin(%) 26.10 25.17 23.98 24.22Adjusted Cash Margin(%) 26.10 25.17 23.98 24.22 21
  • 22. Net Profit Margin(%) 23.97 22.91 21.30 21.18Adjusted Net Profit Margin(%) 23.97 22.91 21.30 21.18Return On Capital Employed(%) 46.95 44.94 42.64 34.60Return On Net Worth(%) 32.88 31.36 28.98 23.85Adjusted Return on Net Worth(%) 32.07 30.34 28.29 23.26Return on Assets Excluding 23.97 20.55 36.69 36.24RevaluationsReturn on Assets Including 24.04 20.62 36.84 36.39RevaluationsReturn on Long Term Funds(%) 46.95 44.95 42.64 34.75Liquidity And Solvency RatiosCurrent Ratio 1.08 1.08 0.92 1.42Quick Ratio 0.51 0.50 0.39 0.61Debt Equity Ratio -- 0.01 0.01 0.01Long Term Debt Equity Ratio -- 0.01 0.01 0.01Leverage ratiosLong term debt / Equity - 0.01 0.01 0.01Total debt/equity - 0.01 0.01 0.01Owners fund as % of total source 99.57 99.37 99.23 98.71Fixed assets turnover ratio 1.81 1.69 1.58 1.44 22
  • 23. Trend Analysis 23
  • 24. The major Competitors of ITC Ltd. Products 1) Godfrey Philips India Ltd.Godfrey Phillips is the second largest player in the Indian cigarette industry with an annualturnover of Rs11bn. Incorporated in 1936; the company‟s operations primarily span theentire northern and western part of the country. The company established its ownmanufacturing facilities in 1944. Godfrey Phillips has two major stakeholders, the K.K. ModiGroup and Philip Morris, and has over 15,000 shareholders. Headquartered in Delhi, GodfreyPhillips today boasts of two manufacturing facilities - located in Ghaziabad (near Delhi) andin Andheri (Mumbai), a state of the art R&D centre in Mumbai and a tobacco-buying unit inGuntur (Andhra Pradesh). The Company today manufactures some of the most popularcigarette brands in the country like Red and White, Four Square, Jaisalmer, Cavenders,Tipper and Prince. 2) Vazir Sultan Tobacco Company (VST)VST Industries Ltd. is a public conglomerate company headquartered in Hyderabad, India.The company manufactures and distributes cigarettes. Its Market Capitalization is 844.49,The company has its registered office in Hyderabad. It started off as the formerly VazirSultan Tobacco Company, commonly known as VST and shares collaboration with BritishAmerican Tobacco group of the United Kingdom It is fully independent and registered asVST Industries Ltd in the year 1983Vazir Sultan Tobacco was started by Mr. Late Vazir Sultan in 1916. He passed away in 1923.During the rule of Mir Osman Ali Khan in Hyderabad State the Vazir Sultan TobaccoCompany Limited was incorporated on 10 November 1930, under the Hyderabad CompaniesAct No.IV of 1320 Fasli and now governed under the Indian Companies Act 1956. The nameof the Company was subsequently changed to VST Industries Limited on 30 April 1983. TheVST has its registered office at Azamabad, Hyderabad, India.Vazir Sultan Tobacco Company is more commonly known as VST. The companymanufactures and distributes cigarettes under the brands names of Charms, Charminar, GoldEtc. The company is headquartered in Hyderabad, India. It is 3rd largest cigarettemanufacturing company in India. 24
  • 25. 3) Golden Tobacco Ltd (GTC Industries)Golden Tobacco Ltd (Formerly GTC Industries Ltd) is one of the leading cigarettes producerin India. It was established in 1930, and is wholly indigenous cigarette manufacturingcompany of its kind, in the country. It captured substantial domestic market shares & alsocarved a niche of brilliance in the highly competitive international markets, on the strength ofits high quality products, variants and services. GTC offers you an exceptional variety ofcigarettes in Virginia and American blends, which meet world class standards of quality &consistency. GTC has a Government of India approved Research & Development (R &D )Centre, which continuously strive to innovate as also in improving the quality of products. 4) NTC (New Tobacco Company)The Company was incorporated on November 15, 1991 as R.D.BUILDERS &DEVELOPERS LIMITED and it received certificate for Commencement of Business onDecember 18, 1991. 1st name was changed to RDB Industries limited on 1st August, 1994.The Company was incorporated with the main object of real estate development. TheCompany took over business of the firm M/s. R.D.BUILDERS as a going concern with effectfrom the close of 3Oth April, 1992. The Company has constructed various buildings in andaround Calcutta.In April, 1994, the Company had taken over the assets of New Tobacco Company on lease interms of the Hon‟ble Calcutta High Court order dated 23rd February, 1994. The Companyhas started commercial production on May 31st, 1994 at Agarpara, West Bengal factory andlaunched brands of Cigarettes namely REGENT, NUMBER TEN FILTER, NUMBER TENVIRGINIA, COOL, PRINCE HENRY (Pipe Tobacco), and REGENT MINI KINGS. 25
  • 26. BUSINESS4 players - ITC, Godfrey Phillips, VST (also a BAT affiliate) and GTC dominate the Indiancigarette industry. These four companies together control almost 99% of the market. Thecigarette industry faces competition mainly from the unorganized sector bidi manufacturers,who are protected from high duties due to small-scale industry status. Affected by steep dutyhikes, the industry has been facing stagnant volume growth in the last 2-3 years. Cigarettesales dropped by 4% in volume terms in FY00. The 2000-01 budgets also hiked excise on alltypes of cigarettes by 5%.Based on the contribution from various products, ITC‟s business can be divided into threemain divisions, namely cigarettes, tobacco and agri-products. ITC‟s mainstay of earnings iscigarettes (63%) and tobacco (3%). Agri-products business contributes 5% of the totalRs80bn revenues, while other businesses of hotels, paper and packaging collectivelycontribute the balance 5%. 26
  • 27. ProjectMarket research for the newly launched cigarette brand HERO Introduction about cigaretteCigarette is a product which is harmful for health, in spite of this feeble; its sales areincreasing globally. The product has been ban from advertisement and promotional activities.It is a challenge for the companies to sale this product and build its brand. The CigaretteIndustry is one of the oldest industries in India. India is the second largest producer oftobacco in the world after China. It produced 572 million kilograms of tobacco in 2002-2003.Approximately 5.5 trillion cigarettes are produced globally each year by the tobacco industry,smoked by over 1.1 billion people, which is more than 1/6 of the worlds total population.ITCis the market leader in cigarettes in India. Its highly popular portfolio of brands includesInsignia, India Kings, Classic, Gold Flake, Navy Cut capstan etc. Gold Flake is the top brandof cigarettes in India. It was launched by ITC in the seventies. It is a well-positioned brand inIndia and is the market leader in its segment. Major amount of the revenue of ITC are earnedthrough the sales of cigarettes. The company today is facing competition from Internationalplayers. Today the cigarette industry of India is booming in the market. The salesof cigarettes are increasing day-by-day. In future the company may face many challengesfrom competitors and government, but it is very difficult to change the aspirations of theconsumers. Due to this the company is benefited. It has been predicted by the company thesale of Gold Flake will grow at the rate of 8% annually. 27
  • 28. HierarchyITC a world leading electric company works as a team as a team system. Hierarchy of thisorganization is as follows:- Chairman (Y.C. Deveshwar) Boards of director Unit Head (Managing Director) Functional Heads (General Manager) District Manager National Sales Manager Regional Sales Manager Branch Head (Branch Manager) Assistant Managers Area Managers Area Executives Sales Trainee Workers Point sales Representatives Supervisors Salesman 28
  • 29. Research Work Location AmbalaAmbala is a city and a municipal corporation in Ambala district in the state of Haryana,India, located on the border of the states of Haryana and Punjab in India. Politically; Ambalahas two sub-areas: Ambala Cantt and Ambala City, approximately 3 kilometers apart fromeach other. It has a large Indian Army and Indian Air Force presence within the confines ofits cantonment area. Ambala separates Ganges river network from Indus river network andsurrounded by two rivers Ghaggar & Tangri from North & South side. Due to itsgeographical location, the Ambala district plays an important role in local tourism.The Ambala Cantonment was established in 1843 after the British abandoned its cantonmentat Saphera, following the malaria epidemic of 1841–42. The cantonment houses the „2Corps‟ one of the three Strike Corps of the Indian Army.Ambala was given the status of a district in 1847, formed by the merging the jagir estates ofhitherto independent chieftains whose territories had lapsed or had been confiscated by theBritish Indian Government. In its 160 years of existence as a district, Ambala has witnessedmany changes in its boundaries. Its boundaries previously extended across tehsils of Ambala,Saphera, Jagadhri, Pipli, Kharar, Mohali, Ropar and Nalagarh. Kalka-cum-Kurari State,Pinjore, Manimajra, Kasauli & Sanawar were also merged into the district at different pointsof time.Ambala Air Force Base is one of the oldest and largest airbases that were inherited from theBritish by the IAF. It was from this airbase that Spitfires and Harvards flown by Instructorsof the Advanced Flying Training School took part in the 1947-48 Kashmir Operations.Subsequently, Ambala was the front line airfield for many years. It was home to variousaircraft that were inducted into the Indian Air Force. Vampires, Ouragans, Hunters, etc. allflew from this base. The airbase was briefly attacked in 1965 by Pakistan Air Forces B-57bombers. Today, the Airbase houses the „7 Wing‟ with squadrons of Jaguars and MiG-21 29
  • 30. Bison‟s. In November 1949 Mahatma Gandhis assassin, Nathuram Godse was hanged atAmbala Jail along with Narayan Apte, a co-conspirator.As of 2011 India census, Ambala had a population of 11, 36,784, consisting of 6, 40,044males and 5, 32,740 females. Ambala has an average literacy rate of 82.9% with 88.5% ofmales and 76.6% of females literate. 11% of the population is under 6 years of age.Ambala is known as city of scientific instruments. It is a major scientific products market andis a hub for products like glass apparatus, microscopes, laboratory equipments etc. Ambalaconstitutes nearly 34% of the total production of scientific instruments produced in India.Ambala is also famous for its clothes market, which draws shoppers from surrounding areas.The market possesses a wide range of custom-made clothes for men and women.Ambala has number of colleges, medical college. Ambala had very few colleges duringBritish India period. After the partition of India in 1947 Punjab University, Lahore (now inPakistan) one of the most prominent university of North India of that time was newlyestablished in Chandigarh, India under the same name Punjab University, Chandigarh. Allthe colleges in the region were affiliated to Punjab University until the in the year 1956 whenthe Kurukshetra University was formed. 30
  • 31. Information on all Cigarette Brands Of ITC Ltd Sr. No. Brand name MRP No. Of Sticks Size Category 1 Insignia 160 20 97mm SKSFT 2 India Kings 140 20 84mm KSFT 3 Classic 116 20 84mm KSFT 4 B&H 120 20 84mm KSFT 5 Gold Flake King 116 20 84mm KSFT 6 Navy Cut 49 10 74mm LONGS 7 Gold Flake 45 10 69mm RSFT 8 Flake 28 10 69mm RSFT 9 Capstun 28 10 69mm RSFT 10 Hero 28 10 69mm RSFTSKSFT:-Super King Size Filter TipKSFT: - King Size Filter TipRSFT: - Regular Size Filter Tip 31
  • 32. Review of LiteratureAs there are various researches done before on the different cigarettes brands of ITC Ltd andthat were also lead to a great effect on the market and on its customers out of them some arebelow:- (1) In 1997 Y.C. Deveshwar, Chairman ITC Ltd. says in annual general meeting that 26 million people are dependent for their livelihood on the tobacco industry. This indicates a million small and marginal tobacco farmers, 5 million farm labor and 1.5 million retailers, not to mention a vast ancillary sector in goods and services and several million homes are part of ITC family. This indicates farmers/ farm labor, small retailers, over 2 lakh shareholders and depositors, nearly 15 million consumer and large numbers employed either directly or indirectly the vast network of ancillary services. (2) In 2002 Baxi Sachin says that in a press report that the golf flake cigarette brand provide the highest sale of Rs.3700 crore including the excise and comes at the top of the list of largest brands by sales and at No.2 its sister brand Wills (including Classic) provides the half of the sale of the gold flake of Rs 1800 crores. (3) In 2007 ITC Ltd try to increase its sales by 52.3 % by involving in the non-tobacco by introducing the new form of its classic brand cigarette in the form of classic rock, jazz, or Blues which provides the customers a musical attraction and providing them to choose from the musical packs and it was a great marketing plan and the new packing were in the form of holographic board printing. (4) In 2008 shah Anand, analyzed conclude that ITC Ltd launches new cigarette brand Wills Navy Cut regular size, Filler cigarettes, priced at Rs 24 a pack of 10 sticks in selected markets in North and West India. (5) Health Warning on pack of cigarette was incorporated from 1975. (6) Railway Banned cigarette and biddi in 1999 (7) Banned on Television advertisement on 2000. (8) Prohibit cigarette smoking at public place by Supreme Court in 2000. 32
  • 33. Need, Scope & ObjectiveNeed ITC Ltd recently launched the new brand Hero in the market. After this launched there is asudden need to study the response from customer, retailer, and vendor. Also the response ofthe cigarette in the market.And also the check whether the product is selling in the competition market by its own nameor by the pressure of other competitors.Is the new product launch gives any competition to competitors this price segment.Is this cigarette is fulfilling the expectation of the customers or not.ScopeThe scope of study is limited to the Ambala City. The study was conducted in May, June &July 2012.ObjectivePrimary Objective 1) To study the test market regarding the launch of HERO Pack in Ambala. 2) To suggest to expand customer base.Secondary objective 1) To study the review of the customer regarding the launch of HERO 2) To study the impact of sales of HERO in retail. 3) To know about the performance of HERO. 4) To study the feedback of different Customer. 5) To know about different schemes. 6) To know about the strategies of our competitors. 33
  • 34. RESEARCH METHODOLOGY“All progress for born of inquiry. Doubt is often better than over confidence for it leads toinquiry and inquiry leads invention”.Research has its significance in solving various operational and planning problems ofbusiness and industry. Operational Research and Market research along with MotivationalResearch are considered crucial and their results exist in more that one way in takingbusiness decisions.Market Research is the investigation of the structure and development of market for thepurpose of formulating efficient policies for the purchasing, production and sales.Operational research refers to the application of mathematical, logical and analyticaltechniques to the solution of business problems for cost minimization or maximization forthe profit, which can be termed as optimization problems.Motivational Research of defining why people behave as they do is mainly concerned withthe determination of motivations underlying their consumer behavior. As these are of greathelp to people in business and industry who are responsible for taking business decisions.The present study, which attempts to know about the awareness and performance of HEROby ITC Ltd, plays a very crucial role. For a good research and for proper and authentic resultsresearch methodology plays a crucial role.Research Methodology is a way to systematically solve the research problem, which is ascience of studying how research is done scientifically. Thus research methodologyencompasses the research methods or techniques research results are capable at beingevaluated either by the researcher himself or by others.The project also covers Descriptive Research which includes surveys and fact findings fromvarious inquiries. 34
  • 35. The relationship between the customers and the market players must be established andexplored to make the marketing effort fruitful and profitable. Thus, it is reflected in the abovewording that the present study shall be useful in meeting and exploring the proposedobjectives. Therefore to make the present study meaningful the data shall be collected fromvarious sources such as questionnaire, journals, newspapers and Internet etc. that will serveas the base for the primary and secondary data and for interacting with the respective users ofthe Cigarette.Research designIn the present study the exploratory-cum-descriptive research design will be followed whichhelp in exploring the answers to the specified objectives of the present study.A research design is an arrangement of condition for collection and analysis of data in amanner that aims to combine relevance to research purpose with economy in procedure.In fact the research design is the conceptual structure with in which the research isconducted. Research design is needed because it facilitates the smooth sailing of the variousresearch operations. Thereby making research as efficient as possible yielding maximalinformation with minimal expenditure of efforts, time and money.Research Design, in fact, has a great bearing on the reliability of the results arrived at and assuch constitutes the firm foundation of the entire evidence of the research work. In the otherwords we can say that research design is advance planning of research.A good research design should be flexible, appropriate, and efficient and so on. It should tryto minimize biases and maximize reliability of the data collected and analyzed is considereda good design.The design must give the smallest experimental error and it should yield maximuminformation. The present study is an attempt of descriptive in nature, which defines methodto measure and find a method of measuring it along with a clear-cut definition of population. 35
  • 36. Hence it is an Endeavour to obtain complete and accurate information and it is a rigidspecially paying attention on these points: Objectives of the study Designing the methods of data collection Selecting the sample Collecting the data Processing the data Reporting the findings 36
  • 37. STEPS OF METHODOLOGYCollection of Data Organization of Data Presentation of Data Analysis of Data Interpretation of DataRESEARCH INSTRUMENTSThe proposed study is based on both primary and secondary data. For the primary data thecustomers has been contacted with the questionnaire designed to gather the data relevant withobjective of the study. Data is collected through newspapers, magazines, journals, publishedreports of the industry players and the internet.SAMPLINGSampling may be defined as the selection of some part of an aggregate or totality on the basicof which a judgment or inference about the aggregate and totality is made. Sampling is usedin practice for various reasons. All items in any field of inquiry constitute a universe orpopulation complete enumeration of all items in the population is known as census inquiry. Itcan be presumed that in such an inquiry, when all items are covered, element of chance is leftand highest accuracy is obtain. But in practice this may be not true. Even the slightest 37
  • 38. element of bias in such an inquiry will get larger and as the numbers of observationsincreased more over there is no way checking the element of bias or it extend except througha survey or used sample checks besides this type of inquiry involves a great deal of time,money and energy. Therefore when the field of inquiry is large this method becomes difficultto adopt because of the resources involve. On the other hand the sample survey has thefollowings advantages:-Sampling can save time and money: A sample study is usually a less expensive than acensus study and produces results at a relatively a faster speed.. Sampling may enable more accurate measurement for trained and experienced investigator generally conducts a sample study.. Sampling remains the only way when population contains infinitely may member.. Sampling remains the only choice when a test involves the destruction of the item under study.. Sampling usually enables to estimate the sampling errors and thus assists in obtaining information concerning same characteristics of the population.SAMPLING UNIT: - Every researcher has to take a decision regarding a sample unit beforeselecting sample. Sampling unit may be a geographical one such as district, state and villageetc or a social unit such as family, club, school, etc or it may be an individual.In my study the sampling units are individuals who are the users of the Cigarette.SAMPLE SIZE: - Size of samples refers to the numbers of items to be selected from theuniverse to constitute a sample. This is a major problem before every researcher. The size ofsample should neither be excessively large, nor too small. It should be optimum. Anoptimum sample is one, which fulfills the requirements of efficiency representatives,reliability and flexibility. While deciding the size of sample researcher must determine the 38
  • 39. desired precision as also an expectable confidence liable for the estimate, the size ofpopulation variance needs to be consider as in case of large variance usually a bigger sampleis needed. The size of population must be kept in view for this also limits the sample size. Assuch budgetary constraints must invariable to taken into consideration when researcherdecide the sample size 20 respondents looking at the above consideration. In this case,stratified random sampling was done.SAMPLING PLANFor the purpose of gathering the primary data the respondents numbering not more than 20shall be contacted with the help of a questionnaire. The sampling has been random anddiscrete.AREA FOR SAMPLINGThe areas, which has been considered for the purpose of present study is Ambala Districtwhere the HERO has been launched. Equal number of respondents is contacted for thepurpose of uniformity in results without a place for biasness in area or location.DATA COLLECTIONThe task of data collection begins after the research program has been defined and researchdesign plan checked out. The data collection is and important part of the research.DATA COLLECTION METHODIn the data collection method different methods are adopted for primary data collection andsecondary data collection.Primary Data Collection: - Primary data collection, which is collected through observationor direct communication with the respondent in one form or another. These are severalmethods for primary data collection. 39
  • 40.  Observation Method Interview Method Through QuestionnaireBut as the time was limited I used the Questionnaire method for data collectionSecondary Data: - Secondary data is also collected by me various documents of thecompany from the Internet.DATA COLLECTION INSTRUMENTSThe data collection instruments used in the study are following: -QUESTIONNAIRE: - This method of data collection is quiet popular, particularly in care ofinquiries. As we know Questionnaire should be comparatively short and simple in the size ofthe questionnaire should be kept to minimum questions should proceed in logical sequencemoving from easy to more difficult. Hence questionnaire made by me is structured.Structured questionnaire is that in which these are define concrete and predeterminequestions. The questions were presented with exactly with same wording and in the sameorder to all respondents. Structured questionnaire are simple to administer and relativelyinexpensive to analyze. The provision of alternatives replies at times helps to understand themeaning of question clearly but such questionnaire have limitations too for instance, widerange of data and that too in respondents own words can‟t be obtained with structuredquestionnaire.The sequence is the next important aspect in order to make the effective questionnaire toensure quality. A researcher should pay attention to the questions sequence in preparing thequestionnaire. A proper sequence of questions reduces considerably the chances of individualquestions being misunderstood. The following type of question should be avoided.Questions that put too much strain on the memory or intellectual of the respondent. Questions of a personal characters 40
  • 41.  Questions related to personal wealthQuestion sequence must be clear and smoothly moving, meaning thereby that the relation ofone question to another question should be reading apparent to the respondent.Concerning the form of questions we can talk about two principles forms: Multiple Choice Questions Open Ended QuestionsMultiple choice or close questions have been the advantages of easy handling, simple toanswer quick and relatively inexpensive to analyze. They are most amendable to a statisticalanalysis some time the open questions are difficult to analyze but as they provide largeinformation so close ended and multiple choice questions are chosen by me in my study.MethodologyThe project was carried under the guidance of Area executive Mr. Bhupesh Chabra andSupervisor named Gaurav and Anusheel who introduced with all the activities carried out atthe distributor centre. The Primary Data Collection Method Survey was carries out in whichconsumers were asked to give their responses in the questionnaire. To find out theperformance of the newly launched brand, survey was carried out. Questionnaire wereprepared for the consumers. Based on their response the reasons for low sale were found outand recommendations were made. Since it was impossible to interview each and everyperson, a sample size of 20 was chosen i.e. 20 consumers were interviewed. The consumersinterviewed were basically middle class or low class people 41
  • 42. Details of Actual work Undertaken  Brand Name HERO  Plan For launch a new product in Ambala of ITC  How many DS in a WD point?  How many routes  How many outlet in a route  What is a frequency served by the DS in a week  What us placement norms in an outlet.*Some short forms used in ITC 1) WD:- Wholesale Distributor 2) DS:- Distributor salesman 3) CDM:- Convince Delivery Model 4) Non-CDM:- Non Convince Delivery Model 5) Van-DS:- Van Distributor Sales manAccording to Study 3 Principles of ITC Ltd Availability:- According to my research the ultimate objective of ITC Ltd is that their product is available with every store either that product is selling or not. Availability plays important role for organization. When your product is available in the market customer will demand for that product Visibility:- As per my research there is guideline for every DS that they have make thir product visible in the shop of retailer . As their basic strategy according to Hindi saying “Jo Deekhta hai who Beekta hai”. Freshness: - As per my study ITC insures that products are made available to the consumer in the desire Form and Freshness. Stock Rotation of cigarettes is important. It is done by the Convenience DS to minimize D&D. Stock Rotation Outlets need to be listed with the WD so as to streamline the activity. 42
  • 43. In case of D&D stocks, stocks need to be taken back & replaced immediately with fresh stocks. o The Stock Rotation norm for Cigarettes is M-2 o The Freshness norm for Cigarettes is M-3WD Selling and Supervision Infrastructure o Convenience Dealer Salesmen (DS) o Convenience Team Leader (TL) (erstwhile Supervisor)Role of Convenience DS: o Convenience DS is an independent salesman working on a margin basis o Ensure Distribution Objectives on availability, visibility & freshness are met in the right outlets o Adhere to frequency of service as per norms o Leverage trade relationship for “sell in” of other FMCG categoriesExamine assistance to the WD for specific Convenience DS basis subsistence levels afterfactoring in DS income from selling cigarettes & other FMCG categories.Role of Convenience Team Leader: o Responsible for a team of Convenience DS and manages cigarette & other FMCG in Convenience outlets o No. of Convenience Team Leaders are based on the frequency of Trade Marketing and Distribution calls Call Type Outlet Type Frequency Trade Marketing Volume class 1, & 2 Once in a week Trade Marketing Volume Class 3 Once in 2 weeks 43
  • 44. Distribution call All outlets on serviced routes Once a month - Trade Marketing Calls are made in Markets > 20K - Distribution Calls are made in all markets and the Team Leader accompanies the Convenience / Cigarette Van DS o Accountable for the Distribution objectives of availability, visibility & freshness o Responsible for allocation & utilization of merchandising materials o Adhere to filling in Customer Call Cards (CCC) & compile the same for Availability Tracker o Responsible for the updating of the WD Visibility Input Tracker o Regularly prospect for new potential outlets to grow business o Training and development of the DS teamCONVENIENCE DELIVERY MODEL (CDM) o The carrying capacity of a Convenience DS can be enhanced through a delivery vehicle ACROSS MARKETS if the route potential is highOTHER FMCG SALES BILLING: o All other FMCG Convenience Sales to be SUMMARY BILLED category wise by Convenience DS in the Customer Information System (CIS) o Convenience DS who use delivery vehicle to be flagged off as CDM in CIS o Other FMCG Convenience Sales Report from CIS to be split by - Convenience CDM DS sales by categories - Balance Convenience DS sale by categoriesClassification of DS Various types of DS activities: - 1) CDM 2) Non-CDM 44
  • 45. 3) VAN-DS 4) Rural Moped DS/ Vistar DSCDM-DS: - Convenience Delivery Model. Under this model DS take ready stock with himeither in mechanized or non mechanized model (puller card, auto rickshaw). Monthly sale ofthis model must be more than 10,000. Cover town area.Non-CDM-DS: - Non Convenience Delivery Model. Under this Model DS has beenprovided with an instrument under which they just go to the various retailers and take theirorder. And they are not carrying any mechanized model (auto rickshaw or Puller card). Itdoesn‟t mean that they are not selling any product. Cover Town area.VAN-DS: - Under this type of Model there has been assign a three wheeler or any smallvehicle. Under this it takes all type of products such as NTD (Non tobacco Division) andwith CFP (Cigarette focused Product) with him. And this model visit rural area where thesmall need has been fulfilled. This DS cover maximum no of Wholesalers and also coverenroots retailers to get Maximum sale.Rural Moped DS / Vistar DS: - Under this model DS cover rural area or village area onmoped or motor cycle. Where is has been assigned with various activities such as point ofsale.* ITS necessary that all DS Must carry– NTD Categories with cigarette in conveniencechannel.** NTD:- except Cigarette all other category –NTD.(NON TOBACCO DIVISION) like-biscuit, soap, shampoo, aggarbattie, match box, bingo, noodles, confectionery.In Ambala No of DS7 DS: - Town DS3 DS: - CDM4 DS: -NON CDM4 DS: -Rural MOPED Or Vistar DS.MarginThere is a margin of 0.8% on sales to DS.The WD owner Margin is 1.45% 45
  • 46. Spot TestIt is the best way of terminology used by ITC Ltd. Under which they send their Supervisor ona retail outlet. Where supervisor have to note down all the cigarettes that is selling in thatshop either that is one single cigarette or a box. Either that is of our competitor or ours.Supervisor note down all the data under the prescribed format and with that they came toknow about which brand is performing well in terms of quantity and in terms of total output.This method is effective in determining for policy formation about that cigarette. Taxing PolicyTo reduce the demand for tobacco, excise tax increases and the resulting higher prices are aproven effective measure that governments can adopt as part of an overall strategy of tobaccocontrol. The higher excises will induce some smokers to quit; reduce consumption bycontinuing smokers; prevent others from starting; and reduce the number of ex-smokers whoresume. Empirical studies have found that a 10 percent cigarette price increase will reduceconsumption by 4 percent in high-income countries and 8 percent in low- and middle-incomecountries, as people with lower incomes are more responsive to price increases (World Bank,1999). Though consumption is reduced, government revenue increases.So cigarette is highly taxed in India. The current rate is differentiated on the basis of the sizeof the cigarette. 46
  • 47. 47
  • 48. Classification of Brands according to the segmentsSegment Brand Name Price Per stickLuxuary Insignia Rs.8.00Segment India King Rs.7.00 Benson & Hedges Rs.6.00Middle Classic(all varient) Rs.6.00Level Gold Flake Kings Rs.6.00Segment Navy Cut Rs.5.00 Gold Flake Rs.4.50Economic Flake Excel Rs.3.00Segment Capstun Rs.3.00 Hero Rs.3.00 Target segment for Hero:The target consumers for HERO Rsft are the people lying in the lower income group roughlyaround 1 to 3 lack per annum. Ambala has got a good number of smokers and majority ofpopulation comes under lower income level.1. The city is surrounded by a large number of villages and rural areas.2. There are an ample number of workers engaged in the small scale business.3. The city enjoys a large crowd coming from villages (be it, for shopping for their smallbusiness at their homes or be it selling their crops) and getting back by night.4. Even the small shopkeepers and businessmen likes to stick to the price range of 1-3 Rs.Per stick.5. Majority of students in degree colleges are from the rural areas in and around the city.They prefer to stick to the low cost cigarette segment.6. People are less heath conscious and hence don‟t prefer the cigarettes having large filtersand more refined tobacco cigarettes i.e. cigarettes from KSFT segment Performance of ITC products:Ambala is surrounded by a large number of villages. And it also attracts the benefit ofcantonment area under which the sales of every segment is partial.KSFT: 48
  • 49. The sales figure of luxury brands like insignia, India kings and Benson & Hedgescomparative low then medium level but sales can‟t be ignored.LSFT :Medium LevelClassic, gold flake (LSFT) and Navy Cut‟s performance is good in comparison with KSFT.RSFT :-In the lower cost segment Gold Flake (RSFT) and Capstan are performing excellent, But onthe flipside the performance of HERO is quiet poor as customer is not demanding thiscigarette.. Margin Table DS Rate Retail Rate No. of Price for Margin Profit % Profit Per Brand Name Per M per M MRP Sticks Consumer for DS of retalr packInsignia 6895 6950 160 20 8 55 15% 21India King 6027 6075 140 20 7 48 15.23% 18.5B&H 5208 5250 120 20 6 42 14.29% 15Classic 5208 5250 116 20 6 42 10.48% 11Gold Flake Kings 5208 5250 116 20 6 42 10.48% 11Navy Cut 4415 4450 49 10 5 35 10.11% 4.5Gold Flake 4127 4160 45 10 4.5 33 8.17% 3.4Flake Excel 2580 2600 28 10 3 20 8% 2Capstun 2570 2590 28 10 3 20 8.11% 2.1Hero 2520 2540 28 10 3 20 10.24% 2.6 *All figures are in Rupees Competitors in RSFT segment:  Four Square  Red and white  Cavenders  Charms  Number 10 49
  • 50. Competitors Price Analysis Brand Campany MRP No. of Sticks Red & White GPI 35 10 Four Square GPI 35 10 Cavender GPI 35 10 Four Square Special GPI 37 10 Marlboro GPI 116 20 Four Square kings GPI 45 10 Red & White Kings GPI 45 10 Crown GPI 28 10 Number 10 NTC 20 10 Charms VST 25 10 Chancellor GTC 15 10 . *MRP is in Rupees. Frequency of Coverage for Retailing Outlets:-POP-GROUP For RetailingMarkets > 10K Thrice a weekMarkets >2K up to 10K Twice a weekMarkets <2K ( Kerala & AP) Once a week*The above figure is the sales of a retail counter (market)**And the above norms are minimum. Outlet Coverage Norms: - What type of outlet ITC coverPOP-GROUP Outlet Norms for RetailingMarkets > 20K Outlets accounting for 80% Industry Volume or 10 packs per day, whichever is higher will be directly serviced. * With the proviso, there will be no reduction in the existing outlet coverageMarkets < 20K Maximize coverage 50
  • 51. Categorizing of outletsVolume Class Packs Per Day Sale 1 > 150 2 81 – 150 3 51 – 80 4 31 – 50 5 11 – 30 6 =< 10* Plannogramming of FOD’s On the shelf Top to Bottom Highest Price Point to Lowest Left to Right ( North, South Regular to Lights & East) 20s to 10s pack Lights to Regular Left to Right ( West) 20s to 10s pack 51
  • 53. Interpretation and analysisData AnalysisData analysis is a technique of examining raw data with a purpose of drawing conclusionfrom that information. It focuses solely on data to find conclusion.Data InterpretationData interpretation is extracted of maximum information from a given set of information.The data can be represented either in the form of tables, pie charts, or line graphs or acombination of all these.The data has been processed and analysed by tabulation interpretation so that findings can becommunicated and can easily understood. The findings are presented in the best possibleway. Tables and graphs has been used for illusions of findings of the research. 53
  • 54. Question 1: Do You Know about the ITC Limited?Yes 18No 02 Awareness Yes No 10% 90%Interpretation:- By analyzing the data it was found that 90% people knows about ITClimited and 10% doesn‟t know about it. 54
  • 55. 2. Which brand you prefer?ITC 13VST 1GPI 5Others 1 Preference ITC VST GPI Others 5% 25% 5% 65%Interpretation: - Out of the survey done I came to know that preference of ITC is 65% thencomes the GPI whose preference is 25% and then VST preference is5% and others is 5%. 55
  • 56. 3. Do you know about recent launch of ITC HERO?Yes 15No 5 Knowledge about Brand No 25% Yes 75%Interpretation: - according to the survey done I came to conclusion that 75% people knowsabout the new launch of ITC Ltd new launch Hero and 25% doesn‟t know about it. 56
  • 57. 4. Have you tried this Cigarette?Yes 10No 10 Customer who tried this cigarette Yes No 50% 50%Interpretation: - According to survey the no of respondents those who tried this cigarette issame. 50% tried it and same haven‟t tried it. 57
  • 58. 5. How is the Taste?Best 1Average 5Not so Good 5Irritating 9 Taste Best Average Not so Good Irritating 5% 25% 45% 25%Interpretation: - as per survey conducted 5% respondent like this cigarette 25% rated it asAverage, 25% rated it as not so good and 45% respondents says it as irritating. 58
  • 59. 6. Would you like to buy this cigarette in Future?Yes 5No 12May Be 3 Future prospects Yes No May Be 15% 25% 60%Interpretation: - according to Survey conducted persons who said they will buy thiscigarette in future is 15% and those who are not sure said 25% but those who said no is 60%which is quite high. 59
  • 60. 7. From where you came to know about this cigarette?World of mouth 1Banners 8Vendors 10Others 1 Knowledge World of mouth Banners Vendors Others 5% 5% 40% 50%Interpretation: - People came to know about this brand mostly from vendors that is 50%and then from the advertising campaign such as banner that is 40% world of mouth is 5% andothers is also 5%. 60
  • 61. 8. What is the best part of this cigarette?Price 6Taste 4Brand Name 4Others 6 Best Part Price Taste Brand Name Others 30% 30% 20% 20%Interpretation: - As per survey 30% people thinks that best part is price and others, but 20%people thinks that taste and Brand name is the best part of this cigarette. 61
  • 62. 9. Please rate ITC-Hero Product on the following parameters? Very Good good Average Below Poor AverageQuality 1 3 5 5 6Packaging 5 9 5 1 -Price - 4 5 6 5Availability 5 5 7 3 -Awareness - - 10 5 5about theProductTaste 1 2 5 2 10 Rating of Hero as Per Following Parameters Very Good good Average Below Average Poor 10 10 9 7 6 6 5 5 5 5 5 5 5 5 5 5 5 4 3 3 2 2 1 1 1 0 0 0 0 0 Quality Packaging Price Availability Awareness Taste about the ProductInterpretation: - The above figure shows the rating of ITC Hero on the basis of Quality,packaging, price, availability and taste. And according to their rating the result comes. 62
  • 64. Findings of the study By analyzing the data it was found that majority of respondents are not aware about the ITC- HERO. As on analyzing the data it was found that people don‟t even want to use taste this cigarette After analyzing the study as ITC is fallowing good promotional scheme for retailers to sell the product but consumer is not willing to purchase this cigarette. After analyzing the above figures and tables it was found that majority of the respondents are providing the negative feedback regarding the new Brand launch by ITC-Hero. After analyzing the data I came to know that People do not like the taste of the HERO. People are not aware about the hero and even they are do not want to try this cigarette. People who are using upper segment of the cigarette don‟t want to switch to lower segment. According to study it was found that customer is not demanding this cigarette; it sells just because of the pressure of vendor. According to study this segment is usually less health consciousness probably stick to low priced sticks. Not ready to experiment until and unless pushed retailers or tempted with a scheme Taste and price are the two topmost criterions. According to study people are not eager to try new brands. 64
  • 65. CONCLUSION 65
  • 66. ConclusionAfter analyzing and interpretation of the data it was found that the new launch of ITC LtdHero doesn‟t put any great impact on the sales of the retailer and it doesn‟t attract newcustomers from the market.As in the market there is already cigarettes of ITC Limited of this price Segment as Flakeexcel is already selling in the market at the price tag of Rs. 28 for 10 sticks. Also there isCapstun which is also there for the same price segment and they target the same categories.This brand was launched to target the customer of lower segment who are consuming GPIbrand. As GPI recently launch Crown which is priced at Rs. 24 for 10 sticks.Usually less health conscious people stick to low price sticks. People are not ready toexperiment until and unless pushed by the retailers or tempted with a scheme Taste and priceare the two topmost criterions. 66
  • 67. REFERENCES 67
  • 68. Referencehttp://stockshastra.moneyworks4me.com/apply/company-shastra-apply/fundamental-analysis-itc-ltd-report/http://www.itcportal.com/shareholder/index.aspxhttp://itcportal.com/itc-business/agri-business/agri-commodities-and-rural-services.aspxhttp://itcportal.com/shareholder/annual-reports/itc-annual-report-2012/subsidiary-companies.aspxhttp://www.bseindia.com/bseplus/StockReach/StockQuote/Equity/ITC%20LTD/ITC/500875/Cigarettes,TobaccoProductshttp://www.moneycontrol.com/company-facts/ntcindustries/history/RDBhttp://itcportal.com/itc-business/group-companies/default.aspxhttp://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&sqi=2&ved=0CFUQFjAB&url=http%3A%2F%2Fwww.itcportal.com%2Fshareholder%2Fannual-reports%2Fitc-annual-report-2010%2Fpdfs%2FITC-annual-report-2010.pdf&ei=3A0EUI_VK8fTrQerpoyLBg&usg=AFQjCNGROa88KLkyQNiqsXKBkSmWQWOhdQ&sig2=ZqD22yMPCnf5HsSQ1BbINAhttp://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&sqi=2&ved=0CGQQFjAE&url=http%3A%2F%2Fcorporate.indbankonline.com%2Fdocuments%2FITC%2520Limited%2520-%2520Update.pdf&ei=XwoEUOLuNYPJrQe2942oBg&usg=AFQjCNFnoqOwVZNJWQlmhyCtLhgnqMLn-Q&sig2=gnP5lMrJO0XxgDYK2IUSBQhttp://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&sqi=2&ved=0CGEQFjAD&url=http%3A%2F%2Fbreport.myiris.com%2FICICISL%2FITC_20111020.pdf&ei=XwoEUOLuNYPJrQe2942oBg&usg=AFQjCNE1SD5aMrsoIm2Hc_N1gMw_eXtI4A&sig2=F8msYqLpdznFP5GrxtqzAwhttp://www.reuters.com/finance/stocks/ITC.BO/key-developmentshttp://en.wikipedia.org/wiki/ITC_Limitedhttp://www.moneycontrol.com/financials/itc/ratios/ITChttp://money.rediff.com/companies/itc-ltd/12630003/ratiohttp://economictimes.indiatimes.com/prices.cms?companyid=13554&fromdate=&todate=&frequency=&numberofdmw=100&exchangeid=50&pagesize=25&pagenumber=1&arc=0 68
  • 69. ANNEXURE 69
  • 70. Questionnaire1. Do You Know about the ITC Limited? a. Yes b. No2. Which brand you Prefer? a. ITC c. VST b. GPI d. Other please Specify………..3. Do You know about the recent launch of the Cigarette by ITC (HERO)? a. Yes b. No4. Have You tried this Cigarette? a. Yes b. No5. How is the taste? a. Best c. Avg. b. Not So good d. Irritating6. Would you like to buy this cigarette in Future? a. Yes b. No c. May Be7. From where you come to know about this cigarette? a. World of Mouth c. Vendor b. Banners d. Others (Please Specify……….) 70
  • 71. 8. What is the Best part of this cigarette? a. Price c. Brand name b. Taste d. Others (please specify……..) 9. Please rate ITC- HERO Brand product on the following parameters: - Very good Good Average Below Poor AverageI) QualityII) PackagingIV) PriceV) Availability in Retail storeVI) Awareness about the ProductVII) TasteName:-Gender:-Occupation:- 71