Bsiness Environment & Strategic Analysis Of Itc Hotels

ITC Limited One of India’s Most Valuable Corporations HIMANSHU DIXIT MBA

Performance Track Record- Snapshot Rs. 1 crore= Rs. 10 million Rs crores

ITC - Key Financials – H1 08/09

Q2 Segment Results

H1 Segment Revenue

H1 Segment Results

Segment Capital Employed

One of the 8 Indian Companies to feature in ‘Forbes A-list’ for 2004
Featuring 400 of the World’s ‘best big companies’ with M-cap. > USD 5 bln. & are rated as the ‘most attractive companies for investors’
Only Indian FMCG Company to feature in Forbes 2000 List
A comprehensive ranking of world’s biggest companies measured by a composite of sales, profits, assets & market value
Among top in :
Sustained value creation (BT-Stern Stewart survey)
Operating profits
Cash Profits
Ranks No. 5 among Indian listed Private Sector Companies by market cap . (@ 30/09/08)
No. 1 in FMCG Sector
Rated as one of India’s Most Respected Companies (IMRB-Businessworld Survey 2006)
ITC One of India’s most valuable corporations

Awards & Accolades (1)
‘ 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.
Sustainability Leadership Award 2007 conferred on Chairman Y C Deveshwar by the Sustainability Forum, Zurich and SAM/SPG at the International Sustainability Leadership Symposium
Business Today Award for the Best Managed Company – Retail and Consumer Products , has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment.
Asian CSR Award 2007 for Environmental Excellence given by the Asian Institute of Management
Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum
In the first of its kind S&P Environmental, Social and Corporate Governance (ESG) ratings released recently, ITC ranked second among top Indian companies .
The Company has won the Corporate Social Responsibility Crown Award for Water Practices from UNESCO and Water Digest for its distinguished work carried out in the water sector in India.
NDTV Profit Business Leadership Award for being the Best Food Company of 2007 .

Accolades & Awards (2)
e-Choupal initiative wins global recognition:
Stockholm Challenge Award 2006 in the Economic Development category which recognises initiatives that leverage Information Technology to improve living conditions and foster economic growth in all parts of the world.
First Indian Company to win the Development Gateway Award 2005 for the most exemplary contribution in the field of Information & Communication Technologies (ICT) for development during the last 10 years
World Business Award 2004 : International Chamber of Commerce & the HRH Prince of Wales & International Business forum
Harvard University case study
Recognised 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”

ITC - Business Portfolio ITC FMCG: Cigarettes Other FMCG Hotels Agri Business Leaf Tobacco Agri Commodities Paperboard Paper & Packaging

Strategy of Organisation to manage diversity of Portfolio
Formal 3-tiered governance structure:
Board of Directors :
Comprising executive (4) and non-executive directors (11)
Strategic supervision
Corporate Management Committee :
Comprising executive directors and senior managers
Strategic management
Divisional Chief Executive & Divisional Management Committee :
Executive management

Sustain multiple drivers of growth, matching internal capabilities with emerging market opportunities
Pursue World class competitiveness in all businesses and across the entire value chain
Best-in-class in terms of:
Internal Vitality
Market Standing
Profitability
Strategy of Organisation and Governance processes geared to manage multiple businesses
Blend core competencies and leverage ITC umbrella strengths to create new avenues of growth
Corporate Strategies

Hotels & Tourism

Hotels & Tourism industry
Foreign arrivals into India: 5 million appx. Vs. 35 million in China
The two nations were on par 2 decades ago at 750,000 arrivals
Today, Beijing alone has as many hotel rooms as the whole of India
India’s luxury rooms availability lower than even smaller East Asian countries
Source: Compendium of Tourism statistics, WTO

Indian hotel industry
Current supply – appx. 110,000 rooms of which 5 Star category accounts for appx. 30%
India needs an additional 50,000 rooms in the next 2/3 years to service projected tourist arrivals
Present mismatch between supply and demand expected to persist over the short term
As infrastructure for trade & commerce improves - growing potential for leisure tourism

Economic impact of the Travel & Tourism Sector Full potential yet to be harnessed in the Indian context

ITC’s Hotel Business
ITC-Welcomgroup : a leading hotel chain in India
Established presence in key business locations
Over 6000 rooms under 4 distinct brands
Capacity expansion underway at Bangalore and Chennai; plans for other locations also being progressed. Positions on land taken at other locations such as Hyderabad and Ahmedabad
Fastest growing hotel chain with highest operating efficiency (PBDIT/Net Income @ 45%) amongst the 3 leading chains
Leverages unique service proposition and international alliance with Starwood Hotels & Resorts
‘ Luxury Collection’ / ‘Sheraton’

ITC’s Hotel Business
Manages 24 full service mid-market properties (1700 + rooms ) under the Fortune Hotels brand
100% subsidiary company : Fortune Park Hotels Ltd.
Also operates 60 properties under the ‘WelcomHeritage’ brand in 19 states
Maharaja Heritage Resorts Ltd. 50% JV with Marudhar Hotels (P) Ltd.
Business growth expected to be impacted by financial meltdown

e-choupal:Strategic Thrust
Procurement: cost & quality optimisation
strategic sourcing support to the Foods business (support creation of verticals in wheat, soya, corn, potato etc.)
cost-effective sourcing for exports/domestic external business
Rural Distribution
‘ last mile connectivity’: 100 partnering companies
diverse range of goods/services : FMCG, consumer durables,agri-inputs, paid extension services etc.
Financial Services
insurance (focus: weather)
credit (focus: Kisan credit card scheme)
Rural retail
23 Choupal Saagars operational
Rapid expansion planned in identified rural markets and Tier 2, 3 & 4 towns

Positioning of ITC A leading FMCG player in India F A R M E R S M A R K E T S Cigarette Trade Marketing capability Branded Foods Expanded FMCG distribution capability e-choupal rural two-way fulfillment capability A basis for strategic partnerships with other FMCG brand owners VPN providing SCM, ERP & CRM capability Lifestyle retailing Education Stationery Matches & Agarbattis Personal Care Products

The Value Chain
Primary activities
Inbound logistic
Outbound logistic
Operations
Marketing & Sales
Service
Support activities
Procurement
HRM
Technology development
Firm infrastructure

The Environment
Tourism
Business factor
Room occupancy
Seasonality
Political Scenario
Tax structure
Differential Pricing

BCG Matrix
Star
Hotels
Paperboard/ Packaging
Agro Business
Question Marks
FMCG- Others
ITC INFOTECH
Cows
FMCG-Cigarettes
Dogs

Competitors
EIH
INDIAN HOTEL
HOTEL LEELA
ASIAN HOTEL
JAPYEE HOTELS
ORENTIAL HOTELS
TAJ GVK HOTELS
ROYAL ORCHID
ADVANI HOTELS
EIH ASSOCIATE HOTEL

Critical Success Factor
SITE AND LOCATION
POSITIONING AND GUEST PROFILE
FINANCIAL STRENGTH
BRAND RECOGNIYION
YIELD MANAGEMENT
DIFFERENTIAL PRICING

SWOT Analysis
Strength
Brand
Distribution network
Management
Weakness
Dependence on tobacco revenues
Negative Connection of Tobacco
Opportunity
Low per capita consumption
Of personal care products
Rural Market
e-Choupal
Threat
Competition both Domestic & International
Increasing Tax on cigarettes

Corporate Social Responsibility
Environmental
ITC has been Carbon Positive 3 years in a row.
Water Positive 6years in a row.
100% solid waste recycling
Social
ITC's businesses generate livelihoods for over 5 million people.
ITC's globally recognised e-Choupal initiative is the world's largest rural digital infrastructure benefiting over 4 million farming families.
ITC's Social and Farm Forestry initiative has greened over 80,000 hectares creating an estimated 35 million person days of employment among the disadvantaged.
ITC's Watershed Development Initiative brings precious water to nearly 35,000 hectares of dry lands and moisture-stressed areas.
ITC's Sustainable Community Development initiatives include women empowerment, supplementary education, integrated animal husbandry programmes.

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

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Bsiness Environment & Strategic Analysis Of Itc Hotels

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