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  1. 1. ITC LimitedOne of India’s Most Admired Companies By babasab patil 1
  2. 2. Performance Track Record - Snapshot Rs croresRs. 1 crore= Rs. 10 million 2
  3. 3. ITC - Key Financials – 2009/10
  4. 4. 2009/10: Segment Revenues
  5. 5. 2009/10: Segment Results
  6. 6. 2009/10: Segment Capital Employed
  7. 7. ITC - Key Financials – Q1 2010/11
  8. 8. Q1 2010/11: Segment Revenues
  9. 9. Q1 2010/11: Segment Results
  10. 10. Segment Capital Employed
  11. 11. ITC One of India’s most valuable and admired companiesOne 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 measure d by a composite of sales, profits, assets & market valueOne of the foremost in the private sector in terms of : Sustained value creation (BT-Stern Stewart survey) Operating profits Cash ProfitsRanks No. 4 among Indian listed Private Sector Companies by market cap. • No. 1 in FMCG SectorRated as one of India’s Most Respected Companies (IMRB-BusinessworldSurvey 2006) 11
  12. 12. 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.• Global Leadership Award conferred on Chairman Y C Deveshwar by the US India Business Council of the US Chamber of Commerce• 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 a nd Consumer Products, has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment.• 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.• ITC Limited won the top UNIDO award at the International Conference on Sharing Innovative Agribusiness Solutions 2008 at Cairo in recognition for its initiatives in agri business.• ITC has been conferred the ICAI Award for Excellence in Financial Reporting with its Annual Report and Accounts, adjudged as a commendable entry under the “Manufacturing and Trading Enterprises” category. 12
  13. 13. 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 a ddress during the national symposium to commemorate 60th year of independence” 13
  14. 14. ITC Business Portfolio FMCGCigarettes Foods Personal Care Lifestyle Retailing , Education & Stationery Matches Incense Sticks Paper & Agri Information Hotels Packaging Technology Business
  15. 15. Strategy of Organisation to manage diversity of PortfolioFormal 3-tiered governance structure: Board of Directors : Comprising executive (3) and non-executive directors (11) Strategic supervision Corporate Management Committee : Comprising executive directors and senior managers Strategic management Divisional Chief Executive & Divisional ManagementCommittee : Executive management 15
  16. 16. Corporate StrategiesSustain multiple drivers of growth, matching internalcapabilities with emerging market opportunitiesPursue World class competitiveness in all businesses andacross the entire value chainBest-in-class in terms of:• Internal Vitality• Market Standing• ProfitabilityStrategy of Organisation and Governance processes gearedto manage multiple businessesBlend core competencies and leverage ITC umbrellastrengths to create new avenues of growth 16
  17. 17. FMCG - Cigarettes 17
  18. 18. ITC’s Cigarettes BusinessMarket leadershipPowerful brands across segmentsLeadership in all segments - geographic & priceExtensive FMCG distribution network Direct servicing of 1,00,000 markets & 2 million retail outletsWorld-class state-of-the-art technology and products Investment - Rs.10 billion in six yearsExciting long term growth potential 18
  19. 19. Cigarettes: Growth potentialCigarettes account for less than 15% of tobacco consumed inIndia unlike world pattern of 85% due to prolonged punitivetaxation• Cigarettes (15% of tobacco consumption) contribute nearly 85% of Revenue to the Exchequer from tobacco sectorOf the 58% of adult Indian males who consume tobacco,barely 15% can afford cigarettesBiri : Cigarettes ratio = 10 : 1Annual per capita adult cigarette consumption in India isappx. one tenth world average : 85Future growth depends on relative rates of growth of percapita income and moderation in taxes 19
  20. 20. Per Capita Consumption of Tobacco in India (gms per year)Source:World Cigarettes – ERC Statistics, Tob Board & Industry Estimates – gms/YrPer Capita consumption is ~ 60% of World Average
  21. 21. Per Capita consumption in India ~ 10% of World average 21
  22. 22. Cigarettes: ChallengesCompetitive context • Competition including international majors becoming more active • Domestic illegal volumes still very strong. Along with smuggled contraband, has emerged as substantive segmentRegulatory & Taxation • Pictorial Graphic warnings in place w.e.f. June 09. • VAT hikes in Maharashtra, Delhi, Rajasthan & Pondicherry- threatening the concept of the ‘Indian Common Market’Cost table increasing with increase in leaf costs 22
  23. 23. Hotels & Tourism 23
  24. 24. Hotels & Tourism industryForeign arrivals into India: 5 million appx. Vs. 35 million in China• The two nations were on par 2 decades ago at 750,000 arrivalsToday, Beijing alone has as many hotel rooms as the whole ofIndiaIndia’s luxury rooms availabil ity lower than even smaller EastAsian countries Source: Compendium of Tourism statistics, WTO 24
  25. 25. Indian Hotel IndustryCurrent supply – appx. 110,000 rooms of which 5 Starcategory accounts for appx. 30%India needs an additional 50,000 rooms in the next 2/3years to service projected tourist arrivalsPresent mismatch between supply and demand expectedto persist over the short termAs infrastructure for trade & commerce improves -growing potential for leisure tourism 25
  26. 26. ITC’s Hotel BusinessITC-Welcomgroup : a leading hotel chain in India • Established presence in key business locations • Over 6000 rooms under 4 distinct brandsBangalore 292 room luxury hotel launched in October ‘09Capacity expansion underway at Chennai & Kolkata; plans for other locationsalso being progressed.Fastest growing hotel chain with highest operating efficiency (PBDIT/NetIncome @ 40%) amongst the 3 leading chainsLeverages unique service proposition and international alliance withStarwood Hotels & Resorts - ‘Luxury Collection’ / ‘Sheraton’ 26
  27. 27. ITC’s Hotel Business• Manages 34 full service mid-market properties (2000 + rooms ) under the Fortune Hotels brand – 21 more hotels in pipeline; room inventory- 4800 appx. – 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. 27
  28. 28. Paperboards, Paper & Packaging 28
  29. 29. Indian paperboard marketAnnual paperboard demand – appx. 2 million tonnesFragmented capacity & obsolete technologyLow per capita usage at around 7 kgs p.a. (world average – over55 kgs p.a.)Indian paperboard market growing at 7% p.a.Value Added Coated board - the fastest growing segment (15%p.a.) in India driven by the growing sophistication of theconsumer 29
  30. 30. ITC’s Paperboards BusinessMarket leader in growth segment - value added coated boardsWorld-class contemporary technology• Ozone bleached Pulp Mill fully operational – only one of its kind in Asia meeting world-class environmental standardsInternationally competitive quality and costSocial farm forestry in mill command area to improve access tocost effective fibre & to attain self-sufficiency• Biotech research based high yielding Clones – effectiveness tested in > 1,00,000 hectaresFully integrated operations with in-house pulping capacity atappx. 2.80 lac MT 30
  31. 31. ITC’s Paperboards & Packaging businessesCapacity expansion projects installed – at optimum capacityutilization • 120000 TPA Pulp Mill – Machine stabilised • 100000 TPA paper machine (to support Education & Stationery business growth plans) Machine stabilized • Investment in 100,000 TPA paperboards machine underwayITC’s packaging SBU -India’s l argest converter of paperboard intohigh quality printed packaging • Leading supplier to Indian FMCG and Consumer Electronic segments • Provides superior packaging solutions to the cigarettes and new31
  32. 32. Agri Businesses - Leaf Tobacco- Agri Commodities 32
  33. 33. Indian Leaf Tobacco industryIndia – the third largest producer of tobaccoHowever, India’s share is only 7% in world tobacco tradeUpgradation of tobacco consumption from other formats tocigarettes will enable: • growing domestic base & larger opportunities for value added exportsITC – India’s largest buyer, p rocessor, consumer & exporter ofcigarette tobaccos 6th largest leaf tobacco exporter in the worldPioneering cultivation of flavourful Flue-cured, superior Burleyand Oriental tobaccos in IndiaExport business - robust growth in export volumes withimprovement in realization over the last 2 years 33
  34. 34. ITC’s Agri Commodity BusinessFarm linkages in 14 states covering Soya, Wheat,Marine products, Coffee etc. Focus on value added agricommoditiesUnique CRM programme in commodity exportsLeveraging IT for the transformational ‘e-Choupal’initiative• Rural India’s largest Internet-based intervention• Over 40000 villages linked through around 6500 e-Choupals servicing over 3.5 million farmersDistinctive sourcing capability for ITC’s Foodsbusiness 34
  35. 35. e-choupal: Strategic ThrustProcurement: 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 businessRural 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 • 24 Choupal Saagars operational 35
  36. 36. Future Growth & Value Capture New FMCG Initiatives 36
  37. 37. Strategic RationaleBlend multiple competencies residing within the ITC Group tocreate new avenues of growthBest fit between internal capabilities and emerging marketopportunitiesEach segment enhances the depth and width of ITC’s FMCGdistribution capabilityBusiness model retains critical elements of value chains withinITC with other elements outsourced • Contributing to the competitiveness of SMEs 37
  38. 38. Branded Packaged FoodsLeverages: • Unique Agri sourcing skills • ITC Welcomgroup’s specialist cuisine & bakery knowledge • FMCG distribution synergies • ITC R&D Centre, Bangalore5 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 (Ready to Eat, Conserves & Chutneys and Frozen Foods), Aashirvaad (Instant Mixes & Cooking Pastes), Sunfeast Pasta 38
  39. 39. 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 – Targeted cost management actions shore up margins• Number of innovative products in the pipeline leveraging the capabilities of the ITC R&D Centre 39
  40. 40. Lifestyle Retailing Leverages trade mark and services expertise of hotels Relaxed wear market growth > 20% p.a Upmarket product range available in exclusive Wills Lifestyle stores (56) and multi-branded outlets/ large format retail stores across the country • Premium segment comprising the ‘Classic’ range of formal wea r, ‘ Wills Sport’ relaxed wear and ‘Wills Clublife’ evening wear • Designer association with leading Indian designers – ‘Wills Signature’ line• Strong distribution network in place for the mid-market brand ‘ John Players’• availability in 225 Exclusive Branded outlets, 200 multi branded outlets and departmental stores 40• Wills Lifestyle rated amongst the top 5 Luxury brands in the country
  41. 41. Education & Stationery Products BusinessLeverages print and paper know-how. Forward linkages with newpaper capacity (already commissioned).An emerging (currently Rs 9000 cr stationery) market in India -growth driven by increasing cross-cultural exposure, govt.spending on education• Mostly commoditized. Offers opportunity for brandingRobust distribution network in place to scale up the Stationerybusiness significantly• ‘Classmate ’ brand already the most widely distributed brand in India. Scholastic products launched• Branded Copier Paper ‘Paperkraft’ footprint being enhanced. Enthusiastic customer response based on green credentials.Comprehensive portfolio approach with new variant/categorylaunches 41
  42. 42. Safety MatchesCurrent industry consumer spend estimated at Rs. 1250 crores p.a.for 24 billion match boxesFragmented supply base arising from policy of reservation forsmall scale industryMass market moving from 0.50 p price point to Re 1.00.ITC markets its brands with value added products across eachprice point• Support SMEs with complementary marketing strengths‘AIM’ – India’s largest selling Safety Matches brandSuccessful acquisition of WIMCO Ltd. by Russell Credit• Key brands: Homelites, Ship, Cheetah Fight etc. 42
  43. 43. Incense sticks (Agarbattis)Current industry consumer spend estimated at over Rs. 900crores p.a.Fragmented supply base arising from policy of reservation forsmall scale industryITC markets its brands with value added products across eachprice point• ‘Mangaldeep’ : second largest national brand in the country• Support cottage sector with complementary marketing strengths• Provides livelihood opportunities to more than 8000 under privileged women 43
  44. 44. Personal Care ProductsCurrent market size estimated at over Rs. 29000 crores (growing at12% p.a.)ITC presence established in Body Wash (Soaps, shower gels), HairCare (Shampoos, conditioner).Product portfolio enlarged with the launch of Fairness cream.Portfolio approach straddling all consumer segments with 4 umbrellabrands• Essenza Di Wills (Prestige)• Fiama Di Wills (Premium)• Vivel Di Wills and Vivel (Mid)• Superia (Popular)Products well received in the market, gaining customer acceptanceSupported by investments in brands – celebrity endorsementsInvestments being made in Research & Development and strategic 44tax incentivised manufacturing sites
  45. 45. Forward-looking StatementsStatements in this presentation describing the Company’sobjectives, future prospects, estimates, expectations etc.may be “forward looking statements” within the meaning of applicable securities laws and regulations. Investors arecautioned that “forward looking statements” are based on certain assumptions of future events over which theCompany exercises no control. Therefore there can be noguarantee as to their accuracy. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from thosethat may be projected or implied by these forward looking statements. Such risks and uncertainties include, but arenot limited to: growth, competition, acquisitions, domestic and international economic conditions affecting demand, 45