ITC company analysis

1. Presenters
Preethi S
Rahul Shetty
Suman B
Sushma T Gowda
Sujith
Pratheksha Rao
Snehal
JUSTICE K S HEGDE INSTITUTE OF MANAGEMENT
NITTE
1

2. Imperial to Indian Tobacco Company
2

3. Company Vision
Sustain ITC position as one of the India's most valuable
corporations through world class performance, creating &
growing values for the Indian economy and the companies stake
holder.
3

4. ITC Timeline
1925: Packaging
and Printing:
Backward
Integration
1975: Entry into
the Hospitality
Sector - A
'Welcom' Move
1990: Agri
Business -
Strengthening
Farmer Linkages
2002: Education
& Stationery
Products -
Offering the
Greenest products
2000: Lifestyle
Retailing -
Premium Offerings
,ITC Infotech
India Limited was
set up
2001: Branded
Packaged Foods -
Delighting Millions
of Households
2002: Agarbattis & Safety
Matches - Supporting the
Small and Cottage Sector
2005: Personal Care
Products - Expert
Solutions for Discerning
Consumers, ITC has
acquired Wimco Ltd
4

5. Introduction
• Incorporated on August 24, 1910
• Type: Public.ltd
• Number of Employees: more than 25000
• Tagline - “ Touching Your life Everyday”
• Adapting other concepts like QC, TQM, Six sigma
• Launched E Choupal – July 2010 – Empowering 4 million Farmers
5

6. Growth in Last four Decades
• In the last 4 decades
Top line grew from ₹145 crores to ₹48000 crores
PAT scored from ₹4 Crores to ₹8700 crores
• Market capitalization from ₹35 crores to ₹275000 crores
• Rated as one of the India’s Most Respected Company (IMRB)
• Sustainability Report – First Company in India
6

7. Corporate Size and Strengths
7

8. Create Drivers for the Economic Growth
8

9. House of Brands
9

10. Current Market
Cigarette – 70%
ITC's wafers brand Bingo has 15%, PepsiCo's Lays has 40%
Education & Stationary – 35%
Kitchen of India – 48%
ITC – 27%, Britannia – 30%
Packaged Wheat Flour Segment – 35% (Aashirvaad Atta)
10

11. FMCG Sector Performance – FY 14
60%
40%
Gross Sales of Rs 10,969 crore
Non - Cigarette Cigarette
Source: Yahoo Finance, 2014
Apparels, Hotels, Paperboard and Agriculture
₹6,769 Crore
Cigarette
₹4,200
crore
11

12. Sector Performance – FY 15
Source: ITC Portal, 2015
FMCG Segment Revenues a robust growth of 11.3%
Fastest growing - branded packaged foods businesses
Launch - 'Mom's Magic, 'Rich Butter' and 'Cashew & Almond'
Agri Business profits up 8.3%
Fastest growing hospitality chains
Market leadership position in the Value Added Paperboard (VAP)
12

13. 13

14. Diversification – Competitive Advantage
• Year 2000 – Started New Bout of Diversification
• 20 Strong Brands
• Acquired Companies
•B Natural, Savlon and 'Shower To Shower'
• Nearly 400000 Sq. ft. Dedicated to R&D
Science Based Differentiation – 350 Patents 14Source: Business Standards

15. Performance
• Market Capitalization
₹2682 Billion
• Turnover
₹ 536 billion
• CAGR in Total Shareholder Returns in the period 1996-2015 : 24.3%
• Enter into Juice Segment – B Natural – 10 Cr Sales
• Planning to Enter Dairy Segment
• Year 2030 – ₹ 1,00,000 Cr FMCG Business
Source: Business Standard, 2015
15

16. Ownership Pattern & Dividend
16

17. Y C Deveshwar
• Mr. Deveshwar joined ITC in 1968
• He was appointed as a director on the Board of the company in 1984
• Became the Chief executive and chairman of the Board on 1996
17

18. Under Deveshwar’s Leadership
• Invested in rural initiatives across India
• Embracing environmentally-friendly practices in its business
• Creating Social Value Chain
18

19. 19

20. Dividend Per Share
Financial year Dividend per Share Dividend (₹ in Crores)
2014-2015 6.25 5009.7
2013-2014 6 4771.91
2012-2013 5.25 4148.46
2011-2012 4.5 3518.29
2010-2011 4.45 3443.48
2009-2010 10 3818.18
2008-2009 3.7 1396.53
2007-2008 3.5 1319.02
2006-2007 3.1 1166.29
2005-06 2.65 995.13
20

21. Profitability & Financial Position
21

22. Net Sales
Year ITC( in Cr) In (%)
2011 21,458.98 14.66
2012 25,173.82 17.20
2013 29,901.27 20.44
2014 33,238.60 22.72
2015 36,507.40 24.95
21,458.98
25,173.82
29,901.27
33,238.60
36,507.40
2011 2012 2013 2014 2015
Amount(cr)
Year
Net sales(in Cr)
ITC
22

23. Total Expenses
Year In(Cr) In(%)
2011 14,316.82 15.16
2012 16,390.79 17.36
2013 19,520.11 20.68
2014 20,912.17 22.15
2015 23,248.38 24.63
14,316.82
16,390.79
19,520.11
20,912.17
23,248.38
2011 2012 2013 2014 2015
Amount(inCr)
Years
Total Expenses(in Cr)
ITC
23

24. Operating Profit Margin
Year ITC(%)
2011 33.97
2012 34.72
2013 35.33
2014 36.95
2015 36.56
33.97
34.72
35.33
36.95
36.56
32
33
34
35
36
37
38
2011 2012 2013 2014 2015
Percentage(%)
Years
Operating Profit Margin(%)
ITC
24

25. Net Profit Margin
Year Rs( in Cr) ITC (%)
2011 7434.87 23.24
2012 9168.15 24.47
2013 10684.18 24.8
2014 13051.55 26.43
2015 14362.05 26.31
23.24
24.47
24.8
26.43 26.31
21
22
23
24
25
26
27
2011 2012 2013 2014 2015
Percentage(%)
Years
Net Profit Margin(%)
ITC
25

26. Dividend Per Share
Year Dividend Per Share(₹)
2011 4.45
2012 4.50
2013 5.25
2014 6.00
2015 6.25
4.45 4.5
5.25
6 6.25
0
1
2
3
4
5
6
7
2011 2012 2013 2014 2015
Amount(Rs)
Years
Dividend Per Share(in ₹)
Dividend Per Share
26

27. Earning per share
Year ITC(in ₹)
2011 6.45
2012 7.88
2013 9.39
2014 11.05
2015 11.99
6.45
7.88
9.39
11.05
11.99
0
2
4
6
8
10
12
14
2011 2012 2013 2014 2015
Amount(inRs) year
EPS( in ₹)
ITC
27

28. Return On Capital Employed
Year ITC(%)
2011 45.48
2012 47.51
2013 48.35
2014 47.71
2015 45.18
45.48
47.51
48.35
47.71
45.18
43.5
44
44.5
45
45.5
46
46.5
47
47.5
48
48.5
49
2011 2012 2013 2014 2015
percentage
Year
Return On Capital Employed(%)
ITC
28

29. Return on Long Term Funds
Year ITC(%)
2011 45.55
2012 47.52
2013 48.35
2014 47.98
2015 45.46
45.55
47.52
48.35
47.98
45.46
44
44.5
45
45.5
46
46.5
47
47.5
48
48.5
49
2011 2012 2013 2014 2015
Percentage Year
Return on Long Term Funds(%)
ITC
29

30. Brand Power and Brand Reach
30

31. Brand Power
31

32. Core Strategy
32
•High-recall brands - Aashirvaad, Sunfeast, Vivel, Bingo!, Classmate and
Yippee
•Non-cigarette FMCG sales grew by 13.7 per cent to ₹2,314 crore in FY-14
• Distribution is biggest advantage
• Focus on all segments
•Prospector strategy for cigarettes and has mixed strategy of prospector
and defender in FMCG as a whole

33. Education & Stationery Products Business
33
• Brands: Paperkraft, Classmate, Classmate Pulse
and Saathi
• Complementary categories
• Classmate : Market leader in Notebooks segment

34. Personal Care Products
34
• Four umbrella brands – Essenza Di Wills – Fiama Di Wills
– Vivel – Superia.
• Acquired ‘Savlon’ and ‘Shower to Shower’ to widen
the portfolio of offerings.
• Laboratoire Naturel – A state-of-the-art consumer and product
interaction Centre
• leveraged to launch unique and differentiated products

35. Lifestyle Retailing
35
• Focused on premium segments initially
• Exclusive Wills Lifestyle stores
(113 outlets) across 51 cities
500 ‘shop-in-shops’ outlets
• Strong distribution network - ‘John Players’
Availability in 400+ Exclusive Branded outlets,
1400+ multi branded outlets
departmental stores

36. Hotels
36
• Moderate and follow defender and analyser strategies
• A 104 properties across 76 locations − 4 Brands:
ITC Hotels,
WelcomHotel,
Fortune
WelcomHeritage

37. Paperboards & Packaging Business
37
• Follows a analyser strategy
•One of its kind in Asia meeting world-class
environmental standards
• India’s largest converter of Paperboards into
high quality printed packaging
• Provides superior packaging solutions to the
cigarettes and new FMCG businesses
• Leading supplier to Indian FMCG industry

38. Agri Business
38
• Superior quality wheat for ‘Aashirvaad’ Atta
• High quality chip stock for ‘Bingo!
Yumitos’ potato wafers
• High quality fruit pulp for ‘B Natural’ range of juices
• Farm linkages in 17 States covering Wheat, Soya, Potato,
Coffee etc.

39. Segment wise revenue
39
FMCG – Cigarettes –₹16805 crore
Other - ₹ 9011 crore
Hotels – ₹1189 crore
Paperboards and Packaging – ₹4974 crore
Agriculture – ₹8380 crore

40. Brand Reach
40
• Sales Push - Paanwallah
• Vivel, Sunfeast Biscuits, Yippe, Mangaldeep,
Engage Deodorants
• Chaupal Sagar – Rural Distribution

41. 41
• ITC’s brands are today available in hundreds of Stock Keeping Units
(SKUs) covering over 1,00,000 markets
• ITC’s distribution organisation - 2 million retail outlets across trade
channels
• This elaborate network provides significant sustainable livelihoods

42. Corporate Social Responsibility
42

43. Put India First
43

44. E-Choupal
44

45. E-Choupal
• Procuring raw material for ITC’s
Foods business
• Supports 4 million farmers
• 6,500 E-Choupal centers installed
45

46. ITC Social & Farm Forestry
• Renewable plantations
• Tree to Text book value chain
 Classmate Notebooks and Paperkraft
Stationery
 Development and Greening over 1,98,000
hectares
• Provided nearly 89 million person-days of
employment to poor tribal communities 46

47. ITC Livestock Development
• Over 70% of households owning milch
animals.
• Modern milk collection networks
• 123 cattle development Centre's
• 2592 village covered annually
47

48. ITC Women Empowerment
• Livelihoods for over 40,000 rural
women
• 1312 self- help groups formed
48

49. Primary Education
• Addresses the lack of
quality primary education in rural communities
• Provides infrastructural
• assistance to Government schools
• ‘roaming laptop’ programme
• ‘Read India Plus’ was introduced in 2013
• Educating over 4,20,000 rural children
49

50. PAT Spends
2010 – 11 2011-12 2012-13
Corporate Social
Responsibility spends*
45 Cr 62 Cr 82 Cr
Average Profit After Taxes
for three immediately
preceding Financial Years
(FYs)
3,482 Cr 4,104 Cr 5,070 Cr
CSR spends as a % of
Average Profit After Taxes
for three immediately
preceding FYs
1.29% 1.51% 1.62%
*The definition of CSR has been aligned with the activities specified in Schedule VII of the
Companies Bill 2012. Previous years’ figures have also been realigned to correspond with the current
year’s disclosures. 50

51. Conclusion
• Built on Value Vision Vitality
• Prominent Vertical Integration
• Producer of World Class Indian Brands
• Creating Products of Tomorrow – Indian Origin
• Execution of Plans – More Investment in India
51

52. Investment – Across Sector
Across Category looks to Invest in Next 5-7 Years - ₹ 25,000 Crore
West Bengal - ₹ 3000 Crore
Telangana - ₹ 8,000 crore
Punjab – ₹ 1400 Crore
Tamil Nadu – ₹ 2500
Source: Business Line, 2015
52

53. Thank You
53