1. 1
ITC LImITedITC LImITed
One Of IndIa’s mOsT VaLuabLeOne Of IndIa’s mOsT VaLuabLe
COrpOraTIOnsCOrpOraTIOns
presenTed bY
deVKInandan purOHIT – 15
2. 2
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 19 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. 4 among Indian listed Private Sector Companies by market cap. (@ April 09)
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
4. 4
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
5. 5
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
9. 9
Market leadership
Powerful brands across segments
Leadership in all segments - geographic & price
Extensive FMCG distribution network
Direct servicing of 1,00,000 markets & 2 million retail outlets
World-class state-of-the-art technology and products
Investment - Rs.10 billion in six years
Exciting long term growth potential
ITC’s CIgareTTes busInessITC’s CIgareTTes busIness
10. CIgareTTe brands frOm ITC.
Gold Flake, Wills, Classic, Insignia
India Kings, Silk Cut, Navy Cut
Capstan, Scissors
Berkeley, Bristol and Flake.
11. 11
Cigarettes account for only 15% of tobacco consumed in India
unlike world pattern of 85% due to prolonged punitive
taxation
Cigarettes (15% of tobacco consumption) contribute nearly
85% of Revenue to the Exchequer from tobacco sector
Of the 58% of adult Indian males who consume tobacco,
barely 15% can afford cigarettes
Future growth depends on relative rates of growth of per
capita income and moderation in taxes
CIgareTTes: grOWTH pOTenTIaL
13. 13
Competitive context
• Competition including international majors becoming more active
• Domestic illegal volumes still very strong. Along with smuggled
contraband, emerges as substantive segment
Regulatory & Taxation
• Pictorial Graphic warnings in place w.e.f. June 09.
• VAT hikes in Maharashtra, Delhi & Rajasthan - threatening the concept of
the ‘Indian Common Market’.
CIgareTTes: CHaLLenges
19. Second Largest Hotel Chain in India – Presence
acrossSegments
The ITC Welcomgroup has a presence in the premium, budget
and heritage segments, either directly or through subsidiary
and joint ventures.
Five catagories of hotel
– ITC Luxury collectionFortune Hotels
– ITCWelcomGroup Sheraton
– WelcomHotel
– Fortune
– WelcomHeritage
20. The hotel business of the company is expected to give a
major boost to the earnings of the company on the back of
events like CommonWealth Games in 2010 & Cricket
World Cup in 2011. We believe going forward, the hotel
business will improve margins.
'Hotel Industry in India' seconds only to China in Asia
Pacific
21. 'India Hotel Industry' is adding about 60,000 quality
rooms, currently in different stages of planning and
development and should be ready by 2012.
Government has approved 300 hotel projects, nearly half
of which are in the luxury range
25. “The superior qualit y of
I TC’s
Element al Chlorine Free pulp
has
enabled expansion of t he
market f or
value added paperboards”
26. “The superior qualit y of
I TC’s
Element al Chlorine Free pulp
has
enabled expansion of t he
market f or
value added paperboards”
27. ITC's Paperboards Division is
India's largest and most
technologically advanced paper
and paperboards business
Manufacturing units produce
more than 500000 TPA of
paper and paperboards that
meet stringent quality
requirements across the world
28. iNdiaN PaPer iNduStry
Growth of 10% in per capita consumption of paper over
the last one year. Per capita
Paper consumption increased to 8.3 kg as of December
2008 as compared to 7.5 kg during 2007-08, as per
estimates of Indian Paper Manufacturers Association
(IPMA).
The Indian paper industry accounts for about 1.6% of the
world's production of paper and paperboard
ITC enjoys the 80% market share in the paperboard
segment.
31. ITC’s Agri – business has two key product segments – tobacco
and other commodities.
It is one of the largest exporters of Agri products from the country
ITC sources the finest of Indian Feed Ingredients, Food Grains,
Edible Nuts, Marine Products, Processed Fruits, Coffee and Spices.
ITC is the largest buyer, processor and exporter of leaf tobaccos in
India
ITC`s Agri exports constituted nearly 60% of the foreign exchange
earnings of $3.2 billion
36. e cHoupAL
• e Choupal is an initiative of ITC Limited to link directly with
rural farmers for agricultural / aquaculture produce like
soybeans, wheat, coffee, and prawns.
• eChoupal was conceived to tackle the challenges posed by the
unique features of Indian agriculture, characterized by
fragmented farms, weak infrastructure and the involvement of
numerous intermediaries.
37. Long term goal is to use e-choupals as sales points for soya
bean oil and a range of other consumer goods.
It began in 2000 with soya farmers in madhya pradesh
Focus is on creating internet access for global market information to
guide production and supply decisions.
Currently 5300 e-choupals covering 33000 villages & over 3 million
farmers.
38. • 4 kinds of e-choupals for prawns, coffee, wheat and soya beans
• Focus is on creating internet access for global market
information to guide production and supply decisions.
• Long term goal is to use e-choupals as sales points for soya bean
oil and a range of other consumer goods.
39. • E-choupals will be targeted to drive their product sales
• E-choupal network is also used to sell ITC and third party
products to the villages.
• E-choupal will soon also provide IT enabled services like
health advisories, education and e-governance.
52. how Market diScountS itc
• Market Cap (In Cr.) :- 92,879.01
• Book Value :- 36.24
• EPS ( F.Y.10) :- 8.88
• Trading Rate :- 245
• Fair Value :- 318.91
• Fair Value = 36.24 * 8.88 = 318.91
53. recoMMendation
• BSE weightage 5.4 %
• i.e If Market Moves Up ITC Supports to
market by 5.4 bases point and vice versa.
• Future Value Discounted as per EPS
F.Y 10 36.24 * 11.3 = 318.91
F.Y 11 36.24 * 13.3 = 481.92
54. Future oF itc
• ITC is that it continues to have elasticity in pricing for
some of its cigarette brands(gold flake filter, scissors
filter).Next price increase can fetch additional revenue of
100cr!
• VAT IS GOING TO BE REPLACED WITH GST.(Goods
& Service Tax) That means no immediate increase in
excise duty.
• "Ultimately we hope to see a convergence or a chain link
between the farm products and the branded end,"
