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ITC Limited One of India

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Title: ITC Limited One of India


1
ITC LimitedOne of Indias Most Admired Companies
2
Performance Track Record - Snapshot
Rs crores
Rs. 1 crore Rs. 10 million
3
ITC - Key Financials 2009/10
4
2009/10 Segment Revenues
5
2009/10 Segment Results
6
2009/10 Segment Capital Employed
7
ITC - Key Financials Q1 2010/11
8
Q1 2010/11 Segment Revenues
9
Q1 2010/11 Segment Results
10
Segment Capital Employed
11
ITC One of Indias most valuable and admired
companies
  • One of the 8 Indian Companies to feature in
    Forbes A-list for 2004
  • Featuring 400 of the Worlds best big companies
    with M-cap. gt 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 worlds biggest
    companies measured by a composite of sales,
    profits, assets market value
  • One of the foremost in the private sector in
    terms of
  • Sustained value creation (BT-Stern Stewart
    survey)
  • Operating profits
  • Cash Profits
  • Ranks No. 4 among Indian listed Private Sector
    Companies by market cap.
  • No. 1 in FMCG Sector
  • Rated as one of Indias Most Respected Companies
    (IMRB-Businessworld Survey 2006)

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 and 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 SP 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.
  • The Best Corporate Social Responsibility Practice
    Award 2008 jointly instituted by the Bombay Stock
    Exchange, Times Foundation and the NASSCOM
    Foundation.

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 address during the national
    symposium to commemorate 60th year of
    independence

14
ITC Business Portfolio
FMCG
Cigarettes
Personal Care
Foods
Lifestyle Retailing
Matches
Incense Sticks
Education Stationery
Paper Packaging
Information Technology
Agri Business
Hotels
15
Strategy of Organisation to manage diversity of
Portfolio
  • Formal 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
    Management Committee
  • Executive management

16
Corporate Strategies
  • 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

17
FMCG - Cigarettes
18
ITCs Cigarettes Business
  • 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

19
Cigarettes Growth potential
  • Cigarettes account for less than 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
  • Biri Cigarettes ratio 10 1
  • Annual per capita adult cigarette consumption in
    India is appx. one tenth world average 85
  • Future growth depends on relative rates of growth
    of per capita income and moderation in taxes

20

Per Capita Consumption of Tobacco in India(gms
per year)
SourceWorld Cigarettes ERC Statistics, Tob
Board Industry Estimates gms/Yr
Per Capita consumption is 60 of World Average
21
  • Per Capita consumption in India 10 of World
    average

22
Cigarettes Challenges
  • Competitive context
  • Competition including international majors
    becoming more active
  • Domestic illegal volumes still very strong. Along
    with smuggled contraband, has emerged as
    substantive segment
  • Regulatory 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

23
Hotels Tourism
24
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
  • Indias luxury rooms availability lower than even
    smaller East Asian countries

Source Compendium of Tourism statistics, WTO
25
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

26
ITCs Hotel Business
  • ITC-Welcomgroup a leading hotel chain in India
  • Established presence in key business locations
  • Over 6000 rooms under 4 distinct brands
  • Bangalore 292 room luxury hotel launched in
    October 09
  • Capacity expansion underway at Chennai Kolkata
    plans for other locations also being progressed.
  • Fastest growing hotel chain with highest
    operating efficiency (PBDIT/Net Income _at_ 40)
    amongst the 3 leading chains
  • Leverages unique service proposition and
    international alliance with Starwood Hotels
    Resorts - Luxury Collection / Sheraton

27
ITCs 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.

28
Paperboards, PaperPackaging
29
Indian paperboard market
  • Annual paperboard demand appx. 2 million
    tonnes
  • Fragmented capacity obsolete technology
  • Low per capita usage at around 7 kgs p.a. (world
    average over 55 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 the consumer

30
ITCs Paperboards Business
  • Market leader in growth segment - value added
    coated boards
  • World-class contemporary technology
  • Ozone bleached Pulp Mill fully operational only
    one of its kind in Asia meeting world-class
    environmental standards
  • Internationally competitive quality and cost
  • Social farm forestry in mill command area to
    improve access to cost effective fibre to
    attain self-sufficiency
  • Biotech research based high yielding Clones
    effectiveness tested in gt 1,00,000 hectares
  • Fully integrated operations with in-house pulping
    capacity at appx. 2.80 lac MT

31
ITCs Paperboards Packaging businesses
  • Capacity expansion projects installed at
    optimum capacity utilization
  • 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
    underway
  • ITCs packaging SBU -Indias largest converter of
    paperboard into high quality printed packaging
  • Leading supplier to Indian FMCG and Consumer
    Electronic segments
  • Provides superior packaging solutions to the
    cigarettes and new FMCG businesses

32
Agri Businesses- Leaf Tobacco- Agri Commodities
33
Indian Leaf Tobacco industry
  • India the third largest producer of tobacco
  • However, Indias share is only 7 in world
    tobacco trade
  • Upgradation of tobacco consumption from other
    formats to cigarettes will enable
  • growing domestic base larger opportunities for
    value added exports
  • ITC Indias largest buyer, processor, consumer
    exporter of cigarette tobaccos
  • 6th largest leaf tobacco exporter in the world
  • Pioneering cultivation of flavourful Flue-cured,
    superior Burley and Oriental tobaccos in India
  • Export business - robust growth in export volumes
    with improvement in realization over the last 2
    years

34
ITCs Agri Commodity Business
  • Farm linkages in 14 states covering Soya, Wheat,
    Marine products, Coffee etc. Focus on value added
    agri commodities
  • Unique CRM programme in commodity exports
  • Leveraging IT for the transformational
    e-Choupal initiative
  • Rural Indias largest Internet-based intervention
  • Over 40000 villages linked through around 6500
    e-Choupals servicing over 3.5 million farmers
  • Distinctive sourcing capability for ITCs Foods
    business

35
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
  • 24 Choupal Saagars operational

36
Future Growth Value Capture
  • New FMCG Initiatives

37
Strategic Rationale
  • Blend multiple competencies residing within the
    ITC Group to create new avenues of growth
  • Best fit between internal capabilities and
    emerging market opportunities
  • Each segment enhances the depth and width of
    ITCs FMCG distribution capability
  • Business model retains critical elements of value
    chains within ITC with other elements outsourced
  • Contributing to the competitiveness of SMEs

38
Branded Packaged Foods
  • Leverages
  • Unique Agri sourcing skills
  • ITC Welcomgroups specialist cuisine bakery
    knowledge
  • FMCG distribution synergies
  • ITC RD Centre, Bangalore
  • 5 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

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 RD Centre

40
Lifestyle Retailing
  • Leverages trade mark and services expertise of
    hotels
  • Relaxed wear market growth gt 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 wear, 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
  • Wills Lifestyle rated amongst the top 5 Luxury
    brands in the country (Global Luxury Survey
    conducted by TIME Magazine)

41
Education Stationery Products Business
  • Leverages print and paper know-how. Forward
    linkages with new paper 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
    branding
  • Robust distribution network in place to scale up
    the Stationery business 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/category launches

42
Safety Matches
  • Current industry consumer spend estimated at Rs.
    1250 crores p.a. for 24 billion match boxes
  • Fragmented supply base arising from policy of
    reservation for small scale industry
  • Mass market moving from 0.50 p price point to Re
    1.00.
  • ITC markets its brands with value added products
    across each price point
  • Support SMEs with complementary marketing
    strengths
  • AIM Indias largest selling Safety Matches
    brand
  • Successful acquisition of WIMCO Ltd. by Russell
    Credit
  • Key brands Homelites, Ship, Cheetah Fight etc.

43
Incense sticks (Agarbattis)
  • Current industry consumer spend estimated at over
    Rs. 900 crores p.a.
  • Fragmented supply base arising from policy of
    reservation for small scale industry
  • ITC markets its brands with value added products
    across each price 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

44
Personal Care Products
  • Current market size estimated at over Rs. 29000
    crores (growing at 12 p.a.)
  • ITC presence established in Body Wash (Soaps,
    shower gels), Hair Care (Shampoos, conditioner).
  • Product portfolio enlarged with the launch of
    Fairness cream.
  • Portfolio approach straddling all consumer
    segments with 4 umbrella brands
  • Essenza Di Wills (Prestige)
  • Fiama Di Wills (Premium)
  • Vivel Di Wills and Vivel (Mid)
  • Superia (Popular)
  • Products well received in the market, gaining
    customer acceptance
  • Supported by investments in brands celebrity
    endorsements
  • Investments being made in Research Development
    and strategic tax incentivised manufacturing
    sites

45
Forward-looking Statements
Statements in this presentation describing the
Companys objectives, future prospects,
estimates, expectations etc. may be forward
looking statements within the meaning of
applicable securities laws and regulations.
Investors are cautioned that forward looking
statements are based on certain assumptions of
future events over which the Company exercises no
control. Therefore there can be no guarantee as
to their accuracy. These statements involve a
number of risks, uncertainties and other factors
that could cause actual results to differ
materially from those that may be projected or
implied by these forward looking statements. Such
risks and uncertainties include, but are not
limited to growth, competition, acquisitions,
domestic and international economic conditions
affecting demand, supply and price conditions in
the various businesses in the Companys
portfolio, changes in Government regulations, tax
regimes and other statutes, and the ability to
attract and retain high quality human resource.
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