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Performance Track Record- Snapshot
Rs crores
Cagr 95-96
95-96 08-09
to 08-09
Gross Turnover 5115 23,144 12.3%
N et Turnover 2536 15,388 14.9%
Market Capitalisation 5571 69,751 21.5%
PBDIT 584 5,393 18.7%
PBIT 536 4,844 18.4%
PBT 452 4,826 20.0%
PAT (After Exceptional Items) 261 3,264 21.4%
EPS Rs (Equalised for 95-96) 0.7 8.65 21.2%
N et Worth 1121 13,735 21.3%
Capital Employed 1886 14,780 17.2%
ROCE% 28.4 32.8
Total Shareholders Returns % 23.0
Rs. Crs.
GTO 23144 8.4
NTO 15388 10.3
PBT 4826 5.6
PAT 3264 4.6
Balance Sheet Size* 14782 15.3
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Segment – Full Year
Results (Rs Crores)
Segment Results 2009 2008 Goly%
a) FMCG - Cigarettes 4184 3634 15%
- Others (483) (264) -83%
Total FMCG 3700 3371 10%
b) Hotels 316 411 -23%
c) Agri business 256 129 98%
d) Paperboards, Paper & Packaging 509 453 12%
Total 4781 4364 10%
Less:
Eliminations 102 36 185%
Unallocable Expenditure (Net) 177 132 34%
Interest Paid 18 5 297%
Interest / Income from investments (342) (381) -10%
Total PBT 4826 4572 6%
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Segment – Full Year
Capital Employed
(Rs Crores)
Segment Capital Employed 2009 2008 Goly%
a) FMCG - Cigarettes 3077 2315 33%
- Others 2087 1827 14%
Total FMCG 5164 4141 25%
b) Hotels 2189 1865 17%
c) Agri business 1038 1469 -29%
d) Paperboards, Paper & Packaging 3771 3264 16%
Total Segment Capital Employed 12162 10740 13%
* Local Tax Provisions a/c Corporate 575 598 -4%
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ITC - Key Financials – Q1 09/10
Q1 09/10 Q1 08/09
Rs crs Goly %
Actuals Actuals
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ITC - Business Portfolio
ITC
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Strategy of Organisation to manage diversity of
Portfolio
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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
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FMCG - Cigarettes
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ITC’s 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
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Cigarettes: Growth potential
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
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
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Cigarettes: Challenges
Competitive context
• Competition including international majors becoming more active
• Domestic illegal volumes still very strong. Along with smuggled
contraband, emerges as substantive segment
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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
80000
70000
60000
50000
40000
30000
20000
10000
0
HongKong Singapore India
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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
Category Brand Positioning
Luxury ITC Hotel: Luxury Collection "Mansions of Luxury"
Upper upscale WelcomHotel: Sheraton "Passion for Quality"
Upscale - mid-scale Fortune Hotels "Promise of True Value"
Heritage WelcomHeritage "Unique Experiences"
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
@ 40%) amongst the 3 leading chains
Leverages unique service proposition and international alliance with Starwood
Hotels & Resorts
• ‘Luxury Collection’ / ‘Sheraton’
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ITC’s Hotel Business
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Indian paperboard market
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
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ITC’s Paperboards Business
Market leader in growth segment - value added coated boards
World-class contemporary technology
• Ozone bleached Pulp Mill operations commenced – 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
nearly 96,000 hectares
Fully integrated operations with in-house pulping capacity at appx. 2.20
lac MT
• Expansion completed; source of sustainable competitive advantage
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ITC’s Paperboards & Packaging businesses
Capacity expansion projects installed – at optimum capacity utilization
• 100000 TPA paper machine (to support Stationery business growth plans)
Machine stabilized
ITC’s packaging SBU -India’s largest converter of paperboard into high
quality printed packaging
• Leading supplier to Indian FMCG and Consumer Electronic segments
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Agri Businesses
- Leaf Tobacco
- Agri Commodities
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Indian Leaf Tobacco industry
India – the third largest producer of tobacco
However, India’s 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 – India’s largest buyer, processor, consumer & exporter of
cigarette tobaccos.
Captured significant incremental volumes as well as margins
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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
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Future Growth & Value Capture
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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
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FMCG Business Initiatives
Branded Packaged Foods
Leverages:
Unique Agri sourcing skills
ITC Welcomgroup’s specialist cuisine & bakery knowledge
FMCG distribution synergies
ITC R&D 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
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FMCG Business Initiatives
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
• Number of innovative products in the pipeline leveraging the capabilities
of the ITC R&D Centre
• Business working on improving product mix and supply chain efficiencies
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FMCG Business Initiatives
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 (~ 50) and
multi-branded outlets/ large format retail stores across the country
Product and brand range being expanded
• Designer association with leading Indian designers – ‘Wills Signature’ line
• Premium segment comprising the ‘Classic’ range of formal wear, ‘Wills Sport’
relaxed wear and ‘Wills Clublife’ evening wear
• Strong distribution network in place for the mid-market brand ‘John Players’
• Wills Lifestyle rated amongst the top 5 Luxury brands in the country in a Global
Luxury Survey conducted by TIME Magazine
• Cost management actions underway. Stores rationalization/relocation and rental
renegotiations carried out/underway. Operating costs also being targeted
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FMCG Business Initiatives
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
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.
Serves to expand the width of ITC’s FMCG distribution capability with negligible
incremental investment
Comprehensive portfolio approach with new variant/category launches
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FMCG Business Initiatives
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’ – India’s largest selling Safety Matches brand
Successful acquisition of WIMCO Ltd. by Russell Credit
• Key brands: Homelites, Ship, Cheetah Fight etc.
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FMCG Business Initiatives
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
Support cottage sector with complementary marketing strengths
‘Mangaldeep’ : the only National brand in the country
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FMCG Business Initiatives
Personal Care Products
Current industry consumer spend estimated at over Rs. 21000 crores p.a.
(growing at 12%)
Brand wise Highlights
– Essenza Di Wills (Super Premium) – Portfolio’s premium imagery
augmented with launch of ‘Aqua’ for men in fine fragrances and
grooming range
– Fiama Di Wills (Premium) – Launched with Shampoos/Soaps/Shower
Gels/Conditioners
– Vivel Di Wills and Vivel (Mid) – Soaps and Shampoos
– Superia (Popular) – Soaps and Shampoos
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 43
FMCG business initiatives…….
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Positioning of ITC
A leading FMCG player in India
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