ITC Case Study

ITC

Diversification Strategy

Topics to be covered

• Company Brief

• Time Line

• Business Portfolio of ITC

• SWOT analysis

• BCG matrix

• Strategies

Company Brief

• ITC is one of India's foremost private sector companies .

• Market capitalisation of nearly US $ 18 billion • Turnover of over US $ 5.1 Billion • One of the 8 Indian Companies to feature in

‘Forbes A-list’ for 2004 .• Only Indian FMCG Company to feature in

Forbes 2000 List .• Ranks No. 9 among Indian listed Private Sector

Companies by market cap. (@ 31/03/08)• No. 1 in FMCG Sector.

Time Line Of ITC 1910 ITCL (Imperial ) established in Kolkatta

1925 ITC ‘s Packaging and printing business was set

1953 Imperial converted into a public limited company

1971 It set up a marine product export Division

1974 Company Changed its name to ITC Ltd

1975 ILTC became a part of ITC

1975 launched Hotel business

1986 Established ITC Hotels as a separate division

1990 ITC set up the Agri Business Division

1994 Commissioned Mc .Kinsey to study their business

2000 e-Choupal initiative in Bhopal with Soya farmers

2000 ITC Launched ‘Expressions’

2000 ITC Launched ‘Wills Lifestyle’

2000 ITC – ITC Infotech

2001 ITC formed the food division.

2002 ITC entered the safety match business

2005 ITC introduced Essenza Di Wills

Business Mix of ITC Ltd.

FMCG • Cigarettes • Foods • Lifestyle Retailing • Greeting, Gifting & Stationery • FMCG – Others (Safety Matches &Agarbattis)

Paperboards and Packaging • Paperboards & Specialty Papers • Packaging

Business Mix of ITC Ltd.

Agri - Business• Agri-Exports• e-Choupal

Hotels

Group Companies • ITC Infotech

SWOT Analysis

Strength•Brand•Management

Weakness•Unrelated diversification

Opportunity•Rural market•E-choupal

Threats•Increasing tax in Cigarettes•Health hazard

The BCG Matrix for ITC Ltd.

Stars•Hotels•Paperboards/ Packaging.•Agri business.

?•FMCG- Others

Cows•FMCG-Cigarettes

Dogs

ITC’s corporate strategies

• Create multiple drivers of growth by developing a portfolio of world class businesses that best matches organizational capability with opportunities in domestic and export markets.

•  Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards & Packaging, Agri Business and Information Technology. .

•  Enhance the competitive power of the portfolio through synergies derived by blending the diverse skills and capabilities residing in ITC’s various businesses.

Thank You

Anoop Anagha MadhurMansi

MeenakshiSuparna

Special Thanks to Prof. Rakesh Gupta for

giving us such an enormous project

FMCG - Cigarettes

ITC’s Cigarettes BusinessITC’s Cigarettes Business

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

Cigarettes: Growth potential

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 : 141

Future growth depends on relative rates of growth of per

capita income and moderation in taxes

Per Capita Adult C igarette Consumption (Sticks)

16621753

561 488

141

1190

USA China Pakistan Nepal India W orld Avg.

Source : Based on Cigarette consumption data(2003) from “World Cigarettes”,ERC Group plc. Back

ITC Distribution Network

DISTRIBUTION NETWORK(Tobacco Div.)

Bangalore Bangalore Calcutta Calcutta Saharanpur Saharanpur Munger Munger

GODOWNS(18)

GODOWNS(18)

BRANCHES (18) BRANCHES (18)

Factories (4)

WHOLESALE DISTRIBUTORS(60 PER BRANCH)

WHOLESALE DISTRIBUTORS(PER BRANCH 60)

RETAILERSRETAILERS SECONDARYWHOLESALERS

SECONDARYWHOLESALERS

Information

Goods

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ITC FOOD

“ Branded food business grew over 57 % than previous year”

(Sustanibility report ITC 2008)

• In 2001 ITC Formed the food Division

• Divided into four main categories

• Ready – to – Eat gourmet.

• Confectionary & chocolates

• Biscuits & cookies.

• Branded Staples.

• Ready to eat Gourment

• Keeping alive long forgotten culinary traditions ITC introduced Kitchen of indiain Aug 2001

• The RTE market is approximately Rs 600-700 million( ITC Food CEO Interview in press

realeses)

• Aashirwad Staples

Confectionary market :- currently into two brands Minto-O and Candyman

Sunfeast Buscuits and cookies range

BINGO was launched in march 2007 it has captured 16% of market share . Making it second largest in the market(4P ‘s magazine 2007 )

ITC Food NOW

• With one year of launch BINGO has attained double digits market share.

• The confectonaray category sales revenue have increased by 40% than last year

• RTE is well established over 4500 stores in US market .( Sustanability report ITC 2008)

Back

PERSONAL CAREMR. Sandeep kaul (CEO)

perfume

• Essenza di wills in mid 2005 (french)

• Inizio femme (women)

• Inizio homme (men)

ADDITION

Essenza di wills AQUA Range for men

(after shave lotion, deodorant. hair and body shampoo & bathing bar)

Shampoos

1)Fiama di wills shampoos conditioner shower gels soap (sep 2007)

2) Vivel di wills Soap shampoo,

3) Superia

Soap

shampoo

WILLS LIFE STYLE

• In 2000,ITC Extended Wills to fashion retailing with an investment of Rs. 2.5 billion and opened first Wills Lifestyle store in Dec. 2000 in New Delhi to retail Wills Sport brand.

• LRBD tied up with American Design Intelligence Group (ADIG) A San Francisco based consultancy

• The LRBD expected to make a turnover of Rs.450 million for financial year March 31,2003.ITC also plans to take Wills Sport overseas by setting up in various countries.

• The move is aimed at wooing the young upwardly mobile segment, which is expected to bring 30 per cent growth for the company.

• From 50 stores at present, the company plans to have 80 stores by the year-end. (July 23,08)E.T

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EDUCATION & STATIONERY

ITC made its entry into the stationery business in 2002 with its premium range of notebooks, followed in the year 2003 with the more popular range to augment its offering.

• Manufacturer of India's first environment friendly Elemental Chlorine Free (ECF) pulp, paper and paperboard. 

• Knowledge of image processing, printing & conversion garnered from its Packaging & Printing Business. 

• Brand Building & Trade Marketing & Distribution strengths resident in its FMCG Business.

• The Paperkraft range consists of premium stationery with a wide variety for executives to choose from

• Classmate - India's largest National brand, reaching 50,000 outlets across the country, has over 300 variants in its range

•

PAPER BORDS AND SPECIALITY PAPERS

• ITC’s Paperboards and Specialty Papers Division is India’s largest and most technologically advanced paper and paperboards business. ITC caters to a wide spectrum of packaging, graphic, communication, writing, printing and specialty paper requirements through its four world-class mills in India.

• Internet and SMS delivering made paper industry( shrinking industry )( Rs 300 crore in 2000, Rs 100 crore now)

• A Rs 3,000-crore market, only 15 per cent of it lies with the organised sector. While ITC claims it has the largest share of the market at 8 per cent (as against Navneet Publications’ 5 per cent and Ballarpur Industries 2 per cent).

Back

FMCG-Other

Helping in growth of SMEs

• Safety Matches: ITC's brands of safety matches include iKno, Mangaldeep, VaxLit, Delite and Aim. The Aim is the largest selling brand of Safety Matches in India. ITC also exports premium brands to markets such as Europe, Africa and the USA.

• Aggarbattis: ITC has launched Mangaldeep brand of Aggarbattis with a wide range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Durbar, Tarangini, Anushri, Ananth and Mogra. Mangaldeep is also being exported to USA, UAE, Bahrain, Nepal, Singapore, Malaysia, Oman and South Africa.

Back

Paperboards, PaperPaperboards, Paper&&

PackagingPackaging

Indian paperboard marketIndian paperboard market

Annual paperboard demand – appx. 1.1 million tonnes

Fragmented capacity & obsolete technology

Low per capita usage at around 6 kgs p.a. (world average –

over 50 kgs p.a.)

Indian paperboard market growing at 9% p.a.

Value Added Coated board - the fastest growing segment (20%

p.a.) in India driven by the growing sophistication of the

consumer

Paperboard Demand Projections - Asia

Asian region demand (excluding Japan) growing by

0.5 million tonnes per annum

Significant export opportunities for high quality Indian

manufacturers

• ITC paperboards exports - Rs. 2 billion appx.

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 India 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 80,000 hectares

Fully integrated operations with in-house pulping capacity at

appx. 2.20 lac MT

• Expansion completed; source of sustainable competitive

advantage

ITC’s Paperboards & Packaging ITC’s Paperboards & Packaging businessesbusinesses

Capacity expansion projects underway

• 120000 TPA Pulp Mill – commissioning commenced; being

stabilised

• 100000 TPA paper machine (to support Stationery business growth

plans) – trial commissioning commenced

ITC’s packaging SBU -India’s largest converter of paperboard into

high quality printed packaging

• Leading supplier to Indian FMCG segment

• Provides superior packaging solutions to the cigarettes and new

FMCG businesses Back

Agri BusinessesAgri Businesses- - Leaf TobaccoLeaf Tobacco

- Agri Commodities- Agri Commodities

ITC’s Agri Commodity Business

Farm linkages in 14 states covering Soya, Wheat, Rice, Marine

products, Coffee etc.

Leveraging IT for the transformational ‘e-Choupal’ initiative

Rural India’s largest Internet-based intervention

Over 38000 villages linked through around 6400 e-Choupals

servicing over 3.5 million farmers

e-choupal:Strategic Thruste-choupal:Strategic Thrust

Procurement: cost & quality optimisation

Rural Distribution

Rural retail• 23 Choupal Saagars operational• Rapid expansion planned in identified rural markets and

Tier 2, 3 & 4 towns

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Hotels & TourismHotels & Tourism

Indian hotel industryIndian 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

ITC’s Hotel BusinessITC’s Hotel Business

ITC-Welcomgroup : a leading hotel chain in India

• Established presence in key business locations

• Over 6000 rooms under 4 distinct brands

Capacity expansion underway at Bangalore and

Chennai; plans for other locations also being progressed

Category Brand PositioningLuxury 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"

ITC’s Hotel Business

• Manages 24 full service mid-market properties (1700 +

rooms ) under the Fortune Hotels brand

– 100% subsidiary company : Fortune Park Hotels Ltd.

• Also operates 52 properties under the

‘WelcomHeritage’ brand

– Maharaja Heritage Resorts Ltd. 50% JV with Marudhar

Hotels (P) Ltd.

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Fact File - ITC Infotech• Incorporated in October, 2000

• 100% subsidiary of ITC Limited

• 100% owned subsidiaries in US & UK

• 1,500+ software professionals

• 2,600+ Tech Support professionals

• 1 Million Sq. Ft. owned infrastructure

Global Footprints

San Jose, CA PragueNashville,TN

Chicago, ILBoston, MA

Kuala Lumpur

Phoenix, AZ

CO-LOCATED OFFICE

Bogota

Mexico

BucharestHamburg

Moscow

Beijing

Tokyo

SingaporeJakarta

Sydney

SeoulIslamabad

Adis AbabaCairo

Lagos

South Africa

PROJECT OFFICE

Bangalore

Calcutta

Milton Keynes

Princeton, NJ

DEVELOPMENT CENTRE

Implementation across 42 Countries, Support for 142 countries

4 global delivery centres

100% owned subsidiaries in US & UK,

Offices in India, USA, UK, Czech Republic and Malaysia

Key Areas of Business

Domain Practices Technology Practices

BPO/Technical Helpdesk Services

CRM Services

Custom Applications (Microsoft, Java)

ERP Services

Mainframe

Infrastructure Services

Multimedia & Animation Services

Strategic Consulting

Testing Services

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Select Clientele

Nike

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