ITC Co Profile

A project report

Submitted

By

BHARATHESH

SAHYADRI COLLEGE OF ENGINEERING AND MANAGEMENT Page 1

1) INDUSTRY PROFILE:

Fast Moving Consumer Goods (FMCG) are products that are sold quickly at

relatively low cost. Though the absolute profit made on FMCG products is relatively

small, they generally sell in large quantities, so the cumulative profit on such products can

be large. FMCG Products are generally replaced of fully used up over a short period of

days weeks, or months, and within one year. This contrasts with durable goods or major

appliances such as kitchen appliances, which are generally replaced over a period of

several years.

FMCG industry provides a wide range of consumables and accordingly the

amount of money circulated against FMCG products is also very high. The competition

among FMCG manufacturers is also growing and as a result of this, investment in FMCG

industry is also increasing. The industry has a good market potentiality because of low

operating cost and strong distribution networks. Population growth is another factor

which is responsible behind the success of this industry. It creates a wide range of job

opportunities. This industry is a stable, diverse, challenging and high profile industry

providing a wide range of job categories like sales, supply chain, finance, marketing,

operations, purchasing, human resources, product development and general management.

FMCG industry is characterized as, a defensive sector with relative inelastic

demand, time –lag between expansion of income and impact on industry, low

technological barriers in terms of technology or investments, imagery and price premium

central to FMCG marketing, new customer acquisition through smaller-sized packaging

and low unit prices, high competition at various price points especially at the regional

levels, enhanced bribing of customers through freebies, focus on increasing reach.

Household care products are a major segment of the FMCG industry. Household

care comprises household cleaners, laundry care, toilet cleaners, air fresheners,

insecticides, Mosquito repellents, polishes and other products related to household care.


INDIAN OVERVIEW:

The Indian FMCG sector is the fourth largest in the economy in globally. As per

The Federation of Indian Chambers of Commerce and Industry (FICCI) the estimated

market size of the FMCG segment in India is Rs 113,000-crore. Industry projections

estimate growth at 30% in 2009-10. The industry recorded 17-18% volume growth in the

last financial year. The FMCG industry in India was worth around US$ 16.03 billion in

August 2008.The middle class and the rural segments of the Indian population are the

most promising market for FMCG, and give brand makers the opportunity to convert

them to branded products. Most of the product categories like jams, toothpaste, skin care,

shampoos, etc, in India, have low per capita consumption as well as low penetration level,

but the potential for growth is huge.

The Indian FMCG industry is divided into five primary segments – personal care

products, household care products, packaged food products, branded spirit and tobacco

products as well as health care products.

GLOBAL OVERVIEW:

Even as the Indian FMCG is governed by local, regional and national

undercurrents, it worked as a subset of the global FMCG industry as well. The global

FMCG market was valued at USD 230 billion. Almost 70% of the global FMCG market

was accounted for by developed geographies like the USA, Europe and Australia.

31%

4%2%

25%

10%

22% 6%Western Europe

Africa/Middle East

Australia

Asia Pacific

Latin America

North America

Eastern Europe


Scope of the Sector:

There is a huge growth potential for all the FMCG companies as the per capita

consumption of almost all products in the country is amongst the lowest in the world.

Again the demand or prospect could be increased further if these companies can change

the consumer's mindset and offer new generation products. Earlier, Indian consumers

were using non-branded apparel, but today, clothes of different brands are available and

the same consumers are willing to pay more for branded quality clothes. It's the quality,

promotion and innovation of products, which can drive many sectors. Marketing,

operations, purchasing, human resources, product development, general management.

Growth Prospects:

With the presence of 12.2% of the world population in the villages of India, the

Indian rural FMCG market is something no one can overlook. Increased focus on farm

sector will boost rural incomes, hence providing better growth prospects to the FMCG

companies. Better infrastructure facilities will improve their supply chain.

FMCG sector is also likely to benefit from growing demand in the market.

Because of the low per capita consumption for almost all the products in the country,

FMCG companies have immense possibilities for growth. And if the companies are able

to change the mindset of the consumers, i.e. if they are able to take the consumers to

branded products and offer new generation products, they would be able to generate

higher growth in the near future. It is expected that the rural income will rise in 2007,

boosting purchasing power in the countryside. However, the demand in urban areas

would be the key growth driver over the long term. Also, increase in the urban

population, along with increase in income levels and the availability of new categories,

would help the urban areas maintain their position in terms of consumption. At present,

urban India accounts for 66% of total FMCG consumption, with rural India accounting

for the remaining 34%. However, rural India accounts for more than 40% consumption in

major FMCG categories such as personal care, fabric care, and hot beverages. In urban

areas, home and personal care category, including skin care, household care and feminine

hygiene, will keep growing at relatively attractive rates.


Personal Care:

The Indian personal care industry is estimated at Rs 170 billion. The industry is divided

into fabric wash, personal wash, hair care, oral cares, skin care, colored cosmetics, men’s

toiletries and fragrances. Most segments of this industry are going through a decline in

2002 with several leading players reporting lower sales in 2002 due to lower volumes as

well as lower realization. The next phase of growth has to come from the rural market as

the urban markets are near saturation levels in terms of penetration.

The industry has a low entry barrier and competition is severe. Besides the large

multinational players, there are some leading domestic players as well as the huge

unorganized players. Though most of the market share is with the larger players,

companies vie for the marginal market share. Cheaper imports and duplicate products are

also affecting the major players. Companies have been adopting promotion schemes to

dole out freebies and repackaging products in smaller packages to cater to a wider

consumer base are some recent trends.

The way ahead for the personal care companies is to introduce new and better

product, improve penetration, and make the consumer trade up in price and quality. Rural

marketing will be a major thrust area for all companies.

Indian Market of personal care products

31%

16%6%

1%

46%Hair crae

Skin care

Colour cosmetics

Fragrances

Bath & shower products

Each of these segments exhibits unique trends and growth patterns. For example, the

largest segment of personal hygiene products is largely dominated by bar soaps. The

second largest segment being hair care products. The skin care market is relatively

smaller and is growing at a high rate while moving away from basic creams and

moisturizers to specialized products such as anti-wrinkle dark circle removing creams.


2) COMPANY PROFILE:

a. BACKGROUND AND INCEPTION OF THE COMPANY

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco

Company of India Limited. As the Company's ownership progressively Indianised, the

name of the Company was changed from Imperial Tobacco Company of India Limited to

India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In

recognition of the Company's multi-business portfolio encompassing a wide range of

businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging,

Paperboards & Specialty Papers, Agri-business, Foods, Lifestyle Retailing, Education &

Stationery and Personal Care - the full stops in the Company's name were removed

effective September 18, 2001. The Company now stands rechristened 'ITC Limited'.

The Company’s beginnings were humble. A leased office on Radha Bazar Lane,

Kolkata, was the centre of the Company's existence. The Company celebrated its 16th

birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee,

(now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the

Company was historic in more ways than one. It was to mark the beginning of a long and

eventful journey into India's future. The Company's headquarter building, 'Virginia

House', which came up on that plot of land two years later, would go on to become one of

Kolkata's most venerated landmarks.

History

Year Events

1910 ITC was incorporated on August 24, 1910 under the name

Imperial Tobacco Company of India Limited.

1925 ITC's Packaging & Printing Business was set up in as a strategic

backward integration for ITC's Cigarettes business. It is today

India's most sophisticated packaging house.


1970 the name of the Company was changed from Imperial Tobacco

Company of India Limited to India Tobacco Company Limited.

1974 Again the name changed to I.T.C. Limited.

1975 the Company launched its Hotels business with the acquisition of a

hotel in Chennai which was rechristened 'ITC-Welcomegroup

Hotel Chola'.

1979 ITC entered the Paperboards business by promoting ITC

Bhadrachalam Paperboards Limited

1985 ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and

British joint venture.

1990 ITC acquired Tribeni Tissues Limited, a Specialty paper

manufacturing company and a major supplier of tissue paper to the

cigarette industry.

1990 ITC set up the Agri Business Division for export of agri-

commodities

2000 ITC forayed into the Greeting, Gifting and Stationery products

business with the launch of Expressions range of greeting cards

2000 ITC also entered the Lifestyle Retailing business with the Wills

Sport range of international quality relaxed wear for men and

women.

In 2000, ITC spun off its information technology business into a

wholly owned subsidiary.

2001 ITC's foray into the Foods business with the introduction of’

Kitchens of India' ready-to-eat Indian gourmet dishes.


2002 ITC entered the confectionery and staples segments with the

launch of the brands mint-o and Candyman confectionery

and Aashirvaadatta (wheat flour). In 2002, ITC's philosophy of

contributing to enhancing the competitiveness of the entire value

chain found yet another expression in the Safety Matches initiative.

2003 ITC's foray into the marketing of Agarbattis (incense sticks) in

2003 marked the manifestation of its partnership with the cottage

sectors.

2003 witnessed the introduction of Sunfeast as the Company entered the

biscuits segment.

2005 ITC introduced Essenza Di Wills, an exclusive range of fine

fragrances and bath & body care products for men and women.

2007 Continuing with its tradition of bringing world class products to

Indian consumers the Company launched 'Fiama Di Wills', a

premium range of Shampoos, Shower Gels and Soaps in

September, October and December 2007 respectively.

2007 ITC's entered the fast growing branded snacks category

with Bingo! . The Company also launched the 'Superia' range of

Soaps and Shampoos in the mass-market segment at select markets.

2008 Vivel De Wills & Vivelrange of soaps in February and Vivel range

of shampoos in June 2008.

2010 ITC entered the fairness cream segment by launching product

‘Vivel active fair’.


b. NATURE OF THE BUSINESS CARRIED

ITC Ltd is an Indian conglomerate founded on 24 August 1910. It has diversified

presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-

Business, Packaged Foods & Confectionery, Information Technology, Branded Apparels,

Personal Care , Stationary, Safety Matches and other FMCG products, while ITC is an

outstanding market leader in its traditional business of cigarettes, Hotels, Paperboards,

Packaging and agri exports, it is rapidly gaining market share even in its nascent business

of Packaged Food& Confectionery , Branded Apparel , Personal Care and Stationary.

ITC –Business Portfolio

FMCG & HOTELS & AGRIBUSINESS PAPERBOARDCIGERATTE IT PACKAGING


c. The ITC Vision and Mission:

The ITC Vision: Sustain ITC's position as one of India's most valuable corporations

through world class performance, creating growing value for the Indian economy and the

Company’s stakeholders.

The ITC Mission: To enhance the wealth generating capability of the enterprise in

a globalizing environment, delivering superior and sustainable stakeholder value.

This over-arching vision of the company is expressively captured in its corporate

positioning statement: "Enduring Value. For the Nation. For the Shareholder."


Core Values:

ITC's Core Values are aimed at developing a customer-focused, high-performance

organization which creates value for all its stakeholders:

Trusteeship

As professional managers, we are conscious that ITC has been given to us in "trust" by all

our stakeholders. We will actualize stakeholder value and interest on a long term

sustainable basis.

Customer Focus

We are always customer focused and will deliver what the customer needs in terms of

value, quality and satisfaction.

Respect for People

We are result oriented, setting high performance standards for ourselves as individuals

and teams.

We will simultaneously respect and value people and uphold humanness and human

dignity.

We acknowledge that every individual brings different perspectives and capabilities to the

team and that a strong team is founded on a variety of perspectives.

We want individuals to dream, value differences, create and experiment in pursuit of

opportunities and achieve leadership through teamwork.

Excellence

We do what is right, do it well and win. We will strive for excellence in whatever we do.

Innovation

We will constantly pursue newer and better processes, products, services and

management practices.


Nation Orientation

We are aware of our responsibility to generate economic value for the Nation. In pursuit

of our goals, we will make no compromise in complying with applicable laws and

regulations at all levels.

Quality Policy:

ITC's development of its Integrated Quality Management System (IQMS) is based on its

strong foundation of implementing ISO 9001:2000, ISO 14001, OHSAS 18001, SA 8000,

HACCP (for Foods) and IQRS (performance rating and benchmarking of the quality

management system). Likewise, ITC's strategic initiatives for developing its people have

been based on participative management concepts like QC (Quality Control), TQM (Total

Quality Management), KSS (Kaizen Suggestion Scheme), 5S, Six Sigma.

All ITC manufacturing units have ISO quality certification. Almost all contract

manufacturing units in the Foods Business and all large hotels have food safety and

quality systems certified by accredited 'third party' in accordance with 'Hazard Analysis

Critical Control Points' (HACCP) standards. Additionally, the quality of all FMCG

products of the Company is regularly monitored through 'Product Quality Rating System'

(PQRS). The Leaf Tobacco and Printing & Packaging businesses have achieved world-

class ratings in the 'International Quality Rating System' (IQRS) for business excellence

in which key processes are rated against international benchmarks and certified by

accredited 'third party' independent assurance providers


d.Product profile:

It is ITC's strategic intent to secure long-term growth by synergizing and blending the

diverse pool of competencies residing in its various businesses to exploit emerging

opportunities in the FMCG sector.

The Company’s institutional strengths – deep understanding of the Indian consumer,

strong trademarks, deep and wide distribution network, agri-sourcing skills, packaging

know-how and cuisine expertise – continue to be effectively leveraged to rapidly grow

the new FMCG businesses.

Over the last few years, ITC has rapidly scaled up presence in its newer FMCG

businesses comprising Branded Packaged Foods, Lifestyle Retailing, Education and

Stationery products, Personal Care products, Safety Matches and Incense Sticks

(Agarbatti) with Segment Revenues growing at an impressive compound annual growth

rate of 38% during the last 5 years.

The Company’s unwavering focus on quality, innovation and differentiation backed by

deep consumer insights, world-class R&D and an efficient and responsive supply chain

will further strengthen its leadership position in the Indian FMCG industry.


ITC’s product portfolio comprises:

Cigarettes:

ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, it

has a leadership position in every segment of the market. It's highly popular portfolio of

brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors,

Capstan, Berkeley, Bristol and Flake.

The Company has been able to build on its leadership position because of its single

minded focus on value creation for the consumer through significant investments in

product design, innovation, manufacturing technology, quality, marketing and

distribution.

ITC's cigarettes are produced in its state-of-the-art factories at Bangalore, Munger,

Saharanpur and Kolkata. These factories are known for their high levels of quality,

contemporary technology and work environment.

Foods:

ITC made its entry into the branded & packaged Foods business in August 2001 with the

launch of the Kitchens of India brand. A more broad-based entry has been made since

June 2002 with brand launches in the Confectionery, Staples and Snack Foods segments.

The packaged foods business is an ideal avenue to leverage ITC's

proven strengths in the areas of hospitality and branded cuisine, contemporary packaging

and sourcing of agricultural commodities. ITC's world famous restaurants like the

Bukhara and the Dum Pukht, nurtured by the Company's Hotels business, demonstrate

that ITC has a deep understanding of the Indian palate and the expertise required to


translate this knowledge into delightful dining experiences for the consumer. ITC has

stood for quality products for over 100 years to the Indian consumer and several of its

brands are today internationally benchmarked for quality.

.

Lifestyle Retailing:

ITC's Lifestyle Retailing Business Division has established a nationwide

retailing presence through its Wills Lifestyle chain of exclusive specialty stores. Wills

Lifestyle, the fashion destination, offers a tempting choice of Wills Classic work wear,

Wills Sport relaxed wear, Wills Club life evening wear, fashion accessories and Essenza

Di Wills - an exclusive range of fine fragrances and bath & body care products and Fiama

Di Wills - a range of premium shampoos and shower gels. Wills Lifestyle has also

introduced Wills Signature designer wear, designed by the leading designers of the

country.

With a distinctive presence across segments at the premium end, ITC

has also established John Players as a brand that offers a complete fashion wardrobe to

the male youth of today. With its brands, ITC is committed to build a dominant presence

in the apparel market through a robust portfolio of offerings.


Personal Care:

ITC forayed into the Personal Care business in July 2005. In the short period since its

entry, ITC has already launched an array of brands, each of which offers a unique and

superior value proposition to discerning consumers. Anchored on extensive consumer

research and product development, ITC's personal care portfolio brings world-class

products with clearly differentiated benefits to quality-seeking consumers.

ITC's Personal Care portfolio under the 'Essenza Di Wills', 'Fiama Di

Wills', 'Vivel Di Wills' 'Vivel UltraPro', 'Vivel' and 'Superia' brands has received

encouraging consumer response and is being progressively extended nationally.

Education and Stationery:

ITC made its entry to the education and stationery business with its Paperkraft

brand in the premium segment in 2002; and later expanded into the popular segment with

its Classmate brand in 2003. By 2007, Classmate became the largest Notebook brand in

the country. Together, Classmate and Paperkraft offer a range of products in the

Education & Stationery space to the discerning consumer, providing unrivalled value in

terms of product & price. Classmate and Paperkraft have become a natural extension of

the consumer. Meticulous understanding of consumer needs helped creating a relevant

and comprehensive portfolio satisfying the needs of different sets of consumers.

Paperkraft Business paper and the papers used in Classmate and Paperkraft notebooks are

superior in quality and environment-friendly. Other offerings available in education and

Stationery range are safe and certified non-toxic.


Safety Matches:

As part of its strategic initiative to create multiple drivers of growth in the FMCG sector,

ITC commenced marketing safety matches sourced from the small-scale sector. The

Matches business leverages the core strengths of ITC in marketing and distribution, brand

building, supply chain management and paperboard & packaging to offer Indian

consumers high quality safety matches.ITC’s range of Safety matches include popular

brands like Kno, Mangaldeep, Aim, Aim Mega and Aim Metro. With differentiated

product features and innovative value additions, these brands effectively address the

needs of different consumer segments.

Hotels:

ITC Welcomgroup, India's premier chain of luxury hotels was

launched on October 18, 1975, with the opening of its first hotel - Chola Sheraton in

Chennai. Since then the ITC-Welcomgroup brand has become synonymous with Indian

hospitality. With over 100 hotels in more than 80 destinations, ITC-Welcomgroup has set

new standards of excellence in the hotel industry in Accommodation, Cuisine,

Environment and Guest Safety. A leader in the premium hospitality segment, ITC-

Welcomgroup Hotels have had the privilege of hosting world leaders, Heads of State and

discerning guests from across the world and within.


e. AREA OF OPERATION-GLOBAL/NATIONAL/REGIONAL:

ITC is one of India's most diversified consumer goods companies having increasingly

reduced its dependence on its core cigarette business. It was initially in the cigarette and

tobacco business and later diversified into multiple businesses including hotels,

paperboards and specialty papers, packaging, agri-business, packaged foods and

confectionery, branded apparel, greeting cards and other FMCG products.

ITC Limited operates its business nationally as well as globally. It has a well established

distribution network and the company’s products are manufactured at multiple production

facilities across the country. It distribute its products across the globe i.e. India,

Americas, Europe, Middle East, Asia Pacific, Africa etc. Its distribution reach is one of

the largest in India – the FMCG business has a retail network over2 million retailers in

the country, ranging from premium outlets in the metros to small shops in the interiors of

rural India.

ITC also sells men’s range of apparel under the brand name John Players through

exclusive brand outlets as well as more than 1500multi-brand outlets. ITC has one of

India's finest hotel chains under the brand name ITC-Welcomgroup with 60 hotels and

approximately. 5200 rooms in India.

ITC has launched its rural hypermarkets in the year 2004 under the name Choupal

Saagar these malls would serve as part of the core infrastructure to support ITC's rural

distribution strategy. 10‘Choupal Saagars’ are now operational in the 3states of Madhya

Pradesh, Maharashtra and Uttar Pradesh while 9 more are in an advanced stage of

construction.


f. OWNERSHIP PATTERN

ITC Limited (BSE: 500875) public conglomerate company headquartered

in Kolkata, India. Total No. of Shareholders as on 25th March, 2011 is 4, 15,230

its turnover is $6 billion and a market capitalization of over $30 Billion.

The Company's shares are listed with 3 Stock Exchanges:

Kolkata (10000018*)

Mumbai (500875*)

National Stock Exchange (ITC*)

Key Management Personnel:

C H A I R M A N

Y C Deveshwar

E X E C U T I V E D I R E C T O R S

Nakul Anand P V Dhobale K N Grant

N O N - E X E C U T I V E D I R E C T O R S

A Baijal S Banerjee AV Girija Kumar

S H Khan S B Mathur D K Mehrotra


H G Powell P B Ramanujam Anthony Ruys

Basudeb Sen K Vaidyanath B Vijayaraghavan

g. Competitors Information:

Hindustan Unilever Limited (HUL): Is India's largest fast moving consumer

goods company. The Anglo-Dutch company Unilever owns a 52% majority stake.HUL

was formed in 1933 as Lever Brothers India Limited and came into being in 1956 as

Hindustan Lever Limited through a merger of Lever Brothers, Hindustan Vanaspati Mfg.

Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India and has employee

strength of over 15,000 employees and contributes to indirect employment of over 52,000

people. The company was renamed in June 2007 as “Hindustan Unilever Limited”.

HUL is the market leader in Indian consumer products with presence in over 20

consumer categories such as soaps, tea, detergents and shampoos amongst others with

over 700 million Indian consumers using its products. The company has a distribution

channel of 6.3 million outlets and owns 35 major Indian brands. Its brands

include Kwality Wall's ice cream, Knorr soups& meal makers, Lifebuoy, Lux, Pears,

Breeze, Liril, Rexona, Hamam and Moti soaps, Pureit water purifier, Lipton tea, Brooke

Bond (3 Roses, Taj Mahal, Taaza, Red Label) tea, Bru coffee, Pepsodent and Close

Up toothpaste and brushes, and Surf, Rin and Wheel laundry detergents, Kissan squashes

and jams, Annapurna salt and atta, Pond's talcs and creams, Vaseline lotions, Fair and

Lovely creams, Lakmé beauty products, Clear, Clinic Plus, Clinic All Clear, Sunsilk

and Dove shampoos, Vim dishwash, Ala bleach, Domex disinfectant, Modern

Bread, Axe deosprays and Comfort fabric softeners.


Nestlé: It is one of the largest food and nutrition companies in the world, founded and

headquartered in Vevey, Switzerland. Nestlé originated in a 1905 merger of the Anglo-

Swiss Milk Company, which was established in 1866 by brothers George Page and

Charles Page, and the Farine Lactée Henri Nestlé Company, which was founded in 1866

by Henri Nestlé. Nestlé has 6,000 brands,[9] with a wide range of products across a

number of markets including coffee (Nescafé), bottled water, other beverages (including

Aero (chocolate) & Skinny Cow), chocolate, ice cream, infant foods, performance and

healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet

food.

Britannia Industries Limited: Is an Indian company based in Bangalore that is

famous for its Britannia and Tiger brands of biscuit, which are highly recognized

throughout the country. Britannia is one of India’s leading biscuit firms, with an

estimated 38% market share. The Company's principal activity is the manufacture and

sale of biscuits, bread, Rusk, cakes and dairy products.

Procter & Gamble Co. (P&G): Is an American company based in Cincinnati, Ohio

that manufactures a wide range of consumer goods. In India Proctor & Gamble has two

subsidiaries: P&G Hygiene and Health Care Ltd. and P&G Home Products Ltd. P&G

Hygiene and Health Care Limited is one of India's fastest growing Fast Moving

Consumer Goods Companies with a turnover of more than Rs. 500 crores. It has in its

portfolio famous brands like Vicks & Whisper. P&G Home Products Limited deals in

Fabric Care segment and Hair Care segment. It has in its kitty global brands such as Ariel

and Tide in the Fabric Care segment, and Head & Shoulders, Pantene, and Rejoice in the

Hair Care segment.

Marico: It is a leading Indian group providing consumer products and services in the

areas of Health and Beauty based in Mumbai. Marico's own manufacturing facilities are

located at Goa, Kanjikode, Jalgaon, Pondicherry, Dehradun, Baddi, Paonta Sahib and

Daman.


In Bangladesh, Marico operates through Marico Bangladesh Limited, a wholly

owned subsidiary Manufacturing facility at Mouchak, near Gazipur. The organisation

holds a number of brands viz. Parachute, Saffola, Sweekar, Hair&Care, Nihar, Shanti,

Mediker, Revive, Manjal, Kaya Skin Clinic, Aromatic, Fiancee, HairCode, Caivil, Code

10 and Black Chic.Marico’s brands and their extensions occupy leadership positions with

significant market shares in a number of health and beauty areas.

h. Global Honors:

• ‘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 S&P 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.

i. Work Flow Model of ITC Ltd:

Positioning of ITC a leading FMCG player


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Expanded FMCG distribution capability

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SCM, ERP and CRM capability

E-Choupal rural two-way fulfillment capability

COMPANY HUB FACTORY

Carrier and forward agent

Whole sale dealer

Small Whole sale dealer

Retailer

Consumer

j. FUTURE GROWTH AND PROSPECTS:

Well-established distribution networks, intense competition between the organized

and unorganized segments characterize the FMGC sector. It is expected to grow by over

60% by 2010. That will translate into an annual growth of 10% over a 5-year period. It

has been estimated that FMCG sector will rise from around Rs 56,500 crores in 2005 to

Rs 92,100 crores in 2010. Hair care, household care, male grooming, female hygiene, and

the chocolates and confectionery categories are estimated to be the

fastest growing segments, says an HSBC report. Though the sector witnessed a slower

growth in 2002-2004, it has been able to make a fine recovery since then. For example,

Indian Tobacco Company Limited (ITC) has shown a healthy growth in the last quarter.

An estimated double-digit growth over the next few years shows that the good times are

likely to continue. With the presence of 12.2% of the world population in the villages of

India, the Indian rural FMCG market is something no one can overlook. Increased focus

on farm sector will boost rural incomes, hence providing better growth prospects to

the FMCG companies. Better infrastructure facilities will improve their supply chain.

FMCG sector is also likely to benefit from growing demand in the market. Because of the

low per capita consumption for almost all the products in the country, FMCG companies

have immense possibilities for growth. And if the companies are able to change the

mindset of the consumers, i.e. if they are able to take the consumers to branded products

and offer new generation products, they would be able to generate higher growth in the

near future. It is expected that the rural income rise in 2011, boosting purchasing power in

the countryside. However, the demand in urban areas would be the key growth driver

over the long term. Also, increase in the urban population, along with increase in income


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T

Cigarette trade marketing capability

Branded food Lifestyle retailing

Education stationary

Matches & agarbattis

Personal care products

levels and the availability of new categories, would help the urban areas maintain their

position in terms of consumption. From the above report we can see that there is a huge

scope for growth and prospect for the company ITC ltd.

3) MCKENSEY’S 7S FRAME WORK

The 7-s framework of MCKENSY ‘S is a value based management (VAM) model that

describes how one can effectively organize the company. Together these factors

determine the way in which a corporation operates.

.

Strategy:

ITC is a board-managed professional company, committed to creating enduring value for

the shareholder and for the nation. It has a rich organizational culture rooted in its core

values of respect for people and belief in empowerment. Its philosophy of all-round value

creation is backed by strong corporate governance policies and systems.

ITC’s corporate strategies are:


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.

Benchmark the health of each business comprehensively across the criteria of

Market Standing, Profitability and Internal Vitality.

Ensure that each of its businesses is world class and internationally competitive.

Enhance the competitive power of the portfolio through synergies derived by

blending the diverse skills and capabilities residing in ITC are various businesses.

Create distributed leadership within the organisation by nurturing talented and

focused top management teams for each of the businesses.

Continuously strengthen and refine Corporate Governance processes and systems

to catalyze the entrepreneurial energies of management by striking the golden

balance between executive freedom and the need for effective control and

accountability.

Structure:

Flowing from the concept and principles of Corporate Governance adopted by the

Company, leadership within ITC is exercised at three levels. The Board of Directors at

the apex, as trustee of shareholders, carries the responsibility for strategic supervision of

the Company. The strategic management of the Company rests with the Corporate

Management Committee comprising the whole time Directors and members drawn from

senior management. The executive management of each business division is vested with

the Divisional Management Committee (DMC), headed by the Chief Executive. Each

DMC is responsible for and totally focused on the management of its assigned business.

This three-tiered interlinked leadership process creates a wholesome balance between the

need for focus and executive freedom, and the need for supervision and control.


Marketing management Structure:

DISTRICT MANAGER

REGIONAL BRANCH MANAGER

BRANCH MANAGER


Board of Directors

Audit Committee

Compensation

Committee

Nomination Committee

Investor Service Committee

Sustainability Committee

Divisional/ Strategic Business Unit (SBU) Management Committees, each headed by a divisional/ SBU Chief Executive

Business includes: FMCG, Hotels, Paperboards, Specialty Papers & Packaging, Agri Business and Information Technology

Corporate Management

Committee

Corporate Functions, each headed by a HOD Corporate Functions include: Planning and Treasury, Accounting, Taxation, Risk Management, Legal, Secretarial, EHS, Human Resources, Corporate

Communications, Corporate Affairs, Internal Audit and Research & Development.

ASSISTANT BRANCH MANAGER

AREA EXECUTIVE

SUPERVISOR

SALES MAN

SKILL:

ITC believes that employee base is a key competitive advantage. The senior

management team has a breadth of experience in the FMCG industry. The skills and

diversity of employees gives the flexibility to respond to the needs of our customers and

customers. The company dedicated to development of expertise and know-how of the

employees and continues to invest in them through training and skills.

ITC’s well-qualified and experienced management team has played a key role in

the development of good corporate governance, effective internal controls and

accounting policies, strong employee relations, and stable supply chain relationships.

The organization provides different types of training for the employees in the different

jobs.

STYLE:

The organization has a Top down style of management. It also has a Participative style

of management where the orders flow from the superior to the subordinate. It has a

two-way communication from both the direction in the organization. The management

gives more importance to the employee’s views while the decision is to be taken it also

considers the farmers views while taking some decision as it is a co-operative society.

SYSTEM

INFORMATION TECHNOLOGY SYSTEM

Information technology systems are important to the business. ITC is heavily reliant on

information technology system in connection with


Order booking

Procurement of raw material

Accounting

Production

Distribution

Disaster recovery systems

Information technology system is a very efficient system which helps ITC to work more

effectively and faster as much accurate in the operations, quality control, finance,

marketing and all in the business activities. Information technology system is very

sensible so any failure in IT systems could result in business interruption, adversely

impacting the reputation and weakening if our competitive position and could have a

material adverse effect on the financial condition and results of operation but ITC have

many experienced employees to maintain the information technology systems very

smoothly, so the information technology system is very effectively applicable in ITC.

STAFF

The success of ITC is dependent on the expertise and services of the management team it

includes all employees and staffs in the organization. It employs over 26,000 people at

more than 60 locations across India. The organization has established a distribution

network across India with a sales staff of over 1,500 people serving approximately 2,500

distributers.The sales force headed by four general managers included 36 state managers,

165 area officers.

SHARED VALUES

ITC's Core Values are aimed at developing a customer-focused, high-performance

organization which creates value for all its stakeholders. The basic philosophy of ITC

Limited is to achieve business excellence and to create and enhance the value for its share

holders, Customers, Employees and Business Associates and thereby to make a

significant contribution to the Economy. The company endeavors to achieve the highest

level of transparency, accountability, integrity and responsibility by following the best

practices in Industry.


4) SWOT ANALYSIS OF ITC LIMITED:

ITC Ltd. is one of the India’s largest multinational corporate enterprises. SWOT analysis

of this organisation.

Strengths:

The organisation has some major strength that gives it a competitive advantage over its

rivals.

1. Strong Financial Performance:

On 31st march, 2010, ITC’s market cap was Rs. 114000 crores with a Gross

income of Rs. 26,863 crores and Profit after tax of Rs. 4061 crores. The company

continues its impressive record of financial performance.

2. Products Portfolio:

ITC’s portfolio of products and services is represented by over 50 energetic

Brands in a range of more than 650 stock keeping units (SKUs).

3. Distribution Network:

ITC’S products are available in over 6 million retail outlets in the country. Its

formidable Distribution organisation directly services more than 2 million of these retail

outlets. It used its experience of transporting and distributing tobacco products to remote

and distant parts of India to the advantage of its FMCG products.

4. Environmental Friendly:

ITC has a status of being ‘Water Positive’ for the 8th consecutive year, ‘Carbon

Positive’ for the 5th year in succession and ‘solid waste recycling positive’ for 3 years in

a row. As consumers and investors become more environment friendly, these

considerations will provide the organisation an opportunity to create USPs and stronger

brand loyalty and brand equity.

5. Research & Development:


ITC recognises that cutting edge R&D can foster breakthrough innovation and

create powerful sources of sustainable competitive advantage. This vision has led to the

establishment of a state of the art R&D centre at Bangalore with over 50 world- class

scientists. Its R&D program will create new game changing business opportunities.

6. Socially Responsibility:

ITC’s initiatives to build social capital through extensive community engagement

have led to the creation of sustainable livelihood opportunities for over 5 million people.

ITC has helped create more than 20,000 rural women entrepreneurs. ITC’s supplementary

education initiative has reached out to over 200000 school children in rural areas. ITC’s

value chain supports over million livelihoods.

7. Brand Equity:

ITC is one of the best known brands in India.

The above factors definitely make the company a strong corporate organisation.

Weaknesses:

In spite of several strengths, there remain some areas of weakness and concern for the

organisation.

1. Dependency on the tobacco business:

To fund its cash guzzling FMCG start-up, the company is still dependent upon its

tobacco revenue. Cigarettes account for 47% of the company’s turnover and for 80% of

its profits. So there is an argument that ITC’s move into FMCG is being subsidised by its

tobacco operations.

2. Not present in many important sectors:

Although ITC is a diversified company trading in a number of business sectors

such as cigarettes, hotels, paper, agriculture, packaged foods and confectionary, personal

care and other FMCG products, safety matches, incense sticks and stationery etc. Yet, it

does not have presence in many important sectors such as insurance, infrastructure,

banking and financial services, BPO, telecom, automotive etc. and thus become

comparatively weak when compared with other conglomerates like the Bharti group, the

Tata group and the Ambani groups.


3. Local Company: ITC is a local company. It does not have a large portfolio of exports

in either products or services. This makes the company comparatively weak in terms of

being able to leverage global opportunities, talent & financing.

Opportunities:

1. Leveraging its brand equity:

ITC’s products & services are of high quality. If ITC enter into any business or

launch any product, consumer know its ITC’s product, consumers shall trust these to be

of good quality. ITC’s brand equity would make ITC successful in most sectors.

2. Right size at the right time:

A corporate must have the right organizational and investment capability and this

must coincide with a growth stage in the economy in which it operates. This seems to be a

perfect setting for ITC. Given the consumption of most products and services in India at a

level far below the global standards and that the Indian economy is on a roll make it a

perfect platform for a company like ITC which already is at a fairly strong stage in its

own growth with the necessary organizational and financial muscle.

3. Synergies across businesses and leveraging domain expertise for growth in other

sectors:

ITC’s fast growing Information Technology subsidiary is founded on a strong base of

domain knowledge derived from ITC’s multiple businesses. It will continue to add

significant value to ITC’s business by providing solution and by enabling them to

leverage Information Technology as a source of superior competitive advantage.

Similarly, ITC’s agri-business with its deep rural linkage is well poised as a supply chain

partner to create value for ITC’s Food and Tobacco businesses. Its large presence in rural

India, with the unique e-choupal infrastructure, will be progressively leveraged to widen

ITC’s FMCG distribution network. ITC uses the network to source and create the raw

material from the farmers.

4. The unique reach and distribution network of E-choupal:


E-choupal is a community of practice that links rural Indian farmers using the

internet. It is also an ambitious project that has a goal of reaching 10 million farmers in

100000 villages. It has already benefited 4 million farmers in 40000 villages. This

platform provides ITC an opportunity, virtually unmatchable, to ride the rural growth that

India in witnessing for the current sets of products and services and additional ones that

can be offered from the same network.

Threats:

1. Competition:

The obvious threat is from competition, both domestic and international. The law

of economies dictates that if competitors see that there is a solid profit to be made in an

emerging economy, more and new products and services will be made available. Global

companies will see India as an exciting opportunity for themselves to find new market

segment for their own offerings. This will put ITC under constant and sustained

competitive pressure from international offerings with deep pockets for a long battle.

2. Pressure groups and Government Policy:

Tobacco and allied product businesses, a major cash cow for ITC, will remain

under public, anti-tobacco, health lobbies and governments through higher excise duties,

advertising restrictions, and packaging guidelines, point of sale restrictions, cancer and

TB campaigns with even a remote possibility of complete ban.

3. General threats:

Wide income disparities leading to social tensions, terror acts, political risks,

legislation changes, tiffs with taxation and excise authorities and public outrage from

negative impacts of products d services remain general treats for the company.

In summary, ITC will need to overcome its weaknesses, leverage the opportunities

through its multiple strengths and be wary of the threats to march into another 100 years

of its glorious journey.


5) Financial Statement analysis:

Current ratio:

PARTICULARS CURRENT ASSETS CURRENT

LIABILITIES

CURRENT RATIO

2009-10 8127.08 8048.24 1.01

2008-09 8159.73 4703.63 1.73

The above table depicts the trend of the current ratio and it is clear from the above table

that the ratio is showing the increasing trend. The standard current ratio is 2:1 but We can

see that ITC’s ratio for the year 09-10 1.01 which has decreased by 41.62% from 2008-

09.It means that the company is very aggressive which may be problematic for its short

term solvency in the year 2009-10. Thus it is below the standard ratio which is 2:1. Here

we can say that the liquidity position of the firm is not satisfactory.

Net Profit Ratio:

It establishes a relationship between net profit and sales and indicates mgt efficiency in

manufacturing, administering and selling the products. This ratio is the overall measure of

firms’ ability to turn each rupees sale into profit.

YEAR NET PROFIT NET SALE NET PROFIT RATIO

2009-10 4061 18153.19 0.22

2008-09 3263.59 15611.92 0.21

The above table depicts that there is an Increase in net profit ratio by 0.01% this is due to increase in net sale by 2541.27.

Net Worth Ratio:PARTICULARS SHAREHOLDER'S FUNDS TOTAL ASSETS NET WORTH

2009-10 14064.38 23005.34 0.61

2008-09 13735.08 19483.45 0.70


The above table shows the shareholders net worth ratio. It is clear that the ratio has

decreased from the year 2008-09 to 2009-10 by 12.86%. It shows that out of the total

assets 61% is owner’s fund.


ITC Co Profile

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