Itc manendra

A Journey that Enduring

VALUE …

TEAM MEMBERSTEAM MEMBERS

MANENDRA SHUKLA RAHUL JOSHI

RICHA SRIVASTAVASHIV BALAK GIRI

3

One of India’s Most One of India’s Most “Valuable”“Valuable”

CorporationCorporation

COMPANY PROFILE

• Chairman:- Y.C Deveshwar

• ITC was incorporated on August 24, 1910

• ITC- 'Imperial Tobacco Company of India Limited'.

• In the initial days it used to operate from a leased office on Radha Bazar Lane, Kolkata.

• IN 1928 headquarter building build, i.e, 'Virginia House' , Kolkata.

COMPANY PROFILE

• Full stop were removed and it become 'ITC Limited‘ on 21st September 2001.

• ITC capitalization- nearly US $ 15 billion

• Turnover- US $ 4.75 billion • Employee-21,000 people • Location-60 locations across India

• VISION: "Enduring Value for the nation & for the Shareholder”

1910

THE CHRONOLOGY OF SUCCESS BY

ITC was incorporated on August 24, 1910. Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house.

1925

In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation

1975

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India

1979

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. Since inception, its shares have been held by ITC, British American Tobacco and various independent shareholders in Nepal.

2002

In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal).

1985

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry

1990

in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities. The Division is today one of India's largest exporters

1990

ITC's unique and now widely acknowledged e-Choupal initiative began in 2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers

2000

In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the launch of Expressions range of greeting cards.

2000

A line of premium range of notebooks under brand “Paperkraft” was launched in 2002its offering and to reach a wider student population

2002

The popular range of notebooks was launched under brand “Classmate” in 2003. “Classmate” over the years has grown to become India’s largest notebook brand and has also increased its portfolio to occupy a greater share of the school bag

2003In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging opportunities in this area. Today ITC Infotech is one of India’s fastest growing global IT and IT-enabled services companies and has established itself as a key player in offshore outsourcing, providing outsourced IT solutions and services to leading global customers across key focus verticals - Manufacturing, BFSI (Banking, Financial Services & Insurance), CPG&R (Consumer Packaged Goods & Retail), THT (Travel, Hospitality and Transportation) and Media & Entertainment.

2000ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000.The Wills Lifestyle chain of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its men's wear brand, John Players,

2000In 2006, Wills Lifestyle became title partner of the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained recognition from buyers and retailers as the single largest B-2-B platform for the Fashion Design industry

2006Years 2007- 2009 saw the launch of Children Books, Slam Books, Geometry Boxes, Pens and Pencils under the “Classmate” brand. In 2008ITC repositioned the business as the Education and Stationery Products Business and launched India's first environment friendly premium business paper under the “Paperkraft” Brand. “Paperkraft” offers a diverse portfolio in the premium executive stationery and office consumables segment

2007-09Paperkraft entered new categories in the office

consumable segment with the launch of Textliners, Permanent Ink Markers and White Board Markers in 2009.

20092002

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

2002

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

partnership with the cottage sector

ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body care products for men

and women in July 2005

2005Continuing 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

2007Vivel De Wills & Vivel range of soaps in February and Vivel range of shampoos in June 2008

200820032009……Recently Company has introduce another Series of Classmate, i.e “CLASSMATE-VICTOR” (a Geometry Box, MRP Rs. 45)

AND THE JOURNEY CONTINUES…..

BOARD OF DIRECTORS

CHAIRMANY C Deveshwar

Anup Singh

EXECUTIVE DIRECTORS

K Vaidyanath

NON-EXECUTIVE DIRECTORS

Anil Baijal R K Kaul S H Khan

S B Mathur D K Mehrotra H G Powell

P B Ramanujam Anthony Ruys Basudev Sen

B Vijayaraghavan

Chairman of the Board from January 1, 1996

Anup Singh-Director on the Board of ITC from November 21, 1997

K Vaidyanath-Director on the

Board of ITC from January

17, 2001

•ITC is rated among the World's Most Reputable Companies by Forbes magazine . ITC ranks among Asia's 50 best performing companies compiled by Business Week ITC is the first Indian company and the second in the world to win the prestigious Development Gateway Award ITC has won the Golden Peacock Awards for 'Corporate Social Responsibility (Asia)' in 2007The Award for ‘CSR in Emerging Economies 2005’ and ‘Excellence in Corporate Governance' ITC Infotech finds pride of place among a select group of SEI CMM Level 5 companies in the world. The only Indian FMCG company to have featured in the Forbes 2000 list The NDTV Profit Business Leadership Award for being the Best Food Company of 2007

GLOBAL HONOURS

The ITC Vision

The ITC Mission

To enhance the wealth generating capability of

the enterprise in a globalizing environment, delivering superior and sustainable stakeholder

value

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

10

ITC - Business Portfolio

ITC

HOTELSFMCG: Cigarettes

Other FMCG

Agri Business

Leaf TobaccoAgri

Commodities

Paperboard

Paper &Packaging

2 0 0 9HOTELS BUSINESS

FMCG: Cigarettes

Other FMCG

Agri Business

Leaf TobaccoAgri

Commodities

Paperboard

Paper &Packaging

When it comes to cigarettes, a brand name that would

instantaneously hit one’s mind would be

“Wills”.

ITC Welcomgroup was named the Best Premier Hotel

Brand at the Galileo-Express TravelWorld Awards 2008 & 2006. ITC WelcomHeritage

won the Best Heritage Hotel Brand award in 2006.

ITC's Agri Inputs business actively encourages the farming community to use judicious combination of organic

and chemical inputs towards Integrated Crop Management (ICM) for sustainable agriculture with focus

on productivity and quality.

ITC’s Paperboards and Specialty Papers Division is India’s largest and most technologically advanced paper and paperboards business.ITC’s Paperboards and Specialty papers business enjoys market leadership in the value-added paperboards segment, and also has a significant share of the Indian paperboards market. It is also the largest Indian exporter of coated boards

Other FMCG

Strategy of Organization (For managing diversity of Portfolio)

Formal 3-tiered Governance Structure :

Board of Directors: Comprising Executive (4) & Non-Executive Directors (11) Strategic Supervision

Corporate Management Committee: Comprising Executive Directors & Senior Managers Strategic Management

Divisional Chief Executive & Divisional Management Committee:

Executive Management

HUMANHUMAN

RESOURCES

THE SMALLEST SEED OF FAITH IS BETTER THAN THE LARGEST FRUIT OF HAPPINESS

HR practices of ITCPolicies of ITC• Policy on Human Rights

• Policy to ensure respect for human rights policy across the supply chain

• Policy to prevent discrimination at workplace

• Policy on freedom of association

• Policy prohibiting child labour and preventing forced labour and preventing forced labour from workplace

• Policy on information and consultation on changes

• HIV/ AIDS policy

Openness

Hard work

Meritocracy (completely professional work atmosphere)

Right balance between work and fun

Informal dress and vibrant weekends

Skip level feedback

Openness

Hard work

Meritocracy (completely professional work atmosphere)

Right balance between work and fun

Informal dress and vibrant weekends

Skip level feedback

WORK CULTURE OF ITC

EMPLOYEE BENEFIT SCHEME

Post retirement Non-Contributory Pension

Family Hospitalisation Assistance Scheme

Housing loan Assistance

Educational Assistance

Recreation Clubs

Subsidised Canteens

•Strategic Human Resource Management

•Sr. Management Committee & Management Framework

•Line Management Capacity for HRM

•Management Development

•Contracts

•Consultants

MANAGEMENT OF PEOPLE IN “ITC”MANAGEMENT OF PEOPLE IN “ITC”

Institutional Memory

ITC Field Presence

The Employment Cycle of ITC

Training and Development

Career & Succession Planning

Enhancing Staff Performance

Management Approach

•Policy

•Responsibility

•Management

•Training and Awareness

•Monitoring and Follow-Up

•Objectives

•Awards

•Context

Labour Practices & Decent Work Environment

•ITC Q1 net up 17.37% at Rs 879 Crore

•Net income rose to Rs 4,132.92 crore in the latest quarter, against Rs 3,934 crore in the same period last fiscal.

•ALTMAN’S Z-SCORE IS 3.17 WHICH IS GREATER THAN 2.99 i,e.

•NSE LAST TRADED PRICE ON 21st IS RS.228.95

•BSE LAST TRADED PRICE ON 21ST IS RS.228.90

“SAFE ZONE”

FINANCIAL GLOSSERY

POSITION OF THE COMPANY FROM 2006 TO 2009

SALES (IN CRORES)

YEAR AMOUNT

2009 15,582.73

2008 13,947.53

2007 12,369.30

2006 9,790.53

SALES REVENUE

0

2000

4000

6000

8000

10000

12000

TOTAL FMCG HOTELS AGRI-BUSINESS PAPERBOARDS,PAPER &

PACKAGING

SEGMENTWISE REVENUE

(IN CRORES)

2009 2008

A. FMCG- Cigarettes 7,557 6,635

- Others 3,050 2,510

TOTAL FMCG 10,607 9,145

B. HOTELS 985 1,012

C. AGRI-BUSINESS 3,896 3,868

D. PAPERBOARDS, PAPER & PACKAGING 2,697 2,158

TOTAL 18,185 16,183

LESS: Inter Segment Revenue 2,603 2,235

SALE       15,582 13,948

SEGMENTWISE REVENUE

Rs. (IN CRORES)

YEARTOTAL

ASSETS

2009 13,857

2008 12,216

2007 10,581

2006 9,122

TOTAL ASSETS

Rs.(IN CRORES)

YEAR PAT2009 3,1832008 2,9662007 2,6622006 2,259

PROFIT AFTER TAX

Rs. (IN CRORES)

YEARRESERVES

& SURPLUS

SHARE CAPITAL

2009 13,302 377

2008 11,624 377

2007 10,003 376

2006 8,626 375

SHAREHOLDER’S FUND

YearCURRENT ASSETS

CURRENT LIABILITIES

CURRENT RATIO

  Rs (in crores)  

2009 8,450 5,862 1.44

2008 7,306 5,265 1.39

2007 6,281 4,585 1.37

2006 5,228 4,126 1.27

CURRENT RATIO

YEAREPS (Rs.) DPS (RS.)

2009 8.65 3.70

2008 8.28 3.50

2007 7.18 3.10

2006 5.95 2.65

EARNING PER SHARE &

DIVIDEND PER SHARE

36.919,1223,3672006

37.8410,5814,0042007

36.2612,2164,4302008

35.5213,8584,9232009

ROI(%)CAPITAL

EMPLOYEDEBITYEAR

IN CRORE

RETURN ON INVESTMENT

POSITION OF ITC LTD. FROM-SEP O8’ TO AUG O9’ ON NSE

PROFIT & LOSS ACCOUNT(IN CRORES)

MAR' 09 MAR' 08 MAR' 07 MAR'06

INCOME:

OPERATING INCOME 14,985.81 14,032.20 12,313.83 9,798.33

EXPENSES:

MATERIAL CONSUMED 6,233.67 6,275.33 5,484.52 4,130.04

MANUFACTURING EXP 481.16 383.42 318.32 295.25

PERSONAL EXPENSES 903.37 745 630.15 541.4

SELLING EXPENSES 1,024.94 1,044.40 803.29 627

ADMINISTRATIVE EXP. 1,492.21 1,266.57 1,116.23 853.39

EXPENSES CAPITALISED -72.55 -112.75 -42.52 -15.78

COST OF SALES 10,062.80 9,601.97 8,309.99 6,431.30

OPERATING PROFIT 4,923.01 4,430.23 4,003.84 3,367.03

OTHER RECURRING ITEMS 422.8 479.82 300.14 273.22

ADJUSTED PBDIT 5,345.81 4,910.05 4,303.98 3,640.25

FINANCIAL EXPENSES 47.65 24.61 16.04 21.1

DEPRECIATION 549.41 438.46 362.92 332.34

OTHER WRITE-OFFS - - - -

ADJUSTED PBT 4,748.75 4,446.98 3,925.02 3,286.81

TAX CHARGES 1,565.13 1,480.97 1,263.07 1,027.57

ADJUSTED PAT 3,183.62 2,966.01 2,661.95 2,259.24

NON RECURRING ITEMS 2.42 36.68 -23.92 -70.02

OTHER NON-CASH ADJUSTMENTS 81.52 117.41 61.94 46.13

REPORTED NET PROFIT 3,267.56 3,120.10 2,699.97 2,235.35

EARNINGS BEFORE APPROPRIATION 3,992.01 3,767.63 3,262.03 2,846.76

EQUITY DIVIDEND 1,396.53 1,319.01 1,166.29 995.12

PREFERENCE DIVIDEND - - - -

DIVIDEND TAX 237.34 224.17 198.21 139.58

RETAINED EARNINGS 2,358.14 2,224.45 1,897.53 1,712.06

MAR' 09 MAR' 08 MAR' 07 MAR‘06

PROFIT & LOSS ACCOUNT (IN CRORES)

BALANCE SHEET(IN CRORES)

MAR' 09 MAR' 08 MAR' 07 MAR' 06

SOURCES OF FUNDS

OWNERS FUND:

EQUITY SHARE CAPITAL 377.44 376.86 376.22 375.52

SHARE APPLICATION MONEY - - - -

PREFERENCE SHARE CAPITAL - - - -

RESERVE AND SURPLUS 13,302.55 11,624.69 10,003.78 8,626.79

LOAN FUNDS:

SECURED LOANS 11.63 5.57 60.78 25.91

UNSECURED LOANS 165.92 208.86 140.1 93.82

TOTAL 13,857.54 12,215.98 10,580.88 9,122.04

FIXED ASSETS:

GROSS BLOCK 10,558.65 8,959.70 7,134.31 6,227.17

LESS: REVALUATION RESERVE 55.09 56.12 57.08 59.17

LESS: ACCUMULATED DEPRICIATION 3,286.74 2,790.87 2,389.54 2,065.44

NET BLOCKS 7,216.82 6,112.71 4,687.69 4,102.56

CAPITAL WORK-IN-PROGRESS 1,214.06 1,126.82 1,130.20 399.97

INVESTMENTS 2,837.75 2,934.55 3,067.77 3,517.01

NET CURRENT ASSETS:

CURRENT ASSETS, LOANS & ADVANCES 8,450.99 7,306.99 6,281.07 5,228.49

LESS: CURRENT LIABILITIES & PROVISION 5,862.08 5,265.09 4,585.85 4,125.99

TOTAL NET CURRENT ASSETS 2,588.91 2,041.90 1,695.22 1,102.50

MISC. EXPENSES NOT WRITTEN - - - -

TOTAL 13,857.54 12,215.98 10,580.88 9,122.04

BALANCE SHEET

MAR’09 MAR’08 MAR’07 MAR’06APPLICATION OF FUNDS

(IN CRORES)

MAR ' 09 MAR ' 08 MAR ' 07 MAR ' 06

LIQUIDITY RATIOS:

CURRENT RATIO 1.44 1.39 1.37 1.27

CURRENT RATIO (INC. ST. LOANS) 1.42 1.36 1.33 1.25

QUICK RATIO 0.60 0.56 0.58 0.57

INVENTRY TURNOVER RATIO 5.26 5.51 6.05 6.43

PROFITABILITY RATIOS:

OPERATING MARGIN(%) 32.85 31.57 32.51 34.36

GROSS PROFIT MARGIN(%) 29.18 28.44 29.56 30.97

NET PROFIT MARGIN(%) 21.18 21.5 21.4 22.19

REPORTED RETURN ON NET WORTH(%) 23.85 25.99 26.01 24.83

LEVERAGE RATIOS:

LONG TERM DEBT / EQUITY 0.01 0.01 0.01 0.01

TOTAL DEBT / EQUITY 0.44 0.46 0.46 0.47

OWNERS FUND AS % OF TOTAL SOURCE 98.71 98.24 98.1 98.68

FIXED ASSETS TURNOVER RATIO 1.44 1.59 1.75 1.59

RATIO ANALYSIS

MAR ' 09 MAR ' 08 MAR ' 07 MAR ' 06

PAYOUT RATIOS:

DIVIDEND PAYOUT RATIO (NET PROFIT) 50.06 49.45 50.53 50.76

DIVIDEND PAYOUT RATIO (CASH PROFIT) 42.84 43.36 44.54 44.19

EARNING RETAINTION RATIO 48.68 47.98 48.75 49.78

PER SHARE RATIOS:

REPORTED EPS (Rs.) 8.65 8.28 7.18 5.95

DIVIDEND PER SHARE (Rs.) 3.70 3.50 3.10 2.65

BOOK VALUE PER SHARE (Rs.) 36.24 31.85 27.59 23.97

RATIO ANALYSIS

MARKETING

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

Customer Focus:- We are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction

ITC regards corporations as critical tools of social development, and considers public - private - people partnerships – bringing together community, government and business– as the only sustainable basis for social sector and infrastructure development.

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

Segmentation

Geographic:• Rural• Urban

Demographic:• Age• Gender• Occupation

Psychographic:• Lifestyle

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

?•FMCG- Others

Cows•FMCG-Cigarettes

Dogs •ITC InfoTech.

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Market Share

46

STRENTHSTRENTH ITC is a diversified company

ITC leveraged it traditional businesses to develop new brands for new segments.

For example:-

• ITC used its experience of transporting and

distributing tobacco products to remote and distant

parts of India to the advantage of its FMCG products.

ITC master chefs from its hotel chain are often asked to develop new food concepts for its FMCG business.

WEAKNESWEAKNESSS

The company's original business was traded in tobacco (the negative connection of tobacco with poor health and premature death. )

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

still dependant upon its tobacco revenues .

ITC is moving into new and emerging sectors including Information Technology, supporting business solutions

ITC leverages e-Choupal in a novel way . It is also an ambitious project that has a goal of reaching 10 million farmers in 100,000 villages

OPPORTUNITIEOPPORTUNITIESS

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

Western companies will see India as an exciting opportunity for themselves to find new market segments for their own offerings.

THREATSTHREATS

Market Share of ITC Ltd.Outstanding market leader

Cigarettes, Hotels, Paperboards,Packaging and Agri-Exports.

Gaining market shareNascent businesses of Packaged Foods& Confectionery, Branded Apparel and

Greeting Cards.

Direct marketing:- Sign boards, posters at shops on point of sale

Delivery vans

Sales force

PROMOTION

7’S OF ITC

• STRATEGY• STRUCTURE• SYSTEM• STYLE• SKILLS• STAFF• SHARED VALUES

COMPETITOR ANALYSIS

The cigarette market in India has 3 players• Godfrey Phillips India (GPI), a Philip Morris affiliate,13%of market share• Vazir Sultan Tobacco (VST), a BAT affiliate, 13% of thetotal market share• Golden Tobacco Company (GTC) with 8% of the marketshare.

Domestic competitors• Kanhayya tobacco• MR tobacco• Sapna enterprises• Sudarshan tobacco

ITC still attains a gigantic market share of 66%

SPANCOP

• S:- Suspect who can buy our product

• P:- Prospect the chances and needs for which customers may buy the product

• A:- Approach the prospect with the USP’s of our product

• N:- Negotiate the deal for the product

• C:- Closing of deal

• O:- Get the order

• P:- Payment follow up

MARKETING STRATEGY BY

ITC is committed to delivering world-class products and services.

This requires a clear focus on continuously striving to create a higher value to customers by achieving excellence in all Company's operations.

Business excellence calls for a passionate focus on:-

•Technology• Products• Services• Processes • An operating environment firmly anchored to an impregnable foundation of Quality.

The Company's R&D team collaborates with other centres of excellence, and leverages expertise from several leading institutes

ITC R & D Centres are manned by highly qualified and trained scientists specialised in their fields. The labs and pilot plants have ultra modern,

state-of-the-art testing and prototyping facilities

e-Choupal is an initiative of ITC Limited to link directly with rural farmers for procurement of agricultural / aquaculture produce like soybeans, wheat, coffee, etc.

e-Choupal is distributed transaction platform that brings together sellers, buyers along with information and service providers.

e-Choupal is an ICT platform for carrying out trade at a number of

locations

ITC's globally recognised e-Choupal initiative is the world's largest rural digital infrastructure benefiting over 4 million farming families.

ITC's businesses generate livelihoods for over 5 million PEOPLE.

Evolving along with emerging changes

through efficient utilization of available

resources, thus maintaining sustainability

Acting proactively by enhancing

capabilities to fulfill the future needs.

MORALE OF THE STORY