itc ppt

Imperial Tobacco Company of

India Limited (ITC).

ITC. Touching your life. Everyday

Presented by

GROUP NO.10 Sumit Roy

Anamika singh

Akansha

Kashish Arora

Tarun Dutt

Minaz humdule

FLOW OF PRESENTATION COMPANY PROFILE

VISION & MISSION

VALUE

POSITIONING OF ITC

DISTRIBUTION NETWORK

SUPPLY CHAIN ANALYSIS OF FMCG PRODUCT(CIGARATTE) &

PEST AND SWOT ANALYSIS OF ITC.

SYNERGIES FOR ITC

EFFICIENCIES IN E-CHOUPAL NETWORK

COMPARISON WITH HARYALI KISAN BAZAR

FUTURE OF E-CHOUPAL

CONCLUSION

ITC. Touching your life. Everyday

Introduction

ITC is one of India's foremost private sector companies

Has a diversified presence in Cigarettes, Hotels, Paperboards &Specialty

Papers, Packaging, Agri-Business, Packaged Foods &Confectionery, Branded

Apparel, Greeting Cards and other FMCG products.

ITC is one of the country's biggest foreign exchange earners (US $2 billion in

the last decade).

Ranks No. 4 among Indian listed Private Sector Companies by market cap. (@

April 09)

No. 1 in FMCG Sector

Rated as one of India‟s Most Respected Companies (IMRB-Business world

Survey 2006).

Diversified group of companies with operations in various industry segments from cigarettes to apparels.

Annual turnover is of the order US$2.4 billion

ITC. Touching your life. Everyday

VISION & MISSION

• 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.

• Mission: To enhance the wealth generating capability

of the enterprise in a globalizing environment, delivering

superior and sustainable stakeholder value.

ITC. Touching your life. Everyday

Values

ITC. Touching your life. Everyday

• 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.

.

POSITIONING OF ITC

ITC. Touching your life. Everyday

PRODUCT PROFILE

ITC. Touching your life. Everyday

Hotel

Cigarettes

Incense Sticks

Personal Care

Safety Matches

Agricultural

Industry

Information

Technology

Paperboards

Packaged Foods

Stationery

Branded Apparel

PRODUCT LINE

ITC. Touching your life. Everyday

ITC Distribution network in India

ITC. Touching your life. Everyday

ITC’s Distribution channel

ITC‟s Distribution channel is as follows:-

ITC. Touching your life. Everyday

.

COMPANY HUB FACTORY

Retailer

small Wholesale dealer

Wholesale dealer

Carried and forward agent

consumer

HI-TECH SUPPLY SOLUTIONS Thousands of small retailers in India who sell cigarettes and

confectionery supplied by ITC Ltd, and who have thus far had to wait for

the next arrival of the company‟s delivery van.

Place orders through mobile phones

Vans go without knowing actual demand so after using this they can

save cost as well as time.

Mobility based applications can bring down the cost of operation by 20-

30% from the manual basis of operation

ITC. Touching your life. Everyday

ITC FMCG Supply chain

• Consists of diverse categories with different priorities

• More than 1000+ SKUs

• Buying Value $68 MM

• Warehousing space of more than 3.5m SFT around 55+

• Locations

• Products manufactured at 45+ plants

• More than 650 trucks moved every day

• Direct distribution from factories to Distributors.

• Indirect movement through RDCs

• Combination of Rail/Road/Sea movement within the

• country depending on the product type.

• (Target is Safer, Faster, cost effective

ITC. Touching your life. Everyday

Indian Tobacco Division (ITD)

Market leaders in Cigarettes and Tobacco business & is

among India‟s most profitable companies

Brands owned by ITC Ltd are Wills Classic, Wills

Navy Cut, Gold Flake, Bristol and Scissors

ITD also sells two luxury filter brands of its parent

company Benson & Hedges and 555

Four manufacturing units for cigarettes at

Bangalore, Saharanpur, Kidder pore, Munger

ITC. Touching your life. Everyday

ITC. Touching your life. Everyday

PEST ANALYSIS

POLITICAL

• Huge burden of VAT

• Excise duty raised by union budget by 5 %

• Ban on communication

• Luxury tax in 10 states

• Smuggling

• 100% FDI allowed

ECONOMICAL

• Bidee : cigarette ratio-10:1

• Profit margin is high

• Other forms of cheap tobacco intake

SOCIO -CULTUR

AL

• Becoming status symbol

• Companions mounted by W.H.O.

• Changing attitudes towards tobacco

• May 31 is no tobacco day

• Change in life style

TECHNICAL

• State-of-the-art factories

• Cheap labour supply

• Development of IQMS

• Adapting other concepts like QC,TQM, KSS, 5 S, 6 sigma

SWOT ANALYSIS

ITC. Touching your life. Everyday

Strength

•Cigarette market is 22,000 cr and ITC

has lion’s share in it

•Strong brand recognition and product

portfolio

•Distribution network

•Management

Weakness

•Dependence on tobacco revenues

• Negative Connection of Tobacco

Opportunity

•Low per capita consumption

Of personal care products

•Rural Market

•E-Choupal

• Filter cigarette segment of less than

60mm size

Threat

•Competition both Domestic &

International

•Increasing Tax on cigarettes

•Excise duty on unfiltered cigarettes less

than 60mm in length was increased 387%

last year

•Hike was 142% for those between 61mm

and 70mm long.

•Regulatory restrictions on cigarettes

•Ban on smoking

CONFRONTATION

NAVY CUT,CLASSIC,INSIGNIA,INDIA KINGS,CAPSTEN,GOLD

FLAKE,SISSORS,SILK CUT,BRISTOL,BERKELEY

ITC. Touching your life. Everyday

GOLD FLAKE PREMIUM

29%

GOLD FLAKE

KINGS

4%

IK Regular

(Rich Gold)

1%

B&H Light

2% Classic Regular

4% Classic Ultra Mild

4%

Silk Cut Kings

5%

Wills Navy Cut

7%

Silk Cut Premium

11%

Marlboro Regular

6%

Select Filter

5%

Four Square Specia

5%

Four Square Premier

5%

Panama Plain

4%

Red & White Super

4%

Cavender Magna

4%

Diversification

• ITC over the years has been investing cash flows from its

cigarette business into various lucrative segments like

foods, personal care, hotels and paper.

• With the paperboard division coming out of a major capex

cycle and a reduction in losses from FMCG-others division

from FY10E, we expect the non-cigarette businesses to

become self-sufficient.

• The agriculture division continues to provide a strong

support as an excellent raw material sourcing base. Hotels

segment though is likely to register slower growth in

FY10E due to economic slowdown and terror attacks.

ITC. Touching your life. Everyday

ITC. Touching your life. Everyday 18

Source : Based on Cigarette consumption data(2003) from

“World Cigarettes”,ERC Group plc.

Per Capita Adult Cigarette Consumption

(Sticks)

16621753

561488

141

1190

USA China Pakistan Nepal India World Avg.

CONT…. • It has 3 contract manufacturers (OCMs)Reliable Cigarette

and Tobacco IndustriesPrivate Ltd. (RCTI)

• Asian Tobacco Company (ATC )Hyderabad Deccan

Cigarette Industries(HDC)

• Huge distribution network with 19 marketing

branches and 33 Godowns across nation

• Also caters to the exports mainly in United States

and Middle-Eastern countries

ITC. Touching your life. Everyday

ITC. Touching your life. Everyday

DISTRIBUTION NETWORK(Tobacco Div.)

Bangalore

Calcutta

Saharanpur

Munger

GODOWNS

(19) BRANCHES

(19)

Factories (4)

WHOLESALE DISTRIBUTORS

(60 PER BRANCH)

RETAILERS SECONDARY

WHOLESALERS

Information

Goods

Role of Each Member

Factories – Supply to 18 godowns

Godowns & Branches

Manage by C&F agents getting monthly remuneration

No rent paid by ITC

one branch – 60 WDs , 5 AMs and 20 Area Executives

Wholesale Distributors(WDs)

Margin – 2% of sales

Appoints secondary Wholesalers

ITC. Touching your life. Everyday

PHYSICAL DISTRIBUTION Demand Estimation – collaborative forecasting( Sales

force with dealers)

Forecast based on last month sales

Production plan made according to forecast

Delivery to C & F agents within 7 days

CFAs deliver goods to dealers on the basis of the branch

office route plan

Factory CFAs- Trucks

CFAs Dealers – Small Vehicles

ITC. Touching your life. Everyday

ITC. Touching your life. Everyday

FLOW FOR E-CHOPAL

Company Logo

ITC e-Choupal : An Introduction, Stake

holder Analysis 1

Comparison of status of Supply Chain

before and after ITC e-Choupal 2

Critical Analysis, and Comparison with

HKB 3

Future Scope 4

ITC e-Choupal : An Introduction

• Started in the year 2000

• Target Area so far 38,000 villages, 6500 kiosks, 9 states

• Wholly owned by ITC

Why it become a success ?

• Only initiative to attempt to combine Services and an Effective Business Model successfully

Designed to address the issues such as: 1. Fragmented farms

2. Weak institutions

3. Involvement of intermediaries

4. Information Asymmetry

ITC’S AGRI COMMODITY DIVISON

Farm linkages in 14 states covering Soya, Wheat, Marine

products, Coffee etc. Focus on value added agri commodities

Unique CRM programme in commodity exports

Leveraging IT for the transformational „e-Choupal‟ initiative

Rural India‟s largest Internet-based intervention

Over 40,000 villages linked through 6500 e-Choupals

servicing over 4 million farmers

Distinctive sourcing capability for ITC‟s Foods business

Low Risk Appetite

Weak Market

Orientation

Low Investment Low Margins

Low Productivity Low Value Addition

Caught in a vicious cycle of

underdevelopment

THE PREDICAMENT OF INDIAN FARMERS

ITC’S SUPPLY CHAIN OF SOYA BEAN BEFORE E-CHOUPAL INITIATIVE

Company Logo

SUPPLY CHAIN FOR E-CHOPAL

Company Logo

Farmer

Agri-Input Companies

Dealer/

StockiestRetailer

Agril University, Met Dept,

Insurance Co.

VLW (of Dept of Agriculture)

Money Lender

Pakka Adtiya(Registered Dealer)

Kaccha Adtiya(Un-Registered Dealer)

Trader

Broker

Proc

esso

r

ITC-IBD

Why ITC thought of e-Choupal

Company Logo

The Tactical Imperative

Capture of Intra-day Price shifts

Seasonal price Inflation

Daily price inflation

ITC’s distance from Farmer

The Strategic Imperative

Horizontal spread

Vertical presence

Risk management

The Social Imperative

ITC’S SUPPLY CHAIN OF SOYA BEAN after e-Choupal Initiative

Supply chain post re-engineering

• Pricing

– Previous day‟s closing price used as benchmark price for next

day

– Mandi prices communicated to sanchalak through e-Choupal

portal

– Sanchalak inspects the sample, assesses quality and gives farmer

a conditional quote and a note (name/village/quality tests/approx.

quantity/conditional price), if farmer decides to sell to ITC

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Pricing Inbound Logistics

Inspection Grading

Weighing and

Payment

Hub Logistics

Technological support

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• Inbound Logistics

– Farmer proceeds to the nearest ITC procurement hub with the

note

– Some procurement hubs are ITC factories, others are purely

warehouse operations

– ITC‟s aim is to have a processing centre within 30-40 km radius

of its farmers

Pricing Inbound Logistics

Inspection Grading

Weighing and

Payment

Hub Logistics

Technological support

Company Logo

• Inspection and Grading

– At the ITC procurement hub, laboratory tests are conducted on

a sample of farmer‟s produce

– To change farmer‟s attitude and appreciating produce quality,

ITC is developing lab tests to reward farmers with reward

points for better quality supply

Pricing Inbound Logistics

Inspection Grading

Weighing and

Payment

Hub Logistics

Technological support

Company Logo

• Inspection and Grading

– At the ITC procurement hub, laboratory tests are conducted on

a sample of farmer‟s produce

– To change farmer‟s attitude and appreciating produce quality,

ITC is developing lab tests to reward farmers with reward

points for better quality supply

Pricing Inbound Logistics

Inspection Grading

Weighing and

Payment

Hub Logistics

Technological support

Company Logo

• Weighing and Payment

– Farmer‟s produce is weighed on electronic weighbridge

– He is then given full cash payment

– Freight expenses are reimbursed

– Appropriate documentation at each stage and farmer is given a

copy of that

– Samyojaks handle cash operations

Pricing Inbound Logistics

Inspection Grading

Weighing and

Payment

Hub Logistics

Technological support

Company Logo

• Hub Logistics

– Farmer transports his produce to the nearest processing centre

or storage hub

– ITC incurs the transportation cost

– The farmer bears the risk of transportation until produce is

delivered and the sale is completed

Pricing Inbound Logistics

Inspection Grading

Weighing and

Payment

Hub Logistics

Technological support

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• Technological support

– Nodal platform catering to commodity blending, agricultural trading, e-

choupal &rural distribution

– 24,000 personalized business function points

– 110,000+ pre-built business function points

– Integrated Business Systems for Direct Agriculture Procurement, Rural

Distribution, e-Choupal Management, Exports, Insurance, Aqua Processing &

Commodity blending

– Support for 8 local languages

Pricing Inbound Logistics

Inspection Grading

Weighing and

Payment

Hub Logistics

Technological

support

A win-win Deal

Company Logo

Farmers gain

• Better information Content

• Better info timing

• Less transportation Cost

• Transaction duration

• Weighing accuracy

• Professionalism

ITC gains

• Disintermediation savings

• Freight costs

• Quality control

• Risk management

Transaction cost in Mandi Chain (before e-Choupal)

Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

Transaction cost in Mandi Chain (after e-Choupal)

SYNERGIES FOR ITC

Generation of Goodwill & positive public opinion

Better supply chain for ITC‟s Food & Agri Businesses

Costs, Quality, Traceability

Access to the Underserved Rural Markets

Through a Virtuous Cycle created by “Larger Incomes”,

and founded on “Trust” that is built

New ITES Business Opportunities

Health, Education, Entertainment, eGovernance

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Company Logo

F

A

R

M

E

R

S

M

A

R

K

E

T

S

Cigarette Trade Marketing capability

Branded

Foods

Expanded FMCG distribution capability

e-choupal rural two-way fulfillment

capability

VPN providing SCM, ERP & CRM capability

Lifestyle

retailing

Education

Stationery

Matches &

Agarbattis

A basis for strategic partnerships with other FMCG brand owners

OTHER E-CHOUPAL INITIATIVE

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Companies using e-Choupal network

Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

Critical Analysis of ITC’s Supply Chain

Company Logo

Stake holder Analysis Primary Stakeholders Interest

Farmer Community

Access to information

– Empowered decisions

– Improved agriculture

Economic benefits through lower transaction costs and process

efficiencies

Served with dignity

Knowledge bundled sale of goods and services

Co-opted in product design Hope for a brighter future

ITC

Lower procurement costs

Direct interaction with farmers - Control on quality & supply

security

Low cost distribution channel Access to market intelligence

Commission Agents

(Kachha & Pakka

Adatiyas)

Gain access to global markets through ITC and commission to compensate some of the loss revenue

Efficiencies in e-Choupal network

Last mile low cost solution

Full Service approach

Demand aggregation

Third party seller

Extensive use of technology

Access to information about customers

Pull based strategy

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Drivers of Supply Chain

Information

Logistics at hub

Transportation

Storage facilities at hub

Who are in problems

Local Mandi

Mandi laborers

Market near Mandi

Small processors

Risk associated with e-Choupal

Eroded dominance of Commission agent

Authenticity of information

Problem of Power and internet connectivity

Hariyali Kisaan Bazaar

Hariyali kisaan bazaar

Farmers

DSCL

ICICI Bank

Other companies

Loan for pass through to farmers

Repayment of loan with interest

Produce procurement

Extension service

E-choupal Haryali Kisaan Bazaar

Main

objective

Procurement Rural Retail

Benefit to the

farmers

computer application to provide

market information

provide better method of cultivation by

trained agronomist

Synergies Synergies with products which

ITC is manufacturing

Synergies with what DSCL is

selling(inputs to agriculture plus other

services

Economies of

scale

25-30 km area coverage 20-25 km area coverage

Procurement

centre

near small town Strategically placed near petrol pump

mainly

Comparison with Haryali Kisaan Bazar

FUTURE OF E-CHOUPAL

Company Logo

e-Choupal 3.0. The Deepening

NEW BUSINESSES:

1) Rural jobs and employability

2) Personalised agri services.

MORE INTERACTION: Through Choupal Saagars and

Haats and via mobile phones

NEW TECHNOLOGY: Use of especially enabled mobile

phones, analytics, new partner

ITC. Touching your life. Everyday

e-Choupal 2.0

Cmpany Logo

ITC e-Choupal Footprint

CONCLUSION

• ITC promoting their brands through advertisement campaign

as well as door to door promotion.

• ITC is also focusing on Retailers and Wholesalers to promote their brand.

• The demand of their product in very low, because people don‟t know about their brands very well.

• ITC knows their strength and weakness in the personal care market, so they are applying new concept to overcome their weaknesses.

• ITC now offering more margins, exiting offers and long credit period to retailers and wholesalers.

ITC. Touching your life. Everyday

.

THINK BEFORE

SMOKING…….

THANK YOU

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