ITC Presentation_KPRSB

8/7/2019 ITC Presentation_KPRSB

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ITC Background

Established by UK-based tobacco major BAT

1910, full fledged sales organization named Imperial

Tobacco Company of India Limited

July 1912,Indian Leaf Tobacco company(ILTC)

Late 1960s,GoI pressured MNC to reduce holdings

Though Imperial clearly dominated cigarette

business, decided to reduce its dependence & sodiversify.


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Brief History

1971, Marine product export division

1974, company changed its name to ITC Ltd.

1977,textile industry

1977, Bhadrachalam Paperboards

1981, cement business

1986, ITC Hotels

1994, Consultancy from McKinsey & Co. to study

businesses of company

{Retained interest in tobacco, hospitality and paper

and sold off stakes in non core businesses}


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Brief History (Cont)

2000, ITCs Packaging & Printing- Expressions

2000, Lifestyle Retailing business division

By 2001,undisputed leader in cigarette industry with

popular brands- Gold Flake, Scissors, Wills, India

kings and Classic

Cigarette contributes- 85% revenue & all other

businesses together 15%


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MISSION

To enhance the wealth generating capability

of the enterprise in a globalizing environment,

delivering superior and sustainable

stakeholder value.


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Corporate Governance Structure

ITC Ltd.

FMCG-Cigarettes

FMCG-Others

Hotels

Agri Business

Paperboards &

Packaging

Infotech


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FMCG-Cigarettes

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

Capstan, Berkeley, Bristol and Flake

'Best Manufacturer of Cigarettes for the year 2007'


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FMCG-Others

Ashirvad Atta, Kitchens Of India, Mint-o, Sunfeast, Candyman, Bingo,

Superia, Wills LifeStyle, Fiama Di Wills, Expressions, Classmate

Superbrand 2006 - Superbrand Council.


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FMCG-OthersAshirvad Atta is now #1 selling.

Sunfeast Biscuits is ranked #3.

Bingo, launched in August 2007, now enjoys 16% market share.

November 2007 Mint-o overtakes its competitor Chlormint

Classmate brand already the most widely distributed stationary brand in India

Kitchens of India has about 48% market share in India and a huge export potential.

Ready to Eat food Market is estimated to be Rs.700m.

Safety Matches market at Rs. 1250 crores p.a. for 24 billion match boxes which is

targeted by ITCs iKno, Aim, Aim Mega, Aim Metro.

Mangaldeep the only National brand in the country serves the nations 900cr incense

sticks market.


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Cigarettes & Style


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Food


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Personal CarePersonal Care


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Education and StationeryEducation and Stationery


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Agarbattis & Safety MatchesAgarbattis & Safety Matches


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Hotels

ITC Maurya (Delhi), ITC Maratha (Mumbai), ITC Grand Central (Mumbai),

ITC Sonar (Kolkatta), ITC Windsor (Bengaluru),

ITC Kakatiya (Hyderabad), ITC Mughal (Agra).

Bukhara Restaurant named as Best Indian Restaurant in the World.


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Innovation for India Award 2006 for ITC e-Choupal in the

Social Innovations category for business organizations

eChoupal, Agri Exports, Leaf

Tobacco


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Packaging & Paperboards

Packaging & Paperboards and Specialty Paper

Indian Manufacturing Excellence Gold Award 2007 and 2006 to

Unit Bollaram by Frost & Sullivan


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Infotech

ITC Infotech Ltd.

Featured amongst Top 100 Global Outsourcing Companies inthe Leaders category - International Association of

Outsourcing Professionals


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Diversification

Concentric diversification

Conglomerate diversification

Horizontal diversification


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PROS of Diversification

Economies of scale and scope

Operational synergies can be realized.

Spreading the firm's unutilized organizational resources to other areas cancreate value.

Leveraging skills across businesses can create value.

Internal capital market

Cash from some businesses can be used to make profitable investments.

External finance may be more costly due to transaction costs, monitoringcosts, etc.


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Diversifying shareholders portfolios

Individual shareholders may benefit from investing in a diversified

portfolio.

PROS of Diversification cont..


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CONS of Diversification Combining two businesses in a single firm is likely to result in

substantial influence costs.

Resource allocation can be influenced by lobbying.

Costly control systems may be needed that reward managers based ondivision profits and discipline managers by tying their careers tobusiness unit objectives.

Internal capital markets may not work well in practice.

Identifying undervalued firms may not be as easy as it sounds.


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SWOT Analysis

Strength

Strong financial performance

Product portfolio

Distribution network

Environment friendly

Research and Development

Social responsibility

Brand equity


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SWOT Analysis

Weakness

Dependency on Tobacco business

Not present in many importance sector

Unrelated diversification


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SWOT Analysis

Opportunity

Leveraging its brand equity

Right size at right time

Unique reach and distribution network of echopal


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SWOT Analysis

Threats

Competition

Pressure group and Government Policy


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PEST ANALYSIS


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Political Aspects

2001 GOI ban advertising

Increased in Excise duties


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Economical Aspects

A growing portfolio of business

Competitiveness, technology up gradation and

market reach of over 170 SMEs.


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Social Aspects

Direct employment to more than 26,000 people.

E-choupal - worlds largest rural digital infrastructure

benefiting over 4 million farmers.

ITC - womens empowerment, supplementary

education.


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Technological Aspects

Wholly own subsidiary named ITC INFOTECH

Indias fastest growing IT services and solution

providers

Providing services in more than 140 countries


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Agri Business

Hotels

Paperboards &

packing

FMCG -

Cigarettes

FMCG -

foods/others

ITC InfoTech


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BCG Matrix

Star High market growth and high market share Agri Business

Hotels

Paperboards & packing

Cash Cow Low growth, high market share FMCG Cigarettes

Dog low growth, low market share ITC InfoTech

Question marks high growth, low market share FMCG foods/others


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Integration

Forward Integration

Backward Integration

Horizontal Integration


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By

Shanthakumar MBA

KPRSB

ITC Presentation_KPRSB

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