corporate presentation

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ITC LimitedITC LimitedOne of India’s Most Valuable One of India’s Most Valuable

CorporationsCorporations

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Performance Track Record- Snapshot

Rs. Crs1995-96 2006-07Actuals Actuals

GROSS TURNOVER 5115 19505 12.9NET TURNOVER 2536 12369 15.5PBDIT 584 4293 19.9PBIT 536 3930 19.9PBT 452 3927 21.7PAT (before exceptional items) 261 2700 23.7Earnings Per Share (Rs) 0.7 7.2 23.4NETWORTH 1121 10425 22.5CAPITAL EMPLOYED 1886 11125 17.5ROCE % 28.4 35.3

Cagr %

Total Shareholder Returns: 25%

Rs. 1 crore= Rs. 10 million

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Key Financials:2006/07

Rs. Crs.

GTO 19505 20.2

NTO 12369 26.3

PBT 3927 20.1

PAT 2700 18.4

PAT (after Exceptional Items) 2700 20.8

Balance Sheet Size 11125 17.0

Non Cigarettes Business 52% of NTO

(48% LY)

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Segment Revenues: FY 06/07

Rs. Crores

FY FY2006-07 2005-06

1. Segment Revenuea) FMCG - Cigarettes 12834 11330 13.3

- Others 1704 1013 68.2Total FMCG 14538 12343 17.8

b) Hotels 986 784 25.7c) Agri Business 3691 2678 37.8d) Paperboards, Paper & Packaging 2100 1896 10.8

21315 17701 20.4

Less : Inter-segment revenue 1810 1476 22.6

Gross sales / Income from operations 19505 16224 20.2

Goly (%)

Total

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Segment Results: FY 06/07Rs. Crores

FY FY2006-07 2005-06

2. Segment Results

a) FMCG - Cigarettes 3172 2709 17.1- Others (202) (172) (17.6)Total FMCG 2970 2537 17.1

b) Hotels 351 258 35.9c) Agri Business 123 91 35.4d) Paperboards, Paper & Packaging 417 351 18.6

3861 3237 19.3

Less : i) Interest (Net) 3 12 (72.5)

ii) (69) (44) -

Profit Before Tax 3927 3269 20.1

Goly (%)

Other un-allocable expenditure net of un-allocable income

Total

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Segment Capital Employed: FY 06/07

Rs. Crores

FY FY2006-07 2005-06

3. Capital Employed

a) FMCG - Cigarettes* 2019 1464 37.9- Others 940 489 92.2Total FMCG 2959 1953 51.5

b) Hotels 1467 1374 6.8c) Agri Business 1480 1060 39.7d) Paperboards, Paper & Packaging 2559 1908 34.1

8465 6295 34.5

Goly (%)

Total Segment Capital Employed

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ITC - Key Financials – Q1 07/08

Q1 07/08Actuals

Q1 06/07Actuals

Goly %

Gross Turnover External 5178 4634 11.7

Net Turnover External 3325 2850 16.7

PBIT 1128 968 16.6

PBT 1129 967 16.7

PAT 783 652 20.0

Capital Employed 11992 10350 15.9

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Segment Revenues: Q1 07/08

Rs. crores

2007/08 2006-07 GolyActuals Actuals

1. Segment Revenue

a) FMCG - Cigarettes 3441 3159 8.9 - Others 542 360 50.8 Total FMCG 3984 3519 13.2 b) Hotels 221 199 11.3 c) Agri Business 1418 1111 27.6 d) Paperboards, Paper & Packaging 526 501 4.9 Total 6149 5330 15.4 Less : Inter segment revenue 971 696 39.5Gross sales / income from operns. 5178 4634 11.7

Q1

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Segment Results: Q1 07/08

Rs. crores

2007/08 2006-07 Goly2. Segment Results a) FMCG - Cigarettes 939 816 15.1 - Others (45) (58) 23.3 Total FMCG 894 757 18.1 b) Hotels 64 58 11.7 c) Agri Business 54 47 15.6 d) Paperboards, Paper & Packaging 87 105 (17.2) Total 1100 967 13.8 Less : i) Interest (Net) (1) 1 NA ii) Other un-allocable expenditure net of(28) (1) (2286)

Total PBT 1129 967 16.7

Q1

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Segment Capital Employed: Q1 07/08

Rs. crores

2007/08 2006-07 Goly3. Capital Employed a) FMCG - Cigarettes * 2069 1504 37.6 - Others 1547 793 95.0 Total FMCG 3616 2297 57.4 b) Hotels 1512 1379 9.6 c) Agri Business 1441 1233 16.9 d) Paperboards, Paper & Packaging 2700 1960 37.7

Total Segment Capital Employed 9269 6869 34.9

Q1

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One of the 8 Indian Companies to feature in ‘Forbes A-list’ for 2004

Featuring 400 of the World’s ‘best big companies’ with M-cap. > USD 5 bln. & are

rated as the ‘most attractive companies for investors’

Only Indian FMCG Company to feature in Forbes 2000 List

A comprehensive ranking of world’s biggest companies measured by a composite of

sales, profits, assets & market value

Among top in :

Sustained value creation (BT-Stern Stewart survey)

Operating profits

Cash Profits

Ranks No. 10 among Indian listed Private Sector Companies by market cap. (@27/07/07)

No. 1 in FMCG Sector

Rated as one of India’s Most Respected Companies (IMRB-Businessworld Survey

2006)

ITC One of India’s most valuable corporations

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Accolades & Awards (1)

• Golden Peacock Global Award for Corporate Social Responsibility in Emerging

economies for 2005 by World Council for Corporate Governance for the e-choupal

and social & farm forestry initiatives

• 2005 Golden Peacock Award for Excellence in Corporate Governance

• ITC Centre,Gurgaon awarded Platinum Green building rating by US Green

Building Council -Leadership in Energy and Environmental Design

– largest Platinum rated building in the world; 7th such building in the world

• Bhadrachalam paperboard unit :

– adjudged ‘Greenest paper mill in India’ by The Centre for Science &

Environment; won the Greentech Environment Excellence Gold Award

• ‘John Players’ adjudged the ‘Most Admired Shirt Brand of the Year’ at the Lycra®

Images Fashion Awards (LIFA) awards in Jan’06

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Accolades & Awards (2)

• e-Choupal initiative continues to win global recognition:

– Stockholm Challenge Award 2006 in the Economic Development category

which recognises initiatives that leverage Information Technology to

improve living conditions and foster economic growth in all parts of the

world.

– First Indian Company to win the Development Gateway Award 2005 for

the most exemplary contribution in the field of Information &

Communication Technologies (ICT) for development during the last 10 years

– World Business Award 2004: International Chamber of Commerce & the

HRH Prince of Wales & International Business forum

– Harvard University case study

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ITC - Business Portfolio

ITC

FMCG: Cigarettes

Other FMCGHotel

s

Agri BusinessLeaf Tobacco

Agri Commodities

Paperboard

Paper &Packaging

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Strategy of Organisation to manage diversity of Portfolio

Formal 3-tiered governance structure: Board of Directors :

Comprising executive (4) and non-executive directors (8) Strategic supervision

Corporate Management Committee : Comprising executive directors and senior managers Strategic management

Divisional Chief Executive & Divisional Management Committee : Executive management

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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

Corporate Strategies

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FMCG - Cigarettes

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ITC’s Cigarettes BusinessITC’s Cigarettes Business

Market leadership

Powerful brands across segments

Leadership in all segments - geographic & price

Extensive FMCG distribution network

Direct servicing of 1,00,000 markets & 2 million retail outlets

World-class state-of-the-art technology and products

Investment - Rs.10 billion in six years

Exciting long term growth potential

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Cigarettes: Growth potential

Cigarettes account for only 15% of tobacco consumed in India

unlike world pattern of 85% due to prolonged punitive taxation

Cigarettes (15% of tobacco consumption) contribute nearly 85% of

Revenue to the Exchequer from tobacco sector

Of the 58% of adult Indian males who consume tobacco, barely

15% can afford cigarettes

Biri : Cigarettes ratio = 10 : 1

Annual per capita adult cigarette consumption in India is appx. one

tenth world average : 141

Future growth depends on relative rates of growth of per capita

income and moderation in taxes

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

Per Capita Adult C igarette Consumption (Sticks)

16621753

561 488

141

1190

USA China Pakistan Nepal India W orld Avg.

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Hotels & TourismHotels & Tourism

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Hotels & Tourism industryHotels & Tourism industry

Foreign arrivals into India: 4.4 million appx. Vs. 35 million in China

• The two nations were on par 2 decades ago at 750,000 arrivals

Today, Beijing alone has as many hotel rooms as the whole of India

India’s luxury rooms availability lower than even smaller East Asian

countries

0

10000

20000

30000

40000

50000

60000

70000

80000

HongKong Singapore India

Source: Compendium of Tourism statistics, WTO

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Indian hotel industryIndian hotel industry

Current supply – appx. 110,000 rooms of which 5 Star category

accounts for appx. 30%

India needs an additional 50,000 rooms in the next 2/3 years to service

projected tourist arrivals

Present mismatch between supply and demand expected to persist over

the short term

As infrastructure for trade & commerce improves - growing potential

for leisure tourism

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Economic impact of the Travel & Tourism Sector

% Share of World Travel &Tourism

Demand^

Travel &Tourism Economy as % of

Total GDP

Travel &Tourism Economy Jobs as % of Total

Employment

WORLD 100.0 10.4 8.3China 6.2 12.2 9.4India 0.9 5.4 5.5Malaysia 0.5 13.3 11.4Singapore 0.5 10.7 8.8Thailand 0.7 14.9 11.3

^ Travel &Tourism Demand => Economic activitySource: The 2007 Travel & Tourism Economic Research of the World Travel &Tourism Council

Full potential yet to be harnessed in the Indian context

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ITC’s Hotel BusinessITC’s Hotel Business ITC-Welcomgroup : a leading hotel chain in India

• Strategy to establish presence in key business locations to complete the chain

achieved in end 2004

• Over 5200 rooms under 4 distinct brands

Capacity expansion underway at Bangalore and Chennai; plans for other locations

also being progressed

Fastest growing hotel chain with highest operating efficiency (PBDIT/Net Income

@ 45%) amongst the 3 leading chains

Leverages unique service proposition and international alliance with Starwood

Hotels & Resorts

• ‘Luxury Collection’ / ‘Sheraton’

Category Brand PositioningLuxury ITC Hotel: Luxury Collection "Mansions of Luxury"Upper upscale WelcomHotel: Sheraton "Passion for Quality"Upscale - mid-scale Fortune Hotels "Promise of True Value"Heritage WelcomHeritage "Unique Experiences"

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ITC’s Hotel Business

• Manages 18 full service mid-market properties (2650 rooms)

under the Fortune Hotels brand

– 100% subsidiary company : Fortune Park Hotels Ltd.

• Also operates 51 properties under the ‘WelcomHeritage’

brand

– Maharaja Heritage Resorts Ltd. 50% JV with Marudhar

Hotels (P) Ltd.

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Paperboards, PaperPaperboards, Paper&&

PackagingPackaging

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Indian paperboard marketIndian paperboard market

Annual paperboard demand – appx. 1.1 million tonnes

Fragmented capacity & obsolete technology

Low per capita usage at around 6 kgs p.a. (world average – over 50

kgs p.a.)

Indian paperboard market growing at 7% p.a.

Value Added Coated board - the fastest growing segment (20% p.a.)

in India driven by the growing sophistication of the consumer

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Paperboard Demand Projections - Asia

Asian region demand (excluding Japan) growing by 0.5

million tonnes per annum

Significant export opportunities for high quality Indian

manufacturers

• ITC paperboards exports - Rs. 2 billion appx.

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ITC’s Paperboards Business

Market leader in growth segment - value added coated boards

World-class contemporary technology

• Elemental Chlorine Free (ECF) Pulp Mill fully operational – only one

of its kind in India meeting world-class environmental standards

Internationally competitive quality and cost

Social farm forestry in mill command area to improve access to cost

effective fibre & to attain self-sufficiency

• Biotech research based high yielding Clones – effectiveness tested in

nearly 68,000 hectares

Fully integrated operations with in-house pulping capacity at appx.

1.10 lac MT

• Expansion programme underway; source of sustainable competitive

advantage

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ITC’s Paperboards & Packaging businessesITC’s Paperboards & Packaging businesses

Capacity expansion projects underway

• 100000 TPA paper machine (to support Stationery business growth plans)

• 90000 TPA paperboards machine

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

quality printed packaging

• Leading supplier to Indian FMCG segment

• Provides superior packaging solutions to the cigarettes and new FMCG

businesses

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Agri BusinessesAgri Businesses- - Leaf TobaccoLeaf Tobacco

- Agri Commodities- Agri Commodities

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Indian Leaf Tobacco industryIndian Leaf Tobacco industry

India – the third largest producer of tobacco

However, India’s share is only 7% in world tobacco trade

Upgradation of tobacco consumption from other formats to cigarettes

will enable:• growing domestic base• larger opportunities for value added exports

ITC – India’s largest buyer, processor, consumer & exporter of

cigarette tobaccos

Pioneering cultivation of flavourful Flue-cured, superior Burley and

Oriental tobaccos in India

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ITC’s Agri Commodity Business

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

Coffee etc.

Unique CRM programme in commodity exports

Leveraging IT for the transformational ‘e-Choupal’ initiative

Rural India’s largest Internet-based intervention

Over 38000 villages linked through around 6400 e-Choupals servicing

over 3.5 million farmers

Distinctive sourcing capability for ITC’s Foods business

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e-Choupal - Recognition

• Stockholm Challenge Award 2006 – Economic Development Category

• World Business Award – ICC-UNDP

• Enterprise Business Transformation Award -Wharton Infosys

• Harvard Business School – case study

• Showcased at ICT4D*, Geneva – UN

* Information and Communication Technologies for Development

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e-choupal:Strategic Thruste-choupal:Strategic Thrust

Procurement: cost & quality optimisation

• strategic sourcing support to the Foods business (support creation of verticals in wheat, soya, corn, potato etc.)

• cost-effective sourcing for exports/domestic external business

Rural Distribution

• ‘last mile connectivity’: 100 partnering companies

• diverse range of goods/services : FMCG, consumer durables,agri-inputs, paid extension services etc.

Financial Services

• insurance (focus: weather)

• credit (focus: Kisan credit card scheme)

Rural retail• 18 Choupal Saagars operational

• Rapid expansion planned in identified rural markets and Tier 3 & 4 towns (pop 2.5 to 10 lacs)

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Future Growth & Value Capture

New FMCG Initiatives

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Strategic Rationale

Blend multiple competencies residing within the ITC Group to create

new avenues of growth

Best fit between internal capabilities and emerging market

opportunities

Each segment enhances the depth and width of ITC’s FMCG

distribution capability

Business model retains critical elements of value chains within ITC with

other elements outsourced

• Contributing to the competitiveness of SMEs

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FMCG Business InitiativesBranded Packaged Foods

Leverages: Unique Agri sourcing skills ITC Welcomgroup’s specialist cuisine & bakery knowledge FMCG distribution synergies ITC R&D Centre, Bangalore

4 chosen categories: Staples

– Aashirvaad Atta, Salt, Spices Biscuits

– Sunfeast Salty Snacks

– Potato chips,Bridge products : Bingo! Confectionery

– Candyman, Mint-o Ready to Eat

– Kitchens of India, Aashirvaad ReadyMeals, Aashirvaad Instant Mix, Sunfeast Pasta

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FMCG Business InitiativesBranded Packaged Foods

• Aashirvaad Atta:

– Current market leader amongst national branded players; leverages the e-

choupal network for cost-quality optimisation and region specific

offerings

• Sunfeast Biscuits:

– Differentiated & innovative products; continues to build consumer

franchise; distributed & outsourced supply chain being ramped up

• Number of innovative products in the pipeline leveraging the capabilities

of the ITC R&D Centre

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FMCG Business InitiativesLifestyle Retailing

Leverages trade mark and services expertise of hotels

Relaxed wear market growth > 25% p.a

Upmarket product range available in exclusive Wills Lifestyle stores

and multi-branded outlets/ large format retail stores across the country

State-of-the-art Master Facility aids speed of execution

Outsourced JIT plant for ‘quick response’ manufacturing

Product and brand range being expanded

• Premium segment comprising the ‘Classic’ range of formal wear, ‘Wills

Sport’ relaxed wear and ‘Wills Clublife’ evening wear

• Strong distribution network in place for the mid-market brand ‘John

Players’

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FMCG Business InitiativesGreetings, Gifting & Stationery

Leverages print and paper know-how

An emerging market in India - growth driven by increasing cross-

cultural exposure

ITC’s ‘Expressions’ range commenced with greeting cards; now

widened to include stationery & gifting

Robust distribution network in place to scale up the Stationery business

significantly

• ‘Classmate’ brand already the most widely distributed brand in India

Serves to expand the width of ITC’s FMCG distribution capability with

negligible incremental investment

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FMCG Business InitiativesSafety Matches

Current industry consumer spend estimated at Rs. 1250 crores p.a. for 24

billion match boxes

Fragmented supply base arising from policy of reservation for small scale

industry

ITC markets its brands with value added products across each price

point

• Support SMEs with complementary marketing strengths

‘AIM’ – India’s largest selling Safety Matches brand

Successful acquisition of WIMCO Ltd. by Russell Credit (shareholding as

at 31/03/07: 94.25%)

• Key brands: Homelites, Ship, Cheetah Fight etc.

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FMCG Business InitiativesIncense sticks (Agarbattis)

Current industry consumer spend estimated at over Rs. 900 crores p.a.

Fragmented supply base arising from policy of reservation for small

scale industry

ITC markets its brands with value added products across each price

point

Support cottage sector with complementary marketing strengths

‘Mangaldeep’ : the only National brand in the country

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FMCG business initiatives…….

Concurrently, ITC’s IT subsidiary assists in web-enabling business

processes

CRM initiatives

ERP transaction processing systems

SCM including the e-choupal capability

… hosted on ITC’s Virtual Private Network

ITC awarded the best IT user in FMCG category by Nasscom

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Future Positioning of ITC A leading FMCG player in India

FARMERS

MARKETS

Cigarette Trade Marketing capability

Branded

Foods

Expanded FMCG distribution capability

e-choupal rural two-way fulfillment capability

A basis for strategic partnerships with other FMCG brand owners

VPN providing SCM, ERP & CRM capability

Lifestyle

retailing

Greeting

cards/statione

ry

Matches &

Agarbattis

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Forward-looking StatementsStatements in this presentation describing the Company’s

objectives, future prospects, estimates, expectations etc. may be “forward looking statements” within the meaning of applicable

securities laws and regulations. Investors are cautioned that “forward looking statements” are based on certain assumptions of

future events over which the Company exercises no control. Therefore there can be no guarantee as to their accuracy. These

statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be projected or implied by these forward looking

statements. Such risks and uncertainties include, but are not limited to: growth, competition, acquisitions, domestic and international

economic conditions affecting demand, supply and price conditions in the various businesses in the Company’s portfolio, changes in Government regulations, tax regimes and other statutes, and the

ability to attract and retain high quality human resource.