Download - 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.