ITC history

ITC Ltd.

SOHAN SHINTRE314639_DIV-F

1ITC Ltd. _314639_Sohan

ITC Ltd. _314639_Sohan 2

Objective of the study

• To know the History & evolution of ITC• VISION & MISSION of ITC• To have a glimpse of the Product portfolio of ITC • To study the challenges/Competition faced by

ITC• To contemplate various strategies adopted by ITC• To examine various Business models & their

implications on ITCs position in the market• Recommendations


History & Evolution of ITC

• Incorporated on 24 August,1910 as Imperial Tobacco company India Ltd.

• As the company’s ownership progressively Indianized name changed to Indian Tobacco company Ltd.[1970] & then to I.T.C. Ltd.[1974]

• The company is now rechristened to ITC Ltd.[2001] as the company diversified into FMCG segments other than Cigarettes such as paperboard , packaging, Hotels, Information Technology & Agricultural exports

• Presently ITC is headed by Yogesh Chander Deveshwar



• 1925: Packaging and Printing: Backward Integration

• 1975: Entry into the Hospitality Sector - A 'Welcom' Move

• 1979: Paperboards & Specialty Papers - Development of a Backward Area

• 1985: Nepal Subsidiary - First Steps beyond National Borders



• 1990: Paperboards & Specialty Papers • 1990: Agri. Business - Strengthening Farmer Linkages• 2000: Lifestyle Retailing• 2000: Information Technology - Business Friendly

Solutions• 2001: Branded Packaged Foods• 2002: Agarbattis & Safety Matches• 2002: Education & Stationery Products• 2005: Personal Care Products• 2010: Expanding the Tobacco Portfolio


• ITC is one of India’s foremost private sector with market capitalization of over US $45Bn and turnover of over US $57Bn

• ITC as robust portfolio of Fast Moving Consumer Goods (FMCG), Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, and Information Technology.

• The competitiveness of ITC’s diverse businesses rest on the strong foundations of institutional strengths derived from its deep consumer insights, cutting-edge Research & Development, differentiated product development capacity, brand-building capability, world-class manufacturing infrastructure, extensive rural linkages, efficient trade marketing and distribution network and dedicated human resources.


• The Company's 'e-Choupal' initiative has enabled Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet.


Vision & Mission

• Vision : Sustain ITC’s position as India’s most valuable corporations through world class performance, creating growing value for the Indian economy and the company’s stake holders

• Mission: To enhance the wealth generating capability of an enterprise in a globalizing superior and sustainable stakeholder value


Vital brands of ITC• Cigarettes: Luxury segment :India king,Benson & hedges,Insignia Middle level segment: Classic,Gold flake kings, Navy cut Economic segment: Gold flake,Flake excel,Capstun,Hero• Branded food: Aashirvaad, Sunfeast, Dark Fantasy, Delishus, Bingo!, Yippee!,

Candyman, mint-o, Kitchens of India

• Personal care products: Essenza Di Wills, Fiama Di Wills, Vivel, Vivel Cell Renew, Engage and

Superia

• Education & stationary: Classmate and Paperkraft


• Lifestyle Apparel: Wills Lifestyle John Players

• Agarbatti: Mangaldeep

• Safety matches: AIM

Vital brands of ITC


Challenges/ Competitors for ITC• HOTEL industry: TAJ group of hotels OBEROI group of hotels

• Cigarette industry: Goldfrey Phillips India [GPI] : FOUR SQUARE, RED & WHITE,CAVENDERS

Vazir Sultan Tobacco [VST] : CHARMINAR, CHARMS etc. National Tobacco Company [NTC] Golden Tobacco Company [GTC]

• FMCG industry: HUL BRITANNIA PARLE NESTLE


• Tobacco Sector at a glance• One of the major profit earning /profitable

industries in the present market• Industry is worth more than INR 60000 crores

as per the census data collected in year 2010 • By 2015 CAGR[Compound annual growth

rate]is expected to be around 7%• Present CAGR – 6.5%

ETOP for Tobacco Industry


• Education level & proportion of Tobacco users [%] :

• Secondary education - 21%• Primary education – 33%• Less than primary education-45%• No formal schooling/education-44%



• Role of Government in Tobacco sector:• Ban on FDI in the production and manufacturing of

cigarettes • The cigarette Act 1975 made it a statutory health

warning on all cigarettes packets mandatory• 1980 Central govt. imposed restrictions on the trade

of Tobacco• 1990 The central govt. issued a notice saying it as a

directive against smoking by prohibiting smoking in public places



• Environmental opportunities:• India is one of the biggest producer of Tobacco• Export potential of country• India amounts to around 6% of international

trade and its rank is 5th after that of Brazil, USA, Turkey& Zimbabwe

• Extensive research & development in the alternative use of tobacco based products in the view of anti-smoking initiative



• Political threats: • Levied taxes and constraints on tobacco production• Challenging environment with applied regulations• Economic factors: • India is among the top 3 tobacco producers of the world• Top 10 exporters of the world• About 2 to 2.5 million people rely on the livelihood on

this sector• About INR15000 million value is added to total net value

of all enterprises



• Social factors:• Growing public awareness and concern against

consumption of tobacco• Govt. restrictions has made promotion of tobacco

products and brands impossible• Technological factors:• Logistic support services • Software investments such as GPS monitoring, online

methods of electronic clearings etc.• Technical support for inventory control



SWOT

• Strengths:Distribution networkBrandCore business valuesVery few local competitors ITC’s master chefs from hotel chain


• Weaknesses: Over dependence on farming of Tobacco Brand association with Tobacco is the barrier for companies

image in other FMCG areas Unrelated Diversification Negative connection of Tobacco with poor health &

premature death ITC’s move into FMCG is being subsidized by its Tobacco

operations Still has to consolidate its place in Cigar market which is

largely dominated by Goldfrey Phillips


• Opportunities:Untapped rural marketsE-choupal ITC’s is entering into new & emerging sectors

including Information technology & supporting business solutions


• Threats:Increased awareness among the consumers

about the health hazards of Cigarette consumption

Increased taxes and regulations on Cigarette mfg.

Competition with Domestic & international rivals


Forces affecting ITC’s market

• New Entrants: Domestic producers of tobacco with cheap or low rate offerings

• Bargaining power Buyers: Oligopoly market situation

• Bargaining power of suppliers: Segments, targeting, fragmentation, consolidation and integration

• Switching costs to low price offerings


• Threat of substitutes:• From buyer to buyer it varies, few are brand

loyal others are likely to switch to substitutes• Competitive rivalry:• New innovative products and offerings from

the rivals

Forces affecting ITC’s market


BCG matrix for ITC

• INDUSTRY:FMCG • SBU’s of ITC• 1] Cigarette• 2] Paper & packaging boards• 3] Hotels• 4]Agri.Business• 5]FMCG others[ Food, Lifestyle, Apparel,

Greetings , Gifts etc.]


BCG matrix for ITC

HOTELSPAPERS & PACKAGINGAGRI.

FMCG CIIGARETTES INFORMATION TECHNOLOGY

FMCG OTHERS

HIGH

HIG

H

LOW

LOW

MS %

GR %


• Star: HOTELS : MS[ 90 HOTELS] - High GR [22.7%] – HighPAPER & PACKAGING : MS [1ST in India]-High GR [ 17.2%]- HighAgri. Business: MS [ 3rd largest exporter]- High GR [ 34.3%]- High

BCG matrix for ITC


• Cash Cows: Cigarette : MS [ 70%]-High GR [ 10.9%] – Low• Dog: InfoTech : MS –Low GR- Low• ? : FMCG others: MS [ 16%]- Low GR [60.2%]- High

BCG matrix for ITC


Competitive Advantage

In order to attract customers ,withstand competitive pressure & strengthen company’s position in the market , ITC adopts:

Overall low cost leadership strategy Focused low cost Broad differentiation [ Ready to eat, staples, Wafers] Focused differentiation [ Ready to eat food, Biscuits] Best cost providers Distribution networks Extensive advertising [ Biscuits, confectionary, wafers]


Strategic intent

• To secure long term growth by synergizing and blending the diverse pool of competencies

• To exploit emerging opportunities in FMCG sector

• Focus on Quality, Innovation & differentiation backed up by consumer insight , World class R&D, and efficient and responsive supply chain


Strategic intent

• Companies institutional strength-Deep understanding of Indian consumers , strong trademark , deep & wide distribution network, Agri-sourcing skills , packaging know how and cuisine expertise


Strategic intent

• Last few years ITC has rapidly scaled up its presence in its newer FMCG business comprising branded packaged foods , Lifestyle retailing , education , stationary products , personal care products with segment revenue growing at 38% CAGR


Examples of successful ITC products

• Aashirvad : India’s most popular atta with 50% market share

• Mint o-Mint o fresh is the India’s largest cough lozenge brand

• Bingo-A new introduction of finger snacks• Kitchens of India-Pre-prepared food designed

by ITC’s master chefs • Sunfeast- Biscuit brand & sub brand on some

pasta products


RECOMMENDATIONS:

• ITC in order to have a hold over the FMCG market needs to invest more in building up its presence in Lifestyle , Apparel , Gifts , Greetings, by aggressive selling and marketing

• Information technolgy is one sector where ITC lags behind its competitors with a huge margin, which over a period may attract a brand switch from its customers.ITC may consider liquidating its IT operations and pump more money into development of FMCG


THANK YOU

Documents

ITC history