Imperial Tobacco Company of

India Limited (ITC).

Presented by
ROLL NO.06
ASHWIN B.G

ITC. Touching your life. Everyday

 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'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.
•


• ITC. WORKING FOR YOU.

WORKING FOR INDIA.
•
•
•
ITC. Touching your life. Everyday
 POSITIONING OF ITC

OU R
N G Y Y .
C H I D A
TO U E R Y
• E E V
LI F

ITC. Touching your life. Everyday

PRODUCT PROFILE

ITC. Touching your life. Everyday

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:-
 COMPANY HUB FACTORY


Carried and forward agent



Wholesale dealer

small Wholesale dealer



Retailer

consumer

ITC. WORKING FOR YOU. WORKING

FOR INDIA. ITC. Touching your life. Everyday
 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

PEST ANALYSIS

ITC. Touching your life. Everyday

 SWOT ANALYSIS
Strength Weakness
Cigarette market is 22,000 cr and ITC has Dependence on tobacco revenues

lion’s share in it Negative Connection of Tobacco

Strong brand recognition and product

portfolio
Distribution network

Management

Opportunity Threat
Low per capita consumption Competition both Domestic & International

Of personal care products Increasing Tax on cigarettes

Rural Market Excise duty on unfiltered cigarettes less

E-Choupal than 60mm in length was increased 387%

 Filter cigarette segment of less than 60mm last year
size Hike was 142% for those between 61mm

and 70mm long.

 Regulatory restrictions on cigarettes

Ban on smoking


ITC. Touching your life. Everyday

 CONFRONTATION
•
NAVY CUT,CLASSIC,INSIGNIA,INDIA KINGS,CAPSTEN,GOLD

FLAKE,SISSORS,SILK CUT,BRISTOL,BERKELEY


ITC. Touching your life. Everyday

 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
 Per Capita Adult Cigarette Consumption
(Sticks)

1753
1662

1190

561
488

141

USA China Pakistan Nepal India World Avg.

Source : Based on Cigarette consumption data(2003) from

“World Cigarettes”,ERC Group plc.

ITC. Touching your life. Everyday 18

 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

DISTRIBUTION NETWORK(Tobacco Div.)

Bangalore Calcutta Saharanpur Munger

Factories (4)

GODOWNS
GODOWNS BRANCHES
BRANCHES
(19)
(19) (19)
(19)

Information
WHOLESALE
WHOLESALE DISTRIBUTORS
DISTRIBUTORS Goods
(60
(60 PER
PERBRANCH)
BRANCH)

RETAILERS
RETAILERS SECONDARY
SECONDARY
WHOLESALERS
WHOLESALERS

ITC. Touching your life. Everyday

 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
Ø Demand Estimation – collaborative forecasting( Sales
force with dealers)
Ø Forecast based on last month sales
Ø Production plan made according to forecast
Ø Delivery to C & F agents within 7 days
Ø CFAs deliver goods to dealers on the basis of the branch
office route plan
Ø Factory CFAs- Trucks
Ø CFAs Dealers – Small Vehicles


ITC. Touching your life. Everyday

FLOW FOR E-CHOPAL
ITC e-Choupal : An Introduction, Stake
1 holder Analysis

Comparison of status of Supply Chain

2 before and after ITC e-Choupal

Critical Analysis, and Comparison with

3 HKB

4 Future Scope

Company Logo
 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

Ø Farm linkages in 14 states covering Soya, Wheat, Marine

products, Coffee etc. Focus on value added agri commodities
Ø Unique CRM programme in commodity exports
Ø 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
Ø Distinctive sourcing capability for ITC’s Foods business

THE PREDICAMENT OF INDIAN
FARMERS
Low Risk Appetite

Low Margins Low Investment

Caught in a vicious
cycle of
underdevelopment
Low Value
Low Productivity
Addition

Weak Market
Orientation
 ITC’S SUPPLY CHAIN OF SOYA BEAN
BEFORE E-CHOUPAL INITIATIVE


Company Logo
 SUPPLY CHAIN FOR E-CHOPAL

Agri -Input Dealer/

Companies Stockiest

Company Logo
Why ITC thought of e-Choupal

–
–


Company Logo
 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
Company Logo
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


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

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

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

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

Company Logo
 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

Company Logo
A win-win Deal

Company Logo
 SYNERGIES FOR ITC

q Generation of Goodwill & positive public opinion

q Better supply chain for ITC’s Food & Agri Businesses
Costs, Quality, Traceability
q Access to the Underserved Rural Markets
Through a Virtuous Cycle created by “Larger Incomes”,
and founded on “Trust” that is built
q New ITES Business Opportunities
Health, Education, Entertainment, eGovernance

Company Logo
 VPN providing SCM, ERP & CRM capability

F M
A e-choupal rural two-way fulfillment A
R capability R
M K
E Cigarette Trade Marketing capability E
R T
Expanded FMCG distribution capability S
S

A basis for strategic partnerships with other FMCG brand

Company Logo
owners
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 Gain access to global markets through ITC and commission to


(Kachha & Pakka compensate some of the loss revenue

Adatiyas)
 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
Company Logo
 Hariyali Kisaan Bazaar
Other companies

Loan for pass

through to
farmers Extension
service

Repayment of
loan with
interest Produce
procurement
 Comparison with Haryali Kisaan Bazar

E-choupal Haryali Kisaan Bazaar

Main objective Procurement Rural Retail

Benefit to the computer application to provide provide better method of cultivation by

farmers market information trained agronomist

Synergies Synergies with products which Synergies with what DSCL is selling(inputs
ITC is manufacturing to agriculture plus other services

Economies of 25-30 km area coverage 20-25 km area coverage

scale

Procurement near small town Strategically placed near petrol pump

centre mainly
 e-Choupal 3.0 .
The Deepening
q NEW BUSINESSES:
1) Rural jobs and employability

2) Personalised agri services.

q MORE INTERACTION: Through Choupal Saagars and

Haats and via mobile phones


q NEW TECHNOLOGY: Use of especially enabled mobile

phones, analytics, new partner
•

ITC. Touching your life. Everyday

e-Choupal 2.0

Company 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. WORKING FOR YOU. WORKING FOR INDIA.


ITC. Touching your life. Everyday

THINK BEFORE


SMOKING…….
 THANK YOU.SMOKING IS
INJURIOUS TO
HEALTH ?????
