ITC
Diversification Strategy
Topics to be covered
• Company Brief
• Time Line
• Business Portfolio of ITC
• SWOT analysis
• BCG matrix
• Strategies
Company Brief
• ITC is one of India's foremost private sector
companies .
• Market capitalisation of nearly US $ 18 billion
• Turnover of over US $ 5.1 Billion
• One of the 8 Indian Companies to feature in
‘Forbes A-list’ for 2004 .
• Only Indian FMCG Company to feature in
Forbes 2000 List .
• Ranks No. 9 among Indian listed Private Sector
Companies by market cap. (@ 31/03/08)
• No. 1 in FMCG Sector.
Time Line Of ITC
1910 ITCL (Imperial ) established in Kolkatta
1925 ITC ‘s Packaging and printing business was set
1953 Imperial converted into a public limited company
1971 It set up a marine product export Division
1974 Company Changed its name to ITC Ltd
1975 ILTC became a part of ITC
1975 launched Hotel business
1986 Established ITC Hotels as a separate division
1990 ITC set up the Agri Business Division
1994 Commissioned Mc .Kinsey to study their business
2000 e-Choupal initiative in Bhopal with Soya farmers
2000 ITC Launched ‘Expressions’
2000 ITC Launched ‘Wills Lifestyle’
2000 ITC – ITC Infotech
2001 ITC formed the food division.
2002 ITC entered the safety match business
2005 ITC introduced Essenza Di Wills
Business Mix of ITC Ltd.
FMCG
• Cigarettes
• Foods
• Lifestyle Retailing
• Greeting, Gifting & Stationery
• FMCG – Others (Safety Matches &Agarbattis)
Paperboards and Packaging
• Paperboards & Specialty Papers
• Packaging
Business Mix of ITC Ltd.
Agri-Exports
Agri - Business•
• e-Choupal
Hotels
Group Companies
• ITC Infotech
SWOT Analysis
Strength Weakness
•Brand •Unrelated diversification
•Management
Opportunity Threats
•Rural market •Increasing tax in
•E-choupal Cigarettes
•Health hazard
The BCG Matrix for ITC Ltd.
Stars ?
•Hotels •FMCG- Others
•Paperboards/
Packaging.
•Agri business.
Cows Dogs
•FMCG-Cigarettes
ITC’s corporate strategies
• Create multiple drivers of growth by developing
a portfolio of world class businesses that best
matches organizational capability with
opportunities in domestic and export markets.
• Continue to focus on the chosen portfolio of
FMCG, Hotels, Paper, Paperboards &
Packaging, Agri Business and Information
Technology. .
• Enhance the competitive power of the portfolio
through synergies derived by blending the
diverse skills and capabilities residing in ITC’s
various businesses.
Thank You
Special Thanks to Prof. Rakesh Gupta for
giving us such an enormous project
Anoop
Anagha
Madhur
Mansi
Meenakshi
Suparna
FMCG - Cigarettes
ITC’s Cigarettes Business
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
Cigarettes: Growth potential
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
P er C apita A dult C igarette C onsum ption
(S ticks)
1753
1 662
11 90
561
48 8
141
USA C hin a P akistan N epal India W orld A vg.
Source : Based on Cigarette consumption data(2003) from
“World Cigarettes”,ERC Group plc.
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ITC Distribution Network
DISTRIBUTION NETWORK(Tobacco Div.)
Bangalore Calcutta Saharanpur Munger
Factories (4)
GODOWNS BRANCHES
(18) (18)
Information
WHOLESALE DISTRIBUTORS Goods
(60 PER BRANCH)
RETAILERS SECONDARY
WHOLESALERS
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ITC FOOD
“ Branded food business grew
over 57 % than previous year”
(Sustanibility report ITC 2008)
• In 2001 ITC Formed the food Division
• Divided into four main categories
• Ready – to – Eat gourmet.
• Confectionary & chocolates
• Biscuits & cookies.
• Branded Staples.
• Ready to eat Gourment
• Keeping alive long forgotten culinary
traditions ITC introduced Kitchen of indiain
Aug 2001
• The RTE market is approximately
Rs 600-700 million( ITC Food CEO Interview in press
realeses)
• Aashirwad Staples
Sunfeast Buscuits and cookies
range
BINGO was launched in march 2007 it
has captured 16% of market share .
Making it second largest in the market
(4P ‘s magazine 2007 )
Confectionary market :- currently into two brands Minto-O
and Candyman
ITC Food NOW
• With one year of launch BINGO has
attained double digits market share.
• The confectonaray category sales revenue
have increased by 40% than last year
• RTE is well established over 4500 stores
in US market .
( Sustanability report ITC 2008)
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PERSONAL CARE
MR. Sandeep kaul (CEO)
perfume
• Essenza di wills in mid 2005 (french)
• Inizio femme (women)
• Inizio homme (men)
ADDITION
Essenza di wills AQUA Range for men
(after shave lotion, deodorant. hair and body
shampoo & bathing bar)
Shampoos
1)Fiama di wills
shampoos
conditioner
shower gels
soap (sep 2007)
2) Vivel di wills
Soap
shampoo,
3) Superia
Soap
shampoo
WILLS LIFE STYLE
• In 2000,ITC Extended Wills to fashion retailing
with an investment of Rs. 2.5 billion and opened
first Wills Lifestyle store in Dec. 2000 in New
Delhi to retail Wills Sport brand.
• LRBD tied up with American Design Intelligence
Group (ADIG) A San Francisco based
consultancy
• The LRBD expected to make a turnover of
Rs.450 million for financial year March
31,2003.ITC also plans to take Wills Sport
overseas by setting up in various
countries.
• The move is aimed at wooing the young
upwardly mobile segment, which is
expected to bring 30 per cent growth for
the company.
• From 50 stores at present, the company
plans to have 80 stores by the year-end.
(July 23,08)E.T
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EDUCATION & STATIONERY
ITC made its entry into the stationery
business in 2002 with its premium range of
notebooks, followed in the year 2003 with
the more popular range to augment its
offering.
• Manufacturer of India's first environment
friendly Elemental Chlorine Free (ECF)
pulp, paper and paperboard.
• Knowledge of image processing, printing
& conversion garnered from its
Packaging & Printing Business.
• Brand Building & Trade Marketing &
Distribution strengths resident in its
FMCG Business.
• The Paperkraft range consists of premium
stationery with a wide variety for
executives to choose from
• Classmate - India's largest National
brand, reaching 50,000 outlets across the
country, has over 300 variants in its range
•
PAPER BORDS AND SPECIALITY
PAPERS
• ITC’s Paperboards and Specialty Papers
Division is India’s largest and most
technologically advanced paper and
paperboards business. ITC caters to a
wide spectrum of packaging, graphic,
communication, writing, printing and
specialty paper requirements through its
four world-class mills in India.
• Internet and SMS delivering made paper
industry( shrinking industry )( Rs 300 crore
in 2000, Rs 100 crore now)
• A Rs 3,000-crore market, only 15 per cent
of it lies with the organised sector. While
ITC claims it has the largest share of the
market at 8 per cent (as against Navneet
Publications’ 5 per cent and Ballarpur
Industries 2 per cent).
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FMCG-Other
Helping in growth of SMEs
• Safety Matches: ITC's brands of safety matches include
iKno, Mangaldeep, VaxLit, Delite and Aim. The Aim is
the largest selling brand of Safety Matches in India. ITC
also exports premium brands to markets such as
Europe, Africa and the USA.
• Aggarbattis: ITC has launched Mangaldeep brand of
Aggarbattis with a wide range of fragrances like Rose,
Jasmine, Bouquet, Sandalwood, Madhur, Durbar,
Tarangini, Anushri, Ananth and Mogra. Mangaldeep is
also being exported to USA, UAE, Bahrain, Nepal,
Singapore, Malaysia, Oman and South Africa.
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Paperboards, Paper
&
Packaging
Indian 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 9% p.a.
Value Added Coated board - the fastest growing segment (20%
p.a.) in India driven by the growing sophistication of the
consumer
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.
ITC’s Paperboards Business
Market leader in growth segment - value added coated boards
World-class contemporary technology
• Ozone bleached Pulp Mill operations commenced – 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 80,000 hectares
Fully integrated operations with in-house pulping capacity at
appx. 2.20 lac MT
• Expansion completed; source of sustainable competitive
advantage
ITC’s Paperboards & Packaging
businesses
Capacity expansion projects underway
• 120000 TPA Pulp Mill – commissioning commenced; being
stabilised
• 100000 TPA paper machine (to support Stationery business growth
plans) – trial commissioning commenced
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 Businesses
- Leaf Tobacco
- Agri Commodities
ITC’s Agri Commodity Business
Farm linkages in 14 states covering Soya, Wheat, Rice, Marine
products, Coffee etc.
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
e-choupal:Strategic Thrust
Procurement: cost & quality optimisation
Rural Distribution
Rural retail
• 23 Choupal Saagars operational
• Rapid expansion planned in identified rural markets and
Tier 2, 3 & 4 towns
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Hotels & Tourism
Indian 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
ITC’s Hotel Business
ITC-Welcomgroup : a leading hotel chain in India
• Established presence in key business locations
• Over 6000 rooms under 4 distinct brands
Category Brand Positioning
Luxury 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"
Capacity expansion underway at Bangalore and
Chennai; plans for other locations also being progressed
ITC’s Hotel Business
• Manages 24 full service mid-market properties (1700 +
rooms ) under the Fortune Hotels brand
– 100% subsidiary company : Fortune Park Hotels Ltd.
• Also operates 52 properties under the
‘WelcomHeritage’ brand
– Maharaja Heritage Resorts Ltd. 50% JV with Marudhar
Hotels (P) Ltd.
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Fact File - ITC Infotech
• Incorporated in October, 2000
• 100% subsidiary of ITC
Limited
• 100% owned subsidiaries in
US & UK
• 1,500+ software professionals
• 2,600+ Tech Support
professionals
• 1 Million Sq. Ft. owned
infrastructure
Global Footprints
Moscow
Boston, MA Milton Keynes
Chicago, IL
Hamburg
Beijing
Princeton, NJ Bucharest Seoul
Prague Islamabad
San Jose, CA
Nashville,TN Tokyo
Phoenix, AZ Calcutta
Cairo
Adis Ababa
Mexico Kuala Lumpur
Lagos Bangalore
Bogota Singapore
Jakarta
Sydney
South Africa
Implementation across 42 Countries, Support for 142 countries
DEVELOPMENT CENTRE 4 global delivery centres
CO-LOCATED OFFICE 100% owned subsidiaries in US & UK,
PROJECT OFFICE Offices in India, USA, UK, Czech Republic and Malaysia
Key Areas of Business
BPO/Technical Helpdesk Services
CRM Services
Travel/Hospitality
Custom Applications (Microsoft, Java)
ERP Services
Manufacturing
Mainframe
Infrastructure Services
Multimedia & Animation Services
Retail
Strategic Consulting
Testing Services
Technology Practices Domain Practices
Select Clientele
Nike
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