Submitted by : Abhay Duseja Amulpreet Singh Ankit Jain Ashish Shah Deepesh Agrawal

Agenda
ITC - Overview Sector Overview and Demand Supply Breakdown of Revenue & ROCE
PESTEL Analysis

Porters Five Force Model

SWOT Analysis Financials Valuation Future Perspective

ITC Overview

ITC is a Indian Conglomerate with businesses in FMCG Hotel Agri Business Paperboards, Paper and Packaging

Diversified

Annual turnover of $7 billion and Market Cap of $34 billion

Market Leader : Hotels, Paperboards, Packaging, AgriExports and Cigarettes Gaining market share : Packaged Foods, Branded Apparel, Personal Care and Stationery.
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FMCG

Market Leadership Powerful brands across segments Large FMCG Distribution network

Serving 1,00,000 markets & 2million retail outlets

Leadership in almost all segments-Geographic and price Branded packaged foods one of the fastest growing food businesses in the country.

FMCG: Demand and supply

Cigarettes account for less than 15% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation Biri : Cigarettes ratio = 8 : 1 48% of adult Indian males consume tobacco. Only 10% of adult Indian males smoke cigarettes as compared to 16% who smoke biris and 33% who use smokeless tobacco (Source: Global Adult Tobacco Survey India 2010) Personal Care: Current market size estimated at over ` 40,000 crores (growing at 12% p.a.) Current Safety Matches & Incense sticks industry consumer spend estimated at INR 5000 crores

FMCG : Demand and supply Contd.

Education and statinery business is emerging (currently INR 12000 crores Stationery) market in India growth driven by increasing crosscultural exposure, government spending on education

Hotels

External Factor Analysis Score ITC Welcomgroup: Fastest growing chain in the country 93 properties across 64 locations First hotel chain in the world to have all its premium luxury hotels certified at the highest LEED (Leadership in Energy and Environmental Design) ITC Grand Chola First 5 Star 'Green Rating for Integrated Habitat Assessment' (GRIHA) rated luxury hotel by the Ministry of New and Renewable Energy

Hotels: Demand and Supply

Foreign arrivals into India: ~6 million Vs. ~56 million in China. The two nations were on par 2 decades ago. Today, Beijing alone has as many hotel rooms as the whole of India. Current supply 140,000 rooms of which 5 Star category accounts for about 25% 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

Agri Business

No 2 in Agri commodities Pioneer in rural transformation Export business robust growth in export volumes in recent years with improvement in realizations Farm linkages in 17 States covering Soya, Wheat, Marine products, Potato,Coffee etc. Focus on value added agri commodities Implementing Information Technology for the transformational e-Choupal initiative

Agri Business : Demand and supply

India the second largest producer of tobacco Over 40000 villages linked through around 6500 eChoupals servicing over 4 million farmers Procurement: cost & quality optimisation

Strategic sourcing support to the Foods business (support creation of verticals in wheat, potato etc.) costeffective sourcing for exports/domestic external business

Rural retail

24 Choupal Saagars operational

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Paperboard

ITC's Paperboards and Specialty Papers Division is India's largest, technologically advanced and most eco-friendly paperboard business. Pioneer in rural transformation Export business robust growth in export volumes in recent years with improvement in realizations Farm linkages in 17 States covering Soya, Wheat, Marine products, Potato,Coffee etc. Focus on value added agri commodities Implementing Information Technology for the transformational e-Choupal initiative

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Paperboard : Demand and supply

Annual paperboard demand approximately. 2.9 million tones. Low per capita usage of paper at around 9 kgs p.a. (world average over 55 kgs p.a.) Indian paperboard market growing at 7.5% p.a. Value Added Coated board, the fastest growing segment (12% p.a.) Ozone bleached Pulp Mill fully operational one of its kind in Asia meeting worldclass environmental standards Fully integrated with inhouse pulping capacity at ~3 lakh MT

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Breakdown of Revenue

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ROCE

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PESTEL ANALYSIS OF FMCG INDUSTRY

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Porters Five Force Model for FMCG

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SWOT ANALYSIS
ITC has highly experienced team of management Strong brand presence, excellent product marketing and advertising Diversified product and services portfolio which includes FMCG, Hotel chains, paper & packaging and agri-business Impressive Financial Performance Untapped rural market & Increasing penetration opportunities in urban areas Increasing purchase power Leverage on brand equity Mergers and acquisitions to strengthen the brand and technological advancement

High dependency business segment

on

the

tobacco

Lack of contribution from hotel/resort business segment Very low exports contribution

Wide income disparities Availability of cheaper substitutes Fragmented industry and intense competition
Changes

in Government Policies like tax structure, removal of import restrictions

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Future Perspective :

Cigarettes:

With increasing taxation policy (to reduce cigarettes consumption in India), company can plan Nicotine free cigarettes for the addicted people.

Hotel :

ITC can attract more revenues by opening new midrange hotels at many tourist places and business destinations Tie up with airlines and online ticket booking sites

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Future Perspective :

Agri Business:

Fragmented land holding, poor infrastructure, restricted access to scientific knowledge and endemic inefficiencies of the market have engulfed the farmers in a vicious cycle of low risk taking ability, low productivity and low margins. To address some of these challenges, Company has been involved in the creation of on and offfarm sustainable livelihood opportunities which empower stakeholder communities to conserve and manage their resources.

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Future Perspective :

Paperboards, Paper and Packaging :

Improved utilisation of biomass and additional wind mills have led to over 41% of Companys total energy requirements being met from renewable sources, compared to 38.5% during the year 201112. A systemic approach is being developed to ensure that Company progressively moves towards a benchmark of utilising at least 50% of its total energy requirements from renewable sources in the near future.

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Thank You

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