Imperial Tobacco Company of India Limited (ITC).

Presented by GROUP NO.10

Sumit Roy Anamika singh Akansha Kashish Arora Tarun Dutt Minaz humdule
ITC. Touching your life.

4/14/12

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

Click to edit Master subtitle style

4/14/12

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 Indias 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 4/14/12 ITC. Touching your life. Everyday

VISION & MISSION

Vision: Sustain ITCs position as one of Indias most

valuable corporations through world class performance, creating growing value for the Indian economy and the Companys stakeholders.

Mission: To enhance the wealth generating capability of

the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.

4/14/12

ITC. Touching your life. Everyday

Values

ITC's Core Values are aimed at developing a customerfocused, 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.

4/14/12

ITC. Touching your life. Everyday

POSITIONING OF ITC

UR YO . NG AY HI YD UC ER TO EV FE LI
4/14/12 ITC. Touching your life. Everyday

PRODUCT PROFILE

4/14/12

ITC. Touching your life. Everyday

PRODUCT LINE

4/14/12

ITC. Touching your life. Everyday

ITC Distribution network in India

4/14/12

ITC. Touching your life. Everyday

ITCs Distribution channel

ITCs 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.

4/14/12 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 companys 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 2030% from the manual basis of operation

Click to edit Master subtitle style

ITC. Touching your life. 4/14/12 Everyday

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

4/14/12

ITC. Touching your life. Everyday

Indian Tobacco Division (ITD)

Market leaders in Cigarettes and Tobacco business & is among Indias 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

4/14/12

ITC. Touching your life. Everyday

PEST ANALYSIS

4/14/12

ITC. Touching your life. Everyday

SWOT ANALYSIS
Strength Weakness Cigarette market is 22,000 cr and ITC has Dependence on tobacco revenues Negative Connection of Tobacco lions share in it Strong brand recognition and product portfolio Distribution network Management Opportunity Low per capita consumption Of personal care products Click to edit Master subtitle style Rural Market E-Choupal Filter cigarette segment of less than 60mm size Threat Competition both Domestic & International Increasing Tax on cigarettes Excise duty on unfiltered cigarettes less than 60mm in length was increased 387% last year Hike was 142% for those between 61mm and 70mm long. Regulatory restrictions on cigarettes Ban on smoking

4/14/12

ITC. Touching your life. Everyday

CONFRONTATION
NAVY CUT,CLASSIC,INSIGNIA,INDIA KINGS,CAPSTEN,GOLD FLAKE,SISSORS,SILK CUT,BRISTOL,BERKELEY

4/14/12

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.

4/14/12

ITC. Touching your life. Everyday

Per Capita Adult Cigarette Consumption (Sticks)

1662 1753

1190

561

488 141

USA

China

Pakistan

Nepal

India

World Avg.

Source : Based on Cigarette consumption data(2003) from World Cigarettes,ERC Group plc.

4/14/12

ITC. Touching your life. Everyday

18

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

CONT.

4/14/12

ITC. Touching your life. Everyday

DISTRIBUTION NETWORK(Tobacco Div.)

Bangalore Calcutta Saharanpur Munger Factories (4)

GODOWNS (19)

BRANCHES (19)

WHOLESALE DISTRIBUTORS (60 PER BRANCH)

Information Goods

RETAILERS

SECONDARY WHOLESALERS

4/14/12

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

4/14/12

ITC. Touching your life. Everyday

PHYSICAL DISTRIBUTION

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

4/14/12

ITC. Touching your life. Everyday

4/14/12

ITC. Touching your life. Everyday

FLOW FOR E-CHOPAL

1 2 3 4
ITC e-Choupal : An Introduction, Stake holder Analysis Comparison of status of Supply Chain before and after ITC e-Choupal Critical Analysis, and Comparison with HKB Future Scope

4/14/12

Company Logo ITC. Touching your life. Everyday

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 life. 4/14/12 ITC. Touching your issues such as:
Everyday

ITCS AGRI COMMODITY DIVISON

Farm linkages in 14 states covering Soya, Wheat, Marine products, Coffee etc. Focus on value added agri commodities Unique CRM programme in commodity exports Leveraging IT for the transformational eChoupal initiative

Rural Indias largest Internet-based intervention

linked through 6500 e-Choupals servicing over 4 million farmers

4/14/12

Over 40,000 villages

Distinctive sourcing capability for ITCs Foods

ITC. Touching your life. Everyday

THE PREDICAMENT OF INDIAN FARMERS

Low Risk Appetite

Low Margins

Low Value Addition

Caught in a vicious cycle of underdevelopment

Low Investment

Low Productivity

Weak Market Orientation

4/14/12

ITC. Touching your life. Everyday

ITCS SUPPLY CHAIN OF SOYA BEAN BEFORE E-CHOUPAL INITIATIVE

4/14/12

Company Logo ITC. Touching your life.

SUPPLY CHAIN FOR E-CHOPAL

4/14/12

Company Logo ITC. Touching your life.

Why ITC thought of e-Choupal

4/14/12

Company Logo ITC. Touching your life.

ITCs Supply chain of Soya bean after e-Choupal Initiative

4/14/12

ITC. Touching your life.

Supply chain post re-engineering

Pricing Previous days 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

4/14/12

Company Logo ITC. Touching your life.

Inbound Logistics Farmer proceeds to the nearest ITC procurement hub with the note Some procurement hubs are ITC factories, others are purely warehouse operations ITCs aim is to have a processing centre within 30-40 km radius of its farmers

4/14/12

Company Logo ITC. Touching your life. Everyday

Inspection and Grading At the ITC procurement hub, laboratory tests are conducted on a sample of farmers produce To change farmers attitude and appreciating produce quality, ITC is developing lab tests to reward farmers with reward points for better quality supply

4/14/12

Company Logo ITC. Touching your life. Everyday

Inspection and Grading At the ITC procurement hub, laboratory tests are conducted on a sample of farmers produce To change farmers attitude and appreciating produce quality, ITC is developing lab tests to reward farmers with reward points for better quality supply

4/14/12

Company Logo ITC. Touching your life. Everyday

Weighing and Payment Farmers 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
4/14/12 Company Logo ITC. Touching your life. Everyday

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

4/14/12

Company Logo ITC. Touching your life. Everyday

Technological support Nodal platform catering to commodity blending, agricultural trading, echoupal &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

4/14/12

Company Logo ITC. Touching your life. Everyday

A win-win Deal

4/14/12

Company Logo ITC. Touching your life.

Transaction cost in Mandi Chain (before e-Choupal)

4/14/12 ITC. Touching your life. Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

Transaction cost in Mandi Chain (after e-Choupal)

4/14/12

ITC. Touching your life.

SYNERGIES FOR ITC

Generation of Goodwill & positive public opinion qBetter supply chain for ITCs Food & Agri Businesses Costs, Quality, Traceability qAccess to the Underserved Rural Markets Through a Virtuous Cycle created by Larger Incomes, and founded on Trust that is built qNew ITES Business Opportunities Click to Health,edit Master subtitle style Education, Entertainment, eGovernance
q

4/14/12

Company Logo ITC. Touching your life. Everyday

VPN providing SCM, ERP & CRM capability

C i g a Expanded FMCG distribution capability r e t Bran Lifest Educat Match t ded yle ion es & Food retail Station Agarb e s ing ery attis T for strategic partnerships with other FMCG brand A basis 4/14/12 Company Logo ITC. Touching your life. r owners
Everyday

F A R M E R S

e-choupal rural two-way fulfillment capability

M A R K E T S

OTHER E-CHOUPAL INITIATIVE

4/14/12

Company Logo ITC. Touching your life. Everyday

Companies using e-Choupal network

4/14/12 ITC. Touching your life. Everyday Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept.

Critical Analysis of ITCs Supply Chain

4/14/12

Company Logo ITC. Touching your life.

Primary Stakeholders

Stake holder Analysis

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 Lower procurement costs Direct interaction with farmers - Control on quality & supply security Low cost distribution channel Access to market intelligence Gain access to global markets through ITC and commission to compensate some of the loss revenue

ITC

Commission Agents (Kachha Adatiyas) 4/14/12 &

Pakka

ITC. Touching your life.

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
ITC. Touching your life. Everyday

4/14/12

4/14/12

Company Logo ITC. Touching your life.

Hariyali Kisaan Bazaar

Other companies
Loan for pass through to farmers Extension service

Repayment of loan with interest

Produce procurement

4/14/12

ITC. Touching your life. Everyday

Comparison with Haryali Kisaan Bazar

E-choupal
Main objective Procurement

Haryali Kisaan Bazaar

Rural Retail

Benefit to thecomputer application to provide farmers market information

provide better method of cultivation by trained agronomist

Synergies

Synergies with products which ITC is manufacturing

Synergies with what DSCL is selling(inputs to agriculture plus other services 20-25 km area coverage Strategically placed near petrol pump

Economies scale Procurement centre

of25-30 km area coverage near small town

4/14/12

mainly ITC. Touching your life. Everyday

FUTURE OF ECHOUPAL

4/14/12

Company Logo ITC. Touching your life.

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 NEW TECHNOLOGY: Use of especially enabled mobile phones, analytics, new partner

4/14/12

ITC. Touching your life. Everyday

e-Choupal 2.0

4/14/12

Cmpany Logo ITC. Touching your life. Everyday

ITC e-Choupal Footprint

4/14/12

ITC. Touching your life. Everyday

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 dont 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. Working for you. Working for India. ITC now offering more margins, exiting offers and long credit periodITC. Touching your life. wholesalers. to retailers and 4/14/12

Everyday

THINK BEFORE SMOKING.

THANK YOU ?????

4/14/12 ITC. Touching your life. Everyday