ITC Limited

One Of IndIas MOst valuable cOrpOratIOns

HIMANSHU DIXIT MBA

Performance Track Record- Snapshot

Rs crores

95-96 Gross Turnover Net Turnover Market Capitalisation PBDIT PBIT PBT PAT EPS Rs Net Worth Capital Employed ROCE% Total Shareholders Returns %
Rs. 1 crore= Rs. 10 million

07-08 21,356 13,948 77,765 5,015 4,576 4,572 3,120 8.3 12,025 12,817 35.7

Cagr 95-96 to 07-08 12.6% 15.3% 24.6% 19.6% 19.6% 21.3% 23.0% 22.7% 21.9% 17.3% 25.8

5115 2536 5571 584 536 452 261 0.7 1121 1886 28.4

ITC - Key Financials H1 08/09

Rs crs Gross Turnover External Net Turnover External PBDIT PBIT PBT PAT Capital Employed

H1 Actuals 11479 7663 2567 2307 2303 1551 14495

H1 LY 10167 6564 2469 2262 2262 1554 12860

Goly % 12.9 16.7 4.0 2.0 1.8 -0.2 12.7

Q2 Segment Results
Rs crs

Quarter ended 30.09.2008 2. Segment Results a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : i) Interest (Net) ii) Other un-allocable net income

Quarter ended 30.09.2007

Goly (%)

1007 (117) 890 69 76 122 1158 3 (34) 1189

864 (37) 827 66 10 126 1029 1 (105) 1133

16.6% -219.1% 7.6% 4.1% 667.8% -2.6% 12.5% 205.5% 67.5% 4.9%

Total Profit Before Tax

H1 Segment Revenue
Rs crs

Half Year ended 30.09.2008 1. Segment Revenue (Net) a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : Inter-segment revenue Net sales / Income from operations

Half Year ended 30.09.2007

Goly (%)

3552 1449 5001 467 2699 1306 9473 1810 7663

3211 1126 4337 412 2127 1038 7915 1351 6564

10.6% 28.7% 15.3% 13.4% 26.8% 25.8% 19.7% 34.0% 16.7%

H1 Segment Results
Rs crs

Half Year ended 30.09.2008 2. Segment Results a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : i) Interest (Net) ii) Other un-allocable net income

Half Year ended 30.09.2007

Goly (%)

1968 (239) 1729 154 153 246 2282 4 (25) 2303

1803 (81) 1722 130 64 212 2129 0 (134) 2262

9.2% -194.7% 0.4% 18.2% 137.4% 15.8% 7.2% 5137.5% 80.9% 1.8%

Total Profit Before Tax

Segment Capital Employed

Rs crs

Half Year ended 30.09.2008 3. Capital Employed a) FMCG - Cigarettes * - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging

Half Year ended 30.09.2007

Goly (%)

2816.30 2403.42 5219.72 1979.42 753.89 3709.77 11662.80

2272.85 1547.38 3820.23 1686.42 1066.87 2847.18 9420.70

23.9% 55.3% 36.6% 17.4% -29.3% 30.3% 23.8%

Total Segment Capital Employed

One of Indias most valuable corporations

One of the 8 Indian Companies to feature in Forbes A-list for 2004

ITC

Featuring 400 of the Worlds best big companies with M-cap. > USD 5 bln. & are
rated as the most attractive companies for investors

Only Indian FMCG Company to feature in Forbes 2000 List

A comprehensive ranking of worlds biggest companies measured by a composite of

sales, profits, assets & market value

Among top in :

Sustained value creation (BT-Stern Stewart survey) Operating profits

Cash Profits
No. 1 in FMCG Sector

Ranks No. 5 among Indian listed Private Sector Companies by market cap. (@ 30/09/08)

Rated as one of Indias Most Respected Companies (IMRB-Businessworld Survey 2006)

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Awards & Accolades (1)

ITC received the FICCI Outstanding Vision Corporate Triple Impact Award 2007 for invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation.

Sustainability Leadership Award 2007 conferred on Chairman Y C Deveshwar by the Sustainability Forum, Zurich and SAM/SPG at the International Sustainability Leadership Symposium
Business Today Award for the Best Managed Company Retail and Consumer Products, has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment. Asian CSR Award 2007 for Environmental Excellence given by the Asian Institute of Management Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum

In the first of its kind S&P Environmental, Social and Corporate Governance (ESG) ratings released recently, ITC ranked second among top Indian companies.
The Company has won the Corporate Social Responsibility Crown Award for Water Practices from UNESCO and Water Digest for its distinguished work carried out in the water sector in India. NDTV Profit Business Leadership Award for being the Best Food Company of 2007.
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Accolades & Awards (2)

e-Choupal initiative wins global recognition:
Stockholm Challenge Award 2006 in the Economic Development category which recognises initiatives that leverage Information Technology to improve living conditions and foster economic growth in all parts of the world. First Indian Company to win the Development Gateway Award 2005 for the most exemplary contribution in the field of Information & Communication Technologies (ICT) for development during the last 10 years World Business Award 2004: International Chamber of Commerce & the HRH Prince of Wales & International Business forum Harvard University case study Recognised in World Development Report 2008 published by World Bank Applauded by President of India Dr APJ Kalam in his special address during the national symposium to commemorate 60th year of independence
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ITC - Business Portfolio

ITC

FMCG: Cigarettes Other FMCG

Hotels

Agri Business Leaf Tobacco Agri Commodities

Paperboard Paper & Packaging

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Strategy of Organisation to manage diversity of Portfolio

Formal 3-tiered governance structure:
Board of Directors :

Comprising executive (4) and non-executive directors (11) Strategic supervision

Corporate Management Committee : Comprising executive directors and senior managers Strategic management Divisional Chief Executive & Divisional Management Committee : Executive management
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Corporate Strategies
Sustain multiple drivers of growth, matching internal capabilities with emerging market opportunities Pursue World class competitiveness in all businesses and across the entire value chain Best-in-class in terms of: Internal Vitality Market Standing Profitability Strategy of Organisation and Governance processes geared to manage multiple businesses Blend core competencies and leverage ITC umbrella strengths to create new avenues of growth
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Hotels & Tourism

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Hotels & Tourism industry

Foreign arrivals into India: 5 million appx. Vs. 35 million in China The two nations were on par 2 decades ago at 750,000 arrivals

Today, Beijing alone has as many hotel rooms as the whole of India
Indias luxury rooms availability lower than even smaller East Asian countries
80000 70000 60000 50000 40000 30000 20000 10000 0 HongKong Singapore India
Source: Compendium of Tourism statistics, WTO

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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

As infrastructure for trade & commerce improves - growing potential for leisure tourism

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Economic impact of the Travel & Tourism Sector

% Share of World Travel & Tourism Demand WORLD South Asia India 10.1 6.5 6.5

Travel & Tourism Economy as % of Total GDP 9.9 6.1 6.1

Travel & Tourism Economy Jobs as % of Total Employment 8.4 5.9 6.4

Full potential yet to be harnessed in the Indian context

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ITCs Hotel Business

ITC-Welcomgroup : a leading hotel chain in India Established presence in key business locations Over 6000 rooms under 4 distinct brands
Category
Luxury Upper upscale Upscale - mid-scale Heritage

Brand
ITC Hotel: Luxury Collection WelcomHotel: Sheraton Fortune Hotels WelcomHeritage

Positioning
"Mansions of Luxury" "Passion for Quality" "Promise of True Value" "Unique Experiences"

Capacity expansion underway at Bangalore and Chennai; plans for other locations also being progressed. Positions on land taken at other locations such as Hyderabad and Ahmedabad Fastest growing hotel chain with highest operating efficiency (PBDIT/Net Income

@ 45%) amongst the 3 leading chains

Leverages unique service proposition and international alliance with Starwood Hotels & Resorts
Luxury Collection / Sheraton
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ITCs 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 60 properties under the WelcomHeritage brand in 19 states

Maharaja Heritage Resorts Ltd. 50% JV with Marudhar Hotels (P) Ltd.
Business growth expected to be impacted by financial meltdown

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e-choupal:Strategic Thrust
Procurement: cost & quality optimisation strategic sourcing support to the Foods business (support creation of verticals in wheat, soya, corn, potato etc.) cost-effective sourcing for exports/domestic external business Rural Distribution last mile connectivity: 100 partnering companies diverse range of goods/services : FMCG, consumer durables,agri-inputs, paid extension services etc. Financial Services insurance (focus: weather) credit (focus: Kisan credit card scheme) Rural retail
23 Choupal Saagars operational Rapid expansion planned in identified rural markets and Tier 2, 3 & 4 towns
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Positioning of ITC
A leading FMCG player in India
VPN providing SCM, ERP & CRM capability

F e-choupal rural two-way A fulfillment capability R M Cigarette Trade Marketing capability E R Expanded FMCG distribution capability S
Branded Foods Lifestyle retailing Matches & Education Agarbatti Stationery s Personal Care Products

M A R K E T S

A basis for strategic partnerships with other FMCG brand owners

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The Value Chain

Primary activities
1. 2. 3. 4. 5. Inbound logistic Outbound logistic Operations Marketing & Sales Service

1. 2. 3. 4.

Support activities
Procurement HRM Technology development Firm infrastructure

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The Environment
Tourism Business factor Room occupancy Seasonality Political Scenario Tax structure Differential Pricing

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BCG Matrix
Star Hotels Paperboard/ Packaging Agro Business Question Marks FMCG- Others ITC INFOTECH

Cows FMCG-Cigarettes

Dogs

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Competitors
EIH INDIAN HOTEL HOTEL LEELA ASIAN HOTEL JAPYEE HOTELS ORENTIAL HOTELS TAJ GVK HOTELS ROYAL ORCHID ADVANI HOTELS EIH ASSOCIATE HOTEL
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Critical Success Factor

SITE AND LOCATION POSITIONING AND GUEST PROFILE FINANCIAL STRENGTH BRAND RECOGNIYION YIELD MANAGEMENT DIFFERENTIAL PRICING

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SWOT Analysis
Strength Brand Distribution network Management Weakness Dependence on tobacco revenues Negative Connection of Tobacco

Opportunity Low per capita consumption Of personal care products Rural Market e-Choupal

Threat Competition both Domestic & International Increasing Tax on cigarettes

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Corporate Social Responsibility

Environmental
1. 2. 3. ITC has been Carbon Positive 3 years in a row. Water Positive 6years in a row. 100% solid waste recycling

1.

Social
ITC's businesses generate livelihoods for over 5 million people.

2. ITC's globally recognised e-Choupal initiative is the world's largest rural digital infrastructure benefiting over 4 million farming families. 3. ITC's Social and Farm Forestry initiative has greened over 80,000 hectares creating an estimated 35 million person days of employment among the disadvantaged. 4. ITC's Watershed Development Initiative brings precious water to nearly 35,000 hectares of dry lands and moisture-stressed areas. 5. ITC's Sustainable Community Development initiatives include women empowerment, supplementary education, integrated animal husbandry programmes.
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Recommendation
Improved security for hotel guests. Floor access control in hotels through key card system. Precision analysis of products in Food Business. Process optimisation for product development in Food Business. Automation of lighting controls. Use of Solar energy for hot water generation and outside area illumination. Installation of PNG (Piped Natural Gas) fuelled generator sets and PNG fired calendar and tumbler drier machines in hotel laundries. Improvements to reduce heat gain/cooling losses from building envelops in hotels. Impact of measures for reduction of energy consumption and consequent impact on the cost of production of goods.

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THAK YOU

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