ITC Limited

One of Indias Most Admired and Valuable Companies

A Profile
Indias most Admired and Valuable company
- Market Capitalisation: over US$ 45 Billion

A USD 8 Billion enterprise by Revenue

- ~54% of Net Revenue from non-Cigarette segments

Leading Fast Moving Consumer Goods (FMCG) marketer in India

- Established several world-class brands in the last 10 years

10 year Value addition ~ Rs. 1.9 lakh crore (US$ 39 billion) with ~75% accruing to the
Exchequer
- Among the top tax payers in the nation (Private sector)
- Excise payments represent ~7% of Indias total Excise collection

Employs over 30,000 people directly; supports livelihoods of ~6 million people

An global exemplar in sustainable business practices
- Only Company in the world of comparable dimensions to have achieved the global
environmental distinction of being Carbon positive (9th Year), Water positive (12th Year) and
Solid waste recycling positive (7th Year)
2

ITC Performance Track Record

Rs. cr.
1995-96

2013-14

18-yr Cagr
95-96 to 13-14

2,536

32,883

15.3%

PBDIT

584

13,562

19.1%

PBIT

536

12,662

19.2%

PBT

452

12,659

20.3%

PAT

261

8,785

21.6%

Capital Employed

1,886

27,626

16.1%

ROCE %

28.4

45.8

Market Capitalisation

5,571

280708

Net Revenue

Total Shareholder Returns %

24.3%
25.9

Market Cap and TSR based on FY-end prices

Sensex (CAGR 95-96 to 13-14) : 11.1%

3

Consistency of Performance

Consistent performance over 18 year, 10 year, 5 year and 3 year horizons

In terms of Revenue, Profits, TSR Vs. Sensex

CAGR

95-96 to
13-14
18 years

03-04 to
13-14
10 years

08-09 to
13-14
5 years

10-11 to
13-14
3 years

NTO

15.3%

17.7%

16.1%

15.8%

PAT

21.6%

18.6%

21.9%

20.8%

TSR

25.9%

28.7%

33.7%

26.4%

Sensex

11.1%

14.9%

18.2%

4.8%

TSR and Sensex returns based on Mar-end of each FY

ITCs ranking
Amongst all listed private sector cos.
PBT: No. 7

PAT: No. 8
Market Capitalisation: No. 2

Note: Based on Published Results for Q2 FY15, Market Capitalisation based on 31 st Dec 2014

ITC is the only Indian Company to be ranked

amongst the Top 10 global FMCG companies in
value creation during the period 2009-13
(Boston Consulting)

Also ranked amongst the Top 10 global FMCG companies by Boston

Consulting Group in terms of value creation in the years 2009, 2010,
2011 and 2012.
The only Indian company to feature consistently amongst the Top 10
global FMCG companies
6

One of Indias most valuable and admired companies

ITC ranked as the most admired company in India in 2014 (Fortune-Hay Group
survey)
One of the foremost in the private sector in terms of :

Sustained value creation (BT-Stern Stewart survey)

Operating profits

Cash Profits
ITC was ranked 3rd among 40 leading companies in the Nielsen Corporate
Image Monitor 2013-14, and amongst the top 5 most admired companies in
India. Also a Company most active in CSR for the third year in a row.
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
7

Awards & Accolades (1)

Chairman
Y
C
Deveshwar
was
conferred
the
Padma Bhushan by
the Government of
India (2011)

Harvard Business Review ranked

ITC Chairman Y C Deveshwar as
the 7th Best Performing CEO in
the World

ITC conferred
the prestigious
World
Business and
Development
Award 2012
at the Rio+20
UN Summit for
its Social and
Farm Forestry
Initiatives

ITC Grand Chola,

the worlds largest
LEED
Platinum
rated hotel in the
New Construction
category, launched
in September 2012

Awards & Accolades (2)

Businessworld
FICCI CSR
award in Large
Enterprise
category

Rainforest Alliance
awarded
ITC's
Bhadrachalam Unit,
the
Forest
Stewardship
Council
Forest
Management
certification

ITC
Hotels
awarded
the
Most Trusted
Hotel brand in
the
Public
Choice Honours
category at the
Times
Travel
Honours

AIM Asian CSR

Award by the
Asian Forum
on Corporate
Social
Responsibility

Best Overall Corporate

Social Responsibility
Performance : Institute
of Public Enterprise

Accolades & Awards (3)

e-Choupal initiative wins global recognition:
World Development Report 2008 published by World
Bank
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 and second in the world to win the
Development Gateway Award 2005 for its trail-blazing eChoupal initiative
Corporate Social Responsibility Award from The Energy
and Resources Institute (TERI)
World Business Award 2004: International Chamber of
Commerce & the HRH Prince of Wales & International
Business forum
Harvard University case study
Applauded by the then President of India Dr APJ Kalam in
his special address during the national symposium to
commemorate 60th year of Independence
10

ITCs Vision Statement

11

ITCs Vision
Make a significant and growing contribution towards :

mitigating societal challenges

enhancing shareholder rewards
By
creating multiple drivers of growth while sustaining leadership in
tobacco, and
focusing on Triple Bottom Line Performance
Enlarge contribution to the Nations
- Financial capital
- Environmental capital
- Social capital

12

Key Corporate Strategies

Focus on the chosen business portfolio
FMCG; Hotels; Paperboards, Paper & Packaging; Agri Business, Information
Technology

Blend diverse core competencies residing in various businesses to enhance

the competitive power of the portfolio
Position each business to attain leadership on the strength of world class
standards in quality and costs
Craft appropriate strategy of organisation and governance process to :
Enable focus on each business and
Harness diversity of portfolio to create unique sources of competitive advantage

13

Strategy of Organisation

Board of Directors
Strategic Supervision
Corporate Management
Committee

Enabling Focus
Harnessing Diversity

Strategic Management
Divisional Management
Committees

Executive Management

14

ITC Business Portfolio

FMCG
Cigarettes

Education & Stationery

Hotels

Personal Care

Foods

Lifestyle Retailing

Safety Matches & Incense Sticks

Paperboards, Paper
& Packaging

Agri Business

Information
Technology

15

ITCs Cigarettes Business

Market leadership
Leadership across all segments - geographic & price
Extensive FMCG distribution network
Direct servicing of 1,00,000 markets & 2 million retail
outlets
State-of-the-art technology and world class products

16

Cigarette Industry in India

Legal cigarettes account for less than 12% of tobacco consumed in India due
to prolonged punitive taxation
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)
Annual per capita adult cigarette consumption in India is appx. one ninth of
world average

17

Cigarette Industry in India

Other
Tobacco
Products
88%

Legal
Cigarettes
12%

Consumption Share

Cigarettes
87%

Other
Tobacco
Products
13%

Tax Revenue Share

Cigarettes are taxed over 47 times as compared to other tobacco products

18

Per Capita Consumption of Tobacco in India (gms per year)

1256
1145

743

China

USA

438

461

468

Pakistan

Nepal

India

World

Source:World Cigarettes ERC Statistics, Tob Board & Industry Estimates gms/Yr

Per Capita consumption is ~60% of World Average

19

Per Capita Cigarette Consumption per annum

2786

No. of cigarettes per capita per annum

1841

1711

1028
468

420
154

Russian Federation Japan

China

USA

Pakistan

Nepal

Bangladesh

96
India

Source: The Tobacco Atlas - 4th Edition (American Cancer Society), 2012

Although India accounts for 17% of world population, its share of world cigarette consumption is just 1.8%

Per Capita consumption in India ~11% of World average

Rapid scale up of FMCG businesses

Rs. crs
8122

7012
5545
4482

3642
3014

2511
1704
563
2004-05

1013

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

21

Creating world-class brands for Indian Consumers

22

Branded Packaged Foods Portfolio

Biscuits, Staples, Snacks, Noodles & Pasta, Confectionery & Ready to Eat

23

Branded Packaged Foods: Some recent launches

Branded Packaged Foods records further improvement in market standing during the quarter
24

Personal Care Products

Portfolio approach straddling all consumer segments with 4 umbrella brands

Essenza Di Wills
Fiama Di Wills
Vivel
Superia

Complemented by Engage brand in the deodorants

segment

Products continue to receive encouraging consumer response; Engage deos well

received by its target consumers

Laboratoire Naturel A state-of-the-art consumer and product interaction

centre leveraged to launch unique and differentiated products
25

Personal Care: Some recent launches

26

Education & Stationery Products Business

Leverages print and paper know-how to address suitable opportunities in
the stationery market.
Industry growth driven by increasing literacy and enhanced scale of
government and public-private initiatives in education
The Business continues to consolidate its market standing

Classmate : Market leader in Notebooks segment

27

Lifestyle Retailing
Slowdown in discretionary consumption expenditure continues to impact the
branded apparel industry
Upmarket product range available in exclusive Wills Lifestyle stores (104) across 43
cities and more than 700 shop-in-shops in leading departmental stores and multi-

brand outlets.
Strong distribution network in place for the mid-market brand John Players
availability in more than 400 Exclusive Branded outlets, 1600 multi branded
outlets and departmental stores

28

ITC Hotels

No. 2 in Size
No. 1 in Profitability

29

Hotels & Tourism industry

Foreign Tourist Arrivals grew by 6% in Q3 Vs. 13% in Q2 and 6% in FY14

Foreign Tourist Arrivals into India @ ~6.8 million remains far behind China (~55.7
million) [Source: UNWTO Tourism Highlights 2014 edition]
Going forward, as economic condition and infrastructure improve, leisure tourism
and business related travel is also projected to grow faster
o Foreign Tourist Arrivals into India is projected at ~11 million by 2021

Current Room inventory ~210,000 rooms of which 52,000 rooms are in the
Luxury and Upper Upscale segment
India needs an additional ~60,000 rooms in Luxury and Upscale Segments in
the next 5 years to service projected tourist arrivals

30

ITC Hotels

The Chain: 98 properties across 71 locations

4 Brands ITC Hotels, WelcomHotel, Fortune & WelcomHeritage
21 Five-Star Deluxe/ Five-Star Properties with over 4600 rooms

43 Fortune Hotels with over 3500 rooms

34 WelcomHeritage Properties with over 800 rooms

Industry impacted by weak pricing scenario due to the excessive room inventory and
sluggish economic conditions

ITC Grand Bharat, Manesar, a 104 all suite resort opened on 14th November 2014

Projects underway at Kolkata and Hyderabad.

31

ITC Hotels: Worlds Greenest Luxury Hotel Chain

All ITC Luxury Hotels LEED Platinum certified

Responsible Luxury ethos weaved into the Brand Identity

Paperboards & Packaging Business

No. 1 in Size
No. 1 in Profitability
No. 1 in Environmental Performance

33

Indian Paperboard market

Annual paperboard demand over 2 million tonnes

Low per capita usage of paper at around 9 kgs p.a. (world average
over 55 kgs p.a.)
Indian paperboard market growing at 6% p.a.
Value-added Paperboards- the fastest growing segment (12% p.a.)
in India driven by :
Increasing demand for branded packaged products
Rising Income table and growing consumer base
Increasing proliferation of organised retail

34

ITCs Paperboards, Paper & Packaging businesses

Market leader in growth segment Value-Added Paperboards

World-class contemporary technology

Internationally competitive quality and cost

Social farm forestry in mill command area to improve access to cost effective fibre &
to attain self-sufficiency

Ozone bleached Pulp Mill fully operational one of its kind in Asia meeting world-class
environmental standards
Fully integrated with in-house pulping capacity at ~3 lakh MT

Biotech research based high yielding clones effectiveness tested in approx. 181,800
hectares

Newly commissioned 1 lakh MT per annum Paperboard machine running well

ITCs packaging SBU - Indias largest converter of Paperboard into high quality printed
packaging
Provides superior packaging solutions to the cigarettes and new FMCG businesses
Leading supplier to Indian FMCG industry
Fully integrated packaging unit at Haridwar operationalised and running well

35

Agri Business

No. 1 in Leaf Tobacco

No. 2 in Agri commodities
Pioneer in rural transformation

36

Indian Leaf Tobacco industry

India the second largest producer of tobacco

However, Indias share is only at 8% of world tobacco trade

ITC Indias largest buyer, processor, consumer & exporter of cigarette
tobaccos
5th largest leaf tobacco exporter in the world
Pioneering cultivation of flavourful Flue-cured and superior Burley
tobaccos in India
Robust growth in exports in recent years with improvement in realizations

37

ITCs Agri Commodity Business

Distinctive sourcing capability for ITCs Foods businesses

Farm linkages in 17 States covering Wheat, Soya, Potato, Coffee etc.

Unique Customer Relationship Management programme for commodity customers

in both domestic and international markets

Leveraging Information Technology for the transformational e-Choupal initiative

Rural Indias largest Internet-based intervention

Over 35000 villages linked through around 6100 e-Choupals servicing around 4
million farmers

e-Choupal: Strategic Thrust

Procurement: cost & quality optimisation
strategic sourcing support to the Foods business
cost-effective sourcing for exports/domestic external business

Rural retail
24 Choupal Saagars operational
38

ITC - Key Financials 2013/14

Rs. Cr.
2013-14

2012-13

Goly %

Gross Turnover

46713

41810

11.7

Net Turnover

32883

29606

11.1

PBDIT

13562

11566

17.3

PBIT

12662

10771

17.6

PBT

12659

10684

18.5

PAT

8785

7418

18.4

39

Segment Revenue - 2013/14

Rs. Cr.
Full Year
GOLY(%)
2013-14 2012-13
%
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

15456
8099
23555
1133
7752
4861
37301
4418
32883

13970
6983
20953
1074
7201
4237
33464
3859
29606

10.6
16.0
12.4
5.5
7.7
14.7
11.5
14.5
11.1

40

Segment Results - 2013/14

Rs. Cr.
Full Year
GOLY(%)
2013-14 2012-13
Segment Results
a) FMCG - Cigarettes
- Liab. no longer reqd. written
FMCG - Cigarettes
- Others
Total FMCG
b) Hotels
c) Agri Business
d) Paperboards, Paper & Packaging
Total
Less: i) Finance Costs
Liab. no longer reqd. written back
Finance Costs
ii) Other Unallocable Exp/(Inc.) - Net
Profit Before Tax

9858
158
10016
22
10038
140
835
892
11905
38
(35)
3
(757)
12659

8326
0
8326
(81)
8245
138
731
964
10078
86
0
86
(693)
10684

18.4
20.3
21.7
1.5
14.2
(7.4)
18.1
(56.4)
(96.6)
9.3
18.5
41

Segment Capital Employed - 2013/14

Rs. Cr.
Full Year
GOLY(%)
2013-14 2012-13
Capital Employed
a) FMCG - Cigarettes
- Others
Total FMCG
b) Hotels
c) Agri Business
d) Paperboards, Paper & Packaging
Total Segment Capital Employed

5705
3384
9089
3625
2052
5319
20086

4953
2532
7485
3460
1257
4958
17160

15.2
33.6
21.4
4.8
63.3
7.3
17.1

42

ITC - Key Financials Q3 2014/15

Rs.
Cr.
` crs

Q3 14/15
Actual

Q3 13/14
Actual

Goly %

Net Revenue

8800

8623

2.1

PBDIT

3464

3284

5.5

PBIT

3809

3449

10.4

PBT

3800

3440

10.5

PAT

2635

2385

10.5

43

Segment Revenue Q3 2014/15

Rs. Cr.

` Crs.

Q3

Q2
2014-15

2014-15

2013-14

4142
2314
6456
330
1598
1199
9583
783
8800

4116
2078
6194
315
1786
1257
9553
930
8623

GOLY(%)

Segment Revenue (Net)

4251
2196
6447
262
2059
1284
10051
1121
8930

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

0.6
11.4
4.2
4.7
(10.6)
(4.7)
0.3
(15.8)
2.1

44

Segment Results Q3 2014/15

Rs. Cr.
` Crs.

Q3

Q2
2014-15
2882
(10)
2872
(10)
298
242
3403
18
(199)
3583

Segment Results
a) FMCG - Cigarettes
- Others
Total FMCG
b) Hotels
c) Agri Business
d) Paperboards, Paper & Packaging
Total
Less: i) Finance Costs
ii) Other Unallocable Exp/(Inc.) - Net
Profit Before Tax

2014-15

2013-14

2886
11
2898
29
239
214
3379
8
(429)
3800

2653
10
2663
62
205
232
3162
9
(287)
3440

GOLY(%)

8.8
10.7
8.8
(53.8)
16.3
(7.7)
6.9
(8.4)
49.5
10.5

45

Segment Revenue YTD Q3 2014/15

Rs.
Cr.
` Crs.
YTD Q3
GOLY(%)
2014-15 2013-14
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

12594
6445
19039
841
6953
3771
30603
3708
26895

11377
5785
17162
812
5748
3599
27321
3584
23737

10.7
11.4
10.9
3.5
21.0
4.8
12.0
3.5
13.3

46

Segment Results YTD Q3 2014/15

Rs. Cr.
` Crs.

YTD Q3
GOLY(%)
2014-15 2013-14
Segment Results
a) FMCG - Cigarettes
- Liab. no longer reqd. written back
FMCG - Cigarettes
- Others
Total FMCG
b) Hotels
c) Agri Business
d) Paperboards, Paper & Packaging
Total
Less: i) Finance Costs
Liab. no longer reqd. written back
Finance Costs
ii) Other Unallocable Exp/(Inc.) - Net
Profit Before Tax

8490
8490
(14)
8476
7
740
731
9953
42
42
(738)
10649

7306
158
7464
(21)
7443
80
689
704
8916
28
(35)
(7)
(514)
9436

16.2
13.7
32.1
13.9
(91.2)
7.3
3.8
11.6
48.7
NA
43.6
12.9

On a Underlying basis: Segment Profits Growth +13.7%, PBT +15.2%

47

Segment Capital Employed Q3 2014/15

Rs. Cr.

` Crs.

YTD Q3
GOLY(%)
2014-15 2013-14
Capital Employed
a) FMCG - Cigarettes
- Others
Total FMCG
b) Hotels
c) Agri Business
d) Paperboards, Paper & Packaging
Total Segment Capital Employed

5888
3681
9569
3733
1807
5482
20591

5218
3167
8386
3576
1793
5184
18939

12.8
16.2
14.1
4.4
0.8
5.7
8.7

48

ITCs Economic Contribution to the Nation

10 year Value addition ~ Rs. 1.9 lakh crore (US$ 39 billion)

~75% of value addition accrued to the Exchequer
Among the top tax payers in the nation (Private sector)
Excise payments represent ~ 7% of Indias total Excise collection

Foreign exchange earnings in the last 10 years: US$ 6 bln

Of which agri exports constituted ~60%

49

Social Performance
Direct employment ITC Group : 30,000
Supported creation of 6 million sustainable livelihoods
e-choupal: worlds largest rural digital infrastructure serving around 4
million farmers

Social and Farm forestry initiative has greened nearly 194,900

hectares & provided over 73 million person-days of employment
among tribals & marginal farmers
Significant thrust on social sector investments

Natural resource management

Sustainable livelihoods
Community development programmes in the economic vicinity of
operating locations
50

Environmental Performance
Carbon positive enterprise 9 years in a row
Sequestering nearly twice the amount of CO2 that the
Company emits

Water positive - 12 years in a row

Creating twice the rainwater harvesting potential than
ITCs net water consumption

Solid waste recycling positive 7 years in a row

Over 38% of total energy consumed is from
renewable sources

Only Company in the world of comparable dimensions to have achieved the global
environmental distinction of being Carbon positive, Water positive and Solid
waste recycling positive
51

Forward-looking Statements
Statements in this presentation describing the Companys objectives, future prospects,
estimates, expectations etc. may be forward looking statements within the meaning
of applicable securities laws and regulations. Investors are cautioned that forward
looking statements are based on certain assumptions of future events over which the
Company exercises no control. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. Therefore there can be no guarantee as to
their accuracy. These statements involve a number of risks, uncertainties and other
factors that could cause actual results to differ materially from those that may be
projected or implied by these forward looking statements. Such risks and uncertainties
include, but are not limited to: growth, competition, acquisitions, domestic and
international economic conditions affecting demand, supply and price conditions in
the various businesses in the Companys portfolio, changes in Government
regulations, tax regimes and other statutes, and the ability to attract and retain high
quality human resource.

52