History and Evolution

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of
India Limited. As the Company's ownership progressively Indianised, the name of the
Company was changed from Imperial Tobacco Company of India Limited to India
Tobacco Company Limited in 1970 and then toI.T.C. Limited in 1974. In recognition of
the Company's multi-business portfolio encompassing a wide range of businesses -
Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty
Papers, Agri-business, Foods, Lifestyle Retailing, Education & Stationery and Personal Care -
the full stops in the Company's name were removed effective September 18, 2001. The
Company now stands rechristened 'ITC Limited'.

The Company’s beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was
the centre of the Company's existence. The Company celebrated its 16th birthday on August
24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L.
Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic
in more ways than one. It was to mark the beginning of a long and eventful journey into
India's future. The Company's headquarter building, 'Virginia House', which came up on that
plot of land two years later, would go on to become one of Kolkata's most venerated
landmarks.

Though the first six decades of the Company's existence were primarily devoted to the
growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies
witnessed the beginnings of a corporate transformation that would usher in momentous
changes in the life of the Company.

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward

integration for ITC's Cigarettes business. It is today India's most sophisticated packaging
house.

In 1975 the Company launched its Hotels business with the acquisition of a hotel in

Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's
entry into the hotels business was rooted in the concept of creating value for the nation. ITC
chose the hotels business for its potential to earn high levels of foreign exchange, create
tourism infrastructure and generate large scale direct and indirect employment. Since then
ITC's Hotels business has grown to occupy a position of leadership, with over 100 owned
and managed properties spread across India.

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam

Paperboards Limited, which today has become the market leader in India. Bhadrachalam
Paperboards amalgamated with the Company effective March 13, 2002 and became a
Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this
division merged with the Company's Tribeni Tissues Division to form the Paperboards &
Specialty Papers Division. ITC's paperboards' technology, productivity, quality and
manufacturing processes are comparable to the best in the world. It has also made an
immense contribution to the development of Sarapaka, an economically backward area in
the state of Andhra Pradesh. It is directly involved in education, environmental protection
and community development. In 2004, ITC acquired the paperboard manufacturing facility
of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit
allows ITC to improve customer service with reduced lead time and a wider product range.

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture.
Since inception, its shares have been held by ITC, British American Tobacco and various
independent shareholders in Nepal. In August 2002, Surya Tobacco became a subsidiary of
ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal).

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company
and a major supplier of tissue paper to the cigarette industry. The merged entity was
named the Tribeni Tissues Division (TTD). To harness strategic and operational synergies,
TTD was merged with the Bhadrachalam Paperboards Division to form the Paperboards &
Specialty Papers Division in November 2002.

Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business
Division for export of agri-commodities. The Division is today one of India's largest
exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000
with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million
farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004
at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operational in the 3 states
of Madhya Pradesh, Maharashtra and Uttar Pradesh.

In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the
launch of Expressions range of greeting cards. A line of premium range of notebooks under
brand “Paperkraft”was launched in 2002. To augment its offering and to reach a wider
student population, the popular range of notebooks was launched under
brand “Classmate” in 2003. “Classmate” over the years has grown to become India’s
largest notebook brand and has also increased its portfolio to occupy a greater share of
the school bag. Years 2007- 2009 saw the launch of Children Books, Slam Books, Geometry
Boxes, Pens and Pencils under the “Classmate” brand. In 2008, ITC repositioned the
business as the Education and Stationery Products Business and launched India's first
environment friendly premium business paper under
the “Paperkraft” Brand. “Paperkraft” offers a diverse portfolio in the premium executive
stationery and office consumables segment. Paperkraft entered new categories in the office
consumable segment with the launch of Textliners, Permanent Ink Markers and White Board
Markers in 2009.
ITC also entered the Lifestyle Retailing business with the Wills Sport range of international
quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive
stores later expanded its range to include Wills Classic formal wear (2002) and Wills
Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its
men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of
the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has
gained recognition from buyers and retailers as the single largest B-2-B platform for the
Fashion Design industry. To mark the occasion, ITC launched a special 'Celebration Series',
taking the event forward to consumers.

In 2000, ITC spun off its information technology business into a wholly owned
subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging
opportunities in this area. Today ITC Infotech is one of India’s fastest growing global IT and
IT-enabled services companies and has established itself as a key player in offshore
outsourcing, providing outsourced IT solutions and services to leading global customers
across key focus verticals - Manufacturing, BFSI (Banking, Financial Services & Insurance),
CPG&R (Consumer Packaged Goods & Retail), THT (Travel, Hospitality and Transportation)
and Media & Entertainment.

ITC's foray into the Foods business is an outstanding example of successfully blending
multiple internal competencies to create a new driver of business growth. It began in August
2001 with the introduction of'Kitchens of India' ready-to-eat Indian gourmet dishes. In
2002, ITC entered the confectionery and staples segments with the launch of the
brands mint-o and Candyman confectionery and Aashirvaadatta (wheat flour). 2003
witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC's
entered the fast growing branded snacks category with Bingo! in 2007. In eight years, the
Foods business has grown to a significant size with over 200 differentiated products under
six distinctive brands, with an enviable distribution reach, a rapidly growing market share
and a solid market standing.

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire

value chain found yet another expression in the Safety Matches initiative. ITC now
markets popular safety matchesbrands like iKno, Mangaldeep, Aim, Aim Mega and Aim
Metro.

ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the
manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands
include Spriha and Mangaldeepacross a range of fragrances like Rose, Jasmine, Bouquet,
Sandalwood, Madhur, Sambrani and Nagchampa.

ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body
care products for men and women in July 2005. Inizio, the signature range under Essenza
Di Wills provides a comprehensive grooming regimen with distinct lines for men (Inizio
Homme) and women (Inizio Femme). Continuing with its tradition of bringing world class
products to Indian consumers the Company launched 'Fiama Di Wills', a premium range of
Shampoos, Shower Gels and Soaps in September, October and December 2007
respectively. The Company also launched the 'Superia' range of Soaps and Shampoos in
the mass-market segment at select markets in October 2007 and Vivel De Wills &
Vivelrange of soaps in February and Vivel range of shampoos in June 2008.
 FMCG
It is ITC's strategic intent to secure long-term growth by synergising and blending the
diverse pool of competencies residing in its various businesses to exploit emerging
opportunities in the FMCG sector.

The Company’s institutional strengths – deep understanding of the Indian consumer,

strong trademarks, deep and wide distribution network, agri-sourcing skills, packaging
know-how and cuisine expertise – continue to be effectively leveraged to rapidly grow
the new FMCG businesses.

Over the last few years, ITC has rapidly scaled up presence in its newer FMCG
businesses comprising Branded Packaged Foods, Lifestyle Retailing, Education and
Stationery products, Personal Care products, Safety Matches and Incense Sticks
(Agarbatti) with Segment Revenues growing at an impressive compound annual
growth rate of 38% during the last 5 years.

The Company’s unwavering focus on quality, innovation and differentiation backed by

deep consumer insights, world-class R&D and an efficient and responsive supply chain
will further strengthen its leadership position in the Indian FMCG industry.

Information Technology

Formed in 2000, ITC Infotech has today carved a niche for itself in
the arena of global IT services and solutions. The company has established technology
Centers of Excellence (CoE) to deepen capabilities and incubate cutting-edge technical
competencies. A robust outsourcing model, comprehensive suite of differentiated solutions
& services and focus on excellence in execution has provided the company a leadership
position in chosen domains.

ITC Infotech’s customer centric go-to-market approach is organized by industry verticals.

The company services industries including, Banking Financial Services & Insurance
(BFSI), Consumer Packaged Goods (CPG), Retail, Manufacturing, Engineering
Services, Media & Entertainment, Travel, Hospitality, Life Sciences and
Transportation & Logistics.

The company enjoys the rare advantage of having a

practitioner's expertise in some of these industry verticals, which has in part been
bequeathed by parent ITC Limited, which runs market leading businesses in these verticals.
While an enterprise range of technology capabilities and world class quality processes form
the foundation of ITC Infotech's cutting-edge IT service strength, a sharp domain focus
ensures that IT services delivery always places business needs ahead of technology.

ITC Infotech provides IT solutions by addressing customer pain points through innovative
solutions, optimizing their IT landscape and maximizing returns from IT investments. The
company focuses on developing deep and differentiated capabilities to enhance expertise in
specific industry domains, business solutions and technologies. This steadfast focus on
delivering enduring value to customers has formed the bedrock of the ITC Infotech’s growth
strategy. The company has been successful in attaining differentiation in niches and
continues to gain competitive advantage and strengthen market standing. ITC Infotech's
leadership capabilities also accrue from business critical engagements with leading
organisations across five continents, and a service delivery footprint spanning over 140
countries.

ITC Infotech conforms to the highest standards in international process quality, with ISO
27001, ISO 9001, CMMi Level 3 and BS 7799 accreditations. These reflect the company's
ongoing enterprise-wide focus to ensure that every engagement, program and project
delivers international quality consistently.
Agri Commodities & Rural Services

ITC's pre-eminent position as one of India's leading corporates in the agricultural sector is
based on strong and enduring farmer partnerships that has revolutionized and transformed
the rural agricultural sector. A unique rural digital infrastructure network, coupled with deep
understanding of agricultural practices and intensive research, has built a competitive and
efficient supply chain that creates and delivers immense value across the agricultural value
chain. One of the largest exporters of agri products from the country, ITC sources the finest
of Indian Feed Ingredients, Food Grains, Edible Nuts, Marine Products, Processed Fruits,
Coffee & Spices.

ITC's Agri Business Division is the country's second largest exporter of agri-
products with exports of over Rs. 1000 Crores (Rs. 10 billion). Its domestic sales of
agri-products are in excess of Rs. 1500 Crores (Rs. 15 billion). It currently focuses on
exports and domestic trading of:

 Feed Ingredients - Soyameal

 Food Grains - Rice (Basmati & Non Basmati), Wheat, Pulses

 Edible Nuts - Sesame Seeds, HPS Groundnuts, Castor oil

 Marine Products - Shrimps and Prawns

 Processed Fruits - Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit

Products, Fresh Fruits

 Coffee & Spices - Coffee, Black Pepper, Chilly, Turmeric, Ginger, Celery and other
Seed Spices
 Farmer empowerment through e-Choupals

ITC’s unique strength in this business is the extensive backward linkages it has established
with the farmers. This networking with the farming community has enabled ITC to build a
highly cost effective procurement system. ITC has made significant investments in web-
enabling the Indian farmer. Christened 'e-Choupal', ITC's empowerment plan for the
farmer centres around providing Internet kiosks in villages. Farmers use this technology
infrastructure to access on-line information from ITC's farmer-friendly
website www.echoupal.com. Data accessed by the farmers relate to the weather, crop
conditions, best practices in farming, ruling international prices and a host of other relevant
information. 
e-Choupal today is the world's largest rural digital infrastructure.

The unique e-Choupal model creates a significant two-way multi-dimensional channel

which can efficiently carry products and services into and out of rural India, while recovering
the associated costs through agri-sourcing led efficiencies. This initiative now comprises
about 6500 installations covering nearly 40,000 villages and serving over 4 million
farmers. Currently, the 'e-Choupal' websiteprovides information to farmers across the 10
States of Madhya Pradesh, Haryana, Uttarakhand, Uttar Pradesh, Rajasthan, Karnataka,
Maharashtra, Andhra Pradesh, Kerala and Tamil Nadu. Over the next 5 years it is ITC's
Vision to create a network of 20,000 e-Choupals, thereby extending coverage to 100,000
villages representing one sixth of rural India.

Supporting the e-Choupal network are ITC's procurement teams, handling agents and
contemporary warehousing facilities across India, enabling its Agri Business to source
identity-preserved merchandise even at short notice. ITC's processors are handpicked,
reliable high quality outfits who ensure hygienic processing and modern packaging. Strict
quality control is exercised at each stage to preserve the natural flavour, taste and aroma of
the various agri products.

Choupal Saagar

Following the success of the e-Choupal, the

Company launched Choupal Saagar, a physical infrastructure hub that comprises collection
and storage facilities and a unique rural hypermarket that offers multiple services under one
roof. This landmark infrastructure, which has set new benchmarks for rural consumers also
incorporates farmer facilitation centres with services such as sourcing, training, soil testing,
health clinic, cafeteria, banking, investment services, fuel station etc. 24 'Choupal
Saagars' have commenced operations in the states of Madhya Pradesh, Maharashtra and
Uttar Pradesh. ITC is engaged in scaling up the rural retailing initiative to establish a chain
of 100 Choupal Saagars in the near future.

Choupal Fresh

Choupal Fresh, ITC's fresh food wholesale and retail

initiative, leverages its extensive backward linkages with farmers and supply chain
efficiencies. It focuses on stocking fresh horticulture produce like fresh fruits and
vegetables. Five Choupal Fresh retail stores are currently operational at Hyderabad. The
company has also set up a complete cold chain for ensuring the availability of fresh products
in the market, besides directly sourcing farm fresh produce from the farmers.

Choupal Pradarshan Khet

In line with its mission of improving the quality

of life in rural India, ITC's Agri Business has launched a flagship extension programme
called 'Choupal Pradarshan Khet' (CPK) or demonstration plots to help farmers enhance
farm productivity by adopting agricultural best practices. Started in 2005-06, the crop
portfolio includes soya, paddy, cotton, maize, bajra, wheat, gram, mustard, sunflower and
potato. This initiative, has covered over 70,000 hectares and has a multiplier impact and
reaches out to 1.6 million farmers. 

Marine Products

ITC has been a significant exporter of seafood from India since 1971. It exports frozen as
well as cooked shrimps and other seafood products to Japan, USA and Europe. Its well-
known brands include Gold Ribbon, Blue Ribbon, Aqua Kings, Aqua Bay, Aqua Feast
and Peninsular.
 ITC Welcomgroup, India's premier chain of luxury hotels was
launched on October 18, 1975, with the opening of its first hotel -
Chola Sheraton in Chennai. Since then the ITC-
Welcomgroupbrand has become synonymous with Indian hospitality. With over 100 hotels in more than
80 destinations, ITC-Welcomgroup has set new standards of excellence in the hotel industry in
Accommodation, Cuisine, Environment and Guest Safety.

A leader in the premium hospitality segment, ITC-Welcomgroup Hotels have had the privilege of

hosting world leaders, Heads of State and discerning guests from across the world and within.

As one of India's most dynamic hospitality chains, ITC-Welcomgroup has set

standards for excellence in the hotel industry by pioneering the concept of branded accommodation. The
chain has developed three brands of accommodation ITC One', 'Towers' and the 'Executive
Club' to differentiate between the needs of various travelers and provide high levels of service.

First to introduce branded cuisine, its restaurants Bukhara,

Dakshin andDumPukht are renowned for their delicious and authentic Indian cuisines from the
different regions of India. ITC-Welcomgroup also showcases international cuisine in its specialty
restaurants West View and Pan Asian.

ITC-Welcomgroup has strategically customized its hotels and appropriately categorized them to fulfill the
service and budgetary needs of travellers. With its exclusive strategic tie up with Starwood for its top of
the line premium brand the 'Luxury Collection', the group is strengthening its international
marketing stance. ITC-Welcomgroup was also instrumental in bringing the 'Sheraton' brand to India, with
which it enjoyed a three-decade exclusive partnership.

 
  

   

The ITC Way

 

ITC is a board-managed professional company, committed to creating enduring value for the
shareholder and for the nation. It has a rich organisational culture rooted in its core values of respect
for people and belief in empowerment. Its philosophy of all-round value creation is backed by strong
corporate governance policies and systems.
ITC’s corporate strategies are :

 Create multiple drivers of growth by developing a portfolio of world class businesses that best
matches organisational 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.

 Benchmark the health of each business comprehensively across the criteria of Market
Standing, Profitability and Internal Vitality.

 Ensure that each of its businesses is world class and internationally competitive.

 Create distributed leadership within the organisation by nurturing talented and focused top
management teams for each of the businesses.

 Continuously strengthen and refine Corporate Governance processes and systems to catalyse
the entrepreneurial energies of management by striking the golden balance between executive
freedom and the need for effective control and accountability.

The ITC Vision & Mission

Sustain ITC's position as one

To enhance the wealth
of 
generating 
India's most valuable
capability of the enterprise in a 
corporations
globalising environment,
through world class
delivering superior and
performance,
sustainable
creating growing value for
stakeholder value
the Indian 
economy and the Company’s
stakeholders

Paperboards and Specialty Papers

 ITC's Paperboards and Specialty Papers Division is India's
largest, technologically advanced and most eco-friendly, paper and paperboards business. The
business caters to a wide spectrum of packaging, graphic, communication, writing, printing and
specialty paper requirements through its four world-class manufacturing units, 6 sales offices and a
network of more than 50 dealers in India, along with an international trade network of 15
distributors / agents.

Having pioneered many specialty applications like cigarette tissues, opaque papers, food grade
packaging boards and tele-card boards, ITC's Paperboards and Specialty Papers business enjoys
market leadership in the value-added paperboards segment, and also has a significant share of the
Indian fine papers market. It is the largest exporter of coated boards from India.

The product range includes:

Virgin Liquid packaging

Folding Box Boards Barrier coated
cartonboards
Solid Bleached Boards
Cupstock
Recycled
Cast coated boards
Coated Duplex
Whiteback Gypsum Liners
Coated Duplex
Greyback  

White Liner

 
 Coated Cards
Ivory Cards Woodfree fine papers
Playing card boards MG Kraft papers
  Opaque papers
Decor Surface, Printing
& barrier papers -
Unbleached Kraft base

ITC takes great pride in servicing a large cross-section of industry requirements - from cigarette
tissues to FMCG cartons, from electrical insulation papers to gypsum board liners, from decorative
laminate base to writing and printing papers and much more. ITC straddles the entire spectrum of
paperboards - from 100% virgin, food-grade boards to 100 % recycled boards.

Some of ITC's prominent paperboard brands are:

Folding Box Boards: Cyber XLPac, Cyber Cypak, Cyber Propac, Cyber XL Premium, Pearl XL
Pac

Solid Bleached Sulphate Boards: Safire Graphik, Art Maestro, Carte Persona Modified Solid
Bleached Sulphate Boards: Carte Lumina, Safire XL Pac

Poly coated boards:  Indobev, Indobarr

Recycled boards: Ecoviron, Fusion

Fine Papers:  ECF AlfaZap, Alfa Plus, Hi Brite, Paperkraft

Each of the units specialises in a range of products. Together, these units produce more than 500000
TPA of paper and paperboards that meet stringent quality requirements across the world. All four
manufacturing units are ISO 9001, ISO 14001 and OHSAS 18001 certified and meet strict
Environment, Health and Safety norms.

The unit in Bhadrachalam is India's largest integrated pulping and paperboard manufacturing unit. It
boasts of equipment supplied by internationally renowned suppliers for pulping processes, paper
machines, web detection & inspection systems, and finishing & packing lines. Currently the unit
produces high-end virgin and recycled boards for packaging and graphic applications, as well as fine
printing papers With the commissioning of a new wood free paper machine in May 2008, ITC has
made its entry into the writing, printing and copier papers segment. The Bhadrachalam unit
manufactures and uses pulp made from light ECF technology using Ozone. The use of ECF technology
significantly reduces the load of toxins in the effluent discharged, and helps customers get a brighter,
stronger product that is also environmentally responsible.

The Kovai unit currently focuses entirely on recycled boards, servicing requirements for both greyback
and whiteback recycled boards, The Kovai unit is a benchmark in environmental performance - helping
ITC turn solid waste recycling positive by consuming more paper waste generated than is generated
internally. This is done by collecting waste from households and institutions and recycling it at this
facility.

The Tribeni unit specializes in fine papers and tissues and the product range from this unit comprises
opaque papers for fine printing like the Bible, dictionaries, cigarette tissues, medical grade papers,
anti-rust papers, electrical insulation papers, decor surface, printing and barrier papers. The
production lines for cigarette component papers and communication papers have been upgraded in
2008 to ensure that all products continue to meet exacting international benchmarks.

The Bollaram unit manufactures specialty boards such as cast coated papers and boards, poly
extrusion coated barrier boards and C2S art boards and brief cards. This unit is BRC certified for food
grade boards. ITC has also commissioned a second poly-extrusion in February 2008 to meet the
growing requirements of barrier boards.

Customers are at the core of the business. This is reflected in the diverse range of products, grades
and value added services. There is a strong focus on partnering customers to co-create and deliver
superior solutions, enhancing their competitive advantage.

The Business' quality philosophy is reflected at every stage - from the selection of clones used for
growing pulpwood to world-class manufacturing facilities to the finishing and packing lines. It
embraces the relevant skills and competencies of employees, managers and specialists as well.

A dedicated network of regional sales offices, an extensive dealer and agent network in India and
across the globe enables ITC's Paperboards and Specialty Papers business to reach out to customers
in more than a 100 different locations. With the division-wide implementation of Enterprise Resource
Planning (ERP) in 2009, the business will also offer customers an enriched experience through
enhanced connectivity and web-access to many of the services that are currently handled offline.

ITC's commitment beyond the market finds a strong expression in the Social and Farm forestry
programmes spearheaded by the business. These programmes help create unitions of man hours of
employment for the rural poor, besides being a sustainable source of high-quality raw material for the
business. ITC's Research and Development efforts in creating disease resistant, high yielding clones
help farmers realize greater yields in a shorter time - from land that may be otherwise unproductive.
More than 1,00,000 hectares of planted area stands testimony to ITC's commitment to sustainable
forestry.

Working towards credible certification of its environmentally responsible processes and products, ITC
has become the first Indian company to become a member of the WWF GFTN programme. With this
membership, ITC has committed to bring larger volumes of its products and more of its operations
under credibly certified schemes like FSC.

Supporting the cause of clean technology, ITC is a front-runner in introducing environment-friendly

Elemental Chlorine Free (ECF) technology, and more recently, Ozone bleaching in India. ITC's focus on
being a carbon-positive, water-positive, zero-solid waste disposal organization leads it to constantly
develop ways of reducing, reusing and recycling.

ITC's Paperboards and Specialty Papers business has also been a first-mover in the field of collecting
and recycling post-consumer waste from residential localities, corporate and educational institutes.
ITC reaches out directly to consumers with its Wealth Out of Waste (WOW) campaign, that has been
successfully implemented in select locations across central and southern India, and will soon be
reaching other locations across the country.

Research & Development

ITC is committed to delivering world-class products and services. This requires
a clear focus on continuously striving to create a higher value to customers by
achieving excellence in all Company's operations. Business excellence calls for
a passionate focus on technology, products, services, processes and an
operating environment firmly anchored to an impregnable foundation of
Quality.

ITC firmly believes that quality is not a specifically

assignable task. It needs to be firmly rooted and institutionalized in the culture and value
system of the Company. ITC nurtures a culture of striving for continuous improvement in
quality, be it in products, services, systems or performance. The Company is committed to
the establishment of systems and processes to promote organisational creativity and
innovation.

ITC's development of its Integrated Quality Management System (IQMS) is based on

its strong foundation of implementing ISO 9001:2000, ISO 14001, OHSAS 18001, SA
8000, HACCP (for Foods) and IQRS(performance rating and benchmarking of the quality
management system). Likewise, ITC's strategic initiatives for developing its people have
been based on participative management concepts like QC (Quality Control), TQM (Total
Quality Management), KSS (Kaizen Suggestion Scheme), 5S, Six Sigma.

All ITC manufacturing units have ISO quality certification. Almost all contract manufacturing
units in the Foods Business and all large hotels have food safety and quality systems
certified by accredited 'third party' in accordance with 'Hazard Analysis Critical Control
Points' (HACCP) standards. Additionally, the quality of all FMCG products of the Company is
regularly monitored through 'Product Quality Rating System' (PQRS). The Leaf Tobacco and
Printing & Packaging businesses have achieved world-class ratings in the 'International
Quality Rating System' (IQRS) for business excellence in which key processes are rated
against international benchmarks and certified by accredited 'third party' independent
assurance providers.

ITC's Research & Development Centres

At ITC's Research & Development Centres at Bengaluru,

Bhadrachalam and Rajahmundry, the Company has assembled a pool of world-class
scientists focused on providing the requisite R&D support to its established and new
businesses enabling the Company to consistently attain internationally benchmarked quality
standards and constantly offer product innovations.

ITC R&D Centre at Bengaluru provides systemized service to the entire range of ITC's
businesses through Product Technology Cells, Common Service Modules, Advanced
Research Initiatives and networking with national and international R&D centres.
Product Technology Cells (PTCs) are product-specific. Each PTC caters to the needs of
the businesses through Market Intelligence, Product Testing & PQRS services, Prototyping
services through advanced pilot plants, flavour and fragrance development services,
periodic audit of factory quality systems and Product Knowledge and Training Workshops.

PTCs assist businesses through sensory evaluations by highly trained and specialised
panelists. Common service modules like Packaging and Advanced Analytical labs offer their
services across all businesses.

ITC R&D Centres are manned by highly qualified and

trained scientists specialised in their fields. The labs and pilot plants have ultra modern,
state-of-the-art testing and prototyping facilities. The laboratory at Bengaluru has
obtained accreditation from NABL (National Accreditation Board for Testing &
Calibration of Laboratories) for ISO 17025 for key testing protocols.

ITC Corporate R&D located in Bengaluru undertakes research programs for multiple ITC
businesses built on a common set of core competencies. The initial sets of core competency
areas identified are: Plant Breeding and Genetics, Agronomy, Microbiology,
Molecular Biology, Silviculture, Cell Biology, Proteomics, Genomics, Biochemistry
and Ingredient Sciences. The facility aims to create 'Centres of Excellence' in these
areas.
 ITC's R&D programme at Bhadrachalam is the core of the
Company's fibre strategy for its Paperboards and Specialty Papers business. This state-of-
the-art research centre is consistently striving to improve the productivity of several tree
species, in order to give attractive land-use alternatives to traditional farmers and
wasteland owners. So far, more than100 high-yielding, fast-growing and disease
resistant 'Bhadrachalam' clones have been produced on a commercial scale, including
23 site-specific clones adapted to problematic soils. The productivity of these saplings is 6-9
times that of normal seedlings.

ITC's comprehensive R&D facilities at Rajahmundry in

Andhra Pradesh cover all aspects of tobacco crop cultivation. In collaboration with the
Central Tobacco Research Institute and the Tobacco Board, ITC pioneered FCV tobacco
cultivation in India and introduced the Burley and HDBRG varieties. ITC's continued focus on
crop development has resulted in new varieties of seeds and hybrids in Andhra Pradesh and
Karnataka, which have significantly improved farm yields and helped fulfill the demands of a
dynamic global market.

The Company's R&D team collaborates with other centres of excellence, and leverages
expertise from several leading institutes including the University of Agricultural Science,
Bengaluru; Indian Institute of Science, Bengaluru; CSIOR, Australia and CSIR, South Africa.
Catering to the need of ITC's Lifestyle Business is a contemporary master Design Facility
at Gurgaon. It offers R&D facilities that have enabled the Company to offer internationally
benchmarked fashion collection every season.

FUTURE ANALYSIS

B y the time you read this, the 15-member board of directors of ITC would have swiftly

concluded its meeting scheduled for the morning of June 18. The mood inside the board room in
Virginia House, the headquarters of India’s largest tobacco company, would have been
understandably buoyant. This is ITC’s centenary year. And the main agenda for the board
meeting — to discuss the proposal for a special 1:1 bonus share issue — would have been
expeditiously cleared.

For Yogesh Chander Deveshwar — Yogi to his colleagues on the board — this would mark the
perfect beginning of the end. By the time he steps down in April 2012, he would have spent
more than 15 years as chairman, easily the longest serving in ITC’s history. But that’s not a
sobriquet that Deveshwar really cares about.

He’s already made it amply clear in media interviews, that he’s looking for a longer innings. 

On the face of it, Deveshwar may have a legitimate reason: He’s in the throes of transforming
ITC from a cigarette maker to a fast moving consumer goods (FMCG) company for the past
decade or so. In the last three years, he’s really upped the ante — and taken on a plethora of
global and local rivals including Unilever, Procter & Gamble, Pepsi Foods, Britannia, Nestle and
Parle Agro, all at one go. 

So far, ITC’s non-tobacco FMCG business is just about Rs. 3,700 crore. In this year’s five year
rolling plan — a ritual that all ITC chairmen have religiously stuck to — Deveshwar says he’s
banking on the FMCG business growing to nearly four times that size (Rs. 12,000 crore) during
this period, even as ITC aims for a turnover of Rs. 55,000 crore. (Put simply, the FMCG target is
a bit like adding four times Marico’s current turnover.) And quitting in the middle of the surge
would seem rather tame.

Clearly, while Deveshwar is preparing the ground for an extension, most insiders reckon the
final nod from the board may not come till the last moment. There’s also the seemingly small
matter of convincing its erstwhile owners British American Tobacco (BAT) to support his
candidature. BAT has about 32 percent stake and two board seats. And the two folks it has
picked for the job, Hugo Powell and Anthony Rhys, are both former FMCG veterans from
Unilever. And while BAT hasn’t interfered with ITC’s management in the last decade and a half
after a failed attempt to take majority stake, it isn’t likely to give in to Deveshwar’s campaign
now without driving a hard bargain. Want to know why? We’ll come to that in a bit. 

Meanwhile, most rivals who’ve witnessed Deveshwar’s bare-knuckled assault from close
quarters are keeping their eyes peeled on the succession issue. For, a change in leadership will
invariably affect how the future plans of ITC are carried out. Already, Deveshwar’s aggressive
expansion of market share has raised eyebrows both inside ITC and outside. The CEO of a
leading Indian FMCG firm, who wishes to remain unnamed, says he is astounded at the kind of
money ITC is putting up to buy market share in the personal care business. Soaps and
shampoos are among the biggest categories in the personal care space. And in trying to build a
Rs. 500 crore business, ITC is said to have lost about Rs. 250-odd crore this year alone. 

Where’s the End Game?

A well-known columnist in a leading business newspaper claims she received a call from
Deveshwar after she referred to some “illogical” players in the FMCG industry in one of her
recent columns. He gently enquired in his avuncular manner whether she was indeed referring
to ITC. “What is his real end game? Do you really know?” she enquires, puzzled. 
It is a question that holds the key to ITC’s future. Ideally, Deveshwar would want nothing better
than to be remembered as the man who helped build India’s largest consumer product firm.
After all, reducing the dependence on the not-so-desirable core tobacco business has proven to
be no mean task. For four decades, ever since ITC’s first Indian chairman A.N. Haksar took
charge from BAT in 1969, every leader has tried his best to diversify beyond tobacco, but
without much success.

  ITC ltd

SINCE 1910

(marketing project)
SANJANA SEHGAL
3423
BBE (1st yr)