ITC Ltd.

SOHAN SHINTRE
314639_DIV-F

ITC Ltd. _314639_Sohan

Objective of the study

To know the History & evolution of ITC VISION & MISSION of ITC To have a glimpse of the Product portfolio of ITC To study the challenges/Competition faced by ITC To contemplate various strategies adopted by ITC To examine various Business models & their implications on ITCs position in the market Recommendations
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History & Evolution of ITC

Incorporated on 24 August,1910 as Imperial Tobacco company India Ltd. As the companys ownership progressively Indianized name changed to Indian Tobacco company Ltd.[1970] & then to I.T.C. Ltd.[1974] The company is now rechristened to ITC Ltd.[2001] as the company diversified into FMCG segments other than Cigarettes such as paperboard , packaging, Hotels, Information Technology & Agricultural exports Presently ITC is headed by Yogesh Chander Deveshwar

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History & Evolution of ITC

1925: Packaging and Printing: Backward Integration 1975: Entry into the Hospitality Sector - A 'Welcom' Move 1979: Paperboards & Specialty Papers Development of a Backward Area 1985: Nepal Subsidiary - First Steps beyond National Borders
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History & Evolution of ITC

1990: Paperboards & Specialty Papers 1990: Agri. Business - Strengthening Farmer Linkages 2000: Lifestyle Retailing 2000: Information Technology - Business Friendly Solutions 2001: Branded Packaged Foods 2002: Agarbattis & Safety Matches 2002: Education & Stationery Products 2005: Personal Care Products 2010: Expanding the Tobacco Portfolio
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 ITC is one of Indias foremost private sector with market capitalization of over US $45Bn and turnover of over US $57Bn ITC as robust portfolio of Fast Moving Consumer Goods (FMCG), Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, and Information Technology. The competitiveness of ITCs diverse businesses rest on the strong foundations of institutional strengths derived from its deep consumer insights, cutting-edge Research & Development, differentiated product development capacity, brand-building capability, world-class manufacturing infrastructure, extensive rural linkages, efficient trade marketing and distribution network and dedicated human resources.
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 The Company's 'e-Choupal' initiative has enabled Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet.

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Vision & Mission

Vision : Sustain ITCs position as Indias most valuable corporations through world class performance, creating growing value for the Indian economy and the companys stake holders Mission: To enhance the wealth generating capability of an enterprise in a globalizing superior and sustainable stakeholder value
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Vital brands of ITC

Cigarettes:
Luxury segment :India king,Benson & hedges,Insignia Middle level segment: Classic,Gold flake kings, Navy cut Economic segment: Gold flake,Flake excel,Capstun,Hero

Branded food:
Aashirvaad, Sunfeast, Dark Fantasy, Delishus, Bingo!, Yippee!, Candyman, mint-o, Kitchens of India
Personal care products: Essenza Di Wills, Fiama Di Wills, Vivel, Vivel Cell Renew, Engage and Superia Education & stationary: Classmate and Paperkraft

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Vital brands of ITC

Lifestyle Apparel: Wills Lifestyle John Players

Agarbatti: Mangaldeep Safety matches: AIM

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Challenges/ Competitors for ITC

HOTEL industry: TAJ group of hotels OBEROI group of hotels Cigarette industry: Goldfrey Phillips India [GPI] : FOUR SQUARE, RED & WHITE,CAVENDERS Vazir Sultan Tobacco [VST] : CHARMINAR, CHARMS etc. National Tobacco Company [NTC] Golden Tobacco Company [GTC] FMCG industry: HUL BRITANNIA PARLE NESTLE
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ETOP for Tobacco Industry

Tobacco Sector at a glance One of the major profit earning /profitable industries in the present market Industry is worth more than INR 60000 crores as per the census data collected in year 2010 By 2015 CAGR[Compound annual growth rate]is expected to be around 7% Present CAGR 6.5%
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ETOP for Tobacco Industry

Education level & proportion of Tobacco users [%] : Secondary education - 21% Primary education 33% Less than primary education-45% No formal schooling/education-44%

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ETOP for Tobacco Industry

Role of Government in Tobacco sector: Ban on FDI in the production and manufacturing of cigarettes The cigarette Act 1975 made it a statutory health warning on all cigarettes packets mandatory 1980 Central govt. imposed restrictions on the trade of Tobacco 1990 The central govt. issued a notice saying it as a directive against smoking by prohibiting smoking in public places
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ETOP for Tobacco Industry

Environmental opportunities: India is one of the biggest producer of Tobacco Export potential of country India amounts to around 6% of international trade and its rank is 5th after that of Brazil, USA, Turkey& Zimbabwe Extensive research & development in the alternative use of tobacco based products in the view of anti-smoking initiative
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ETOP for Tobacco Industry

Political threats: Levied taxes and constraints on tobacco production Challenging environment with applied regulations Economic factors: India is among the top 3 tobacco producers of the world Top 10 exporters of the world About 2 to 2.5 million people rely on the livelihood on this sector About INR15000 million value is added to total net value of all enterprises
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ETOP for Tobacco Industry

Social factors: Growing public awareness and concern against consumption of tobacco Govt. restrictions has made promotion of tobacco products and brands impossible Technological factors: Logistic support services Software investments such as GPS monitoring, online methods of electronic clearings etc. Technical support for inventory control
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SWOT
Strengths: Distribution network Brand Core business values Very few local competitors ITCs master chefs from hotel chain

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 Weaknesses: Over dependence on farming of Tobacco Brand association with Tobacco is the barrier for companies image in other FMCG areas Unrelated Diversification Negative connection of Tobacco with poor health & premature death ITCs move into FMCG is being subsidized by its Tobacco operations Still has to consolidate its place in Cigar market which is largely dominated by Goldfrey Phillips
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 Opportunities: Untapped rural markets E-choupal ITCs is entering into new & emerging sectors including Information technology & supporting business solutions

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 Threats: Increased awareness among the consumers about the health hazards of Cigarette consumption Increased taxes and regulations on Cigarette mfg. Competition with Domestic & international rivals
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Forces affecting ITCs market

New Entrants: Domestic producers of tobacco with cheap or low rate offerings Bargaining power Buyers: Oligopoly market situation Bargaining power of suppliers: Segments, targeting, fragmentation, consolidation and integration Switching costs to low price offerings
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Forces affecting ITCs market

Threat of substitutes: From buyer to buyer it varies, few are brand loyal others are likely to switch to substitutes Competitive rivalry: New innovative products and offerings from the rivals

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BCG matrix for ITC

INDUSTRY:FMCG SBUs of ITC 1] Cigarette 2] Paper & packaging boards 3] Hotels 4]Agri.Business 5]FMCG others[ Food, Lifestyle, Apparel, Greetings , Gifts etc.]
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GR %

BCG matrix for ITC

HOTELS PAPERS & PACKAGING AGRI. FMCG OTHERS

LOW

FMCG CIIGARETTES

INFORMATION TECHNOLOGY

HIGH
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LOW

MS %
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BCG matrix for ITC

Star: HOTELS : MS[ 90 HOTELS] - High GR [22.7%] High PAPER & PACKAGING : MS [1ST in India]-High GR [ 17.2%]- High Agri. Business: MS [ 3rd largest exporter]- High GR [ 34.3%]- High
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BCG matrix for ITC

Cash Cows: Cigarette : MS [ 70%]-High GR [ 10.9%] Low Dog: InfoTech : MS Low GR- Low ? : FMCG others: MS [ 16%]- Low GR [60.2%]- High
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Competitive Advantage
In order to attract customers ,withstand competitive pressure & strengthen companys position in the market , ITC adopts: Overall low cost leadership strategy Focused low cost Broad differentiation [ Ready to eat, staples, Wafers] Focused differentiation [ Ready to eat food, Biscuits] Best cost providers Distribution networks Extensive advertising [ Biscuits, confectionary, wafers]
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Strategic intent
To secure long term growth by synergizing and blending the diverse pool of competencies To exploit emerging opportunities in FMCG sector Focus on Quality, Innovation & differentiation backed up by consumer insight , World class R&D, and efficient and responsive supply chain
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Strategic intent
Companies institutional strength-Deep understanding of Indian consumers , strong trademark , deep & wide distribution network, Agri-sourcing skills , packaging know how and cuisine expertise

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Strategic intent
Last few years ITC has rapidly scaled up its presence in its newer FMCG business comprising branded packaged foods , Lifestyle retailing , education , stationary products , personal care products with segment revenue growing at 38% CAGR

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Examples of successful ITC products

Aashirvad : Indias most popular atta with 50% market share Mint o-Mint o fresh is the Indias largest cough lozenge brand Bingo-A new introduction of finger snacks Kitchens of India-Pre-prepared food designed by ITCs master chefs Sunfeast- Biscuit brand & sub brand on some pasta products
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RECOMMENDATIONS:
ITC in order to have a hold over the FMCG market needs to invest more in building up its presence in Lifestyle , Apparel , Gifts , Greetings, by aggressive selling and marketing Information technolgy is one sector where ITC lags behind its competitors with a huge margin, which over a period may attract a brand switch from its customers.ITC may consider liquidating its IT operations and pump more money into development of FMCG
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THANK YOU

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