INDIA TOBACCO

COMPANY LTD.
or
“itc LTD.”
 INTRODUCTION
• 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 to I.T.C. Limited in
1974
PRODUCTS
The Company operates in four segments :
• Fast Moving Consumer Goods (FMCG), Hotels,
Paperboards, Paper & Packaging, and Agri
Business.
• The FMCG segment includes Cigarettes, which
comprises cigarettes and smoking mixtures, and
Others, which include branded packaged foods
(staples, biscuits, confectionery, snack foods and
ready-to-eat foods), garments, educational and
other stationery products, matches, agarbattis and
personal care products. The hotel segment
includes hoteliering.
• The hotel segment includes hoteliering.
• The paperboards, paper & packaging segment
includes paperboards, paper including specialty
paper and packaging including flexibles.
• The Agri Business segment includes agri
commodities, such as rice, soya, coffee and leaf
tobacco.
• The Company's Agri Business markets agri
commodities in the export and domestic markets;
supplies agri raw materials to the branded packaged
foods business and sources leaf tobacco for the
cigarettes business
Market share
• Hardware was worth $1.1 Trillion in 2009 and is now the
second smallest of the categories (although it remains the
second largest in Asia Pacific); it is also the most global,
with the major vendors taking significant proportions of
the market; in 2009 Samsung led the market with an 8.3%
share –thanks largely to its mobile handset sales; HP held
a 7.0% share and was the leader of the IT market,
although it might want to consider addressing the
Communications market as others have in the top seven
• The Software market is the smallest ITC category,
accounting for $643 Billion in 2009; here Microsoft led
with a 4.3% share, followed by IBM with 3.3%; Oracle is
gaining ground with a 3.0% share, while Nintendo
managed a 1.0% share through sales of its gaming titles
• The IT Service market was worth $1.4 Trillion in 2009
and is the larges IT category; IBM held a significant
lead over other vendors with a 4.1% share; HP –
largely through the acquisition of EDS – also held a
strong second position with a 2.6% share; Google and
Amazon (with 1.7% share each) demonstrate the
extent to which Internet-based service are
encroaching on traditional IT Services business
• Telecom Service is the least global of the four
categories in the sense that the market leaders took a
smaller share of revenues in 2009; it is also the largest
single category accounting for a massive $3.0 Trillion
revenue in the year; the market was led by AT&T
whose business is largely in the USA;
GROWTH IN ITC SECTOR

ITC, which completed 100 years on Tuesday,

has come a long way from being a pure
tobacco company to become a well-
diversified, fast-moving-consumer-goods
company (FMCG) and is eyeing major
investment opportunities over the next
decade to spur growth in these areas. Its
growth mantra
• "Innovation should be a source for creating
consumer delight as well as triple bottomline
performance so as to generate greater value for
the shareholder and the society at large," ITC
Chairman Y.C. Deveshwar told the company's
29,000 employees across the country through a
webcast at its centenary event from Kolkata on
Tuesday.
• The prime focus should always be on value
creation for the Indian society and this is best
achieved by creating sustainable livelihoods and
replenishing natural capital."
 Higher losses in the FMCG segment
result in a fall in operating profit margins
• The Rs 13, 948 crore ITC's margins for the March 2008 quarter
slipped 100 basis points to 26.5 per cent as higher start-up
costs for non-cigarette FMCG products resulted in bigger
losses than levels seen a year ago, though sales were up a
smart 50 per cent.

The stock was down 4 per cent on Friday with the losses from
the non-cigarette FMCG business somewhat higher than the
street's expectations at Rs 118 crore compared with Rs 48
crore in Q4FY07.

Besides, the very disappointing 13 per cent rise in the net

profit was more the result of a huge increase of 60 per cent in
the other income.
• As ITC focuses on newer businesses— especially in
the foods and the consumer lifestyle space—
revenues from cigarette are coming down as a
percentage of net sales (pre-inter segment
adjustments): in the March-quarter they contributed
39 per cent down from 42 per cent a year ago.
• ITC is expected to close FY09 with revenues of about
Rs 16,500 crore and profits of about Rs 3,600 crore;
the earnings per share (EPS) which in FY08 was Rs
8.25 are expected to grow by 15-16 per cent. At Rs
211, the stock trades at 22 times FY09 estimated
earnings and could outperform in an otherwise
weak market
Comparisions with wipro
• ITC Limited which previously stood for Imperial
Tobacco Company of India Limited[1], is one of
India's foremost private sector companies with
a market capitalisation of more than US $ 15
billion and a turnover of US 14.75 billion.
• Wipro Tech (NYSE: WIT) is an information
technology service company established in
India in 1980. It is the global IT services arm of
Wipro Limited (in operation since 1945,
incorporated 1946). It is headquartered in
Bangalore and is the third larges
Type:
• Public (BSE:ITC)
• Public (NYSE: WIT)
Founded:
• August 24, 1910 Radha Bazar Lane, Kolkata, India
1945 (Pre Independence)
Headquarters:
• Virginia House, Kolkata, India
• Bangalore
Key people:
• Y C Deveshwar, Chairman K Vaidyanath, Director, CFO:
Partho Chatterjee
• Azim Premji, Chairman and Managing Director hide
• Industry:
• Tobacco, Foods, Hotels
• Information technology services hide

Revenue:
• $4.75 billion USD (2006)
• $3.47 billion USD hide
Employees:
• 20,000 (2006)
• 78,000+ (2007)
 COMPAIRING WITH HUL
• Indian cigarette maker ITC Ltd. is expected to
report strong earnings growth for its first
quarter through June, while consumer goods
company Hindustan Unilever Ltd. is likely to
post a marginal dip in profit.
• Analysts said revenue growth at ITC and
Hindustan Unilever will primarily be driven by
sales volume growth as increased competition
has restricted their ability to raise prices.
• Operating margins could come under pressure as
consumer goods companies won't rein in
advertising and promotion expenditure given the
intense competition in the sector, analysts said,
adding that higher raw material costs will also
hurt quarterly margins.
• But there are signs that, like the previous quarter,
food price inflation won't have much of an
impact on sales, even though higher food costs
typically tend to restrict discretionary spending
on items such as personal care products
• Key Issues: Analysts will look to see how far
cigarette sales volume dipped after ITC
resorted to a steep 14%-15% price increase
during the quarter to offset higher taxes.
• Some analysts have forecast a 3%-4% year-on-
year decline in cigarette sales volume.
• Analysts will watch Hindustan Unilever's local
sales, which rebounded strongly with an 11%
expansion in volume in the three months
through March. The company is facing intense
competition in its core soaps and detergent
segment in India, forcing it to make price cuts
in a bid to regain market share
 SWOT ANLYSIS IN ITC
• ITC is one of India's biggest and best-known private
sector companies. In fact it is one of the World's most
high profile consumer operations. Its businesses and
brands are focused almost entirely on the Indian
markets, and despite being most well-known for its
tobacco brands such as Gold Flake, the business is now
diversifying into new FMCG (Fast Moving Consumer
Goods) brands in a number of market sectors -
including cigarettes, hotels, paper, agriculture,
packaged foods and confectionary, branded apparel,
personal care, greetings cards, Information Technology,
safety matches, incense sticks and stationery
Strengths
• ITC leveraged it traditional businesses to develop new
brands for new segments. For example, ITC used its
experience of transporting and distributing tobacco
products to remote and distant parts of India to the
advantage of its FMCG products. ITC master chefs from
its hotel chain are often asked to develop new food
concepts for its FMCG business.
• ITC is a diversified company trading in a number of
business sectors including cigarettes, hotels, paper,
agriculture, packaged foods and confectionary, branded
apparel, personal care, greetings cards, Information
Technology, safety matches, incense sticks and
stationery
Weaknesses
• The company's original business was traded in tobacco. ITC
stands for Imperial Tobacco Company of India Limited. It is
interesting that a business that is now so involved in
branding continues to use its original name, despite the
negative connection of tobacco with poor health and
premature death.
• To fund its cash guzzling FMCG start-up, the company is still
dependant upon its tobacco revenues. Cigarettes account
for 47 per cent of the company's turnover, and that in itself
is responsible for 80% of its profits. So there is an argument
that ITC's move into FMCG (Fast Moving Consumer Goods)
is being subsidised by its tobacco operations. Its Gold Flake
tobacco brand is the largest FMCG brand in India - and this
single brand alone hold 70% of the tobacco market.
Opportunities
• Core brands such as Aashirvaad, Mint-o, Bingo! And Sun
Feast (and others) can be developed using strategies of
market development, product development and
marketing penetration.
• ITC is moving into new and emerging sectors including
Information Technology, supporting business solutions.
• e-Choupal is a community of practice that links rural
Indian farmers using the Internet. This is an original and
well thought of initiative that could be used in other
sectors in many other parts of the world. It is also an
ambitious project that has a goal of reaching 10 million
farmers in 100,000 villages.
• ITC leverages e-Choupal in a novel way.
Threats
• The obvious threat is from competition, both domestic and
international. The laws of economics dictate that if
competitors see that there is a solid profit to be made in an
emerging consumer society that ultimately new products
and services will be made available. Western companies
will see India as an exciting opportunity for themselves to
find new market segments for their own offerings.
• ITC's opportunities are likely to be opportunities for other
companies as well. Therefore the dynamic of competition
will alter in the medium-term. Then ITC will need to decide
whether being a diversified conglomerate is the most
competitive strategic formation for a secure future
 ITC FUTURE PLANS
• TOBACCO-TO-HOTELS & FMCG company ITC
Ltd is poised to make aggressive inroads into
the market with a slew of new launches in the
branded and packaged foods business.
• ITC Ltd's foods division is also planning to
increase the export component of its 'Kitchens
of India' range of premium ready-to-eat Indian
dishes
• Master blaster Sachin Tendulkar himself was
at hand to launch a special edition of Sunfeast
Sachin Fit Kit on the occasion of Sunfeast
Open 2007. He is brand ambassador of
Sunfeast, ITC's branded biscuits range.
THANK YOU