ITC case presentation

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Submitted by V Tamilvelan D Srikanth Nisanth

4/27/12

facts

Not a safety product. duty.

Excise

85%

vs. 15% 2001. Vs 30% 2010.

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70%

Diversification

Three

major players.

1910 to 1960 form 1970

Diversifcation

No

of non core competenices bussiness

Divested

History

in agrotech and cement bussiness 4/27/12

Core

competiences. channdels

Distrubution

Brand

builings. service

Quality

Diversification strategies. Global entity

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BCG ANALYSIS
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`
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Segment wise revenue 4/27/12

In

FMCG 3,55,000crores by 2018.

Paper

boards investment upto 6000 crores.

Investment

ITC future

opportunity of 9000 crores in next 7- 10 years.

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LRBD launched in Dec 2000 to retail WILLS SPORT Brand in New Delhi up with a San Francisco based consultancy,American Design Intelligence Group for Store Design and Mechandizing. up new Design & Technology center and it followed a Dual branding strategy, brand as Wills Sport Apparel Brand one as Wills Lifestyle Retail Brand Wills Classic for the formal segment
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Tied

Set

First

Second

Launched

Year 2000 - LRBD

In 2002, there were 50 Lifestyle Stores Planned to double its number to 100 Stores IN July 2003 Competitors Indigo Nation Scullers Color PLUS Wills Lifestyle - planned to launch in Foreign countries

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Wills Lifestyle Milestone

The

brand has created a distinctive identity in the premium western wear market. the past it has been declared The Most Admired Women's wear Brand of the Year" and the "Most Admired Exclusive Retail Chain of the Year" at the Images Fashion Awards. year, it has been declared the "Most 4/27/12 Admired Fashion Brand of the Year -

In

This

Year 2000-Greeting Card & Gifts in 2000 as Expressions under Printing & Launched
Packaging Division

Offered International Quality Greeting Cards Leveraged its Distribution Network Launched in 600 Cities & Towns and Over 11000 multi brand retail outlets Over 10000 designs launched E-Commerce model was Implemented Online ordering for Customized products Gifting & Corporate Stationary added to its Portfolio Launched Premium Bond Paper range under WHITE GOLD Leveraged its expertise in manufacture of Paper In 2002, associated with4/27/12 SOS Childrens Village of India (Welfare Organization) Launched 195 designs across 1500

Year 2001- Foods Division

1. 2. 3. 4.

Under the name Kitchens of India Brand Entered into 4 Catagories, Ready to Serve Confectionary & Chocolates Biscuits & Cookies Branded Staples

ITC acquired the Minto from Candico

Candico, based in Delhi, started their operations in 1997, and now they are the Largest confectionery companies in India. Candico is a confectionery multinational headquartered in India with operations in 19 countries and 4/27/12 annual turnover of US$ 2 billion.

1.

Launched Minto & Candyman (2 Variants Wild Banana & Mango Delight) Idea is to Leverage ITCs Distribution Network

2.

.Competiors .Perfetti .Nestle

in Confectionary Business are

Van Melle

India Lever

.Hindustan .Joyco

But it is Large Volume,Low profit Margin Business.

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Under Kitchens of India Brand, ITC launched Veg. & Nonveg Dishes Growth of this Industry - estimated to be higher as it may grow from Rs.500 600 Million to touch Rs. 2.5 Billion by 2006 In 2002, They entered Into Highly fragmented segment of Staples Introduction of Aashirwad - atta Competitors like HLL, Cargil, Godrej Pillsbury & Agro Tech were making loss in this segment at that point of time In Nov 2002, They entered into Rs. 30 Billion snack foods market with Bischips under the Brand I I denotes Youth Individual

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Year 2002 - Branded Safety Matches

Diversified into Branded Safety Matches with five Brands Mangaldeep targeting Housewives & Aim, Dlite, Vaxlite & iKno targeting Smokers Analysts considered as an excellent Diversification of ITC although it is a low profit item and Limited growth Business Leveraged Distribution Network and also PaperBoards and Printing & Packaging Businesses ITC Bhardrachalam exported Matches to African countries

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Expectations & Challenges Ahead 5 billion in Non-Tobacco Businesses & it was Invested Rs.
expected to reach around Rs. 20 Billion in 5 years

Gross Turnover was over Rs. 200 Million but still not gainful due to start up cost Expressions were not generating Revenues Incurred losses of 5% of PBT in Branded Garments, Greeting Cards, & Package Food Venture in the Year 2002 Growth & Overall Profits would get diminished if this continues In 2005 ITC hoped to generate Rs. 2.5 Billion revenues from Greeting Cards & Foods Hoped Food Division would contribute Rs. 5 Billion to ITCs revenue in 2007
4/27/12 In the Long run, ITC expects 40 % revenue from Non Tobacco Industries

ITCs Core Building Capabilities Competencies: Superior Brand

Extensive Excellent

Distribution Network Supply Chain Management Service Skills

Acknowledged

How they used these core competencies for creating Growth Avenues?
Test

Marketed Wills Sport apparels at Golf Pro Shop in Royal Calcutta Golf Course launched in 8 other Golf courses in the country due to good response in 1997 and eventually launched the full fledged WILLS 4/27/12 LIFESTYLE in 2000 at Delhi along with the

Then