ITC Limited

One of Indias Most Admired and Valuable Companies

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%

2

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. 6

PAT: No. 5
Market Capitalisation: No. 3

Note: Based on Published Results for FY14, Market Capitalisation based on 30 th Jun 2014

ITC is the only Indian Company to be ranked

amongst the Top 10 global FMCG companies in
value creation during the period 2008-12
(Boston Consulting)

One of Indias most valuable and admired companies

One of the foremost in the private sector in terms of :

Sustained value creation (BT-Stern Stewart survey)

Operating profits

Cash Profits
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

Also ranked amongst the Top 10 global FMCG companies in terms of value

creation during the period 2005-2009 by Boston Consulting Group. Is the only
Indian company to feature consistently amongst the Top 10 global FMCG
companies.
6

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

Accolades & Awards 2013/14

ITC was ranked 3rd among 40 leading companies in the Nielsen Corporate Image Monitor 201314, and was featured among the top 5 most admired companies in India. ITC was also perceived
to be the Company most active in CSR for the third year in a row.

ITC voted among the top two Buzziest Brands in the Corporate category by afaqs, one of
the worlds largest marketing and advertising portals.

The ITC Green Centre at Manesar was awarded the 5 Star rating by the Bureau of Energy
Efficiency, Government of India.

ITC Hotels was recognised as the Most Respected Company in the Hospitality category by the
Business World Magazine.

ITCs Paperboards and Specialty Papers Business has been

conferred the Green Product of the Year award at the India
Green Business Summit 2014.

ITCs Agri Business has bagged the Rural Marketing

Association of India (RMAI) Flame Award 2013 in the
category of excellence in Brand Promotion.
10

ITCs Vision

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

ITC Business Portfolio

FMCG
Cigarettes

Education & Stationery

Hotels

Personal Care

Foods

Lifestyle Retailing

Safety Matches & Incense Sticks

Paperboards, Paper
& Packaging

Agri Business

Information
Technology

14

Strategy of Organisation

Board of Directors
Strategic Supervision
Corporate Management
Committee

Enabling Focus
Harnessing Diversity

Strategic Management
Divisional Management
Committees

Executive Management

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

Cigarettes account for less than 12% of tobacco consumed in India unlike
world pattern of 85% due to prolonged punitive taxation
Cigarettes (<12% of tobacco consumption in India) contribute the bulk of
Revenue to the Exchequer from tobacco sector

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

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

18

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

20

Creating world-class brands for Indian Consumers

21

Branded Packaged Foods

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

22

Branded Packaged Foods

Amongst one of the fastest growing Foods business in the country

Bakery and Confectionery Foods - Biscuits, Confectionery

Snack Foods - Savoury Snacks, Noodles and Pasta
Staples, Spices and Ready to Eat Foods - Atta, Salt, Spices, Ready to Eat (RTE)

Driven by strong brands Aashirvaad Staples (Wheat flour, Salt,

Spices), Ready to Eat Ready Meals, Instant
Mixes

Atta (wheat flour) - #1 in Branded

packaged Atta among national players

Sunfeast Biscuits

Biscuits - #3 All India

Sunfeast Yippee Noodles and Pasta

Noodles - #2 All India

Bingo! Potato Chips Yumitos, Finger

Snacks Mad Angles, Tedhe Medhe, Tangles,
Galata Masti

Savoury Snacks - #2 All India

mint-o & Candyman Confectionery

Confectionery - #3 in Sugar Confectionery

Kitchens of India Ready Meals, Premium

conserves, chutneys & cooking sauces

Ready-to-Eat - Leveraging expertise of

Hotels
business.
Premium
Conserves/Chutneys first in India
23

Education & Stationery

Products

Notebooks
Writing
Instruments
(Pen, Pencils etc)
Scholastic
products
Brands

Classmate
Paperkraft

24

Education & Stationery Products Business

Leverages print and paper know-how to address suitable opportunities in
the stationery market.
An emerging (currently `12000 cr. Stationery) market in India - growth
driven by increasing cross-cultural exposure, government spending on
education

Classmate and Paperkraft continue to gain consumer franchise

Classmate : Market leader in Notebooks segment

25

Personal Care Products

Brands:
Essenza Di Wills
Fiama Di Wills
Vivel
Superia
Engage

Product portfolio:
Personal Wash

(Soaps, Shower Gel)

Deodorants
Skin Care

(Skin Cream, Face Wash

etc.)
Hair Care

(Shampoo, Conditioner)
Talc

26

Personal Care Products

Current market size estimated at over ` 57000 crores

Portfolio approach straddling all consumer segments with 4 umbrella brands

Essenza Di Wills
Fiama Di Wills
Vivel
Superia

Recently launched Engage brand in the fast

growing deodorants segment well received

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

centre leveraged to launch unique and differentiated products

Products continue to receive encouraging consumer response

27

Lifestyle Retailing

Enhanced lustre & premiumness to brand Wills to a position of eminence

Offering a Lifestyle proposition with portfolio straddling multiple genres

-

Wills Lifestyle - a fashion destination, offers a choice of super-premium formals, designer,

work, relaxed & evening wear and fashion accessories

John Players embodies the spirit of the modern youth that is playful, fashionable and cool

28

Lifestyle Retailing
Upmarket product range available in exclusive Wills Lifestyle stores (92) across 40
cities and more than 700 shop-in-shops in leading departmental stores and multibrand 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

Club ITC a pan-ITC consumer loyalty programme with over 1.8 Lakh members,
serves as a platform for creating superior bonding with premium consumers and
leverages synergies between Wills Lifestyle and ITC Hotels

29

Safety Matches & Incense sticks (Agarbattis)

Current Safety Matches & Incense sticks industry consumer spend
estimated at ~ ` 6,700 crores
AIM Indias largest selling Safety Matches brand

Mangaldeep : Indias second largest selling Incense sticks brand

ITC markets its brands with value-added products across price points

ITCs Matches & Incense sticks businesses provide livelihood opportunities

to more than 18000 people

30

ITC Hotels

No. 2 in Size
No. 1 in Profitability Margin

31

Hotels & Tourism industry

Foreign arrivals into India: ~6.6 million Vs. ~57.7 million in China
The two nations were on par 2 decades ago
Today, Beijing alone has as many hotel rooms as the whole of India
Indias luxury rooms availability lower than even smaller East Asian countries
Huge potential driven by Indias diversity and economic growth

80000
70000
60000
50000
40000
30000

20000
10000
0

Hong Kong

Bangkok

Singapore

Malaysia

India

Source: Compendium of Tourism statistics, WTO

32

Indian Hotel Industry

Current supply ~183,000 rooms of which 5 Star category represents

nearly 50,000 of total inventory

India needs an additional 50,000 rooms in the next 3/5 years to
service projected tourist arrivals
Present high levels of room inventory in key Indian cities leading to a
relatively weak pricing scenario to persist over the short term
As infrastructure for trade & commerce improves - potential for
leisure tourism to grow

33

ITC Hotels

100 properties across 70 locations

4 Brands ITC Hotels, WelcomHotel, Fortune & WelcomHeritage
20 Five-Star Deluxe/ Five-Star Properties with over 4500 rooms
43 Fortune Hotels with nearly 3600 rooms
37 WelcomHeritage Properties with over 900 rooms

Added four new hotels under Management Contract at New Delhi,

Chandigarh, Kollam and Kozhikode in 2013/14.
ITC Hotels rated as greenest luxury hotel chain in the world

ITC Grand Chola - First 5 Star 'Green Rating for Integrated Habitat Assessment'
(GRIHA) rated luxury hotel by the Ministry of New and Renewable Energy.

Projects underway at Kolkata, Classic Golf Resort (near Gurgaon) and

Hyderabad.
34

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

36

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

37

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. 165000
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

38

Agri Business

No. 1 in Leaf Tobacco

No. 2 in Agri commodities
Pioneer in rural transformation

39

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

40

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 (support creation of verticals in wheat,
potato etc.)
cost-effective sourcing for exports/domestic external business

Rural retail
24 Choupal Saagars operational
41

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

42

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

43

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
44

Segment Capital Employed - 2013/14

Rs. Cr.

FY14
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

45

ITC - Key Financials Q1 2014/15

Rs. Cr.

Q1 14/15

Q1 13/14 Goly %

Net Revenue

9164

7339

24.9

PBDIT

3512

2994

17.3

PBIT

3281

2779

18.0

PBT

3266

2762

18.2

PAT

2186

1891

15.6

46

Segment Revenue - Q1 2014/15

Rs.
Cr.
` Crs.

Q1
GOLY(%)
2014-15 2013-14

Q4
2013-14
Segment Revenue (Net)
4079
2315
6393
321
2004
1261
9979
834
9145

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

4201
1935
6136
249
3296
1288
10969
1804
9164

3537
1745
5282
250
2189
1163
8884
1546
7339

18.8
10.9
16.2
(0.5)
50.6
10.8
23.5
16.8
24.9

47

Segment Results - Q1 2014/15

Rs.
` Cr.
Crs.

Q1
GOLY(%)
2014-15 2013-14

Q4
2013-14
2552
43
2595
60
145
188
2989
10
(244)
3223

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

2722
(16)
2706
(12)
202
275
3171
15
(109)
3266

2242
(19)
2223
9
199
252
2683
17
(97)
2762

21.4
17.6
21.7
NA
1.6
9.3
18.2
(10.6)
13.3
18.2

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: USD 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 164,500

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 one and half times 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