A Bussiness Plan

Of
ITC LIMITED
A
Project Report
Submitted to
Mrs. Gaytri Vayas Meghnani

S.K. School of business Management,

North Gujarat University

Submitted by
Bhankhriya komal (4)
Makwana vinayak(19)
Prajapati Vishvani(45)
Saxena Smruti (49)

INDEX
No.

Sub No.

Contents

Page no.

1.1
1.2
1.3

Company Name and Address

Brief History And Description Of Business
Brief Overview Of Market And Trends

3
4
6
11

2.1

Vision And Mission Statement

What business are we in

13
14

3.1
3.2

Company Products And Service

Product And Service Description
Customer Benefits

15
17
24

4.1.1

Market And Competitive Analysis

Overall Market And Target Market

26
27

4.2.1
4.2.2
4.2.3

Industry Analysis
SWOT Analysis
Main Competitors

28
28
30

Business Strategy And Marketing Plan

Pricing Strategy
Distribution Strategy

corporate Strategy

32
32
32
33

Organization and management summary

Organization Chart And Structure
Personal Plan

34
34
34

1.0

2.0

3.0

4.0
4.1
4.2

5.0
5.1
5.2
5.3
6.0
6.1
6.2

EXECUTIVE SUMMARY

Our Business Plane Report is on ITC LTD.. Main objective of this project is to
know the General Information and corporate status of iTC LTD. For that we had
references the three consecutive years annual reports. In addition to these annual reports
of ITC Ltd. we had also used various Books and Web based information to cover the
current trends of the company and its competitors, as well as the whole industry.
To analyze the firm, we have prepared Executive Summery, Vision and Mission
Statement, company product and service, market and competition analysis, business
strategy and marketing plane, organization and management summery.

INTRODUCTION
OF
ITC
COMPANY

ORGANISATION PROFILE
4

Name of company:
Indian Tobacco Company
Date of establishment:
In 1974
Form of Organization:
LIMITED
Type of Organization:
Large scale

ITC PROFILE
ITC Limited or ITC is an Indian public conglomerate company headquartered in Kolkata, West Bengal,
India. Its diversified business includes four segments: Fast Moving Consumer Goods (FMCG), Hotels,
Paperboards, Paper & Packaging and Agri Business. ITC's annual turnover stood at $7 billion and market
capitalization of over $33 billion. The company has its registered office in Kolkata. It started off as the
Imperial Tobacco Company, and shares ancestry with Imperial Tobacco of the United Kingdom, but it is
now fully independent, and was rechristened to India Tobacco Company in 1970 and then to I.T.C.
Limited in 1974.
The company is currently headed by Yogesh Chander Deveshwar. It employs over 26,000 people at more
than 60 locations across India and is listed on Forbes 2000. ITC Limited completed 100 years on
24 August 2010.
ITC has a diversified presence in FMCG (Fast Moving Consumer Goods), Hotels, Paperboards &
Specialty Papers, Packaging, Agri-Business and Information Technology. While ITC is an outstanding
market leader in its traditional businesses of Hotels, Paperboards, Packaging, Agri-Exports and
Cigarettes, it is rapidly gaining market share even in its nascent businesses of Packaged Foods &
Confectionery, Branded Apparel, Personal Care and Statio

Contact Details
Address

Virginia House,37 Jawaharlal Nehru Road, Kolkata, West Bengal-700071.

Phone No

91-033-22889371/22886426/22880034 (Phone)

Fax

91-033-22882358 (Fax)

Email ID

isc@itc.in

Website

www.itcportal.com

Registrar Details
Registrar
Registrar's Office

ITC Ltd.
Virginia House,37 Jawaharlal Nehru Road,
,Kolkata 700071
033-2288 9371 / 2288 6426 / 2288 0034 (Phone)
033-2288 2358 (Fax)
isc@itc.in
www.itcportal.com

Registrar Phone
Registrar Fax
Registrar Email Id
Registrar Website

Listing Details
Industry
House
BSE Code
NSE Symbol
ISIN NO
Face Value
Listing
BSE Group
Indices

Cigarettes/Tobacco
MNC
500875
ITC
INE154A01025
1
BSE,NSE,Kolkata
A
SENSEX, BSE100, BSE200, BSE500, BSEFMC, GREENEX, CARBONEX ,
NIFTY, CNX500, CNX100, CNXFMCG, CNXCONSUMP, CNX200,
CNXDIVOPPT

HISTORY OF DEVLOPMENT
6

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of India '. In
the first six decades, the company solely focused on growth and strengthening of the cigarettes and leaf
tobacco businesses. In the seventies it witnessed an evolution leading towards momentous changes in the
life of company.
ITC is one of the leading private sector enterprises that has a market capitalisation of $19 billion and a
turnover of over $5.1 billion. This diversified conglomerate has business interests in cigarettes, hotels,
paperboards and specialty papers, packaging, agri-business, packaged foods and confectionery,
information technology, branded apparel, personal care, stationery, safety matches and other FMCG
products. The company has employee strength of over 25,000 people at more
A Modest Beginning
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.
1925: Packaging and Printing: Backward Integration
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, 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.
1975: Entry into the Hospitality Sector - A 'Welcom' Move
The Seventies witnessed the beginnings of a corporate transformation that would usher in momentous
changes in the life of the Company. In 1975, the Company launched its Hotels business with the
acquisition of a hotel in Chennai which was rechristened 'ITC-WelcomgroupHotel Chola' (now
renamed My Fortune, Chennai). 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 under four brands namely, ITC Hotels - Luxury
Collection, WelcomHotels, Fortune Hotels and WelcomHeritage.
ITC Hotels recently took its first step toward international expansion with an upcoming super
premium luxury hotel inColombo, Sri Lanka. In addition, ITC Hotels also recently tied up with RP
Group Hotels & Resorts to manage 5 hotels in Dubai and India under ITC Hotels' 5-star 'WelcomHotel'
brand and the mid-market to upscale 'Fortune' brand.
1979: Paperboards & Specialty Papers - Development of a Backward Area
7

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited.
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.
1985: Nepal Subsidiary - First Steps beyond National Borders
In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. In August
2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal
Private Limited (Surya Nepal). In 2004, the company diversified into manufacturing and exports of
garments.
1990: Paperboards & Specialty Papers - Consolidation and Expansion
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.
1990: Agri Business - Strengthening Farmer Linkages
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. Also, through the 'ChoupalPradarshanKhet' initiative, the
agri services vertical has been focusing on improving productivity of crops while deepening the
relationship with the farming community.
2002: Education & Stationery Products - Offering the Greenest products
ITC launched line of premium range of notebooks under brand Paperkraft in 2002. To augment its
offering and to reach a wider student population, the Classmate range of notebooks was launched 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
Practical Books, Drawing Books, Geometry Boxes, Pens and Pencils under the 'Classmate' brand. In
2008, ITC positioned 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. In 2010, Colour Crew was launched as a new brand of art stationery.

2000: Lifestyle Retailing - Premium Offerings

8

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 'Wills
Signature', taking the event forward to consumers.
2000: Information Technology - Business Friendly Solutions
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 - Banking Financial Services & Insurance (BFSI), Consumer
Packaged Goods (CPG), Retail, Manufacturing, Engineering Services, Media & Entertainment, Travel,
Hospitality, Life Sciences and Transportation & Logistics.
2001: Branded Packaged Foods - Delighting Millions of Households
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 entered the fast growing branded snacks category with Bingo!in 2007. In 2010,
ITC launched Sunfeast Yippee!to enter the Indian instant noodles market. In just over a decade, the
Foods business has grown to a significant size under seven distinctive brands, with an enviable
distribution reach, a rapidly growing market share and a solid market standing.
2002: Agarbattis& Safety Matches - Supporting the Small and Cottage Sector
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 matches
brands like iKno, Mangaldeep and Aim.
ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its
partnership with the cottage sector. Mangaldeep is a highly established national brand and is available
across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood and 'Fragrance of Temple'.
2005: Personal Care Products - Expert Solutions for Discerning Consumers
ITC entered the Personal Care Business in 2005. In eight years, the Personal Care portfolio has grown
under 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel' and 'Superia' brands which have received
encouraging consumer response and have been progressively extended nationally. In May 2013, the
business expanded its product portfolio with the launch of Engage - one of India's first range of 'couple
deodorants'
2010: Expanding the Tobacco Portfolio
9

In 2010, ITC launched its handrolled cigar, Armenteros, in the Indian market. Armenteros cigars are
available exclusively at tobacco selling outlets in select hotels, fine dining restaurants and exclusive clubs

Awards and Recognition

ITC PSPD Unit Kovai received the Award for Excellent Water Efficient Unit for the third year at the 6th
National Awards for Excellence in Water Management 2009 organised by the CII Sohrabji Godrej Green
Business Centre, Hyderabad
ITC became the first Indian company to gain membership with WWF GFTN for responsible forestry
ITC's Sustainability Report 2009 was adjudged as one of the best global reports in the 'Carbon
Disclosure' category in CRRA'10 (Corporate Responsibility Reporting Award '10), the only global body
to evaluate Corporate Responsibility Reports
ITC ranked 2nd among top companies in India and 7th in Asia in the first of its kind Asian Sustainability
Rating released by CSR Asia
ITCs Social and Farm Forestry programme won the 2nd NASSCOM Social Innovation Honours 2010 for
bringing about social change and development through technology
Chairman Y C Deveshwar was conferred the US Global Leadership Award by the US India Business
Council of the US Chamber of Commerce
ITC was presented the FICCI Award for Outstanding Achievement in Rural and Community
Development by the Finance Minister, Shri Pranab Mukherjee
ITC 'sBhadrachalam Paperboard mill was declared the Paper Mill of the year 2005 -06by the Indian
Paper ManufacturersAssociation (IPMA)
Greentech Environment Excellence Gold Award was presented the governor of Goa, Dy. Chief Minister
and Minister of Environment, Science and Technology, Govt. of Goa during 7th Annual Greentech
Environment Excellence Award Program on 31st August, 2006.
National Award for Excellence in Energy Management 2005
CII conferred National Award for Excellence in Water Management 2005 to ITC Limited - PSPD,
Bhadrachalam Unit
Capexil's Top Export Award in the year 2003-04 and 2001-2002
National Award for Excellence in Energy Management for Year 2004Golden Peacock Award in the year
2003 by the World Environment Foundation
The company received National Energy Conservation Award for the year 2002

10

Indira PriyadarshiniVrikshamitra Award 1997, by Ministry of Environment and forests, Government of

India.
Rajiv Gandhi PartiBhoomiMitra Award 1996, by Ministry of Rural Areas and Employment, Government
of India1991-1992
FAPCCI Award for The Best Technological Development in Research and Development for 1991-92by
Federation of Andhra Pradesh Chambers of Commerce and Industry

11

INDUSTRY OVERVIEW
FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily deals with
the production, distribution and marketing of consumer packaged goods. The Fast Moving Consumer
Goods (FMCG) are those consumables which are normally consumed by the consumers at a regular
interval. Some of the prime activities of FMCG industry are selling, marketing, financing, purchasing, etc
. The industry also engaged in operations, supply chain, production and general management. Some
common FMCG product categories include food and dairy products, glassware, paper products,
pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing and stationery,
household products, photography, drinks etc. and some of the examples of FMCG products are coffee,
tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes, watches, soaps etc. Some of the
merits of FMCG industry, which made this industry as a potential one, are low operational cost, strong
distribution networks,presence of renowned FMCG companies. Population growth is another factor
which is responsible behind the success of this industry.

ITC Limited

ITC is an Indian company headquartered in Kolkata, West Bengal, India. Its diversified business
includes four segments: Fast Moving Consumer Goods (FMCG), Hotels, Paperboards, Paper &
Packaging and Agri Business. ITC's annual turnover stood at $7 billion and market capitalization of over
$33 billion. The company has its registered office in Kolkata. It started off as the Imperial Tobacco
Company, and shares ancestry with Imperial Tobacco of the United Kingdom, but it is now fully
independent, and was rechristened to Indian Tobacco Company in 1970 and then to I.T.C. Limited in
1974.ITC Limited completed 100 years on 24 August 2010. ITC has a diversified presence in Cigarettes,
Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery,
Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG
products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels,
Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent
businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery. ITC
features on the Forbes Global 2000 rankings for 2007 at position 1256. ITC is the only Indian FMCG
company that features on the Forbes Global 2000 rankings for 2009 at position 987. ITC also featured on
the Forbes World's most reputable Companies List at position 95.

12

Key Corporate Strategies

Focus on the chosen business portfolio
FMCG;Hotels;Paperboards,Paper&Packaging;AgriBusiness,InformationTechnology
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 classs tandards inquality and costs

Craft appropriate strategy of organization and governance process to:

Enable focus on each business and
Harness diversity of portfolio to create unique sources of competitive advantage

SUBSIDAIRY COMPANY

Gold Flake Corporation Limited

ITC Infotech
King Maker Marketing Inc., USA

Landbase

Surya Nepal Private Limited

Russell Credit Limited

TechnicoPty Limited, Australia

Srinivasa Resorts Limited
WimcoLimited

Fortune Park Hotels Limited

Bay Island Hotels Limited

ITCs Vision
13

Make a significant and growing contribution towards:

enhancing shareholder rewards
By
creating multiple drivers of growth while sustaining leadership in tobacco, and
focusing on TripleBottom Line Performance
Enlarge contribution to the Nations
-Financial capital
-Environmental capital
-Social capital

The ITC Vision and Mission:

14

What we do

Business cannot succeed in societies that fail. Businesses must play a more meaningful, involved
and active role in the creation of a more sustainable and inclusive future.
ITC is pursuing innovative business strategies that synergise the creation of sustainable livelihoods and
the preservation of natural capital with the building of shareholder value.
This Triple Bottom Line strategy of building economic, social and environmental capital involves:

What we believe

At ITC, we believe that businesses exist to sub-serve larger societal goals. Therefore, their contribution is
best measured by the value they create for the society at large, giving beyond traditional profit and loss
statements.
Inspired by this vision, ITC has innovatively crafted unique business models that synergise long-term
shareholder value creation with enhancing societal capital.
It is ITCs belief that a companys performance must be measured by its Triple Bottom Line contribution
to building economic, social and environmental capital.
By adopting this approach, the company has unleashed multiple drivers of growth in India, creating
sustainable livelihoods around 6 million people belonging to the marginalized sections of society as well
as ensuring long-term sustainability and competitiveness of its businesses.
ITC is today an exemplar in sustainability practices; a fact that is manifest in its status of being the only
company in the world of comparable dimensions to be 'carbon positive', 'water positive' and 'solid waste
recycling

15

Company products and services

16

LIST OF PRODUCTS & BRANDS

In FMCG, ITC has a strong presence in:

Cigarettes:

W. D. & H. O. Wills,

Gold Flake Kings,

Gold Flake Premium,

Navy Cut,

Insignia,

India Kings,

Classic

Verve,

Menthol,

Menthol Rush,

Regular,Citric Twist,

Mild & Ultra Mild,

555,

Benson & Hedges,

Silk Cut,

Scissors,

Capstan,

Berkeley,

Bristol,

Lucky Strike,

Players and

Flake.

Foods:

Kitchens of India;

Aashirvaad,
17

Minto,

Sunfeast,

Candyman,

Bingo,

Yippee,

Sunfeast Pasta brands in Ready to Eat, Staples, Biscuits, Confectionery, Noodles and
Snack Foods

Apparel:

Wills Lifestyle and

John Players ;

Personal care:

Fiama di Wills;

Vivel;

Essenza di Wills;

Superia;

Vivel di Wills brands of products in perfumes, hair care and skincare

Stationery:

Classmate and

PaperKraft brands

Safety Matches and Agarbattis:

iKno;

Mangaldeep;

Aim brands

Other businesses include:

Hotels: ITC's hotels (under brands including WelcomHotel) have evolved into being India's
second largest hotel chain with over 80 hotels throughout the country. ITC is also the exclusive
franchise in India of two brands owned by Sheraton International Inc.- The Luxury Collection
and Sheraton which ITC uses in association with its own brands in the luxury 5 star segment. Brands
18

in the hospitality sector owned and operated by its subsidiaries include Fortune and Welcome
Heritage brands.

Paperboard, Specialty Paper, Graphic and other Paper;

Packaging and Printing for diverse international and Indian clientele.

Infotech (through its fully owned subsidiary ITC Infotech India Limited which is a SEI CMM
Level 5 company)

19

Creating world-class brands for Indian Consumers

Cigarette Industry in India

Legal cigarettes account for less than 12% of tobacco consumed in India due to pro longed punitive
taxation

48% of adult Indian males consume tobacco. Only 10% of adult Indian males moke cigarettes as
compared
to
16%
who
smoke
birisand
33%
who
use
smoke
less
tobacco(Source:GlobalAdultTobaccoSurveyIndia2010)

Annual per capita adult cigarette consumption in India is appx. One ninth of world average
Branded Packaged Foods Portfolio

20

Personal Care Products

Portfolio approach straddling all consumer segments with 4 umbrella brands
EssenzaDiWills
FiamaDiWills
Vivel
Superia
Complemented by Engage brand in the deodorants segment

Products continue to receive encouraging consumer response; Engagede well received by it starget
consumers

LaboratoireNaturelAstate-of-the-artconsumer and product in teraction centreleveraged to

launchunique and differentiated products

21

Education & Stationery Products Business

Leverages print and paper know-howtoaddresssuitableopportunitiesinthestationerymarket.
Industry growth driven by increasing literacy and enhanced scale of government and public-private
initiatives in education
The Business continues to consolidate its market standing
Classmate:Market leader in Notebooks segment

Lifestyle Retailing
Slow down indiscretionary consumption expenditure continues to impactthe branded apparel
industry
Up market product range available in exclusive WillsLifestyle stores(104) across 43 cities and
morethan 700 shop-in-shopsin leading departmental to resand multi-brand outlets.
Strong distribution network in place for the mid-market brand JohnPlayers
availability in morethan 400 Exclusive Branded outlets ,1600 multibranded out lets and departmental
stores

22

Hotels & Tourism industry

Foreign Tourist Arrivals grew by 6% in Q3Vs.13% in Q2 and 6% in FY14
Foreign Tourist Arrivalsin to India@~6.8million remains far behind China(~55.7million)
[Source:UNWTOTourismHighlights2014edition]
Foreign Tourist Arrivals into India is projected at~ 11million by2021
Current Room inventory~210,000 room so which52,000 rooms are in the Luxury and Upper
Upscalesegment
India needs an additional ~60,000 rooms in Luxury and Upscale Segments in the next 5years to service
projected tourist arrivals
TheChain:98properties across 71 locations
4BrandsITCHotels,WelcomHotel,Fortune&WelcomHeritage
21Five-StarDeluxe/Five-StarPropertieswithover4600rooms
43FortuneHotelswithover3500rooms
34Welcom Heritage Properties with over 800rooms
Industry impacted by weak pricing scenario

23

due to the excessive room inventory

Indian Leaf Tobacco industry

India

the second largest producer of tobacco

However,Indias share is only at 8% of world tobacco trade

ITCIndias largest buyer, processor, consumer&exporter of cigarette tobaccos
5th largest leaf tobacco exporter in the world
Pione eringcultivation of flavourfulFlue-cured and superior Burley tobaccos in India
Robust growth in exports inrecent years with improvement inrealizations
Indiathe second largest producer oftobacco
However,Indias share is only at8% of world tobacco trade
ITCIndias largest buyer, processor,consumer&exporter of cigarette tobaccos
5th largest leaf tobacco exporter in the world
Pioneering cultivation of flavourful Flue-curedand superior Burley tobaccos in India
Robust growth in exports inrecent years with improvement inrealizations

e-Choupal: Strategic Thrust

Procurement:cost & quality optimisation
strategic sourcing support to the Foods business
cost-effective sourcing for exports/domestic external business
Rural retail
24Choupal Saagars operational

24

Customer benefit
The ITC companies (ITCTransmisison, Michigan Electric Transmission Company, and ITC Midwest)
submit the following comments for consideration by the Midwest ISO in evaluation of the proposal
before the RECB taskforce.
Benefit Metric(s)
The ITC companies support the use of 100% adjusted production cost as the sole benefit metric, as
proposed by the Midwest ISO. Given the regulatory structure for a majority of generators in the Midwest
ISOs generation fleet coupled with limited customer choice, a benefit metric that measures the cost of
production appears appropriate. Additionally, the ITC companies would like to note that the economic
benefits of new transmission are multifaceted and the various benefits are not derived independently. In
this instance, as proposed by the Midwest ISO, adjusted production cost is only a proxy for the actual
economic benefits that will result from new transmission. However, the proxy is not a comprehensive or
all-inclusive approach to evaluating benefits provided by transmission.
Benefit/Cost Threshold
A benefit/cost ratio of 1.00 is achieved when the benefits and costs of a particular project are equivalent
over time. While there is uncertainly in the magnitude of both project costs and economic benefits
represented by adjusted production cost, these benefits, which accrue over time are inherently more
difficult to quantify than project cost. Therefore, when developing a threshold ratio to ensure that a
projects benefits will outweigh the costs, a benefit/cost ratio between 1 and 1.25 seems appropriate,
particularly when the benefit measures are limited and asset lives can be 70 up to years. Additionally,
with the exception of extreme cases, the ancillary benefits of these projects will overcome cost estimate
variances resulting in a project that provides overall benefit to the customer.
Timeframe
The Midwest ISO proposed 20 year planning horizon to evaluate the benefits of Market Efficiency
Projects appears to be an appropriate compromise considering the longer life of transmission assets while
also recognizing the difficultly of forecasting benefits for years far in the future.
Voltage Criteria
Projects over 100kV and less than 300 kV should be eligible for cost allocation via Market Efficiency
Projects in accordance with agreed upon principles determined by this task force. For instance, consider a
highly congested system that locally limits the export of inexpensive power. Through the development of
a 230 kV transmission line the broader MISO market would now have access to less costly power, thus
providing economic benefit to a region greater than the host zone. Likewise, projects under 300 kV

25

can provide economic benefits to a region larger than a TOs footprint and should be eligible for cost
sharing utilizing a more granular approach.
Discount Rate
As proposed, the Midwest ISO discount rate utilizing the TOs average WACC fails to consider the
customers time value of money. A transmission owners decision to develop new transmission is not
generally predicated on a corporate decision to invest in select group of projects providing a greater
return than others, but the characteristics of a particular project and the benefits it will provide to
customers. Providing value to the customer through the development of transmission is the objective,
thus the customers contribution to a project and associated monetary value should be considered when
evaluating the benefits of transmission.

Employees Benifit
As per the Annual report of the company, it had 25,962 employees as on 31 March 2013,out of which
3,043 were women. It spent Rs. 2,145 crores on Employee benefits during the FY 2012-13 During the
same
year,
its
attrition
rate
was
12%
Its Chairman Y C Deveshwar has won renowned awards and recognitions including Padma Bhushan
from Govt. of India and 7th best performing CEO in the world by Harvard Business Review. Meera
Shankar, Indian ambassador to USA between 2009 and 2011, joined the board of ITC Limited as the first
woman director in its history She is an additional non-executive director of the company

26

Market & competitive analysis

We deliver "Trade Impact for Good through six focus areas:

1. Trade and market intelligence for SME competitiveness
2. Supporting regional economic integration and South-South links
3. Connecting to value chains : SME competitiveness, diversification and links to export markets
4. Strengthening trade and investment support institutions
5. Promoting and mainstreaming inclusive and green trade
6. Building a conductive business environment

ITC is headed by an Executive Director, who reports to the Secretary General of the United Nations
Conference on Trade and Development (UNCTAD) and the Director General of the World Trade
Organization (WTO). The Senior Management Committee (SMC) is made up the two executive officers
and the heads of ITCs four divisions.

Internally, our organization is structured into the offices of the Executive Director and the Deputy
Executive Director, and four divisions with Divisional Directors at the head.The Office of the Executive
Director oversees key management control functions especially governance, planning and performance
reporting, evaluation and impact assessment; spearheads the positioning of ITC, including
communication with donors, external stakeholders, beneficiary groups and the general public as well as
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internally among ITC staff; leads a corporate approach to event management and fundraising and
coordinates strategic partnerships.The Division of Country Programmes provide set clear priorities for
ITCs Aid for Trade activities in programme countries through partnerships and coordination, needs
assessment, project design, business development and project management.The Division of Market
Development supports SME competitiveness in developing countries by providing market analysis and
research, trade information services and coordinates ITCs sector-specific work following a marketdriven approach.The Division of Business and Institutional Support develops and supports the
internationalisation of SMEs by providing services to strengthen the ability of SMEs to maximize
international competitiveness; improve the performance of trade support institutions to provide business
support services to SMEs; contribute to a conducive business environment through facilitating effective
participation of the private sector in policy making.The Division of Programme Support provides
administrative support activities, such as budget preparation and implementation control, accounting,
human resources management, building management, procurement, travel and registry services and
information technology services to the organization.

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Industry Analysis
SWOT Analysis ITC

ITC is one of Indias biggest and best-known private sector companies. In fact it is one of the Worlds
most high profile consumer operations. This SWOT analysis is about ITC. 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

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. Take a look
at eChoupal here http://www.itcportal.com/agri_exports/e-choupal_new.htm
ITC leverages e-Choupal in a novel way. The company researched the tastes of consumers in the North,
West and East of India of atta (a popular type of wheat flour), then used the network to source and create
the raw materials from farmers and then blend them for consumers under purposeful brand names such as
Aashirvaad Select in the Northern market, Aashirvaad MP Chakki in the Western market and Aashirvaad
in the Eastern market. This concept is tremendously difficult for competitors to emulate.
Chairman Yogi Deveshwars strategic vision is to turn his Indian conglomerate into the countrys premier
FMCG business.
Per capita consumption of personal care products in India is the lowest in the world offering an
opportunity for ITCs soaps, shampoos and fragrances under their Wills brand.

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.
ITCs 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.
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ITC was incorporated on August 24, 1910 under the name of Imperial Tobacco Company of India
Limited. Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of
the Companys 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.

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 companys 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 companys turnover, and that in itself is responsible for 80% of
its profits. So there is an argument that ITCs 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.

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Main Competitors
HINDUSTAN UNILEVER LIMITED Company Profile

Hindustan Unilever Limited (HUL), a majority-owned subsidiary of Anglo-Dutch giant Unilever, has
been working its way into India since 1888, when it started selling its products there. As India's largest
consumer goods firm, HUL markets more than 400 brands that include beverages, food, and home and
personal care goods. Some of its names include Kwality Wall's ice cream, Sunlight dish detergent,
Lifebuoy and Dove soap, Lipton tea, Pepsodent toothpaste, and Surf laundry detergent. HUL markets atta
(a type of meal), maize, rice, and salt, and its export division ships castor oil and fish. The company also
sells bottled water and over-the-counter medications.

RELIANCE INDUSTRIES LIMITED Company Profile

India and Reliance Industries rely on each other. The company is India's largest petrochemical firm and
among the country's largest companies (along with Indian Oil and Tata Group), accounting for 14% of
India's total exports and 4% of its total market capitalization. Oil refining and the manufacture of
polyolefins and related chemicals account for the bulk of Reliance Industries' sales. It also makes textiles
and explores for oil and gas. Reliance Industries operates more than a dozen manufacturing plants
in India. The company has fully integrated its oil and gas refining subsidiary, Reliance Petroleum, in an
effort to consolidate the company's position as a major player in the global refining business.

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Industries Where ITC Limited Competes

Tobacco Product Manufacturing

Crop Production

Information Technology Services

Consumer Products Manufacturing

Apparel Manufacturing

Main Competitors of ITC ltd.:

Hindustan Unilever
Golden Tobacco Ltd.
Godfrey Philips India Ltd.
RTCL Ltd.
VST Industries Ltd.
Marico Ltd.

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Business strategy & marketing plan

Distribution Process at ITC

the flow of the goods from the manufacturing stage to the selling stage. After the goods are manufactured they
are sent to C&F for storage and from there it is supplied to the distributors in various parts of the city to be
sold to the various outlets like provision stores, sub-wholesale, bakeries, super markets, fancy stores, etc.
There are 16 ITC distributors in Bangalore city. The same distributor supplies all the products like food,
personal care and cigarettes to the retail outlets. There are salesmen to collect the order from the various
outlets and the order delivery is done the next day with the help of the delivery vehicles. Salesmen get a fixed
salary for the month. There are about 350-380 loyalty outlets that provide about 50% of the total turnover for
the company.

Pricing Strategies Of ITC

Pricing Strategy ITC Foods Business Division (Staples)The FMCG & RETAIL Pricing
StrategyUNDERSTANDING THE PROCESSFMCG Pricing Strategy is now a critical element of the
management mix. Old schoolmanagement responsibilities of Sales owning the trade spend budget
and customer negotiations with marketing owning the Recommend Retail Price do not work in today'sinformation
driven age.Retail sales volume is now 80% controlled by 2-3 chains with a scattering of independentoperators making up
the rest of the volume. This concentration means the negotiations favour the retailer with the supplier handing over
margin via the mechanism of trading terms and viathe demand for increased promotional frequencies and
deep price discounts on key brandedlines.The challenge for Trade Marketing, Category Management
as well as Sales and Marketing isto develop a pricing system that can be customized to reflect your Is this
Essay helpful? Join OPPapers to read more and access more than 325,000 just like it!get better grades business needs
but utilize the power of a structured and proven pricing management system.The Basic Concept used by
ITC is:PRICE IS SOMETHING WHICH CUSTOMER IS READY TO PAY FOR YOUR PRODUCT
Hence it is a majority function of - Consumers purchasing Power.- Market condition created by the Competitor
in terms of the Price.PRICING STRATEGYPricing is an important strategic issue because it is related to
product positioning.Furthermore, pricing affects other marketing mix elements such as product features,
channeldecisions, and promotion.While there is no single recipe to determine pricing, the following is a general
sequence of steps that are followed for developing the pricing of product:1. Develop marketing strategy perform marketing analysis, segmentation, targeting, and positioning. Methods Adopted: Box Plot
Method: i.e. Market Segmentation2. Make marketing mix decisions - define the product, distribution, and promotional
tactics.3. Estimate the demand curve - understand how...

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ITCs corporate strategies

ITC is a board-managed professional company, committed to creating enduring value for the nation and
the shareholder. 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.
ITCs 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.

Enhance the competitive power of the portfolio through synergies derived by blending the diverse
skills and capabilities residing in ITCs various businesses.

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

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Organisation & management summary

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