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ITC LimitedITC LimitedOne of India’s Most Valuable One of India’s Most Valuable

CorporationsCorporations

HIMANSHU DIXITMBA

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Performance Track Record- Snapshot

Rs. 1 crore= Rs. 10 million

Rs crores

95-96 07-08Cagr 95-96

to 07-08

Gross Turnover 5115 21,356 12.6%Net Turnover 2536 13,948 15.3%Market Capitalisation 5571 77,765 24.6%PBDIT 584 5,015 19.6%PBIT 536 4,576 19.6%PBT 452 4,572 21.3%PAT 261 3,120 23.0%EPS Rs 0.7 8.3 22.7%Net Worth 1121 12,025 21.9%Capital Employed 1886 12,817 17.3%ROCE% 28.4 35.7Total Shareholders Returns % 25.8

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ITC - Key Financials – H1 08/09

Rs crs H1 Actuals H1 LY Goly %

Gross Turnover External 11479 10167 12.9

Net Turnover External 7663 6564 16.7

PBDIT 2567 2469 4.0

PBIT 2307 2262 2.0

PBT 2303 2262 1.8

PAT 1551 1554 -0.2

Capital Employed 14495 12860 12.7

Q2 Segment Results

Rs crs

Quarter Quarter Golyended ended (%)

30.09.2008 30.09.2007

2. Segment Resultsa) FMCG - Cigarettes 1007 864 16.6%

- Others (117) (37) -219.1%Total FMCG 890 827 7.6%

b) Hotels 69 66 4.1%c) Agri Business 76 10 667.8%d) Paperboards, Paper & Packaging 122 126 -2.6%

Total 1158 1029 12.5%Less : i) Interest (Net) 3 1 205.5%

ii) Other un-allocable net income (34) (105) 67.5%

Total Profit Before Tax 1189 1133 4.9%

H1 Segment Revenue

Rs crs

Half Year Half Year Golyended ended (%)

30.09.2008 30.09.2007

1. Segment Revenue (Net)a) FMCG - Cigarettes 3552 3211 10.6%

- Others 1449 1126 28.7%Total FMCG 5001 4337 15.3%

b) Hotels 467 412 13.4%c) Agri Business 2699 2127 26.8%d) Paperboards, Paper & Packaging 1306 1038 25.8%

Total 9473 7915 19.7%Less : Inter-segment revenue 1810 1351 34.0%

Net sales / Income from operations 7663 6564 16.7%

H1 Segment ResultsRs crs

Half Year Half Year Golyended ended (%)

30.09.2008 30.09.2007

2. Segment Resultsa) FMCG - Cigarettes 1968 1803 9.2%

- Others (239) (81) -194.7%Total FMCG 1729 1722 0.4%

b) Hotels 154 130 18.2%c) Agri Business 153 64 137.4%d) Paperboards, Paper & Packaging 246 212 15.8%

Total 2282 2129 7.2%Less : i) Interest (Net) 4 0 5137.5%

ii) Other un-allocable net income (25) (134) 80.9%

Total Profit Before Tax 2303 2262 1.8%

Segment Capital Employed

Rs crs

Half Year Half Year Golyended ended (%)

30.09.2008 30.09.2007

3. Capital Employeda) FMCG - Cigarettes * 2816.30 2272.85 23.9%

- Others 2403.42 1547.38 55.3%Total FMCG 5219.72 3820.23 36.6%

b) Hotels 1979.42 1686.42 17.4%c) Agri Business 753.89 1066.87 -29.3%d) Paperboards, Paper & Packaging 3709.77 2847.18 30.3%

Total Segment Capital Employed 11662.80 9420.70 23.8%

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One of the 8 Indian Companies to feature in ‘Forbes A-list’ for 2004

Featuring 400 of the World’s ‘best big companies’ with M-cap. > USD 5 bln. & are

rated as the ‘most attractive companies for investors’

Only Indian FMCG Company to feature in Forbes 2000 List

A comprehensive ranking of world’s biggest companies measured by a composite of

sales, profits, assets & market value

Among top in :

Sustained value creation (BT-Stern Stewart survey)

Operating profits

Cash Profits

Ranks No. 5 among Indian listed Private Sector Companies by market cap. (@ 30/09/08)

No. 1 in FMCG Sector

Rated as one of India’s Most Respected Companies (IMRB-Businessworld Survey

2006)

ITC One of India’s most valuable corporations

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Awards & Accolades (1)

• ‘ITC received the FICCI Outstanding Vision Corporate Triple Impact Award 2007 for invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation.

• Sustainability Leadership Award 2007 conferred on Chairman Y C Deveshwar by the Sustainability Forum, Zurich and SAM/SPG at the International Sustainability Leadership Symposium

• Business Today Award for the Best Managed Company – Retail and Consumer Products, has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment.

• Asian CSR Award 2007 for Environmental Excellence given by the Asian Institute of Management

• Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum

• In the first of its kind S&P Environmental, Social and Corporate Governance (ESG) ratings released recently, ITC ranked second among top Indian companies.

• The Company has won the Corporate Social Responsibility Crown Award for Water Practices from UNESCO and Water Digest for its distinguished work carried out in the water sector in India.

• NDTV Profit Business Leadership Award for being the Best Food Company of 2007.

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Accolades & Awards (2)

• e-Choupal initiative wins global recognition:

– 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 to win the Development Gateway Award 2005 for the most

exemplary contribution in the field of Information & Communication Technologies

(ICT) for development during the last 10 years

– World Business Award 2004: International Chamber of Commerce & the HRH

Prince of Wales & International Business forum

– Harvard University case study

– Recognised in World Development Report 2008 published by World Bank

– Applauded by President of India Dr APJ Kalam in his “special address during

the national symposium to commemorate 60th year of independence”

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ITC - Business Portfolio

ITC

FMCG: Cigarettes

Other FMCGHotels

Agri BusinessLeaf Tobacco

Agri Commodities

PaperboardPaper &

Packaging

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Strategy of Organisation to manage diversity of Portfolio

Formal 3-tiered governance structure: Board of Directors :

Comprising executive (4) and non-executive directors (11) Strategic supervision

Corporate Management Committee : Comprising executive directors and senior managers Strategic management

Divisional Chief Executive & Divisional Management Committee : Executive management

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Sustain multiple drivers of growth, matching internal capabilities

with emerging market opportunities

Pursue World class competitiveness in all businesses and across

the entire value chain

Best-in-class in terms of:

Internal Vitality

Market Standing

Profitability

Strategy of Organisation and Governance processes geared to

manage multiple businesses

Blend core competencies and leverage ITC umbrella strengths to

create new avenues of growth

Corporate Strategies

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Hotels & TourismHotels & Tourism

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Hotels & Tourism industryHotels & Tourism industry

Foreign arrivals into India: 5 million appx. Vs. 35 million in China

• The two nations were on par 2 decades ago at 750,000 arrivals

Today, Beijing alone has as many hotel rooms as the whole of India

India’s luxury rooms availability lower than even smaller East Asian

countries

0

10000

20000

30000

40000

50000

60000

70000

80000

HongKong Singapore India

Source: Compendium of Tourism statistics, WTO

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Indian hotel industryIndian hotel industry

Current supply – appx. 110,000 rooms of which 5 Star category

accounts for appx. 30%

India needs an additional 50,000 rooms in the next 2/3 years to service

projected tourist arrivals

Present mismatch between supply and demand expected to persist over

the short term

As infrastructure for trade & commerce improves - growing potential

for leisure tourism

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Economic impact of the Travel & Tourism Sector

Full potential yet to be harnessed in the Indian context

% Share of World Travel & Tourism

Demand

Travel & Tourism Economy as %

of Total GDP

Travel & TourismEconomy Jobs as

% of TotalEmployment

WORLD 10.1 9.9 8.4South Asia 6.5 6.1 5.9India 6.5 6.1 6.4

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ITC’s Hotel BusinessITC’s Hotel Business ITC-Welcomgroup : a leading hotel chain in India

• Established presence in key business locations

• Over 6000 rooms under 4 distinct brands

Capacity expansion underway at Bangalore and Chennai; plans for other locations

also being progressed. Positions on land taken at other locations such as Hyderabad

and Ahmedabad

Fastest growing hotel chain with highest operating efficiency (PBDIT/Net Income

@ 45%) amongst the 3 leading chains

Leverages unique service proposition and international alliance with Starwood

Hotels & Resorts

• ‘Luxury Collection’ / ‘Sheraton’

Category Brand PositioningLuxury ITC Hotel: Luxury Collection "Mansions of Luxury"Upper upscale WelcomHotel: Sheraton "Passion for Quality"Upscale - mid-scale Fortune Hotels "Promise of True Value"Heritage WelcomHeritage "Unique Experiences"

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ITC’s Hotel Business

• Manages 24 full service mid-market properties (1700 +

rooms ) under the Fortune Hotels brand

– 100% subsidiary company : Fortune Park Hotels Ltd.

• Also operates 60 properties under the ‘WelcomHeritage’

brand in 19 states

– Maharaja Heritage Resorts Ltd. 50% JV with Marudhar

Hotels (P) Ltd.

• Business growth expected to be impacted by financial meltdown

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e-choupal:Strategic Thruste-choupal:Strategic Thrust

Procurement: cost & quality optimisation

• strategic sourcing support to the Foods business (support creation of verticals in wheat, soya, corn, potato etc.)

• cost-effective sourcing for exports/domestic external business

Rural Distribution

• ‘last mile connectivity’: 100 partnering companies

• diverse range of goods/services : FMCG, consumer durables,agri-inputs, paid extension services etc.

Financial Services

• insurance (focus: weather)

• credit (focus: Kisan credit card scheme)

Rural retail• 23 Choupal Saagars operational

• Rapid expansion planned in identified rural markets and Tier 2, 3 & 4 towns

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Positioning of ITC A leading FMCG player in India

FARMERS

MARKETS

Cigarette Trade Marketing capability

Branded

Foods

Expanded FMCG distribution capability

e-choupal rural two-way fulfillment capability

A basis for strategic partnerships with other FMCG brand owners

VPN providing SCM, ERP & CRM capability

Lifestyle

retailing

Education

Stationery

Matches &

Agarbattis

Personal Care

Products

The Value Chain

•Primary activities1.Inbound logistic

2.Outbound logistic

3.Operations

4.Marketing & Sales

5.Service

•Support activities1.Procurement

2.HRM

3.Technology development

4.Firm infrastructure

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The Environment

•Tourism

•Business factor

•Room occupancy

•Seasonality

•Political Scenario

•Tax structure

•Differential Pricing

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BCG Matrix

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Star• Hotels•Paperboard/ Packaging•Agro Business

Question Marks•FMCG- Others•ITC INFOTECH

Cows•FMCG-Cigarettes

Dogs

Competitors•EIH

•INDIAN HOTEL

•HOTEL LEELA

•ASIAN HOTEL

•JAPYEE HOTELS

•ORENTIAL HOTELS

•TAJ GVK HOTELS

•ROYAL ORCHID

•ADVANI HOTELS

•EIH ASSOCIATE HOTEL

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Critical Success Factor

•SITE AND LOCATION

•POSITIONING AND GUEST PROFILE

•FINANCIAL STRENGTH

•BRAND RECOGNIYION

•YIELD MANAGEMENT

•DIFFERENTIAL PRICING

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SWOT Analysis

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Strength•Brand•Distribution network•Management

Weakness•Dependence on tobacco revenues• Negative Connection of Tobacco

Opportunity•Low per capita consumptionOf personal care products•Rural Market •e-Choupal

Threat•Competition both Domestic & International•Increasing Tax on cigarettes

Corporate Social Responsibility•Environmental1.ITC has been Carbon Positive 3 years in a row.

2.Water Positive 6years in a row.

3.100% solid waste recycling

•Social1.ITC's businesses generate livelihoods for over 5 million people.  

2.ITC's globally recognised e-Choupal initiative is  the world's largest rural digital infrastructure benefiting over 4 million farming families.  

3.ITC's Social and Farm Forestry initiative has greened over 80,000 hectares creating an estimated 35 million person days of employment among the disadvantaged. 

4.ITC's Watershed Development  Initiative brings precious water to nearly 35,000 hectares of dry lands and moisture-stressed areas. 

5.ITC's Sustainable Community Development initiatives include women empowerment, supplementary education, integrated animal husbandry programmes.

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Recommendation

•Improved security for hotel guests.

•Floor access control in hotels through key card system.

•Precision analysis of products in Food Business.

•Process optimisation for product development in Food Business.

•Automation of lighting controls.

•Use of Solar energy for hot water generation and outside area illumination.

•Installation of PNG (Piped Natural Gas) fuelled generator sets and PNG fired calendar and tumbler drier machines in hotel laundries.

• Improvements to reduce heat gain/cooling losses from building envelops in hotels.

•Impact of measures for reduction of energy consumption and consequent impact on the cost of production of goods.

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THAK YOU

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