ITC Limited

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ITC Limited
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ITC - Financial Snapshot
(Rs. 1 crore Rs. 10 million)
Market capitalisation _at_ 27/05/2005 US 8.95
Billion
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2004-05 Financials
(Rs. 1 crore Rs. 10 million)
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Segment Revenues 2004/05
(Rs. 1 crore Rs. 10 million)
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Segment Results 2004/05
Rs. crores
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Segment Capital Employed - March 05
(Rs. 1 crore Rs. 10 million)
Rs. crores
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Key Financials - Q4 2004/05
(Rs. 1 crore Rs. 10 million)
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Segment Revenues - Q4 2004/05
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Segment Results - Q4 2004/05
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ITC One of Indias most valuable corporations

• One of the 8 Indian Companies to feature in
  Forbes A-list for 2004
• Featuring 400 of the Worlds best big companies
  with m-cap exceeding USD 5 billion are rated as
  the most attractive companies for investors
• 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
• Among top in
• Sustained value creation (BT-Stern Stewart
  survey)
• Operating profits
• Cash Profits
• Ranks No. 10 among Indian listed Companies by
  market Cap
• 6th amongst Private Sector No. 1 in FMCG Sector
• High rating for Corporate Governance
• First company in India to be CG rated

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External recognition

• Awarded the Golden Peacock Global Award for
  Corporate Social Responsibility in emerging
  economies for 2005 by World Council for Corporate
  Governance for the e-choupal and social farm
  forestry initiatives
• e-Choupal initiative continues to win global
  recognition
• World Business Award International Chamber of
  Commerce the HRH Prince of Wales International
  Business forum
• Harvard University case study
• Thought leaders in business strategy
• C K Prahalad, University of Michigan Business
  School,Mohanbir Sawhney, Kellog School of
  Management
• ITC Centre, Gurgaon awarded Platinum Green
  building rating by US green building Council
  -Leadership in Energy and Environmental Design
• largest Platinum rated building in the world 7th
  such building in the world
• ITC Welcomgroup Environment champion of the
  Year 2004 (FHRAI)
• Bhadrachalam paperboards unit
• adjudged Greenest paper mill in India by The
  Centre for Science Environment won the
  Greentech Environment Excellence Gold Award
• John Players won the Rising Star of the year
  brand- Images Fashion Award 2004

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ITC - Business Portfolio
ITC
FMCG Cigarettes Other FMCG
Paperboards Paper Packaging
Agri Business Leaf Tobacco Agri Commodities
Hotels
Focus area for future growth
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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 (8)
• Strategic supervision
• Corporate Management Committee
• Comprising executive directors and senior
  managers
• Strategic management
• CEO Divisional Management Committee
• Executive management

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Corporate Strategies

• 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

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FMCG - Cigarettes
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ITCs Cigarettes Business

• Market leadership
• Powerful brands across segments
• Leadership in all segments - geographic price
• Extensive distribution network
• Over 900 wholesale dealers serving more than 1
  million retail outlets
• World-class state-of-the-art technology and
  products
• Investment - Rs.11 billion in six years
• Exciting long term growth potential

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Cigarettes Growth potential

• Cigarettes account for only 14 of tobacco
  consumed in India unlike world pattern of 85 due
  to prolonged punitive taxation
• Cigarettes (14 of tobacco consumption)
  contribute nearly 85 of Revenue to the Exchequer
  from tobacco sector
• Of the 58 of adult Indian males who consume
  tobacco, barely 15 can afford cigarettes
• Biri Cigarettes ratio 10 1
• Annual per capita adult cigarette consumption in
  India is one tenth world average 117
• Future growth depends on relative rates of growth
  of per capita income and moderation in taxes

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Source Based on Cigarette consumption
data(2003) from World Cigarettes, ERC Group
plc.
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Hotels Tourism
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Hotels Tourism industry

• Foreign arrivals into India - 3 million appx. vs
  31 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
• Indias luxury rooms availability lower than even
  smaller East Asian countries

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Luxury hotel rooms - East Asia
Source Compendium of Tourism statistics, WTO
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Indian hotel industry

• Current supply - 80,000 rooms of which 5 Star
  category accounts for less than 30
• To support GDP growth of 6 p.a., Indian room
  capacity needs to double in five years
• 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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ITCs hotel business

• One of three chains in India
• Strategy to establish presence in key business
  locations to complete the chain achieved in end
  2004
• Revenue leadership in most locations
• Leverage unique service proposition and
  international alliance with Sheraton
• Large tax advantages on investments on ITC
  Balance Sheet
• Attractive medium / long term prospects

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Amalgamation

• Board meeting on 25th August 2004 approved scheme
  of amalgamation for merger of ITC Hotels and
  Ansal Hotels with ITC
• Merger ratios
• 3 shares of ITC for 25 shares of ITC Hotels
• 1 share of ITC for every 150 shares of Ansal
  Hotels
• Merger effective from 1st April 2004
• Post-Merger, ITCs hotel business
• Leading hotel chain in terms of pre-tax profits
• Highest EBITDA margin

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ITCs Hotel Properties Projects

• ITC Ltd
• ITC Hotels Ltd(merged w.e.f 1/4/04)

• Maurya Sheraton, New Delhi
• ITC One, New Delhi
• Grand Maratha, Mumbai
• Sonar Bangla, Kolkata
• Grand Central, Mumbai (Commissioned in Jan 05)
• Ansal Hotels Ltd (merged w.e.f. 1/4/04)
• Windsor Manor, Bangalore
• Rajputana Palace, Jaipur
• Mughal, Agra
• Chola, Chennai
• Park, Chennai (Managed)
• Vadodara

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Other Hotel Properties

• Srinivasa Resorts
• (68 shareholding)
• Bay Island Hotels
• (100 shareholding)
• Fortune Park Hotels
• (99.99 shareholding)
• Marudhar Hotels
• (50 shareholding)

• Kakatiya, Hyderabad
• Bay Island, Port Blair
• Manages mid-segment hotels
• Manages Heritage hotels

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Paperboards, PaperPackaging
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Indian paperboards market

• Annual paperboards demand - 0.90 million tonnes
• Fragmented capacity obsolete technology
• Low per capita usage at 0.75 kg - 1/7th global
  average
• Indian paperboards market growing at 6 -7 p.a.
• Value Added Coated board - the fastest growing
  segment (20 p.a.) in India driven by the growing
  sophistication of the consumer

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Paperboards Demand Projections - Asia

• Asian region demand (excluding Japan) growing by
  0.5 million tonnes per annum
• This region expected to be a net importer by 2005
• Significant export opportunities for high quality
  Indian manufacturers
• ITC paperboards exports - Rs. 1 billion

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ITCs Paperboards Business

• Market leader in growth segment - value added
  coated boards
• World-class contemporary technology
• Elemental Chlorine Free (ECF) Pulp Mill fully
  operational only one of its kind in India
  meeting world-class environmental standards
• Internationally competitive quality and cost
• Social farm forestry in mill command area to
  improve access to cost effective fibre to
  attain self-sufficiency
• Biotech research based high yielding Clones
  effectiveness tested in about 30,000 hectares
• Pulping capacity enhanced by 100,000 MT to
  strengthen competitiveness

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ITCs Paper Packaging businesses

• Capacity expansion in recycled segment
• Acquisition of Kovai Unit in March 2004 65000
  TPA
• Another 75000 TPA commissioned in Jan. 05
• ITCs packaging SBU -Indias largest converter of
  paperboards into high quality printed packaging
• Leading supplier to Indian FMCG segment

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Agri Businesses- Leaf Tobacco- Agri Commodities
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Indian Leaf Tobacco industry

• India - the second largest producer of tobacco
• But, Indian exports constitutes mere 0.7 of the
  value of world trade in tobacco
• Upgradation of tobacco consumption from other
  formats to cigarettes will enable
• growing domestic base
• larger opportunities for value added exports
• ITC - Indias largest buyer, processor, consumer
  exporter of cigarette tobaccos

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ITCs Agri Commodity Exports

• Farm linkages in 14 states covering Soya, Wheat,
  Rice, Marine products, Edible nuts, Coffee
• Unique CRM programme in commodity exports
• Leveraging IT for the transformational
  e-Choupal initiative
• Rural Indias largest Internet-based intervention
• Over 30000 villages linked through 5200
  e-Choupals servicing over 3 million farmers
• First rural mall christened Choupal Sagar
  opened at Sehore,M.P
• Distinctive sourcing capability for ITCs Foods
  business

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e-Choupal - Recognition

• World Business Award ICC-UNDP
• Enterprise Business Transformation Award -Wharton
  Infosys
• Harvard Business School case study
• Showcased at ICT4D, Geneva UN

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ITCs strategic thrust

• Cost effective extension services to enhance farm
  productivity and quality, and better align farm
  produce with requirements of the market, both
  domestic and international
• Enhances competitiveness of ITC agri sourcing
• Create e-infrastructure to serve as transaction
  backbone
• Provides ITC two-way fulfilment capability in and
  out of rural markets for a range of goods and
  services
• Rural marketing initiatives being scaled up
  progressively

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Future Growth Value Capture

• New FMCG Initiatives

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Strategic Rationale

• Blend multiple competencies residing within the
  ITC Group to create new avenues of growth
• Best fit between internal capabilities and
  emerging market opportunities
• Each segment enhances the depth and width of
  ITCs FMCG distribution capability
• Business model retains critical elements of value
  chains within ITC with other elements outsourced
• Contributing to the competitiveness of SMEs

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FMCG Business InitiativesBranded Packaged Foods

• Leverages
• Unique Agri sourcing skills
• ITC Welcomgroups specialist cuisine bakery
  knowledge
• FMCG distribution synergies
• ITC Group RD Centre,Bangalore
• 4 chosen categories
• Staples
• Aashirvaad Atta Salt
• Snack Foods
• Sunfeast Biscuits, Pasta
• Confectionery
• Candyman, mint-o
• Ready to Eat
• Kitchens of India, Aashirvaad ReadyMeals

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FMCG Business InitiativesBranded Packaged Foods

• Aashirvaad Atta - current market leader amongst
  national branded players leverages the e-Choupal
  network for cost-quality optimisation and region
  specific offerings
• Sunfeast Biscuits - Differentiated innovative
  productsvery encouraging response in launch
  markets distributed outsourced supply chain
  being ramped up
• Number of innovative products in the pipeline
  leveraging the capabilities of the ITC Group RD
  centre

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FMCG Business InitiativesLifestyle Retailing

• Leverages trade mark and services expertise of
  hotels
• Relaxed wear market growth gt 25 p.a
• Upmarket product range available in exclusive
  Wills Lifestyle stores and multi-branded outlets/
  large format retail stores across the country
• State-of-the-art Master Facility aids speed of
  execution
• Outsourced JIT plant for quick response
  manufacturing
• Product and brand range being expanded
• Wills range expanded to Formals and Social
  evening wear segments
• Strong distribution network in place for the
  mid-market brand John Players

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FMCG Business InitiativesGreetings, Gifting
Stationery

• Leverages print and paper know-how
• An emerging market in India - growth driven by
  increasing cross-cultural exposure
• ITCs Expressions range commenced with greeting
  cards now widened to include stationery gift
  wraps
• Distribution network being strengthened to scale
  up the Stationery business significantly
• Serves to expand the width of ITCs FMCG
  distribution capability with negligible
  incremental investment

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FMCG Business InitiativesSafety Matches

• Current industry consumer spend estimated at
  Rs.1250 crores p.a. for 24 billion match boxes
• Fragmented supply base arising from policy of
  reservation for small scale industry
• ITC markets its brands with value added products
  across each price point
• Support SMEs with complementary marketing
  strengths
• AIM Indias largest selling Safety Matches
  brand

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FMCG Business InitiativesIncense sticks
(Agarbattis)

• Current industry consumer spend estimated at over
  Rs. 900 crores p.a.
• Fragmented supply base arising from policy of
  reservation for small scale industry
• ITC markets its brands with value added products
  across each price point
• Support cottage sector with complementary
  marketing strengths
• All India roll out of Mangaldeep umbrella brand
  under way

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FMCG business initiatives.

• Concurrently, ITCs IT subsidiary assists in
  web-enabling business processes
• CRM initiatives
• ERP transaction processing systems
• SCM including the e-Choupal capability
• hosted on ITCs Virtual Private Network
• ITC awarded the best IT user in FMCG category by
  Nasscom

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Future Positioning of ITC A leading FMCG player
in India
VPN providing SCM, ERP CRM capability
M A R K E T S
F A R M E R S
e-Choupal rural two-way fulfillment capability
Cigarette Trade Marketing capability
Expanded FMCG distribution capability
Greeting cards/stationery
Branded Foods
Lifestyle retailing
Matches Agarbattis
A basis for strategic partnerships with other
FMCG brand owners
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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. 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.