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CIGARETTE INDUSTRY
IN INDIA
Submitted By : Prithwiraj Deb
Section: HRM
Roll No 38
Batch : SS -08-10
VS
INDIAN CIGARETTE INDUSTRY
Weakness
7. burden of Tobacco tax
8. Prohibition of Direct advertising
SWOT (CONTD…)
Opportunities
2. significant opportunity for cigarette industry to extent and
consolidate its position in intentional market due to some
recent trend like withdrawal/reduction of agricultural
subsidy and escalating cost in the traditional cigarette
exporting countries.
Threats
4. Various N.G.O’s and Forums against the use and
consumption of tobacco
5. Smuggled foreign cigarettes
ITC Limited
ITC
11
Corporate Strategies
Ø Sustain multiple drivers of growth, matching
internal capabilities with emerging market
opportunities
Ø Pursue World class competitiveness in all
businesses and across the entire value chain
Ø Best-in-class in terms of:
Internal Vitality
Market Standing
Profitability
Ø Strategy of Organisation and Governance
processes geared to manage multiple businesses
Ø Blend core competencies and leverage ITC
umbrella strengths to create new avenues of
growth 12
Headline Financials: 2007/08
Rs.
Crs.
GTO 2135 á 1
6 á 0.7
NTO 1394 1
8 á 4.7
PBT 4 1
572 á 6.4
PAT 3 1
120
1281 5.6
á 15.4
Balance Sheet
Size 7
Non Cigarettes Business 52.4% of NTO
(51.5% LY)
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ITC’s Cigarettes Business
Ø Market leadership
Ø Powerful brands across segments
Ø Leadership in all segments - geographic & price
Ø Extensive FMCG distribution network
Direct servicing of 1,00,000 markets & 2 million retail
outlets
Ø World-class state-of-the-art technology and
products
Investment - Rs.10 billion in six years
Ø Exciting long term growth potential
14
SWOT Analysis
Strength Weakness
2. Biggest and the largest 2. It still has to consolidate
player in the Indian its foot in the cigar market
tobacco market with a largely dominated by
market share of 80%. Godfrey Philips.
3. Its Gold Flake tobacco
brand is the largest FMCG
brand in India - and this
single brand alone holds
70% of the tobacco
market.
Opportunities Threats
2. ITC is moving into new and 2. The obvious threat is from
emerging markets like competition, both
developing countries of domestic and
Eastern Europe, Africa etc. international.
3. ITC's opportunities are
likely to be opportunities
for other companies as
well
FIVE FORCES
ANALYSIS
Entry Barriers
Industry Rivalry
Substitutes
GODFREY PHILIPS
ØMission
empowers all its people to think and act radically,
stretch relentlessly and generate path breaking
ideas and strategies to propel the Company. This
helps to create and build powerful brands with
unmatched service and world class processes.
FINANCIALS
MAJOR Brands
SWOT Analysis
Strength Weakness
2. The second biggest 2. low popularity of most of
tobacco company in India its products
3. the first and only tobacco 3. No sole authority
company to organize the
fragmented cigar market
in India and secure its
position as the market
leader in the cigar
distribution.
4. partnering with some of
the top most players in the
international tobacco
industry
Contd….
Opportunities Threats
2. Already present in the 2. ITC getting into the cigar
Middle East, West Africa, market
South East Africa and 3. it has a mere 12% in
South East Asia, Godfrey market share
Phillips India can
strengthen its position as
an international player by
entering new markets
3. Even expanding market
share in the Indian tobacco
market is an opportunity
Five Forces
Competition
Demand of Buyers
Available Substitutes
Cigarettes: Growth potential
Cigarettes: Growth potential
Ø Cigarettes account for only 15% of tobacco
consumed in India unlike world pattern of 85% due
to prolonged punitive taxation
Cigarettes (15% of tobacco consumption) contribute
nearly 85% of Revenue to the Exchequer from tobacco
sector
Ø Of the 58% of adult Indian males who consume
tobacco, barely 15% can afford cigarettes
Ø Biri : Cigarettes ratio = 10 : 1
Ø Annual per capita adult cigarette consumption in
India is appx. one tenth world average : 141
Ø Future growth depends on relative rates of growth
of per capita income and moderation in taxes
26