PRESENTED BY :

Iqbal Singh Kalsi …………..(25)

Hitesh Salian ..………….(40)
Hardik Dhruve ..………….(60)
 PRESENTATION SUMMARY

• INTRODUCTION TO TOBACCO CIGARETTES.

• MANUFACTURING OF CIGARETTES.

• INTRODUCTION TO ITC LTD.

•SUPPLY CHAIN MANAGEMENT & DISTRIBUTION.

Introduction to tobacco & cigarettes.

TOBACCO

The taste for tobacco, first acquired by the Indian royals, soon
spread to the commoners and, in the seventeenth century, tobacco
began to take firm roots in India.
 It was with the establishment of British colonial rule, however,
that the commercial dimensions of India’s tobacco production and
consumption grew to be greatly magnified.

The British East India Company began growing tobacco in India as

a cash crop. Attempts were made, under the colonial rule, both to
increase the land under tobacco cultivation and to enhance the
quality of the leaves produced.
As domestic consumption of cigarettes rose, the Imperial Tobacco
Company commenced production within India.

Today tobacco occupies a prime place in the Indian economy on

account of its considerable contribution to the agricultural, industrial
and export sectors. India is the second largest producer of tobacco in
the world.

CIGARETTES

A cigarette is a product consumed through smoking and

manufactured out of cured and finely cut tobacco leaves and
reconstituted tobacco, often combined with other additives, then
rolled or stuffed into a paper-wrapped cylinder.
 Components of a Cigarette

1. Filter made of 95% cellulose acetate.

2. Tipping paper to cover the filter.
3. Rolling paper to cover the tobacco.
4. Tobacco blend.
 Introduction to ITC LTD.

ITC was set up in 1910 by the name of 'Imperial Tobacco Company

of India Limited'.
It change its name on September 18th,2001 and now the company is
known as ITC ltd. (Indian Tobacco Company Ltd.)

Presently, ITC has a market capitalization of nearly US $ 15 billion

and a turnover of over US $ 4.75 billion. It employs over 21,000
people at more than 60 locations across India.
ITC has been rated as:
World's Best Big Companies by Asia's 'Fab 50' .
World's Most Reputable Companies by Forbes magazine.
India's Most Respected Companies by Business World.
India's Most Valuable Companies by Business Today. 
 ITC LTD CIGARETTES

ITC is the market leader in cigarettes in India and

has a wide range of popular brands.

ITC – India’s largest buyer, processor, consumer &

exporter of cigarette tobaccos.
ITC's pursuit of international competitiveness is reflected
in its initiatives in the overseas markets.

ITC's cigarettes are produced in its state-of-the-art

factories at Bengaluru, Munger, Saharanpur and Kolkata.
 Strategy Analysis of ITC cigarettes

The Company has been able to build on its leadership position because
of its single minded focus on value creation for the consumer through
significant investments in product design, innovation, manufacturing
technology, quality, marketing, supply chain management and
distribution.
 SUPPLY CHAIN MANAGEMENT

“..Supply Chain Management is

Getting the right things

to the right places at the right times, for

profit ..”

New information and communications technologies have

revolutionized today’s supply chains, making them
extraordinarily better, faster, and cheaper.
 The process from farm to factory

•Tobacco farmers bring their crop to warehouses where the

tobacco leaves are weighed and stacked in piles.

•The warehouse then pays the tobacco farmer for the tobacco he brought
and the tobacco companies or government co-ops pay the warehouse for
the tobacco. 
The Indian Tobacco Division has:
• 3 contract manufacturers (CMs)
Reliable Cigarette and Tobacco Industries Private Ltd. (RCTI)
Asian Tobacco Company (ATC )
Hyderabad Deccan Cigarette Industries (HDC)

• Huge distribution network with 19 marketing branches and 33

Godowns across nation.

• Also caters to the exports mainly in United States and Middle-Eastern

countries.
The Manufacturing Process

•Cigarette manufacturing process involves processing of tobacco leaf

and stem to different tobacco blends, which is called cut tobacco.

•Cut tobacco is then converted to cigarettes using other raw materials

for making cigarettes and packing them in various forms as per the
trading requirements.

•ITD receives various grades of Tobacco Leaf and Stem from Indian Leaf
Tobacco Division (ILTD) based mainly in Guntur, Andhra Pradesh.
•Tobacco leaf and stem are Processed to form tobacco blends at one of
the three Tobacco Processing Units at Bangalore, Saharanpur and
Munger.

•Tobacco Processing Unit is called PMD or Primary Manufacturing

Division.

•The cut tobacco is then sent to the Secondary Manufacturing Division

(SMD) for making and packing cigarettes.

•Rest of the raw material (WMS) required for making or packing

cigarettes is provided to all factories from various WMS suppliers, most
of which are part of ITC Ltd.
•At SMD, there are two processes: Making and Packing.
 Making process is the rolling of cigarette sticks.
Packing process is packing of these cigarette sticks in the cigarette
packets of various pack styles.

•Cigarettes are categorized in different segments based on filter or non-

filter type, cigarette length, circumference, pack style, filter length and
cigarette placement. Under each segment there are various brands.

•Finished Good (Cigarettes) are supplied from the factories to godowns

using mainly road and rail transportation.
SUPPLY CHAIN NETWORK OF ITC
CIGARETTES

PMD:- Primary Manufacturing Division

SMD:- Secondary Manufacturing Division

ILTD:- Indian Leaf Tobacco Division

RCTI:- Reliable Cigarette and Tobacco

Industries Private Ltd

ATC:- Asian Tobacco Company

HDC:- Hyderabad Deccan Cigarette

Industries

WMS:- Rest of the raw material

 DISTRIBUTION CHANNEL

Existing distribution channels

Can be described by how direct they are to the customer in other words how
many channels it take the goods to reach customer.

Trends and emerging channels

New channels can offer the opportunity to develop a competitive advantage
shorten the channel length.

Channel power structure

For example, in the case of a product having little brand equity, retailers have
negotiating power over manufacturers and can capture more margin.
DISTRIBUTION NETWORK OF ITC LTD
Factory C & F Agent/
hub

WD

Van Retail DS Van Wholesaler DS

DS

retailer Wholesaler
dealer

End Consumer
 Carry and Forward Agent

The C&F Agent is an important link in the supply chain. He receives a

token amount as service charge from ITC. Both stocks and PoP material is
stored at these godowns. He performs the following functions:
•Receives goods from the factory and updates the SAP (GR)
•Prints out Invoices/Delivery Orders
•The deliveries are made according to the deliver summary which he gets
from the branch everyday
•Physical stock reconciliation is done every evening and a record of it is
kept on a board.
•Maintenance of the godown according to the prescribed norms.
 Wholesale Distributor (WD)

The WD is an intermediary between the company and the retailer.

He distributes and services (including merchandising) the town retailers and wholesalers
directly through daily salesman.

He is required to maintain a certain stock level and investment in the company.

He is required to maintain appropriate infrastructure according to the company's requirements.

This included warehouses, human resources, computational resources and distribution structure.

He is responsible for various brand promotions, launches and cycle inputs in his area.

The WD is also required to maintain the Volume/value growth of ITC's products in his
market.
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