PROJECT REPORT

ON

SUBMITTED TO:
PROF. SANDEEP SRIVASTAVA
FACULTY-MARKETING

SUBMITTED BY:
PRATEEK SHRIVASTAV
STUDENTS-JIML [PGDM]

Jaipuria Institute of Management, Lucknow

[2007-09]

1
 ACKNOWLEDGEMENT

WITH GREAT PLEASURE, WE EXTEND OUR GRATITUDE

TOWARDS PROF. SANDEEP SRIVASTAVA, UNDER WHOSE

VALUABLE GUIDANCE, CONSTANT INTEREST AND

ENCOURAGEMENT WE HAVE BEEN ABLE TO COMPLETE THE

PROJECT SUCCESSFULLY.

THIS CO-OPERATION IS NOT ONLY USEFUL FOR THIS PROJECT

BUT WILL ALSO BE A CONSTANT SOURCE OF INSPIRATION FOR

US IN THE FUTURE.

WE ARE ALSO THANKFUL TO ALL THOSE WHO HELPED US

CONSTANTLY IN THE PREPARATION OF THIS PROJECT DIRECTLY

OR INDIRECTLY.

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 INDEX

ITC......................................................................................................................................4
Business of ITC .................................................................................................................6
COMPARISON OF THE COMPANY IN FINANCIAL YEAR-05 AND FINANCIAL
YEAR-07................................................................................................................ ...................7
Financial Analysis of the Company...................................................................................8
Areas of Diversification....................................................................................................10
ITC in FMCG Sector........................................................................................................11
Cigarettes ............................................................................................................................ ....11
Snacks:......................................................................................................... ...........................16
ITC in Hotel Industry.......................................................................................................17
ITC in Agricultural Industry............................................................................................19
ITC’s E- choupal................................................................................................................ .....21
ITC in Paper Industry......................................................................................................22
ITC in Apparels.................................................................................................................24
ITC in Information Technology.......................................................................................27
Interpretation of article written by Shalesh Dhobal on ITC diversification..................28
Interpretation of article written by Sanjoy Narayan on ITC diversification..................29

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 ITC
"Enduring Value. For the nation. For the
Shareholder."
I

TC is one of India's foremost private sectors companies with a market capitalization of

nearly US $ 15 billion and a turnover of over US $ 4.75 billion. ITC is rated among the
World's Best Big Companies,
Asia's 'Fab 50' and the World's ITC! India Limited
Most Reputable Companies by Type Public (BSE:ITC)
Forbes magazine, among India's August 24, 1910
Most Respected Companies by Founded
Radha Bazar Lane, Kolkata, India
Business World and among India's
Most Valuable Companies by Headquarters Virginia House, Kolkata, India
Business Today. ITC also ranks Y C Deveshwar, Chairman
among India's top 10 `Most Key people K Vaidyanath, Director, CFO: Partho
Valuable (Company) Brands', in a Chatterjee
study conducted by Brand Finance
and published by the Economic Industry Tobacco, Foods, Hotels
Times. Cigarettes, Packaged Food, Hotels,
Products
Apparel
ITC has a diversified presence in Revenue $4.75 billion USD (2006)
Cigarettes, Hotels, Paperboards & Employees 20,000 (2006)
Specialty Papers, Packaging, Agri- Website http://www.itcportal.com/
Business, Packaged Foods &
Confectionery, Information Technology, Branded Apparel, Greeting Cards, 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 and Greeting Cards.

As one of India's most valuable and respected corporations, ITC is widely perceived to be
dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a
commitment beyond the market". In his own words: "ITC believes that its aspiration to
create enduring value for the nation provides the motive force to sustain growing
shareholder value. ITC practices this philosophy by not only driving each of its
businesses towards international competitiveness but by also consciously contributing
to enhancing the competitiveness of the larger value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating multiple
drivers of growth anchored on its time-tested core competencies: unmatched distribution
reach, superior brand-building capabilities, effective supply chain management and
acknowledged service skills in hotelier. Over time, the strategic forays into new

4
businesses are expected to garner a significant share of these emerging high-growth
markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one
of the country's biggest foreign exchange earners (US $ 2.8 billion in the last decade).
The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance
its competitiveness by empowering Indian farmers through the power of the Internet. This
transformational strategy, which has already become the subject matter of a case study at
Harvard Business School, is expected to progressively create for ITC a huge rural
distribution infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is
aggressively pursuing emerging opportunities in providing end-to-end IT solutions,
including e-enabled services and business process outsourcing.

ITC'sΘ production facilities and hotels have won numerous national and international
awards for quality, productivity, safety and environment management systems. ITC was
the first company in India to voluntarily seek a corporate governance rating.

ITC employs over 21,000 people at more than 60 locations across India. The Company
continuously endeavors to enhance its wealth generating capabilities in a globalizing
environment to consistently reward more than 3,95,000 shareholders, fulfill the
aspirations of its stakeholders and meet societal expectations. This over-arching vision of
the company is expressively captured in its corporate positioning statement:

source: www.itcportal.com

5
 Business of ITC

D
uring the June, 07 quarter, a 12.5% value added tax was levied on cigarettes,
which is expected to depress the volume+. Since ITC is a dominant player, it
has the pricing power to compensate for any fall in volumes. To maintain its
dominant position in the tobacco business in the face of the rising competition, ITC has
announced plans to invest around Rs.1000 million in the cigarette business.
However, its non tobacco business is increasing and acquiring greater significance as the
company is betting huge sums on new business. In FY07, the cigarette business
accounted for around half of the ITC consolidated revenues but only 37% of its capital
expenditure. Not surprisingly, its non- tobacco business is growing faster.
In FY07, its non cigarette business grew 32% against 14% growth in the tobacco
business. Most importantly, profit before tax from non tobacco business was up 34%
against 17% growth of its tobacco business. This was achieved despite continued losses
reported by non tobacco FMCG business. In the June quarter, revenues from non tobacco
business grew 7% mainly, on account of a decline in the profitability of paper and paper
board business.
ITC is using its strength in rural sourcing network and brand building to acquire industry
leadership in branded staples, ready to eat, hospitality and life style apparel segments. In
the short run, it has depressed it consolidated margins and returns on capital, but many of
these businesses may now start yielding results. It now plans to expand its branded
packaged food portfolio by launching more products for which it has stepped up research
and development spend.
ITC is also expanding its hotel business and started rebranding exercise to maintain its
premium status as many international chains are planning to foray into India. It is adding
around 770 rooms and 100 service apartments in Bangalore and Chennai. Its paper
business provides packaging solutions to its other businesses. It is also expanding in the
paper business to tap Indian paper growing market. It is doubling its pulp capacity and


source: economics times
www.Indiatimes.com

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adding new paperboard machines. This will raise its paper and paper board capacity by
around 37% to 4.5 lakh tones.

ITC FINANCIALS

40
35
30
25 FY05
YEAR

20
15 FY07
10
5
0

T
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Rs
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IA

PE
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NG
L

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TO

AT

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TA
M

PE
W

TO

O
RA

COMPARISON OF THE COMPANY IN FINANCIAL YEAR-05 AND

FINANCIAL YEAR-07

source: prowess

7
 Financial Analysis of the
Company

I
n the quarter ended June, 07, ITC’s net profit grew 20% to Rs.782.87 million and
net sales rose up 17% to Rs.3325.23 million. This profit growth was primarily
driven by its cigarette business because of high margin and agribusiness, but its top
line growth mainly comes from non tobacco business and agro business. ITC is facing
pressure on its consolidating operating margin due to continued losses by its non-
cigarette FMCG business and decline in the profitability for paper and paper board
business. Higher advertising expanses, which grew 35% in FY07 and freight cost, which
were up 31% last year, have also affected the margins. Going forward, the focus will be
on the performance of its non tobacco FMCG business, which has begin to show sign of
turning around.

GODFRE
Y
ITC HUL PHILLIPS
NET SALES GROWTH 23.3 4.7 7.7
RAW MATERIAL COST GROWTH 28.8 4.6 8.4
OPERATING COST GROWTH 19.5 -8.8 30.3
PAT GROWTH 19.2 1.6 19.1
INTREST COVER RATIO 151.1 89.8 29.9
DEBT-TO-EQUITY RATIO 0 0.4 0.2
ROCE 38.4 56.8 25.8

COMPARISION FROM TWO OTHER COMPANIES∗


source: www.indiatimes.com
The Economic times.

8
ITC’s top line and bottom-line growth is likely to be marginally affected looking at its
aggressive investment in hotel and other FMCG business. Its recent foray in to home and
personal care also need immediate investment.
At the current market price of Rs.180, the stock is valued at around 20.5 times its FY08
estimated earning per share of Rs.9. this is significantly lower than its historical price to
earnings multiple of around 25 and also lower than its peers in FMCG sectors. This
provides 20-25% upside over the next 12-18 months.

9
 Areas of Diversification

I
TC∗ has transformed itself from a leading cigarette manufacturer to an umbrella
group that offers a diversified product mix to enhance its brand image and reduce
dependency on tobacco related products. It has forayed into the hospitality service
industry and has become a major player in the hotels segment. Its position in the FMCG
(fast moving consumer goods) business is also on a growth curve; especially its
confectionery and biscuits which are slated to achieve the top ranks among its peers. It
has made heavy investments to strengthen its IT (information technology) segment and to
compete with the big players like Infosys and Wipro. Although the ITC group is
marketing its image as an ideal corporate citizen and a company that takes its social
responsibility seriously, it still earns 80% of revenues from selling cigarettes and other
tobacco related products. The major areas in which ITC has diversified are:
 FMCG
 Cigarettes
 Food
 Lifestyle Retailing
 Greetings and stationery
 Safety Matches
 Incense sticks
 Hotels
 Paperboards and Packaging
 Paperboards and specialty papers
 packaging
 Agri-Business
 Agri- exports
 E-choupal
 Information Technology

source: www.itcportal.com
www.google.com
www.businessworld.com

10
 ITC in FMCG Sector
Cigarettes

ITC is the market leader in cigarettes in India. With its wide range of invaluable brands, it
has a leadership position in every segment of the
market. It's highly popular portfolio of brands
includes Insignia, India Kings, Classic, Gold
Flake, Silk Cut, Navy Cut, Scissors, Capstan,
Berkeley, Bristol and Flake.

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 and distribution.

All initiatives are therefore worked upon with the intent to fortify market standing in the
long term. This in turns aids in designing products which are contemporary and relevant
to the changing attitudes and evolving socio economic profile of the country. This
strategic focus on the consumer has paid ITC handsome dividends.

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ITC's pursuit of international competitiveness is reflected in its initiatives in the overseas
markets. In the extremely competitive US market, ITC offers high-quality, value-priced
cigarettes and Roll-your-own solutions. In West Asia, ITC has become a key player in the
GCC markets through growing volumes of its brands.

ITC's cigarettes are produced in its state-of-the-art factories at Bengaluru, Munger,

Saharanpur and Kolkata. These factories are known for their high levels of quality,
contemporary technology and work environment

Foods
Ready to Eat:
Keeping alive long forgotten culinary traditions, ‘Kitchens of India’ presents its range of
ready-to-eat cuisines. Each one of these legendary delicacies has been created by the
Master Chefs of ITC Hotels, following rare, closely guarded recipes, handed down
through the ages, from one generation to the next.

Bukhara
Bukhara, a village in Uzbekistan, was a meeting place for the traders from Asia and Europe. It
was also a spot on the fabled Silk Route , a passage commonly used by traders, scholars and
nomads. It was on this route that the unique Bukhara style of cooking was born.

The Master Chefs of ITC Hotels have whipped up the delectable bite into history with this cuisine
from the North-West Frontier Province with a masterpiece like Dal Bukhara.

Dal Bukhara

Dal Bukhara is an exquisite culinary treat made from Whole Black Lentils
simmered with prized Indian Spices over a coal fire, for long hours on end.

Dum Pukht
The art of ‘Dum’ cooking (cooked in its own juices) traces its origin to the times of the ‘Nawabs of
Awadh’ who ruled the Northern Provinces of India during the 18th century. ‘Kitchens of India’ has
currently introduced ‘Mirch Ka Salan’ in this range.

Mirch Ka Salan

An extravagant delicacy made from succulent green chillies, delicately

cooked in a thick gravy of roasted peanuts, almonds and sesame seeds.

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Kheema Mutter

Ground lamb and fresh green peas cooked in mild spices together with ginger, garlic, tomatoes
and herbs.

Mughlai Paneer

Fresh cubes of Paneer prepared with khus-khus, ground watermelon seeds and fine onion paste,
spiced with coriander leaves and cardamom powder.

Dakshin
This cuisine reflects the tradition and culture of the southern Indian peninsula. ‘Kitchens of India’
offers you Chicken Chettinad and Chicken Stew:

Chicken Chettinad

Succulent chunks of tender chicken in a dark, spicy paste of curry leaves and
freshly ground pepper. Showcasing the distinctive tastes and fragrances of
the South.

Chicken Stew

Tender nuggets of chicken in a mild, coconut gravy.

Gharana
A pan-Indian cuisine specially created by
ITC’s Hotels Master Chefs.

Paneer Darbari

Soft, fresh and juicy cubes of cottage

cheese simmered in an aromatic tomato
gravy to create an unforgettable delicacy.

Chicken Darbari

A superb blend of juicy and tender chicken

chunks in an aromatic tomato gravy, laced
with butter.

Murgh Methi

Discover the delights of Nawabi cuisine in every serving of Murgh Methi. Tender chunks of
chicken, spiced mildly, and simmered for long hours in a gravy of green coriander and fenugreek.

Paneer Malai

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Fresh chunks of Paneer, sautéed with onions and green peppers, immersed in a creamy tomato
sauce.

Lagan ki boti

Tender lamb marinated in mint & coriander and then with cashew nuts and poppy seeds, and
braised in a 'Lagan' together with spring onion, chillies and saffron.

:: ‘Kitchens of India’ Curry Pastes

A special blend of handpicked spices, created by the Master Chefs of ‘Kitchens of India’, in
accordance with original, traditional recipes. Just add fresh ingredients, and cook. These are
ready made pastes and there is no need to add oil, salt or spices. It’s truly the most deliciously
authentic way to recreate your favorite dishes. These pastes by themselves are fully vegetarian.

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 Butter Chicken Curry Paste

A rich, mildly spiced gravy, that follows the original, traditional

Butter Chicken Curry recipe. Just add succulent nuggets of
chicken and cook.

Hyderabadi Biryani Paste

A rich coconut yogurt gravy, in accordance with the original,

traditional Hyderabadi Biryani recipe. Just add long grained
basmati rice, tender pieces of chicken or lamb and cook.

Fish Curry Paste

A rich, mildly spiced gravy, according to the original Fish Curry

recipe. Just add fresh slices of fish and cook.

Vegetable Biryani Paste

A rich, mildly spiced gravy, faithful to the original, traditional

Vegetable Biryani recipe. Just add long grained basmati rice,
garden-fresh vegetables and cook.

Chicken Curry Paste

A thick, tomato-onion gravy, that follows the original, traditional

Chicken Curry recipe. Just add succulent nuggets of chicken and
cook.

Mutton Curry Paste

A rich, mildly spiced, aromatic gravy, in keeping with the original,

traditional Mutton Curry recipe. Just add tender pieces of lamb
and cook.

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Snacks:
Sunfeast

In 2003, ITC forayed into the Biscuits market with

the Sunfeast range of Glucose, Marie and Cream
Biscuits. Sunfeast’s brand essence, "Spread the
Smile" connotes happiness, contentment,
satisfaction and pleasure. The mascot Sunny
reinforces the emotional aspects of the brand.

Sunfeast
immediately established itself as a provider of innovative and
distinctive products - Sunfeast Marie was launched in an
innovative orange flavour and the 'Sunfeast Dream Cream' range includes new flavours as well
as flavour enhancers. The Sunfeast Dream Cream range is currently available in 8 variants. The
Company has also introduced 'Sunfeast Dark Fantasy', a dark chocolate and vanilla cream
offering for the premium segment in select markets.

Riding on the success of its initial offerings, ITC also entered the milk biscuit category with
Sunfeast Milky Magic biscuits. Apart from milk which helps mental growth, these biscuits also
contain the finest quality wheat aiding physical growth.

In the last two years, the Sunfeast biscuits portfolio has been enhanced to include salted crackers
and cookies. The 'Sunfeast Snacky' salted crackers are available in 2 unique variants – ‘Chilli
Flakes’ and ‘Classic Salted’. Sunfeast's latest offering, 'Sunfeast Special' biscuits are also
available in select markets. The Sunfeast Special range currently includes cookies in two variants
– Butter and Cashew, as well as cream biscuits in two variants – Choco and Orange.

The Sunfeast product portfolio has been further expanded to include healthy snacking options.
'Sunfeast Pasta Treat' is a whole wheat based instant pasta for children. After the tremendous
success of the 4 initial flavours, the instant Pasta range has been extended with two new exciting
flavours – ‘Pizza’ and ‘Chicken’. The pasta segment was further expanded with the launch of
'Sunfeast Benne Vita' in 4 innovative variants.

Confectionary:
ITC currently has two brands in the confectionery segment - 'mint-o' and 'Candyman'.

'mint-o' was acquired by ITC from Candico in March 2002. ITC re-launched the compressed mint
offering, across all major markets in India, with new and improved product and packaging.
Available in the regular mint flavour with added blue specks to enhance consumer experience,
mint-o is also offered in innovative 'Orange mint' and 'Lemon mint' flavours. 'mint-o' is available
in two sizes – rolls of 20 and 6, capturing the international essence of ‘youthful cool’

ITC launched 'mint-o Fresh' in October 2004. An ‘active’ mint deposited candy, mint-o Fresh is
available in two refreshing mint flavours across all markets. Its launch extended the footprint of
the 'mint-o' brand in line with the strategy of adding excitement and contributing to the growth of
the confectionery category. 'mint-o Fresh' is especially targeted at the adult consumer seeking a

16
 basket of mint-based products across price points.

ITC launched the 'Candyman' range of confectioneries in August 2002. Led by the 'Candyman
Fruitee Fun' range of assorted fruit flavours ('Wild Banana', 'Pineapple Punch', 'Orange Josh'
and 'Mango Delite'), the 'Candyman' portfolio now includes deposited candy products like
'Candyman Butterscotch Licks' and 'Candyman Éclairs' (Choco flavoured as well as Vanilla
Cream centre inside a Butterscotch outer shell). The coffee toffee segment also saw the
successful launch of 'Candyman Cofitino' in November 2005. Two new products – 'Candyman
Natkhat Mango' and 'Candyman Maha Mango' were launched recently. The 'Candyman' range
of confectionery is targeted at ‘fun-filled, naughty kids’ who seek a delightful candy experience
through a range of candy types and flavours.

Bingo!

ITC's new snacks brand Bingo! marks the

company's foray into the fast growing branded
snacks segment. The launch of Bingo!
represents ITCs' fifth major line of foods
business after the highly successful Staples,
Biscuits, Ready-to-Eat and Confectionery
businesses. Bingo! will leverage the platform of a
youthful and innovative snack offering.

The launch of Bingo! is symbolic of ITCs' distinct approach of

introducing innovative and differentiated products in a largely
undifferentiated market place.

The initial offerings from Bingo! include an array of products

in both Potato Chips & Finger Snacks segment. The
Potato Chips offerings comprise four
innovative variants inspired by the
snacking habits of different parts of the
country as well as Masalas, Salted
and Tomato flavours. Additionally, a south-inspired dairy option has also
been introduced under the potato chips offering.

ITC in Hotel Industry

ITC Limited entered the hotels business in 1975 with the acquisition of a hotel in Chennai,
which was rechristened Hotel Chola. Since then the ITC-Welcomgroup brand has become
synonymous with Indian hospitality. Today amongst India's finest and fastest growing
hotel chains, it consists of over 70 hotels across as many destinations in India. These
include super deluxe and five star hotels, heritage palaces, havelis and resorts and full
service budget hotels.

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 The 440-room ITC Maurya at New Delhi is not only
amongst the leading business hotel in the country, but is in
a class by itself. Complete with the 'ITC One', the hotel has
played host to a galaxy of world dignitaries, including Bill
Clinton and Bill Gates. In fact, even as he was leaving the
White House, the former US President nostalgically
recalled the memories of a fabulous Indian meal he and
his family had at the Bukhara restaurant in the hotel.
Bukhara has been declared the Best Indian Restaurant
in the world, by 'The Restaurant Magazine', UK

The 386-room ITC Maratha, opened in February

2001, is perceived as amongst the leading and the
finest properties in Mumbai, designed in a grandiose
classic style, the hotel pays tribute to Mumbai's
colonial roots and the spirit of the Great Marathas.

In keeping with its plan to have a presence in every major

business destination in India, ITC-Welcomgroup unveiled
one of Asia's finest business resort, the 238-room ITC
Sonar in Kolkata on December 31, 2002.

Another landmark hotel - the ITC Grand Central in Parel,

Mumbai was formally inaugurated in January 2005. This
five star deluxe property with 242 suites and rooms offers
international standards of service, state of the art amenities
and culinary excellence.

ITC Mughal at Agra, a proud recipient of Asia's first

Aga Khan Award for Architecture, is an outstanding
resort hotel, lavishly spreading across 35 acres of
beautifully landscaped Mughal gardens.

ITC-Welcomgroup also pioneered a holistic concept of

"branded accommodation" in the hospitality industry. It was
the first to launch the powerful idea of a 'Hotel within a
Hotel' by segmenting and branding the hotel services. It
created the exclusive 'ITC One', 'The Towers' and the
'Executive Club' each catering to the needs of the global
business traveller with unmatched quality and a range of
services.

In 2007, ITC-Welcomgroup entered a new phase in its collaboration with Starwood Hotels
& Resorts. ITC-Welcomgroup now has an exclusive tie-up with Starwood in bringing its
premium brand, the ‘Luxury Collection’, to India. The seven hotels which are part of this
collection are: ITC Maurya in Delhi, ITC Maratha in Mumbai, ITC Sonar in Kolkata, ITC
Grand Central in Mumbai, ITC Windsor in Bengaluru, ITC Kakatiya in Hyderabad and ITC
Mughal in Agra. The agreement also includes the rebranding of WelcomHotel New Delhi as
a Sheraton, while the Chola and the Park in Chennai, and the Rajputana in Jaipur retain
their Sheraton connections.

The Welcome Heritage brand brings together a chain of palaces, forts, havelies and

18
resorts that offer a unique experience. Welcom Heritage endeavours to preserve ancient
royal homes and the historical Indian grandeur, opulence of romance, valour and adventure
for the future Indian generations. Welcom Heritage Hotels, provide a fine range of hotel
services inside these architectural legacies present in Rajasthan, Punjab, Himachal
Pradesh, Madhya Pradesh, Uttaranchal, Jammu & Kashmir, West Bengal, Tamil Nadu,
Haryana and Karnataka.

ITC-Welcomgroup was also the first to brand its

cuisine. The Bukhara, the Dakshin and the Dum
Pukht are today powerful cuisine brands, which
delight connoisseurs in restaurants in several ITC-
Welcomgroup hotels. Others included Dublin, West
View and the Pan Asian.

Fortune hotels are a part of the well thought-out growth

strategy that brings out the mid-level business and leisure
traveler under the ITC-Welcomgroup umbrella, offering full
service properties without compromising on quality. With a
strong presence at Ahmedabad, Thiruvananthapuram,
Calicut, Darjeeling, Jamshedpur, Vapi, Hyderabad,
Gurgaon, Indore, Ootacamund, Madurai, Jodhpur, Tirupati
and Port Blair, it will be shortly commissioning several
more hotels across India.

ITC in Agricultural Industry

ITC's International Business Division (IBD) is the country's second largest exporter of agri-
products with exports of over Rs. 1000 Crores (Rs. 10 billion). Its domestic sales of agri-
products are in excess of Rs. 1500 Crores (Rs. 15 billion). It currently focuses on exports of :

• Feed Ingredients – Soyameal

• Foodgrains - Rice (Basmati & Non Basmati), Wheat, Pulses
• Edible Nuts - Sesame Seeds, HPS Groundnuts, Castor oil

19
 • Marine Products - Shrimps and Prawns
• Processed Fruits - Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit
Products, Fresh Fruits
• Coffee & Spices - Coffee, Black Pepper, Chilly, Turmeric, Ginger, Celery and
other Seed Spices

Although one of the relatively younger business divisions of ITC, it has,

in a short span established itself as a first-choice supply chain partner
of several leading international customers. Its major customers include
Cargill, Marubeni, Toepfer, among others, who source agriculture
commodities and food products from India. Its customer relationship
management has enabled it to achieve a very high reputation for
quality, reliability and value added services.

ITC's unique strength in this business is the extensive backward

linkages it has established with the farmers. This networking with the
farming community has enabled ITC to build a highly cost effective
procurement system. ITC has made significant investments in web-
enabling the Indian farmer. Christened 'e-Choupal', ITC's web plan for
the farmer centres around providing Internet kiosks in villages.
Farmers use this technology infrastructure to access on-line information from ITC's farmer-
friendly website. Data accessed by the farmers relate to the weather, crop conditions, best
practices in farming, ruling international prices and a host of other relevant information.

Currently, the 'e-Choupal' website - www.echoupal.com - provides information to farmers across

the nine States of Madhya Pradesh, Haryana, Uttaranchal, Uttar Pradesh, Rajasthan, Karnataka,
Maharashtra, Andhra Pradesh and Kerala. ITC plans to extend the 'e-Choupal' to cover 10 million
farmers across 100,000 villages covering 15 Indian states.

Following the impressive success of e-Choupal,

the Company unveiled the first 'Choupal Saagar' near
Sehore in Madhya Pradesh in August 2004. Eighteen
more 'Choupal Saagars' have commenced
operations in the states of Madhya Pradesh, Maharashtra
and Uttar Pradesh. The 'Choupal Saagar' is a rural
hypermarket which provides multiple services under
one roof. It creates a platform for farmers to sell their
produce. Farmers can also buy quality products for their
farm and household consumption from 'Choupal
Saagar'. These rural malls also provide farmers the
invaluable additional services of soil testing, banking,
insurance, medical facilities and restaurant. Such
malls, in synergistic combination with the e-choupal network, serves as the core infrastructure to
support ITC's rural distribution strategy. Over the next 7-10 years ITC plans to open over 700
such hypermarkets.

The business is progressing a pilot project for retailing fresh fruits and vegetables. Three
Choupal Fresh Cash & Carry Stores are currently operational at Hyderabad, Pune &
Chandigarh.The Company has set up a complete warehousing and cold chain infrastructure for
ensuring the availability of fresh products in the market, besides direct linkages with the farmers
for sourcing farm fresh produce.

20
In Processed Fruits category, ITC exports from HACCP Certified plants to Western Europe, North
Africa, Mid-East , Japan and North America, a wide range of Processed Fruits products made
from Mango (Alphonso, Kesar &
Totapuri) , Guava , Papaya ,&
Pomegranate for Industrial and
Consumer use. ITC is the leading
Indian exporter of Organic Fruit
Products Certified to European (EC
2092/91) & US ( NOP) Standards.

Fresh Table Grapes & Pomegranates are sourced from ITC's EUREPGAP Certified Farmer
groups & retailed through prominent supermarkets like Sainsbury's & Albert Heijn in Europe ,
Daiei in Japan.

ITC's countrywide network of procurement teams, handling agents and contemporary

warehousing facilities enable it to source quality merchandise even at short notice. ITC's
processors are handpicked reliable outfits which ensure hygienic processing and modern
packaging. Strictest quality control is exercised at each stage to preserve the natural
flavour, taste and aroma of the various agri-products.

ITC has been a significant exporter of seafoods from India since 1971.

It exports frozen as well as cooked shrimps and other seafood products to Japan, USA and
Europe. Its well-known brands include Gold Ribbon, Blue Ribbon, Aqua Kings, Aqua Bay,
Aqua Feast and Peninsular.

ITC's International Business Division continues to use innovation as its core strategy to retain its
position as the one-stop shop for sourcing agri-commodities from India.

ITC’s E- choupal

ITC’s International Business Division, one of India’s largest exporters of agricultural

commodities, has conceived e-Choupal as a more efficient supply chain aimed at
delivering value to its customers around the world on a sustainable basis.

The e-Choupal model has been specifically designed to tackle the challenges posed by
the unique features of Indian agriculture, characterised by fragmented farms, weak
infrastructure and the involvement of numerous intermediaries, among others.

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The Value Chain - Farm to Factory Gate:

‘e-Choupal’ also unshackles the potential of Indian farmer who has been trapped in a
vicious cycle of low risk taking ability > low investment > low productivity > weak
market orientation > low value addition > low margin > low risk taking ability. This made
him and Indian agribusiness sector globally uncompetitive, despite rich & abundant
natural resources.

Such a market-led business model can enhance the competitiveness of Indian agriculture
and trigger a virtuous cycle of higher productivity, higher incomes, enlarged capacity for
farmer risk management, larger investments and higher quality and productivity.

Further, a growth in rural incomes will also unleash the latent demand for industrial
goods so necessary for the continued growth of the Indian economy. This will create
another virtuous cycle propelling the economy into a higher growth trajectory.

ITC in Paper Industry

ITC is one of the world's most modern and contemporary manufacturers of packaging
and graphic series of boards. ITC's Paperboards business has a manufacturing
capacity of 360,000 (TPA) tonnes per annum and is India's market leader across all
carton-consuming segments including cigarettes, foods, beverages, pharma,
personal care & toiletries, durables and match shells. ITC makes some of the
premium graphic boards used for greeting cards , covers, sleeves, tags and playing

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cards. The Company produces both Virgin and Recycled boards spanning the full
requirement of a packaging customer.

The erstwhile ITC Bhadrachalam Paperboards Limited was incorporated in 1975. It set
up an integrated pulp and paper/board manufacturing facility in 1979 at Bhadrachalam in
Andhra Pradesh in South India, 300 kms. east of Hyderabad. Since then, the mill facilities
have been continuously upgraded to achieve
internationally benchmarked quality
standards and operational efficiencies.

In 1998, the Paperboards business

commissioned a new production line for
coated boards. This production line
incorporated Paper Machine 4, with original
capacity of 120,000 tonnes per annum (TPA)
and finishing & packing lines sourced from
internationally renowned suppliers. This
machine has been fitted with a sophisticated 'Web Detection and Inspection system' and
since been modernised further with the addition of the latest web forming technology.
The PM4 board machine can deliver international quality boards for Cigarette, Liquid,
Food and Pharma Packaging by providing a flawless surface for print reproduction. To
meet the growing requirement for high quality paperboards , PM5 was commissioned in
2003 with a capacity of 80,000 TPA.

In September 2002, ITC's Bhadrachalam Paperboard Unit commissioned a 110,000

TPA Elemental Chlorine Free (ECF) fibre line. This is a state-of-the-art
fibre line and the only one in India, which meets effluent norms, set by the
Ministry of Environment and Forests of the Government of India and
Pollution Control Boards. The product range has also been enhanced as
ECF pulp uniquely fulfills the demand for food-grade packaging and
environment-friendly paper. To meet its growing need for bleached pulp, a
second ECF pulp line with a capacity of 120000 TPA is now nearing completion at
Bhadrachalam.

ITC is the largest exporter of coated boards from India. The Company exports nearly 15 per
cent of the coated boards it produces. Its coated boards fulfill exacting customer requirements in
Malaysia, Sri Lanka, Bangladesh, Iran, Australia, UAE, UK, Italy, Poland and Russia.

ITC has set up India's first world-class plant for the manufacture of premium Cast Coated
Boards that meet highly sophisticated packaging and
printing requirements. The Unit at Bollaram has been
expanded further to accommodate specialized
converting production lines. ITC has added a modern
Poly-extrusion line to its production facility, to meet the

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growing demand for food packaging and beverage cups. A 2nd poly-extrusion line is due for
commissioning in Jan 2008 , to meet the growing demand for barrier boards. The Super-
Calendering line installed at Bollaram Unit near Hyderabad has also added Art Boards and Ivory
Cards to its product range. ITC has also pioneered the development of Liquid Packaging
Boards and Plasterboard liners. Continuous product development has reinforced ITC's market
leadership in the Paperboards business.

ITC's Paperboards business has a strong customer focus. The Company's Paperboards business
devoutly practices a 'TPM' philosophy during each stage of manufacture. Lean management
techniques have also been introduced in making the operations more responsive and efficient.
Statistical Process & Quality control supplement the state-of-the-art on-line process controls
and scanning systems in the production lines.

ITC is the premier manufacturer of Specialty Papers in India, with a diversified product portfolio.
ITC's Specialty Papers are used in the manufacture of opaque lightweight fine printing papers,
cigarettes, papers for decorative laminates, electrical insulation-grade papers , fireworks
fuse tissue and automotive filter paper.

This Division pioneered the manufacture of Specialty Papers for the Indian cigarette
industry in 1949. It currently offers a comprehensive range of Cigarette Tissues, Plug Wrap,
Tipping Base, Printed tipping papers and Metallising Base.

The Specialty Papers Unit of PSPD at Tribeni, Chandrahati, West Bengal aims to reach out and
fulfill existing and emerging customers needs. The Unit reconfigures systems and processes to
meet specific customer requirements. Quality control processes at the Unit are designed to
ensure consistent high quality at every stage of manufacture. On-line monitoring and
documentation of production parameters are carried out for continuous correction and
updation of quality standards.A Product Development Team ensures Total Quality Management
(TQM) in all operations. The TQM group closely dovetails its operations with marketing,
production and research teams to ensure international standards in products and services. The
business creates long-term product development solutions on the basis of customer
specifications and market trends.ITC has demonstrated strong capability in product
development and research in pulp and paper. The Company has collaborated with the United
Nations Development Programme (UNDP) and the Government of India on research
programmes to develop high quality pulp.

The Division exports cigarette tissues and décor paper for laminates to Iran, Turkey , Nepal, and
Bangladesh

ITC in Apparels
ITC’s Lifestyle Retailing Business Division has established a nationwide retailing
presence through its Wills Lifestyle chain of exclusive specialty stores. Wills Lifestyle,
the fashion destination, offers a tempting choice of Wills Classic work wear, Wills Sport
relaxed wear, Wills Clublife evening wear, fashion accessories, Essenza Di Wills – an
exclusive range of fine fragrances and bath & body care products for men and women
and Fiama Di Wills – a range of premium shampoos and shower gels. Wills Lifestyle
has also introduced Wills Signature, designer wear by leading designers of the country.

With a distinctive presence across segments at the premium end, ITC has also established

24
John Players as a brand that offers a complete fashion wardrobe to the male youth of
today. The recent launch of Miss Players with its range of trendy fashion wear for young
women has been a successful addition to the youth portfolio. With its brands, ITC is
committed to build a dominant presence in the apparel market through a robust portfolio
of offerings.
This season, Wills Lifestyle presents a complete fashion
wardrobe that complements every facet of your lifestyle -
at work, when you're relaxed, while you party and for
those special occasions.
Wills Lifestyle has been established as a chain of
exclusive specialty stores providing the Indian consumer
a truly 'International Shopping Experience' through
world-
class ambience, customer facilitation and clearly differentiated product presentation. Our
stores have established themselves as preferred shopping destinations in the prime
shopping districts across the country.
At Wills Lifestyle, customers can browse at leisure, and shop in a relaxed and pleasing
atmosphere. The use of space is refreshing, which is reflected even in the spacious
changing rooms. Every store offers an international retailing ambience with the extensive
use of glass, steel and granite, reflecting the most contemporary trends in store design,
thereby creating a splendid backdrop for the premium offerings.

superbrand 2006 was awarded to Wills Lifestyle by the Superbrands Council of India. At
the Images Fashion Awards 2001 & 2003, Wills Lifestyle was declared ' The Most
Admired Exclusive Brand Retail Chain of the Year'.
Wills Lifestyle is now title partner of the country’s most premier
fashion event - Wills Lifestyle India Fashion Week. Taking the
celebration of the event to its stores, Wills Lifestyle has partnered
with leading designers Rohit Bal, Rajesh Pratap Singh, Manish
Malhotra and Rohit Gandhi - Rahul Khanna to create a new edition
of Designer wear, which is now available at Wills Lifestyle

Wills Sport, fashionable relaxed wear for men and women has, over fifteen seasons,
become the vibrant face of contemporary fashion. At the Images Fashion Awards 2001,
Wills Sport was declared ‘The Most Admired Brand Launch of the Year'. Following this,
Wills Sport was declared 'The Most Admired Women's wear Brand of the Year', at Images
Fashion Awards 2002. This season, Wills Sport presents a collection designed to
complement your exuberant lifestyle. Vibrant designs create magic in breezy fabrics.
Racy stripes and enchanting details add charm to the purest linen and cotton.
Wills Classic work wear was launched in November 2002, providing the premium
consumer a distinct product offering and a unique brand positioning. Featuring luxurious
fabrics crafted to perfection with the most contemporary styling, Wills Classic work wear
is positioned as the brand for new age leaders, who are changing the rules of business and
encouraging a dynamic culture of enterprise, innovation and teamwork. Showcasing the

25
epitome of new age luxury. Featuring the finest shirts, crafted in Italy. Complemented by
exquisite trousers and jackets, made by European master craftsmen. Experience a new
language of charming sophistication this season.

Wills Lifestyle complements the range of premium

apparel with a tempting choice of fashion accessories.
This season a wider choice of accessories will be offered
across ties, cuff links, socks, caps, hand bags, wallets,
belts, eyewear and shoes. With the introduction of
premium formal and relaxed jackets in the range, Wills
Lifestyle will continue to offer the definitive look of the
season.

Continuing with its philosophy of bringing to Indian

consumers world class products that enrich the quality of their lives, ITC launched
Essenza Di Wills - an exclusive range of fine fragrances and bath & body care products
for men and women in July 2005. Inizio, the signature range under Essenza Di Wills
provides a comprehensive grooming regimen with distinct lines for men (Inizio Homme)
and women (Inizio Femme).

The rich and sensual fine fragrances are all day offerings designed by the leading
international fragrance houses in France. The personal care range includes a host of bath
and body care products that share the same olfactory signature of the men’s and women’s
fine fragrances to offer you a harmonized fragrance experience.
ITC forayed into the youth fashion segment with the launch of John Players in
December 2002 and John Players is committed to be the No. 1 fashion brand for the
youth. This foray leverages ITC’s proven competencies in understanding consumer
insights, brand building and design capabilities.

Hrithik Roshan, Superstar and Youth Icon, with his innate style, vibrancy and
playfulness best personifies the core attributes of the brand as its ambassador

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 ITC in Information Technology
ITC InfoTech, a global IT services company, is today one of India’s fastest growing IT
and ITES service providers. Since it's inception in October 2000, the company has
established itself as key player in offshore outsourcing, providing outsourced IT solutions
and services to leading global customers.

While an enterprise range of technology capabilities and

world class quality processes form the foundation of ITC
InfoTech’s cutting-edge IT service strength, a sharp
domain focus ensures that IT and It’s delivery always
places business needs ahead of technology.

The company enjoys the rare advantage of having a practitioner's expertise with a strong
vertical focus in Consumer Packaged Goods (CPG) and Retail, Travel, Hospitality
and Transportation, and Manufacturing - domains that its parent, ITC Limited, has
traditionally dominated - as well as in the main stay of technology service providers:
Banking, Financial Services and Insurance.

ITC InfoTech offers services through a global delivery platform with a strength of over
2,000 employees and delivery centers across North America, Europe and Asia-Pacific
that serve Fortune-listed companies in 42 countries.

ITC InfoTech conforms to the highest standards in

international process quality, with ISO 27001, ISO 9001,
SEI CMM Level 5 and BS 7799 accreditations. These
reflect the company’s ongoing enterprise-wide focus to
ensure that every engagement, program and project
delivers international quality consistently.

Industry Recognition: Premier analyst and market research agencies have recognized
ITC InfoTech’s position as the preferred IT partner. It has been:

 Featured amongst Top 100 Global Outsourcing Companies in the Leaders

category - International Association of Outsourcing Professionals
 Ranked amongst Top 10 Specialty Application Development Providers - Global
Services, CMP Media
 Named amongst major Indian global service providers for PLM implementation
and engineering services - ARC Advisory
 Listed as a leading Player in CRM & CPG Space – Forrester
 Mentioned amongst Top Offshore SAP Service Providers - Forrester
 Referred to as a Key Offshore Testing Services Provider - AMR Research

27
 Interpretation of article! written by
Shalesh Dhobal on ITC
diversification

ITC has been a leader in the tobacco business, but it realize from the up coming trends
that remaining with a single business is not a noble thought, moreover the company was
threatened of the anti-tobacco campaign. Therefore the company decided to venture into
InfoTech with ITC InfoTech, foods via Kitchens of India, greeting cards through
Expressions and lifestyle retailing through Wills Sport. Each of these is intended to draw
revenues of at least Rs. 250 crore by 2005.

ITC was a cash rich company with a liquidity of Rs.8816 million in the cigarette
business, even though the company understood the need and usefulness of diversification.

The writer in the article is mainly concerned with the way ITC spreads its wings in the
lifestyle segments, he writes:” forty-five stores in 34 cities in just under a year, selling an
expensive fashion brand of relaxed-wear. If retail swamp-out and brand salience were the
goals, ITC’s Wills Sport would be on a victory lap already.”

The company has started its retail stores not only in Indian metros but also in the small
towns like Ranchi, Jabalpur, Gwalior, Belguam, Ernakulam etc. the article also talks
about the strong market campaign done by the company, it also describe how the
company has used its brand image to attract the Indian youth. It also tells about the
strategy adopted by the company to differentiate itself in this segment, like the company
is outsourcing its designs form the American Design Intelligence Group (ADIG), a San
Francisco, US-based garment and retail consultancy. Now it has its own six-member
team, even as it continues a tie-up with Science & Designs, an Italian fashion design
house – through which it keeps a watch on hot western labels such as Banana Republic
and Armani Exchange.

The author believes that by adopting these strategies ITC will surely be successful in its
new business.


taken from article published in economic times

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 Interpretation of article∗ written by
Sanjoy Narayan on ITC
diversification

“BLENDING DIVERSE SKILLS AND LEVERAGING ITS DISTRIBUTION

MUSCLE, THE TOBACCO GIANT IS UNLEASHING A WELTER OF NEW
BUSINESSES. AN INSIDE ACCOUNT OF THE SILENT REVOLUTION.”

These are the words from the mouth of the editor of business today
Sanjoy Narayan.

The writer says that the company has diversified from a cigarette giant
to a fully diversified company in a very efficient manner. The article
talks about how a tobacco company, moves on the path of
diversification and started manufacturing confectionary, fast food,
apparels etc and the company is actually doing well.

The article describes the lateral thinking of the chairman and the persons who are running
the company, why they have decided to diversify and on what grounds. The articles
describes about the market capitalization of the company in various fields in which it has
diversified, it also talks about ties and ventures of the company with various firms.

It also talks about the new ventures of ITC in various other fields and about the future
plans of the company.


taken from the article published in business today

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