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ITC CREATING ENDURING VALUE


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ITC LTD PROFILE

History And Evolution of ITC LtdITC was incorporated on August 24, 1910 under the name Imperial TobaccoCompany of India Limited

The Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974

In recognition of the Company's multi-business portfolio encompassing a widerange of businesses - Fast Moving Consumer Goods , Hotels, Paperboards &

Specialty Papers, Packaging, Agri-Business and Information Technology

ITC's Packaging & Printing Business was set up in 1925

In 1975, the Company launched its Hotels business with the acquisition of a hotelin Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola' (now

renamed My Fortune, Chennai).


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In 1979, ITC entered the Paperboards business by promotingITC Bhadrachalam Paperboards Limited

In 1990, leveraging its agri-sourcing competency, ITC set up theAgri Business Division for export of agri-commodities

ITC also entered the Lifestyle Retailing business with the WillsSport range of international quality relaxed wear for men andwomen in 2000

ITC launched line of premium range of notebooks under brandPaperkraft in 2002

In 2002, ITC also entered the confectionery and staplessegments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour)

In 2003, ITC witnessed the introduction of Sunfeast as theCompany entered the biscuits segment

ITC entered the fast growing branded snacks category withBingo! in 2007

In 2010, ITC launched Sunfeast Yippee! to enter the Indianinstant noodles market


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VISION Sustain ITC's position as one of India's most valuable corporationthrough world class performance, creating growing value for the Indian economy andthe Companys stakeholders

MISSION To enhance the wealth generating capability of theenterprise in a globalizing environment, delivering superior and

sustainable stakeholder value

CORE VALUES ITC's Core Values are aimed at developing a customer-focused,high-performance organization which creates values for all its stakeholders


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BUSINESS PORTFOLIO --- ITC LTD

ITC

FMCG HOTELSAGRI BUSINESS,LEAF

TOBACCO , AGRI

COMMODITIES

PAPER BOARD, PAPERBOARD AND PACKAGING

CIGARETTE

PERSONAL CARE

PACKEGED FOODPRODUCTS


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PRODUCT MIX OF ITC LTD (FMCG Sector)


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TRIPLE BOTTOM LINE PERFORMANCE (Turnover and profits as on 17TH July 2012 )

Gross Income for the year grew by 14.9% to over Rs. 36,000 crores. Profitbefore tax increased by 22.4% to over Rs. 8,800 crores while Net Profits grewby 23.6% to over Rs. 6,100 crores.

The non-cigarette segment net revenue growing 12-fold from about Rs. 1,360crores in 1996 to Rs. 16,150 crores today.

As a result, 57% of net segment revenue of your Company is now frombusinesses other than cigarettes

Your Company is today acknowledged as one of India's most valuablecorporations. Market capitalisation, which stood at Rs. 5,570 crores in 1996,has multiplied over 35 times to touch Rs. 2 lakh crores.

ITC's traditional businesses have touched a turnover of over Rs. 5,500 croresin a relatively short span of time.

The topline from this segment is expected to triple over the next 5 to 7 yearsto a level of Rs. 15,000 crores,


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HOW HAS THE FINANCIAL PERFORMANCE OFITC LTD BEEN ?


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ACHIEVEMENTS

ITC is the first Indian company and the second in the world to win theprestigious Development Gateway Award

ITC is the first Corporate to receive the Annual FICCI Outstanding VisionCorporate Triple Impact Award in 2007

ITC was conferred the World Business and Development Award 2012 at

the historic Rio+20 United Nations Summit which concluded recently ITC has won the Golden Peacock Awards for 'Corporate Social

Responsibility (Asia)' in 2007

The Business Today Award for the Best Managed Company in recognitionof its outstanding initiatives in the consumer products segment.

The only Indian FMCG company to have featured in the Forbes 2000 list.


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SWOT ANALYSIS

Strength

Strong FinancialPerformance Products PortfolioDistribution NetworkEnvironmental FriendlyResearch & Development

Socially ResponsibilityBrand Equity

Weakness

Dependency on the tobaccobusinessNot present in manyimportant sectorsLocal Company

OpportunitiesLeveraging its brandequity

Right size at the right time The unique reach anddistribution network of E-choupal: Synergies acrossbusinesses and leveraging

domain expertise forgrowth in other sectors

ThreatsCompetitionPressure groups and

Government PolicyGeneral threats


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SUNFEAST- AN OVER VIEW

Sun "mascot - The brand ambassador reinforcing the positioning of thebrand with an essence Spread theSmile "Sunfeast " - The umbrella brand name introduced in the Glucose, Marieand Cream segments

Sunfeast - To be launched nationally in phases in over one million retail outlets across the country .

Sunfeast " range of biscuits is competitively priced and would includetwo new product innovations - Orange flavored Marie and Butterscotch

flavored Cream biscuitsProduct innovation
http://www.itcportal.com/brands-microsite/packaged-foods/sunfeast.asp


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http://www.itcportal.com/brands-microsite/packaged-foods/sunfeast.asp


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PRICING STRATEGY OF ITC LTD (FOOD DIVISION)

The pricing of the ITC food division depends upon the Customersdemand schedule, the cost function and the competitors price.

The pricing of the company is such that it caters to the need of allincome groups of people but special provision has been kept for Lowand middle income group, and their pricing are competitive withrespect to other players like Britannia, Parle and Briskfarm.

The company follows the Going rate pricing that is the price of theproduct depends upon the competitors price. The firm chooses pricingmore or less the same as Market leader.


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PRICING STRATEGY FOR SUNFEAST

Sunfeast look at a two prolonged strategy:-High margin(High margins in cream variants)

High volumes (High volumes from the

Marie and Glucose segments)

Examplessunfeast glucose (200 gm): 20/-sunfeast marie light (130gm : 10/-Sunfeast dream cream (82): 10/-


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DISTRIBUTION NETWORK FOR SUNFEAST

The company used its existing network of convenience stores: thecompanys name for the hole-in-the-wall pan-beedi shops for Sunfeast.

The company also looked at grocery stores and other retail formats.

The company says the brand is now available in nearly 1.8 million outlets.14 manufacturing units

The company has extended its manufacturing capacity by setting up threenew biscuit plants in UP and West Bengal to focus on supply chainmanagement strategy to enhance product freshness, market servicing andmargins
http://www.itcportal.com/itc-business/fmcg/foods/sunfeast.aspx


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Sunfeast school programme: cover 1000 schools across country, to familiarizechildren with sunfeast brand name and sunfeast mascot

Brand ambassador: shahrukh khan & surya (south actor)

Official sponsor of WTA tennis championship-sunfeast open

Launch of Sachins Fit Kit, the first product co-created with brand ambassador

Other activities:-On buses, print media , hoardings, TV and radio advertisements

PROMOTIONAL STRATEGY


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INDIAN BISCUIT INDUSTRY Indian Biscuits Industry came into limelight after 20th century when the

urbanized society called for ready made food products at a tenable cost.

It is assumed as sick-man's diet in earlier days .

Bread and biscuits is the two major product of the bakery industry and coversaround 80% of the total bakery market, out of which

Industry size is about 14500 crore

biscuit covers up to 70% of the total production

The organized and unorganized sector of the biscuit

industry is in the proportion of 65% : 35%


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INDUSTRY CONSISTS OF

Major Players Minor Players Emerging Players Foreign Niche

Players

UnitedBiscuits(Bitain)Danone (Frenchfood giant) Nubisco

Unibic (tied upwith Food Bazaarlaunched TastyTreat

ParleBritannia

ITC

Surya Biscuits PvtLtd

priyaGold Anmol

Krafts CadburyOreoPepsiCo : "protein-

rich Alivalaunched 2009


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BRITANIAINDUSTRIES

LIMITED

PARLE PRODUCTSPVT LIMITED

SURYA FOOD ANDAGRO LIMITED

MAJOR COMPETITORS

Established in 189690% of Britanniasannual revenue ofRs2,200 crore comesfrom biscuits

KEY PRODUCTS:TIGER, GOODDAY,BORBON, 50-50,MARIE GOLD,TIME PASS

Established in 1929the largest selling brandof biscuits in the world70% market share inIndia in the glucose

biscuit categoryKEY PRODUCTS:Parle-G, Hide and Seek,Krack Jack, Monaco,Parle Marie, MilkShakti, Parle 20-20.

Incorporated1992Manufacturing andselling of biscuit under

brand PRIYAGOLDin octoer1993. Key

products: ClassicCream, Butter Bite,Bourbon, Marie Lite,Magic Gold, CNC ,Sanack, zig zag,
http://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/Crorehttp://en.wikipedia.org/wiki/Indian_rupee


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STRATEGIC COMPARISON


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Biscuit Industry Market (in crore)

PER CAPITA CONSUMPTION INKG

AS PER FEDERATION OF BISCUIT MANUFACTURERS OFINDIA (FBMI )

0

1

2

3

4

5

6

7

8

9

10

India USA UK Japan China

2.1

10 10

7.5

1.9

0

2000

4000

6000

8000

10000

12000

14000

16000

2004-06 2007-08 2008-09 2009-10 2010-11

4000

6800

9830

11206

14500


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Annual growth rate of biscuit

industry

Annual production (in lakhmetric tonnes )

INDIAN BISCUIT MANUFACTURERS ASSOCIATION (IBMA )

0%

2%

4%

6%

8%

10%

12%

14%

16%

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

14%13%

15%

10%

14%15%

0

2

4

6

810

12

14

16

18

20

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

1112.54

14.29

16.1417.44

16.5718.25

19.6


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BCG MATRIX: OBJECTIVES

BCG matrix is a tool to determine the future strategic plan for eachSBU

SBU can be a company division, a product line or even individual brands

Companies have multiple products and businesses under their umbrella

While preparing the marketing strategy companies need to decide aboutadding new products or identify products should no longer be retained.

So the first step is to identify the various Strategic Business Units(SBUs) in a company portfolio.


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BCG Market share/Market Growth Matrix

STARS

generateconsiderable income

Strategy: Invest morefund for future

growth

Question mark

Have potential tobecome stars or cash

cows

Strategy: Either investmore fund for growth

or disinvesting

Cash flowGenerate strong cash

flowStrategy: milk

profits to financegrowth of Stars or

Question marks

DogGenerate little profits

Strategy: Considerwithdrawing I N

D U S T R Y G R O W T H

R A T E

RELATIVE MARKET SHARE

H I G H

L O W

LOWHIGH


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ITC BCG MATRIX

STARSHIGH MARKET

SHARE

&HIGH MARKET

GROWTHHotels, packaging &

Paper boards, e-choupal

CASH COWSHIGH MARKET

SHARE&

LOW MARKETGROWTH

FMCG-Cigarette

DOGSLOW MARKET

SHARE

&LOW MARKET

GROWTHITC infotech

QUESTION MARKSLOW MARKET

SHARE

&HIGH MARKET

GROWTHFMCG others

HIGHGROWTH

LOWGROWTH

HIGH MARKET SHARE

LOW MARKET SHARE


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PORTERS FIVE FORCES

PORTERS FIVE FORCES ANALYSIS


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PORTERS FIVE FORCES ANALYSIS

Major players dominatethe Indian Market.

High competition tocapture maximum marketshare

Unorganized sector cannotcompete with major

players in the case ofAdvertising

THREATS OF NEWENTRANTS

Low entry barriers because ofHeavy competition from major

playersBUYERS

BARGAININGPOWER

High because of,Availability of many biscuits from low,

moderate pricesAvailability of biscuits

from non organizedsector

Brand Loyalty makes buyers more powerful

in the case of newentries

THREAT OF SUBSTITUTESHigh Growing packaged industry

and bread industryTraditional Indian homemade

snacks

THREAT FROMSUPPLIERS

In the case of major players bargaining

power of suppliers isvery low as they

dictate the prices.

The ingredients are basic commodities

such as wheat , sugaretc.


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Bakery Items, Fast

foods, Ready-to-eat

Britannia, Parle

Oreo, PepsiCo

Inflation in sugar &wheat prices

Premium productsare increasing in

market

PORTERS FIVE FORCES SUN FEAST


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STP OF SUNFEAST

Biscuit Segmenting Targeting Positioning

Age

Sunfeast orangeMarie

Sunfeastmarielight

Sunfeast orangecream

SunfeastButterscotchCream

Sunfeastbourbon cream

A very differentiateoffering

Children betweenthe age group 4-14

yr

Children between theage group 4-14 yr

Children between theage group 4-14 yr

Children between the

age group 4-14 yrs

Housewives

Children between

the age group 4-14yrs

Smooth and yummy

Cream

Smooth andyummy Cream

Smooth and yummycream

Natural goodness of wheat

Tight and CrispyIncome

Education

Demographic

Geographic

Sunfeastglucose biscuit

Lifestyle


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PRODUCT FOCUS

high quality

great tasting biscuits

With Different Segments

Brand Essence "Spread the Smile"


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PRICING STRATEGY

Essentially, Parle plays a high volume, low margin game.

But Sunfeast look at a two-pronged strategy, High margins in cream variants

and volumes from the Marie and Glucose segments. For instance, cream biscuits

from both Sunfeast cost Rs10 for 100 grams.

Parle, however, only charges Rs 5 for its cream variants.

Except for Hide & Seek, all of Parle 'products lie in the price range between Rs 4

and Rs 6for 100 gram packs.

There is Two method of Pricing1. Low Margin2. Two-Pronged Strategy


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In August 2003, a month after Sunfeast launch, the companyundertook a major sampling exercise to promote the product. For twoyears then, the brand did all the usual rounds -- riding behind buses,

blocking television spots, booking that corner space in your favorite

newspaper and soon .

BRAND PRAMOTION

The company says the brand is now available in nearly 1.8million outlets, Welldifferentiated advertisements, some which showed a complete cream world withcream rivers, cream mountains and cream trees, were targeted at kids watchingcartoon channels. In April 2005, Sunfeast launched its major campaign. It signedon Hindi film actor, Shahrukh Khan as its brand ambassador


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SUGGESTIONS AND RECOMMENDATION

Sun feast has to give attention towards Advertisement.

Sun feast has to maintain its status by providing more and morefacilities.

Sun feast has to develop more variety of biscuit so that the customercould not return in case of lack of choice.

The company should also give emphasis on other gift scheme


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SWARUPANANDA DEOGHARIA 36

KRISHNAKUMAR MAURYA 27

ABHIJIT SHARMA 21

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