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Insights of ITCAnalysis and Comments on Financial
Statements
Submitted to: Submitted by:
Prof. Vandana Gupta Abhas Agarwal- 211181
Anurag Sengar- 211174
Ankit Kothari- 211175
Durgendra Singh- 211172
Lavi Agarwal- 211170
Subhendu Bagchi- 211137
The analysis performed by the group on various sections is written in Brown Colored Italicfont.
The data used for analysis is collected from www.moneycontrol.com & ITC financial reporthandouts.
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Table of Contents
Chapter 1: Introduction on Company
Profile page 3
Line of Businesses page 3
Board of Directors page 4
Shareholding patterns page 5
Recent events page 5
Chapter 2: Operating Performance
Analysis of Sales Mix page 6
Pee-Comparison page 10
Export Sales page 10
Chapter 3: Financial Statement Analysis
Ratio Analysis page 12
Trend Analysis page 14
Profit/Loss & Balance Sheet Analysis page 17
Chapter 4: Cash Flow Analysis page 18
Chapter 5: SWOT Analysis page 19
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ITC(Indian Tobacco Company)
Introduction:-
Indianpublicconglomerate company.
Headquarter-Kolkata, West Bengal Annual Turnover-$7 Billion
Market Capitalization-$34 Billion
Chairman-Yogesh Chander Deveshwar
100 Years completion on 24 August 2010
Lineof business:-
FMCG (Mainly Cigarettes and then confectionaries, toiletries, cosmetics etc)
Hotels
Paperboards, Paper and Packaging
Agri Business
(The company is gradually moving to various new sectors, unlike their primitive
business of cigarettes, this may be because of the governmental norms growing
against promotion of cigarettes.
The latest announcement that the company has made is regarding their entry to
diary sector serving society with milk, butter, cheese and other products.)
Board of directors:-
Category NamePercentage to totalno. of Directors
Major Responsibility
ExecutiveDirectors(4)
Y.C. Deveshwar
25
Chairman
N.Anand Looks after Hotels Business
P.V.DhobaleLooks after Paper & PackagingBusiness
K.N. Grant Looks after FMCG sector
Non-ExecutiveIndependentDirectors(9)
A. Baijal
56
S.H.Khan
S.B. Mathur
P.B. Ramanujam
B.Sen
B.Vijayaraghavan
S.Banerjee
A.V. Girija Kumar
D.K. MehrotraOther Non-
ExecutiveDirectors(3)
H.G. Powell
19A.Ruys
K.vaidyanath
Total 16 100
http://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Conglomerate_(company)http://en.wikipedia.org/wiki/Conglomerate_(company)http://en.wikipedia.org/wiki/Public_company8/13/2019 ITC Annual Report
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(The appointment of executive directors for various responsibilities shows that the
company is managing all its sectors well and is very considerate about them.)
Shareholding Pattern (%):-
(The shareholding pattern holding shows that the company has nearly all the equity
from public, the share of promoters is plenty. Also majority shareholders are Banks,
Financial Institutions, Mutual Funds and Insurance Companies which generally hold
the shares for a very long time. This shows that company is always cash-rich)
Banks, Financial
Institutions,
Insurance
Companies and
Mutual Funds,
34.25
Foreign
Institutional
Investors, 17.4
Foreign
Companies,
30.87
NRIs And
Foreign
Nationals,
0.54
Bodies
Corporate,
5.76 Public and
Others, 10.87
Shares
underlying
Global
Depository
Receipts, 0.31
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Analysis of Sales Mix
(The chart above shows that the Total Revenue of the company including all the
sectors is growing every year. Growth in FY2011-12 was 14.22%)
Visualizing the performance of each sector now
Here, instead of analysing FMCG as one sector, It is sub-divided into Cigarettes and
other FMCG sector.
(The latter includes confectionary, toiletries, cookies etc)
2009 2010 2011 2012
Total revenue 25817.32 28931.27 30527.88 34871.86
0
5000
10000
15000
20000
25000
30000
35000
40000
Axis
Title
Total revenue
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Cigarettes
(The figure above shows Cigarettes holds the majority of share in total revenue ofthe company. Excluding FY2011-12, the share has always risen. Also, despite there
was a drop in share of cigarettes in total revenue, still the revenue from share has
risen by12.24%)
Other FMCG Products
(The figures above shows a continuous increase in the share of other FMCG
products in the total revenue of the company, also the revenue of this section is also
continuously growing. For FY2011-12 the volume growth was 23.65%, which is
remarkable)
2009 2010 2011 2012
ciggrates 15115.07 17283.03 19821.16 22248.07
0
5000
10000
15000
20000
25000
AxisTitle
Cigarettes
58.54%
59.74%
64.93%
63.79%
2009 2010 2011 2012
Other FMCG 3014.04 3641.68 4480.12 5539.93
0
1000
2000
3000
4000
5000
6000
AxisTitle
Other FMCG
11.67%11.67%11.67%
12.58%
14.67%
15.88%
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Hotels
(Though this sector contributes just 2-3% in the total revenue, but still the company
predicts a high level of growth in this sector, recently it is in talks with TAJHotels,
planning to but their branch of Delhi.
There was a sharp downfall in FY2009-10, due to some internal conflicts and
mismanagement, but the sector grew 8.8% in FY2010-11, as it provided
accommodations to my players participating in Comm onwealth Games)
Agri Business
(This sector provides a share of nearly 10-12% in the total revenue of the company.
This sector however does not shows a significant growth in the share, this is
because a majority of farming is dependent on monsoons, and year 2010,2011 had
missed monsoons.
2009 2010 2011 2012
hotels 1020.27 910.81 991.47 996.3
840
860
880
900
920
940
960
980
1000
1020
1040
AxisTitle
Hotels
3.98%
3.15%
3.24% 2.86%
2009 2010 2011 2012
Agri 3845.98 3862.14 2919.55 3507.85
0
500
1000
1500
20002500
3000
3500
4000
4500
AxisTitle
Agri
14.89 % 13.35 %
9.56 %
10.06%
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However, the company has installed various scientific equipments to enhance the
productivity of the land, viz. Tube well; this helps in irrigating the land even in
absence of monsoons.
Also the company has now started planting tobacco, so that they can cut down their
dependence on suppliers for tobacco
The company has also started many initiative to educate farmers, Their program like
e-chaupalis helping farmers to get the environmental conditions, tips regardingfarming and also the current price of the crop
Another initiative is Chaupal-Sagar which also is regarding the welfare of the
farmers and the rural people)
Paperboards
(The share of this sector is regarding 7-10%, the total revenue got dropped in
FY2011-12 because of a significant increase in their operating expenses. This sector
grew by 11.4% in FY2011-12)
2009 2010 2011 2012
paper 2821.96 3233.61 2315.58 2579.71
0
500
1000
1500
2000
2500
3000
3500
AxisTitle
Paperboards
10.93 %
11.17 %
7.58 %7.39 %
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Peer Comparison
(The figures above show that ITC dominates over all its peers in the cigarettessector. In all the categories, ITC is at the top.)
Sales as per Geographic Divisions
ITC exports only Cigarettes in various parts of the world. The growth of the sales
within the country and outside that is given below
(The sales for the company has steeply risen within the country for cigarettes
segments)
21381.6
24020.27
28140.72
32619.1
0
5000
10000
15000
20000
25000
30000
35000
2009 2010 2011 2012
Within India
Within India
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(The sales in FY2011-12 has fallen, due to increase in excise duty in the countries
where ITC used to trade. However, as per the Directors Statement ITC is planningto export their other FMCG products too to various parts of the world. Director
focuses on Aashirwaad Aata, saying they would try to work in exporting that.)
1761.93
2239.332463.67
2252.76
0
500
1000
1500
2000
2500
3000
2009 2010 2011 2012
Outside India
Outside India
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Financial Ratio Analysis
Liquidity Ratios:
Year /
Ratio
2009 2010 2011 2012
Current ratio 1.73 1.01 1.07 1.11
Quick Ratio 0.76 0.45 0.45 0.49
Debtors
Payment Days11.08 10.61 10.52 9.79
By loo king at their l iquid i ty rat io, fo l lowing points c an be made
Company is very conservative as its current ratio is nearly 1, the company
uses generally its own funds. There have not been any significant changes inthe figures.
There is also stability in the quick ratio of the company, shows that
management of the company is good. In FY2011-12, this figure has
marginally increased, which is a good sign.
The debtors payment days is also in the range of 9-11 days, which is nearly
same for this sector. Also there has been a marginal downfall on this no. on
FY2011-12, which is again a good sign.
Solvency Ratios:
Year /
Ratio2009 2010 2011 2012
Debt/Equity 0.01 0.01 0.01 0.01
Debt/Asset .012 .007 .005 .006
Inventory
Turnover Days69.92 63.47 59.95 57.68
Fol lowing are the points that can be made by looking at the solvency rat io
The D/E and Debt ratio both are too thin, indicating that company depends
on its own funds. There is hardly any borrowing.
Inventory Turnover days has gradually fallen from nearly 70 in 2009 to
nearly 58 in 2012, showing that company isnt piling upthe inventory, instead
is able to sell them. Shows good Supply-Chain-Management.
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Profitability Ratios:
Year /
Ratio2009 2010 2011 2012
Operating profitmargin
21.6% 24% 24% 24.5%
Assets Turnover 1.77 1.87 2.03 2.01
ROE 25.42 29.33 33.35 35.58
Net Profit
margin16.8% 18.3% 16% 17%
Fol lowing are the points that can be m ade after visual izing these data
Operating Profit margin has gradually increased, also from the balance sheetand P/L account, it was clear that, income has risen significantly but expenses
hadnt, this shows that company is adopted new techniques to cut-down their
prices and maintain the same level of production. This increase is appreciable
for any company.
Assets Turnover ratio is also increasing or nearly stable, shows that
utilitisation of assets is done properly and this management is gradually
improving.
ROE is increasing at a significant rate, thus attracting new shareholders.
Also Net margin is gradually increasing, expect in FY2010-11, this downfall isdue to high taxes implemented by Governments. Still in FY2011-12, the net
profit margin has grown from 16% to 17%, which is remarkable.
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Trend Analysis
(The gross income of the company is increasing in every fiscal year. The growth in
FY2011-12 is 14.8%. There has been a significant increase in sales of sector like
cigarettes, other FMCG and Agri Business.)
23593.64
26814.32
31399.1
36072.59
0
5000
10000
15000
20000
25000
30000
35000
40000
2009 2010 2011 2012
Gross Income
Gross Income
5393.47
6688.77
7992.53
9673.96
0
2000
4000
6000
8000
10000
12000
2009 2010 2011 2012
PBDIT
PBDIT
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(There has been an increase in Income of the company from all the sectors while the
percentage growth in expenditure is marginal, thereby making that PBDIT rise
continuously.
Also company has increased the price of cigarettes once a year, and this sector
contributes a major section for their growth.)
(There has been marginal growth in equity from 2009 to 2011, but the equity has
increased in FY2011-12, as company has issued some shares)
(The long term liability is growing with a moderate rate, which is mainly due to
Deferred tax liability. The company has however made some repayment of the loans
in FY2009-10.)
27470.16 28128.76
31906.54
37583.78
0
5000
1000015000
20000
25000
30000
35000
40000
2009 2010 2011 2012
Equity
Equity
1053.58
921.93
1003.07
1072.68
800
850
900
950
1000
1050
1100
2009 2010 2011 2012
Long-term Liablity
Long-term Liablity
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(The current liability is not a great issue to focus on, because a majority of share in
these figures are of Tax payable and Dividends payable, the latter giving good
signals to the shareholders.)
(The growth in Net worth per share is proportional to the growth of the company, and
can make shareholder happy)
4695.55
8019.038477.48
9101.83
0
2000
4000
6000
8000
10000
2009 2010 2011 2012
Current liability
Current liability
18.2 18.4220.62
24.04
0
5
10
15
20
25
30
2009 2010 2011 2012
Net worth per share
Net worth per share
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(The increasing growth of the share price of the company is shown above. The data
is recorded on April 1, of the corresponding year, and current value is pertaining toSept 11,2012. There has been a remarkable growth in the value of the shares.)
(ITC has always been kind to their shareholders, they provide annual dividends, also
in 2010, Company go t its 100 years com pletedand provided an specia l dividend
worth Rs 5.5 per share to all their shareholders, also since there was a remarkable
growth in companys performance in half-yearly reports of 2011, company has also
given in ter im dividendworth Rs 1.65 per share)
92.4
131.58
181.45
226.85
268.15
0
50
100
150
200
250
300
2009 2010 2011 2012 Current Value
Share price
share price
3.74.5
2.84.5
5.5
1.65
0
2
4
6
8
10
12
2009 2010 2011 2012
Dividend Special
Dividends
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Cash Flow Analysis
After visualising the graph and data above, following points are concluded:-
Cash from operating activities of the company is growing at a very significant
rate; this is a good sign as it makes trust in the minds of the investors that the
company is growing. For FY2011-12 Growth rate is 14.26%.
Cash from investing activities is seen to be negative in almost all the year; this
is because company regularly believes in purchasing fixed assets and ahuge amount of Current investments. Also it supports many of its
subsidiaries.
Cash from financing activities is also generally seen to be negative; This is
because company pays a huge amount of dividends to its equity
shareholders and Income tax for dividends. Distribution of dividends is
always a good sign for shareholders. But there is always a significant inflow of
cash from the issue of share capital.
3279
4630
5264
6015
-1260
-3531
-616
-2210
-1556 -1009
-3551
-3246
2009 2010 2011 2012
Cash Flow Analysis
Operating Activity Investing Activity Financing Activity
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SWOT Analysis
Strengths
They are into Cigarettes from so long, thus introduction of new FMCG
products to the market is not very tough as same distribution channel is
required to meet the retailers, so the expenses of the company will be low. The company has planned to rely on renewable sources of energy for their
almost sectors specially Hotels, This will help them in cutting down their
operating expenses.
Subsidy in their Agriculture business by government.
Weakness
High taxation in their cigarettes segment; nearly 60% of the price of cigarettes
constitute for taxes.
Currently States like U.P. and Karnataka has imposed VAT of 50% ontobacco products.
Due to this Company cannot maintain a uniform price across the country.
Opportunity
The company is planning to expand their FMCG sector, recently they have
announced to enter into Dairy Sector.
The company is ready to invest 25000 Cr. In its FMCG, logistics and Hotels
segments in the next 5-7 years.
The company is planning to buy Hotel Ashok, Delhi.
Threats
Their Cigarettes division is always on target, Governments both state and
central; impose new tax and duties every now and then. This bounds the
company to raise the price of this segment which contributes more than 50%
of their business.
Their majority of Agriculture Business is still dependent on monsoons, thus
any absence of monsoon results in overall loss for this sector.
Entries of new players in FMCG sector, viz. Sahara Q, Easy Day etc. If FDI in retailgets permitted there will also be many foreign players entering
Indian Market.
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