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ITC LimitedITC LimitedOne of India’s Most Valuable One of India’s Most Valuable

CorporationsCorporations

HISTORY

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ITC was incorporated on August 24,1910 under the name of IMPERIAL TOBACCO COMPANY of India ltd’.

In 1974 company’s name was changed to INDIAN TOBACCO COMPANY LTD.

From September 18,2001, company’s name has effectively become ITC Ltd.

About ITC

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Founded August 24,1910 Headquarters Virginia House, KolkataChairman Mr. Y.C.DeveshwarIndustry Tobacco, foods, hotels,

stationery, greeting cards, personal care, IT etc.

Net Sales Rs 16200 croresEmployees 25,000 app.

Mr. Y.C.DeveshwarChairman ITC Ltd.

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ITC One of India’s most valuable corporations

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One of the 8 Indian Companies to feature in ‘Forbes

A-list’ for 2004

Only Indian FMCG Company to feature in Forbes

2000 List

Top in : Sustained value creation (BT-Stern Stewart survey) Operating profits Cash Profits

Ranks No. 9 among Indian listed Private Sector

Companies by market cap. (@ 31/03/08)

No. 1 in FMCG Sector

Awards & Accolades

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ITC features on FORBES GLOBAL 2000 rankings for 2007 ‘ITC received the FICCI Outstanding Vision Corporate Triple

Impact Award 2007 for invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation.

Business Today Award for the Best Managed Company – Retail and Consumer Products, has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment.

The Company’s watershed program also won the Asian CSR Award for Environmental Excellence from the Asian Institute of Management.

The World Development Report 2008 of the World Bank, which was recently released in India, makes a special mention of ITC’s e-Choupal initiative as “an innovative use of Information Technology to link farmers to markets in India”.

Accolades & Awards

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e-Choupal initiative wins global recognition:Stockholm Challenge Award 2006 in the Economic Development

category which recognizes initiatives that leverage Information

Technology to improve living conditions and foster economic growth

in all parts of the world.

First Indian Company to win the Development Gateway Award

2005 for the most exemplary contribution in the field of Information

& Communication Technologies (ICT) for development during the

last 10 years

World Business Award 2004: International Chamber of

Commerce & the HRH Prince of Wales & International Business

forum

Harvard University case study

Recognized in World Development Report 2008 published by

World Bank

Applauded by President of India Dr APJ Kalam in his “special

address during the national symposium to commemorate

60th year of independence”

ITC - Business Portfolio

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ITC

FMCG: Cigarettes

Other FMCGHotels

Agri BusinessLeaf Tobacco

Agri Commodities

PaperboardPaper &

Packaging

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Strategy of Organisation to manage diversity of Portfolio

Formal 3-tiered governance structure: Board of Directors :

Comprising executive (4) and non-executive directors (11) Strategic supervision

Corporate Management Committee : Comprising executive directors and senior managers Strategic management

Divisional Chief Executive & Divisional Management Committee : Executive management

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Sustain multiple drivers of growth, matching internal capabilities with emerging market opportunities

Pursue World class competitiveness in all businesses and across the entire value chain

Best-in-class in terms of : Internal Vitality Market Standing Profitability

Blend core competencies and leverage ITC umbrella strengths to create new avenues of growth

Corporate Strategies

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FMCG - Cigarettes

ITC’s Cigarettes BusinessITC’s Cigarettes Business

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Market leadership in all segments - geographic & price

Powerful brands across segments Extensive FMCG distribution network

Direct servicing of 1,00,000 markets & 2 million retail outlets

World-class state-of-the-art technology and products Investment - Rs.10 billion in six years

Exciting long term growth potential

Cigarettes: Growth potential

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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

Of the 58% of adult Indian males who consume tobacco, barely 15% can afford cigarettes

Biri : Cigarettes ratio = 10 : 1

Annual per capita adult cigarette consumption in India is app.. one tenth of world average : 141

Future growth depends on relative rates of growth of per capita income and moderation in taxes

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Source : Based on Cigarette consumption data(2003) from “World Cigarettes”,ERC Group plc.

Per Capita Adult Cigarette Consumption (Sticks)

16621753

561 488

141

1190

USA China Pakistan Nepal India World Avg.

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Hotels & TourismHotels & Tourism

ITC’s Hotel BusinessITC’s Hotel Business

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ITC-Welcomgroup : a leading hotel chain in India

• Established presence in key business locations

• Over 6000 rooms under 4 distinct brands

Capacity expansion underway at Bangalore and Chennai; plans for

other locations also being progressed

Fastest growing hotel chain with highest operating efficiency

(PBDIT/Net Income @ 45%) amongst the 3 leading chains

Leverages unique service proposition and international

alliance with Starwood Hotels & Resorts

• ‘Luxury Collection’ / ‘Sheraton’

Category Brand PositioningLuxury ITC Hotel: Luxury Collection "Mansions of Luxury"Upper upscale WelcomHotel: Sheraton "Passion for Quality"Upscale - mid-scale Fortune Hotels "Promise of True Value"Heritage WelcomHeritage "Unique Experiences"

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Paperboards, PaperPaperboards, Paper&&

PackagingPackaging

ITC’s Paperboards Business

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Market leader in growth segment - value added coated boards

World-class contemporary technology

• Ozone bleached Pulp Mill operations commenced – only one of its kind in India meeting world-class environmental standards

Internationally competitive quality and cost

Social farm forestry in mill command area to improve access to cost effective fibre & to attain self-sufficiency

• Biotech research based high yielding Clones – effectiveness tested in nearly 80,000 hectares

Fully integrated operations with in-house pulping capacity at appx. 2.20 lac MT

• Expansion completed; source of sustainable competitive advantage

ITC’s Paperboards & Packaging ITC’s Paperboards & Packaging businessesbusinesses

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Capacity expansion projects underway

• 120000 TPA Pulp Mill – commissioning commenced; being

stabilised

• 100000 TPA paper machine (to support Stationery business

growth plans) – trial commissioning commenced

ITC’s packaging SBU -India’s largest converter of

paperboard into high quality printed packaging

• Leading supplier to Indian FMCG segment

• Provides superior packaging solutions to the cigarettes and

new FMCG businesses

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Agri BusinessesAgri Businesses- - Leaf TobaccoLeaf Tobacco

- Agri Commodities- Agri Commodities

Indian Leaf Tobacco industryIndian Leaf Tobacco industry

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India – the third largest producer of tobacco

However, India’s share is only 7% in world tobacco

trade

Upgradation of tobacco consumption from other

formats to cigarettes will enable:• growing domestic base• larger opportunities for value added exports

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

exporter of cigarette tobaccos

Pioneering cultivation of flavourful Flue-cured,

superior Burley and Oriental tobaccos in India

ITC’s Agri Commodity Business

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Farm linkages in 14 states covering Soya, Wheat, Rice, Marine products, Coffee etc.

Unique CRM programme in commodity exports

Leveraging IT for the transformational ‘e-Choupal’ initiative Rural India’s largest Internet-based intervention Over 38000 villages linked through around 6400 e-Choupals

servicing over 3.5 million farmers

Distinctive sourcing capability for ITC’s Foods business

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The eChoupal Services

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Relevant & Real-time InformationCommodity prices, Local Weather, News

Customised KnowledgeFarm Management, Risk Management

Supply Chain for Farm InputsScreened for Quality, Demand Aggregation for

Competitive Prices & Efficient Logistics

Direct Marketing Channel for Farm ProduceLower Transaction Costs, Better Value through

Traceability

Other Services through e-Choupal

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Distribution of Products and Services to Rural Markets

Micro marketingProduct/Services DemosMarketing and Brand Building activities

PilotsBhoomieHealth with Private Health Service ProviderseEducation Rural BPO

Reasons For DiversificationReasons For Diversification

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Tobacco Business is facing an increasingly stringent tax & regulation regime.

• In 2001 taxes were raised by 15%; Revenue collection sub optimized

( cigarette sales fell disproportionately as forcing consumers to shift to cheaper alternatives, but overall tobacco consumption increased )

• Last year 5% increase in excise + 12.5 %VAT leading to unprecedented 30% increase in tax (volume of illegal cigarettes has doubled )

• This year excise on non-filter cigarettes was increased (20 % of its portfolio for ITC) as a result ITC has discontinued production of non filter cigarettes.

Strategic Rationale

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Blend multiple competencies residing within the ITC

Group to create new avenues of growth

Best fit between internal capabilities and emerging

market opportunities

Each segment enhances the depth and width of ITC’s

FMCG distribution capability

Business model retains critical elements of value

chains within ITC with other elements outsourced

• Contributing to the competitiveness of SMEs

Future Growth & Value Capture

New FMCG Initiatives

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FMCG Business InitiativesBranded Packaged Foods

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Leverages: Unique Agri sourcing skills ITC Welcomgroup’s specialist cuisine & bakery knowledge FMCG distribution synergies ITC R&D Centre, Bangalore

5 chosen categories: Staples

– Aashirvaad Atta, Salt, Spices Biscuits

– Sunfeast Salty Snacks

– Potato chips, Bridge products : Bingo! Confectionery

– Candyman, Mint-o Ready to Eat

– Kitchens of India, Aashirvaad ReadyMeals, Aashirvaad Instant Mix, Sunfeast Pasta

FMCG Business InitiativesBranded Packaged Foods

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Aashirvaad Atta:

Current market leader amongst national branded players;

leverages the e-choupal network for cost-quality

optimisation and region specific offerings

Sunfeast Biscuits:

Differentiated & innovative products; continues to build

consumer franchise; distributed & outsourced supply chain

being ramped up

Number of innovative products in the pipeline

leveraging the capabilities of the ITC R&D Centre

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FMCG Business InitiativesLifestyle Retailing

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FMCG Business InitiativesLifestyle Retailing

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Leverages trade mark and services expertise of

hotels

Relaxed wear market growth > 25% p.a

Upmarket product range available in exclusive Wills

Lifestyle stores

(> 50) and multi-branded outlets/ large format retail

stores across

the country

State-of-the-art Master Facility aids speed of

execution

Product and brand range being expanded

• Premium segment comprising the ‘Classic’ range of formal

wear, ‘Wills Sport’ relaxed wear and ‘Wills Clublife’

evening wear

• Strong distribution network in place for the mid-market

brand ‘John Players’

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FMCG Business InitiativesPersonal Care Products

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Current industry consumer spend estimated at over Rs.

21000 crores p.a. (growing at 12%)

Brand wise Highlights

Essenza Di Wills (Super Premium) – Portfolio’s premium imagery augmented with launch of ‘Aqua’ for men in fine fragrances and grooming range

Fiama Di Wills (Premium) – Launched with Shampoos/Soaps/Shower Gels/Conditioners

Vivel Di Wills and Vivel (Mid) – Soaps and Shampoos

Superia (Popular) – Soaps and Shampoos

Products well received in the market, rapidly gaining customer acceptance

Supported by investments in brands – celebrity endorsements

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FMCG Business InitiativesEducation & Stationery Products Business

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Leverages print and paper know-how. Forward

linkages with new paper capacity.

An emerging market in India - growth driven by

increasing cross-cultural exposure

Robust distribution network in place to scale up the

Stationery business significantly• ‘Classmate’ brand already the most widely distributed brand in India

• Scholastic products launched

Serves to expand the width of ITC’s FMCG

distribution capability with negligible incremental

investment

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FMCG Business InitiativesSafety Matches

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Current industry consumer spend estimated at Rs. 1250

crores p.a. for 24 billion match boxes

Fragmented supply base arising from policy of

reservation for small scale industry

ITC markets its brands with value added products

across each price point

• Support SMEs with complementary marketing strengths

‘AIM’ – India’s largest selling Safety Matches brand

Successful acquisition of WIMCO Ltd. by Russell Credit

(shareholding as at 31/03/08: 96.82%)

• Key brands: Homelite,

• Ship,

• Cheetah Fight etc.

FMCG Business InitiativesIncense sticks (Agarbattis)

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Current industry consumer spend estimated at over Rs. 900

crores p.a.

Fragmented supply base arising from policy of reservation for

small scale industry

ITC markets its brands with value added products across each

price point

Support cottage sector with complementary marketing strengths

‘Mangaldeep’ : the only National brand in the country

FMCG business initiatives…….

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Concurrently, ITC’s IT subsidiary assists in web-

enabling business processes

CRM initiatives

ERP transaction processing systems

SCM including the e-choupal capability

… hosted on ITC’s Virtual Private Network

ITC awarded the best IT user in FMCG category by

Nasscom

Positioning of ITC A leading FMCG player in India

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FARMERS

MARKETS

Cigarette Trade Marketing capability

Branded

Foods

Expanded FMCG distribution capability

e-choupal rural two-way fulfillment capability

A basis for strategic partnerships with other FMCG brand owners

VPN providing SCM, ERP & CRM capability

Lifestyle

retailing

Education

Stationery

Matches &

Agarbatti

Personal Care

Products

THANK YOU

Parul Agarwal Saloni Jain

Vibha Porwal

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