A Project

On

ITC LIMITED

Of

Organisational Behaviour

Submitted to

UNIVERSITY OF MUMBAI

Submitted By

MANDAR A. BHOIR

Roll No. 63

MASTERS IN COMMERCE - MANAGEMENT (Sem III)

UNDER THE GUIDANCE OF:

Prof. Anand Deshpande

RIZVI COLLEGE OF ARTS, SCIENCE, COMMERCE

Bandra (West), Mumbai

Academic Year

2014-2015

DECLARATION

Myself, Bhoir Mandar Ashok of Rizvi College of Arts, Science & Commerce studying

M.COM-Sem-III hereby declare that I have completed this project on ‘ITC LIMITED’ in

Academic Year 2014- 2015.

The information submitted in this project is true & original to the best of my knowledge.

Date-

Place-MUMBAI

(BHOIR MANDAR ASHOK)

CERTIFICATE

This is to certify that MANDAR BHOIR student of M.Com-III class, Roll No. 63 of the

academic year 2014-15 studying at Rizvi College of Arts, Science & Commerce, has successful

completed the project entitled ‘ITC LIMITED’

____________________ ______________________

Prof. Anand Deshpande Prof. Qamar Sir

(M.Com Co-ordinator)

___________________ ______________________

External Examiner Dr. Farooqui M.Z

(Principal)

ACKNOWLEDGMENT

I owe a great many thanks to a great many people who helped and supported me during

this project.

My deepest thanks to the Guide of this project Professor Anand Deshpande , for

guiding and correcting various documents of mine with attention and care. He has taken pain to

go through the project and make necessary correction as and when needed.

I would also thank my Institution and my faculty members without whom this project would have been a distant reality. I also extend my heartfelt thanks to my family and well-wishers.

EXECUTIVE SUMMARY

ITC was established on Aug 24, 1910 as the Imperial Tobacco Company of India Ltd in

Kolkata and its name was changed to I.T.C. Limited in 1974 and finally they changed it to ITC

Ltd in 2001. ITC has diversified presence in tobacco, foods and confectionery, apparel, paper

boards, packaging and hotel businesses.

The Foods Division is the most recent diversification of the ITC group. They entered in this

business in 2001. They launched KoI brand under Ready to Eat segment .They expanded with

brand launches in the Confectionery, Staples and Snacks Food segments.

ITC has fulfilled all needs and requirements of the people. If the company maintains its standard

or increases it in the near future it surely will attain the no. 1 position in the market.

Here, through our report we have tried to study the environment in which ITC

foods operate. We have also analyzed the market of ITC foods and the

competition involved. We have also studied the various strategies adopted by

company to achieve its goals and the structure and the culture developed within

ITC to support its objective. Also, an effort has been made to project ITC’s

future prospects, sales and profits.

INTRODUCTION

ITC made its entry into the branded & packaged Foods business in August 2001 with the launch

of the Kitchens of India brand. A more broad-based entry has been made since June 2002 with

brand launches in the Confectionery, Staples and Snack Foods segments.

For ITC, the packaged foods is an ideal business to utilize ITC's proven strengths in the areas of

hospitality, branded cuisine, contemporary packaging and sourcing of agricultural commodities.

ITC's world famous restaurants like the Bukhara and the Dum Pukht, nurtured by the Company's

Hotels business, demonstrate that ITC has a deep understanding of the Indian taste and the

expertise required to translate this knowledge into delightful dining experiences for the

consumers. ITC has stood for quality products for over 98 years to the Indian consumer and

several of its brands are today internationally benchmarked for quality.

All products of ITC's Foods business available in the market today have been crafted based on

consumer insights developed through extensive market research. Apart from the current portfolio

of products, several new and innovative products are under development in ITC's state-of-the-art

Product Development facility located at Bengaluru.

ITC has over the last 98 years established a very close business relationship with the farming

community in India and is currently in the process of enhancing the Indian farmer's ability to link

to global markets, through the e-Choupal initiative, and produce the quality demanded by its

customers. This long-standing relationship is being utilized in sourcing best quality agricultural

produce for ITC's Foods business.

The Foods business is today represented in 4 categories in the market. These are:

1. Ready To Eat Foods

2. Staples

3. Confectionery

4. Snack Foods

In order to assure consumers of the highest standards of food safety and hygiene, ITC is engaged

in assisting outsourced manufacturers in implementing world-class hygiene standards through

HACCP certification. The unwavering commitment to internationally benchmarked quality

standards enabled ITC to rapidly gain market standing in all its 6 brands:

1. Kitchens of India

2. Aashirvaad

3. Sunfeast

4. mint-o

5. Candyman

6. Bingo!

Recently, on Aug 1, 2008, ITC Foods has drawn up plans to extend its Kitchen of India brand to

frozen foods.

ITC’s Branded Packaged Foods business continues to expand with sales growing by 23% over

the previous year. Apart from the development costs of new products, the business has had to

contend with the recent economic slowdown and severe cost increases in input commodities

including wheat, vegetable oil, maize and skimmed milk powder, in addition to the soaring fuel

prices. Having acquired reasonable scale in a relatively short span of time, the business is

progressively focusing on consolidating the portfolio in certain categories, improving market

servicing and driving supply chain efficiencies.

BACKGROUND NOTE (ITC)

ITC was established on August 24, 1910 as the Imperial Tobacco Company of India Limited in

Kolkata. Initially, the company was involved in the trading of imported cigarettes.

In 1925, in a backward integration move, the company started a packaging and printing

business.

The name of the company was changed to India Tobacco Company Limited (I.T.C. Ltd.) in

1974.

In 1975, I.T.C. Ltd., through ITC-Welcomgroup, tied up with the US-based Sheraton

Corporation to enter the hospitality industry. It acquired its first hotel in Madras (later renamed

Chennai) in Tamil Nadu and called it the Welcomgroup Chola Sheraton.

I.T.C. Ltd established ITC Bhadrachalam Paperboards Ltd. (IBPL) in 1975. The company started

production at its integrated pulp and paper/board manufacturing facility at Bhadrachalam,

Andhra Pradesh, in 1979.

In 1990, I.T.C. Ltd. set up an International Business Division (IBD) for export of

agricommodities.

I.T.C. started a greeting cards business under the brand name Expressions in the year 2000.

In the same year, I.T.C. also entered the fashion retailing business by extending its well known

cigarette brand Wills. The retail outlets were called Wills Lifestyle and offered premium leisure

wear for men and women under the Wills Sport brand.

In September 2001, the company was renamed ITC Ltd (without full stops, and with no meaning

attributed to the alphabets).

In 2001, ITC made an entry into the foods business.

In 2002, the company launched another clothing brand, John Players, which targeted the urban

youth.

In 2004, ITC was one of eight Indian companies to make it to the “Forbes ‘A’ List”8 which

featured 400 of “the world’s best big companies”.

In Oct 2005, ITC has launched an exclusive line of prestige fine fragrances and personal care

products under the Essenza Di Wills brand.

In late 2007, ITC launched Fiama Di Wills soaps and shampoos following the success of

Essenza Di Wills.

In Dec 2007 ITC launches ECF (Elemental Chlorine Free). ITC is the first and only Company in

India using the ECF technology.

Market and Competition

Indian Foods market is a monopolistic market. There are many competitors in all the categories

and although they all have similar products available at similar prices, they are trying to prove

themselves different through their marketing strategies. However, entry to this business is easy

and ITC has utilized this fact very efficiently to their benefit as they entered into the several

categories among this Foods business.

READY TO EAT

ITC entered into the branded and packaged foods business in with the launch of Kitchens

of India brand. In 2004, the company launched KoI brand fruits and spice conserves and cooking

pastes. The fruits and spice conserves, were developed jointly with Karen Anand, a food expert.

Priced at Rs. 70, these were targeted at the premium segment. The KoI cooking pastes, which

were priced at Rs.30 for a 100g pack, also targeted the high-end market. Multi-purpose cooking

pastes were also launched under the Aashirvaad brand and these were priced at Rs. 10 for 80g

pack. The manufacturing of these products was outsourced to contract manufacturers for saving

the operating cost.

ITC entered the branded spices market in 2005 and the Instant Mix segment in 2006, both under

the Aashirvaad Brand. As on April 2006, the total turnover in the Indian ready-to-eat and ready-

to-cook segments was only around Rs. 700 million, but it continued to post an annual growth of

20%. By early 2006, though ITC had captured a 35% market share in the ready-to-eat segment,

MTR was the clear market leader with close to 60% in market share. ITC exported 40-50% of

KoI brand products (in terms of volumes) to the US, Canada, the UK, Switzerland, and Australia.

In May 2006, ITC planned to introduce ten more varieties under the KoI brand within a price

range of Rs. 35 to Rs. 98. In 2007, some new products have been launched under Ready To Eat

category like chutneys, curries, conserves, biryanis (Noor Mahal, Bhori Biryani and some new

range of products under Gharana (Paneer Malai, Keema Mutter). After launching all these

products ITC FOODS is looking to share 50 to 60% of market by 2008-2009.Following are the

major competitors ITC is competing with in Ready to Eat category:

Brands Description

Gits

Gits produces the selected range of popular ready to cook and

instant foods that cover a range of ethnic Indian cuisine-and

where the recipes have "Global pallete acceptance".

Haldirams

Offers packaged Bhel puri chats such as Sev Puri, Chana

Masala, Samosa, Pakoras, Alu Tikki, Pao Bhaji, Gol Gappa,

Dhokla among others

Ethnic Kitchens

Offers packaged sweets,syrups,namkeens, cookies, pickles, aloo

Masala, Bhujia, Bhelpuri, Chana Dal, Kajui Ladoo and many

more items.

MTRMTR foods currently comprise twenty-two delicious and

completely authentic Indian curries, gravies and rice.

Priyafoods

Priya has a range of popular traditional recipes starting from Dal

Makhani, Navaratan Kurma to Palak Paneer, Paneer Butter

Masala, Punjabi Chhole and Rajma Masala along with true

southern delicacies like Andhra Veg Pulav, Mango Dal, Gongura

Dal.

Market Share - Ready To Eat

48%

35%

8%

9%ITC Ltd.

MTR

Kohinoor

Others(Gits, PriyaFoods etc.)

as on June, 2008

CONFECTIONERY

Confectionary market in India is about Rs.2500 crore. It is loosely divided into seven categories:

1. Hard boiled candies

2. Toffies

3. Eclairs

4. Chewing gum

5. Bubble gum

6. Mints

7. lozenges

ITC has currently in market with its two brands “Mint-o” and “Candyman”. ITC’s Mint-O

fresh secured a 17% share of Indian cough lozenges market ahead of former leader Perfetti

which only achieved 14.3% with chloromint. The Indian giant marked the confectionary sector

in 2002 and has only two brands “mint-o fresh” and “Candyman”. But in overall confectionary

market they are lagging behind having just 3% market share as compared to market leader

Perfetti with more than 37% market and providing larger number of brands.

Perfetti van melle ITC Ltd. Nestle Cadbury

Alpenliebe

Alpenliebe

Creamfills

Alpenliebe

Lollipop

Big Babol

Center Fresh

Candyman

Minto

. Kit Kat

. Kit Kat Lite

. Milky Bar

. Munch

. Milk Chocolate

. Fun Bar

. Polo

Bubbaloo

Dairymilk

Eclairs

% Star

Gems

Perk

Halls

Center Fruit

Center Shock

Chatar Patar

Chlor-mint

Chocotella

Cofitos

Fruittella

Happydent White

Protex Happydent

Marbels

Mentos

Chocoliebe

. Polo Power mint

. Munch Pop Choc

. Éclairs

Market Share - Confectionery

3%

37%

11%7%

42%

ITC Ltd.

Perfetti Van Melle

Cadbury

Nestle

Others(Parle,Joyco, HUL etc.)

STAPLES

ITC entered the staples market in 2002 with wheat flour under the Aashirvaad brand. In 2003,

ITC extended the Aashirvaad brand to edible salt. By early 2006, ITC had a 40% market share in

the Rs. 6 billion packaged flour business. Its closest competitor HLL’s Annapurna brand was

trailing behind with a market share of 18%. The market was growing at 12%. Under its

Aashirvad brand ITC FOODS also launched salt, mixers, ready to cook pastes. In the Rs. 4

billion organized salt market (as of 2006), Tata Salt was the market leader with a 28% market

share. ITC had only a 5% share of the market. Other players in this business are HLL (Knorr

Annapurna), Nirma (Shudh), Marico Industries (Saffola), etc.

Market Share - Staples

42%

21%

13%

24%

ITC Ltd.

HLL

Pillsbury

Others(Sri LalMahal, LocalBrands etc.)

BISCUITS:

Indian biscuit market is estimated to be around 5000 crore. Biscuit industry in India in the

organized sector produces around 60% of the total production, the balance 40% being

contributed by the unorganized bakeries. ITC with its premium product, SUNFEAST, is

acquiring a big share of market. Within few years, they are able to get 12% share of the market.

Britannia ITC Ltd

(Sunfeast)

Parle Priyagold

Tiger

Nutrichoice

Junior

Good Day,

50 50,

Treat

Pure Magic,

Milk Bikis

Good Morning.

Marie

Dream cream

Milky Magic

Fit kit

Choco Nut

Butter Nut

Parle-g

Krack-Jack

Monaco

Kreams

Hide and Seek

Milk Shakti

Butter Bite

Classic Cream

Butter Lite

Big Boss

Marie Lite

Magic Gold

Market Share - Biscuits

12%

10%

38%

32%

8%ITC Ltd.

Priyagold

Britannia

Parle

Others(Bonn,Anmol etc.)

SNACKS:

Snacks industry overview

Snacks industry in India is worth 1800 Crores of Rs. and growing at 10% is one of the largest

markets in the world, out of which potato chips holds the major market share of around 85%.

Product Price

(ITC Ltd)

Product Price

(Frito Lay)

Product Price

(Haldiram)

Bingo

Rs. 5

Rs. 10

Rs. 20

Lays

Rs. 5

Rs. 10

Rs. 20

Lehar Namkeen

Rs. 5

Rs. 20

Kurkure

Rs. 5

Rs. 10

Rs. 20

Namkeen

Rs. 5

Rs. 10

Rs. 20

Market Sahre - Snacks

16%

45%

27%

12%

ITC Ltd.

FritoLay India

Haldiram's

Others

SALES OF FOOD SECTOR AND ITS PROJECTION:

2006 2007 2008 2009(projected)

Sales (crores) 1230.54 1698.53 2526.60 3410

The foods business is expanding rapidly with sales growth of 35% in the year 2007. This range

of product includes more than 150 different products. The growth of this sector in terms of

product categorization is as follows.

Sales in biscuits category grew by 55%.

Sales in staples category grew by 52%

Sales in confectionary grew by 51%.

Sales in RTE grew by 35%

ITC Food is looking to expand its RTE category to maximize its profit.

ITC’S NEW CHALLENGES:

This food industry is the industry with very less profit margins. So low operation cost is the key.

Also, Indian middle class is price sensitive. In this area international, national and also regional

competition is very tough. With that wheat, petrol and labor cost is increasing day by day.

Different types of restrictions imposed by the government are also playing a vital role in

reducing profit margins. For example, exporting non-vegetarian foods out of India is restricted.

To cover this up, ITC is trying to reduce cost of its biscuits by acquiring mass production of

wheat directly from farmers through its E-chaupal initiatives. Also in this way ITC is able to

reduce the price of its staples. As far as Confectionary market is concerned, ITC is looking to

launch its brand of chocolate in collaboration with an American company. After analyzing the

food sector, one can say that it is one of the toughest market to compete in as all the market

giants are already there.

GROWTH AND INVESTMENT PLANS:

This food sector is the most promising field and has already overtaken IT and

PHARMACEUTICALS Sector of India. Even Indian Government is looking to develop this

sector. That’s the reason central Government has already passed several projects for food parks.

In this way FDI in this sector is possible. Also government in its 2006 budget has reduced

custom duty from 16% to 8% on packaged food and also excises duty on instant food mixes.

This will help ITC to be competitive in the market. Recently ITC has started exporting packaged

food from its Bangalore plant. It is also planning to open one more new plant in Calcutta for

Indian market. They are looking to add several products in their RTE list which will be exported

as well. Also in late 2007 ITC has acquired one Australian Plant and seed technology industry.

Through this they will provide highly valuable seeds and other solutions to farmers in India,

which ultimately will increase the productivity and cost effectiveness for their staples and

biscuits business.

Its turnover in the foods business was around Rs. 8 billion in 2005-06 which further increased to

Rs. 10.2 billion in year 2006-2007.

ITC has decided to make an investment of 300 crores over a period of 5 years. ITC Foods has

also decided not to make heavy investments in manufacturing unless volumes pick up. As of

today ITC has invested 20 crores in R & D and planning to invest further 15 crores to produce

new products in different categories.

Thus looking at all the strategy of ITC future investment and planning. The future investment

plan is as follows

Rate of Increase Sales Operating Profits Net Profit/loss

2010 18.07 18.30 37.58

2011 28.16 19.15 2.01

2012 26.34 18.90 20.79

2013 12.76 11.31 15.56

2014(Projected) 21.33 16.92 18.98

Major Strategies Adopted by ITC Foods

Entering the foods business was itself a strategic decision for ITC. While ITC’s core business,

tobacco, was under pressure owing to several factors like government bans on advertising and on

smoking in public places, hikes in the excise duty for cigarettes, and anti tobacco campaigns,

ITC planned to deploy its surplus in the packaged food business where it saw huge business

potential. Following are some of the strategies that ITC adopted to make its food business a

success:

Entering into less competitive or unexplored markets (Ready to eat, Staples,

Wafers): When ITC entered into the foods business in 2001, it focused on unleashing the

areas where the competition is very less or there is no competition. It started with

packaged ready to eat food and later extended that to Aashirvaad brand of edible salt and

Atta. Recently ITC has announced its desire to forge in the frozen foods category in the

domestic market. Players in this category are limited and ITC hope to exploit this fact.

Also, in Bingo, although the competition is tough but there is only one player with whom

ITC has to compete i.e. Frito Lay. This strategy has helped ITC to quickly establish itself

in the above mentioned businesses.

Distribution Network: ITC already had a huge distribution network due to its tobacco

business. ITC used this network to distribute their biscuits and wafers. This not only

provided a good launch to their products but also helped in boosting sales. Today, ITC’s

Bingo and Sunfeast are available at nearly 1.8 million outlets whereas Parle is available

at only 1.5 million outlets.

Market differentiation (Ready to eat, Biscuits): ITC started packaged foods business

with the KoI brand of ready-to cook products. They were positioned as premium products

with target groups including tourists, NRIs, etc. In Biscuits also, ITC launched

differentiated products in each and every segment. For e.g. it introduced an Orange

Marie, a butterscotch cream biscuit, chilli flakes in a biscuit and even honey flavor under

the Sunfeast brand.

In March 2005, ITC Foods launched Sunfeast Pasta, a whole wheat based product

targeted at children. It was expected to compete with products like Nestle’s Maggie

noodles. With this strategy ITC built for itself new markets.

Cost control strategy (all products): When ITC started the foods division, its main

challenge was to compete with the players who were already there. To overcome this

challenge, ITC realized that they have to offer products at a price which is either equal or

less than what the competitors are offering. To do this, they planned to capitalize by

leveraging the strength of the group’s other businesses. ITC’s printing and packaging

business provided high-quality, cost-effective, and innovative packaging. ITC also

enjoyed cost advantages over its competitors owing to its electronic procurement system

called e-Choupal. This helped ITC to compete with the best.

Diversification of products (Biscuits, Wafers, and Ready to Eat): One of the ITC’s

successful strategies has been the method of diversifications among its various products.

If we talk just about Bingo, ITC has come up with 16 flavors in comparison to its

competitor ‘Lays’ of ‘Frito Lay’ which has only 4 major flavors. Same is the case with

Ready to Eat food category and Biscuits.

This strategy has helped ITC to attract a wide range of market.

Extensive advertising (Biscuit, confectionary, wafers): Just like a Bollywood movie

needs good publicity to be a super hit, every new product launched in the market needs to

be known to the consumers before it is launched. Advertising is where ITC made the

difference in comparison to its competitors. They hired the best professionals and the best

ambassadors in the country to make their products famous. This is evident form the

award winning marketing campaign for Bingo and Minto Fresh. The tagline "Jab Laila ko

karna tha impress to majnu ne khayi mint o fresh" has stood the test of times and is still

widely known and remembered. Hiring the best people from the film industry and sports

(Sharukh Khan and Sachin Tendulkar for Biscuits, Rakhi Sawant for Minto Fresh)

showed ITC’s urge to be the best.

On television, the company booked 10 to 15 spots per channel per day on youth channels

such as MTV and Star World, mass Hindi channels like Zee and Star TV, and news

channels. It also had around 20 spots on a variety of radio channels and advertised in

most leading national dailies. In the top-30 cities, over 1,000 outdoor hoardings

advertised the product. According to industry estimates, ITC spent close to Rs 100 crore

on marketing.

This kind of promotion of products helped ITC to make its products known to everyone

and now it was not difficult to attract consumers.

Regular introduction of new products (all products): Having acquired reasonable

scale in a relatively short span of time, ITC realized that, to remain in the competition it

had to introduce new products regularly. ITC has been expanding its distribution network

aggressively and also their product range. In biscuits and wafers range, it is launching

new products or flavors week after week. Same is the case with Ready to Eat and Kitchen

of India.

Innovation (all products): When the need to introduce new products arrived, ITC

shifted its focus on to the innovation. Also, ITC was innovative in identifying the market

or niche for all its products.

Maintenance of freshness and hygiene (all products): ITC positioned its wheat flour

on the health & hygiene and value for money terms. Success in the staples business,

especially in the branded and packaged wheat flour business, depended on two factors –

an effective distribution network and the quality of the product. Therefore, ITC attempted

to ensure that the supply chain was responsive, and laid emphasis on making accurate

sales forecasts using inputs from distributors, sales personnel and a well-managed MIS

system. To maintain freshness of the product, the company strove to minimize the transit

time by regulating the shippers to maintain company-specific transit norms. The physical

aspects of the supply chain like warehouses and trucks were closely monitored to

maintain cleanliness.

From Analyzers to Prospectors (Biscuits): When ITC entered the biscuits market with

Sunfeast in 2003, with three varieties of biscuits - glucose, marie, and cream, they did

what any new player in the market does, imitating and emulating the leader that was

Britannia. Their strategy was to manufacture those products which are already a success

in the market. But, as ITC got hold of the market, it started to manufacture flavors which

were never heard of. This was the result of ITC’s desire to exploit new product and

market opportunities.

All the above strategies and with the help of launch of Bingo in 2007, ITC finally tasted success

in its food business in 2008 when it became a profitable business for the first time since its

launch in 2001

Structure

ITC has a three-tier management structure.

At the top are Chairman and Board of Directors, who are responsible for the strategic supervision

of ITC, its wholly owned subsidiaries and their wholly owned subsidiaries. The ITC board is a

balanced board comprising Executive and Non-Executive Directors. The Board ensures that the

Company has clear goals relating to shareholder value and its growth. It sets strategic goals and

seeks accountability for their fulfillment. There are four board committees, namely, the Audit

Committee, the Nominations Committee, the Compensation Committee and the Investor

Services Committee.

At the second level is the Corporate Management Committee, which is responsible for the

strategic management of the company's businesses within Board-approved direction/framework.

It comprises all the Executive Directors and three or four key senior members of management.

Third level consists of divisional CEOs of each business assisted by their own

divisional management committees. Corporate Functions of the Executive Management Team

includes Planning and Treasury, Accounting, Legal, Secretarial, Human Resources,

Communications, Internal Audit and Information Technology.

The company’s organizational structure and governance processes are designed to support

effective management of multiple businesses while retaining focus on each of them." This three-

tier governance structure ensures that:

For and on behalf of the shareholders the company believes in incorporating strategic

governance in its work culture so as to ensure that despite being free from involvement in the

task of strategic management of the Company, it can be conducted by the Board with objectivity,

thereby sharpening and ensuring accountability of management;

With mundane tasks of everyday executive management being delegated the management

remains focused on issues of immediate importance;

The Executive management of the individual businesses that are free of handling strategic

management responsibilities of ITC as a whole is then able to channelize their energies and time

in enhancing the effectiveness and overall growth of their individual units.

Corporate Governance as defined by ITC is a systemic process by which

companies are directed and controlled to enhance their wealth-generating capacity. A company

employs vast sums of societal resources during this process of wealth generation. ITC is of the

firm belief that the governance process being followed should ensure that these resources are

used optimally to meet the aspirations of its stakeholders and society. This is further reflected in

the deep commitment of the company to contribute to the ‘Triple Bottom Line’, which is the

development of the nation’s economic, ecological and social resources.

The company believes in empowering the executive management. But corporate

governance ensures a system of checks and balances to ensure that these powers that are

bestowed upon the executive management are used in a responsible manner so as to meet

shareholder and societal expectations. The core strengths of ITC's governance philosophy are

trusteeship, transparency, empowerment and accountability, control and ethical corporate

citizenship. The practice of each of these creates the right corporate culture that fulfils the true

purpose of Corporate Governance.

Overall, the structure of ITC has high complexity because of horizontal differentiation

within the organization. The most visible evidence is that of specialization and departmentation.

Complexity also increases because of spatial differentiation.

The ITC Code of Conduct, as adopted by the Board of Directors, is applicable to all

Directors, senior management and employees of the Company. This Code is derived from three

interlinked fundamental principles, viz. good corporate governance, good corporate citizenship

and exemplary personal conduct. The Code covers ITC's commitment to sustainable

development, concern for occupational health, safety and environment, a gender friendly

workplace, transparency and auditability, legal compliance, and the philosophy of leading by

personal example. Since non-adherence to the code is brought to the attention of the immediate

reporting authority, formalization is also there in ITC. Decision-making is decentralized, as the

company believes in giving executive freedom to the management to drive the enterprise forward

without undue restraints but this freedom of management should be exercised within a

framework of effective accountability.

CULTURE

ITC's Vision

Sustain ITC's position as one of India's most valuable corporations through world-class

performance.

Create growing value for the Indian economy and the Company's stakeholders.

ITC's Mission

To enhance the wealth generating capability of the enterprise in a globalizing

environment

Deliver superior and sustainable stakeholder value.

ITC's Core Values

The company’s Core Values are aimed at developing a performance-oriented organization that is

highly customer focused and also creates value for those holding stake in it. It fully understands

that it has a commitment to its stakeholders to act as a guardian of the company from

stakeholder’s point of view and deliver results in a manner that actualizes stakeholder’s interest

on a long-term basis.

It also delivers on the commitment to its customers by consistently addressing their needs on

product quality, value and overall satisfaction. It respects the values of people and also

encourages individuals to pursue their dreams, values their differences and helps them to

experiment in the pursuit of various opportunities.

ITC firmly believes in the concept of Excellence with their mantra being, “we do what is right,

do it well and win. We will strive for excellence in whatever we do”. It is constantly in the

pursuit of better and newer products, processes, services and management practices. Apart from

the interest of shareholders they also address their commitment to the nation to generate

economic value, at the same time ensuring that in achieving these goals no compromises are

made whatsoever in complying with rules and regulations as specified by law.

ITC’s Philosophy

ITC believes in practicing ethical behavior among the corporate citizen. The company follows an

HR policy that is regulated by Teamwork, Trust, Collaboration, Mutuality,

Meritocracy, Objectivity, Collaboration, Self-respect and Human-dignity. It is also deeply

committed to make the company a gender friendly place for each individual while also ensuring

enhancement of equal opportunities for men and women, preventing sexual harassment of any

form and the adherence to good employment practices. It is ensured that the interest of the

company is foremost and in this context acceptance of any kind of gifts or payments from

suppliers or customers is viewed as a serious breach of company discipline. And such acts are

also considered as damaging to the reputation of the company.

High standards of house keeping and hygiene are followed to ensure excellent physical working

conditions. It is understood that all the directors, senior management and employees shall

conduct themselves in an honest manner and avoid any conflict of interest.

The top officials and employees of ITC believe that ITC provides them freedom at work and

resources to experiment. Employees take pride in working for ITC for its work culture,

environment, and the way people are treated. They are consulted before a new project\system is

introduced and their concerns and suggestions addressed. ITC also gives a lot of input to develop

their skill and career. They give utmost importance to equal opportunities, better work

environment.

DESIGN

Looking at the structure and culture of ITC, we can say that its design is based more or less on

the Divisional Structure. ITC has a diversified presence in different industries and each of its

businesses act as an autonomous unit which are coordinated by the top level, i.e. the board and

corporate management committee. The divisional managers are responsible for performance and

hold complete strategic and operating decision-making authority. The top management provides

support services to the divisions. It acts as an external overseer, evaluating and controlling

performance. Hence the top management is free from being concerned with the day-to-day

operating details so they can pay attention to the long term. Big picture, strategic decision

making is done at the top level

Bibliography:

www.itcportal.com www.wikipedia.org

www.moneycontrol.com www.economictimes.indiatimes.com www.moneycontrol.com www.bseindia.com www.perfettivanmelle.in www.cadburyindia.com www.nestle.in