15597234-Analysis-of-Cigarette-Industry-in-India

ANALYSIS OF CIGARETTE INDUSTRY IN INDIA : 

ANALYSIS OF CIGARETTE INDUSTRY IN INDIA Submitted By : Prithwiraj Deb Section: HRM Roll No 38 Batch : SS -08-10

Slide 2: 

VS

Slide 3: 

INDIAN CIGARETTE INDUSTRY India is the second largest producer of tobacco in the world . Tobacco occupies a prime place in the Indian economy on account of its considerable contribution to the agricultural, industrial and export sectors. India is one of the leading Tobacco exporting countries in the world

Evolution: 

Evolution The oldest cigarette manufacturing firm was established around 1887 by 1930 the industry had spread across the country Initially under British East India Company and there after British Raj First private company to set up was Imperial Tobacco now Indian Tobacco Company(ITC).

Market share: 

Market share

Sales: 

Sales

SWOT on the INDUSTRY: 

Strength one the largest manufacturers of tobacco in terms of production traditional item of India's foreign trade leading Tobacco exporting countries in the world Weakness burden of Tobacco tax Prohibition of Direct advertising SWOT on the INDUSTRY

SWOT (CONTD…): 

Opportunities significant opportunity for cigarette industry to extent and consolidate its position in intentional market due to some recent trend like withdrawal/reduction of agricultural subsidy and escalating cost in the traditional cigarette exporting countries. Threats Various N.G.O’s and Forums against the use and consumption of tobacco Smuggled foreign cigarettes SWOT (CONTD…)

ITC Limited : 

one of India's biggest and best-known private sector companies incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of India Limited‘ has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri -Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products Its Gold Flake tobacco brand is the largest FMCG brand in India - and this single brand alone holds 70% of the tobacco market. One of the 8 Indian Companies to feature in ‘Forbes A-list’ for 2004 ITC Limited

Vision and Mission: 

Vision and Mission Vision Sustain ITC's position as one of India's most valuable corporations through world class performance, creating growing value for the Indian economy and the Company’s stakeholders. Mission To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.

Slide 11: 

11 ITC - Business Portfolio ITC FMCG: Cigarettes Other FMCG Hotels Agri Business Leaf Tobacco Agri Commodities Paperboard Paper & Packaging

Slide 12: 

12 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 Strategy of Organisation and Governance processes geared to manage multiple businesses Blend core competencies and leverage ITC umbrella strengths to create new avenues of growth Corporate Strategies

Slide 13: 

13 Headline Financials: 2007/08 Rs. Crs. GTO 21356 á 10.7 NTO 13948 á 14.7 PBT 4572 á 16.4 PAT 3120 á 15.6 Balance Sheet Size 12817 á 15.4 Non Cigarettes Business 52.4% of NTO (51.5% LY)

Slide 14: 

14 ITC’s Cigarettes Business Market leadership Powerful brands across segments Leadership in all segments - geographic & price 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

SWOT Analysis: 

SWOT Analysis Strength Biggest and the largest player in the Indian tobacco market with a market share of 80%. Its Gold Flake tobacco brand is the largest FMCG brand in India - and this single brand alone holds 70% of the tobacco market. Weakness It still has to consolidate its foot in the cigar market largely dominated by Godfrey Philips.

Slide 16: 

Opportunities ITC is moving into new and emerging markets like developing countries of Eastern Europe, Africa etc. Threats The obvious threat is from competition, both domestic and international. ITC's opportunities are likely to be opportunities for other companies as well

Slide 17: 

FIVE FORCES ANALYSIS Entry Barriers Supplier Bargaining Power Buyer's Bargaining Power Industry Rivalry Substitutes

GODFREY PHILIPS : 

GODFREY PHILIPS the second largest player in the Indian cigarette industry annual turnover exceeds INR 1800 crores (approx. US $369.6 million) has two major stakeholders, one of India's leading industrial houses - the K. K. Modi Group and one of the world's largest tobacco companies, Philip Morris.

Slide 19: 

Vision To become a leading tobacco player in India and beyond. Mission empowers all its people to think and act radically, stretch relentlessly and generate path breaking ideas and strategies to propel the Company. This helps to create and build powerful brands with unmatched service and world class processes.

Slide 20: 

FINANCIALS

Slide 21: 

MAJOR Brands

SWOT Analysis : 

SWOT Analysis Strength The second biggest tobacco company in India the first and only tobacco company to organize the fragmented cigar market in India and secure its position as the market leader in the cigar distribution. partnering with some of the top most players in the international tobacco industry Weakness low popularity of most of its products No sole authority

Contd….: 

Contd …. Opportunities Already present in the Middle East, West Africa, South East Africa and South East Asia, Godfrey Phillips India can strengthen its position as an international player by entering new markets Even expanding market share in the Indian tobacco market is an opportunity Threats ITC getting into the cigar market it has a mere 12% in market share

Slide 24: 

Five Forces Entry Of New Competitors in Market Suppliers as an Integral Part Competition Demand of Buyers Available Substitutes

Slide 25: 

Cigarettes: Growth potential

Slide 26: 

26 Cigarettes: Growth potential 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 appx . one tenth world average : 141 Future growth depends on relative rates of growth of per capita income and moderation in taxes