ITC Nov 04

ITC Limited : 

ITC Limited

Slide 2: 

ITC - Financial Snapshot Rs. crores (Rs. 1 crore = Rs. 10 million)

Slide 3: 

2003-04 Financials (Rs. 1 crore = Rs. 10 million)

Slide 4: 

Segment Revenues 2003/04 Rs. crs. (Rs. 1 crore = Rs. 10 million)

Slide 5: 

Segment Results 2003/04 Rs. crs. (Rs. 1 crore = Rs. 10 million)

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Segment Capital Employed March ‘04 Rs. crs. (Rs. 1 crore = Rs. 10 million)

Slide 7: 

Key Financials - Q2 FY ‘05 (Rs. 1 crore = Rs. 10 million)

Slide 8: 

Key Financials - H1 FY ’05 (Rs. 1 crore = Rs. 10 million)

Segment Revenues - H1 FY ‘05 : 

Segment Revenues - H1 FY ‘05 Rs. crs. (Rs. 1 crore = Rs. 10 million)

Segment Results- H1 FY ‘05 : 

Segment Results- H1 FY ‘05 Rs. crs. (Rs. 1 crore = Rs. 10 million)

Capital Employed-H1 FY ‘05 : 

Capital Employed-H1 FY ‘05 Rs. crs. (Rs. 1 crore = Rs. 10 million)

ITC : 

One of India’s most valuable corporations Included in the ‘Forbes A-list’* featuring 400 of the World’s “best big companies” Among top in : Sustained value creation Operating profits Cash Profits High rating for Corporate Governance First company in India to be CG rated * Sales or Market Cap. of US$ 5 billion or more ITC

ITC - Business Portfolio : 

ITC - Business Portfolio ITC FMCG Cigarettes * Other FMCG Hotels Paperboard Paper & Packaging Agri Business Leaf Tobacco Agri Commodities * Focus area for future growth

Slide 14: 

Strategy of Organisation to manage diversity of Portfolio Formal 3-tiered governance structure: Board of Directors : Comprising executive (4) and non-executive directors (8) Strategic supervision Corporate Management Committee : Comprising executive directors and senior managers Strategic management CEO & Divisional Management Committee : Executive management

Slide 15: 

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

FMCG - Cigarettes : 

FMCG - Cigarettes

ITC’s Cigarettes Business : 

ITC’s Cigarettes Business Market leadership Powerful brands across segments Leadership in all segments - geographic & price Extensive distribution network Over 900 wholesale dealers serving more than 1 million retail outlets World-class state-of-the-art technology and products Investment - Rs.11 billion in six years Exciting long term growth potential

Cigarettes: Growth potential : 

Cigarettes: Growth potential Cigarettes account for only 14% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation Cigarettes (14% 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 one tenth world average : 117 Future growth depends on relative rates of growth of per capita income and moderation in taxes

Annual Per Capita Adult Cigarette Consumption : 

Annual Per Capita Adult Cigarette Consumption Source : Tobacco Institute of India Japan USA UK China Nepal Pakistan B’desh India

Hotels & Tourism : 

Hotels & Tourism

Hotels & Tourism industry : 

Hotels & Tourism industry Foreign arrivals into India - 3 million appx. vs 31 million in China The two nations were on par 2 decades ago at 750,000 arrivals Today, Beijing alone has as many hotel rooms as the whole of India India’s luxury rooms availability lower than even smaller East Asian countries

Luxury hotel rooms - East Asia : 

Luxury hotel rooms - East Asia Source: Compendium of Tourism statistics, WTO

Indian hotel industry : 

Indian hotel industry Current supply - 80,000 rooms of which 5 Star category accounts for less than 30% To support GDP growth of 6% p.a., Indian room capacity needs to double in five years Present mismatch between supply and demand expected to persist over the short term As infrastructure for trade & commerce improves - growing potential for leisure tourism

ITC’s hotel business : 

ITC’s hotel business One of three chains in India Immediate strategy to establish presence in key business locations to complete the chain expected to be achieved by end 2004 Revenue leadership in most locations Leverage unique service proposition and international alliance with Sheraton Large tax advantages on investments on ITC Balance Sheet Attractive medium / long term prospects

Amalgamation : 

Amalgamation Board meeting on 25th August 2004 approved scheme of amalgamation for merger of ITC Hotels and Ansal Hotels with ITC Merger ratios: 3 shares of ITC for 25 shares of ITC Hotels 1 share of ITC for every 150 shares of Ansal Hotels Proposed date of merger: 1st April 2004, subject to High Court/other approvals

ITC’s Hotel Properties & Projects : 

ITC’s Hotel Properties & Projects ITC Ltd ITC Hotels Ltd Maurya Sheraton, New Delhi ITC One, New Delhi Grand Maratha, Mumbai Sonar Bangla, Kolkata Grand Central, Mumbai (Project) Ansal Hotels Ltd. (81.5%) Windsor Manor, Bangalore Rajputana Palace, Jaipur Mughal, Agra (Licensed) Chola, Chennai (Licensed) Park, Chennai (Managed) Vadodara (Licensed)

Other Hotel Properties - ITC Hotels Ltd. : 

Other Hotel Properties - ITC Hotels Ltd. Srinivasa Resorts (68% shareholding) Bay Island Hotels (100% shareholding) Fortune Park Hotels (100% shareholding) Marudhar Hotels (50% shareholding) Kakatiya, Hyderabad Bay Island, Port Blair Manages mid-segment hotels Manages Heritage hotels

Paperboards, Paper&Packaging : 

Paperboards, Paper&Packaging

Indian paperboard market : 

Indian paperboard market Annual paperboard demand - 0.90 million tonnes Fragmented capacity & obsolete technology Low per capita usage at 0.75 kg - 1/7th global average Indian paperboard market growing at 6 -7% p.a. Value Added Coated board - the fastest growing segment (20% p.a.) in India driven by the growing sophistication of the consumer

Paperboard Demand Projections - Asia : 

Paperboard Demand Projections - Asia Asian region demand (excluding Japan) growing by 0.5 million tonnes per annum This region expected to be a net importer by 2005 Significant export opportunities for high quality Indian manufacturers ITC paperboards exports - Rs. 1 billion

ITC’s Paperboards Business : 

ITC’s Paperboards Business Market leader in growth segment - value added coated boards World-class contemporary technology Elemental Chlorine Free (ECF) Pulp Mill commissioned – 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 about 24,000 hectares Pulping capacity enhanced by 100,000 MT to strengthen competitiveness

ITC’s Paper & Packaging businesses : 

ITC’s Paper & Packaging businesses Capacity expansion in recycled segment Acquisition of Kovai Unit in March 2004: +65000 TPA Another 75000 TPA to be commissioned by Q3 2004 ITC’s packaging SBU -India’s largest converter of paperboard into high quality printed packaging Leading supplier to Indian FMCG segment

Agri Businesses- Leaf Tobacco- Agri Commodities : 

Agri Businesses- Leaf Tobacco- Agri Commodities

Indian Leaf Tobacco industry : 

Indian Leaf Tobacco industry India - the second largest producer of tobacco But, Indian exports constitutes mere 0.7% of the value of world trade in tobacco 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

ITC’s Agri Commodity Exports : 

ITC’s Agri Commodity Exports Farm linkages in 14 states covering Soya, Wheat, Rice, Marine products, Edible nuts, Coffee Unique CRM programme in commodity exports Leveraging IT for the transformational ‘e-Choupal’ initiative Rural India’s largest Internet-based intervention Over 22000 villages linked through 4700 e-Choupals servicing more than 2.8 million farmers First rural mall christened ‘Choupal Sagar’ opened in M.P Distinctive sourcing capability for ITC’s Foods business

e-Choupal - Recognition : 

e-Choupal - Recognition World Business Award – ICC-UNDP Enterprise Business Transformation Award -Wharton Infosys Harvard Business School – case study Showcased at ICT4D, Geneva – UN

ITC’s strategic thrust : 

ITC’s strategic thrust Cost effective extension services to enhance farm productivity and quality, and better align farm produce with requirements of the market, both domestic and international Enhances competitiveness of ITC agri sourcing Create e-infrastructure to serve as transaction backbone Provides ITC two-way fulfilment capability in and out of rural markets for a range of goods and services Rural marketing initiatives being scaled up progressively

Future Growth & Value Capture : 

Future Growth & Value Capture New FMCG Initiatives

Strategic Rationale : 

Strategic Rationale 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

FMCG Business InitiativesBranded Packaged Foods : 

FMCG Business InitiativesBranded Packaged Foods Leverages: Unique Agri sourcing skills ITC Welcomgroup’s specialist cuisine & bakery knowledge FMCG distribution synergies ITC Group R&D centre,Bangalore 4 chosen categories: Staples Aashirvaad Atta & Salt Biscuits Sunfeast Confectionery Candyman, mint-o Ready to Eat Kitchens of India, Aashirvaad ReadyMeals

FMCG Business InitiativesBranded Packaged Foods : 

FMCG Business InitiativesBranded Packaged Foods 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 ; very encouraging response in launch markets ;distributed & outsourced supply chain being ramped up Number of innovative products in the pipeline leveraging the capabilities of the ITC Group R&D centre

FMCG Business InitiativesLifestyle Retailing : 

FMCG Business InitiativesLifestyle Retailing Leverages trade mark and services expertise of hotels Relaxed wear market growth > 25% p.a Upmarket product range available in exclusive Wills Lifestyle stores and multi-branded outlets/ large format retail stores across the country State-of-the-art Master Facility aids speed of execution Outsourced JIT plant for ‘quick response’ manufacturing Product and brand range being expanded ‘Wills’ range expanded to Formals and Social evening wear segments Strong distribution network in place for the mid-market brand ‘John Players’

FMCG Business InitiativesGreetings & Gifts : 

FMCG Business InitiativesGreetings & Gifts Leverages print and paper know-how An emerging market in India - growth driven by increasing cross-cultural exposure ITC’s ‘Expressions’ range commenced with greeting cards; now widened to include stationery & gift wraps Serves to expand the width of ITC’s FMCG distribution capability with negligible incremental investment

FMCG Business InitiativesSafety Matches : 

FMCG Business InitiativesSafety Matches Current 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

FMCG Business InitiativesIncense sticks (Agarbattis) : 

FMCG Business InitiativesIncense sticks (Agarbattis) Current 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 All India roll out of ‘Mangaldeep’ umbrella brand under way

FMCG business initiatives……. : 

FMCG business initiatives……. 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

Future Positioning of ITC A leading FMCG player in India : 

Future Positioning of ITC A leading FMCG player in India F A R M E R S M A R K E T S 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 Greeting cards/stationery Matches & Agarbattis

Forward-looking Statements : 

Forward-looking Statements Statements in this presentation describing the Company’s objectives, future prospects, estimates, expectations etc. may be “forward looking statements” within the meaning of applicable securities laws and regulations. Investors are cautioned that “forward looking statements” are based on certain assumptions of future events over which the Company exercises no control. Therefore there can be no guarantee as to their accuracy. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be projected or implied by these forward looking statements. Such risks and uncertainties include, but are not limited to: growth, competition, acquisitions, domestic and international economic conditions affecting demand, supply and price conditions in the various businesses in the Company’s portfolio, changes in Government regulations, tax regimes and other statutes, and the ability to attract and retain high quality human resource.

Slide 49: 

Q1 2004/05 Financials 2004/05 2003/04 Goly (%) Gross Turnover 3236 2756 17.4 Net Turnover 1775 1429 24.2 Exports 312 207 50.4 PBDIT 755 669 12.9 PBIT 687 610 12.8 PBT 675 604 11.6 PAT 462 397 16.3 Capital Employed 6974 5830 19.6 (Rs. crores)

Segment Revenue Q1 2004/05 : 

Segment Revenue Q1 2004/05

Segment Results Q1 2004/05 : 

Segment Results Q1 2004/05

Segment Capital Employed Q1 2004/05 : 

Segment Capital Employed Q1 2004/05