Itc Divercification

GROUP 3 – Sec.B

 Established

by the UK based Tobacco major, BAT(1910)  Imperial Tobacco Company of India Ltd (1910)  Tribeni Handlooms and Bhadrachalam Paperboards(1981)  In 1981 bought 33% stake in India Cements from IDBI.  ITC hotels in 1986

FMCG

Cigarettes • Foods • Lifestyle Retailing • Greeting, Gifting & • Safety Matches • Agarbattis

•

Stationery

Paperboards & Packaging • Paperboards & • Packaging

Specialty Papers

Agri - Business • Agri-Exports

• e-Choupal • Leaf Tobacco Hotels Information Technology • ITC Infotech

 Feb

2001, GOI restricted the sale and consumption of tobacco products  Restriction to advertise  Rising excise duties and competition smuggled products  ITC’s core business contributes 85% of the total revenue  Other business -15%

 Total

consumption was declining from 104.2 billion(mar’98) – 97.8 billion(mar’01)

 30%

decline in non filter cigarette sales

 Annual

growth of the smuggled products were 25%

 ITC-

market leader-78% share

 Godfrey

Philips India Ltd.(GPIL) and Vazir Sultan Tobacco(VST)- other major players

 In

2001, ITC’s share was 70% with a revenue of Rs 99.82 billion

 Wills Sport, Started in 2000  Rs 2 billion brand by 2005(Vision)  Invested Rs 2.5 billion  Invested Rs 60 million on the design

production and technology center  Positioned it as mid-priced brand  In 2002, 50 Lifestyle stores across India  Turnover of Rs 450 million by mar’03

In

2000, Invested Rs 2.5 billion “Expressions” In 600 cities, 11000 multibrand outlets It had 10000 designs Launched “White Gold”- Premium bond paper In 2002, launched second range of greeting cards under Expression In 2003, planned to go for notebooks, Stationery products, notepads

In 2001, ITC formed the foods division  Ready to serve gourmet, Confectionery and chocolates, Biscults, Cookies  entered the Rs 1.1 billion organized Confectionery market with Minto and Candyman  It had both Vegetarian and Nonvegetarian dishes  In 2002, ITC launched ‘Aashirwaad’ and entered the snack foods market 

 Entered

in 2002  Mangaldeep, Aim, D’lite,Vaxlite,iKno  No extra distribution cost  No extra marketing costs  Low value item

 Marketing expertise in building Strong

Brands.  Ability to differentiate within its brands and serve to a wide variety of segments in a market.  Mass and wide distribution capabilities.

In Clothing they created strong brands Wills Sports, Wills Lifestyle, Wills Classic Established a strong retail chain. In Greeting cards , gifts and paper Expressions, White gold, Classmate, etc Foods business Minto, Candyman, Aashirwaad atta, Sunfest

, Bingo, etc Leveraging its distribution skills.

Safety Matches Mangaldeep, Aim, D’lite, iKno, etc. Leveraged its existing distribution and

production synigeries

 McKinsey

report showed that food and clothing were fastest growing industries in India.  Both markets lacked strong brands and most brands were not widely distributed  Most brands were category specific

Business/ Year

Growth Value (Rs in Crore) % 2005 2004

FMCG-Cigarettes 8.4

10002.54 9230.27

FMCG-Others

85.2

563.39

304.16

Hotels

124.1

577.25

257.53

Agribusiness

4.2

1780.07

1708.77

Paper & pkg.

24.9

1565.31

1253.29

Net revenue

12.99

13349.58 11815.04

Category

CAGR

Growth parameters

Cigarettes 10.9 %

Pricing power

Hotels

22.7%

Inward traffic, occupancy

Paper

17.2 %

Agri business FMCGOthers

34.3 %

Capacity utilization, value added products e-Choupal

60.2 %

Fast track, decent share.

Outstanding market leader  Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports. Gaining market share  Nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.

Sta rs •Hotels •Paperboards/ Packaging. •Agri business. Cows •FMCG-Cigarettes

? •FMCG- Others

Dogs •Maybe ITC Infotech.