Itc Limited

ITC Limited One of India’s Most Valuable Corporations

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ITC

One of India’s most valuable corporations  One of the 8 Indian Companies to feature in ‘Forbes A-list’ for 2004 

Featuring 400 of the World’s ‘best big companies’ with M-cap. > USD 5 bln. & are rated as the ‘most attractive companies for investors’

 Only Indian FMCG Company to feature in Forbes 2000 List 

A comprehensive ranking of world’s biggest companies measured by a composite of sales, profits, assets & market value

 Among top in : 

Sustained value creation



Operating profits



Cash Profits

 Ranks No. 5 among Indian listed Private Sector Companies by market cap. (@ 30/09/08) 

No. 1 in FMCG Sector

 Rated as one of India’s Most Respected Companies (IMRB-Businessworld Survey 2006) 2

ITC - Business Portfolio ITC

FMCG: Cigarettes Other FMCG

Hotels

Agri Business Leaf Tobacco Agri Commodities

Paperboard Paper & 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 4

Corporate Strategies  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 5

FMCG - Cigarettes

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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

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Cigarettes: Growth potential  Cigarettes account for only 15% of tobacco consumed in India unlike world pattern of 85% .  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 8

Per Capita Adult Cigarette Consumption (Sticks) 1662

1753

1190

561

488 141

USA

China

Pakistan

Nepal

India

World Avg.

Source : Based on Cigarette consumption data(2003) from “World Cigarettes”,ERC Group plc. 9

Hotels & Tourism

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Hotels & Tourism industry  Foreign arrivals into India: 5 million appx. Vs. 35 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 80000 70000 60000 50000 40000 30000 20000 10000 0

HongKong

Singapore

India

Source: Compendium of Tourism statistics, WTO

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Indian hotel industry  Current supply – appx. 110,000 rooms of which 5 Star category accounts for appx. 30%  India needs an additional 50,000 rooms in the next 2/3 years to service projected tourist arrivals  Present mismatch between supply and demand expected to persist over the short term  As infrastructure for trade & commerce improves - growing potential for leisure tourism

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ITC’s Hotel Business  ITC-Welcomgroup : a leading hotel chain in India • Established presence in key business locations •

Over 6000 rooms under 4 distinct brands Category

Brand

Positioning

Luxury Upper upscale Upscale - mid-scale Heritage

ITC Hotel: Luxury Collection WelcomHotel: Sheraton Fortune Hotels WelcomHeritage

"Mansions of Luxury" "Passion for Quality" "Promise of True Value" "Unique Experiences"

 Capacity expansion underway at Bangalore and Chennai; plans for other locations also being progressed. Positions on land taken at other locations such as Hyderabad and Ahmedabad  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’

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ITC’s Hotel Business • Manages 24 full service mid-market properties (1700 + rooms ) under the Fortune Hotels brand – 100% subsidiary company : Fortune Park Hotels Ltd. • Also operates 60 properties under the ‘WelcomHeritage’ brand in 19 states – Maharaja Heritage Resorts Ltd. 50% JV with Marudhar Hotels (P) Ltd. • Business growth expected to be impacted by financial meltdown

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Paperboards, Paper & Packaging

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Indian paperboard market  Annual paperboard demand – appx. 1.1 million tonnes  Fragmented capacity & obsolete technology  Low per capita usage at around 6 kgs p.a. (world average – over 50 kgs p.a.)  Indian paperboard market growing at 10% p.a.  Value Added Coated board - the fastest growing segment (20% p.a.) in India driven by the growing sophistication of the consumer  Value added paper market growing at 10%-19%

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Paperboard Demand Projections - Asia  Asian region demand (excluding Japan)

growing by 0.5

million tonnes per annum  Significant export opportunities for high quality Indian manufacturers • ITC paperboards exports - Rs. 2 billion appx.

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ITC’s Paperboards Business  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 84,000 hectares  Fully integrated operations with in-house pulping capacity at appx. 2.20 lac MT • Expansion completed; source of sustainable competitive advantage 18

ITC’s Paperboards & Packaging businesses  Capacity expansion projects installed • 120000 TPA Pulp Mill – commissioning commenced; being stabilised • 100000 TPA paper machine (to support Stationery business growth plans) – production commenced. under stabilization stage (normal stabilization period is 6-9 months)  Results impacted by sharp increases in input prices  ITC’s packaging SBU -India’s largest converter of paperboard into high quality printed packaging • Leading supplier to Indian FMCG and Consumer Electronic segments • Provides superior packaging solutions to the cigarettes and new FMCG businesses

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Agri Businesses - Leaf Tobacco - Agri Commodities

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Indian Leaf Tobacco industry  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.  Captured significant incremental volumes as well as margins

 Pioneering cultivation of flavourful Flue-cured, superior Burley and Oriental tobaccos in India 21

Calculation of EPS ITC

MAR 07(in Rs Cr)

MAR 08 (in Rs Cr)

PBDIT

4299.12

4965.65

INTEREST

16.04

24.61

PBDT

4283.09

4941.04

DEPRICIATION

362.92

438.46

PBT

3920.17

4502.58

EXTRA ORDINARY ITEMS

61.94

117.41

PBT(AFTER EXTRA ORD. ITEMS)

3982.11

4619.99

TAX

1263.07

1480.97

REPORTED NET INCOME (PAT)

2699.97

3120.10

TOTAL VALUE ADDITION

2806.4

3307.720

PREFFERENCE DIVIDENT

0.00

0.00

EQUITY DIVIDENT

1166.29

1319.01

CORPORATE DIVIDENT TAX

198.21

224.17

SHARES IN ISSUES (IN LACS)

37622.23

37686.10

EPS

7.18

8.28

EQUITY DIVIDENT %

310

350.00

BOOK VALUE

27.59

31.85

Presented by Atul Kumar Singh (9068) Mahesh Magar (9084) Ankur Motwani (9114)