ITC CREATING ENDURING VALUE

BY: -

SUMIT AHLUWALIA MALOBIKA BANERJEE

ITC LTD PROFILE

History And Evolution of ITC Ltd

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited The Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974 In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Fast Moving Consumer Goods, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology ITC's Packaging & Printing Business was set up in 1925 In 1975, the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola' (now renamed My Fortune, Chennai).

 In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited In 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000 ITC launched line of premium range of notebooks under brand Paperkraft in 2002 In 2002, ITC also entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour) In 2003, ITC witnessed the introduction of Sunfeast as the Company entered the biscuits segment ITC entered the fast growing branded snacks category with Bingo! in 2007 In 2010, ITC launched Sunfeast Yippee! to enter the Indian instant noodles market

VISION

Sustain ITC's position as one of India's most valuable corporation through world class performance, creating growing value for the Indian economy and the Companys stakeholders

To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value

MISSION

CORE VALUES

ITC's Core Values are aimed at developing a customer-focused, high-performance organization which creates values for all its stakeholders

BUSINESS PORTFOLIO --- ITC LTD

ITC

FMCG

HOTELS

AGRI BUSINESS

PAPER BOARD

Information Technology

CIGARETTE PERSONAL CARE PACKEGED FOOD PRODUCTS

Leaf Tobacco

Paper Packaging Stationery

Agri-commodtiy

PRODUCT MIX OF ITC LTD (FMCG-Food Sector)

TRIPLE BOTTOM LINE PERFORMANCE

(Turnover and profits as on 17TH July 2012 )
Gross Income for the year grew by 14.9% to over Rs. 36,000 crores. Profit before tax increased by 22.4% to over Rs. 8,800 crores while Net Profits grew by 23.6% to over Rs. 6,100 crores. The non-cigarette segment net revenue growing 12-fold from about Rs. 1,360 crores in 1996 to Rs. 16,150 crores today. As a result, 57% of net segment revenue of your Company is now from businesses other than cigarettes Your Company is today acknowledged as one of India's most valuable corporations. Market capitalisation, which stood at Rs. 5,570 crores in 1996, has multiplied over 35 times to touch Rs. 2 lakh crores. ITC's traditional businesses have touched a turnover of over Rs. 5,500 crores in a relatively short span of time. The topline from this segment is expected to triple over the next 5 to 7 years to a level of Rs. 15,000 crores,

ACHIEVEMENTS
ITC is the first Indian company and the second in the world to win the prestigious Development Gateway Award

ITC is the first Corporate to receive the Annual FICCI Outstanding Vision Corporate Triple Impact Award in 2007
ITC was conferred the World Business and Development Award 2012 at the historic Rio+20 United Nations Summit which concluded recently ITC has won the Golden Peacock Awards for 'Corporate Social Responsibility (Asia)' in 2007 The Business Today Award for the Best Managed Company in recognition of its outstanding initiatives in the consumer products segment. The only Indian FMCG company to have featured in the Forbes 2000 list.

SWOT ANALYSIS
Strength
Strong Financial Performance Products Portfolio Distribution Network Environmental Friendly Research & Development Socially Responsibility Brand Equity

Weakness
Dependency on the tobacco business Not present in many important sectors Local Company

Opportunities
Leveraging its brand equity Right size at the right time The unique reach and distribution network of Echoupal: Synergies across businesses and leveraging domain expertise for growth in other sectors

Threats Competition Pressure groups and Government Policy General threats

SUNFEAST- AN OVER VIEW

Sun"mascot - The brand ambassador reinforcing the positioning of the brand with an essence Spread theSmile "Sunfeast" - The umbrella brand name introduced in the Glucose, Marie and Cream segments

Sunfeast - To be launched nationally in phases in over one million retail outlets across the country. Sunfeast" range of biscuits is competitively priced and would include two new product innovations - Orange flavored Marie and Butterscotch flavored Cream biscuits Product innovation

SUNFEAST RANGE OF BISCUITS CONTD

PRICING STRATEGY OF ITC LTD (FOOD DIVISION)

The pricing of the ITC food division depends upon the Customers demand schedule, the cost function and the competitors price.

The pricing of the company is such that it caters to the need of all income groups of people but special provision has been kept for Low and middle income group, and their pricing are competitive with respect to other players like Britannia, Parle and Briskfarm.

The company follows the Going rate pricing that is the price of the product depends upon the competitors price. The firm chooses pricing more or less the same as Market leader.

PRICING STRATEGY FOR SUNFEAST

Sunfeast looks at a two prolonged strategy: High margin (High margins in cream variants) High volumes (High volumes from the Marie and Glucose segments) Examples sunfeast glucose (200 gm): 20/sunfeast marie light (130gm : 10/Sunfeast dream cream (82): 10/-

DISTRIBUTION OF FOODS PRODUCTS

DISTRIBUTION NETWORK FOR SUNFEAST

The company used its existing network of convenience stores: the companys name for the hole-in-the-wall pan-beedi shops for Sunfeast. The company also looked at grocery stores and other retail formats. The company says the brand is now available in nearly 1.8 million outlets. 14 manufacturing units The company has extended its manufacturing capacity by setting up three new biscuit plants in UP and West Bengal to focus on supply chain management strategy to enhance product freshness, market servicing and margins

PROMOTIONAL STRATEGY

Sunfeast school programme: covers 1000 schools across country, to familiarize children with sunfeast brand name and sunfeast mascot Brand ambassador: shahrukh khan & surya (south actor) Official sponsor of WTA tennis championship-sunfeast open Launch of Sachins Fit Kit, the first product co-created with brand ambassador Other activities:On buses, print media , hoardings, TV and radio advertisements

INDIAN BISCUIT INDUSTRY

Indian Biscuits Industry came into limelight after 20th century when the urbanized society called for ready made food products at a tenable cost. It is assumed as sick-man's diet in earlier days . Bread and biscuits is the two major product of the bakery industry and covers around 80% of the total bakery market, out of which Industry size is about 14500 crore biscuit covers up to 70% of the total production The organized and unorganized sector of the biscuit industry is in the proportion of 65% : 35%

INDUSTRY CONSISTS OF
Major Players Minor Players Emerging Players Foreign Niche Players

Parle Britannia ITC

Surya Biscuits Pvt Ltd priyaGold Anmol

Krafts Cadbury Oreo PepsiCo : "proteinrich Aliva launched 2009

United Biscuits(Bitain) Danone (French food giant) Nubisco Unibic (tied up with Food Bazaar launched Tasty Treat

MAJOR COMPETITORS
BRITANIA INDUSTRIES LIMITED PARLE PRODUCTS PVT LIMITED SURYA FOOD AND AGRO LIMITED

Established in 1896 90% of Britannias annual revenue of Rs2,200 crore comes from biscuits KEY PRODUCTS: TIGER, GOODDAY, BORBON, 50-50, MARIE GOLD, TIME PASS

Established in 1929 the largest selling brand of biscuits in the world 70% market share in India in the glucose biscuit category KEY PRODUCTS: Parle-G, Hide and Seek, Krack Jack, Monaco, Parle Marie, Milk Shakti, Parle 20-20.

Incorporated 1992Manufacturing and selling of biscuit under brand PRIYAGOLD in octoer1993. Key products: Classic Cream, Butter Bite, Bourbon, Marie Lite, Magic Gold, CNC , Sanack, zig zag,

STRATEGIC COMPARISON

BCG MATRIX: OBJECTIVES

BCG matrix is a tool to determine the future strategic plan for each SBU SBU can be a company division, a product line or even individual brands

Companies have multiple products and businesses under their umbrella While preparing the marketing strategy companies need to decide about adding new products or identify products should no longer be retained. So the first step is to identify the various Strategic Business Units (SBUs) in a company portfolio.

ITC BCG MATRIX

HIGH MARKET SHARE
STARS HIGH MARKET SHARE & HIGH MARKET GROWTH Hotels, packaging & Paper boards, e-choupal

QUESTION MARKS LOW MARKET SHARE & HIGH MARKET GROWTH FMCG others

HIGH GROWTH
CASH COWS HIGH MARKET SHARE & LOW MARKET GROWTH FMCG-Cigarette DOGS LOW MARKET SHARE & LOW MARKET GROWTH ITC infotech

LOW GROWTH

LOW MARKET SHARE

SUN FEAST BCG MATRIX

HIGH MARKET SHARE
STARS HIGH MARKET SHARE & HIGH MARKET GROWTH Sunfeast Dark Fantasy Choco Fills and Sun feast snack-foods-Bingo

QUESTION MARKS LOW MARKET SHARE & HIGH MARKET GROWTH

HIGH GROWTH
CASH COWS HIGH MARKET SHARE & LOW MARKET GROWTH Milky Magic ,Marie Light Original and orange, Sunfeast Dual Dream Cream DOGS LOW MARKET SHARE & LOW MARKET GROWTH Sun feast Fit-Kit

LOW GROWTH

LOW MARKET SHARE

PORTERS FIVE FORCES SUN FEAST

Bakery Items, Fast foods, Ready-to-eat

Inflation in sugar & wheat prices

Britannia, Parle

Premium products are increasing in market

Oreo, PepsiCo

STP OF SUNFEAST Biscuit Sunfeast glucose biscuit Sunfeast orange Marie Sunfeast marielight Sunfeast orange cream Sunfeast Butterscotch Cream Sunfeast bourbon cream Segmenting Demographic Targeting Children between the age group 4-14 yrs Housewives Children between the age group 4-14 yrs Children between the age group 4-14 yr Children between the age group 4-14 yr Children between the age group 4-14 yr Positioning Natural goodness of wheat A very differentiate offering Tight and Crispy

Education

Income

Geographic

Smooth and yummy cream

Age

Smooth and yummy Cream

Smooth and yummy Cream

Lifestyle

PRODUCT FOCUS
high quality

great tasting biscuits

With Different Segments Brand Essence "Spread the Smile"

DIVERSIFICATION
Indian rural and agri. market is 70% to other resources in India ,but only 30 % of GDP is from agriculture sector .

FMCG being the fourth largest sector in the field which is expanding at a very fast pace and it has huge potential , along with the benefit that it can be accrued by organizing the existing fragmented market accrued by market leading to concept of one stop shop. Further India being one of the largest economies with the benefit of its vast market ,it attracted ITC to the expand its operation in various areas of hospitality, FMCG ,Greeting cards Branded Apparels etc.

PRICING STRATEGY
There is Two method of Pricing 1. Low Margin 2. Two-Pronged Strategy Essentially, Parle plays a high volume, low margin game. But Sunfeast looks at a two-pronged strategy, High margins in cream variants and volumes from the Marie and Glucose segments. For instance, cream biscuits from both Sunfeast cost Rs10 for 100 grams. Parle, however, only charges Rs 5 for its cream variants. Except for Hide & Seek, all of Parle 'products lie in the price range between Rs 4 and Rs 6for 100 gram packs.

SUGGESTIONS AND RECOMMENDATION

Sunfeast has to give attention towards Advertisement.

Sunfeast has to maintain its status by providing more and more facilities.
Sunfeast has to develop more variety of biscuit so that the customer could not return in case of lack of choice.

The company should also give emphasis on other gift and/or discount schemes.
ITC must cater more funds to their FMCG-Food sector as it has been showing growth of 20.9 % from FY 2011-12 to 2012-13.