ITC Limited

ITC - Financial Snapshot

Rs. Crores

DESCRIPTION GROSS TURNOVER NET TURNOVER MARKET CAPITALISATION PBDIT PBIT PBT PAT (before exceptional items) EPS - Basic (Rs.)(before exceptional items) NETWORTH CAPITAL EMPLOYED ROCE(%) Book Value Per Share ( Rs. ) Total Shareholder Returns % * Market Capitalisation as on 31/3/06

1995-96 5115 2536 5571 584 536 452 261 0.70 1121 1886 28.4 3.0

CAGR (%) 2005-06 1995-96 to 2005-06 16224 9791 73207 * 3613 3281 3269 2280 6.08 9061 9506 34.5 24.1 12.2 14.5 29.4 20.0 19.9 21.9 24.2 24.1 23.2 17.6 23.0 30.3

Market Capitalisation @ 26/05/2006 : Rs. 68814 crs. (US$ 15 bln).

2005-06 Financials
Rs. Crs.

2005/06 Gross Turnover Net Turnover Exports PBDIT PBIT PBT PAT (Before Exceptional items) PAT (After Exceptional items) Capital Employed Segment Capital Employed EPS - Basic (Rs.) (Before Exceptional Items) 16224 9791 1827 3613 3281 3269 2280 2235 9506 6295 6.08

2004/05 13350 7639 1316 3028 2716 2673 1837 2191 8517 5388 4.91

Goly(%) 21.5 28.2 38.8 19.3 20.8 22.3 24.1 2.0 11.6 16.8 23.8

(Rs. 1 crore = Rs. 10 million)

Segment Revenues 2005/06

Rs. crores Actuals 2005-06 Segment Revenue a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : Inter segment revenue Gross sales / income from operations 11330 1013 12343 783 2678 1896 17701 1476 16224 10003 563 10566 577 1780 1565 14489 1139 13350 13.3 79.9 16.8 35.7 50.5 21.1 22.2 29.6 21.5 Actuals 2004-05 Goly (%)

(Rs. 1 crore = Rs. 10 million)

Segment Results 2005/06

Rs. crores Actuals 2005-06 Segment Results a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : i) Interest (Net) ii) Other un-allocable expenditure net of un-allocable income PBT (Before Exceptional Items) 2709 (172) 2537 258 91 351 3237 12 (44) 3269 2289 (195) 2094 141 96 280 2611 42 (105) 2673 18.3 12.0 21.2 83.1 (5.8) 25.5 24.0 (71.9) 58.1 22.3 Actuals 2004-05 Goly (%)

(Rs. 1 crore = Rs. 10 million)

Segment Capital Employed

Rs. crores 31.03.2006 Capital Employed a) FMCG - Cigarettes * - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Segment Capital Employed * 1463 489 1953 1374 1060 1908 6295 1240 262 1502 1401 740 1745 5388 18.0 86.5 30.0 (1.9) 43.3 9.3 16.8 31.03.2005 Goly (%)

Before considering provision of Rs. 426 crs (31.03.2005 - Rs. 337 crs) in respect of disputed State taxes, the levy / collection of which by the States has been stayed.

(Rs. 1 crore = Rs. 10 million)

ITC Q4 05/06 - Key Financials

Rs. Crs. Gross Turnover External Net Turnover External Total Forex Earnings PBDIT PBIT PBT PAT (before Exceptional Items) Exceptional Items (Net of Tax) PAT (after Exceptional Items) Capital Employed Segment Capital Employed Q4 Actuals 4420 2784 609 877 791 781 567 0 568 9506 6295 Q4 Last Years 3534 2177 366 722 633 632 417 354 772 8517 5388 Goly(%) 25.1 27.9 66.4 21.5 25.0 23.6 35.9 -99.9 -26.4 11.6 16.8

Segment Revenue: Q4 2005/06

Rs. crores Q4 05/06 Segment Revenue a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : Inter segment revenue Gross sales / income from operations 2883 306 3188 263 804 476 4731 311 4420 2504 174 2678 181 516 412 3786 252 3534 15.1 75.7 19.1 45.4 55.8 15.5 24.9 23.5 25.1 Q4 04/05 Goly (%)

Segment Results: Q4 2005/06

Rs. crores Q4 05/06 Segment Results a) FMCG - Cigarettes - Others Total FMCG b) Hotels c) Agri Business d) Paperboards, Paper & Packaging Total Less : i) Interest (Net) ii) Other un-allocable expenditure net of un-allocable income PBT (Before Exceptional Items) 638 (42) 596 98 9 79 781 10 (10) 781 560 (69) 492 57 3 54 605 1 (28) 632 13.9 38.2 21.2 72.2 247.2 46.4 29.2 665.9 65.5 23.7 Q4 04/05 Goly (%)

One of Indias most valuable corporations

One of the 8 Indian Companies to feature in Forbes A-list for 2004

ITC

Featuring 400 of the Worlds best big companies with M-cap. > USD 5 bln. & are rated as the most attractive companies for investors A comprehensive ranking of worlds biggest companies measured by a composite of sales, profits, assets & market value

Only Indian FMCG Company to feature in Forbes 2000 List

Among top in :

Sustained value creation (BT-Stern Stewart survey) Operating profits Cash Profits

Ranks No. 8 among Indian listed Companies by market cap.(@31/03/06)

No. 1 in FMCG Sector; 6th amongst Private Sector

Rated as one of Indias Most Respected Companies (IMRBBusinessworld Survey 2006)

Accolades & Awards (1)

Golden Peacock Global Award for Corporate Social Responsibility in Emerging economies for 2005 by World Council for Corporate Governance for the e-choupal and social & farm forestry initiatives

2005 Golden Peacock Award for Excellence in Corporate Governance

ITC Centre,Gurgaon awarded Platinum Green building rating by US Green Building Council -Leadership in Energy and Environmental Design
largest Platinum rated building in the world; 7th such building in the world

Bhadrachalam paperboard unit : adjudged Greenest paper mill in India by The Centre for Science &

Environment; won the Greentech Environment Excellence Gold Award

John Players adjudged the Most Admired Shirt Brand of the Year at the Lycra Images Fashion Awards (LIFA) awards in Jan06

Accolades & Awards (2)

e-choupal initiative continues to win global recognition: Stockholm Challenge Award 2006 in the Economic Development category which recognises initiatives that leverage Information Technology to improve living conditions and foster economic growth in all parts of the world. First Indian Company to win the Development Gateway Award (2005) for the most exemplary contribution in the field of Information & Communication Technologies (ICT) for development during the last 10 years World Business Award 2004: International Chamber of Commerce & the HRH Prince of Wales & International Business forum Harvard University case study

ITC - Business Portfolio

ITC

FMCG: Cigarettes Other FMCG

Hotel s

Agri Business Leaf Tobacco Agri Commodities

Paperboar d Paper & Packaging

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

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

FMCG - Cigarettes

ITCs 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 products

state-of-the-art

technology

and

Investment - Rs.10 billion in six years

Exciting long term 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 appx. one tenth world average : 141 Future growth depends on relative rates of growth of per capita income and moderation in taxes

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.

Hotels & Tourism

Hotels & Tourism industry

Foreign arrivals into India - 3.9 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
Indias luxury rooms availability lower than even smaller East Asian countries

Luxury hotel rooms - East Asia

80000 70000 60000 50000 40000 30000 20000 10000 0

Bangkok

HongKong

Singapore

Source: Compendium of Tourism statistics, WTO

Malaysia

India

Indian hotel industry

Current supply appx. 100000 rooms of which 5 Star category accounts for less than 30% India needs 130000 rooms to service 5 million tourists a figure expected to be reached by 2007 Present mismatch between supply and demand expected to persist over the short term As infrastructure for trade & commerce improves growing potential for leisure tourism

ITCs hotel business

ITC-Welcomgroup : a leading hotel chain in India
Strategy to establish presence in key business locations to complete the chain achieved in end 2004 Over 5200 rooms under 4 distinct brands

Fastest growing hotel chain with highest operating efficiency (PBDIT/Net Income @ 41%) amongst the 3 leading chains Leverages unique service proposition and international alliance with Sheraton Large tax advantages on investments on ITC Balance Sheet Attractive medium / long term prospects

ITCs Hotel properties

ITC Hotel Maurya Sheraton & Towers,New Delhi ITC Hotel Grand Maratha Sheraton & Towers,Mumbai ITC Hotel Sonar Bangla Sheraton,Kolkata ITC Hotel Grand Central,Mumbai ITC Hotel Windsor Sheraton & Towers,Bangalore ITC Hotel Kakatiya Sheraton & Towers,Hyderabad (thru a 68% holding in Srinivasa Resorts Ltd.) ITC Hotel Park Sheraton & Towers ,Chennai (managed property) WelcomHotel Rajputana Palace Sheraton,Jaipur WelcomHotel Chola Sheraton, Chennai WelcomHotel Mughal Sheraton,Agra WelcomHotel,New Delhi WelcomHotel Rama International , Aurangabad WelcomHotel Vadodara (thru associate company) WelcomHotel New Delhi WelcomHotel Grand Bay,Visakhapatnam (managed property)

ITCs Hotel Business

Manages 15 full service mid-market properties under the Fortune Hotels brand
100% subsidiary company : Fortune Park Hotels Ltd.

Also operates 35 properties WelcomHeritage brand

under

the

Maharaja Heritage Resorts Ltd. 50% JV with Marudhar Hotels (P) Ltd.

Paperboards, Paper & Packaging

Indian paperboard market

Annual paperboard demand appx. 1 million tonnes Fragmented capacity & obsolete technology Low per capita usage at 0.75 kg - 1/7th global average Indian paperboard market growing at 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

Asian region demand (excluding Japan) growing by 0.5 million tonnes per annum This region expected to be a net importer by 2006 Significant export opportunities for high quality Indian manufacturers ITC paperboards exports - Rs. 2 billion appx.

ITCs Paperboards Business

Market leader in growth segment - value added coated boards World-class contemporary technology Elemental Chlorine Free (ECF) Pulp Mill fully operational 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 41,000 hectares Fully integrated operations with in-house pulping capacity at appx. 1.10 lac MT
Expansion programme underway; source of sustainable competitive advantage

ITCs Paperboards & Packaging businesses

Capacity expansion in recycled segment
Acquisition of Kovai Unit in March 2004: +65000 TPA
Another 75000 TPA commissioned in Jan. 05

ITCs packaging SBU -Indias largest converter of paperboard into high quality printed packaging
Leading supplier to Indian FMCG segment Provides superior packaging solutions to the cigarettes and new FMCG businesses

Agri Businesses - Leaf Tobacco

- Agri Commodities

Indian Leaf Tobacco industry

India - the second largest producer of tobacco

But, Indias 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 - Indias largest buyer, processor, consumer & exporter of cigarette tobaccos

ITCs 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 Indias largest Internet-based intervention Over 36000 villages linked through 6000 e-Choupals servicing over 3.5 million farmers 10 Choupal Sagars operational; 9 more to be launched shortly

Distinctive sourcing capability for ITCs Foods business

e-Choupal - Recognition
World Business Award ICC-UNDP
Enterprise Business Transformation Award Wharton Infosys

Harvard Business School case study

Showcased at ICT4D*, Geneva UN * Information and Communication Technologies for Development

ITCs 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

New FMCG Initiatives

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 ITCs 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 Initiatives Branded Packaged Foods

Leverages:
Unique Agri sourcing skills ITC Welcomgroups specialist cuisine & bakery knowledge FMCG distribution synergies ITC R&D Centre,Bangalore

4 chosen categories:
Staples
Aashirvaad Atta, Salt, Spices

Snack Foods
Sunfeast Biscuits

Confectionery
Candyman, mint-o

Ready to Eat
Kitchens of India, Aashirvaad ReadyMeals, Sunfeast Pasta

FMCG Business Initiatives Branded 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; continues to build consumer franchise; distributed & outsourced supply chain being ramped up

Number of innovative products in the pipeline leveraging the

capabilities of the ITC R&D centre

FMCG Business Initiatives Lifestyle 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 Initiatives Greetings, Gifting & Stationery

Leverages print and paper know-how
An emerging market in India - growth driven by increasing cross-cultural exposure

ITCs Expressions range commenced with greeting cards;

now widened to include stationery & gift wraps Distribution network being strengthened to scale up the Stationery business significantly Serves to expand the width of ITCs FMCG distribution capability with negligible incremental investment

FMCG Business Initiatives Safety Matches

Current industry 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 Indias largest selling Safety Matches brand Successful acquisition of WIMCO Ltd. by Russell Credit (shareholding as at 26th May 2006: 93.66%)
Key brands: Homelites, Ship, Cheetah Fight etc.

FMCG Business Initiatives Incense sticks (Agarbattis)

Current industry 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 Mangaldeep : the only National brand in the country

FMCG business initiatives.

Concurrently, ITCs IT subsidiary assists in webenabling business processes
CRM initiatives ERP transaction processing systems SCM including the e-choupal capability

hosted on ITCs Virtual Private Network ITC awarded the best IT user in FMCG category by Nasscom

Future Positioning of ITC

A leading FMCG player in India
VPN providing SCM, ERP & CRM capability

F A e-choupal rural two-way R fulfillment capability M Cigarette Trade Marketing capability E R Expanded FMCG distribution capability S
Branded Foods Lifestyle retailing Greeting cards/st ationery Matches & Agarbatti s

M A R K E T S

A basis for strategic partnerships with other FMCG brand owners

Forward-looking Statements
StatementS in thiS preSentation deScribing the companyS 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 companyS portfolio, changes in Government regulations, tax