Post on 08-Apr-2018
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ITC Background
Established by UK-based tobacco major BAT
1910, full fledged sales organization named Imperial
Tobacco Company of India Limited
July 1912,Indian Leaf Tobacco company(ILTC)
Late 1960s,GoI pressured MNC to reduce holdings
Though Imperial clearly dominated cigarette
business, decided to reduce its dependence & sodiversify.
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Brief History
1971, Marine product export division
1974, company changed its name to ITC Ltd.
1977,textile industry
1977, Bhadrachalam Paperboards
1981, cement business
1986, ITC Hotels
1994, Consultancy from McKinsey & Co. to study
businesses of company
{Retained interest in tobacco, hospitality and paper
and sold off stakes in non core businesses}
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Brief History (Cont)
2000, ITCs Packaging & Printing- Expressions
2000, Lifestyle Retailing business division
By 2001,undisputed leader in cigarette industry with
popular brands- Gold Flake, Scissors, Wills, India
kings and Classic
Cigarette contributes- 85% revenue & all other
businesses together 15%
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MISSION
To enhance the wealth generating capability
of the enterprise in a globalizing environment,
delivering superior and sustainable
stakeholder value.
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Corporate Governance Structure
ITC Ltd.
FMCG-Cigarettes
FMCG-Others
Hotels
Agri Business
Paperboards &
Packaging
Infotech
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FMCG-Cigarettes
Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors,
Capstan, Berkeley, Bristol and Flake
'Best Manufacturer of Cigarettes for the year 2007'
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FMCG-Others
Ashirvad Atta, Kitchens Of India, Mint-o, Sunfeast, Candyman, Bingo,
Superia, Wills LifeStyle, Fiama Di Wills, Expressions, Classmate
Superbrand 2006 - Superbrand Council.
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FMCG-OthersAshirvad Atta is now #1 selling.
Sunfeast Biscuits is ranked #3.
Bingo, launched in August 2007, now enjoys 16% market share.
November 2007 Mint-o overtakes its competitor Chlormint
Classmate brand already the most widely distributed stationary brand in India
Kitchens of India has about 48% market share in India and a huge export potential.
Ready to Eat food Market is estimated to be Rs.700m.
Safety Matches market at Rs. 1250 crores p.a. for 24 billion match boxes which is
targeted by ITCs iKno, Aim, Aim Mega, Aim Metro.
Mangaldeep the only National brand in the country serves the nations 900cr incense
sticks market.
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Cigarettes & Style
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Food
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Personal CarePersonal Care
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Education and StationeryEducation and Stationery
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Agarbattis & Safety MatchesAgarbattis & Safety Matches
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Hotels
ITC Maurya (Delhi), ITC Maratha (Mumbai), ITC Grand Central (Mumbai),
ITC Sonar (Kolkatta), ITC Windsor (Bengaluru),
ITC Kakatiya (Hyderabad), ITC Mughal (Agra).
Bukhara Restaurant named as Best Indian Restaurant in the World.
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Innovation for India Award 2006 for ITC e-Choupal in the
Social Innovations category for business organizations
eChoupal, Agri Exports, Leaf
Tobacco
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Packaging & Paperboards
Packaging & Paperboards and Specialty Paper
Indian Manufacturing Excellence Gold Award 2007 and 2006 to
Unit Bollaram by Frost & Sullivan
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Infotech
ITC Infotech Ltd.
Featured amongst Top 100 Global Outsourcing Companies inthe Leaders category - International Association of
Outsourcing Professionals
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Diversification
Concentric diversification
Conglomerate diversification
Horizontal diversification
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PROS of Diversification
Economies of scale and scope
Operational synergies can be realized.
Spreading the firm's unutilized organizational resources to other areas cancreate value.
Leveraging skills across businesses can create value.
Internal capital market
Cash from some businesses can be used to make profitable investments.
External finance may be more costly due to transaction costs, monitoringcosts, etc.
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Diversifying shareholders portfolios
Individual shareholders may benefit from investing in a diversified
portfolio.
PROS of Diversification cont..
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CONS of Diversification Combining two businesses in a single firm is likely to result in
substantial influence costs.
Resource allocation can be influenced by lobbying.
Costly control systems may be needed that reward managers based ondivision profits and discipline managers by tying their careers tobusiness unit objectives.
Internal capital markets may not work well in practice.
Identifying undervalued firms may not be as easy as it sounds.
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SWOT Analysis
Strength
Strong financial performance
Product portfolio
Distribution network
Environment friendly
Research and Development
Social responsibility
Brand equity
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SWOT Analysis
Weakness
Dependency on Tobacco business
Not present in many importance sector
Unrelated diversification
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SWOT Analysis
Opportunity
Leveraging its brand equity
Right size at right time
Unique reach and distribution network of echopal
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SWOT Analysis
Threats
Competition
Pressure group and Government Policy
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PEST ANALYSIS
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Political Aspects
2001 GOI ban advertising
Increased in Excise duties
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Economical Aspects
A growing portfolio of business
Competitiveness, technology up gradation and
market reach of over 170 SMEs.
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Social Aspects
Direct employment to more than 26,000 people.
E-choupal - worlds largest rural digital infrastructure
benefiting over 4 million farmers.
ITC - womens empowerment, supplementary
education.
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Technological Aspects
Wholly own subsidiary named ITC INFOTECH
Indias fastest growing IT services and solution
providers
Providing services in more than 140 countries
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Agri Business
Hotels
Paperboards &
packing
FMCG -
Cigarettes
FMCG -
foods/others
ITC InfoTech
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BCG Matrix
Star High market growth and high market share Agri Business
Hotels
Paperboards & packing
Cash Cow Low growth, high market share FMCG Cigarettes
Dog low growth, low market share ITC InfoTech
Question marks high growth, low market share FMCG foods/others
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Integration
Forward Integration
Backward Integration
Horizontal Integration
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By
Shanthakumar MBA
KPRSB