ITC LimitedITC Limited

ITC - Financial SnapshotRs. Crores

DESCRIPTION 1995-96 2005-06CAGR (%) 1995-96 to

2005-06

GROSS TURNOVER 5115 16224 12.2NET TURNOVER 2536 9791 14.5MARKET CAPITALISATION 5571 73207 * 29.4PBDIT 584 3613 20.0PBIT 536 3281 19.9PBT 452 3269 21.9PAT (before exceptional items) 261 2280 24.2EPS - Basic (Rs.)(before exceptional items) 0.70 6.08 24.1NETWORTH 1121 9061 23.2CAPITAL EMPLOYED 1886 9506 17.6ROCE(%) 28.4 34.5Book Value Per Share ( Rs. ) 3.0 24.1 23.0Total Shareholder Returns % 30.3* Market Capitalisation as on 31/3/06

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

2005-06 Financials

(Rs. 1 crore = Rs. 10 million)

Rs. Crs.

2005/06 2004/05 Goly(%)

Gross Turnover 16224 13350 21.5Net Turnover 9791 7639 28.2Exports 1827 1316 38.8PBDIT 3613 3028 19.3PBIT 3281 2716 20.8PBT 3269 2673 22.3PAT (Before Exceptional items) 2280 1837 24.1PAT (After Exceptional items) 2235 2191 2.0Capital Employed 9506 8517 11.6Segment Capital Employed 6295 5388 16.8EPS - Basic (Rs.) (Before Exceptional Items) 6.08 4.91 23.8

Segment Revenues 2005/06

(Rs. 1 crore = Rs. 10 million)

Rs. croresActuals Actuals

2005-06 2004-05 Goly (%)

Segment Revenue

a) FMCG - Cigarettes 11330 10003 13.3 - Others 1013 563 79.9Total FMCG 12343 10566 16.8

b) Hotels 783 577 35.7c) Agri Business 2678 1780 50.5d) Paperboards, Paper & Packaging 1896 1565 21.1

Total 17701 14489 22.2

Less : Inter segment revenue 1476 1139 29.6

Gross sales / income from operations 16224 13350 21.5

Segment Results 2005/06

(Rs. 1 crore = Rs. 10 million)

Rs. croresActuals Actuals

2005-06 2004-05 Goly (%)

Segment Results

a) FMCG - Cigarettes 2709 2289 18.3 - Others (172) (195) 12.0Total FMCG 2537 2094 21.2

b) Hotels 258 141 83.1c) Agri Business 91 96 (5.8)d) Paperboards, Paper & Packaging 351 280 25.5

Total 3237 2611 24.0

Less : i) Interest (Net) 12 42 (71.9) ii) Other un-allocable expenditure net of un-allocable income (44) (105) 58.1

PBT (Before Exceptional Items) 3269 2673 22.3

Segment Capital Employed

(Rs. 1 crore = Rs. 10 million)

Rs. crores

31.03.2006 31.03.2005 Goly (%)

Capital Employed

a) FMCG - Cigarettes * 1463 1240 18.0 - Others 489 262 86.5Total FMCG 1953 1502 30.0

b) Hotels 1374 1401 (1.9)c) Agri Business 1060 740 43.3d) Paperboards, Paper & Packaging 1908 1745 9.3

Total Segment Capital Employed 6295 5388 16.8

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

ITC Q4 05/06 - Key Financials

Q4 Q4 Last Goly(%)Actuals Years

Gross Turnover External 4420 3534 25.1

Net Turnover External 2784 2177 27.9

Total Forex Earnings 609 366 66.4

PBDIT 877 722 21.5

PBIT 791 633 25.0

PBT 781 632 23.6

PAT (before Exceptional Items) 567 417 35.9

Exceptional Items (Net of Tax) 0 354 -99.9

PAT (after Exceptional Items) 568 772 -26.4

Capital Employed 9506 8517 11.6

Segment Capital Employed 6295 5388 16.8

Rs. Crs.

Segment Revenue: Q4 2005/06

Rs. crores

Q4 05/06 Q4 04/05 Goly (%)

Segment Revenue

a) FMCG - Cigarettes 2883 2504 15.1 - Others 306 174 75.7Total FMCG 3188 2678 19.1

b) Hotels 263 181 45.4c) Agri Business 804 516 55.8d) Paperboards, Paper & Packaging 476 412 15.5

Total 4731 3786 24.9

Less : Inter segment revenue 311 252 23.5

Gross sales / income from operations 4420 3534 25.1

Segment Results: Q4 2005/06Rs. crores

Q4 05/06 Q4 04/05 Goly (%)

Segment Results

a) FMCG - Cigarettes 638 560 13.9 - Others (42) (69) 38.2Total FMCG 596 492 21.2

b) Hotels 98 57 72.2c) Agri Business 9 3 247.2d) Paperboards, Paper & Packaging 79 54 46.4

Total 781 605 29.2

Less : i) Interest (Net) 10 1 665.9 ii) Other un-allocable expenditure net of un-allocable income (10) (28) 65.5

PBT (Before Exceptional Items) 781 632 23.7

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 (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 India’s Most Respected Companies (IMRB-Businessworld Survey 2006)

ITC One of India’s most valuable corporations

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 Jan’06

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 FMCGHotel

s

Agri BusinessLeaf Tobacco

Agri Commodities

Paperboard

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

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

Corporate Strategies

FMCG - Cigarettes

ITC’s Cigarettes BusinessITC’s 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 state-of-the-art technology and products 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

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

Per Capita Adult C igarette Consumption (Sticks)

16621753

561 488

141

1190

USA China Pakistan Nepal India W orld Avg.

Hotels & TourismHotels & Tourism

Hotels & Tourism industryHotels & 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

India’s luxury rooms availability lower than even smaller East Asian countries

Luxury hotel rooms - East AsiaLuxury hotel rooms - East Asia

01000020000300004000050000600007000080000

Ho

ng

Ko

ng

Ban

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k

Sin

gap

ore

Mal

aysi

a

Ind

ia

Source: Compendium of Tourism statistics, WTO

Indian hotel industryIndian 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

ITC’s hotel businessITC’s 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

ITC’s 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)

ITC’s 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 under the ‘WelcomHeritage’ brand– Maharaja Heritage Resorts Ltd. 50% JV with Marudhar

Hotels (P) Ltd.

Paperboards, PaperPaperboards, Paper&&

PackagingPackaging

Indian paperboard marketIndian 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.

ITC’s 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

ITC’s Paperboards & Packaging businessesITC’s Paperboards & Packaging businesses

Capacity expansion in recycled segment Acquisition of Kovai Unit in March 2004: +65000 TPA

Another 75000 TPA commissioned in Jan. ‘05

ITC’s packaging SBU -India’s 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 BusinessesAgri Businesses- - Leaf TobaccoLeaf Tobacco

- Agri Commodities- Agri Commodities

Indian Leaf Tobacco industryIndian Leaf Tobacco industry

India - the second largest producer of tobacco

But, 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

ITC’s 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 India’s 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 ITC’s 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

ITC’s strategic thrustITC’s 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 ITC’s FMCG distribution capability

Business model retains critical elements of value chains within ITC with other elements outsourcedContributing to the competitiveness of SMEs

FMCG Business InitiativesBranded Packaged Foods

Leverages: Unique Agri sourcing skills ITC Welcomgroup’s 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 InitiativesBranded 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 InitiativesLifestyle 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 InitiativesGreetings, Gifting & Stationery

Leverages print and paper know-how

An emerging market in India - growth driven by increasing

cross-cultural exposure

ITC’s ‘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 ITC’s FMCG distribution

capability with negligible incremental investment

FMCG Business InitiativesSafety 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’ – India’s 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 InitiativesIncense 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 pointSupport cottage sector with complementary marketing

strengths ‘Mangaldeep’ : the only National brand in the country

FMCG business initiatives…….

Concurrently, ITC’s IT subsidiary assists in web-enabling business processes CRM initiatives ERP transaction processing systems SCM including the e-choupal capability

… hosted on ITC’s Virtual Private Network ITC awarded the best IT user in FMCG category

by Nasscom

Future Positioning of ITC A leading FMCG player in India

FARMERS

MARKETS

Cigarette Trade Marketing capability

Branded

Foods

Expanded FMCG distribution capability

e-choupal rural two-way fulfillment capability

A basis for strategic partnerships with other FMCG brand owners

VPN providing SCM, ERP & CRM capability

Lifestyle

retailing

Greeting

cards/statione

ry

Matches &

Agarbattis

Forward-looking Statements

Statements in this presentation describing the Company’s 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 Company’s

portfolio, changes in Government regulations, tax regimes and other statutes, and the ability to attract and retain high

quality human resource.