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Imperial Tobacco Company of India Limited (ITC).
ITC. Touching your life. Everyday
Presented byGROUP NO.10
Sumit RoyAnamika singh
AkanshaKashish Arora
Tarun DuttMinaz humdule
FLOW OF PRESENTATIONCOMPANY PROFILEVISION & MISSIONVALUEPOSITIONING OF ITCDISTRIBUTION NETWORKSUPPLY CHAIN ANALYSIS OF FMCG PRODUCT(CIGARATTE) &PEST AND SWOT ANALYSIS OF ITC.SYNERGIES FOR ITCEFFICIENCIES IN E-CHOUPAL NETWORK COMPARISON WITH HARYALI KISAN BAZARFUTURE OF E-CHOUPALCONCLUSION
ITC. Touching your life. Everyday
Introduction
ITC is one of India's foremost private sector companies Has a diversified presence in Cigarettes, Hotels, Paperboards &Specialty
Papers, Packaging, Agri-Business, Packaged Foods &Confectionery, Branded Apparel, Greeting Cards and other FMCG products.
ITC is one of the country's biggest foreign exchange earners (US $2 billion in the last decade).
Ranks No. 4 among Indian listed Private Sector Companies by market cap. (@
April 09)
No. 1 in FMCG Sector
Rated as one of India’s Most Respected Companies (IMRB-Business world
Survey 2006). Diversified group of companies with operations in various industry segments
from cigarettes to apparels. Annual turnover is of the order US$2.4 billion
ITC. Touching your life. Everyday
VISION & MISSION • Vision: Sustain ITC’s position as one of India’s most
valuable corporations through world class performance, creating growing value for the Indian economy and the Company’s stakeholders.
• Mission: To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.
ITC. Touching your life. Everyday
Values
ITC. Touching your life. Everyday
• ITC's Core Values are aimed at developing a customer-focused, high-performance Organisation.
• Customer Focus we are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction.
• ITC. WORKING FOR YOU. WORKING FOR INDIA.
POSITIONING OF ITC
ITC. Touching your life. Everyday
•TOUCHING YOUR
LIFE EVERYDAY.
PRODUCT PROFILE
ITC. Touching your life. Everyday
Hotel
Cigarettes
Incense Sticks
Personal Care
Safety Matches
Agricultural
Industry
Information
Technology
Paperboards
Packaged Foods
Stationery
Branded Apparel
PRODUCT LINE
ITC. Touching your life. Everyday
ITC Distribution network in India
ITC. Touching your life. Everyday
ITC. Touching your life. Everyday
ITC’s Distribution channelITC’s Distribution channel is as follows:-
ITC. WORKING FOR YOU. WORKING FOR INDIA.
COMPANY HUB FACTORY
Retailer
small Wholesale dealer
Wholesale dealer
Carried and forward agent
consumer
HI-TECH SUPPLY SOLUTIONS Thousands of small retailers in India who sell cigarettes and confectionery supplied by ITC Ltd, and who have thus far had to wait for the next arrival of the company’s delivery van.
Place orders through mobile phones
Vans go without knowing actual demand so after using this they can save cost as well as time.
Mobility based applications can bring down the cost of operation by 20-30% from the manual basis of operation
ITC. Touching your life. Everyday
ITC FMCG Supply chain• Consists of diverse categories with different priorities• More than 1000+ SKUs• Buying Value $68 MM• Warehousing space of more than 3.5m SFT around 55+• Locations• Products manufactured at 45+ plants• More than 650 trucks moved every day• Direct distribution from factories to Distributors.• Indirect movement through RDCs• Combination of Rail/Road/Sea movement within the• country depending on the product type.• (Target is Safer, Faster, cost effective
ITC. Touching your life. Everyday
Indian Tobacco Division (ITD)
Market leaders in Cigarettes and Tobacco business & is among India’s most profitable companies
Brands owned by ITC Ltd are Wills Classic, Wills Navy Cut, Gold Flake, Bristol and Scissors ITD also sells two luxury filter brands of its parent company Benson & Hedges and 555 Four manufacturing units for cigarettes at Bangalore, Saharanpur, Kidder pore, Munger
ITC. Touching your life. Everyday
ITC. Touching your life. Everyday
PEST ANALYSIS
POLITICAL
•Huge burden of VAT
•Excise duty raised by union budget by 5 %
•Ban on communication
•Luxury tax in 10 states
•Smuggling•100% FDI
allowed
ECONOMICAL
•Bidee : cigarette ratio-10:1
•Profit margin is high
•Other forms of cheap tobacco intake
SOCIO -CULTURAL
•Becoming status symbol
•Companions mounted by W.H.O.
•Changing attitudes towards tobacco
•May 31 is no tobacco day
•Change in life style
TECHNICA
L
•State-of-the-art factories
•Cheap labour supply
•Development of IQMS
•Adapting other concepts like QC,TQM, KSS, 5 S, 6 sigma
ITC. Touching your life. Everyday
SWOT ANALYSISStrength•Cigarette market is 22,000 cr and ITC has lion’s share in it•Strong brand recognition and product portfolio •Distribution network•Management
Weakness•Dependence on tobacco revenues• Negative Connection of Tobacco
Opportunity•Low per capita consumptionOf personal care products•Rural Market •E-Choupal• Filter cigarette segment of less than 60mm size
Threat•Competition both Domestic & International•Increasing Tax on cigarettes•Excise duty on unfiltered cigarettes less than 60mm in length was increased 387% last year •Hike was 142% for those between 61mm and 70mm long. •Regulatory restrictions on cigarettes•Ban on smoking
ITC. Touching your life. Everyday
CONFRONTATION
NAVY CUT,CLASSIC,INSIGNIA,INDIA KINGS,CAPSTEN,GOLD FLAKE,SISSORS,SILK CUT,BRISTOL,BERKELEY
GOLD FLAKE PREMIUM29%
GOLD FLAKE KINGS
4%
IK Regular (Rich Gold)1%
B&H Light2%
Classic Regular4%
Classic Ultra Mild4%
Silk Cut Kings5%
Wills Navy Cut7%
Silk Cut Premium11%
Marlboro Regular6%
Select Filter 5%
Four Square Specia
5%
Four Square Premier
5%
Panama Plain 4%
Red & White Super4% Cavender Magna
4%
Diversification
• ITC over the years has been investing cash flows from its cigarette business into various lucrative segments like foods, personal care, hotels and paper.
• With the paperboard division coming out of a major capex cycle and a reduction in losses from FMCG-others division from FY10E, we expect the non-cigarette businesses to become self-sufficient.
• The agriculture division continues to provide a strong support as an excellent raw material sourcing base. Hotels segment though is likely to register slower growth in FY10E due to economic slowdown and terror attacks.
ITC. Touching your life. Everyday
ITC. Touching your life. Everyday 18
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.
CONT….• It has 3 contract manufacturers (OCMs)Reliable Cigarette
and Tobacco IndustriesPrivate Ltd. (RCTI)• Asian Tobacco Company (ATC )Hyderabad Deccan Cigarette
Industries(HDC)• Huge distribution network with 19 marketing
branches and 33 Godowns across nation• Also caters to the exports mainly in United States
and Middle-Eastern countries
ITC. Touching your life. Everyday
ITC. Touching your life. Everyday
DISTRIBUTION NETWORK(Tobacco Div.)
Bangalore Calcutta Saharanpur Munger
GODOWNS(19)
GODOWNS(19)
BRANCHES (19)
BRANCHES (19)
Factories (4)
WHOLESALE DISTRIBUTORS(60 PER BRANCH)
WHOLESALE DISTRIBUTORS(60 PER BRANCH)
RETAILERSRETAILERS SECONDARYWHOLESALERS
SECONDARYWHOLESALERS
Information
Goods
Role of Each Member
Factories – Supply to 18 godowns Godowns & Branches
Manage by C&F agents getting monthly remuneration No rent paid by ITC one branch – 60 WDs , 5 AMs and 20 Area Executives
Wholesale Distributors(WDs) Margin – 2% of sales Appoints secondary Wholesalers
ITC. Touching your life. Everyday
PHYSICAL DISTRIBUTION Demand Estimation – collaborative forecasting( Sales
force with dealers) Forecast based on last month sales Production plan made according to forecast Delivery to C & F agents within 7 days CFAs deliver goods to dealers on the basis of the branch
office route plan Factory CFAs- Trucks CFAs Dealers – Small Vehicles
ITC. Touching your life. Everyday
ITC’S AGRI COMMODITY DIVISON
Farm linkages in 14 states covering Soya, Wheat, Marine
products, Coffee etc. Focus on value added agri commodities
Unique CRM programme in commodity exports
Leveraging IT for the transformational ‘e-Choupal’ initiative
Rural India’s largest Internet-based intervention
Over 40,000 villages linked through 6500 e-Choupals
servicing over 4 million farmers
Distinctive sourcing capability for ITC’s Foods business
Low Risk Appetite
Weak Market Orientation
Low InvestmentLow Margins
Low ProductivityLow Value Addition
Caught in a vicious cycle of
underdevelopment
THE PREDICAMENT OF INDIAN FARMERS
OTHER E-CHOUPAL INITIATIVE
Company Logo
Companies using e-Choupal network
Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
Critical Analysis of ITC’s Supply Chain
Company Logo
Stake holder AnalysisPrimary Stakeholders Interest
Farmer Community
Access to information– Empowered decisions– Improved agriculture
Economic benefits through lower transaction costs and process efficiencies
Served with dignity Knowledge bundled sale of goods and services Co-opted in product design Hope for a brighter future
ITC
Lower procurement costs Direct interaction with farmers - Control on quality & supply
security Low cost distribution channel Access to market intelligence
Commission Agents
(Kachha & Pakka
Adatiyas)
Gain access to global markets through ITC and commission to compensate some of the loss revenue
ITC e-Choupal Footprint
ITC. Touching your life. Everyday
CONCLUSION
• ITC promoting their brands through advertisement campaign as well as door to door promotion.
• ITC is also focusing on Retailers and Wholesalers to promote their brand.
• The demand of their product in very low, because people don’t know about their brands very well.
• ITC knows their strength and weakness in the personal care market, so they are applying new concept to overcome their weaknesses.
• ITC now offering more margins, exiting offers and long credit period to retailers and wholesalers.
ITC. WORKING FOR YOU. WORKING FOR INDIA.
THINK BEFORE SMOKING…….
THANK YOU?????