Tribeni Tissues Ltd. I.T.C.Ltd

Submitted By:

Hetal Patel

108070592056

Submitted To:

Prof. Anshita

Tribeni Tissues Ltd. I.T.C.Ltd

The ITC Vision & Mission

Sustain ITC's position as one of India's most valuable corporationsthrough world class performance,creating growing value for the Indian economy and the Company’sstakeholders

To enhance the wealth generating capability of the enterprise in a

globalising environment,delivering superior and sustainablestakeholder value

   

   

History and Evolution

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the Company's ownership progressively Indianite, the name of 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 - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agri-business, Foods, Lifestyle Retailing, Education & Stationery and Personal Care - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'.

The Company’s beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more ways than one. It was to mark the beginning of a long and eventful journey into India's future. The Company's headquarter building, 'Virginia House', which came up on that plot of land two years later, would go on to become one of Kolkata's most venerated landmarks.

Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the Company.

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house.

In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation. ITC chose the hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. Since then ITC's Hotels business has grown to occupy a position of leadership, with over 100 owned and managed properties spread across India.

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this division merged with the Company's Tribeni Tissues Division to

form the Paperboards & Specialty Papers Division. ITC's paperboards' technology, productivity, quality and manufacturing processes are comparable to the best in the world. It has also made an immense contribution to the development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is directly involved in education, environmental protection and community development. In 2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve customer service with reduced lead time and a wider product range.

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. Since inception, its shares have been held by ITC, British American Tobacco and various independent shareholders in Nepal. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal).

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry. The merged entity was named the Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty Papers Division in November 2002.

Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities. The Division is today one of India's largest exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operational in the 3 states of Madhya Pradesh, Maharashtra and Uttar Pradesh.

In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the launch of Expressions range of greeting cards. A line of premium range of notebooks under brand “Paperkraft” was launched in 2002. To augment its offering and to reach a wider student population, the popular range of notebooks was launched under brand “Classmate” in 2003. “Classmate” over the years has grown to become India’s largest notebook brand and has also increased its portfolio to occupy a greater share of the school bag. Years 2007- 2009 saw the launch of Children Books, Slam Books, Geometry Boxes, Pens and Pencils under the “Classmate” brand. In 2008, ITC repositioned the business as the Education and Stationery Products Business and launched India's first environment friendly premium business paper under the “Paperkraft” Brand. “Paperkraft” offers a diverse portfolio in the premium executive stationery and office consumables segment. Paperkraft entered new categories in the office consumable segment with the launch of Textliners, Permanent Ink Markers and White Board Markers in 2009.

ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain

of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained recognition from buyers and retailers as the single largest B-2-B platform for the Fashion Design industry. To mark the occasion, ITC launched a special 'Celebration Series', taking the event forward to consumers.

In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging opportunities in this area. Today ITC Infotech is one of India’s fastest growing global IT and IT-enabled services companies and has established itself as a key player in offshore outsourcing, providing outsourced IT solutions and services to leading global customers across key focus verticals - Manufacturing, BFSI (Banking, Financial Services & Insurance), CPG&R (Consumer Packaged Goods & Retail), THT (Travel, Hospitality and Transportation) and Media & Entertainment.

ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC's entered the fast growing branded snacks category with Bingo! in 2007. In eight years, the Foods business has grown to a significant size with over 200 differentiated products under six distinctive brands, with an enviable distribution reach, a rapidly growing market share and a solid market standing.

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative. ITC now markets popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro.

ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands include Spriha and Mangaldeep across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Sambrani and Nagchampa.

ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body care products for men and women in July 2005. Inizio, the signature range under Essenza Di Wills provides a comprehensive grooming regimen with distinct lines for men (Inizio Homme) and women (Inizio Femme). Continuing with its tradition of bringing world class products to Indian consumers the Company launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October and December 2007 respectively. The Company also launched the 'Superia' range of

Soaps and Shampoos in the mass-market segment at select markets in October 2007 and Vivel De Wills & Vivel range of soaps in February and Vivel range of shampoos in June 2008.

The ITC Way

ITC is a board-managed professional company, committed to creating enduring value for the shareholder and for the nation. It has a rich organisational culture rooted in its core values of respect for people and belief in empowerment. Its philosophy of all-round value creation is backed by strong corporate governance policies and systems.

ITC’s corporate strategies are :

Create multiple drivers of growth by developing a portfolio of world class businesses that best matches organisational capability with opportunities in domestic and export markets.

Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards & Packaging, Agri Business and Information Technology.

Benchmark the health of each business comprehensively across the criteria of Market Standing, Profitability and Internal Vitality.

Ensure that each of its businesses is world class and internationally competitive. Enhance the competitive power of the portfolio through synergies derived by blending

the diverse skills and capabilities residing in ITC’s various businesses. Create distributed leadership within the organisation by nurturing talented and focused

top management teams for each of the businesses. Continuously strengthen and refine Corporate Governance processes and systems to

catalyse the entrepreneurial energies of management by striking the golden balance between executive freedom and the need for effective control and accountability.

   

   

Core Values

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

Trusteeship

As professional managers, we are conscious that ITC has been given to us in "trust" by all our stakeholders. We will actualize stakeholder value and interest on a long term sustainable basis.

Customer Focus

We are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction.

Respect for People

We are result oriented, setting high performance standards for ourselves as individuals and teams.

We will simultaneously respect and value people and uphold humanness and human dignity.

We acknowledge that every individual brings different perspectives and capabilities to the team and that a strong team is founded on a variety of perspectives.

We want individuals to dream, value differences, create and experiment in pursuit of opportunities and achieve leadership through teamwork.

Excellence

We do what is right, do it well and win. We will strive for excellence in whatever we do.

Innovation

We will constantly pursue newer and better processes, products, services and management practices.

Nation Orientation

We are aware of our responsibility to generate economic value for the Nation. In pursuit of our goals, we will make no compromise in complying with applicable laws and regulations at all levels.

Corporate Governance

Preamble

Over the years, ITC has evolved from a single product company to a multi-business corporation. Its businesses are spread over a wide spectrum, ranging from cigarettes and tobacco to hotels, packaging, paper and paperboards and international commodities trading. Each of these businesses is vastly different from the others in its type, the state of its evolution and the basic nature of its activity, all of which influence the choice of the form of governance. The challenge of governance for ITC therefore

lies in fashioning a model that addresses the uniqueness of each of its businesses and yet strengthens the unity of purpose of the Company as a whole.

Since the commencement of the liberalization process, India's economic scenario has begun to alter radically. Globalization will not only significantly heighten business risks, but will also compel Indian companies to adopt international norms of transparency and good governance. Equally, in the resultant competitive context, freedom of executive management and its ability to respond to the dynamics of a fast changing business environment will be the new success factors. ITC's governance policy recognizes the challenge of this new business reality in India.

Definition and Purpose

ITC defines Corporate Governance as a systemic process by which companies are directed and controlled to enhance their wealth generating capacity. Since large corporations employ vast quantum of societal resources, we believe that the governance process should ensure that these companies are managed in a manner that meets stakeholder’s aspirations and societal expectations.

Core Principles

ITC's Corporate Governance initiative is based on two core principles. These are :

i. Management must have the executive freedom to drive the enterprise forward without undue restraints; and

ii. This freedom of management should be exercised within a framework of effective accountability.

ITC believes that any meaningful policy on Corporate Governance must provide empowerment to the executive management of the Company, and simultaneously create a mechanism of checks and balances which ensures that the decision making powers vested in the executive management is not only not misused, but is used with care and responsibility to meet stakeholder aspirations and societal expectations.

Cornerstones

From the above definition and core principles of Corporate Governance emerge the cornerstones of ITC's governance philosophy, namely trusteeship, transparency, empowerment and accountability, control and ethical corporate citizenship. ITC believes that the practice of each of these leads to the creation of the right corporate culture in which the company is managed in a manner that fulfils the purpose of Corporate Governance.

Trusteeship:

ITC believes that large corporations like itself have both a social and economic purpose. They represent a coalition of interests, namely those of the shareholders, other providers of capital, business associates and employees. This belief therefore casts a responsibility of trusteeship on the Company's Board of Directors. They are to act as trustees to protect and enhance shareholder value, as well as to ensure that the Company fulfill its obligations and responsibilities to its other stakeholders. Inherent in the concept of trusteeship is the responsibility to ensure equity, namely, that the rights of all shareholders, large or small, are protected.

Transparency:

ITC believes that transparency means explaining Company's policies and actions to those to whom it has responsibilities. Therefore transparency must lead to maximum appropriate disclosures without jeopardising the Company's strategic interests. Internally, transparency means openness in Company's relationship with its employees, as well as the conduct of its business in a manner that will bear scrutiny. We believe transparency enhances accountability.

Empowerment and Accountability:

Empowerment is an essential concomitant of ITC's first core principle of governance that management must have the freedom to drive the enterprise forward. ITC believes that empowerment is a process of actualising the potential of its employees. Empowerment unleashes creativity and innovation throughout the organisation by truly vesting decision-making powers at the most appropriate levels in the organisational hierarchy.

ITC believes that the Board of Directors are accountable to the shareholders, and the management is accountable to the Board of Directors. We believe that empowerment, combined with accountability, provides an impetus to performance and improves effectiveness, thereby enhancing shareholder value.

Control:

ITC believes that control is a necessary concomitant of its second core principle of governance that the freedom of management should be exercised within a framework of appropriate checks and balances. Control should prevent misuse of power, facilitate timely management response to change, and ensure that business risks are pre-emptively and effectively managed.

Ethical Corporate Citizenship:

ITC believes that corporations like itself have a responsibility to set exemplary standards of ethical behaviour, both internally within the organisation, as well as in their external relationships. We believe that unethical behaviour corrupts organisational culture and undermines stakeholder value.

Contact InformationCompany Name

Tribeni Tissues Ltd. A Divn. of I.T.C. Ltd.

Phone: 000-000-91-33-22472281

Fax: 91-33-22478576

Address Line1

2, Tribeni House Lee Rd.

City : KOLKATA

State: West Bengal

Country: India

Zip/Postal Code: 700071

Motives behind M&A

The dominant rationale used to explain M&A activity is that acquiring firms seek improved financial performance. The following motives are considered to improve financial performance:

Economy of scale : This refers to the fact that the combined company can often reduce its fixed costs by removing duplicate departments or operations, lowering the costs of the company relative to the same revenue stream, thus increasing profit margins.

Economy of scope : This refers to the efficiencies primarily associated with demand-side changes, such as increasing or decreasing the scope of marketing and distribution, of different types of products.

Increased revenue or market share: This assumes that the buyer will be absorbing a major competitor and thus increase its market power (by capturing increased market share) to set prices.

Cross-selling : For example, a bank buying a stock broker could then sell its banking products to the stock broker's customers, while the broker can sign up the bank's customers for brokerage accounts. Or, a manufacturer can acquire and sell complementary products.

Synergy : For example, managerial economies such as the increased opportunity of managerial specialization. Another example are purchasing economies due to increased order size and associated bulk-buying discounts.

Taxation : A profitable company can buy a loss maker to use the target's loss as their advantage by reducing their tax liability. In the United States and many other countries, rules are in place to limit the ability of profitable companies to "shop" for loss making companies, limiting the tax motive of an acquiring company.

Geographical or other diversification: This is designed to smooth the earnings results of a company, which over the long term smoothens the stock price of a company, giving conservative investors more confidence in investing in the company. However, this does not always deliver value to shareholders (see below).

Resource transfer: resources are unevenly distributed across firms (Barney, 1991) and the interaction of target and acquiring firm resources can create value through either overcoming information asymmetry or by combining scarce resources.[7]

Vertical integration : Vertical integration occurs when an upstream and downstream firm merge (or one acquires the other). There are several reasons for this to occur. One reason is to internalise an externality problem. A common example of such an externality is double marginalization. Double marginalization occurs when both the upstream and downstream firms have monopoly power and each firm reduces output from the competitive level to the monopoly level, creating two deadweight losses. Following a merger, the vertically integrated firm can collect one deadweight loss by setting the downstream firm's output to the competitive level. This increases profits and consumer surplus. A merger that creates a vertically integrated firm can be profitable.[8]

Hiring: some companies use acquisitions as an alternative to the normal hiring process. This is especially common when the target is a small private company or is in the startup phase. In this case, the acquiring company simply hires the staff of the target private company, thereby acquiring its talent (if that is its main asset and appeal). The target private company simply dissolves and little legal issues are involved.[citation needed]

Absorption of similar businesses under single management: similar portfolio invested by two different mutual funds (Ahsan Raza Khan, 2009) namely united money market fund and united growth and income fund, caused the

management to absorb united money market fund into united growth and income fund.</ref>

However, on average and across the most commonly studied variables, acquiring firms' financial performance does not positively change as a function of their acquisition activity.[9] Therefore, additional motives for merger and acquisition that may not add shareholder value include:

Diversification: While this may hedge a company against a downturn in an individual industry it fails to deliver value, since it is possible for individual shareholders to achieve the same hedge by diversifying their portfolios at a much lower cost than those associated with a merger. (In his book One Up on Wall Street, Peter Lynch memorably termed this "diworseification".)

Manager's hubris: manager's overconfidence about expected synergies from M&A which results in overpayment for the target company.

Empire-building : Managers have larger companies to manage and hence more power.

Manager's compensation: In the past, certain executive management teams had their payout based on the total amount of profit of the company, instead of the profit per share, which would give the team a perverse incentive to buy companies to increase the total profit while decreasing the profit per share (which hurts the owners of the company, the shareholders)..

(Rs crore)

Balance sheet

  Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Sources of funds

Owner's fund

Equity share capital 773.81 381.82 377.44 376.86 376.22

Share application money - - - - -

Preference share capital - - - - -

Reserves & surplus 15,126.12 13,628.17 13,302.55 11,624.69 10,003.78

Loan funds

Secured loans 1.94 - 11.63 5.57 60.78

  Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Unsecured loans 97.26 107.71 165.92 208.86 140.10

Total 15,999.13 14,117.70 13,857.54 12,215.98 10,580.88

Uses of funds

Fixed assets

Gross block 12,765.82 11,967.86 10,558.65 8,959.70 7,134.31

Less : revaluation reserve 53.34 54.39 55.09 56.12 57.08

Less : accumulated depreciation 4,420.75 3,825.46 3,286.74 2,790.87 2,389.54

Net block 8,291.73 8,088.01 7,216.82 6,112.71 4,687.69

Capital work-in-progress 1,333.40 1,008.99 1,214.06 1,126.82 1,130.20

Investments 5,554.66 5,726.87 2,837.75 2,934.55 3,067.77

Net current assets

Current assets, loans & advances 10,592.28 8,463.31 8,450.99 7,306.99 6,281.07

Less : current liabilities & provisions 9,772.94 9,169.48 5,862.08 5,265.09 4,585.85

Total net current assets 819.34 -706.17 2,588.91 2,041.90 1,695.22

Miscellaneous expenses not written - - - - -

Total 15,999.13 14,117.70 13,857.54 12,215.98 10,580.88

Notes:

Book value of unquoted investments 2,972.48 5,108.69 2,861.88 2,958.68 3,091.90

Market value of quoted investments 3,096.14 1,355.62 9.12 13.42 13.30

Contingent liabilities 251.78 258.73 261.36 308.08 129.56

Number of equity sharesoutstanding (Lacs) 77381.44 38181.77 37744.00 37686.10 37622.23

Key Financial Ratios of ITC

Mar '11

Mar '10 Mar '09 Mar '08

Investment Valuation Ratios

Face Value 1.00 1.00 1.00 1.00

Dividend Per Share 4.45 10.00 3.70 3.50

Operating Profit Per Share (Rs) 9.30 16.06 13.04 11.76

Net Operating Profit Per Share (Rs) 27.29 48.63 39.70 37.23

Free Reserves Per Share (Rs) 19.07 34.73 34.27 29.88

Bonus in Equity Capital 91.81 85.85 86.84 86.98

Profitability Ratios

Operating Profit Margin(%) 34.08 33.02 32.84 31.57

Profit Before Interest And Tax Margin(%) 30.05 28.97 28.37 27.50

Gross Profit Margin(%) 30.97 29.74 29.17 28.44

Cash Profit Margin(%) 25.17 23.98 24.22 23.45

Adjusted Cash Margin(%) 25.17 23.98 24.22 23.45

Net Profit Margin(%) 22.91 21.30 21.18 21.50

Adjusted Net Profit Margin(%) 22.91 21.30 21.18 21.50

Return On Capital Employed(%) 44.94 42.64 34.60 36.60

Return On Net Worth(%) 31.36 28.98 23.85 25.99

Adjusted Return on Net Worth(%) 30.34 28.29 23.26 24.71

Return on Assets Excluding Revaluations 20.55 36.69 36.24 31.85

Return on Assets Including Revaluations 20.62 36.84 36.39 32.00

Return on Long Term Funds(%) 44.95 42.64 34.75 36.88

Liquidity And Solvency Ratios

Current Ratio 1.08 0.92 1.42 1.36

Quick Ratio 0.50 0.39 0.61 0.56

Debt Equity Ratio 0.01 0.01 0.01 0.02

Long Term Debt Equity Ratio 0.01 0.01 0.01 0.01

Debt Coverage Ratios

Interest Cover123.3

082.46 168.97 258.92

Total Debt to Owners Fund 0.01 0.01 0.01 0.02

Financial Charges Coverage Ratio100.4

673.42 112.17 199.51

Financial Charges Coverage Ratio Post Tax 73.25 52.72 81.02 145.60

Management Efficiency Ratios

Inventory Turnover Ratio 6.05 6.04 5.26 5.51

Debtors Turnover Ratio 23.91 24.31 21.32 20.43

Investments Turnover Ratio 6.05 6.04 5.26 5.51

Fixed Assets Turnover Ratio 1.69 1.58 1.44 1.59

Total Assets Turnover Ratio 1.34 1.33 1.09 1.16

Asset Turnover Ratio 1.69 1.58 1.44 1.59

Average Raw Material Holding184.5

3193.81 185.08 220.61

Average Finished Goods Held 40.67 36.33 64.35 43.88

Number of Days In Working Capital 13.97 -13.69 62.19 52.39

Profit & Loss Account Ratios

Material Cost Composition 40.72 38.45 45.80 44.95

Imported Composition of Raw Materials Consumed

13.34 12.03 12.98 12.78

Selling Distribution Cost Composition 6.80 6.66 7.12 7.44

Expenses as Composition of Total Sales 13.32 12.68 14.85 15.45

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 80.24 109.63 50.06 49.45

Dividend Payout Ratio Cash Profit 70.91 95.34 42.84 43.36

Earning Retention Ratio 17.06 -12.31 48.67 47.98

Cash Earning Retention Ratio 26.99 2.64 56.23 54.68

AdjustedCash Flow Times 0.02 0.02 0.05 0.06

Mar '11

Mar '10 Mar '09 Mar '08

Earnings Per Share 6.45 10.64 8.65 8.28

Book Value 20.55 36.69 36.24 31.85

Report cardAttribute Value Date

PE ratio 35.19 30/03/12

EPS (Rs) 6.45 Mar, 11

Sales (Rs crore) 6,247.84 Dec, 11

Face Value (Rs) 1  

Net profit margin (%) 22.91 Mar, 11

Attribute Value Date

Last bonus 1:1 18/06/10

Last dividend (%) 445 20/05/11

Return on average equity 31.36 Mar, 11