ITC Corporate Presentation

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ITC LimitedITC LimitedOne of India’s Most Valuable One of India’s Most Valuable

CorporationsCorporations

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Performance Track Record- Snapshot

Rs. 1 crore= Rs. 10 million

Rs crores

95-96 07-08Cagr 95-96

to 07-08

Gross Turnover 5115 21,356 12.6%Net Turnover 2536 13,948 15.3%Market Capitalisation 5571 77,765 24.6%PBDIT 584 5,015 19.6%PBIT 536 4,576 19.6%PBT 452 4,572 21.3%PAT 261 3,120 23.0%EPS Rs 0.7 8.3 22.7%Net Worth 1121 12,025 21.9%Capital Employed 1886 12,817 17.3%ROCE% 28.4 35.7Total Shareholders Returns % 25.8

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Headline Financials: 2007/08

Rs. Crs.

GTO 21356 10.7

NTO 13948 14.7

PBT 4572 16.4

PAT 3120 15.6

Balance Sheet Size 12817 15.4

Non Cigarettes Business 52.4% of NTO

(51.5% LY)

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ITC - Key Financials – 07/08

Rs crsYTD Q4 Actuals

YTD Q4 LY

Goly %

Gross Turnover External 21356 19300 10.7

Net Turnover External 13948 12164 14.7

PBDIT 5015 4293 16.8

PBIT 4576 3930 16.4

PBT 4572 3927 16.4

PAT 3120 2700 15.6

Capital Employed 12817 11111 15.4

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Segment Revenues & Results: FY 07/08Rs. crores

2007-08 2006-07 Goly Segment Revenue (Net)

a) FMCG - Cigarettes 6635 5895 12.6 - Others 2510 1689 48.5 Total FMCG 9145 7584 20.6 b) Hotels 1012 906 11.7 c) Agri Business 3868 3501 10.5 d) Paperboards, Paper & Packaging 2158 1911 12.9 Total 16183 13902 16.4 Less : Inter segment revenue 2236 1738 28.6Net sales / income from operns. 13948 12164 14.7

2007-08 2006-07 Goly Segment Results a) FMCG - Cigarettes 3634 3172 14.6 - Others (264) (202) (30.5) Total FMCG 3371 2970 13.5 b) Hotels 411 351 17.1 c) Agri Business 129 124 4.6 d) Paperboards, Paper & Packaging 453 417 8.7 Total 4364 3861 13.0 Less : i) Interest (Net) 5 3 40.2 ii) Other un-allocable expenditure net of (213) (69) (209.6)

Total PBT 4572 3927 16.4

Full Year

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Segment Capital Employed: FY 07/08

Rs. crores

2007-08 2006-07 GolyCapital Employed a) FMCG - Cigarettes * 2315 1997 15.9 - Others 1827 962 89.8 Total FMCG 4141 2959 40.0 b) Hotels 1865 1466 27.2 c) Agri Business 1469 1480 (0.7) d) Paperboards, Paper & Packaging 3264 2559 27.5Total Segment Capital Employed 10740 8465 26.9

* Local Tax Provision not incl. 598 536 11.7

Full Year

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ITC - Key Financials – Q2 08/09

Rs crsQ2 08/09Actuals

Q2 07/08Actuals

Goly %



PBDIT 1326 1240 6.9

PBIT 1192 1134 5.1

PBT 1189 1133 4.9

PAT 803 771 4.1


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ITC - Key Financials – H1 08/09

Rs crs H1 Actuals H1 LY Goly %



PBDIT 2567 2469 4.0

PBIT 2307 2262 2.0

PBT 2303 2262 1.8

PAT 1551 1554 -0.2


Q2 Segment Revenue

Rs crs

Quarter Quarter Golyended ended (%)

30.09.2008 30.09.2007

1. Segment Revenue (Net)a) FMCG - Cigarettes 1812 1574 15.1%

- Others 757 584 29.8%Total FMCG 2570 2157 19.1%

b) Hotels 228 208 9.7%c) Agri Business 864 741 16.7%d) Paperboards, Paper & Packaging 700 560 25.2%

Total 4362 3666 19.0%Less : Inter-segment revenue 599 396 51.4%

Net sales / Income from operations 3763 3270 15.1%

Q2 Segment Results

Rs crs

Quarter Quarter Golyended ended (%)

30.09.2008 30.09.2007

2. Segment Resultsa) FMCG - Cigarettes 1007 864 16.6%

- Others (117) (37) -219.1%Total FMCG 890 827 7.6%

b) Hotels 69 66 4.1%c) Agri Business 76 10 667.8%d) Paperboards, Paper & Packaging 122 126 -2.6%

Total 1158 1029 12.5%Less : i) Interest (Net) 3 1 205.5%

ii) Other un-allocable net income (34) (105) 67.5%

Total Profit Before Tax 1189 1133 4.9%

H1 Segment Revenue

Rs crs

Half Year Half Year Golyended ended (%)

30.09.2008 30.09.2007

1. Segment Revenue (Net)a) FMCG - Cigarettes 3552 3211 10.6%

- Others 1449 1126 28.7%Total FMCG 5001 4337 15.3%


Total 9473 7915 19.7%Less : Inter-segment revenue 1810 1351 34.0%

Net sales / Income from operations 7663 6564 16.7%

H1 Segment ResultsRs crs


30.09.2008 30.09.2007

2. Segment Resultsa) FMCG - Cigarettes 1968 1803 9.2%

- Others (239) (81) -194.7%Total FMCG 1729 1722 0.4%


Total 2282 2129 7.2%Less : i) Interest (Net) 4 0 5137.5%

ii) Other un-allocable net income (25) (134) 80.9%

Total Profit Before Tax 2303 2262 1.8%

Segment Capital Employed

Rs crs


30.09.2008 30.09.2007

3. Capital Employeda) FMCG - Cigarettes * 2816.30 2272.85 23.9%

- Others 2403.42 1547.38 55.3%Total FMCG 5219.72 3820.23 36.6%

b) Hotels 1979.42 1686.42 17.4%c) Agri Business 753.89 1066.87 -29.3%d) Paperboards, Paper & Packaging 3709.77 2847.18 30.3%

Total Segment Capital Employed 11662.80 9420.70 23.8%

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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. 5 among Indian listed Private Sector Companies by market cap. (@ 30/09/08)

No. 1 in FMCG Sector

Rated as one of India’s Most Respected Companies (IMRB-Businessworld Survey

2006)

ITC One of India’s most valuable corporations

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Awards & Accolades (1)

• ‘ITC received the FICCI Outstanding Vision Corporate Triple Impact Award 2007 for invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation.

• Sustainability Leadership Award 2007 conferred on Chairman Y C Deveshwar by the Sustainability Forum, Zurich and SAM/SPG at the International Sustainability Leadership Symposium

• Business Today Award for the Best Managed Company – Retail and Consumer Products, has been conferred on ITC in recognition of its outstanding initiatives in the consumer products segment.

• Asian CSR Award 2007 for Environmental Excellence given by the Asian Institute of Management

• Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum

• In the first of its kind S&P Environmental, Social and Corporate Governance (ESG) ratings released recently, ITC ranked second among top Indian companies.

• The Company has won the Corporate Social Responsibility Crown Award for Water Practices from UNESCO and Water Digest for its distinguished work carried out in the water sector in India.

• NDTV Profit Business Leadership Award for being the Best Food Company of 2007.

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Accolades & Awards (2)

• e-Choupal initiative wins 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

– Recognised in World Development Report 2008 published by World Bank

– Applauded by President of India Dr APJ Kalam in his “special address during

the national symposium to commemorate 60th year of independence”

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ITC - Business Portfolio

ITC

FMCG: Cigarettes

Other FMCGHotel

s

Agri BusinessLeaf Tobacco

Agri Commodities

Paperboard

Paper &Packaging

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Strategy of Organisation to manage diversity of Portfolio

Formal 3-tiered governance structure: Board of Directors :

Comprising executive (4) and non-executive directors (11) Strategic supervision

Corporate Management Committee : Comprising executive directors and senior managers Strategic management

Divisional Chief Executive & Divisional Management Committee : Executive management

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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

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FMCG - Cigarettes

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ITC’s Cigarettes BusinessITC’s Cigarettes Business

Market leadership

Powerful brands across segments

Leadership in all segments - geographic & price

Extensive FMCG distribution network

Direct servicing of 1,00,000 markets & 2 million retail outlets

World-class state-of-the-art technology and products

Investment - Rs.10 billion in six years

Exciting long term growth potential

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Cigarettes: Growth potential

Cigarettes account for only 15% of tobacco consumed in India

unlike world pattern of 85% due to prolonged punitive taxation

Cigarettes (15% 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

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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.

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Hotels & TourismHotels & Tourism

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Hotels & Tourism industryHotels & Tourism industry

Foreign arrivals into India: 5 million appx. Vs. 35 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

0

10000

20000

30000

40000

50000

60000

70000

80000

HongKong Singapore India

Source: Compendium of Tourism statistics, WTO

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Indian hotel industryIndian hotel industry

Current supply – appx. 110,000 rooms of which 5 Star category

accounts for appx. 30%

India needs an additional 50,000 rooms in the next 2/3 years to service

projected tourist arrivals

Present mismatch between supply and demand expected to persist over

the short term

As infrastructure for trade & commerce improves - growing potential

for leisure tourism

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Economic impact of the Travel & Tourism Sector

Full potential yet to be harnessed in the Indian context

% Share of World Travel & Tourism

Demand

Travel & Tourism Economy as %

of Total GDP

Travel & TourismEconomy Jobs as

% of TotalEmployment

WORLD 10.1 9.9 8.4South Asia 6.5 6.1 5.9India 6.5 6.1 6.4

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ITC’s Hotel BusinessITC’s Hotel Business ITC-Welcomgroup : a leading hotel chain in India

• Established presence in key business locations

• Over 6000 rooms under 4 distinct brands

Capacity expansion underway at Bangalore and Chennai; plans for other locations

also being progressed. Positions on land taken at other locations such as Hyderabad

and Ahmedabad

Fastest growing hotel chain with highest operating efficiency (PBDIT/Net Income

@ 45%) amongst the 3 leading chains

Leverages unique service proposition and international alliance with Starwood

Hotels & Resorts

• ‘Luxury Collection’ / ‘Sheraton’

Category Brand PositioningLuxury ITC Hotel: Luxury Collection "Mansions of Luxury"Upper upscale WelcomHotel: Sheraton "Passion for Quality"Upscale - mid-scale Fortune Hotels "Promise of True Value"Heritage WelcomHeritage "Unique Experiences"

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ITC’s Hotel Business

• Manages 24 full service mid-market properties (1700 +

rooms ) under the Fortune Hotels brand

– 100% subsidiary company : Fortune Park Hotels Ltd.

• Also operates 60 properties under the ‘WelcomHeritage’

brand in 19 states

– Maharaja Heritage Resorts Ltd. 50% JV with Marudhar

Hotels (P) Ltd.

• Business growth expected to be impacted by financial meltdown

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Paperboards, PaperPaperboards, Paper&&

PackagingPackaging

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Indian paperboard marketIndian paperboard market

Annual paperboard demand – appx. 1.1 million tonnes

Fragmented capacity & obsolete technology

Low per capita usage at around 6 kgs p.a. (world average – over 50

kgs p.a.)

Indian paperboard market growing at 10% p.a.

Value Added Coated board - the fastest growing segment (20% p.a.) in

India driven by the growing sophistication of the consumer

Value added paper market growing at 10%-19%

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Paperboard Demand Projections - Asia

Asian region demand (excluding Japan) growing by 0.5

million tonnes per annum

Significant export opportunities for high quality Indian

manufacturers

• ITC paperboards exports - Rs. 2 billion appx.

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ITC’s Paperboards Business

Market leader in growth segment - value added coated boards

World-class contemporary technology

• Ozone bleached Pulp Mill operations commenced – 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

nearly 84,000 hectares

Fully integrated operations with in-house pulping capacity at appx.

2.20 lac MT

• Expansion completed; source of sustainable competitive advantage

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

Capacity expansion projects installed

• 120000 TPA Pulp Mill – commissioning commenced; being stabilised

• 100000 TPA paper machine (to support Stationery business growth plans)

– production commenced. under stabilization stage (normal stabilization

period is 6-9 months)

Results impacted by sharp increases in input prices

ITC’s packaging SBU -India’s largest converter of paperboard into high

quality printed packaging

• Leading supplier to Indian FMCG and Consumer Electronic segments

• Provides superior packaging solutions to the cigarettes and new FMCG

businesses

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Agri BusinessesAgri Businesses- - Leaf TobaccoLeaf Tobacco

- Agri Commodities- Agri Commodities

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Indian Leaf Tobacco industryIndian Leaf Tobacco industry

India – the third largest producer of tobacco

However, 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.

Captured significant incremental volumes as well as margins

Pioneering cultivation of flavourful Flue-cured, superior Burley and

Oriental tobaccos in India

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ITC’s Agri Commodity Business

Farm linkages in 14 states covering Soya, Wheat, Rice, Marine products,

Coffee etc.

Unique CRM programme in commodity exports

Leveraging IT for the transformational ‘e-Choupal’ initiative

Rural India’s largest Internet-based intervention

Over 38000 villages linked through around 6400 e-Choupals servicing

over 3.5 million farmers

Distinctive sourcing capability for ITC’s Foods business

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e-choupal:Strategic Thruste-choupal:Strategic Thrust

Procurement: cost & quality optimisation

• strategic sourcing support to the Foods business (support creation of verticals in wheat, soya, corn, potato etc.)

• cost-effective sourcing for exports/domestic external business

Rural Distribution

• ‘last mile connectivity’: 100 partnering companies

• diverse range of goods/services : FMCG, consumer durables,agri-inputs, paid extension services etc.

Financial Services

• insurance (focus: weather)

• credit (focus: Kisan credit card scheme)

Rural retail• 23 Choupal Saagars operational

• Rapid expansion planned in identified rural markets and Tier 2, 3 & 4 towns

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Future Growth & Value Capture

New FMCG Initiatives

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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 outsourced

• Contributing to the competitiveness of SMEs

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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

5 chosen categories: Staples

– Aashirvaad Atta, Salt, Spices Biscuits

– Sunfeast Salty Snacks

– Potato chips, Bridge products : Bingo! Confectionery

– Candyman, Mint-o Ready to Eat

– Kitchens of India (Ready to Eat, Conserves & Chutneys and Frozen Foods), Aashirvaad (Instant Mixes & Cooking Pastes, Sunfeast Pasta

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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

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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 (> 50) and

multi-branded outlets/ large format retail stores across the country

Product and brand range being expanded

• Designer association with leading Indian designers – ‘Wills Signature’ line

• Premium segment comprising the ‘Classic’ range of formal wear, ‘Wills Sport’

relaxed wear and ‘Wills Clublife’ evening wear

• Strong distribution network in place for the mid-market brand ‘John Players’

• Trendy women’s wear brand ‘Miss Players’

• Wills Lifestyle rated amongst the top 5 Luxury brands in the country in a Global

Luxury Survey conducted by TIME Magazine

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FMCG Business InitiativesEducation & Stationery Products Business

Leverages print and paper know-how. Forward linkages with new paper

capacity (already commissioned).

An emerging (currently Rs 9000 cr stationery) market in India - growth

driven by increasing cross-cultural exposure

Mostly commoditized. Offers opportunity for branding

Robust distribution network in place to scale up the Stationery business

significantly

• ‘Classmate’ brand already the most widely distributed brand in India

• Scholastic products launched

Serves to expand the width of ITC’s FMCG distribution capability with

negligible incremental investment

Comprehensive portfolio approach with new variant/category launches

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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

Mass market moving from .50 p price point to Re 1.00

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 31/03/08: 96.82%)

• Key brands: Homelites, Ship, Cheetah Fight etc.

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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

point

Support cottage sector with complementary marketing strengths

‘Mangaldeep’ : the only National brand in the country

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FMCG Business InitiativesPersonal Care Products

Current industry consumer spend estimated at over Rs. 21000 crores

p.a. (growing at 12%)

Brand wise Highlights

– Essenza Di Wills (Super Premium) – Portfolio’s premium imagery augmented with launch of ‘Aqua’ for men in fine fragrances and grooming range

– Fiama Di Wills (Premium) – Launched with Shampoos/Soaps/Shower Gels/Conditioners

– Vivel Di Wills and Vivel (Mid) – Soaps and Shampoos

– Superia (Popular) – Soaps and Shampoos

Products well received in the market, rapidly gaining customer acceptance

Supported by investments in brands – celebrity endorsements

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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

SMIS system for efficient supply chain management of FMCG

products

… hosted on ITC’s Virtual Private Network

ITC awarded the best IT user in FMCG category by Nasscom

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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

Education

Stationery

Matches &

Agarbattis

Personal Care

Products

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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.

Documents

ITC Corporate Presentation