ITC Limited

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

Vision & Mission statements

• 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.

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

ITC - Business Portfolio

ITC

FMCG: CigarettesOther FMCG

Hotels

Agri BusinessLeaf TobaccoAgri Commodities

PaperboardPaper &Packaging

ITC’s Cigarettes BusinessMarket leadership

Powerful brands across segmentsLeadership in all segments - geographic &

priceExtensive 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

Bidi : 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

The BCG Matrix for ITC Ltd.Stars•Hotels•Paperboards/ Packaging.•Agri business.

?•FMCG- Others

Cows•FMCG-Cigarettes

Dogs •Maybe ITC Infotech.

COMPETITORS

In India, three major cigarette players dominate the market, primarily ITC with 72% market share, Godfrey Phillips with 12% and VST with 8% share of the market.

Supply Chain Evolution Two hundred years ago, giant mechanical machines

replaced labor to complete tasks in large factories. Railroads, electricity and new communications mediums expanded markets and also made supply chains better, faster, and cheaper.

In the early 1900s, Henry Ford created the first moving assembly line, utilizing scientific management methods. This reduced the time required to build a Model T from 728 hours to 1.5 hours, and ushered in the mass production era.

But in the 1970s, U.S. manufacturing’s superiority was challenged by lower costs and higher quality products from foreign firms in many industries.

Starting in the early 1970s, Japanese manufacturers like Toyota changed the rules of production from mass to lean. Lean manufacturing focuses on flexibility and quality more than on efficiency and quantity.

04/08/2023 10

“..Supply Chain Management is Getting the right things to the right places at the right times, for profit ..”

New information and

communications

technologies have

revolutionized today’s supply

chains, making them

extraordinarily better, faster,

and cheaper04/08/2023 11

Components of supply chain

The supply chain has basically four components:

Production: where businesses focus on how much to produce, where to produce it, and what suppliers to use.

Inventory: where businesses decide where to store their products, and how much to store.

Distribution: where businesses address questions about how their products should be moved and stored.

Payments: where businesses look for the best ways to pay suppliers and get paid by customers.

The efficiency and effectiveness of a supply chain is contingent on the ability

to gather and analyze important information through these components

04/08/2023 12

Indian Tobacco Division of ITC Ltd.

Supply Chain Management

04/08/2023 13

About the Company…

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, Munger04/08/2023 14

Contd…It has 3 contract manufacturers (OCMs)

Reliable Cigarette and Tobacco

Industries Private 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

04/08/2023 15

ITD’s Supply Chain (Before IT implementation)

Cigarette manufacturing process involves processing

of tobacco leaf and stem to different tobacco blends,

which is called cut tobacco

Cut tobacco is then converted to cigarettes using

other raw materials for making cigarettes and

packing them in various forms as per the trading

requirements

ITD receives various grades of Tobacco Leaf and

Stem from Indian Leaf Tobacco Division (ILTD)

based mainly in Guntur, Andhra Pradesh04/08/2023 16

Contd…

Processed to form tobacco blends at one of the

three Tobacco Processing Units at Bangalore,

Saharanpur and Munger.

Tobacco Processing Unit is called PMD or Primary

Manufacturing Division.

The cut tobacco is then sent to the Secondary

Manufacturing Division (SMD) for making and

packing cigarettes

04/08/2023 17

Contd…Three OCMs and Kidderpore factory don’t have in-house

PMD, and are supplied with tobacco from one of the three

ITD PMDs

Rest of the raw material (WMS) required for making or

packing cigarettes is provided to all factories from

various WMS suppliers, most of which are part of ITC Ltd

At SMD, there are two processes: Making and Packing

Making process is the rolling of cigarette sticks

Packing process is packing of these cigarette sticks in

the cigarette packets of various pack styles. 04/08/2023 18

Contd..

Cigarettes are categorized in different segments

based on filter or non-filter type, cigarette length,

circumference, pack style, filter length and

cigarette placement. Under each segment there

are various brands.

Finished Good (Cigarettes) are supplied from the

factories to godowns using mainly road and rail

transportation. From marketing godowns, the FG

flows to wholesale distributors and from there on

to retail channel. Requirement for each warehouse

is expressed brand-wise

04/08/2023 19

ITD Supply Chain Network

04/08/2023 20

Raw materials, intermediates and the final product

sourcing/distribution in widespread across the

country

Few items have more than 1 supplier for the raw

material e.g. filter rods can be sourced from either

Mumbai, Bangalore or Devas in MP

Huge supply-demand network for cigarette

business, which must operate in the cost optimal

way to maximize the profits

Few segments are particular to factories e.g

Kingsize cigarettes are made only at Saharanpur

and Bangalore and supplied to the entire country

2104/08/2023

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