Understanding The Business Environment Itc Marketing Essay

ITC was incorporated on august 24, 1910 under imperial tobacco company of India limited. Further the company name was changed to India Tobacco Company limited from imperial tobacco company of India limited in 1974. In recognition of the company multi-business portfolio prising of wide range of businesses- cigarettes and tobacco, information technology, hotels, packaging, speciality paper and paperboards, agriculture business, food, apparel, education and stationery, and personal care- the full stop in the company’s name were effectively removed on September 18, 2001. The company now stands for ‘ITC LIMITED’

GROWTH TIME LINE OF ITC:

Established by UK based tobacco major bat.

1910, company registered with the name imperial tobacco company of india limited

July, Indian leaf tobacco company(ILTC)

late 1960’s, GOI pressured MNC to reduce holding

Though imperial clearly dominated cigarette business decided to reduce to reduce its dependence and so diversified.

1971, marine product export division

1974, company changed its name to ITC ltd.

1977,textile industry

1977, bhadrachalam paperboards

1981, cement business

1986, ITC hotels

1994, consultancy from Mckinsey & co. To study

2000, ITC packaging & printing- ‘expression’

2000, lifestyle retailing business division

ITC has diversified itself from a leading cigarette manufacturer to an umbrella group that has diversified product mix to enhance its brand image and reduce. Diversification from ITC is a corporate strategy aiming to create multiple drivers of growth which help to derisk from one business and provide stability. Entering into the business is expected to garner a significant share of this emerging high growth.

FMCG: the goods which are used very frequently by consumer over a very short period of time (days, week, months or with the year).

FMCG sector of India going through the great change in last few years. Every day a new company is coming into the market. Many external factors are affecting the existing brand and new brand. The FMCG business based upon the high volume sales because the profit margin for FMCG is very low. The competition in this sector is very high its contribution is about 8000 crores. This sector is also one of the largest sectors in the economy.

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THE PRESENCE OF ITC IN FMCG

CIGARETTES: GOLD FLAKE, Navy Cut, Insignia, India Kings, Classic (Verve, Rush, Regular, Mild & Ultra Mild, Silk Cut, Scissors, Capstan, Berkeley, Bristol, Lucky Strike and Flake.

Foods: Kitchens of India; Ashirvaad; Minto; Sunfeast; Candyman; Bingo brands in Ready to Eat, Staples, Biscuits, Confectionery and Snack Foods

Apparel: Wills Lifestyle and John Players brands

Personal care: Fiama di Wills; Vivel; Essenza di Wills; Superia; Vivel brands of products in perfumes, hair care and skincare

Stationery: Classmate and Paperkraft brands

Safety Matches and Agarbattis; Aim brands & Mangaldeep.

INCOME GENERATED FROM FMCG

Total Revenue OF ITC: `26,259.60 crores (2010)

FMCG Revenue: ` 20,924.71 crores (2010)

FMCG-Cigarettes: `17,283.03 crores

FMCG-Others: `3,641.68 crores.

Turnover: US $6 billion

Market Capitalization: US $ 22 billion

CAGR: FMCG (Others) clocked 38% in the last 5 years.

Employees: 26,150 (2009)

INFLATION RATE : 9.70 ON OCTOBER 2010

SUSTAINABLE DEVELOPMENT OF ITC

ITC DIVERSIFYING IN VARIOUS OTHER SECTORS WHICH HELP THEM TO DRIVE its GROWTH BY ENGAGING THEM SELF INTO THE FMCG, PAPERBOARD AND PACKAGING, AGRICULTURE, HOTELS AND INFORMATION TECHNOLOGY.

THE TOTAL TURNOVER IS NEARLY ABOUT US$ 6 BILLION AND THE MARKET CAPITALISATION IS NEARLY ABOUT US$ 30 BILLION.

CHALLENGES FOR ITC IN FMCG

ITC HAS EXPANDING ITS FMCG PORTFOLIO BY CONSTANTLY DEVELOPING NEW BUSINESSESG. FMCG REVENUE HAS GROWN AT AN IMPRESSIVE RATE OF 38% IN THE LAST 5 YEARS. ITC IS STRENGHTING ITS POSITION IN FMCG INDUSTRY.

CIGRATTES CONTRIBUTE 15% OF TOTAL TOBACCO CONSUMPTION WHICH CONTRIBUTES 85% TAX WHICH IS 35 TIMES HIGHER THAN THE OTHER FORM OF TOBACO.

MARKET LEADER IN CIGRETTES IN INDIA.

ITC PROVIDES BRANDED FOOD PACKAGING WHICH INCLUDES STAPLES, BISCUITS, SNACK FOOD, CONFECTIONERY AND READY TO EAT MEALS, WITH MOE THAN 170 DISTINCT PRODUCTS UNDER 6 BRANDS.

ITC IS ALSO IN THE BRANDED APPEAEL MARKET, ‘WILLS LIFE STYLE ‘.

COMPANY IS ALSO IN INCENSE STICKS, SAFTY MATCH STICKS, EDUCATION, STATIONARY AND PRODUCT BUSINESS AND PERSONAL CARE PRODUCTS.

REASONS FOR DIVERSIFICATION:

ITC IS THE MARKET LEADER IN TOBACCO BUSINESS, THE COMPANY REALIZE FROM UPCOMMING BUSINESS TREND THAT REMAING IN A SINGLE BUISINESS IS NOT A REAT THOUGHT; MOREOVER THAT COMPANY WAS TREATENED OF ANTI- TOBACCO CAMPAIGN. THEN COMPANY DECIDED TO ENTER INTO THE NEW BUSINESS OF INFO TECH WITH ITC INFO TECH, IN FOOD BUSINESS VIA KITCHENS OF INDIA, GREETING CARD THROUGH EXPRESSION AND APPAREL THROUGH WILLS SPORT.ITC WAS CASH RICH COMPANY WITH A LOQUIDITY OF RS. 8816 MILLION IN THE CIGARETTE BUSINESS, THIS HAS BEEN DONE IN VERY SIGNIFICANT MANNER. OPERATION SYNERGY CAN BE REALIZED BY THE ITC THET UTILIZING the unutilised organization resources to other areas can create value for the company. Making profitable investments by using cash from main businesses of tobacco.

POLITICAL FACTOR

In 2001 government of India has banned on advertising by cigarettes companies.

EXCISED DUTY HAS BEEN INCREASED BY GOVERNMENT OF INDIA WHICH AFFECTS IN DECREASE IN PROFIT.

ECONOMICAL FACTOR

The portfolio of ITC consists of FMCG, Paperboards & Packaging, Agriculture & Foods Business, Hotels and Information Technology.

A turnover of over US $ 5 billion and a market capitalization of over US$ 18 billion.

Total Shareholder Returns, measured in terms of increase in market capitalization and dividends, grew at a compound rate of over 24% per annum over the last 5 years.

The new FMCG businesses support the competitiveness, technology up gradation and market reach of over 170 Small and Medium Enterprises (SMEs).

SOCIAL FACTOR

29000 people were directly employed by ITC.

Itc helps to generate livelihood for approximately 5 million people.

Over 4 million farmers are benefitted by itc globally recognised initiative of e- CHOUPAL over 40000 villages which is the world largest rural digital infrastructure programme.

ITC sustainable community development initiative includes women’s empowerment, supplementary education programme.

TECHNOLOGICAL FACTOR:

Wholly own subsidiary named “ITC INFOTECH”.

It is also one of India’s fastest growing it service providers.

Itc info tech provides its services in more than 140 countries.

To sustain its leadership in tobacco company invested 1000 crores.

To compete with current market itc has invested huge amount on technology up gradation.

Fmcg market requires huge investment in technology because to achieve economies of scale and have better quality of product against competitor.

ENVIRONMENTAL FACTOR:

Itc is also taking care of our environment with its initiative of social and farm forestry which has greened 107000 hectares, and also with this initiative they are providing employment to 48 million persons – days of employment.

In another programme known as watershed development initiative which brings water to over 5400 hectares of dryland.

Itc storing co2 which is twice of the amount that company emits.

For eight consecutive years company is saving three times more water than its net consumption.

31% of total energy consumed is from renewable sources.

Itc royal gardenia and itc green centre are two of the world largest leed platinum rated green building.

Itc paper and packaging industry harms our ecological system, because paper is made up of tree.

Financial Results for the Quarter ended 30th September, 2010

Boston consulting group ranked 6th to ITC for its sustained value creation during 2005/2009.

The non-cigarette Fmcg business of ITC has grown by 37% which is 421rs crores in September 2010 as compared to 307 crores in September 2009.

A very healthy performance by non cigarette Fmcg business. The revenue increased by 22.2% which shown an improved profitability in the branded packaged food business.

‘Sunfeast yippee’ noodles has launched into selected market in two flavours.

The agriculture business shown a very high growth of 21.5% in its revenue which is of soya and wheat.

Recently huge amount of investment in paper and pulp capacities and superior product mix continues drive margin extension.

ITC completed its century of successful business life in august 24th 2010.

GUIDED BY: Prof. ASHISH SURI SUBMITTED BY: PANKAJ KUMAR YADAV