itc limited
TRANSCRIPT
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
THANK YOU