ITC

ITC is one of India's foremost private sector companies with a market capitalisation of more than US $ 10 billion and a turnover of US $ 3 billion. Rated among the World's Best Big Companies by Forbes magazine, ITC ranks third in pre-tax profit among India's private sector corporations. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Branded Apparel, Greeting Cards and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.

As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practises this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 2 billion in the last decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Limited, is aggressively pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services and business process outsourcing.

ITC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management systems. ITC was the first company in India to be rated for Corporate Governance by ICRA, an associate of Moody's Investors Service, which accorded it the second highest rating, signifying "a high level of assurance on the quality of corporate governance."

ITC employs over 20,000 people at more than 60 locations across India. Ranked among India's most valuable companies by the 'Business Today' magazine, ITC continuously endeavors to enhance its wealth generating capabilities in a globalising environment to consistently reward more than 4, 00, 932 shareholders, fulfil the aspirations of its stakeholders and meet societal expectations. This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. For the nation. For the Shareholder."

ITC’s core businesses, products and brands

  1    FMCG

CigarettesBrands include Insignia, India Kings, Classic, Gold Flake, Capstan, Berkeley, Bristol, Navy Cut and Scissors

Branded Packaged Foods Staples (‘Aashirvaad’ atta, ‘Aashirvaad’ salt), Confectionery (‘Mint-o’, ‘Candyman’), Snack Foods and Biscuits (‘Sunfeast’) and Ready-to-Eat Meals (‘Aashirvaad’ and ‘Kitchens of India’)

Lifestyle Retailing‘Wills Classic’ formal wear, ‘Wills Clublife’ premium evening wear, ‘Wills Sport’ relaxed wear. ‘John Players’ range of men’s wear in the mid-priced segment

Greeting, Gifting and Stationery‘Expressions’ Greeting Cards, ‘Paperkraft’ range of gift wrappers, autograph books and slam books and the ‘Classmate’ range of notebooks

Safety Matches and Agarbattis‘Spriha’ and ‘Mangaldeep’ agarbattis, and Safety Matches brands ‘Mangaldeep’, ‘iKnow’, ‘VaxLit’, and ‘Aim’. These products are sourced from Small & Medium Enterprises (SMEs)

  2    Hotels

The ITC Welcomgroup chain in the premium segment and the WelcomHeritage and Fortune Brands in the resort and mid-priced full service segments.

  3    Paperboards, Specialty Papers and Packaging

Value-added paperboards for the FMCG, foods and pharmaceutical industries. Brands include ‘Safire Graphik’, ‘Pearl Graphik’, ‘Cyber

XLPac’ and ‘Indolux’.Packaging products and solutions for the cigarette, liquor, food, beverage and personal products industries.

  4    Agri Business

Sourcing and export of agri produce.Processing and export of cigarette tobaccos.Rural distribution & retailing.

The e-choupal initiative

It is a business model specifically designed for the companies International Business Division, aimed at improving the life of farmers, bringing the company closer to them, eliminate the middlemen from the trading of agricultural products and improve efficiencies all along the chain. It is an internet-enabled one that is knowledge-based and customer focused. The concept was first launched in a village in Madhya Pradesh called Misrod. The front-end of the e-choupal at Misrod was an internet kiosk that enabled the village’s populace access the back-end, a portal soyachoupal.com that provided farmers with information on agricultural inputs, best practices in soyabean farming, the market price, and the weather apart from serving as a trading platform. The approach was to separate the flow of information in the commodities chain, from that of the products. Middlemen typically controlled both. In the e-choupal model, the internet takes care of the information bit: the International Business Division appoints a local farmer sanchalak (conductor in Hindi) to serve as an interface between the computer and other farmers. He gets a commission of 0.5 per cent on the produce sold. And rather than appoint someone aggregate, store and transport the produce, the idea is to use the existing middlemen rendered that much powerless by the fact that they no longer controlled the flow of information.

The e-choupals have helped ITC’s IBD improve the quality of products it sources and reduce costs (on soyabean it saves Rs 250 a tonne). In the business of agricultural commodities, where margins can often be as slim as 1 per cent, that’s a lot. Today, 60 companies, including the likes of Nagarjuna Fertilizers, Monsanto, Eicher, BPCL, TVS Motor, Hero Cycles, LIC and ICICI Prudential sell their products through the e-choupal network: ITC earns a commission of anything between 3 per cent and 40 per cent on these. ITC expects the e-choupals network would cover 1 lakh villages by 2010- to bring in more revenues than the cigarette business by the end of the decade.

Today, ITC has 3,000 e-choupals connecting 18,000 villages across Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Karnataka, and Maharashtra. Apart from soyachoupal.com, there are three more portals, plantersnet.com (for coffee traders in Karnataka; site available in English and Kannada), e-choupal.com (wheat farmers; Uttar Pradesh; English and Hindi) and aquachoupal.com (shrimp farmers; Andhra Pradesh; English and Telugu). The company has spent around Rs 60 crore on the initiative.

ITC has become the first Indian company and the second in the world to win the prestigious Development Gateway Award. It won the $100,000 Award for the year 2005 for its trailblazing ITC e-Choupal initiative which has achieved the scale of a movement in rural India. The Development Gateway Award recognizes ITC's e-Choupal as the most exemplary contribution in the field of Information and Communication Technologies (ICT) for development during the last 10 years. ITC e-Choupal won the Award for the importance of its contribution to development priorities like poverty reduction, its scale and replicability, sustainability and transparency. As the largest Information Technology (IT)-based corporate initiative in rural India, ITC e-Choupal was chosen from 135 nominations from across the world.

ITC e-Choupal today reaches out to and empowers over 3.5 million farmers over 31,000 villages by enabling them to readily access crop-specific, customised and comprehensive information in their local language. Vernacular websites relating to each agricultural crop that ITC deals in, created by the Company, provide real-time information to even the smallest marginal farmers on the prevailing Indian and international prices and price trends for their crop, expert knowledge on best farming practices, and micro-level weather forecast. This significantly improves the farmer's decision-making ability, thereby helping him better align his agricultural produce to market demand, ensure better quality, productivity and improved price discovery.

ITC's e-Choupal model helps aggregate demand by creating a virtual producers' co-operative, thus facilitating access to higher quality farm inputs at lower costs for the farmer. ITC e-Choupal also creates a direct marketing and fulfilment channel for rural India, eliminating intermediation and multiple handling, thus significantly reducing transaction costs and improving logistical efficiency.

ITC e-Choupal plans to launch educational services through the network in the coming months. ITC e-Choupal has also recently commenced a pilot project for providing rural health services in partnership with one of the leading private health service providers. Over the next decade, the ITC e-Choupal network aims to cover over 100,000 Indian villages, representing 1/6th of rural India, and create more than 10 million e-farmers.

For additional information on ITC please visit ‘www.itcportal.com’. Read the Sustainability Report for a much detailed and exhaustive information about the company.

________________________________________________________________________Submitted by-Dheeraj K. SinghReg. No. 155/42