ITC-Corporate-Presentation.pdf
52
ITC Limited One of India’s Most Admired and Valuable Companies
-
Upload
arun-mathews-jacob -
Category
Documents
-
view
214 -
download
0
Transcript of ITC-Corporate-Presentation.pdf
ITC LimitedOne of India’s Most Admired and Valuable Companies
2
A Profile
India’s most Admired and Valuable company
- Market Capitalisation: over US$ 45 Billion
A USD 8 Billion enterprise by Revenue
- ~54% of Net Revenue from non-Cigarette segments
Leading Fast Moving Consumer Goods (FMCG) marketer in India
- Established several world-class brands in the last 10 years
10 year Value addition ~ Rs. 1.9 lakh crore (US$ 39 billion) with ~75% accruing to theExchequer
- Among the top tax payers in the nation (Private sector)
- Excise payments represent ~7% of India’s total Excise collection
Employs over 30,000 people directly; supports livelihoods of ~6 million people
An global exemplar in sustainable business practices
- Only Company in the world of comparable dimensions to have achieved the globalenvironmental distinction of being Carbon positive (9th Year), Water positive (12th Year) andSolid waste recycling positive (7th Year)
3
ITC Performance Track Record
Sensex (CAGR 95-96 to 13-14) : 11.1%
Rs. cr.
1995-96 2013-1418-yr Cagr
95-96 to 13-14
Net Revenue 2,536 32,883 15.3%
PBDIT 584 13,562 19.1%
PBIT 536 12,662 19.2%
PBT 452 12,659 20.3%
PAT 261 8,785 21.6%
Capital Employed 1,886 27,626 16.1%
ROCE % 28.4 45.8
Market Capitalisation 5,571 280708 24.3%
Total Shareholder Returns % 25.9
Market Cap and TSR based on FY-end prices
4
Consistent performance over 18 year, 10 year, 5 year and 3 year horizons
In terms of Revenue, Profits, TSR Vs. Sensex
Consistency of Performance
95-96 to
13-14
03-04 to
13-14
08-09 to
13-14
10-11 to
13-14
18 years 10 years 5 years 3 years
NTO 15.3% 17.7% 16.1% 15.8%
PAT 21.6% 18.6% 21.9% 20.8%
TSR 25.9% 28.7% 33.7% 26.4%
Sensex 11.1% 14.9% 18.2% 4.8%
CAGR
TSR and Sensex returns based on Mar-end of each FY
5
ITC’s rankingAmongst all listed private sector cos.
PBT: No. 7
PAT: No. 8
Market Capitalisation: No. 2
Note: Based on Published Results for Q2 FY15, Market Capitalisation based on 31st Dec 2014
6
ITC is the only Indian Company to be ranked
amongst the Top 10 global FMCG companies in
value creation during the period 2009-13
(Boston Consulting)
Also ranked amongst the Top 10 global FMCG companies by Boston Consulting Group in terms of value creation in the years 2009, 2010, 2011 and 2012.
The only Indian company to feature consistently amongst the Top 10 global FMCG companies
7
ITC ranked as the most admired company in India in 2014 (Fortune-Hay Groupsurvey)
One of the foremost in the private sector in terms of :
– Sustained value creation (BT-Stern Stewart survey)
– Operating profits
– Cash Profits
ITC was ranked 3rd among 40 leading companies in the Nielsen CorporateImage Monitor 2013-14, and amongst the top 5 most admired companies inIndia. Also a ‘Company most active in CSR’ for the third year in a row.
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
One of India’s most valuable and admired companies
8
Awards & Accolades (1)
Harvard Business Review rankedITC Chairman Y C Deveshwar asthe 7th Best Performing CEO inthe World
ITC conferredthe prestigious‘WorldBusiness andDevelopmentAward 2012’at the Rio+20UN Summit forits Social andFarm ForestryInitiatives
Chairman Y CDeveshwar wasconferred thePadma Bhushan bythe Government ofIndia (2011)
ITC Grand Chola,the world’s largestLEED Platinumrated hotel in theNew Constructioncategory, launchedin September 2012
9
Awards & Accolades (2)
Businessworld FICCI CSR award in Large Enterprise category
Best Overall CorporateSocial ResponsibilityPerformance : Instituteof Public Enterprise
AIM Asian CSR Award by the Asian Forum on Corporate Social Responsibility
Rainforest Allianceawarded ITC'sBhadrachalam Unit,the ForestStewardshipCouncil ForestManagementcertification
ITC Hotelsawarded the‘Most TrustedHotel brand’ inthe PublicChoice Honourscategory at theTimes TravelHonours
10
Accolades & Awards (3)
• e-Choupal initiative wins global recognition:– World Development Report 2008 published by World
Bank
– Stockholm Challenge Award 2006 in the EconomicDevelopment category which recognises initiatives thatleverage Information Technology to improve livingconditions and foster economic growth in all parts of theworld.
– First Indian Company and second in the world to win theDevelopment Gateway Award 2005 for its trail-blazing e-Choupal initiative
– Corporate Social Responsibility Award from The Energyand Resources Institute (TERI)
– World Business Award 2004: International Chamber ofCommerce & the HRH Prince of Wales & InternationalBusiness forum
– Harvard University case study
– Applauded by the then President of India Dr APJ Kalam inhis “special address during the national symposium tocommemorate 60th year of Independence”
12
ITC’s Vision
Make a significant and growing contribution towards :
• mitigating societal challenges
• enhancing shareholder rewards
By
• creating multiple drivers of growth while sustaining leadership in
tobacco, and
• focusing on Triple Bottom Line Performance
Enlarge contribution to the Nation’s
- Financial capital
- Environmental capital
- Social capital
13
Key Corporate Strategies
Focus on the chosen business portfolio
– FMCG; Hotels; Paperboards, Paper & Packaging; Agri Business, Information
Technology
Blend diverse core competencies residing in various businesses to enhance
the competitive power of the portfolio
Position each business to attain leadership on the strength of world class
standards in quality and costs
Craft appropriate strategy of organisation and governance process to :
– Enable focus on each business and
– Harness diversity of portfolio to create unique sources of competitive advantage
14
Strategy of Organisation
Strategic Supervision
Board of Directors
Corporate Management Committee
Strategic Management
Divisional Management Committees
Executive Management
Enabling Focus
Harnessing Diversity
15
ITC Business Portfolio
FMCG
Paperboards, Paper & Packaging
Hotels Agri BusinessInformation Technology
Cigarettes Personal CareFoods Lifestyle Retailing
Education & Stationery Safety Matches & Incense Sticks
16
ITC’s Cigarettes Business
Market leadership
− Leadership across all segments - geographic & price
Extensive FMCG distribution network
– Direct servicing of 1,00,000 markets & 2 million retail
outlets
State-of-the-art technology and world class products
17
Cigarette Industry in India
Legal cigarettes account for less than 12% of tobacco consumed in India due
to prolonged punitive taxation
48% of adult Indian males consume tobacco. Only 10% of adult Indian males
smoke cigarettes as compared to 16% who smoke biris and 33% who use
smokeless tobacco (Source: Global Adult Tobacco Survey India 2010)
Annual per capita adult cigarette consumption in India is appx. one ninth of
world average
18
Cigarette Industry in India
Cigarettes are taxed over 47 times as compared to other tobacco products
Legal Cigarettes
12%
Other Tobacco Products
88%
Cigarettes87%
Other Tobacco Products
13%
Consumption Share Tax Revenue Share
19
Per Capita Consumption of Tobacco in India (gms per year)
Source:World Cigarettes – ERC Statistics, Tob Board & Industry Estimates – gms/Yr
Per Capita consumption is ~60% of World Average
China USA Pakistan Nepal India World
11451256
438 461 468
743
Per Capita Cigarette Consumption – per annum
Source: The Tobacco Atlas - 4th Edition (American Cancer Society), 2012
Russian Federation Japan China USA Pakistan Nepal Bangladesh India
2786
18411711
1028
468 420
154 96
No. of cigarettes per capita per annum
• Although India accounts for 17% of world population, its share of world cigarette consumption is just 1.8%
• Per Capita consumption in India ~11% of World average
21
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
5631013
1704
25113014
3642
4482
5545
7012
8122
Rs. crs
Rapid scale up of FMCG businesses…
23
Branded Packaged Foods Portfolio
Biscuits, Staples, Snacks, Noodles & Pasta, Confectionery & Ready to Eat
24
Branded Packaged Foods: Some recent launches
• Branded Packaged Foods records further improvement in market standing during the quarter
25
Personal Care Products
Portfolio approach straddling all consumer segments with 4 umbrella brands
– Essenza Di Wills
– Fiama Di Wills
– Vivel
– Superia
Complemented by ‘Engage’ brand in the deodorants
segment
Products continue to receive encouraging consumer response; Engage deos well
received by its target consumers
Laboratoire Naturel – A state-of-the-art consumer and product interaction
centre – leveraged to launch unique and differentiated products
27
Education & Stationery Products Business
Leverages print and paper know-how to address suitable opportunities in
the stationery market.
Industry growth driven by increasing literacy and enhanced scale of
government and public-private initiatives in education
The Business continues to consolidate its market standing
– Classmate : Market leader in Notebooks segment
28
Lifestyle Retailing
Slowdown in discretionary consumption expenditure continues to impact the
branded apparel industry
Upmarket product range available in exclusive Wills Lifestyle stores (104) across 43
cities and more than 700 ‘shop-in-shops’ in leading departmental stores and multi-
brand outlets.
Strong distribution network in place for the mid-market brand ‘John Players’
– availability in more than 400 Exclusive Branded outlets, 1600 multi branded
outlets and departmental stores
30
Hotels & Tourism industry
Foreign Tourist Arrivals grew by 6% in Q3 Vs. 13% in Q2 and 6% in FY14
– Foreign Tourist Arrivals into India @ ~6.8 million remains far behind China (~55.7
million) [Source: UNWTO Tourism Highlights 2014 edition]
– Going forward, as economic condition and infrastructure improve, leisure tourismand business related travel is also projected to grow faster
o Foreign Tourist Arrivals into India is projected at ~11 million by 2021
Current Room inventory ~210,000 rooms of which 52,000 rooms are in theLuxury and Upper Upscale segment
India needs an additional ~60,000 rooms in Luxury and Upscale Segments inthe next 5 years to service projected tourist arrivals
31
The Chain: 98 properties across 71 locations
– 4 Brands – ITC Hotels, WelcomHotel, Fortune & WelcomHeritage
21 Five-Star Deluxe/ Five-Star Properties with over 4600 rooms
43 Fortune Hotels with over 3500 rooms
34 WelcomHeritage Properties with over 800 rooms
Industry impacted by weak pricing scenario due to the excessive room inventory and
sluggish economic conditions
ITC Grand Bharat, Manesar, a 104 ‘all suite’ resort opened on 14th November 2014
Projects underway at Kolkata and Hyderabad.
ITC Hotels
“Responsible Luxury” ethos weaved into the Brand Identity
ITC Hotels: World’s Greenest Luxury Hotel Chain
All ITC Luxury Hotels LEED Platinum certified
33
Paperboards & Packaging Business
• No. 1 in Size
• No. 1 in Profitability
• No. 1 in Environmental Performance
34
Indian Paperboard market
Annual paperboard demand over 2 million tonnes
Low per capita usage of paper at around 9 kgs p.a. (world average –over 55 kgs p.a.)
Indian paperboard market growing at 6% p.a.
Value-added Paperboards- the fastest growing segment (12% p.a.)in India driven by :
Increasing demand for branded packaged products
Rising Income table and growing consumer base
Increasing proliferation of organised retail
35
Market leader in growth segment – Value-Added Paperboards
World-class contemporary technology– Ozone bleached Pulp Mill fully operational – one of its kind in Asia meeting world-class
environmental standards– Fully integrated with in-house pulping capacity at ~3 lakh MT
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 approx. 181,800hectares
Newly commissioned 1 lakh MT per annum Paperboard machine running well
ITC’s packaging SBU - India’s largest converter of Paperboard into high quality printedpackaging
– Provides superior packaging solutions to the cigarettes and new FMCG businesses– Leading supplier to Indian FMCG industry– Fully integrated packaging unit at Haridwar operationalised and running well
ITC’s Paperboards, Paper & Packaging businesses
36
Agri Business
• No. 1 in Leaf Tobacco
• No. 2 in Agri commodities
• Pioneer in rural transformation
37
Indian Leaf Tobacco industry
India – the second largest producer of tobacco
However, India’s share is only at 8% of world tobacco trade
ITC – India’s largest buyer, processor, consumer & exporter of cigarettetobaccos– 5th largest leaf tobacco exporter in the world
Pioneering cultivation of flavourful Flue-cured and superior Burleytobaccos in India
Robust growth in exports in recent years with improvement in realizations
38
ITC’s Agri Commodity Business
Distinctive sourcing capability for ITC’s Foods businesses
Farm linkages in 17 States covering Wheat, Soya, Potato, Coffee etc.
Unique Customer Relationship Management programme for commodity customersin both domestic and international markets
Leveraging Information Technology for the transformational ‘e-Choupal’ initiative
– Rural India’s largest Internet-based intervention
– Over 35000 villages linked through around 6100 e-Choupals servicing around 4million farmers
e-Choupal: Strategic Thrust Procurement: cost & quality optimisation
– strategic sourcing support to the Foods business
– cost-effective sourcing for exports/domestic external business
Rural retail
– 24 Choupal Saagars operational
39
ITC - Key Financials – 2013/14
Rs. Cr.
2013-14 2012-13 Goly %
Gross Turnover 46713 41810 11.7
Net Turnover 32883 29606 11.1
PBDIT 13562 11566 17.3
PBIT 12662 10771 17.6
PBT 12659 10684 18.5
PAT 8785 7418 18.4
40
Segment Revenue - 2013/14
Rs. Cr.
2013-14 2012-13 %
Segment Revenue (Net)
a) FMCG - Cigarettes 15456 13970 10.6
- Others 8099 6983 16.0
Total FMCG 23555 20953 12.4
b) Hotels 1133 1074 5.5
c) Agri Business 7752 7201 7.7
d) Paperboards, Paper & Packaging 4861 4237 14.7
Total 37301 33464 11.5
Less : Inter segment revenue 4418 3859 14.5
Net sales / income from operations 32883 29606 11.1
Full YearGOLY(%)
41
Segment Results - 2013/14
Rs. Cr.
2013-14 2012-13
Segment Results
a) FMCG - Cigarettes 9858 8326 18.4
- Liab. no longer reqd. written 158 0
FMCG - Cigarettes 10016 8326 20.3
- Others 22 (81)
Total FMCG 10038 8245 21.7
b) Hotels 140 138 1.5
c) Agri Business 835 731 14.2
d) Paperboards, Paper & Packaging 892 964 (7.4)
Total 11905 10078 18.1
Less: i) Finance Costs 38 86 (56.4)
Liab. no longer reqd. written back (35) 0
Finance Costs 3 86 (96.6)
ii) Other Unallocable Exp/(Inc.) - Net (757) (693) 9.3
Profit Before Tax 12659 10684 18.5
Full YearGOLY(%)
42
Segment Capital Employed - 2013/14
Rs. Cr.
2013-14 2012-13
Capital Employed
a) FMCG - Cigarettes 5705 4953 15.2
- Others 3384 2532 33.6
Total FMCG 9089 7485 21.4
b) Hotels 3625 3460 4.8
c) Agri Business 2052 1257 63.3
d) Paperboards, Paper & Packaging 5319 4958 7.3
Total Segment Capital Employed 20086 17160 17.1
Full YearGOLY(%)
43
ITC - Key Financials – Q3 2014/15
` crs
Q3 14/15
Actual
Q3 13/14
ActualGoly %
Net Revenue 8800 8623 2.1
PBDIT 3464 3284 5.5
PBIT 3809 3449 10.4
PBT 3800 3440 10.5
PAT 2635 2385 10.5
Rs. Cr.
44
Segment Revenue – Q3 2014/15
` Crs.
Q22014-15 2014-15 2013-14
Segment Revenue (Net)
4251 a) FMCG - Cigarettes 4142 4116 0.6
2196 - Others 2314 2078 11.4
6447 Total FMCG 6456 6194 4.2
262 b) Hotels 330 315 4.7
2059 c) Agri Business 1598 1786 (10.6)
1284 d) Paperboards, Paper & Packaging 1199 1257 (4.7)
10051 Total 9583 9553 0.3
1121 Less : Inter segment revenue 783 930 (15.8)
8930 Net sales / income from operations 8800 8623 2.1
Q3GOLY(%)
Rs. Cr.
45
Segment Results – Q3 2014/15
` Crs.
Q2
2014-15 2014-15 2013-14
Segment Results
2882 a) FMCG - Cigarettes 2886 2653 8.8
(10) - Others 11 10 10.7
2872 Total FMCG 2898 2663 8.8
(10) b) Hotels 29 62 (53.8)
298 c) Agri Business 239 205 16.3
242 d) Paperboards, Paper & Packaging 214 232 (7.7)
3403 Total 3379 3162 6.9
18 Less: i) Finance Costs 8 9 (8.4)
(199) ii) Other Unallocable Exp/(Inc.) - Net (429) (287) 49.5
3583 Profit Before Tax 3800 3440 10.5
Q3GOLY(%)
Rs. Cr.
46
Segment Revenue – YTD Q3 2014/15
` Crs.
2014-15 2013-14
Segment Revenue (Net)
a) FMCG - Cigarettes 12594 11377 10.7
- Others 6445 5785 11.4
Total FMCG 19039 17162 10.9
b) Hotels 841 812 3.5
c) Agri Business 6953 5748 21.0
d) Paperboards, Paper & Packaging 3771 3599 4.8
Total 30603 27321 12.0
Less : Inter segment revenue 3708 3584 3.5
Net sales / income from operations 26895 23737 13.3
YTD Q3GOLY(%)
Rs. Cr.
47
Segment Results – YTD Q3 2014/15
– On a Underlying basis: Segment Profits Growth +13.7%, PBT +15.2%
` Crs.
2014-15 2013-14
Segment Results
a) FMCG - Cigarettes 8490 7306 16.2
- Liab. no longer reqd. written back - 158
FMCG - Cigarettes 8490 7464 13.7
- Others (14) (21) 32.1
Total FMCG 8476 7443 13.9
b) Hotels 7 80 (91.2)
c) Agri Business 740 689 7.3
d) Paperboards, Paper & Packaging 731 704 3.8
Total 9953 8916 11.6
Less: i) Finance Costs 42 28 48.7
Liab. no longer reqd. written back - (35)
Finance Costs 42 (7) NA
ii) Other Unallocable Exp/(Inc.) - Net (738) (514) 43.6
Profit Before Tax 10649 9436 12.9
YTD Q3GOLY(%)
Rs. Cr.
48
Segment Capital Employed – Q3 2014/15
` Crs.
2014-15 2013-14
Capital Employed
a) FMCG - Cigarettes 5888 5218 12.8
- Others 3681 3167 16.2
Total FMCG 9569 8386 14.1
b) Hotels 3733 3576 4.4
c) Agri Business 1807 1793 0.8
d) Paperboards, Paper & Packaging 5482 5184 5.7
Total Segment Capital Employed 20591 18939 8.7
YTD Q3GOLY(%)
Rs. Cr.
49
ITC’s Economic Contribution to the Nation
10 year Value addition ~ Rs. 1.9 lakh crore (US$ 39 billion)
– ~75% of value addition accrued to the Exchequer
• Among the top tax payers in the nation (Private sector)
• Excise payments represent ~ 7% of India’s total Excise collection
Foreign exchange earnings in the last 10 years: US$ 6 bln
– Of which agri exports constituted ~60%
50
Social Performance
Direct employment ITC Group : 30,000
Supported creation of 6 million sustainable livelihoods
e-choupal: world’s largest rural digital infrastructure serving around 4million farmers
Social and Farm forestry initiative has greened nearly 194,900hectares & provided over 73 million person-days of employmentamong tribals & marginal farmers
Significant thrust on social sector investments– Natural resource management– Sustainable livelihoods– Community development programmes in the economic vicinity of
operating locations
51
Environmental Performance
Carbon positive enterprise – 9 years in a row– Sequestering nearly twice the amount of CO2 that the
Company emits
Water positive - 12 years in a row– Creating twice the rainwater harvesting potential than
ITC’s net water consumption
Solid waste recycling positive – 7 years in a row
Over 38% of total energy consumed is fromrenewable sources
Only Company in the world of comparable dimensions to have achieved the global environmental distinction of being Carbon positive, Water positive and Solid
waste recycling positive
52
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. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. 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.
