ITC Limited

2

ACKNOWLEDGEMENT

I, Ms Priti Das, deem, it is a pleasure and privilege for me to work under the guidance of Mr

Raman Preet, Ex. Director of Pune Institute of business management. I would like to express

my gratitude and regards to him for rendering me her thoughtful and rational approach

regarding this project work, which enable me to complete it.

I would also like to thank our honourable Principal Director, Mr Kumar Iyer , honourable

Assistant Director, Mr Pranav Nagpurkar and my mentor, Mr David of Pune Institute of

business management , for offering me the proper environment, internet facilities and

overall administration which are very much suitable for my study and project work.

I would also render my thanks to all the faculty members for helping me to complete and

submit my project work.

Date: - ………………………

……………………………………

Place: - ……………………... PGDM, 2nd SEM

3

Table of Contents SECTORAL INFORMATION ...................................................................................................................... 5

Worldwide sectorial Contribution to the World Economy ............................................................... 5

GDP % Contribution to the Indian Economy ..................................................................................... 6

Historical Growth/Degrowth Pattern observed in the last 5 years .................................................. 7

Porter’s Five Forces Model................................................................................................................. 8

............................................................................................................................................................ 8

COMPANY INFORMATION ................................................................................................................... 10

Market Share of the company ......................................................................................................... 11

Competitor Analysis ......................................................................................................................... 11

Product/Services offered by the company ...................................................................................... 12

News (Last 6/12 month) incl. corporate announcement ................................................................ 13

SUNFEAST- AN OVER VIEW .................................................................................................................. 14

PRODUCT .............................................................................................................................................. 15

MARKETING STRATEGY ........................................................................................................................ 16

PEST analysis..................................................................................................................................... 16

SWOT analysis of company .............................................................................................................. 17

Segmentation, Target, Positioning .................................................................................................. 18

Comparison of sales of company for past 3 years .......................................................................... 18

BCG matrix ........................................................................................................................................ 19

Promotional strategy of the company............................................................................................. 20

Growth drivers.................................................................................................................................. 20

Consumer behaviour ........................................................................................................................ 22

Demography study survey of consumers. ....................................................................................... 22

Branding and positioning ................................................................................................................. 23

Packaging .......................................................................................................................................... 24

Advertising ........................................................................................................................................ 27

Promotion or communication strategy ........................................................................................... 31

.......................................................................................................................................................... 31

Rural Marketing vs. Urban Marketing ............................................................................................. 32

Channel / Distribution strategy ....................................................................................................... 33

Challenges faced in Marketing ......................................................................................................... 34

BUSINESS FINANCE ............................................................................................................................... 35

Gross Profit and Net Profit Margin of the company ....................................................................... 35

Direct and indirect costs of the company – change in comparison to previous year .................... 37

4

Fixed assets added during the year ................................................................................................. 38

Working Capital requirement for the year ...................................................................................... 39

Debt/Equity ratio of the company and its implications ................................................................. 39

Top line and bottom-line ................................................................................................................. 40

DuPont Analysis ................................................................................................................................ 41

HUMAN RESOURCE MANAGEMENT .................................................................................................... 42

Organization Structure ..................................................................................................................... 42

Analysis of JDs and Job Specifications posted by the company on online-job portals .................. 43

Training needs of the company ....................................................................................................... 44

Organization culture (as per employee reviews or research findings) .......................................... 45

CONCLUSION .................................................................................................................................... 47

BIBLIOGRAPHY .................................................................................................................................. 48

5

SECTORAL INFORMATION

Worldwide sectorial Contribution to the World Economy

India is a consumer driven market, with consumer spending in the country projected to more

than double by 2025. These days, the Indian consumer segment, broadly categorized into

urban and rural markets, is attracting marketers from across the globe.

Global corporations see India as a key market for the future. The growth in the country's

consumer market is largely driven by a young demographic and rising disposable income. If

India sustains its current pace of growth for the foreseeable future, average household

incomes will likely triple over the next twenty years and the country will become the world's

fifth largest consumer economy by 2025, as per a study by the McKinsey Global Institute

(MGI).

The Government of India has also played a significant role in the growth of the Indian

consumer segment. It has brought about policies which have attracted foreign direct

investment (FDI) and consequently boosted economic growth.

India has the potential to become the world's largest middle class consumer market with an

aggregated consumer spend of nearly US$ 13 trillion by 2030, as per a report by Deloitte

titled 'India matters: Winning in growth markets'.

Driven by growing incomes and increasing affordability, the consumer durables market is

projected to expand at a compound annual growth rate (CAGR) of 14.8 per cent, from US$

7.3 billion in FY12 to US$ 12.5 billion in FY15.

Online retailing, both direct and via marketplaces, will grow threefold to become an Rs

50,000 crore (US$ 8.26 billion) industry by 2016, driven by a 50-55 per cent per year growth

over the next three years, as per rating agency Crisil. The growth of internet retail is also

expected to boost offline retail stores.

https://www.cia.gov/library/publications/the-world-factbook

Agriculture 6%

Industry31%

Services63%

PERCENTAGE CONTRIBUTION

6

GDP % Contribution to the Indian Economy

The overall fast moving consumer goods (FMCG) market is expected to increase at a

compound annual growth rate (CAGR) of 14.7 per cent to touch US$ 120.4 billion in the

period 2015-2020, with the rural FMCG market anticipated to increase at a CAGR of 17.7

per cent to US$ 100 billion during 2015-2025.

The market size of the Indian FMCG sector is expected to reach US$ 135 billion by 2020

from US$ 82.9 billion in 2013. It is also the fourth largest sector in the Indian economy and

has grown at an annual average of about 11 per cent over the last decade. Food products, the

leading market segment with 43 per cent of the overall market revenue together with personal

care at 22 per cent make up two-thirds of the sector's revenue.

The Government of India's policies and regulatory frameworks such as relaxation of license

rules and approval of 51 per cent foreign direct investment (FDI) in multi-brand and 100 per

cent in single-brand retail are some of the major growth drivers in this sector. The

government has also amended the Sugarcane Control Order, 1966, and replaced the Statutory

Minimum Price (SMP) of sugarcane with Fair and Remunerative Price (FRP) and the State

Advised Price (SAP).

There is a lot of scope for growth in the FMCG sector from rural markets with consumption

expected to grow in these areas as penetration of brands increases. Also, with rising per

capita income, which is projected to expand at a CAGR of 7.8 per cent over the period 2015-

19, the FMCG sector is anticipated to witness some major growth.

http://www.tradingeconomics.com/india/gdp

7

https://www.cia.gov/library/publications/the-world-factbook

Historical Growth/Degrowth Pattern observed in the last 5 years

8

Porter’s Five Forces Model

Threat of New Entry

Threat of new entrants refers to the threat that the new competitors pose to existing market

players in the industry. Naturally, a profitable industry will attract more competitors who are

looking to achieve profits. If the entry barriers in the industry are low, it may pose a great

threat to the firms who are already competing in that market.

Bargaining power of the Supplier

Supplier power refers to the pressure that the suppliers can exert on businesses by raising

prices or lowering quality or reducing product availability. Strong suppliers can pressurize

the buyers by raising product prices or lowering product quality or reducing product

availability. All of these things directly costs to the buyer.

Bargaining power of the Buyer

It refers to the pressure that the buyers can exert on businesses to provide them higher quality

products, better customer service, and at lower prices. Strong buyers can make the industry

more competitive, thus decreasing the profit for the seller.

Competitive Rivalry

It is the extent to which the competitive firms within an industry can pressurize each other’s,

thus decreasing the profits. Fierce competition may lead to stealing of profits and market

share within the competitors

Threat of Substitution

It is the availability of a substitute product which the buyers can find instead of a core selling

product.

9

Porter’s Five Forces Model of ITC Dark Fantasy

Britannia, Parle

Bakery Items, Fast

foods, Ready-to-

eat

Premium products

are increasing in market

Oreo, PepsiCo

Inflation in sugar & wheat prices

10

COMPANY INFORMATION

Promoters of the Company and company snapshot

Type Public

Traded as

BSE: 500875

NSE: ITC

BSE SENSEX Constituent

CNX Nifty Constituent

Industry Conglomerate

Predecessor W.D. & H.O. Wills

Founded August 24, 1910

(as Imperial Tobacco Company of India)

Headquarters Kolkata, West Bengal, India

Key people Y C Deveshwar, (Chairman)

Products

Tobacco, hotels, paperboards & specialty papers, packaging, agri-

business, packaged foods & confectionery, IT, branded apparels,

personal care, stationery, safety matches and other FMCG products

Number of

employees 25,959 (Mar 2013)

Divisions ITC InfoTech, Surya Nepal Pvt Ltd.

Website www.itcportal.com

11

Market Share of the company

Competitor Analysis

Name Market share in %

ITC 35.92

HUL 33.66

Dabur India 5.85

Godrej Consumer 4.90

Colgate 4.29

Marico 4.42

Emami 2.04

P and G 2.46

Gillette India 2.10

Godrej India 1.74

Others 2.58

ITC36%

HUL34%

Dabur India6%

Godrej Consumer5%

Colgate4%

Marico4%

Emami2%

P and G2%

Gillette India2%

Godrej Ind2%

Others3%

12

Product/Services offered by the company

ITC's Branded Packaged Foods business is one of the fastest growing foods businesses in

India, driven by the market standing and consumer franchise of its popular brands -

Aashirvaad, Sunfeast, Bingo!, Yippee!, Kitchens of India, B Natural, mint-o, Candyman and

Gum On. The Foods business is today represented in multiple categories in the market -

Staples, Spices, Ready-to-Eat, Snack Foods, Bakery & Confectionery and the newly

introduced Juices & Beverages. ITC's uncompromising commitment to the health and safety

of its consumers ensures adherence to the highest levels of quality, safety and hygiene

standards in manufacturing processes and in the supply chain. The quality performance of all

manufacturing units is monitored continuously online. Going beyond process control, ITC

ensures that quality standards are scrupulously adhered to while choosing ingredients that go

into the preparation of its food products.

ITC's Foods brands delight millions of households with a wide range of differentiated, value-

added products developed by leveraging ITC's in-house R&D capabilities, relevant consumer

insights, a deep understanding of the Indian palate gained from its Hotels business, its agri-

sourcing & packaging strengths, exciting, innovative communication and an unmatched

distribution network.

The business continues to invest in every aspect of manufacturing, distribution and marketing

to ensure that it can leverage emerging opportunities and fulfil its aspiration of being the most

trusted provider of Branded Packaged Foods in the country.

13

News (Last 6/12 month) incl. corporate announcement

Century Textiles up 8% on demerger of cement, paper biz

Shares of Century Textiles and Industries climbed 8.4 percent intraday Wednesday on media

reports that company's textile & cement businesses may be demerged, and paper division

may be sold. India's largest cigarette maker ITC is in talks with Century Textile and

Industries Ltd to buy its paper division in a bid to diversify revenue to non-tobacco

businesses, said two sources directly involved in the deal. However, ITC told CNBC-TV18

that they are not looking at paper business of Century. In separate transactions, Century's

textile division will be merged with Aditya Birla Nuvo and the cement unit will be merged

with UltraTech Cement, as part of the company's restructuring, the sources said. The sources

declined to be named as the deal talks were not public yet. A spokeswoman for Aditya Birla

group declined to comment and a spokesman for ITC did not immediately reply to Reuters

request for comment. Century Textile's officials were not immediately reachable. Axis

Capital spokeswoman did not immediately offered comments. At 11:25 hours IST, the scrip

of Century Textiles and Industries was quoting at Rs 754.75, up Rs 40, or 5.60 percent while

UltraTech Cement rose 1.53 percent to Rs 2,797.50 and Aditya Birla Nuvo jumped 2.5

percent to Rs 1,653.50 on the Bombay Stock Exchange.

ITC in talks to buy Century's paper business

ITC Ltd , India's largest cigarette maker, is in talks with Century Textile and Industries Ltd to

buy its paper division in a bid to diversify revenue to non-tobacco businesses, said two

sources directly involved in the deal. In separate transactions, Century's textile division will

be merged with Aditya Birla Nuvo Ltd and the cement unit will be merged with UltraTech

Cement Ltd, as part of the company's restructuring, the sources said. The sources declined to

be named as the deal talks were not public yet. Axis Bank is advising Century Textile on the

restructuring process, the sources said. A spokeswoman for Aditya Birla group declined to

comment and a spokesman for ITC did not immediately reply to Reuters request for

comment. Century Textile's officials were not immediately reachable. Axis Capital

spokeswoman did not immediately offered comments. Axis Bank stock price On April 23,

2015, at 12:59 hrs. Axis Bank was quoting at Rs 537.95, down Rs 2.4, or 0.44 percent. The

52-week high of the share was Rs 655.35 and the 52-week low was Rs 298.87. The

company's trailing 12-month (TTM) EPS was at Rs 29.59 per share as per the quarter ended

December 2014. The stock's price-to-earnings (P/E) ratio was 18.18. The latest book value of

the company is Rs 161.16 per share. At current value, the price-to-book value of the company

is 3.34.

Hold ITC; may touch Rs 425, says Gaurang Shah

Gaurang Shah of Geojit BNP Paribas Financial Services told CNBC-TV18, "The disclosure

is we have personal coverage on ITC. The only problem in the recent time has been the anti-

tobacco approach by various state governments as well as the government at the center and

the increase in duties which impact the tobacco business vertical of ITC which by default is

the largest contributor to the top line and bottom-line." He further added, "We should see the

stock heading towards Rs 425 from a longer timeframe horizon – that’s about one year plus.

There is also a trigger about the cigarettes business getting hived off and getting listed as

separate entity, so that the negative impact of the cigarette business does fall on the other

business that ITC has plus they have recently invested into new business verticals which will

translate into positivity over longer period of time.

14

SUNFEAST- AN OVER VIEW

Sun “mascot - The brand ambassador reinforcing the positioning of the brand with an essence

“Spread the Smile”

"Sunfeast" - The umbrella brand name introduced in the Glucose, Marie and Cream

segments

“Sunfeast” - To be launched nationally in phases in over one million retail outlets across the

country. “

“Sunfeast" range of biscuits is competitively priced and would include two new product

innovations - Orange flavored Marie and Butterscotch flavored Cream biscuits

15

PRODUCT

A sub brand of ITC Sunfeast. Launched in 2005 as a premium biscuit brand which was a new

trend in Indian market. Acquired the status of a standalone brand, introduced with a tagline

"Pure Indulgence “, later launched with the tagline to “Escape into One “

• Available in 5 variants

• Dark Fantasy chocolate

• Dark Fantasy vanilla

• Choco fills launched in 2011

• Choco Meltz in 2013

16

MARKETING STRATEGY PEST analysis

17

SWOT analysis of company

ITC is one of India’s biggest and best-known private sector companies. In fact it is one of the

World’s most high profile consumer operations.

. Its businesses and brands are focused almost entirely on the Indian markets, and despite

being most well-known for its tobacco brands such as Gold Flake, the business is now

diversifying into new FMCG (Fast Moving Consumer Goods) brands in a number of market

sectors

Strengths

ITC leveraged it traditional businesses to develop new brands for new segments. For

example, ITC used its experience of transporting and distributing tobacco products to remote

and distant parts of India to the advantage of its FMCG products. ITC master chefs from its

hotel chain are often asked to develop new food concepts for its FMCG business.

ITC is a diversified company trading in a number of business sectors including cigarettes,

hotels, paper, agriculture, packaged foods and confectionary, branded apparel, personal care,

greetings cards, Information Technology, safety matches, incense sticks and stationery.

Weaknesses

The company’s original business was traded in tobacco. ITC stands for Imperial Tobacco

Company of India Limited. It is interesting that a business that is now so involved in

branding continues to use its original name, despite the negative connection of tobacco with

poor health and premature death.

Opportunities

Core brands such as Aashirvaad, Mint-o, and Bingo! And Sun Feast (and others) can be

developed using strategies of market development, product development and marketing

penetration. ITC is moving into new and emerging sectors including Information

Technology, supporting business solutions.

Per capita consumption of personal care products in India is the lowest in the world offering

an opportunity for ITC’s soaps, shampoos and fragrances under their Wills brand.

Threats

The obvious threat is from competition, both domestic and international. The laws of

economics dictate that if competitors see that there is a solid profit to be made in an emerging

consumer society that ultimately new products and services will be made available. Western

companies will see India as an exciting opportunity for themselves to find new market

segments for their own offerings. ITC’s opportunities are likely to be opportunities for other

companies as well. Therefore the dynamic of competition will alter in the medium-term.

Then ITC will need to decide whether being a diversified conglomerate is the most

competitive strategic formation for a secure future.

18

Segmentation, Target, Positioning

Segmentation Demographic Age and Income class

Targeting The product is mainly targeting adults

mainly, young fun loving adults

Positioning To the middle and high income adults who

are seeking self-indulgence

Premium biscuit brands

Heavy campaign are used

It gives pure chocolate sensual

STP of Sunfeast

Biscuit Segmenting Targeting Positioning

Sunfeast glucose

biscuit

Demographic Children between

the age group 4-14

yrs.

Natural goodness

of wheat

Sunfeast orange

Marie

Education Housewives A very differentiate

offering

Sunfeast Marie

light

Income Children between

the age group 4-14

yrs.

Tight and Crispy

Sunfeast orange

cream

Geographic Children between

the age group 4-14

yrs.

Smooth and yummy

cream

Sunfeast

Butterscotch

Cream

Age Children between

the age group 4-14

yrs.

Smooth and yummy

cream

Sunfeast bourbon

cream

Lifestyle Children between

the age group 4-14

yrs.

Smooth and yummy

cream

Comparison of sales of company for past 3 years

Particular Mar 2014 Mar 2013 Mar 2012

Net Sales 33238.6 29901.27 25147.46

% change in sales 11.16116473 18.90373819

19

BCG matrix

BCG Matrix of ITC

BCG Matrix of Sun Feast, Dark Fantasy

STARS

HIGH MARKET SHARE

&

HIGH MARKET GROWTH

Sunfeast Dark Fantasy Choco Fills and Sun feast

snack-foods-Bingo

CASH COWS

HIGH MARKET SHARE

&

LOW MARKET GROWTH

Milky Magic, Marie Light Original and orange,

Sunfeast ‘Dual’ Dream Cream

DOGS

LOW MARKET SHARE

&

LOW MARKET GROWTH

Sun feast Fit-Kit

QUESTION MARKS

LOW MARKET SHARE

&

HIGH MARKET GROWTH

20

Promotional strategy of the company

Growth drivers Disposable Income: There is increase in disposable income, observed in both rural and

urban consumers, which is giving opportunity to many rural consumers to shift from

traditional unorganized unbranded products to branded FMCG products and urban

fraternity to splurge on value added and lifestyle products. The increasing salaries,

along with rising trend of perks in the corporate sector at regular intervals, have

increased people’s spending power. As per some research, there is a high correlation

between Disposable per capita and HPC per capita.

Organized Retail: The emergence of organized retail have led to more variety with

ease in browsing, opportunity to compare with different products in a category, one

stop destination (entertainment, food and shopping) etc., which is playing an important

role in bringing boom in the Indian FMCG market. Currently the modern trade is

capturing 5% of the total retail space, which will increase to 10% and 25% in 2010 and

2025 respectively. Also, as the credit card and organized retail trend picks up, people

won’t think much while buying and buy more.

Distribution Depth - Rural Penetration: There are 5500 towns and 6.38 Lacs villages

with 2.5Mln and 5Mln outlets respectively. Due to saturation and cut throat competition

in urban India, many FMCG companies are devising strategies for targeting rural

consumers in a big way. Many FMCG companies are focusing on increasing their

distribution network to penetrate with a step by step plan. This is the reason that FMCG

urban market size has dropped from 50% to 29% in last 5 years. The FMCG market

size for semi-urban and rural segment was 19% and 52% respectively for the year 2006-

07. As per FICCI, the FMCG market size for urban, semi-urban and rural for year 2007-

21

08 was expected to be 57%, 21% and 22%, which clearly shows that rural market is the

growth engine for FMCG growth. Though the urban markets are growing too, the

incremental addition in consumer’s households is much more in rural space as

compared to urban markets. The planned development of roads, ports, railways and

airports, will increase FMCG penetration in the long term. 180 million rural and semi-

urban people’s attention has already been diverted towards FMCG products, according

to latest estimates released by industry chamber, Assocham in 2008. The estimated

number of households using FMCG products in rural India has grown from 131 million

in 2004 to 140 million in 2007, according to market research company IMRB. Over

70% sale of FMCG products is made to middle class households and over 50% of

middle class is in rural India.

Buying Pattern Shift: The crisis of declining FMCG markets during 2001-04 was

driven by new avenues of expenditure for growing consumer income such as consumer

durables, entertainment, mobiles, motorbikes etc. Now, as many consumers have

already upgraded, their income is being directed towards pampering themselves.

22

Consumer behaviour

Consumer perception

PRODUCT

Innovative product

A new experience

High quality , premium brand image

Better than competitors

PRICE

Slightly on expensive side ,

But it’s worth

PACKAGING AND LABELLING

Highly attractive and appealing

New and makes product unique

Gives a more luxurious aura to the brand

Demography study survey of consumers.

Favourable Indian Economy & Demographics: 45% people in India are under 20 years of

age. Per capita disposable income has increased from $550 to $600 in 2007 (9% increase).

GDP is growing at a CAGR between 8 to 9%.In the next five years, affluent and aspirers as a

total will supersede strives and will be dominated by aspirers, as per NCAER.

23

Source:

Simplify360 – A Social Media Analytics Tool

Sunfeast dark fantasy is mainly targeting children and adults, who are basically from middle

and high income background, as it is a bit costly compared to other cookies and biscuits

Branding and positioning

• “To the middle and high income adults who are seeking self-indulgence, the brand

Sunfeast Dark Fantasy is a premium cookie cream biscuit that gives a pure chocolate

sensual indulgence for one to escape reality into exotic fantasies “

• Positioned as a premium biscuit brand

• Took a risk in positioning as the premium space was vacant

• Uncertainty about how customers will react

• had the first mover advantage

• Heavy campaigns were used

24

Packaging

ITC's Packaging Business has 3 major product lines

Carton Board Packaging

o Printed Cartons

o Fluted cartons

Flexible Packaging

Tobacco Packaging

Carton Board Packaging

ITC occupies a leadership position in catering to the needs of the liquor, mobile phones &

food. ITC offers a range of value additions for carton board packaging such as UV offset

printing, Foil Stamping, Embossing, Window patching & lined cartons, etc.

25

Flexible Packaging

Flexible Packaging is an area of high growth, supported with investments in technology and

equipment from world class suppliers. ITC offers a completely integrated solution for

laminates from Pre-press, In-house Blown Film, Cast film, Extrusion Lamination, Hot Melt

Coating, specialty pouching and bag making. This is backed by in house cylinder making and

pre-press support.

Tobacco packaging

ITC offers a range of products line including flip top boxes (Square, Round, Bevelled and

Pillow Pack Hinge lids etc.), Outers, Soft Cup labels, Pack inserts, Printed cork tipping,

printed overwraps, inner frames. ITC makes value added shoulder boxes for cigars and

cigarettes. ITC supplies packaging for over 80 billion cigarettes a year domestically, and

supplies packaging for 15 billion cigarette sticks a year for the export market to leading

tobacco majors.

26

Innovation & New Product Development

ITC has enhanced the value of some of the most favoured brands with superior look-and-feel

packaging, using the best raw materials and process combinations, and an in-house pre-press

Design Centre.

A Product Introduction Process team pioneers packaging innovations. The team uses a unique

process to pilot the client's packaging through its manufacturing system. Specifications are

evolved based on clients' needs based on which a variety of packaging solutions is generated.

The efficacy of the packaging is tested simulating the client's factory conditions. ITC has

contemporary laboratories for its 3 product lines for testing packaging requirements.

Green Packaging

ITC Packaging has pioneered offering of Green Packaging which includes usage of raw

material from sustainable sources and conversion of the same in a facility which is 100%

powered by renewable energy (Wind Energy). This clean energy initiative along with the

other sustainability initiatives helps the Packaging Business to significantly contribute to ITC

being a carbon Positive, Water Positive and Solid Waste Recycling Positive Company.

Quality of the pack46%

Graphics8%

Colour4%

Uniqueness42%

Importance of packaging for ITC

27

Advertising

Sunfeast Dark Fantasy’s strategy revolves around temptation. With brilliant imagery and

visuals, they have managed to strike decent chord with their mature audiences.

It has a fairly huge Facebook community that manages to keep its audience engaged. Though

Twitter and YouTube are a disappointment.

Platform-wise Strategy

Facebook

Dark Fantasy’s Facebook Page boasts of a 1.1 million member strong with a very impressive

engagement rate to show off. They have used visual content that is literally mouth-watering

and the results are there for all to see.

Source: Simplify360 – A Social Media Analytics Tool

Source: Simplify360 – A Social Media Analytics Tool

But again, the problem with too many image updates is that you don’t get that many

comments. An average update on the page gets more than 1000 ‘likes’ but only 25 comments.

28

Source: Simplify360 – A Social Media Analytics Tool

And we all know that a ‘like’ is not as good as what a ‘comment’ is for any brand which

needs to connect deeper with its audience.

Which is why I would love to see some more interactive updates (and better ones, the present

updates are not that effective) from them.

They can also make do with some nice campaigns on contests to generate some buzz and

activity.

As far as usage of custom tabs are concerned, I found several of them as not working.

Though I must commend them on their smartness of allowing users to download their jingles

as ringtones. Their TVCs have some really great jingles and seeing people gushing about it,

they have done a great job by allowing them to download it.

Twitter

Hugely disappointed with absence of any Twitter handle for Sunfeast Dark Fantasy. The only

Sunfeast branded handle we have on Twitter is @sunfeastcares but I am not sure if it is the

official handle or not.

It has no bio or any branding that can help me decide its veracity.

YouTube

Another downer. If you rely on brilliant visuals and your there is temptation, I am surprised

why you are not using videos. Just images won’t work.

Instead, what we have with us is the YouTube channel of the parent brand where all the

TVCs are stored. So you will find TVCs of Dark Fantasy besides Dream Cream as well.

Hopefully, this 2013 we will see many brands using YouTube to its full potential.

Sunfeast Dark Fantasy’s Campaigns

Alas! They are not having any campaign either. No, there wasn’t any for the holiday season

gone by too.

29

Comparison with Competitors

The competing brand which targets the same TG and has the same ‘temptation’ theme would

be Parle’s Hide & Seek. But Parle is unable to match the quality content that Sunfeast has

come up with and hence the low engagement rate.

Source: Simplify360 – A Social Media Analytics Tool

But Twitter is where Hide & Seek has left Dark Fantasy far behind. Not only there is a

separate handle for Parle Hide & Side, but with some decent branding (the cover photo is

amiss though!) and interactive, they have managed to build a good following of 800+ on

Twitter. And the community is in fact talking to the brand instead of being mute followers.

Comments on the Strategy

Their strategy of temptation has worked nicely and they have built a good audience of mature

adults (instead of kids who’d prefer Oreo).

They have carried their offline personality to the social media world and have succeeded a

good deal in it.

Feedback of the Strategy

The community seems to be loving their content. Not only are they liking it, they are sharing

it with their friends too. An average update gets shared 500 times and I believe this is what

has led to its phenomenal growth on Facebook.

The community also seems to be happy and has no complaints whatsoever from the page.

Source: Simplify360 – A Social Media Analytics Tool

Overall, I like the fact that Sunfeast Dark Fantasy is doing a great job at Facebook but I hope

they start doing some kickass work on Twitter and Facebook too.

30

SHOPS

14%

ADVERTISEMENT

44%

FRIENDS

36%

OTHERS

6%

Importance of advertising for ITC

31

Promotion or communication strategy

PROMOTIONAL STRATEGY

Sunfeast school program: cover 1000 schools across country, to familiarize children

with Sunfeast brand name and Sunfeast mascot

Brand ambassador: Shahrukh khan & surya (south actor)

Official sponsor of WTA tennis championship-Sunfeast open

Launch of Sachin’s Fit Kit, the first product co-created with brand ambassador

Other activities:-

On buses, print media , hoardings, TV and radio advertisements

Heavy promotion

Spends around 35-40 per cent of its turnover

Print ads

TV commercials

Digital presence

Outdoor advertisements

Visual merchandising

In- flight sampling

The most influential promotion tool

TVC

38%

HOARDINGS

10%

PRINT AD

18%

ONLINE

ADVERTISING

12%

IN STORE

PROMOTION

22%

32

Rural Marketing vs. Urban Marketing

E-Choupal is an initiative of ITC Limited "Indian Tobacco Company", a conglomerate

in India, to link directly with rural farmers via the Internet for procurement

of agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. E-Choupal

tackles the challenges posed by Indian agriculture, characterized by fragmented farms, weak

infrastructure and the involvement of intermediaries. The programme installs computers with

Internet access in rural areas of India to offer farmers up-to-date marketing and agricultural

information.

4A’s of marketing

Availability

Due to poor access to rural markets, poor infrastructure and irregular or no power supply to

rural areas it is a difficult task for firms to make products available all the time in the reach of

the rural consumers

Acceptability

Firms have to understand rural customers’ need. Automotive, salt, FMCG, telecom,

insurance, soft drinks, cigarettes, TV, fans, pressure cooker, washing soaps, tea, blades, tooth

powder are the goods and services which are excelling in the rural market

Awareness

Rural consumer is not much aware about brands. They rely more on local brands. To develop

reliability factor in them towards new brands it is necessary to publicize the brand awareness

by NGOs working actively in the region. This can be done through mouth publicity by any

known resident of the same village also. E-Choupal program of ITC is helping it in making

brand image. Illiteracy makes them unable to read basic text about the brand identification. It

is easy to sale spurious products in rural market

Advertising strategies in rural market

Rural society is mostly agrarian society. Rural people can be easily contacted by a rural

salesperson in afternoon which generally comes under their leisure time. Since most of the

rural people live in joint families therefore almost all the family members especially demand

generators of that household can be contacted directly. This will also build face-to-face

relationship between salesperson and customers.

33

Channel / Distribution strategy

FACTORY

CNF

WHOLESALE

DISTRIBUTOR

WHOLESALE

DEALER BASE

RETAILER

Customer

34

ITC uses FIFO method to reduce the wastage of goods due to expiry.

They also keep the good on constant move from low sales area to high sales area.

The company collects all the expired goods four times a year, and destroys them.

Retailers must return expired or damaged products within six months after the date of

expire.

Adjustment for them is done in three months’ time.

ITC provides their retailers with racks, hangers, etc. to display the products.

The benefits received by the retailers depend upon their sales volume and also the

location of their shops.

ITC has hired IMRB to do the market research.

Challenges faced in Marketing

Infrastructure Barrier – Technology Innovation ,cooperation with government bodies

Knowledge Barrier – Enhance publicity and training , simplify inference e- Choupal

Cost – Extended lifecycle of Equipment ,increase revenue by adding advertisement

35

BUSINESS FINANCE

Gross Profit and Net Profit Margin of the company

Gross Profit Margin Formula= Gross Profit/ Net sales, (Gross profit= Net Sales- Direct Cost)

2014 (Rs in Crores) 2013 (Rs in Crores) 2012 (Rs in Crores)

Net Sales 33238.6 29901.27 25147.46

Direct Cost 16836.79 15406.27 12461.17

Gross profit 16401.81 14495 12686.29

GP Ratio 0.493457 0.484762 0.504476

0

5000

10000

15000

20000

25000

30000

35000

Net Sales

Direct Cost

Gross profit

2014 (Rs in Crores) 2013 (Rs in Crores) 2012 (Rs in Crores)

36

Net Profit Margin

Formula= PAT/ Net sales

2014 (Rs in Crores) 2013 (Rs in Crores) 2012 (Rs in Crores)

Net Sales 33238.6 29901.27 25147.46

PAT 8785.21 7418.39 6162.37

Net profit ratio 3.78 4.03 4.08

0

5000

10000

15000

20000

25000

30000

35000

Net Sales

PAT

2014 (Rs in Crores) 2013 (Rs in Crores) 2012 (Rs in Crores)

37

Direct and indirect costs of the company – change in comparison to previous year

Formula: (Current year- Previous year) /Previous year*100

Direct Cost 2014(Rs in Crores) 2013(Rs in Crores)

Raw Materials Consumed 13284.75 12312.13

Power & Fuel Cost 613.19 550.11

Employee Cost 1608.37 1387.01

Other Manufacturing Expenses 1330.48 1157.02

Percentage Change 0.15

Indirect Cost 2014(Rs in Crores) 2013(Rs in Crores)

General and Administration Expenses 1089.35 1234.39

Selling and Distribution Expenses 1982.31 2088.32

Miscellaneous Expenses 983.04 800.09

Percentage Change -0.0165

0

2000

4000

6000

8000

10000

12000

14000

Raw Materials Consumed Power & Fuel Cost Employee Cost Other ManufacturingExpenses

2014(Rs in Crores) 2013(Rs in Crores)

0

500

1000

1500

2000

2500

General and AdministrationExpenses

Selling and Distribution Expenses Miscellaneous Expenses

2014(Rs in Crores) 2013(Rs in Crores)

38

Fixed assets added during the year

Formula= Current year- Previous year

2014(Rs in

Crores)

2013(Rs in

Crores)

Difference(Rs in

Crores)

Land Freehold 1089.18 1052.25 36.93

Land Leasehold 241.35 227.74 13.61

Buildings Freehold 3872.96 3562.23 310.73

Licensed Properties -

Building Improvement 58.8 56.56 2.24

Plant and Equipment 12094.75 10925.17 1169.58

Furniture and Fixtures 683.52 644.35 39.17

Vehicles 105.67 97.33 8.34

Office Equipment 27.4 21.03 6.37

Railway Sidings etc. 1.97 1.72 0.25

0

2000

4000

6000

8000

10000

12000

14000

2014(Rs in Crores) 2013(Rs in Crores)

39

Working Capital requirement for the year

Formula= Current Asset- Current Liabilities

2014(Rs in Crores)

Total Current Assets 14617.47

Total Current Liabilities 11504.32

Working Capital 3113.15

Debt/Equity ratio of the company and its implications

Formula= Total Debt/ Shareholder's Funds

2014 (Rs in Crores)

Total Debts 166.09

Shareholder's Funds 26262.02

Debt Equity Ratio 0.006

Debt equity ratio is usually calculated to find out the nature of management of the

organization, it is said that if Debt equity ratio is more than 0.5, then the management is

aggressive in nature, and vice versa. In case of ITC it is 0.006, which is far below 0.5, so we

can state that the management is not aggressive in nature and does not want to take any risk.

0

5000

10000

15000

Total Current Assets Total Current Liabilities Working Capital

2014(Rs in Crores)

40

Top line and bottom-line

Top line is comparison of Net Sales

2014(Rs in

Crores)

2013(Rs in

Crores)

2012(Rs in

Crores)

2011(Rs in

Crores)

2010(Rs in

Crores)

Net Sales 33238.6 29901.27 25147.46 21458.98 18153.19

% change 11.16 18.90 17.19 18.21 -

Bottom line is comparison of PAT

2014(Rs in

Crores)

2013(Rs in

Crores)

2012(Rs in

Crores)

2011(Rs in

Crores)

2010(Rs in

Crores)

PAT 8785.21 7418.39 6162.37 4987.61 4061

%change 18.42 20.38 23.55 22.82

2014(Rs inCrores)

2013(Rs inCrores)

2012(Rs inCrores)

2011(Rs inCrores)

2010(Rs inCrores)

33238.629901.27

25147.4621458.98

18153.19

NET SALES

2014(Rs inCrores)

2013(Rs inCrores)

2012(Rs inCrores)

2011(Rs inCrores)

2010(Rs inCrores)

8785.217418.39

6162.374987.61

4061

PAT

41

DuPont Analysis Operating Efficiency

Formula: Net Profit/Sales*100

Assets Usage Financial Leverage

Formula: Sales/Total Assets Formula: Total assets/Shareholder fund

Return on Equity

Formula: Net Profit/ Shareholders Fund* 100

Calculation:

Operating Efficiency X Assets Usage X Financial Leverage = Return on Equity

(Net Profit/Sales*100) X (Sales/Total Assets) X (Total assets/Shareholder fund) =

(Net Profit/ Shareholders Fund* 100)

2014 2013 2012 2011 2010

Operating Efficiency 0.264 0.248 0.245 0.232 0.224

Assets use efficiency 1.258 1.330 1.324 1.328 1.281

Financial Leverage 1.006 1.009 1.011 1.013 1.008

ROE 0.335 0.333 0.328 0.313 0.289

The net profit has increased from 0.224 in 2010 to 0.264 in 2015, which reflects a

good indication of performance for the company

Assets turnover ratio has also detoriated from 1.281 in 2010 to 1.258 in 2014, which

is not good and it indicates that the company is not properly utilizing its assets for its

operations.

Financial leverage has though decreased, which was 1.008 in 2010 to 1.006 in 2014,

but it has almost remained constant in the last consecutive years, this means that the

company is not focusing much on their capital, and not gone for much investment

either through equity or through debt.

ROE has increased from 28.9% in 2010 to 33.5% in 2014 which is a slight

improvement, and it says that the company is doing well, as they are providing more

than the expected or benchmark return which is said to be 30% and above.

42

HUMAN RESOURCE MANAGEMENT

Organization Structure

43

Job Description and Job Specifications posted by the company

Career in Sales

Students selected for a career with ITC will join as Sales Trainees. They will be on probation

for a period of one year. During the probation period, they will undergo training and upon

successful completion of training they will be positioned as Area Executives. Before

applying, students must keep in mind that the end of their probationary period is conditional

upon a confirmation review. Thus, it is important that they have a high learning orientation.

As Sales Trainees, they will be exposed to the Selling and Distribution process across

channels in ITC. They will be expected to visit retail outlets on a daily basis in different

localities in the city and learn on ground.

Once confirmed as Area Executives, they will be responsible for the turnover of an entire

section allocated to them. They will be accountable for sales & distribution, cost control,

adherence to systems and processes and training of their teams of that section. They will also

be expected to deal with distributors, supervisors and salesmen and hence must display strong

leadership qualities.

Location

Though the candidates will be employed for a particular location, they should be open to

relocation across any geography basis the organization’s needs.

Challenging Career Opportunities

Area Executives will be rotated across different channels in ITC. Basis their good

performance they can look at being promoted as Area Managers, and beyond. Please note that

growth across the organization is factor of performance and mobility.

Qualifications

We are looking for final year students currently pursuing Masters in Business Administration

or its equivalent with specialization in Marketing.

Selection Process

The selection process will entail shortlisting basis academic results, written test, group

discussion and personal interview.

Remuneration

Gross remuneration will be Rs. 3.5 Lacs per year for Sales Trainees and Rs. 6.1 Lacs (Fixed –

4.7 Lacs, Variable – Average of 1.4 Lacs) per year for Area Executives.

44

Training needs of the company

Improved Productivity: The key purpose of any training is to improve effectiveness and

productivity. Everyone needs training to do their jobs well. Internal training begins with an

induction program, enabling the employee to learn how to do the job, its purpose and how it

fits into the corporate strategies.

Relevance: By training staff internally, an organization can customize the learning to fit

business needs exactly, adapting some elements and omitting any considered unnecessary for

the job. This enables the employees to focus more clearly on the organizational goals and

strategies, while sensing their individual contributions to its success.

Employee Motivation and Retention: Training as a reward is an effective motivator, and

happy employees are more productive and less likely to think about leaving. A structured

internal training program shows staff the organization recognizes their worth and it is in their

interests to stay. Keeping the staff motivated and happy is one of the best public relations

tools that an organization can have.

Costs: Internal training can be a lot less expensive to develop than training from external

providers. In-house courses and programs can be costly to set up initially, but in the long term

they can be re-used and adapted as required without further investment. Among the lowest

cost internal training strategies are the informal techniques such as using mentors and peers

for on-the-job training. Cascade training can help to make the most of any necessary external

training. Trainees are required, on completion of an external course, to share some of the

most important aspects of their new expertise with colleagues through presentations or

written reports.

45

Organization culture (as per employee reviews or research findings)

Working in ITC, the pros and cons are:

Pros

"It is a very good place for work life balance" (in 5 reviews)

"We are provided very good working culture with essence of learning" (in 8 reviews)

"A century old, so it has the BRAND NAME" (in 7 reviews)

"Great place for fresher’s to start career, lots of experience" (in 7 reviews)

"A great learning ground for youngsters who start their careers as management

trainee" (in 6 reviews)

Cons

"Work-life balance, I don’t see anything other than this for this column" (in 25

reviews)

"Slow growth due to extremely low attrition at senior level" (in 8 reviews)

"Slow decision making in simple issues at times" (in 6 reviews)

"No freedom, lot of politics, no meritocracy, lack of systems and good culture" (in 3

reviews)

"No work life balance in company" (in 3 reviews)

46

Example:

47

CONCLUSION

After completing the entire report, what I can say, is that ITC focuses on innovation and

promotion of its brands, which is highly required in current scenario, so they spend a lot on

media advertisement and sponsorship, to keep a visibility in the market, but if we look at the

financial statistics we will see, that they have low debt equity ratio, which says that the

management is now aggressive and in not looking for expansion as of now. Their ROE has

increased which states that they are performing well and utilising their resources properly.

And as far the organization culture, they have a good culture and environment for its

employees, gives respect to them, and indulge them in various activities, which motivate

them to work hard and give a high productivity for the company.

ITC is relying too much on their cigarette brand which is not good, as the industry forecast is

not good and is predicted to decline in the future, so if ITC wants to progress and retain their

position in the market then they will have to focus on FMCG, and transfer their dependence

toward the FMCG industry, which will definitely progress in the future.

Overall ITC is doing well as for my opinion.

48

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http://www.mbaskool.com/brandguide/food-and-beverages/479-ITC-darkfantasy.html

www.ITC.com/Annual-Reports-2013-14

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India-Limited-Pune-3-to-8-years-

170415003462?xp=4&qp=Dabur%20india&srcPage=s

http://viragbrand.blogspot.in/2012/12/dabur-chyawanprash-vs-himani-sona.html

http://fmcgmarketers.blogspot.in/2008/07/fmcg-growth-drivers-and-category-

trends.html

http://www.socialsamosa.com/2013/01/social-media-strategy-review-sunfeast-dark-

fantasy/

http://www.moneycontrol.com/news/buzzingstocks/century-textiles8demergercement-

paper-biz_1364405.html

http://www.aceanalyser.com/

IBEF.org

http://www.glassdoor.co.in/Reviews/ITC-Reviews-E40052.htm