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A PDCS MINOR PROJECT REPORTON

MARKETING STRATEGY OF

INDIAN TOBACCO COMPANY LIMITED

SUBMITTED BY

DEEPAK JAIN

Enrollment no: 09019201709

STUDENT OF

LINGAYAS LALITA DEVI INSTITUTE OF MANAGEMENT & SCIENCES

MANDI ROAD, NEW DELHI-110047

FOR THE PARTIAL FULFILLMENT

OF

BACHELOR OF BUSINESS ADMINISTRATION

UNDER THE SUPERVISION

OF

Mrs.sushma Sharma(Project Guide)

(Faculty Of Lingayas Lalita Devi Institute Of managment And Science)

SUBMITTED TO

GURU GOBIND SINGH INDRAPASTHA UNIVERSITY

DELHI, INDIA

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CERTIFICATE

Certified that this project report MARKETING STRATEGY OF INDIAN TOBACCOCOMPANY LIMITED is the bonafide work of DEEPAK JAINwho carried out the projectwork under the supervision of Mrs. sushma sharma.

SIGNATURE SIGNATURE

DR. Rakesh Gupta Mrs. Sushma Sharma

(HEAD OF THE DEPARTMENT) (Project Incharge)

B.B.A-3RD SEM

Lingyas lalita devi institute of management and science

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ACKNOWLEDGEMENT

I owe a great many thanks to a great many people who helped and supported me during the

writing of this report. My deepest thanks to Lecturer, Mrs. Sushma Sharma (the Guide of the

project for guiding) for correcting various documents of mine with attention and care. He has

taken pain to go through the project and make necessary correction as and when needed. I

express my thanks to the hod of, B.B.A Deparment for extending his support. My deep sense of

gratitude to Mrs. sushma sharma (supervisor of the project report), India Tobacco Company

Limited support and guidance. Thanks and appreciation to the helpful people at India

Tobacco Company Limited, for their support. I would also like to thank my Institute and myfaculty members without whom this project would have been a distant reality.

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DECLARATION

I hereby declare that the project work entitled MARKETING STRATEGY OF INDIANTOBACCO COMPANY LIMITEDsubmitted to the Guru gobind singh indraprasthauniversity, is a record of an original work done by me under the guidance of Mrs. SushmaSharma, Faculty Member, (Lingyas lalita devi institute of management and science),and this

project work has not performed the basis for the award of any Degree to the best of myknowledge.

NAME: - DEEPAK JAIN

ENROLMENT NO: - 09019201709

[SIGNATURE OF STUDENT]

INDEX

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CONTENTS PAGE NO.

1. EXECUTIVE SUMMARY 6

2. Introduction

a. Board of directors 7

b. History 10

3. Mission and Objectives 11

4.Research Methodlogy 12

5. Findings 14

a.product line 16

b. ITC HOTELS 33

c. Research Development 37

d. paper boards and speciality papers 39

e. packaging 42

f. agri commodities and rural services 44

e. A Commitment beyond the Market 55

I). Spreading the Joy of Learning 56

II). Social & Firm Forestry 58

III). Integrated Watershed Development 60

f. e-choupal 61

g. comparision between competitor 64

6. limitation 65

7. Recomdations 66

8. conclusion 67

9. BIBLIOGRAPHY 68

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EXECUTIVE SUMMARY

ITC is one of India's foremost private sector companies with a market capitalisation of over US

$ 22 billion and a turnover of US $ 6 billion.* ITC is rated among the World's Best Big

Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine,

among India's Most Respected Companies by BusinessWorld and among India's Most Valuable

Companies by Business Today. ITC ranks among India's `10 Most Valuable (Company)

Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC

also ranks among Asia's 50 best performing companies compiled by Business Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,

Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,

Branded Apparel, Personal Care, Stationery, Safety Matches 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, Personal Care and

Stationery.

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 createenduring value for the nation provides the motive force to sustain growing shareholder value.

ITC practices 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.

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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 $ 3.2 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. Thistransformational 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 Ltd, provides IT

services and solutions to leading global customers. ITC Infotech has carved a niche for itself by

addressing customer challenges through innovative IT solutions.

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 companyin India to voluntarily seek a corporate governance rating.

ITC employs over 26,000 people at more than 60 locations across India. The Company

continuously endeavors to enhance its wealth generating capabilities in a globalising

environment to consistently reward more than 3,60,000 shareholders, fulfill 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."

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B O A R D O F D I R E C T O R S

C H A I R M A N

Y C Deveshwar

E X E C U T I V E D I R E C T O R S

K Vaidyanath K N Grant

N O N - E X E C U T I V E D I R E C T O R S

A Baijal S Banerjee AV Girija Kumar

S H Khan S B Mathur D K Mehrotra

H G Powell P B Ramanujam Anthony Ruys

Basudeb Sen B Vijayaraghavan

Y C D E V E S H W A R

Y C Deveshwar (63), an engineering graduate from the Indian Institute

of Technology, Delhi joined ITC Limited in 1968. He was appointed

as a Director on the Board of the Company in 1984 and became the

Chief Executive and Chairman of the Board on January 1, 1996.

Between 1991 and 1994, he led Air India as Chairman and Managing

Director.

Under his leadership, ITCs Sustainability efforts were given shape through unique business

models. ITC became the first Indian company to publish its Sustainability Report, 2004 in

accordance with the guidelines of the Global Reporting Initiative. For the efforts at creating

sustainable livelihood opportunities, ITC also won the inaugural World Business Award

instituted jointly by the United Nations Development Program (UNDP), International Chamber

of Commerce (ICC) and the HRH Prince of Wales International Business Leader's Forum

(IBLF). ITCs e-Choupal, a digital infrastructure initiative to empower marginal farmers in

India, is taught as a case study at the Harvard Business School. This initiative won the

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Development Gateway award at Beijing in September 2005 and the Stockholm Challenge

Award in May 2006.

Deveshwar is the Past President of the Confederation of Indian Industry. He is also a member

of the Board of Governors of the Indian School of Business and the former Chairman of the

Society and Board of Governors of the Indian Institute of Management, Calcutta. He also

serves on the National Executive Committees of some of Indias premier trade and industry

bodies.

Amongst several awards and recognitions during his distinguished career, Deveshwar has been

honoured with the Global Leadership Award 2010 by the U.S.- India Business Council of the

US Chamber of Commerce, the SAM/SPG Sustainability Leadership Award 2007 conferred at

the International Sustainability Leadership Symposium, the Business Person of the Year Award

2006 by the UK Trade & Investment by His Royal Highness Prince Andrew, the Duke of York.

In January 2006, he was inducted to the prestigious Hall of Pride at the Indian Science

Congress. He was also named the Manager Entrepreneur of the Year 2001 by Ernst & Young.

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History

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India

Limited. As the Company's ownership progressively Indianised, the name of the Company was

changed from Imperial Tobacco Company of India Limited to India Tobacco CompanyLimited in 1970 and then to I.T.C. Limited in 1974. In recognition of the Company's multi-

business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels,

Information Technology, Packaging, Paperboards & Specialty Papers, Agri-business, Foods,

Lifestyle Retailing, Education & Stationery and Personal Care - the full stops in the Company's

name were removed effective September 18, 2001. The Company now stands rechristened

'ITC Limited'.

The Companys beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was

the centre of the Company's existence. The Company celebrated its 16th birthday on August

24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. NehruRoad) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more

ways than one. It was to mark the beginning of a long and eventful journey into India's future.

The Company's headquarter building, 'Virginia House', which came up on that plot of land two

years later, would go on to become one of Kolkata's most venerated landmarks.

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ITC MISSION AND OBJECTIVES

ITC enables small business export success in developing countries by providing, with partners,

sustainable and inclusive trade development solutions to the private sector, trade support institutions andpolicymakers.

ITCs strategic objectives

Enterprises Strengthen the international competitiveness of enterprises

Trade support institutions Develop the capacity of trade service providers to supportbusinesses.

Policymakers Support policymakers in integrating the business sector into the globaleconomy.

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 Companys stakeholders

To enhance the wealth generating capability of the enterprise in a globalenvironment, delivering superior and sustainable stakeholder value.

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The Big Picture:

ITCs Agri Business Division, one of Indias largest exporters of agricultural commodities, hasconceived e-Choupal as a more efficient supply chain aimed at delivering value to its customersaround the world on a sustainable basis.

The e-Choupal model has been specifically designed to tackle the challenges posed by theunique features of Indian agriculture, characterised by fragmented farms, weak infrastructureand the involvement of numerous intermediaries, among others.

The Value Chain - Farm to Factory Gate:

e-Choupal also unshackles the potential of Indian farmer who has been trapped in a viciouscycle of low risk taking ability > low investment > low productivity > weak market orientation> low value addition > low margin > low risk taking ability. This made him and Indianagribusiness sector globally uncompetitive, despite rich & abundant natural resources.

Such a market-led business model can enhance the competitiveness of Indian agriculture andtrigger a virtuous cycle of higher productivity, higher incomes, enlarged capacity for farmerrisk management, larger investments and higher quality and productivity.

Further, a growth in rural incomes will also unleash the latent demand for industrial goods sonecessary for the continued growth of the Indian economy. This will create another virtuous

cycle propelling the economy into a higher growth trajector

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The Model in Action:

Appreciating the imperative of intermediaries in the Indian context, e-Choupal leveragesInformation Technology to virtually cluster all the value chain participants, delivering the same

benefits as vertical integration does in mature agricultural economies like the USA.

e-Choupal makes use of the physical transmission capabilities of current intermediaries aggregation, logistics, counter-party risk and bridge financing while disintermediating themfrom the chain of information flow and market signals.

With a judicious blend of click & mortar capabilities,village internet kiosks managed by farmers calledsanchalaks themselves, enable the agriculturalcommunity access ready information in their local languageon the weather & market prices, disseminate knowledge onscientific farm practices & risk management, facilitate thesale of farm inputs (now with embedded knowledge) and

purchase farm produce from the farmers doorsteps(decision making is now information-based).

Real-time information and customised knowledge provided by e-Choupal enhance the abilityof farmers to take decisions and align their farm output with market demand and secure quality& productivity. The aggregation of the demand for farm inputs from individual farmers givesthem access to high quality inputs from established and reputed manufacturers at fair prices. Asa direct marketing channel, virtually linked to the mandi system for price discovery, e-Choupal eliminates wasteful intermediation and multiple handling. Thereby it significantly

reduces transaction costs.

e-Choupal ensures world-class quality in delivering all these goods & services throughseveral product / service specific partnerships with the leaders in the respective fields, inaddition to ITCs own expertise.

While the farmers benefit through enhanced farm productivity and higher farm gate prices, ITCbenefits from the lower net cost of procurement (despite offering better prices to the farmer)having eliminated costs in the supply chain that do not add value.

The Status of Execution:

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Launched in June 2000, 'e-Choupal', has already becomethe largest initiative among all Internet-basedinterventions in rural India. 'e-Choupal' services todayreach out to over 4 million farmers growing a range ofcrops - soyabean, coffee, wheat, rice, pulses, shrimp - in

over 40,000 villages through 6500 kiosks across tenstates (Madhya Pradesh, Haryana, Uttarakhand,Karnataka, Andhra Pradesh, Uttar Pradesh, Rajasthan,Maharashtra, Kerela and Tamil Nadu).

The problems encountered while setting up and managing these e-Choupals are primarily ofinfrastructural inadequacies, including power supply, telecom connectivity and bandwidth,apart from the challenge of imparting skills to the first time internet users in remote andinaccessible areas of rural India.

Several alternative and innovative solutions some ofthem expensive are being deployed to overcome thesechallenges e.g. Power back-up through batteries charged

by Solar panels, upgrading BSNL exchanges with RNSkits, installation of VSAT equipment, Mobile Choupals,local caching of static content on website to stream in thedynamic content more efficiently, 24x7 helpdesk etc.

Going forward, the roadmap includes plans to integrate bulk storage, handling & transportationfacilities to improve logistics efficiencies.

As Indias kissan Company, ITC has taken care to involve farmers in the designing andmanagement of the entire e-Choupal initiative. The active participation of farmers in this ruralinitiative has created a sense of ownership in the project among the farmers. They see the e-Choupal as the new age cooperative for all practical purposes.

This enthusiastic response from farmers has encouraged ITC to plan for the extension of the e-Choupal initiative to altogether 15 states across India over the next few years. On the anvil are

plans to channelise other services related to micro-credit, health and education through thesame 'e-Choupal' infrastructure.

Another path-breaking initiative the Choupal Pradarshan Khet, brings the benefits ofagricultural best practices to small and marginal farmers. Backed by intensive research andknowledge, this initiative provides Agri-extension services which are qualitatively superior andinvolves pro-active handholding of farmers to ensure productivity gains. The services arecustomised to meet local conditions, ensure timely availability of farm inputs including credit,and provide a cluster of farmer schools for capturing indigenous knowledge.

COMPARISION

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ITC Vs HUL(Hindustan unilever limited)

We continue to remain positive on both HUL and ITC in the FMCG sector over the long term

and expect them to outperform broader markets. We believe strong rural demand (largely

inelastic demand), strong pipeline of innovations targeting the upper end of the urban

consumer, and sharp fall in raw material prices will continue to be strong growth drivers for

both.However, over the medium term, we expect ITC to outperform HUL:

HUL unlikely to re-rate: HUL outperformed Sensex by ~70% over the past one year, and istrading near its peak at over 150% premium over Sensex. Factors like imminent pricecuts/promotions by Procter & Gamble (P&G) and regional players, slowing volume growth forHUL, loss of market share in key categories, and a less harsh winter (HULs personal caregrowth is likely to take a hit in Dec quarter) are likely to cap any significant upsides to HULfrom current levels on an absolute basis.

ITC likely to re-rate: ITC has been trading at lower end of its trading band at 17x one yearforward P/E and has underperformed HUL by ~40% over the past one year. We expect ITC tore-rate from current levels as good performance in cigarettes gets rewarded, supplemented withthe likelihood of a soft budget for cigarettes (in June/July) and easing of FMCG losses ,coupled with gains in market share in soaps and shampoo (already at ~2.5%; up from ~1.5%, aquarter back).

HUL Segment Breakup ITC Segment Breakup

LIMITATIONS

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Every work has some limitations. These are extent to which the process should not

exceed. In this project, following limitations can be considered.

1. In a rapidly changing industry, analysis on one day or in one segment can

change very quickly. The environmental changes are vital to be considered in

order to assimilate the findings.

2. I was having the time limitation which was fixed by the company itself.

All the above mentioned statements are the limitations of this project. The study has

been done by taking and keeping all the limitations in mind. The project is completed

in the given period of time. As understanding and analyzing the consumer purchasing

pattern in this span of time was a big task to accomplish.

Recommendations

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Leverage the brand in order to attract customers.

Try to introduce better technology to gain an edge over itscompetitors

It needs to increase its promotional activity in order to

influence customers and raise customer awareness

about its brand.

To have an effective competition with the global leaders, it

should be an M.N.C.

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CONCLUSION

ITC has taken steps to make up the lasting difference. That simple answer, expressing concern

and desire to help, is the spirit of ITCs rural development initiatives. A social mission reaching

out to join hands, convert old relationships into new partnerships, put on the ground solutionsthat bring lasting benefits to society.

ITCs policies concerning its future development are strictly determined by the requirements of

sustainability and the larger context in which it operates.

ITC regards corporations as critical tools of social development, and considers public - private -

people partnerships bringing together community, government and business as the only

sustainable basis for social sector and infrastructure development.

Some important factors to be kept in mind for batter development are:-

Slowdown in Hotel business: ITCs hotel business has been impacted by thedownturn in the economy and the terror attacks in Mumbai. It is worthwhileto note that the Hotel business contributed ~8% of net revenues and ~11%of EBIT for ITC in FY08.

FMCG losses for ITC exceed our expectations by significant margin.

HULs volumes improve drastically despite price hikes across the board.

Price wars from P&G/ regional players does not happen. FY10 budget is harsh on cigarettes.

Create multiple drivers of growth by developing a portfolio of world class businessesthat best matches organisational capability with opportunities in domestic and exportmarkets

Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards &

Packaging, Agri Business and Information Technology.

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BIBLIOGRAPHY

1. WIKIPEDIA.COM

2. ITCPORTAL.COM

3. ITC LIMITED

4. FORBES.COM

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