Diversification of ITC
- 1. Case Study of ITC HAD DIVERSIFICATION REALLY PAID OFF? Submitted by: Ruhaan M. A-20 Srujan M. A-29 Susheel S. A-32 Trushna J. A-34 1
- 2. CONTENTS ITC History Segments of ITC FMCG • Cigarettes • Other Hotels Paper, Paperboards & Packaging Agri Business BCG matrix for ITC Conclusion 2
- 3. ITC HISTORY ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited Imperial Tobacco Company became Indian Tobacco Company in 1970 1925 • Packaging and Printing: Backward Integration 1975 • Entry into the Hospitality Sector: Company launched its Hotels business with the acquisition of a hotel in Chennai 1990 • Paperboards & Specialty Papers: Consolidation and Expansion 1990 • Agri Business: Strengthening Farmer Linkages 3
- 4. ITC HISTORY 2000 • Lifestyle Retailing: Premium Offerings, ITC entered the Lifestyle Retailing business with the Wills Sport 2000 • Information Technology: Business Friendly Solutions 2002 • Education & Stationery Products: Offering the Greenest products , ITC launched range of notebooks under brand Paper Kraft 2005 • Personal Care Products: Expert Solutions for Discerning Consumers 2010 • Expanding the Tobacco Portfolio: ITC launched its hand rolled cigar, armenteros in the Indian market 4
- 6. SEGMENTS OF ITC ITC FMCG CIGARETTES OTHER AGRI- BUSINESS HOTELS PAPERS & PACKAGING 6
- 7. FMCG: CIGARETTES Graph showing slight reduction in revenue generated from cigarette's which reduced from 64% to 60% over 5 year period Cigarettes 60%FMCG 13% Agri Business 13% Hotel 3% Paper & Packaging 11% 2010 Cigarettes 64% FMCG 6% Agri Business 15% Hotel 4% Paper & Packaging 11% 2006 7
- 8. FMCG: ITC FMCG (OTHER) HAS NEGATIVE EBITDA AS COMPARED TO COMPETITORS -20 -10 0 10 20 30 40 1 2 3 EBITDA MARGIN ITC (Other) Britannia HUL Palre P & G 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008 2009 2010 Market Share of ITC Compared to Competitors % ITC (Other) Britannia HUL Parle P & G 8
- 9. HOTELS 0 10 20 30 40 50 60 70 80 90 100 2008 2009 2010 EBITDA MARGIN (%) ITC EHI Ltd Hotel Leela Indian Hotel 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008 2009 2010 MARKET SHARE OF ITC (%) ITC EHI Ltd Hotel Leela Indian Hotel 9
- 10. PAPER, PAPERBOARDS & PACKAGING 0 5 10 15 20 25 30 35 2008 2009 2010 EBITDA MARGIN (%) ITC Ballarpur Abdra Paper West Paper JK Paper 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008 2009 2010 MARKET SHARE OF ITC PAPER (%) ITC Ballarpur Abdra Paper West Paper JK Paper 10
- 11. BCG FOR ITC 11 Agro Business Paper, Paperboard and Packaging FMCG (Others) Hotels Cigarettes ITC Infotech* * From ITC Website G R O T H MATKET SHARE
- 12. CONCLUSION In ITC, revenue share of Cigarettes is reducing since last 5 years which comes down from 64% to 60% which is slightly positive sign ITC is successful in using some of its STRATEGIC ASSETS in Agro business and Paper Industry, which is benefited ITC so this diversification helped company to reduce dependency on Cigarettes to certain extend In FMCG, ITC is not able to become market leader, because in FMCG HUL with highest market share has core competency in this business In Hotel, since ITC don’t have ALL STRATEGIC ASSETS, it is struggling to gain market share since last 5 years 12
- 13. Thank You…. 13