Overview

ITC Ltd (NSE:ITC) is one of India's foremost private sector companies and a diversified conglomerate with businesses spanning Fast Moving Consumer Goods, Hotels, Paperboards and Packaging, Agri Business and Information Technology. The Company is acknowledged as one of India's most valuable business corporations with a Gross sales value of ₹ 76,097.31 crores and Net Profit of ₹ 15,136.05 crores (as on 31.03.2020). ITC was ranked as India's most admired company, according to a survey conducted by Fortune India, in association with Hay Group. 1

ITC is the country's leading FMCG marketer, the clear market leader in the Indian Paperboard and Packaging industry, a globally acknowledged pioneer in farmer empowerment through its wide-reaching Agri Business, a pre-eminent hotel chain in India that is a trailblazer in 'Responsible Luxury'. ITC's wholly-owned subsidiary, ITC Infotech, is a specialized global digital solutions provider.

Over the last decade, ITC's new Consumer Goods Businesses have established a vibrant portfolio of 25 world- class Indian brands that create and retain value in India. ITC's world class FMCG brands including Aashirvaad, Sunfeast, Yippee!, Bingo!, B Natural, ITC Master Chef, Fabelle, Sunbean, Fiama, Engage, Vivel, Savlon, Classmate, Paperkraft, Mangaldeep, Aim and others have garnered encouraging consumer franchise within a short span of time. While several of these brands are market leaders in their segments, others are making appreciable progress.

Plant Location

CIGARETTE FACTORIES

  • Bengaluru,Karnataka
  • Kolkata,West Bengal 
  • Munger,Bihar 
  • Pune,Maharashtra
  • Saharanpur,Uttar Pradesh 

GREEN LEAF THRESHING PLANTS

  • Anaparti,Andhra Pradesh
  • Chirala,Andhra Pradesh 
  • Nanjangud,Karnataka 

PACKAGING & PRINTING FACTORIES

  • Chennai,Tamil Nadu 
  • Haridwar,Uttarakhand 
  • Munger,Bihar 

PAPER & PAPERBOARD MILLS

  • Bollaram,Telangana 
  • Sarapaka,Telangana 
  • Thekkampatty,Tamil Nadu
  • Tribeni,West Bengal

FOODS FACTORIES

  • Haridwar,Uttarakhand 
  • Kamrup,Assam 
  • Kapurthala,Punjab 
  • Malur,Karnataka 
  • Munger,Bihar 
  • Nanjangud,Karnataka 
  • Panchla,West Bengal
  • Pudukkottai,Tamil Nadu
  • Pune,Maharashtra 
  • Uluberia,West Bengal

PERSONAL CARE PRODUCTS FACTORIES

  • Haridwar,Uttarakhand 
  • Kamrup,Assam 
  • Manpura,Himachal Pradesh

PLANTS UNDER CONSTRUCTION

  • Ambarnath,Maharashtra 
  • Khordha,Odisha 
  • Medak,Telangana 
     

Company History

Established in 1910, ITC Limited is a diversified conglomerate with businesses spanning Fast Moving Consumer Goods comprising Foods, Personal Care, Cigarettes and Cigars, Branded Apparel, Education & Stationery Products, Incense Sticks and Safety Matches; Hotels, Paperboards and Packaging, Agri Business and Information Technology. The Company 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 to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of the ITC's multi-business portfolio encompassing a wide range of businesses, the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited,' where 'ITC' is today no longer an acronym or an initialised form.2

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Key Milestones

1925: Packaging and Printing: Backward Integration

Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business.

1975: Entry into the Hospitality Sector - A 'Welcom' Move

 In 1975, the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola' (now renamed My Fortune, Chennai).

1979: Paperboards & Specialty Papers - Development of a Backward Area

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division.

1985: Nepal Subsidiary - First Steps beyond National Borders

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture.

1990: Paperboards & Specialty Papers - Consolidation and Expansion

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry.

1990: Agri Business - Strengthening Farmer Linkages

In 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities.

2002: Education & Stationery Products - Offering the Greenest products

ITC launched line of premium range of notebooks under brand Paperkraft in 2002. To augment its offering and to reach a wider student population, the Classmate range of notebooks was launched in 2003. Classmate over the years has grown to become India's largest notebook brand and has also increased its portfolio to occupy a greater share of the school bag.

2000: Lifestyle Retailing - Premium Offerings

ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000.

2000: Information Technology - Business Friendly Solutions

In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC Infotech India Limited.

2001: Branded Packaged Foods - Delighting Millions of Households

ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad Atta (wheat flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC entered the fast growing branded snacks category with Bingo! in 2007. In 2010, ITC launched Sunfeast Yippee! to enter the Indian instant noodles market. In September 2014, ITC launched GumOn Chewing Gum marking the entry into the category of gums. The Company entered the Fruit-based juices and beverages market with the launch of B Natural Fruit beverages in January 2015. ITC's forayed into the dairy segment with the launch of Aashirvaad Svasti Ghee in November 2015. Launched in April 2016, Fabelle chocolates are ITC's premier offering in the luxury chocolate space. ITC forayed into the branded coffee category in July 2016 with the launch of Sunbean Gourmet Coffee. In February 2017, ITC launched ITC MasterChef super safe spices - the first-of-its-kind spices launched in India, offering export quality super safe spices to the Indian homemaker. ITC MasterChef Prawns were launched in June 2017 as the Company entered the Frozen foods segment. ITC's first foray into fresh fruits and vegetables segment was marked with the launch of Farmland Potatoes in November 2017. In 2018, ITC forayed into the packaged milk segment with the launch of Aashirvaad Svasti pouch milk and into dairy-based beverages with the Sunfeast Wonderz range of milkshakes. The ITC Master Chef Frozen Snacks range was also introduced the same year, marking the Company's first venture into the frozen snacks segment.

2002: Agarbattis & Safety Matches - Supporting the Small and Cottage Sector

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative. ITC now markets popular safety matches brands like iKno, Mangaldeep and Aim. ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector. Mangaldeep is a highly established national brand and is available across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood and 'Fragrance of Temple'.

2005: Personal Care Products - Expert Solutions for Discerning Consumers

ITC entered the Personal Care Business in 2005 and the portfolio has grown under 'Essenza Di Wills', 'Fiama', 'Vivel' 'Superia' brands which have received encouraging consumer response and have been progressively extended nationally. In May 2013, the business expanded its product portfolio with the launch of Engage deodorants. ITC marked its foray into the health space with the acquisition of the brand Savlon and Shower to Shower in 2015. In 2017, the business acquired the brand Charmis to enhance its skincare portfolio. In 2018, ITC acquired the brand Nimyle to enter the floor cleaner space. In 2018, the business also launched the Dermafique brand, foraying into the premium skincare product territory. In 2020, the Personal Care Product Business launched multiple personal and home hygiene products and entered the fruit and vegetable wash category with the launch of brand Nimwash.

2010: Expanding the Tobacco Portfolio

In 2010, ITC launched its handrolled cigar, Armenteros, in the Indian market. Armenteros cigars are available exclusively at tobacco selling outlets in select hotels, fine dining restaurants and exclusive clubs.

Brands

FMCG

ITC is one of the India's leading marketer in Fast Moving Consumer Goods Business. Some of ITC's brands that have gained significant market standing among consumers are Aashirvaad, Sunfeast, Bingo!, YiPPee!, Candyman, mint-o and Kitchens of India in the Branded Packaged Foods space; Essenza Di Wills, Fiama, Vivel and Superia in the Personal Care Products segment; Classmate and Paperkraft in Education & Stationery products; WLS in the Lifestyle Apparel business; Mangaldeep in Agarbattis as well as Aim in Matches.

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CategoryBrandsDescriptions
FoodsAshirwadAtta, Ghee, Salt, Spices, Ready To Eat Meals & Instant Mixes
 SunfeastBiscuits, Cookies & Cakes
 BingoPotato Chips & Finger Snacks
 Kitchens of IndiaReady To Eat Gourmet Cuisine, Masala Mixes, Chutneys & Conserves
 Sunfeast YippeeInstant Noodles & Pasta
 B NaturalJuices & Beverages
 mint-oConfectionery
 CandymanConfectionery
 GumOnGums
 FabelleLuxury Chocolate
 SunbeanGourmet Coffee & Beaten Coffee
 Sunfeast Wonderz MilkDairy Beverages
 ITC Master ChefBlended Spices, Frozen Prawns, Snacks & Kebabs
 FarmlandFresh Potatoes, Frozen Vegetables and Tomato Puree
   
Personal CareEssenza Di WillsFine Fragrances, Deodorants, Hair and Body Shampoos & Bathing Bars
 DermafiquePremium Skin Care
 FiamaShower Gels, Bathing Bars, Handwashes, Essential Oils, Body Oils and Bathing Accessories
 VivelSoaps & Body Wash
 EngageColognes, Deodorants & Perfume Sprays
 SuperiaSoaps & Shampoos
 NimyleNimyle Herbal Floor Cleaner
 NimwashNimwash - Vegetable & Fruit Wash
 SavlonAntiseptic Liquid, Soaps & Handwashes
 Shower to ShowerPrickly Heat Powder
 CharmisCream
   
EducationClassmateNotebooks, Pens, Pencils, Art Stationery, Geometry Boxes & Scholastic Products
 PaperkraftPremium Notebooks, Diaries, Notepads & Pens
   

Matches & Agarbatti

AIMSafety Matches
 MangaldeepIncense Sticks (Agarbattis) & Dhoop
 HomelitesHomelites matches
   

Lifestyle Retail

WLSFormal Wear, Casual Wear, Evening Wear & Designer Wear

Hotels

Launched in 1975, ITC Hotels, India's premier chain of luxury hotels, has become synonymous with Indian hospitality. ITC Hotels pioneered the concept of 'Responsible Luxury' in the hospitality industry, drawing on the strengths of ITC groups' exemplary sustainability practices. Responsible Luxury personifies an ethos that integrates world-class green practices with contemporary design elements to deliver the best of luxury in the greenest possible manner.

The Responsible Luxury commitment of ITC Hotels blends elements of nature to deliver a unique value proposition to guests, conscious of their responsibility to be planet positive. Today, these unique interventions have made ITC Hotels a trailblazer in green hoteliering with all its premium luxury hotels LEED (Leadership in Energy and Environmental Design) Platinum certified.

ITC Hotels has an exclusive tie-up with Marriott's 'The Luxury Collection'. ITC Hotels are luxury hotels located at strategic business and leisure locations.  Welcomhotelsoffers five-star hospitality for the discerning business and leisure traveller.

Fortune Hotels operates mid-market to upscale properties in the first-class, full-service business hotel segment all over India, in major metros, mini metros, state capitals and business towns, promising business and leisure travellers a wide choice of destinations and accommodation. WelcomHeritage brings together a chain of palaces, forts, havelis and resorts that offer a unique experience.

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Owned HotelsLicenced HotelsChoupal Saagars – Rural Services Centres
MumbaiAhmedabad,Gujarat Amravati,Maharashtra 
  ITC MarathaGurugram,Haryana Badaun,Uttar Pradesh
  ITC Grand CentralKota,Rajasthan Bahraich,Uttar Pradesh
 Port Blair,Andaman & NicobarChindwara,Madhya Pradesh
New DelhiVadodara,Gujarat Dewas,Madhya Pradesh
  ITC Maurya Dhar,Madhya Pradesh
  Sheraton New Delhi Hotel Gonda,Uttar Pradesh
 Hotels under Operating ServicesDhar,Madhya Pradesh
ChennaiAurangabad,Maharashtra Hardoi,Uttar Pradesh
  ITC Grand CholaChennai,Tamil NaduHathras,Uttar Pradesh
  WelcomHotel ChennaiHyderabad,Telangana Itarsi,Madhya Pradesh
 Jodhpur,Rajasthan Jagdishpur,Uttar Pradesh
Bengaluru,KarnatakaKhimsar,Rajasthan Mandsaur,Madhya Pradesh
  ITC GardeniaMamallapuram,Tamil NaduMhow,Madhya Pradesh
  ITC WindsorMussoorie,Uttarakhand Nagda,Madhya Pradesh
  WelcomHotel BengaluruNew DelhiParbhani,Maharashtra 
 Pahalgam,Jammu & KashmirPilibhit,Uttar Pradesh
Kolkata,West BengalPanchkula,HaryanaRatlam,Madhya Pradesh
  ITC SonarVisakhapatnam,Andhra PradeshSehore,Madhya Pradesh
  ITC Royal Bengal Ujjain,Madhya Pradesh
 Hotels Under ConstructionVidisha,Madhya Pradesh
ITC Grand Goa Resort & Spa,GoaAhmedabad,GujaratWardha,Maharashtra 
Hyderabad TelanganaBhubaneswar,Odisha Washim,Maharashtra 
Jaipur,RajasthanGuntur,Andhra PradeshYavatmal,Maharashtra 
Agra,Uttar Pradesh  
Amritsar,Punjab   
Coimbatore,Tamil Nadu  

Agri Business

ITC's pre-eminent position as one of India's leading corporates in the agricultural sector is based on strong and enduring farmer partnerships that has revolutionized and transformed the rural agricultural sector. A unique rural digital infrastructure network, coupled with deep understanding of agricultural practices and intensive research, has built a competitive and efficient supply chain that creates and delivers immense value across the agricultural value chain. One of the largest exporters of agri products from the country, ITC sources the finest of Indian Feed Ingredients, Food Grains, Marine Products, Processed Fruits & Coffee.

ITC's Agri Business is the country's second largest exporter of agri-products. It currently focuses on exports and domestic trading of:

  • Feed Ingredients - Soyameal
  • Food Grains - Wheat & Wheat Flour, Rice, Pulses, Barley & Maize
  • Marine Products - Shrimps and Prawns
  • Processed Fruits - Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit Products
  • Coffee

Paperboards and Specialty Papers

ITC's Paperboards and Specialty Papers Business is the leader in volume, product range, market reach and environmental performance, and is the clear market leader in the value-added paperboards segment. Providing internationally competitive quality and cost, the Business caters to a wide spectrum of packaging, graphic, communication, writing, printing and specialty paper requirements.

ITC takes great pride in servicing a large cross-section of industry requirements - from cigarette papers and Components to FMCG cartons, from electrical insulation papers to Bio-based Barrier Coated Board, from decorative laminate base to writing and printing papers and much more. ITC straddles the entire spectrum of paperboards - from 100% virgin, food-grade boards which are made from renewable and sustainable sources to 100% recycled boards.

Packaging Boards: 
Virgin BoardsSafire Graphik,Cyber Cypak,Cyber XLPac,Carte Lumina,PearlXL Packaging,Opus Card,Vivaa Card,Carte Persona
Recycled BoardsEco Natura,Eco Blanca,NeoWhite Bliss
Barrier Coated BoardsIndobev,Indobarr 1PE & 2PE,
Biodegradable Barrier Coated BoardsOmegabev,Omegabarr
Graphic BoardsArt Maestro,Digiart,Indoluxx,
  
Specialty Papers: 
CommunicationOpaque Tissue,Bible Printing,Alfa Plus,Alfa Zap,Hi Brite,Hi Zine,Perma White,Superfine Printing,Pharma Print
Wrapping paper (Food grade)WrapWell
DécorDecor Papers

Packaging

ITC's Packaging & Printing Business is the largest value added converter of paperboard packaging in South Asia. It converts over 70,000 tonnes of paper, paperboard and laminates per annum into a variety of value-added packaging solutions for the food & beverage, personal products, cigarette, liquor and consumer goods industries.

The Division, which was set up in 1925 as a strategic backward integration for ITC's Cigarettes business, is today India's most sophisticated packaging house. State-of-the-art technology, world-class quality and a highly skilled and dedicated team have combined to position ITC as the first-choice supplier of high value added packaging.

The Division supplies value-added packaging to ITC's various FMCG businesses. Its client list includes several well-known national and international companies like Nokia, Colgate Palmolive, Pernod Ricard, Diageo, British American Tobacco, Philip Morris International, Agio Cigars, UB Group, Tata Tetley, Tata Tea, Reckitt Benckiser, Radico Khaitan, Akbar Brothers, Surya Nepal, VST Industries, etc.

With three packaging factories at Tiruvottiyur near Chennai (in the South), Munger in Bihar (in the East), and Haridwar (in the North of India), the Company offers a comprehensive product range in packaging backed by its packaging expertise over the decades and cutting edge technology making it truly a "One stop shop for Packaging".

Carton Board PackagingUV offset printing, Foil Stamping, Embossing, Window patching & lined cartons
Flexible PackagingITC 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
Tobacco Packaging ITC makes value added shoulder boxes for cigars and cigarettes
Green PackagingITC 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). 

Information Technology

ITC Infotech is a leading global technology services and solutions provider, led by Business and Technology Consulting. ITC Infotech provides business-friendly solutions to help clients succeed and be future-ready, by seamlessly bringing together digital expertise, strong industry specific alliances and the unique ability to leverage deep domain expertise from ITC Group businesses. The company provides technology solutions and services to enterprises across industries such as Banking & Financial Services, Healthcare, Manufacturing, Consumer Goods, Travel and Hospitality, through a combination of traditional and newer business models, as a long-term sustainable partner.

Tobaco

Cigarettes

  • Insignia
  • India Kings
  • Classic
  • Gold Flake
  • American Club
  • Navy Cut
  • Players
  • Scissors
  • Capstan
  • Berkeley
  • Bristol
  • Flake
  • Silk Cut
  • Duke
  • Royal

Cigar

  • Armenteros

Business Overview

FMCG Cigarettes

the Cigarettes category remains heavily impacted by punitive and discriminatory taxation. In the period between 2011-12 and 2017-18 taxes on cigarettes almost trebled (on a comparable basis). In July 2017, the industry was further impacted by a sharp increase of 13% in tax incidence under the GST regime. Coupled with the increase in Excise Duty rates announced in the Union Budget 2017, this resulted in an incremental tax incidence of over 20% on cigarettes, post implementation of GST. Thereafter, relative stability in taxation up to January 2020 provided some relief to the legal cigarette industry and lent buoyancy to tax collections. However, legal industry volumes continued to remain significantly below June 2014 levels. The short period of relative stability in taxes was halted in February 2020 with a sharp increase of 13% in tax incidence consequent to significant increases in the rates of National Calamity Contingent Duty announced in the Union Budget.3

Discriminatory taxation on cigarettes has caused progressive migration from consumption of duty-paid cigarettes to other lightly taxed/tax-evaded forms of tobacco products, comprising illegal cigarettes, bidi, chewing tobacco, gutkha, zarda, snuff, etc. Consequently, while the share of legal cigarettes in total tobacco consumption in the country has declined considerably from 21% in 1981-82 to a mere 9% (against global average of 90%), aggregate tobacco consumption in the country has increased over the same period. As a result, despite accounting for less than 1/10th of the tobacco consumed in the country, duty-paid cigarettes contribute more than 4/5th of the revenue generated from the tobacco sector. It is estimated that on account of illegal cigarettes alone, revenue loss to the Government is almost Rs 15000 crores per annum. In respect of the other tobacco products also, the revenue losses are significant since about 68%2 of the total tobacco consumed in the country remains outside the tax net.

India is the 2nd largest tobacco grower in the world. Tobacco occupies a prime place in the Indian economy on account of its considerable contribution to the agricultural, industrial and export sectors.

FMCG – Others

The FMCG Businesses comprising Branded Packaged Foods, Personal Care Products, Education and Stationery Products, Incense Sticks (Agarbattis) and Safety Matches have grown at an impressive pace over the past several years. Segment EBITDA for the year registered robust growth of 32.8% to Rs 914 crores with significant margin expansion of ~160 bps to 7.1%. This was driven by enhanced scale, product mix enrichment, reduced distance-to-market and other strategic cost management initiatives after absorbing the impact of sustained investment in brand building, gestation costs of new categories & facilities and the impact due to disruptions following the outbreak of the pandemic.

Despite the challenging conditions prevailing during the year and the significant slowdown following the outbreak of the pandemic, the company’s FMCG-Others businesses recorded Segment Revenue of Rs 12844.23 crores representing an increase of 5% over the previous year (on comparable basis, excluding the Lifestyle Retailing Business). Most major categories enhanced their market standing during the year. Prior to the outbreak of the pandemic, the FMCG-Others segment was on track to register double-digit revenue growth for the fourth quarter, on a comparable basis. The Education and Stationery Products Business, which reported strong growth till February 2020, was severely impacted due to the outbreak of COVID-19 pandemic towards the end of the year which coincided with the commencement of the new academic session. While ‘Aashirvaad’ atta, spices and salt, ‘Dark Fantasy Choco Fills’, ‘Dark Fantasy Bourbon’, ‘Bounce Layered Cakes’, ‘Bingo! Tedhe Medhe and Potato chips, ‘Yippee! Noodles, ‘Aashirvaad Svasti’ fresh dairy products and ‘Candyman Fantastik’ wafer sticks were the key drivers of growth in the Branded Packaged Foods Businesses ‘Vivel’/‘Fiama’ shower gels & bodywash, ‘Savlon’/‘Fiama’ handwash, ‘Savlon’ sanitizers & antiseptic liquids and ‘Nimyle’ herbal floor cleaner witnessed good traction in Personal Care Products Business. However, relatively subdued performance of ‘Engage’ deodorants and ‘Vivel’ Soaps, in line with industry trends, weighed on overall revenue growth. During the year, the Lifestyle Retailing Business was scaled down significantly pursuant to the divestiture of ‘John Players’ trademark/copyright and its variants in the apparel category in March 2019.

The company’s vibrant portfolio of over 25 world-class Indian brands, largely built through an organic growth strategy in a relatively short period of time, represents an annual consumer spend of over Rs 19700 crores in aggregate. ‘Aashirvaad’ is today nearly Rs 6000 crores in terms of annual consumer spend; ‘Sunfeast’ over Rs 4000 crores; ‘Bingo!’ nearly Rs 2700 crores; ‘Classmate’ nearly Rs 1400 crores; ‘YiPPee!’ nearly Rs 1300 crores; ‘Mangaldeep’ over Rs 800 crores and ‘Vivel’ Rs 500 crores. These home-grown Indian brands support the competitiveness of domestic value chains, especially in the agri space, thereby ensuring creation and retention of value within the country.

The company’s FMCG brands have achieved impressive market standing in a relatively short span of time. Today, Aashirvaad is No. 1 in Branded atta, Bingo! is No. 1 in Bridges segment of Snack Foods (No. 2 overall in Snacks & Potato Chips), Sunfeast is No. 1 in the Cream Biscuits segment, Classmate is No. 1 in Notebooks, YiPPee! is No. 2 in Noodles, Engage is No. 2 in Deodorants (No. 1 in women’s segment) and Mangaldeep is No. 2 in Agarbattis (No. 1 in Dhoop segment).

Branded Packaged Foods

Against the backdrop of an extremely challenging operating environment as aforestated, the company sustained its position as one of the fastest growing branded packaged foods businesses in the country, leveraging a robust portfolio of brands, a slew of first-to-market offers, a range of distinctive products customised to address regional tastes and preferences, along with an efficient supply chain and distribution network. Whilst the Business was on track to register a double-digit revenue growth in the last quarter of the financial year, the momentum was severely disrupted by the onset of COVID-19 pandemic.

The company’s Branded Packaged Foods Businesses continued to make significant investments towards brand building and supporting the scaling up of nascent categories. Cut-through advertising and brand engagement platforms touching millions of consumers through market development efforts strengthened the market standing of brands across categories. With consumer spends of nearly Rs 15000 crores anchored on robust brands that reach one out of every two Indian households, the company sustained its market standing as the 3rd largest food company in the country (publicly listed). During the year, the company’s brands have been successful in entering an additional 10.5 million households (source: HHP, Kantar World Panel, MAT Dec’19).

In the Spices category, during the year, the company expanded its geographical footprint to 17 states and recorded healthy volume growth. The industry offers significant opportunity for migration from unbranded to branded spices, salience of which is low.

On 23rd May, 2020, the company entered into a Share Purchase Agreement (‘SPA’) to acquire 100% of the equity share capital of Messrs. Sunrise Foods Private Limited (SFPL), an Indian company primarily engaged in the business of spices under the trademark ‘Sunrise’, subject to fulfilment of various terms and conditions as specified in the SPA.

Sunrise is a clear market leader in eastern India in the fast-growing Spices category with a rich heritage and brand legacy of over 70 years. Over the years, the brand has built a loyal consumer franchise, anchored on a differentiated product portfolio tailored to regional tastes and preferences, both in the basic and blended spice segments.

Increasing consumer traction for ‘Bingo!’ Potato Chips and Tedhe Medhe continued to drive growth in the Snacks Business. In the Instant Noodles category, YiPPee! noodles sustained its overall market standing as a strong, competitive No. 2 brand in the noodles space. In the Biscuits category, Dark Fantasy Choco Fills sustained its high growth trajectory driven by superior product attributes, focused communication, efficient distribution and consumer activation. The recently launched Bounce Cake variants continue to receive excellent response from consumers and are now available in all target markets. In the Confectionery Business, multi-unit packs and higher salience of ‘Re. 1 and above’ products contributed to portfolio premiumisation. ‘Fabelle’ chocolates continue to receive excellent response from discerning consumers setting new benchmarks in the luxury and FMCG chocolate segments. The range was augmented with the launch of Fabelle Choco Deck Milk & Ruby Chocolate in the FMCG range.

‘Sunbean’ gourmet coffee, which is available across all ITC Hotels and select e-Commerce platforms, continues to receive excellent response from discerning consumers. ‘Sunbean Beaten Caffe’, a unique ready-to-use beaten coffee paste that produces a rich, creamy, frothy cup of coffee, is being piloted in select markets in Delhi/NCR and has been well received by consumers. In the Dairy & Beverages Business, the ‘B Natural’ range of juices anchored on the proposition of ‘100% Indian Fruit, 0% concentrate’ with the added ‘goodness of fibre’, continues to deepen consumer connect by providing a more nutritive and ‘natural’ tasting experience. The ‘Aashirvaad Svasti’ fresh dairy portfolio comprising pouch milk, pouch curd and paneer, gained strong consumer traction on the back of high quality standards and superior taste profile, in Bihar and West Bengal where the portfolio is currently available.

Over the years, the company has invested in several state-of-the-art Integrated Consumer Goods Manufacturing and Logistics facilities (ICMLs) towards augmenting its manufacturing and sourcing footprint across categories with a view to providing structural advantages such as ensuring product freshness, improving market responsiveness, reducing the cost of servicing proximal markets and providing heightened focus on product hygiene, safety and quality. The ICMLs also enable scalability, besides setting new benchmarks in quality, safety, productivity and process excellence. During the year, the Business ramped up capacity utilisation at the recently commissioned facilities at Trichy, Guwahati, Panchla, Haridwar & Pune.

Several manufacturing units of the company’s Branded Packaged Foods Businesses, competing with the best within and outside the industry, received several awards and accolades during the year bearing testimony to the company’s focus on manufacturing excellence, safety and quality. The Biscuits plants in Haridwar and Guwahati won the CII award for Outstanding performance in Food Safety Excellence (in the large manufacturing and rising star category respectively); Panchla and Haridwar (Snacks) factories won ‘Gold’ awards at the National Awards for Manufacturing Competitiveness (NAMC) instituted by the International Research Institute for Manufacturing (IRIM); the Haridwar plant won the Best Environment Award from CII and the National Safety Award from the Ministry of Labour and Employment, New Delhi. The procurement and supply chain functions also won several awards during the year. The company was awarded the prestigious ‘Fastest Growing FMCG Company for 2019’ award by Globoil India, one of the world’s largest trade events in the agri space.

Personal Care Products

The company’s Personal Care Products Business consolidated its market standing across categories driven by sustained focus on innovation, portfolio premiumisation and expansion of distribution reach, both in traditional trade as well as e-Commerce. While ‘Fiama’ handwash, ‘Vivel’ bodywash, ‘Savlon’ handwash and antiseptic liquid and ‘Nimyle’ floor cleaner witnessed robust growth, performance in the bar soaps and fragrancing products categories was relatively subdued in line with the slowdown in consumer demand in the industry witnessed during the year.

In the Personal Wash & Hygiene category, the Business augmented the ‘Fiama’ bodywash range with the launch of ‘Fiama’ Scents in two exciting variants, thereby strengthening the brand’s ‘mood upliftment’ value proposition. Fiama Scents, a first-to-market product in India, is crafted with fragrance encapsulation technology which enables long lasting fragrance delivery through skin friendly micro fragrance capsules, which burst on touch or a slight rub. The Business also introduced a first-of-its-kind Fiama ‘mood uplifting’ handwash in the premium segment with three refreshing variants. The Business also launched two innovative products in record time - ‘Savlon Surface Disinfectant Spray’ and ‘Savlon Hexa’ hand sanitizing liquid for quick and persistent action.

In the Fragrances category, ‘Engage’ consolidated its position as the second largest brand in the category. Over the years, the brand has been built on disruptive innovations anchored on ‘affordability’ and ‘convenience’ thereby driving category expansion. The Business also launched a range of innovative 2-in-1 pocket perfume variants providing the consumer a choice of two fragrances in a single pack to cater to different engagement occasions during the day.

The Business continued to expand its presence in the Floor Cleaner category leveraging the recently acquired ‘Nimyle’ brand. Nimyle is a 100% natural action floor cleaner which derives its efficacy from neem extracts making it an ideal product for daily household use for providing a clean and hygienic environment. During the year, Nimyle witnessed strong growth in the East and also expanded its geographical footprint to the South, to become the 3rd largest brand nationally in a relatively short span of time. The brand’s unique natural action proposition offers immense potential to build on the values of authenticity and trust which have assumed critical significance in the wake of COVID-19 pandemic.

The Business continued to strengthen its presence in the premium skincare space through its ‘Dermafique’ brand and in the popular space through ‘Charmis’. Designed and validated for Indian consumers, the Dermafique range is powered by cutting-edge skincare technology and extensive research. The brand is now available on all key e-Commerce platforms and continues to receive encouraging consumer response.

The Business continues to accord the highest priority to manufacturing excellence. The Haridwar and Manpura facility received the prestigious Five-S certification by JUSE (Union of Japanese Scientists and Engineers) bearing testimony to the company’s focus on manufacturing excellence, safety and quality. With this, all three manufacturing facilities of the Business are Five-S certified.

Education and Stationery Products

The Education and Stationery products industry was adversely impacted during the year due to sluggish demand and tight liquidity conditions. The situation was exacerbated by the onset of the COVID-19 pandemic towards the close of the year which led to postponement of the academic session across the country. This also coincided with the peak season for sales

The Business continued to develop and launch several innovative and superior quality products in the market leveraging its product development cell, recently commissioned dedicated manufacturing facility and the company’s Life Sciences and Technology Centre. During the year, the ‘Classmate’ product portfolio was augmented with the launch of innovative variants while the premium ‘Paperkraft’ portfolio was enriched with the launch of super premium pens with world-class technology and leather-bound notebook organiser. With a view to consolidating its leadership position, the Business also scaled up presence in the college and value segments of the notebook industry through the ‘Classmate Pulse’ and ‘Saathi’ brands respectively.

‘Classmate Spellbee’, a highly popular spelling competition open to students of Classes 5 to 9, continues to grow its franchise and has now completed eleven successful seasons. This platform along with other activation programmes, such as handwriting and sit-and-draw competitions conducted in key cities and towns, reaches out to over a million children across appx. 2000 schools and continues to strengthen brand engagement with the institutional channel.

Incense Sticks (Agarbattis) and Safety Matches

The Agarbatti industry witnessed a marked deceleration in growth rates during the year in line with the slowdown in consumption in the broader economy. The trend of premiumisation that had gathered pace in recent years, saw some moderation during the year with affordability considerations amidst the economic slowdown resulting in higher demand for ‘value for money’ packs.

While demand conditions in the Safety Matches industry remained sluggish, the Business sustained its market leadership position through portfolio premiumisation and by leveraging a robust portfolio of offerings across market segments.

With effect from 1st April, 2020, GST rates for all safety matches irrespective of process of manufacture (mechanised/semi-mechanised units and ‘handmade’ safety matches) have been harmonised at 12% compared to 18% for mechanised/semi-mechanised and 5% for handmade matches earlier. The harmonised rates offer a level playing field for all players.

Hotels

2019-20 turned out to be a mixed bag for the domestic Hospitality industry. While General Elections and sluggish economic activity weighed on the occupancy and room rates during the first half of the year, the second half witnessed a pick-up in growth momentum driven by increase in inbound & domestic tourism, meetings & conventions and retail segments. Reduction in GST rates announced in September 2019 also contributed to the recovery. However, the revival in demand was short-lived with the onset of the COVID-19 pandemic, the impact of which was felt as early as February 2020, severely disrupting operations.

Segment Revenue for the nine months ended 31st December, 2019 recorded robust growth of 19% appx. driven mainly by the newer properties in the portfolio. Segment EBITDA grew faster at 34% appx. on the back of higher RevPar and operational leverage, notwithstanding gestation costs of the new properties. The impact of COVID-19 pandemic weighed on performance for the fourth quarter leading to full year Segment Revenue growth of appx. 10% to Rs 1837 crores and Segment EBITDA growth of appx. 12% to Rs 420 crores

The company’s Hotels Business remains amongst the fastest growing hospitality chains in the country with 109 properties and over 10250 rooms under four distinct brands – ‘ITC Hotels’ in the Luxury segment, ‘Welcomhotel’ in the Upper-Upscale segment, ‘Fortune’ in the Mid-market to Upscale segment and ‘WelcomHeritage’ in the Leisure & Heritage segment.

During the year, the Business commissioned ITC Royal Bengal, Kolkata. Located adjacent to ITC Sonar and in close proximity to the new business districts of Kolkata, this ‘One of a Kind’ luxury hotel is an ode to the region’s cultural heritage and lineage. Together, the two hotels offer one of the largest meetings and conventions spaces in eastern India comprising 693 rooms & suites (including 82 serviced apartments), appx. 1 lakh square feet of banqueting space, a range of dining destinations and Kaya Kalp - The Royal Spa.

The Food & Beverage segment continues to be a major strength of the company’s Hotels Business with some of the most iconic brands in the country. Bukhara at ITC Maurya regained its coveted place in Asia’s 50 Best Restaurants 2020. EDO at ITC Gardenia was rated the No.1 restaurant at The Condé Nast Traveller & Himalayan Top Restaurant Awards 2019. Travel+Leisure Delicious Food Awards 2019 acknowledged Yi Jing at ITC Kohenur for ‘Best Ambience’, Royal Vega at ITC Grand Chola for ‘Best Veg Cuisine’ and Dum Pukht at ITC Maurya for ‘Best Mughlai cuisine’. India’s Top 50 restaurants at the Condé Nast Traveller & Himalayan Awards 2019 featured Dum Pukht & Bukhara at ITC Maurya and Avartana at ITC Grand Chola. The Food & Beverage offerings at ITC Royal Bengal is already much sought after - The Grand Market Pavilion, acknowledged as the ‘Noteworthy Newcomer All Day Dining’ at the Times Food and Night-life Awards 2020 and 12 other Food & Beverage outlets at the integrated complex bear testimony to the wide range of popular culinary offerings.

In the wellness space, Kaya Kalp-The Royal Spa at ITC Hotels, received multiple accolades at the AsiaSpa Awards 2019 - ‘Best Indigenous Luxury Spa Chain’; Kaya Kalp at ITC Grand Bharat was adjudged the ‘Best Destination Spa (India)’ and Kaya Kalp at ITC Mughal was acknowledged as the ‘Best Hotel Spa (India)’.

The ‘Fortune’ brand maintained its prominent position in the Mid-market to Upscale segment, with the sharpened brand positioning of ‘First class, full service hotels - an affordable alternative’. The Fortune brand presently comprises 43 hotels and nearly 3200 rooms across 37 cities. The ‘WelcomHeritage’ brand retains its leadership as the country’s most successful and largest chain of heritage hotels with 36 operational hotels and over 900 rooms.

Paperboards, Paper and Packaging

After witnessing a robust 2018-19 in terms of strong end-user demand and higher realisations on the back of higher pulp prices, the Paper and Paperboard industry remained relatively muted in 2019-20. General economic slowdown, sharp fall in rural demand and tight liquidity conditions impacted end-user demand across segments. Pulp prices which started correcting towards the end of 2018-19, declined sharply during the year due to contraction in global demand and higher inventory levels. The fall in pulp prices not only resulted in lower price realisation, but also led to a surge in imports of paper into the country. This, along with subdued demand conditions which have been exacerbated by the COVID-19 pandemic, is likely to render the business environment challenging in the short-term.

Against the backdrop of a challenging environment as aforestated, the company delivered a competitively superior performance in the Paperboards, Paper & Packaging segment. Strategic investments in pulp import substitution, proactive capacity addition in Value Added Paperboard (VAP) segment, process improvements and a cost-competitive fibre chain supported by effective go-to-market strategies helped the company deliver robust growth in revenue and substantial improvement in profitability in paperboards and paper. The packaging business, however, witnessed a marked slowdown in demand especially in the FMCG and Liquor industries, which weighed on its performance.

Paperboards & Specialty Papers

Global demand for Paper & Paperboard in 2019 witnessed degrowth of 2% on the back of weak demand mainly in Asia and North America. Going forward, demand recovery is expected to be led by the packaging segment while demand for writing & printing and newsprint segments is expected to decline. The growth in the packaging segment is expected to be driven by essential consumer goods, pharmaceuticals, food service and e-Commerce. Writing & Printing and Newsprint segments, on the other hand, are expected to remain under pressure largely due to increasing adoption of digitisation and proliferation of smartphone usage.

Domestic demand for Paper & Paperboard which remained subdued for the first nine months of the year, started witnessing a marginal pick-up in growth trajectory in the fourth quarter. However, nation-wide lockdown amidst the COVID-19 pandemic halted the recovery momentum, and led to demand contraction in the ensuing months. Beyond the short-term, demand is expected to be primarily driven by essential consumer goods in the FMCG industry, Pharma and Food delivery sectors. Recovery in other major sectors such as Garments, Footwear, Publishing, Toys and certain discretionary segments of FMCG is expected to be more gradual while longer term demand is expected to be driven by the move towards higher levels of indigenous manufacturing. Emerging consumer trends in these end-user industries are likely to provide significant opportunities to the Business going forward.

While growth in the domestic paper and paperboard industry was subdued during the year, cheap imports of paper and paperboard continued to flood the domestic market. Imports from China, ASEAN and South Korea rose sharply by 27% during the year. The current import policy and extant regulations governing commercial and social forestry in the country have put the Indian Paper and Paperboard industry at a significant disadvantage vis-à-vis imports. There is clearly a need to review the current import duty structure and re-examine the existing Free Trade Agreements (FTAs) as well as the new ones under formulation, towards providing a level playing field to the domestic industry and encouraging commercial farming of wood in India.

Despite a subdued operating environment and sluggish demand conditions, the Business achieved its highest ever volume of production and sales, crossing 8 lakh tonnes, driven by strategic investments in augmenting VAP manufacturing capacity, continuous focus on enhancing operational efficiency and innovations across the value chain. The company remains the clear leader in the VAP segment and continues to consolidate its preferred supplier position amongst leading end-use customers and brands. It is also a leading player in the eco-labelled products segment and premium recycled fibre based boards space.

The Business continues to be a leading quality player in the Writing & Printing paper segment, leveraging strong forward linkages with the company’s Education and Stationery Products Business. In the Specialty Papers segment, the Business enhanced its presence in the Pharma leaflets and publishing segments. The recently commissioned Décor Papers machine at the Tribeni unit caters to a diverse range of world-class products and continues to be well accepted by discerning customers.

The Business continues to make structural interventions to reduce operating costs and dependence on imported pulp. Significant increase in in-house pulp production was achieved during the year through strategic interventions, Industry 4.0 initiatives and improved wood mix. Capacity utilisation of Bleached Chemical Thermo Mechanical Pulp mill (BCTMP) at the Bhadrachalam unit was further scaled up during the year.

Packaging and Printing

The company’s Packaging and Printing Business is a leading provider of superior value-added packaging for the consumer packaged goods industry. The Business also provides strategic support to the company’s FMCG Businesses by facilitating faster turnaround for new launches, innovative packaging options, design changes, ensuring security of supplies and delivering benchmarked international quality at competitive cost.

The Business caters to the packaging requirements of leading players across several industry segments viz. Food & Beverage, Personal Care, Home care, Footwear, Consumer Electronics, Pharma, Liquor and Tobacco. With its comprehensive capability-set across multiple packaging platforms, coupled with in-house cylinder making and blown film manufacturing lines, the Business continues to provide innovative solutions to several key customers in India and overseas. The Business continued to provide strategic support to the company’s Cigarette and FMCG businesses.

Agri Business

Leaf Tobacco

After declining for 6 years in a row, global production of Flue Cured tobacco in 2019 remained stable at around 3470 million kgs. Crop production in major producing countries like China, Brazil, Zimbabwe and India, being largely similar to 2018 levels, contributed to 80 percent of global flue cured supplies. In line with demand requirements, Indian Flue Cured tobacco supplies are stabilising at around 220-230 million kgs. However, it still remains far below the levels of 2014 representing a drop of over 30%. The disruptions caused by the COVID-19 pandemic are likely to weigh on global cigarette industry volumes and consequently on leaf tobacco trade.

A punitive and discriminatory taxation and regulatory regime on cigarettes, apart from severely impacting the domestic legal Cigarette industry, has also resulted in significant pressure on the leaf tobacco crop grown in India. This, together with declining trend of global cigarette demand, excess production in certain geographies, relative strength of the Indian Rupee compared to currencies of competing origins, lower export incentives and heightened illicit trade in cigarettes has culminated in reduced demand for Indian tobacco. Consequently, leaf tobacco exports have declined by around 24% over the last six years - from 236 million kgs. in 2013-14 to 180 million kgs. in 2019-20. Analysis of Indian exports between 2016-17 and 2019-20 reveals a sharp drop in offtake by global tobacco majors due to decline in cigarette volumes and increased sourcing from cheaper origins.

Other Agri Commodities

Overall domestic food grain production for 2019 crop year stood at 285 million tonnes, at par with previous year. Production of wheat grew by 2.3% to 102.2 million tonnes, rice production increased by 3% to 116 million tonnes while coarse cereals production dropped by 9% to 43 million tonnes. Oilseed production increased by 2.5% to 32.3 million tonnes mainly due to higher soybean output, which increased by 26% to 13.8 million tonnes. Going forward, food grain production for crop year 2020 is estimated to increase to 291 million tonnes.

In 2019-20, world wheat output increased by 33 million tonnes to about 764 million tonnes mainly due to higher production in European Union, Russia and Ukraine. Exports from India were negligible owing to uncompetitive prices compared to competing origins such as Russia and Ukraine. India witnessed a higher production by 2.3 million tonnes which led to increase in the surplus available for domestic trade. The Business leveraged its strong geographical presence to supply high quality wheat at competitive prices to flour mills, largely located in South and East India besides servicing the internal requirements for Aashirvaad atta.

Exports of rice from India at 7.5 million tonnes witnessed a significant decline against 12 million tonnes last year. Exports to destination markets dwindled due to protective import tariffs and surplus production in other competing origins. The Business continued to service orders from customers in both domestic and export trade in selected varieties.

The Agri Business remains focused on enhancing its presence in identified high value-added segments viz. spices for ‘food-safe’ markets, processed fruits, frozen marine products, frozen vegetables, etc. This includes the ‘ITC Master Chef’ range of ‘Super Safe’ frozen prawns, which adhere to stringent standards prevalent in USA, EU and Japan. These products go through rigorous testing (240+ tests) and are ‘individually quick frozen’ to ensure freshness and highest standards of safety and hygiene. Launched in eight cities, leveraging the company’s experience of catering to customers in international markets, the range has been well appreciated for its taste and quality.

Financial highlight

Overall for FY 2019-20, Gross Revenue at Rs 46323.72 crores increased by 2.4%, while PBT (before exceptional items) at Rs 19298.92 crores grew by 4.6% over FY 2018-19. Profit after Tax grew at a faster pace of 21.4% to Rs 15136.05 crores, aided by reduction in corporate income tax rates during the year (net of calibration in pricing).

Total Comprehensive Income for the year stood at Rs 13754.24 crores (previous year Rs 12826.88 crores). Earnings Per Share for the year stood at Rs 12.33 (previous year Rs 10.19)

ITC Q2 profit falls 20% to Rs 3,232 crore; FMCG jumps 15% 4

November 9, 2020;   ITC reported a 19.7 percent year-on-year decline in September quarter profit dented by cigarette and hotel segment. However, FMCG others remained strong for the quarter.

Net profit fell to Rs 3,232.4 crore during the quarter, compared to Rs 4,023.1 crore in the same period last year, meeting street estimates.

Revenue from operations grew by 0.9 percent year on year to Rs 11,976.8 crore in the quarter ended September 2020, ITC said in its BSE filing. It was ahead of CNBC-TV18 poll estimate, which was pegged at Rs 11,220 crore for the quarter.

Cigarette segment reported a 3.9 percent YoY decline in revenue at Rs 5,121.3 crore for the quarter with its earnings before interest and tax (EBIT) falling 15.6 percent as sales hit during July-August; but FMCG others registered a 15.4 percent YoY growth at Rs 3,795 crore in Q2FY21 and its EBIT grew by 179.3 percent YoY to Rs 252.68 crore.

At the operating level, its earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 11 percent year-on-year to Rs 4,060 crore and margin contracted 450 bps YoY to 33.9 percent for the quarter ended September 2020.

EBITDA was largely in line but margin missed CNBC-TV18 poll estimates, which were pegged at Rs 4,000 crore and 35.7 percent respectively for the quarter.

The hotel segment reported an 80.8 percent YoY decline in revenue at Rs 81.96 crore with loss at EBIT level at Rs 184.90 crore against EBIT profit at Rs 17.43 crore in the same period last year.

Agri-business registered a 12.8 percent YoY increase in revenue at Rs 2,985.crore with its EBIT rising 2.7 percent, while paper and packaging business declined 6.8 percent YoY to Rs 1,458.7 crore in Q2FY21 with EBIT declining 7.2 percent YoY.

References

  1. ^ https://www.itcportal.com/about-itc/profile/index.aspx
  2. ^ https://www.itcportal.com/about-itc/profile/history-and-evolution.aspx
  3. ^ https://www.bseindia.com/bseplus/AnnualReport/500875/5008750320.pdf
  4. ^ https://www.moneycontrol.com/news/business/earnings/itc-q2-profit-falls-20-to-rs-3232-crore-fmcg-jumps-15-6080861.html
Tags: IN:ITC
Created by Asif Farooqui on 2021/02/02 12:47
     
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