Itc Limited · NSE:ITC
Itc — Morgan Stanley's 21st Annual India Summit 2019
77 slides from Itc's conference presentation, Jun 12, 2019
Slide 1: Cover letter to stock exchanges on investor conference participation
ITC Limited Virginia House 37 J. L. Nehru Road Kolkata 700 071, India Tel. : 91 33 2288 9371 Enduring Value Fax : 91 33 2288 4016 / 1256 / 2259 / 2260 12th June, 2019 The Manager The General Manager The Secfetary Listing Department Dept. of Corporate Services The Calcutta Stock National Stock Exchan
Slide 2: Copy distribution list
A Enduring Value cc: Securities Exchange Commission Division of Corporate Finance Office of International Corporate Finance Mail Stop 3-9 450 Fifth Street Washington DC 20549 U.S.A. cc: Societe de la Bourse de Luxembourg 35A Boulevard Joseph II L - 1840 Luxembourg
Slide 3: Creating Multiple Drivers of Growth through Responsible Competitiveness
Creating Multiple Drivers of Growth through Responsible Competitiveness Morgan Stanley’s 21st Annual India Summit 12th June 2019 1
Slide 4: ITC Today: Contributing to all sectors of the economy
ITC Today : Contributing to all sectors of the economy Agriculture, Manufacturing & Services Leading FMCG marketer in India Clear market leader in the Indian paperboards, paper and packaging industry - scale, profitability & sustainability 2nd largest Hotel chain by Revenue, leader in profitab
Slide 5: ITC FMCG Business Transformation
ITC FMCG Business Transformation 2001-02 2018-19 1 Categories 40 Diversity of Portfolio <100 SKUs 1,800+ 3 Channels 10 Scale of 72K Markets Serviced 1 Lakh+ Distribution 0.75 Mn Outlets Serviced 2 Mn+ 6 Factories 200+ Strength of 0.4 Mn sqft Warehousing Space 5.2 Mn sq.ft Resources 0.95 Mn MT Throug
Slide 6: Performance Track Record – Last 10 Years
Performance Track Record – Last 10 Years (` cr.) Gross Sales Value PBT PAT Market Cap 75309 18444 363714 12464 800 00 200 00 400 000 180 00 700 00 350 000 160 00 600 00 300 000 140 00 500 00 250 000 120 00 400 00 100 00 200 000 300 00 25311 800 0 150 000 4826 3264 69751 600 0 200 00 100 000 400 0 10
Slide 7: ITC ranks amongst the Top Contributors to Exchequer
ITC ranks amongst the Top 3 Contributors to Exchequer (pvt. sector) Value Addition & Contribution to Exchequer Share of Value Added Contribution to Exchequer, 73% (incl. GST, Excise Duty, Local Taxes, Income Tax, Dividend Distribution Tax) 37972 27546 41059 30742 43568 32075 46296 33791 50363 36585
Slide 8: ITC consistently in the Top League
ITC consistently in the Top League ITC’s ranking amongst listed private sector cos. 8 5 5 5 5 5 5 6 6 6 6 4 7 7 PBT 2 0 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 8 5 5 5 5 5 6 6 6 8 7 7 4 8 PAT 2 0 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 3 3 3 3 4 4
Slide 9: Global Exemplar in Sustainability
Global Exemplar in Sustainability 24 7
Slide 10: ITC's Vision
ITC’s Vision Make a significant and growing contribution towards : • mitigating societal challenges • enhancing shareholder rewards By • creating multiple drivers of growth while reinforcing leadership in tobacco, and • focusing on ‘Triple Bottom Line’ Performance Enlarge contribution to the Nat
Slide 11: Key Corporate Strategies
Key Corporate Strategies Focus on the chosen business portfolio • Best fit - market opportunity & enterprise strengths • FMCG; Hotels; Paperboards, Paper & Packaging; Agri Business Blend diverse core competencies residing in various Businesses to enhance the competitive power of the portfolio
Slide 12: Strategy of Organisation
Strategy of Organisation 3-Tiered Governance Structure 10
Slide 13: ITC won the Porter Prize 2017
ITC won the prestigious Porter Prize 2017 for 'Excellence in Corporate Governance and Integration' and for its exemplary contribution in 'Creating Shared Value'. 11
Slide 14: ITC's Non-Cigarette Business Portfolio
ITC’s Non-Cigarette Business Portfolio FMCG Foods Personal Care Education & Stationery Lifestyle Retailing Safety Matches & Incense Sticks Hotels Paperboards, Paper & Packaging Agri Business 12
Slide 15: Structural Drivers of Growth - FMCG in India
Structural Drivers of Growth - FMCG in India Median age among the lowest in the world Increasing affluence Digital explosion 53% % Penetration (All India Urban) 46% 0 10 20 30 40% Facewash 24 FMCG Per Capita Consumption 35% 5x 28% 31% Floor Cleaner 23 Handwash 21 4X Body Lotion 15 2X Fragrances 14 X
Slide 16: Strategic directions – ITC FMCG
Strategic directions – ITC FMCG Impactful campaigns in conventional & digital media, activation, larger brand Invest in cutting-edge product purpose development & R&D capabilities Leverage digital/social media to Leverage LSTC to launch products deepen consumer engagement with health benefits Consum
Slide 17: Foods: Driving synergistic growth
Driving synergistic growth Brand Building Capability Life Sciences & Deep & Wide Technology Distribution Capability Network High Quality Foods Agri Sourcing Consumer Expertise Engagement Packaging Cuisine Knowhow Knowledge 15
Slide 18: Rapid scale up of FMCG businesses
Rapid scale up of FMCG businesses (` cr.) 14000 12505 12000 11329 10512 9731 10000 9038 8122 8000 7012 6000 5545 4482 3642 3014 4000 2000 0 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 3rd Largest FMCG Player in India One of the fastest growing Foods Busine
Slide 19: FMCG – Others: Significant increase in Scale & Profitability
FMCG – Others: Significant increase in Scale & Profitability (` cr.) Segment Revenue Segment EBITDA Rs.cr. Rs.cr. 1.24x* 2.60x 10512 12505 265 688 FY17 FY19 FY17 FY19 *On comparable basis 17
Slide 20: Creating over 25 world-class mother brands
Creating over 25 world-class mother brands for Indian Consumers 18
Slide 21: Annual Consumer Spends of over 18000 cr. (FY19)
Annual Consumer Spends of over 18000 cr. (FY19) >4500 cr. >3800 cr. ~2500 cr. >1000 cr. >500 cr. 19
Slide 22: Impressive market standing in a relatively short span of time
Impressive market standing in a relatively short span of time # 1 in Branded Atta # 1 in Notebooks #1 in Cream Biscuits # 3 Overall # 2 in Deodorants # 1 in Bridges segment # 2 in Bodywash # 1 in Potato Chips (South) #1 in Dhoop # 2 in Noodles # 2 in Agarbatti 20
Slide 23: Branded Packaged Foods Portfolio
Branded Packaged Foods Portfolio Biscuits, Staples, Snacks, Noodles & Pasta, Confectionery, Ready to Eat, Juices, Dairy, Chocolates and Coffee 21
Slide 24: Personal Care
Personal Care Soaps, Shower Gels, Fragrancing products, Antiseptic Liquids, Hand Wash Skin Care, Shampoos, Floor Cleaner 22
Slide 25: Education & Stationery Products
Education & Stationery Products Notebooks, Pens, Pencils, Art Stationery, Geometry Boxes, Scholastic Products 23
Slide 26: Incense sticks (Agarbattis) & Safety Matches
Incense sticks (Agarbattis) & Safety Matches 24
Slide 27: First-to-Market Innovations
First-to-Market Innovations Dark Fantasy ChocoFills Sunfeast Bounce Minis Luscious chocolate filling Sunfeast YiPPee! Sunfeast Wonderz B Natural Juices Bite Sized Cream Filled enrobed within a rich Unique round shape and Real fruit inclusions Aseptic PET format Cookies cookie non-sticky noodles Fabe
Slide 28: Regional Taste & Preferences
Regional Taste & Preferences Bingo! Tedhe Medhe Wakhra Style, Tomato Masti & Aashirvaad Koora Karam Spices Pudina Twist Aashirvaad MP Atta Sunfeast Marie Light Vita YiPPee! WoW Chicken Bingo! Red Chilli Bijli & Fiery Mangaldeep Jathimalligai Red Tomato 26
Slide 29: Premiumising the Portfolio
Premiumising the Portfolio Dark Fantasy Yumfills and Jellifills Aashirvaad Select Atta YiPPee! Quik Mealz Candyman Jelimals, Tadka Time & Fantastik Body Wash with fragrance Dermafique Skin care Premium Perfume range Classmate Asteroid encapsulation Geo Boxes 27
Slide 30: Building a 'Free From' and 'Good For You' portfolio
Building a ‘Free From’ and ‘Good For You’ portfolio Aashirvaad Sugar Aashirvaad Atta Aashirvaad Nature’s Super Foods range ITC Master Chef Super Release Control Atta with multigrains Ragi Flour, Multi Millet Mix, Gluten Free Flour Safe Prawns YiPPee! Power Up Masala Noodles Sunfeast Farmlite Digesti
Slide 31: Innovation anchored on Affordability & Convenience
Innovation anchored on Affordability & Convenience Savlon Handwash Vivel Bodywash Savlon Hand sanitizer Fiama Showergel 80 ml / Rs. 20 75 ml / Rs. 20 9 ml / Rs. 45 100 ml / Rs. 55 Essenza Di Wills Travel Pack Sunfeast Bounce Cakes Sunfeast Dark Fantasy Engage ON 16 ml / Rs. 799 17 gms / Rs. 5 20 gms
Slide 32: Winning in emerging channels – Modern Trade, e-Commerce, On-the-go
Winning in emerging channels – Modern Trade, e-Commerce, On-the-go Modern Trade Key Strategies Deepening capability Developing tailored products Strategic planning with large accounts MT Growth @ 2x of General Trade On-the-Go e-Commerce (Airports, Railway Stations, Airlines, Corporate Parks etc.) Ex
Slide 33: Addressing the Food Services opportunity
Addressing the Food Services opportunity Eggless Mayonnaise Tomato Ketchup Green Chilli Sauce ITC Master Chef ITC Master Chef Frozen Snacks Super Safe Prawns Bulk Atta Basmati Rice Mango Pulp Tomato Puree Dehydrated Onions 31
Slide 34: Leveraging Digital to deepen consumer engagement – The 3C's
Leveraging Digital to deepen consumer engagement – The 3C’s Content Connect Commerce Innovative & Unique Recipes Dark Fantasy ChocoFills recipes ITCstore.in Fostering Learning through Gamification & Augmented reality Aashirvaad Atta recipes Classmateshop.com Devotional Content Brand Advocacy by empl
Slide 35: Sixth Sense - Marketing Command Centre
Sixth Sense - Marketing Command Centre Marketing Command Centres operational in Kolkata & Bengaluru Dashboards on Social Media & Brand Performance Indicators (online / offline) Over 200 creatives generated Social Listening Tracking Reporting performance Analytics & Insights Mothers Day – Virat Kohli
Slide 36: Anchoring Brand Purpose on larger consumer needs
Anchoring Brand Purpose on larger consumer needs Karuna Nundy Vivel’s brand purpose anchored on Women Empowerment Savlon ‘Healthy Hands Chalk Sticks’ initiative Braille-enabled packs introduced on World Sight Day 34
Slide 37: Savlon 'Healthy Hands Chalk Sticks' Campaign: Global Recognition
Savlon ‘Healthy Hands Chalk Sticks’ Campaign : Global Recognition Won 7 Cannes Lions Grand Prix for Creative (2017) Effectiveness (Cannes 2018) Ranked Second most effective campaign in 2018 globally by WARC. WARC = World Advertising Research Center, U.K. 35
Slide 38: ICML – Cost advantage, Freshness, Agility and Scalability
ICML – Cost advantage, Freshness, Agility and Scalability Develop centers of manufacturing excellence - safety, quality, cost, people capability, process KAPURTHALA HARIDWAR Ensure recipe secrecy and integrity & protect GUWAHATI manufacturing know-how ULUBERIA PANCHLA Provide fresher products and re
Slide 39: ICML Kapurthala, Punjab
ICML Kapurthala, Punjab Commissioned in November 2017 - Currently manufacturing Atta, Biscuits, Beverages, Noodles, Snacks 37
Slide 40: ICML Trichy, Tamil Nadu
ICML Trichy, Tamil Nadu Commissioned in August 2018 - Currently manufacturing Atta, Biscuits, Noodles, Snacks 38
Slide 41: ICML Uluberia, West Bengal
ICML Uluberia, West Bengal Commissioned in November 2016 - Currently manufacturing Atta, Biscuits, Snacks 39
Slide 42: LSTC: Cutting-edge R&D capability
Cutting-edge R&D capability Life Sciences and Technology Centre, Bengaluru 350 highly qualified Partnering with scientists; 836 Global R&D centers patent applications and Academia LSTC Pilot Plants for all State of the Art product categories Analytics Labs 40
Slide 43: Smart Value Chain
Smart Value Chain Manufacturing Sales & Planning Distribution Marketing & Operations Smart Manufacturing Dealer Management System Demand Forecast Supply Planning Smart Utilities Inventory Planning Network Design & Optimization S&OP Planning Transportation Mgmt. Robotic Process Automation (RPA) & Dat
Slide 44: Unique sources of competitive advantage – FMCG
Unique sources of competitive advantage – FMCG • Deep rural linkages, agri-sourcing, culinary expertise of Hotels • State-of-the-art ICMLs – structural cost management & driving efficiency in market servicing • Relentless focus on quality, hygiene and food safety • Established trademarks facilitatin
Slide 45: Agri Business
Agri Business Leading Agri Business player in India & Pioneer in rural transformation Sourcing and supply operations spread across 20 states Largest procurer of wheat after FCI 5th largest leaf tobacco exporter in the world - 43% value share of Indian exports 43
Slide 46: Agri SBU: Strategic Direction
Agri SBU: Strategic Direction Deliver sustainable competitive edge to ITC’s FMCG Businesses through agri sourcing Enhance scale & scope of external business leveraging deep and wide sourcing network Build a robust portfolio of value-added products to expand margin Establish B2B & B2C brands 44
Slide 47: Strategic sourcing support to Foods Businesses
Strategic sourcing support to Foods Businesses Wheat Potato Fruit Pulp Spices Milk New Varietal Security of Supply High quality at Development Sourcing Food Safe Sourcing of high quality Yield improvement competitive prices products milk through farmer Securing premium Develop supply chain for Proxi
Slide 48: Delivering competitive advantage to Aashirvaad Atta
Delivering competitive advantage to Aashirvaad Atta Securing Premium Varieties, Cost Quality Optimisation, Identity Preserved SCM, Lowest Landed Cost Logistics Multiple distributed bulk buying, storage & manufacturing locations Optimised delivery network Securing Long Term Advantage through R&D and
Slide 49: Agri Business: Increasing focus on Value Addition
Agri Business: Increasing focus on Value Addition Brands Attribute Based Value Added Brands, B2B and Basic Value B2C : Prawns, Bulk Added High Curcumin Staples, Tomato Regional/Varietal Turmeric, Blended Puree, Spices, Grades Spices, Low sugar Frozen Snacks Basic Fruit Pulp, Tomato Puree, IPM Chilli
Slide 50: ITC Hotels
ITC Hotels One of the fastest growing hospitality chains in India Trailblazer in Green Hoteliering Leader in Profitability 48
Slide 51: ITC Kohenur & ITC Grand Goa added to portfolio in FY19
ITC Kohenur & ITC Grand Goa added to portfolio in FY19 ITC Kohenur - 271 keys, 6 F&B Outlets ITC Grand Goa 252 keys, 6 F&B outlets, 36,000 sq. ft. of Spa space 49
Slide 52: Projects in progress: 'ITC Hotels' & 'WelcomHotel'
Projects in progress: ‘ITC Hotels’ & ‘WelcomHotel’ ITC Royal Bengal ITC Narmada, Ahmedabad Phase 1 commissioned in Jun’19 WelcomHotel, Guntur WelcomHotel, Bhubaneswar WelcomHotel, Amritsar 50
Slide 53: Hotels: Strategic Direction
Hotels: Strategic Direction Drive profitable growth by leveraging world-class infrastructure & capability • Iconic properties • Iconic cuisine brands • Loyalty programmes • Cutting-edge digital infrastructure / distribution Leveraging assets and growing through management contracts • Asset-right
Slide 54: Paperboards & Packaging Business
Paperboards & Packaging Business No. 1 in Size No. 1 in Profitability World-class Environmental Performance 52
Slide 55: Paperboards & Packaging Business
Paperboards & Packaging Business Market leader in fast growing Value Added Paperboards segment Integrated Operations • In-house ozone bleached pulp mill • Bleached Chemical Thermo Mechanical Pulp Mill commissioned in Mar‘17 – first-of-its-kind in India Secure, sustainable & cost competitive fi
Slide 56: Key Sustainability Initiatives
Key Sustainability Initiatives Water Carbon Solid Waste Recycling Positive Positive Positive 17 years 14 years 12 years 54
Slide 57: ITC's approach to Sustainability
ITC’s approach to Sustainability Create innovative, synergistic models that reinforce sustainable competitive advantage & foster inclusive growth as well as create sustainable value chains Embed sustainability in Business operations • Low Carbon footprint, Water and Solid waste management Deepen
Slide 58: Impactful Social Performance
Impactful Social Performance 56
Slide 59: Making Agri value chains competitive
Making Agri value chains competitive Quality, productivity, market access, sustainable practices • Partnering NITI Aayog Baareh Mahine Hariyali Initative in 27 Districts • Over 2 lakh farmers trained till date Doubling Farmers Income through round-the-year interventions Climate Smart Agriculture (eg
Slide 60: Social and Farm Forestry
Social and Farm Forestry Greening over 7,33,000 acres Creating 125 million person days of employment 58
Slide 61: Social and Farm Forestry
Social and Farm Forestry High yielding varieties developed by ITC R&D Clonal Saplings grown in Nursery 59
Slide 62: Wasteland Conversion
Wasteland Conversion ~ Conyiiait rc Limi
Slide 63: Agro-Forestry Model
Agro-Forestry Model 61
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Slide 65: ITC Farm Forestry
ITC Farm Forestry 45 sec 300419
Slide 66: Watershed Development
Watershed Development Over 15,000 structures creating rainwater harvesting potential of 34.6 Million KL irrigating 10.1 lakh acres (3x of ITC’s net water consumption) 64
Slide 67: Participatory Watershed Planning
Participatory Watershed Planning 65
Slide 68: Water User Groups
Water User Groups Copyright. ITC Limited
Slide 69: Enduring Value
Enduring Value
Slide 70: Copyright ITC Limited
Copyright ITC Limited
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Slide 72: ITC Watershed
ITC WATERSHED
Slide 73: Low Carbon Footprint
Low Carbon Footprint Renewable Energy – 41% of energy consumed 24 Platinum rated Green Buildings; World’s Greenest Luxury Hotels chain ITC Sankhya: World's First LEED Platinum Data Continuous Reduction in Specific Energy/Water Centre Consumption 71
Slide 74: Global Recognition
Global Recognition World Business and Development Inaugural UNDP-ICC Award Sustainability Leadership Award, Zurich Award 2012 at the Rio+20 UN Summit The Stockholm Challenge Award Development Gateway Award 72
Slide 75: ITC: Creating Enduring Value
ITC: Creating Enduring Value A passion for profitable growth…. …..in a way that is sustainable……. …. and inclusive 73
Slide 76: Forward-looking Statements
Forward-looking Statements This presentation contains certain forward-looking statements including those describing the Company’s strategies, strategic direction, objectives, future prospects, estimates etc. Investors are cautioned that “forward looking statements” are based on certain assumptions o
Slide 77: Thank You
Thank You 75