ITC Limited

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ITC Limited
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ITC - Financial Snapshot
(Rs. 1 crore Rs. 10 million)
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2005-06 Financials
(Rs. 1 crore Rs. 10 million)
4
Segment Revenues 2005/06
(Rs. 1 crore Rs. 10 million)
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Segment Results 2005/06
(Rs. 1 crore Rs. 10 million)
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Segment Capital Employed 2005/06
Before considering provision of Rs. 426 crs
(31.03.05 Rs. 337 crs) in respect of disputed
State taxes, the levy / collection of which has
been stayed.
(Rs. 1 crore Rs. 10 million)
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ITC Key Financials Q1 2006-07
Rs. Crs
(Rs. 1 crore Rs. 10 million)
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Segment Revenue Q1 2006-07
(Rs. 1 crore Rs. 10 million)
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Segment Results Q1 2006-07
(Rs. 1 crore Rs. 10 million)
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Segment Capital Employed Q1 2006-07
Before considering provision of Rs. 489 crs
(30.06.05 - Rs. 359 crs) in respect of disputed
State Taxes
(Rs. 1 crore Rs. 10 million)
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ITC One of Indias most valuable corporations

• One of the 8 Indian Companies to feature in
  Forbes A-list for 2004
• Featuring 400 of the Worlds best big companies
  with M-cap. gt USD 5 bln. are rated as the most
  attractive companies for investors
• Only Indian FMCG Company to feature in Forbes
  2000 List
• A comprehensive ranking of worlds biggest
  companies measured by a composite of sales,
  profits, assets market value
• Among top in
• Sustained value creation (BT-Stern Stewart
  survey)
• Operating profits
• Cash Profits
• Ranks No. 8 among Indian listed Companies by
  market cap.(_at_30/06/06)
• No. 1 in FMCG Sector 6th amongst Private Sector
• Rated as one of Indias Most Respected Companies
  (IMRB-Businessworld Survey 2006)

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Accolades Awards (1)

• Golden Peacock Global Award for Corporate Social
  Responsibility in Emerging economies for 2005 by
  World Council for Corporate Governance for the
  e-choupal and social farm forestry initiatives
• 2005 Golden Peacock Award for Excellence in
  Corporate Governance
• ITC Centre,Gurgaon awarded Platinum Green
  building rating by US Green Building Council
  -Leadership in Energy and Environmental Design
• largest Platinum rated building in the world 7th
  such building in the world
• Bhadrachalam paperboard unit
• adjudged Greenest paper mill in India by The
  Centre for Science Environment won the
  Greentech Environment Excellence Gold Award
• John Players adjudged the Most Admired Shirt
  Brand of the Year at the Lycra Images Fashion
  Awards (LIFA) awards in Jan06

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Accolades Awards (2)

• e-Choupal initiative continues to win global
  recognition
• Stockholm Challenge Award 2006 in the Economic
  Development category which recognises initiatives
  that leverage Information Technology to improve
  living conditions and foster economic growth in
  all parts of the world.
• First Indian Company to win the Development
  Gateway Award 2005 for the most exemplary
  contribution in the field of Information
  Communication Technologies (ICT) for development
  during the last 10 years
• World Business Award 2004 International Chamber
  of Commerce the HRH Prince of Wales
  International Business forum
• Harvard University case study

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ITC - Business Portfolio
ITC
FMCG Cigarettes Other FMCG
Paperboard Paper Packaging
Agri Business Leaf Tobacco Agri Commodities
Hotels
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Strategy of Organisation to manage diversity of
Portfolio

• Formal 3-tiered governance structure
• Board of Directors
• Comprising executive (4) and non-executive
  directors (8)
• Strategic supervision
• Corporate Management Committee
• Comprising executive directors and senior
  managers
• Strategic management
• CEO Divisional Management Committee
• Executive management

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Corporate Strategies

• Sustain multiple drivers of growth, matching
  internal capabilities with emerging market
  opportunities
• Pursue World class competitiveness in all
  businesses and across the entire value chain
• Best-in-class in terms of
• Internal Vitality
• Market Standing
• Profitability
• Strategy of Organisation and Governance processes
  geared to manage multiple businesses
• Blend core competencies and leverage ITC umbrella
  strengths to create new avenues of growth

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FMCG - Cigarettes
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ITCs Cigarettes Business

• Market leadership
• Powerful brands across segments
• Leadership in all segments - geographic price
• Extensive FMCG distribution network
• Direct servicing of 85000 markets nearly 2
  million retail outlets
• World-class state-of-the-art technology and
  products
• Investment - Rs.10 billion in six years
• Exciting long term growth potential

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Cigarettes Growth potential

• Cigarettes account for only 14 of tobacco
  consumed in India unlike world pattern of 85 due
  to prolonged punitive taxation
• Cigarettes (14 of tobacco consumption)
  contribute nearly 85 of Revenue to the Exchequer
  from tobacco sector
• Of the 58 of adult Indian males who consume
  tobacco, barely 15 can afford cigarettes
• Biri Cigarettes ratio 10 1
• Annual per capita adult cigarette consumption in
  India is appx. one tenth world average 141
• Future growth depends on relative rates of growth
  of per capita income and moderation in taxes

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Source Based on Cigarette consumption
data(2003) from World Cigarettes,ERC Group plc.
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Hotels Tourism
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Hotels Tourism industry

• Foreign arrivals into India - 3.9 million appx.
  vs 31 million in China
• The two nations were on par 2 decades ago at
  750,000 arrivals
• Today, Beijing alone has as many hotel rooms as
  the whole of India
• Indias luxury rooms availability lower than even
  smaller East Asian countries

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Luxury hotel rooms - East Asia
Source Compendium of Tourism statistics, WTO
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Indian hotel industry

• Current supply appx. 100000 rooms of which 5
  Star category accounts for less than 30
• India needs 130000 rooms to service 5 million
  tourists a figure expected to be reached by
  2007
• Present mismatch between supply and demand
  expected to persist over the short term
• As infrastructure for trade commerce improves -
  growing potential for leisure tourism

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ITCs Hotel Business

• ITC-Welcomgroup a leading hotel chain in India
• Strategy to establish presence in key business
  locations to complete the chain achieved in end
  2004
• Over 5200 rooms under 4 distinct brands
• Fastest growing hotel chain with highest
  operating efficiency (PBDIT/Net Income _at_ 41)
  amongst the 3 leading chains
• Leverages unique service proposition and
  international alliance with Sheraton
• Large tax advantages on investments on ITC
  Balance Sheet
• Attractive medium / long term prospects

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ITCs Hotel properties

• ITC Hotel Maurya Sheraton Towers,New Delhi
• ITC Hotel Grand Maratha Sheraton Towers,Mumbai
• ITC Hotel Sonar Bangla Sheraton,Kolkata
• ITC Hotel Grand Central,Mumbai
• ITC Hotel Windsor Sheraton Towers,Bangalore
• ITC Hotel Kakatiya Sheraton Towers,Hyderabad
  (thru a 68 holding in Srinivasa Resorts Ltd.)
• ITC Hotel Park Sheraton Towers ,Chennai
  (managed property)
• WelcomHotel Rajputana Palace Sheraton,Jaipur
• WelcomHotel Chola Sheraton, Chennai
• WelcomHotel Mughal Sheraton,Agra
• WelcomHotel,New Delhi
• WelcomHotel Rama International , Aurangabad
• WelcomHotel Vadodara (thru associate company)
• WelcomHotel New Delhi
• WelcomHotel Grand Bay,Visakhapatnam (managed
  property)

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ITCs Hotel Business

• Manages 15 full service mid-market properties
  under the Fortune Hotels brand
• 100 subsidiary company Fortune Park Hotels
  Ltd.
• Also operates 35 properties under the
  WelcomHeritage brand
• Maharaja Heritage Resorts Ltd. 50 JV with
  Marudhar Hotels (P) Ltd.

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Paperboards, PaperPackaging
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Indian paperboard market

• Annual paperboard demand appx. 1.1 million
  tonnes
• Fragmented capacity obsolete technology
• Low per capita usage at around 6 kgs p.a. (world
  average over 50 kgs p.a.)
• Indian paperboard market growing at 7 p.a.
• Value Added Coated board - the fastest growing
  segment (20 p.a.) in India driven by the growing
  sophistication of the consumer

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Paperboard Demand Projections - Asia

• Asian region demand (excluding Japan) growing by
  0.5 million tonnes per annum
• This region expected to be a net importer by 2006
• Significant export opportunities for high quality
  Indian manufacturers
• ITC paperboards exports - Rs. 2 billion appx.

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ITCs Paperboards Business

• Market leader in growth segment - value added
  coated boards
• World-class contemporary technology
• Elemental Chlorine Free (ECF) Pulp Mill fully
  operational only one of its kind in India
  meeting world-class environmental standards
• Internationally competitive quality and cost
• Social farm forestry in mill command area to
  improve access to cost effective fibre to
  attain self-sufficiency
• Biotech research based high yielding Clones
  effectiveness tested in about 41,000 hectares
• Fully integrated operations with in-house pulping
  capacity at appx. 1.10 lac MT
• Expansion programme underway source of
  sustainable competitive advantage

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ITCs Paperboards Packaging businesses

• Capacity expansion in recycled segment
• Acquisition of Kovai Unit in March 2004 65000
  TPA
• Another 75000 TPA commissioned in Jan 05
• ITCs packaging SBU -Indias largest converter of
  paperboard into high quality printed packaging
• Leading supplier to Indian FMCG segment
• Provides superior packaging solutions to the
  cigarettes and new FMCG businesses

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Agri Businesses- Leaf Tobacco- Agri Commodities
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Indian Leaf Tobacco industry

• India the third largest producer of tobacco
• However, Indias share is only 7 in world
  tobacco trade
• Upgradation of tobacco consumption from other
  formats to cigarettes will enable
• growing domestic base
• larger opportunities for value added exports
• ITC Indias largest buyer, processor, consumer
  exporter of cigarette tobaccos
• Pioneering cultivation of flavourful Flue-cured,
  superior Burley and Oriental tobaccos in India

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ITCs Agri Commodity Exports

• Farm linkages in 14 states covering Soya, Wheat,
  Rice, Marine products, Edible nuts, Coffee
• Unique CRM programme in commodity exports
• Leveraging IT for the transformational
  e-Choupal initiative
• Rural Indias largest Internet-based intervention
• Over 36000 villages linked through around 6300
  e-Choupals servicing over 3.5 million farmers
• 10 Choupal Saagars operational 9 more to be
  launched shortly (40 nos. over the next 18
  months)
• Distinctive sourcing capability for ITCs Foods
  business

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e-Choupal - Recognition

• Stockholm Challenge Award 2006 Economic
  Development Category
• World Business Award ICC-UNDP
• Enterprise Business Transformation Award -Wharton
  Infosys
• Harvard Business School case study
• Showcased at ICT4D, Geneva UN
• Information and Communication Technologies for
  Development

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ITCs strategic thrust

• Cost-effective extension services to enhance farm
  productivity and quality, and better align farm
  produce with requirements of the market, both
  domestic and international
• Enhances competitiveness of ITC agri-sourcing
• Create e-infrastructure to serve as transaction
  backbone
• Provides ITC two-way fulfilment capability in and
  out of rural markets for a range of goods and
  services
• Rural marketing initiatives being scaled up
  progressively

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Future Growth Value Capture

• New FMCG Initiatives

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Strategic Rationale

• Blend multiple competencies residing within the
  ITC Group to create new avenues of growth
• Best fit between internal capabilities and
  emerging market opportunities
• Each segment enhances the depth and width of
  ITCs FMCG distribution capability
• Business model retains critical elements of value
  chains within ITC with other elements outsourced
• Contributing to the competitiveness of SMEs

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FMCG Business InitiativesBranded Packaged Foods

• Leverages
• Unique Agri sourcing skills
• ITC Welcomgroups specialist cuisine bakery
  knowledge
• FMCG distribution synergies
• ITC RD Centre, Bangalore
• 4 chosen categories
• Staples
• Aashirvaad Atta, Salt, Spices
• Snack Foods
• Sunfeast Biscuits
• Confectionery
• Candyman, Mint-o
• Ready to Eat
• Kitchens of India, Aashirvaad ReadyMeals,
  Aashirvaad Instant Mix, Sunfeast Pasta

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FMCG Business InitiativesBranded Packaged Foods

• Aashirvaad Atta
• Current market leader amongst national branded
  players leverages the e-choupal network for
  cost-quality optimisation and region specific
  offerings
• Sunfeast Biscuits
• Differentiated innovative products continues
  to build consumer franchise distributed
  outsourced supply chain being ramped up
• Number of innovative products in the pipeline
  leveraging the capabilities of the ITC RD Centre

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FMCG Business InitiativesLifestyle Retailing

• Leverages trade mark and services expertise of
  hotels
• Relaxed wear market growth gt 25 p.a
• Upmarket product range available in exclusive
  Wills Lifestyle stores and multi-branded outlets/
  large format retail stores across the country
• State-of-the-art Master Facility aids speed of
  execution
• Outsourced JIT plant for quick response
  manufacturing
• Product and brand range being expanded
• Premium segment comprising the Classic range of
  formal wear, Wills Sport relaxed wear and
  Wills Clublife evening wear
• Strong distribution network in place for the
  mid-market brand John Players

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FMCG Business InitiativesGreetings, Gifting
Stationery

• Leverages print and paper know-how
• An emerging market in India - growth driven by
  increasing cross-cultural exposure
• ITCs Expressions range commenced with greeting
  cards now widened to include stationery gift
  wraps
• Distribution network being strengthened to scale
  up the Stationery business significantly
• Classmate brand already the most widely
  distributed brand in India
• Serves to expand the width of ITCs FMCG
  distribution capability with negligible
  incremental investment

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FMCG Business InitiativesSafety Matches

• Current industry consumer spend estimated at Rs.
  1250 crores p.a. for 24 billion match boxes
• Fragmented supply base arising from policy of
  reservation for small scale industry
• ITC markets its brands with value added products
  across each price point
• Support SMEs with complementary marketing
  strengths
• AIM Indias largest selling Safety Matches
  brand
• Successful acquisition of WIMCO Ltd. by Russell
  Credit (shareholding as at 30/06/06 93.84)
• Key brands Homelites, Ship, Cheetah Fight etc.

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FMCG Business InitiativesIncense sticks
(Agarbattis)

• Current industry consumer spend estimated at over
  Rs. 900 crores p.a.
• Fragmented supply base arising from policy of
  reservation for small scale industry
• ITC markets its brands with value added products
  across each price point
• Support cottage sector with complementary
  marketing strengths
• Mangaldeep the only National brand in the
  country

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FMCG business initiatives.

• Concurrently, ITCs IT subsidiary assists in
  web-enabling business processes
• CRM initiatives
• ERP transaction processing systems
• SCM including the e-choupal capability
• hosted on ITCs Virtual Private Network
• ITC awarded the best IT user in FMCG category by
  Nasscom

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Future Positioning of ITC A leading FMCG player
in India
VPN providing SCM, ERP CRM capability
M A R K E T S
F A R M E R S
e-choupal rural two-way fulfillment capability
Cigarette Trade Marketing capability
Expanded FMCG distribution capability
Greeting cards/stationery
Branded Foods
Lifestyle retailing
Matches Agarbattis
A basis for strategic partnerships with other
FMCG brand owners
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Forward-looking Statements
Statements in this presentation describing the
Companys objectives, future prospects,
estimates, expectations etc. may be forward
looking statements within the meaning of
applicable securities laws and regulations.
Investors are cautioned that forward looking
statements are based on certain assumptions of
future events over which the Company exercises no
control. Therefore there can be no guarantee as
to their accuracy. These statements involve a
number of risks, uncertainties and other factors
that could cause actual results to differ
materially from those that may be projected or
implied by these forward looking statements. Such
risks and uncertainties include, but are not
limited to growth, competition, acquisitions,
domestic and international economic conditions
affecting demand, supply and price conditions in
the various businesses in the Companys
portfolio, changes in Government regulations, tax
regimes and other statutes, and the ability to
attract and retain high quality human resource.