ITC Company Snapshot:
ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As it kept growing the ownership shifted to Indian investors and company is renamed as India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974.
Over a period of time ITC has diversified its offerings, as a result of which company’s revenue share from non-tobacco products is growing and stood at 58% for year ending March 2017. With USD 8 Billion in revenue and Market Cap of over 50 Billion it’s one of the large conglomerates in the world.
With such a scale ITC has grown at a CAGR of 12% in the last 20 years. ITC Clocked a Revenue of 55 thousand Crores for the year 2017.
Chairman: Yogesh Chander Deveshwar
CEO & Executive Director: Sanjiv Puri
Brands of ITC:
Shower to Shower
|Cigarettes||Wills Navy Cut|
SWOT Analysis of ITC:
Huge Brands: ITC as a brand name has a long history of over 100 years which acts as a catalyst for growth. Some of largest Brands of ITC by annual sales are Aashirvaad 3500 Crore Brand, Sunfeast 3000 Crore Brand, Bingo 1000 Crore Brand, Yipee 1000 Crores Brand, Vivel 500 Crores Brand, Classmate 1000 Crore Brand. Mangaldeep 500 Crore Brand.
Distribution Network: Company has one of the largest Distribution network in India spread across cities and towns. The reach and availability of products still plays crucial role in India’s consumption. Infact distribution reach is single largest driver of sales in small and remote towns.
Well Diversified: From Technology to Serious of FMCG products ITC has well diversified its portfolio and growing in other area of business. Which resulted in around 10% of sales of the ITC group being Internal.
Sustainable CSR Programmes: e-Choupal and other Rural initiates have built to secure its procurement in a sustainable way. This adds many plus points for a Brand which is focusing on increasing its non-cigarette revenue YoY.
Brand Positions: With more than 35 FMCG brands ITC has built world-class brands. ITC’s winning brands and their Market Positions are commanding. Some of Top Brands of ITC are:
Classmate: India’s No. 1 notebook & stationery brand
Aashirvaad: India’s No 1 Atta Brand
Yippee: India’s No 2 Instant Brand
Mangaldeep: India’s No. 2 Agarbatti Brand
Engage: India’s No 2 Deodorant Brand
AIM: India’s Largest Brand by Sales.
Increasing Tax Burden: ITC is still seen as a cigarette company and sales of the company are dominated by Cigarette sales. Which is attracting a higher Tax slabs YoY from the Exchequer in a move to discourage smoking and promote health.
Procurement Cost: Many areas in which Brands of ITC operate the cost of war materials are increasing mainly in Paper and FMCG segment so giving a thin margin to operate. Rising procurement cost discourages growth and competitive advantage.
Tobacco Products: Tobacco products sales outlook seems muted or going to decline day by day. With rising awareness of its negatives. Indian consumers are getting increasingly health conscious and this trend is a along time play, given visibility of growing income levels and living standards tobacco products are on a downtrend. ITC has to do Hercules efforts to increase its other products revenue mix in a given time.
E Commerce: This is ITC’s most promising future growth avenue, with e-Choupal operating in more than 40 thousand villages. It’s foray into e-commerce particularly on demand Vegetables and Fruits will act as a game changer for the Indian conglomerate. Where procurement and supply chain are well built across the length and breadth of the country it’s a clear choice waiting to be implemented.
New Avenues of Growth: ITC InfoTech has a limited growth even since its launch and has a huge opportunity when world is looking at India for innovation. Future technologies like AI, IoT and ML etc... offer new growth opportunities for ITC. And there are several product categories in which it can enter and built a much wider offering in FMCG.
Acquisitions: Having invested much of time and money to diversify its business and to build successful market leading products it’s time for the company to look at inorganic growth. Particularly in Fashion Accessories and Dairy space which are at a consolidation phase with many regional players. Company did some successful acquisitions in the past like Savlon from Johnson & Johnson and B Natural from Balan natural Foods the road is yet less travelled and opportunities and many.
FDI in Retail: Governments push to FDI in Retail is attracting leading global players to set up a shop in India. New entrants like Walmart have huge investment and operational plus technological knowhow which players like ITC need to keep an eye to stay relevant and bring in efficiency with scale across all product range.
Decreasing Margins: Margins are going down although economies of scale apply as theory in most of the manufacturing companies. ITC’s margins are under pressure due to increasing procurement cost. One of its strongest backbone is challenged by competition and emerging players like Patanjali. Procurement competition will shoot up raw material cost for the FMCG industry in the near future with limited scope for raising the MRP efficiency coupled with technology adoption is a way forward.
Competition: Competitive is an ongoing challenge for every company irrespective of its size, this needs to be taken care by more niche products and better positioning.
In Apparel from Online players: ITC brands like Wills Lifestyle and John Players are under severe pressure from the online market places like Amazon and Flipkart. This is one segment where ITC shall explore the possible exit and focus on core areas of strength and offering which are able to create a unilateral brand experience for its consumers.