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ITC LIMITEDITC LIMITED

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ITC - Financial Snapshot

Rs. croresRs. crores1997 2004 CAGR %

Gross Turnover (Ext.) 5863 11815 11

Net Turnover (Ext.) 2912 6470 12

PBIT 707 2344 19

PBT 587 2319 22PAT 347 1593 24

Capital Employed 2085 6619 18

EPS (Rs.) 14 64 24

Book Value per share (Rs.) 55 259 25

Op. Profit Margin (%) 24 36

Net Profit Margin (%) 12 25

Return on Capital Employed (%) 34 35

Total Shareholders Return (%) 23

(Rs. 1 crore = Rs. 10 million)

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2003-04 Financials

(Rs. crore = Rs. 0 million)

2003/04 2002/03 Goly (%)

Gross Turnover 11815 11025 7.2

Net Turnover 6470 5866 10.3

Exports 1103 1336 -17.4PBDIT 2585 2323 11.3

PBIT 2344 2086 12.4

PBT 2319 2056 12.8

PAT

1593 1371 16.2

CapitalEmployed 6619 5546 19.3

Rs. crores

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S m nt Capital mplo a ch 04

Rs. crs.

00 04 00 0

. Capital mplo

a) FMCG - Cigarettes * 1572.50 1621.58 (3. )

- Others 212.10 80.41 63.

Total FMCG .6 1701.99 .9

b) Hotels 978.68 943.09 3.

c) Agri Business 476.90 410.88 6.

d) Paperboards, Paper & Packaging 1468.89 1260.91 6.5

Total Segment Capital Employed 9. 4316.87 9.

* Luxury Tax Provision not incl. 366 970.00 .


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Key Financials - Q2 FY 0Rs. rs

Q2

Last Year

Q2

ct als Goly (%)

2856 Gr ss T r er E ter al 219 12.7

1536 Net T r er E ter al 1738 13.1

688 PBDIT 76811.6

628 PBIT 698 11.1

624 PBT 688 10.2

428 PAT 486 13.5

6257 Ca ital E l ye 754020.5

4295 Operati Cap.E pl ye 4562 6.2

17.29 EPS 19.61 13.4


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Key Financials - H FY 0

H as

Yea

H

c als

2004

Goly (%)

5611 Gross Turnover External 6455 15.0

2965 Net Turnover External 3513 18.5

1357 PBDIT 1523 12.3

1238 PBIT 1385 11.9

1228 PBT 1362 10.9

825 PAT 948 14.9

6257 Capital Employed 7540 20.5

4295 Operating Cap.Employed 4562 6.233.33 EPS 38.25 14.8


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Segment even es - H FY 0

04/05 03/04 Amt %

1. Segment Revenue

a) FMCG - Cigarettes 5079 4575 504 11

- Others 237 127 111 87Total FMCG 5317 4702 615 13

b) Hotels 131 107 24 23

c) AgriBusiness 862 734 128 17

d) Paperboards, Paper & Packaging 763 604 159 26

Total 7073 6147 926 15

Less : Inter-seg ent revenue 617 535 82 15

Gross sales / Income from operations 6455 5611 844 15

GrowthRs c s


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Segment Res lts- H FY 0

04/05 03/04 Amt

2. SegmentResu ts

a)F CG -Ci ar tt s

-Oth rs ( ) ( ) ( ) ( )

Tot F CG 081 983 10

b)H t ls

c) Agri B si ess

) Paperb ar s Paper& Packagi g 150 114 35 31

Tot 1321 1167 154 13

GrowthRs c s


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Capital mployed-H FY 0

04/05 03/04 Amt %

3. Capital Employed

a) FMCG - Cigarettes 1240 1275 (35) (3)- Others 238 157 81 52

Total FMCG 1478 1432 46 3

b) Hotels 993 967 26 3

c) Agri Business 495 317 179 56

d) Paperboards, Paper & Packaging 1579 1301 278 21

Total Segment Capital Employed 4545 4016 529 13

GrowthRs c s


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One o Indias most val able co po ations

Included in the F be -list* featuring 400 of theWorlds best big companies

Among top in :Sustained value creation

Operating profits

Cash Profits

High rating for Corporate overnance First company in India to be CG rated

* Sales or Market Cap. of US$ 5 billion or more

ITC

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ITC - siness o t olio

ITC

FMCGCIGARETTES

* OTHER FMCGHOTEL

S

PAPERBOARD

PAPER &PACKAGING

AGRI BUSINESSLEAF TOBACCO

AGRI COMMODITIES

* FOCUS AREA FOR

FUTURE GROWTH

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St ategy o O ganisation to managediversity

o ort olio

Formal 3-tieredgovernance structure:

Board o Directors :Comprising e ecutive (4) and non-e ecutive directors ( )

Strategic supervision

Corporate Management Committee :Comprising e ecutive directors and senior managersStrategic management

C O & Divisional Management Committee :Executive management

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Sustain multiple drivers o growth, matching internalcapabilities with emerging market opportunities

ursue World class competitiveness in all businesses and

across the entire value chain

Best-in-class in terms o :

Internal Vitality

Market Standing

Profitability

Strategy o Organisation and Governance processes

geared to manage multiple businesses

Blend core competencies and leverage ITC umbrella

strengths to create new avenues o growth

Corporate Strategies

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FMCG - Cigarettes

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ITCs Cigarettes BusinessITCs Cigarettes Business

Market leadership owerful brands across segments

eadership in all segments - geographic & price

Extensive distribution network

Over 900 wholesale dealers serving more than million

retail outlets

World-class state-of-the-art technology and

productsInvestment - Rs billion in six years

Exciting long term growth potential

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Cigarettes:Growth potential

Cigarettes account for only 14% of tobacco consumed inIndia unlike world pattern of 85% due to prolongedpunitive taxation

Cigarettes ( 4% of tobacco consumption) contribute nearly

% o f R evenue 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 isone tenth world average : 117

Future growth depends on relative rates of growth of per

capita income and moderation in taxes

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Annual er Capita Adult Cigarette ConsumptionAnnual er Capita Adult Cigarette Consumption

0

500

1000

1500

2000

2500

3000

Source: Tobacco Institute ofIndia

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Hotels & TourismHotels & Tourism

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Hotels & Tourism industryHotels & Tourism industry

Foreign arrivals into India - million appx. vs

31 million in China

The two nations were on par 2 decades ago at750,000 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 roomsLuxury hotel rooms -- East AsiaEast Asia

0

10000

20000

30000

40000

50000

60000

70000

80000

HongKo

ng

Bangk

ok

Singapore

Malaysia

India

Source: Compendium ofTourism statistics, WTO

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Indian hotel industryIndian hotel industry

Current supply - 80,000 rooms of which 5 Star

category accounts for less than 30%

To support GD growth of 6% p a , Indian room

capacity needs to double in five years

resent 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 businessITCs hotel business

One ofthree chains in India

Immediate strategy to establish pr esence in key business

locations to complete the chain expected to be achieved by

end 2004

Revenue leadership in most locations

Leverage unique service proposition and

international alliance with Sheraton

Large tax advantages on investments on ITCBalance Sheet

Attractive medium / long term prospects

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Amalgamation

Board meeting on 25th August 2004 approvedscheme ofamalgamation for merger of ITCHotels and Ansal Hotels with ITC

Merger ratios:

3 shares of ITC for 25 shares of ITC Hotels

1 share of ITC forevery 150 shares of Ansal

Hotels Proposed date of merger: 1st April 2004,

subject to High Court/otherapprovals

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ITCs Hotel roperties & rojects

ITC Ltd

ITC Hotels Ltd

Maurya Sheraton, ew Delhi

ITC One, ew Delhi

GrandMaratha, Mumbai

SonarBangla, Kolkata

Grand Central, Mumbai

roject Ansal Hotels Ltd. 81.5%

WindsorManor, Bangalore

Rajputana alace, Jaipur Mughal, Agra Licensed)

Chola, Chennai Licensed)

Park, Chennai Managed)

Vadodara Licensed)

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Other Hotel Properties - ITC Hotels Ltd.

Srinivasa Resorts

68% shareholding)

Bay Island Hotels

100% shareholding)

FortuneParkHotels

100% shareholding)

Marudhar Hotels

50% shareholding)

Kakatiya, Hyderabad

Bay Island, Port Blair

Manages mid-segmenthotels

Manages Heritage hotels

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Paperboards, PaperPaperboards, Paper

&&

PackagingPackaging

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Indian paperboard marketIndian paperboard market

Annual paperboard demand - 0.90 million

tonnes

Fragmented capacity & obsolete technology

Low per capita usage at 0.75 kg - 1/7th global

average

Indian paperboard market growing at 6 -7%

p.a.Value Added Coated board - the fastest growing

segment 20% p.a.) in India driven by the

growing sophistication ofthe consumer

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Paperboard DemandProjections - Asia

Asian region demand (excluding Japan) growing

by 0.5 million tonnes per annum

This region expected to be a net importer by 2005

Significant export opportunities for high quality

Indian manufacturers

ITC paperboards exports - Rs. 1 billion

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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 commissioned 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 Eff ectivenesstested in about 24,000 hectares

Pulping capacity enhanced by 100,000 MT to strengthen

competitiveness

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ITCs Paper & Packaging businessesITCs Paper & Packaging businesses

Capacity expansion in recycled segment

Acquisition of Kovai Unit in March 2004: +65000 TPA

Another 75000 TPA to be commissioned by Q3 2004

ITCs packaging SBU -Indias largest converter of

paperboard into high quality printed packaging

Leading supplier to Indian FMCG segment

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Agri BusinessesAgri Businesses

-- LeafTobaccoLeafTobacco

-- Agri CommoditiesAgri Commodities

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Indian LeafTobacco industryIndian LeafTobacco industry

India - the second largest producer oftobacco

But, Indian exports constitutes mere 0.7% of the value of

world trade in tobacco

Upgradation of tobacco consumption from other formatsto cigarettes will enable:

growing domestic base

larger opportunities for value added exports

ITC - Indias largest buyer, processor, consumer &

exporter ofcigarette tobaccos

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ITCs Agri CommodityExports

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-Choupalinitiative

Rural Indias largest Internet-based intervention

Over 22000 villages link ed through 4700 e-Choupalsservicing more than 2.8 million farmers

First rural mall christened Choupal Sagar opened in M.P

Distinctive sourcing capability for ITCs Foods

business

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e-Choupal - Recognition

World Business Award ICC-UNDP

Enterprise Business Transformation Award -

Wharton Infosys

Harvard Business School case study

Showcased at ICT4D, Geneva UN

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ITCs strategic thrustITCs 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

internationalEnhances competitiveness of ITC agri sourcing

Createe-infrastructure to serve as transaction backbone

Provides ITC two-way fulfilment capability in and out of rural markets

fora range of goods and services

Rural marketing initiativesbeing scaled up progressively

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FutureGrowth & 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 ofITCs 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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FMCGBusiness InitiativesBrandedPackaged Foods

Leverages:Unique Agri sourcing skills

ITC Welcomgroups specialist cuisine & bakery knowledge

FMCG distribution synergies

ITC Group R& centre,Bangalore

4 chosen categories:

Staples

Aashirvaad Atta & Salt

Biscuits

SunfeastConfectionery

Candyman, mint-o

Ready to Eat

Kitchens of India, Aashirvaad ReadyMeals

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FMCGBusiness Initiatives

BrandedPackaged 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 - ifferentiated & innovative products ; very

encouraging response in launch markets ;distributed & outsourced

supply chain being ramped up

Number of innovative products in the pipeline leveraging the

capabilities of the ITC Group R& centre

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LifestyleRetailing

Leverages trade mark and services expertise ofhotels

Relaxed wear market growth > 25% p.a

Upmarket product range available in exclusive Wills

Lifestyle stores and multi-branded outlets/ large formatretail 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 expandedWills r ange expanded to Formals and Social evening wear

segments

Strong distribution network in place for the mid-market

brand John Players

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Greetings & Gifts

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

Serves to expand the width of ITCs FMCG distribution

capability with negligible incremental investment

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SafetyMatches

Current consumer spend estimated at Rs.1250 crores

p.a. for 24 billion match boxes

Fragmented supply base arising from policy ofreservation 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

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Incense sticks (Agarbattis)

Current consumer spend estimated at over Rs.900crores 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

strengthsAll India roll out of Mangaldeep umbrella brand under

way

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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 categoryby Nasscom

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FuturePositioning ofITC

A leading FMCG player in India

F

A

R

M

E

R

S

M

A

R

KE

T

S

Cigarette TradeMarketing capability

BRANDEDFOODS

EXPANDED FMCG DISTRIBUTION CAPABILITY

E-CHOUPAL RURAL TWO-WAYFULFILLMENT CAPABILITY

BASIS FOR STRATEGIC PARTNERSHIPS WITH OTHER FMCG BRAND OWNER

VPN PROVIDING SCM, ERP & CRM CAPABILITY

LIFESTYLERETAILING

GREETINGCARDS/STATIONERY

MATCHES &AGARBATTI

S

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Q12004/05 Financials

2004/05 2003/04 Goly ( )

Gro Turno er 3236 2756 17.4

Ne Turno er 1775 1429 24.2

Expo

rts312 207 50.4

PBDIT 755 669 12.9

PBIT 687 610 12.8

PBT 675 604 11.6

PAT 462 397 16.3

Capital Employed 6974 5830 19.6

(Rs. crores)

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Segment Revenue Q12004/05

Rs. Crores

2004 05 200 04 Goly

Actuals Actuals -

1. Segment evenue

a) FMCG - Cigarettes 2538.28 2291.05 10.8

- Others 105.22 51.66 103.7

Total FMCG 2643.50 2342.71 12.8

b) Hotels 62.47 50.07 24.8

c) Agri Business 459.27 331.32 38.6

d) Paperboards, Paper & Packaging 377.33 295.64 27.6

Total 3542.57 3019.74 17.3

Less : Inter segment revenue 306.30 264.12 16.0

Gross sales / income from operations 3236.28 2755.62 17.4

Q1

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Segment Capital Employed Q12004/05

Rs. Crores

2004 05 2003-04 Goly

3. apital E ployed Actuals Actuals 2004-05

a) FMC - Cigarettes * 1110.78 1281.43 (13.3)- thers 227.38 114.45 98.7

Total M 1338.16 1395.88 (4.1)

b) otels 983.33 960.36 2.4

) gri Business 617.40 467.77 32.0

d) Paperboards, Paper Pa kaging 1526.40 1282.82 19.0

Total Seg ent apital E ployed 4465.29 4106.83 8.7

* uxury Tax Provision not included 1468 1069 37.3

1

ITC Nov 04

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