Contents

ITC Report & Accounts 2014
ITC - Creating Enduring Value for India

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As a Company deeply rooted in India's soil, ITC is inspired by the opportunity to serve a larger national purpose and create enduring value for its stakeholders. This abiding vision has spurred innovation, creativity and vitality to ensure a substantial and growing contribution to the Indian Economy, whilst simultaneously contributing significantly to enhancing environmental capital and sustainable livelihoods.
ITC's aspiration to create enduring value has been powered by strategies that have focused on:

Leveraging enterprise strengths to create Multiple Drivers of Growth with a robust portfolio of future ready businesses
Building world-class Indian brands that Create, Capture and Retain Growing Value in India
Making Societal Value Creation
an integral part of its journey of growth
Investing in Creating Assets for the Nation in the critical areas of agriculture, manufacturing and services

Multiple Drivers of Growth

ITC's unique and multi-faceted enterprise strengths including deep consumer insights, brand building capability, cutting-edge Research & Development, globally benchmarked manufacturing infrastructure,agri-sourcing advantages and extensive rural linkages,trade marketing & distribution network, committed and competent human resources, constitute a robust and formidable foundation that has enabled the Company to create multiple drivers of growth in its chosen portfolio of businesses that spans FMCG, Hotels, Paperboards and Packaging, Agri-Business and Information Technology.

These enterprise strengths coupled with the opportunities arising out of rising disposable incomes, urbanisation, a favourable demographic dividend and growth in rural areas provide competitiveness to ITC's strategy of creating enduring value for its stakeholders and the nation.

ITC continues to blend its diverse competencies residing in various businesses to enhance the competitive power of the portfolio and position each business to attain leadership on the strength of world-class standards in quality and costs. The Company has also crafted an effective strategy of organisation and governance processes to not only enable focus on each business but also harness the diversity of its portfolio to create unique sources of competitive advantage.

ITC's Foods business, for example, gains competitive advantage from enterprise synergies existing in ITC e-Choupal's agri-sourcing capabilities, cuisine expertise of its Hotels business, brand building capabilities, in-house packaging competencies as well as an unmatched distribution network.

Creating World-Class Indian Brands

Successful brands are a badge of honour for the country they belong to. When a country's institutions nurture and build world-class brands, they enable a sustained source of wealth creation thereby enriching their economies in perpetuity. ITC creates enduring value for the country by building world-class Indian brands which generate, capture and retain value in the country, apart from supporting sustainable livelihoods.

The success of competitive domestic brands in gaining larger franchise in the Indian global market has multiplier effects. On the one hand, it creates national assets that are more anchored in the country vis-a-vis manufacturing investments of foreign brands that can cross borders seeking cost advantages. On the other hand, it reduces precious outgo on account of royalties as well as consumption of foreign brands. Most importantly, when national and corporate energies align to create world-class Indian brands, they build valuable intellectual property assets that help make the country and its institutions globally competitive.

Driven by its mission to create world-class Indian brands, ITC has organically built several brands, which have attained considerable market standing in a relatively short period of time. Brands created by ITC in the last 10 years currently represent over Rs 10,000 crores in terms of annualised consumer spend, a feat perhaps unrivalled in the Indian FMCG industry.

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 Foods space; Essenza Di Wills, Fiama Di Wills, Vivel and Superia in the Personal Care products segment; Classmate and Paperkraft in Education & Stationery products; Wills Lifestyle and John Players in the Lifestyle Apparel business; Mangaldeep in Agarbattis as well as Aim in Matches.

Triple Bottom Line Contribution

ITC's abiding vision to serve a larger societal purpose lies at the heart of its corporate strategy. ITC believes that enterprises possess the unique capacity to create game-changing transformation amongst the most disadvantaged in society by channelising the power of entrepreneurial vitality, innovation and creativity. ITC's mission to create enduring value for society is manifest in many ways - whether it is in empowering 4 million farmers, ensuring soil and moisture conservation for nearly 150,000 hectares, providing livelihood opportunities to 40,000 women or greening over 160,000 hectares.

The Triple Bottom Line commitment of the Company to simultaneously build economic, social and environmental capital has spurred innovation to orchestrate a symphony of efforts that addresses some of the most challenging societal issues including widespread poverty and environmental degradation. These concerted efforts of the Company over several years have led to the creation of sustainable livelihoods for around 6 million people, many of whom represent the most disadvantaged in society.

ITC is a global exemplar in sustainability practices. It is the only organisation of comparable dimensions in the world to be carbon positive for 9 years, water positive for 12 years and solid waste recycling positive for the past 7 years. Its environmental stewardship is also reflected in all its luxury hotels being LEED Platinum Certified green buildings and in the fact that over 38% of the Company's energy consumption comes from renewable sources.

Investing in India's Future

Building Infrastructural Assets
ITC's commitment to India's progress and prosperity is also manifest in the enduring value created by building assets for the future that encompass state-of-the-art manufacturing facilities, luxury hotels, logistics hubs, R&D centres, office and residential complexes across India. It has, in the pipeline, almost 60 infrastructure projects that will not only enhance the level of investment in the Indian economy but create precious brick and mortar assets in the country.

Cutting-edge R&D
ITC's R&D organisation led by the ITC Life Sciences & Technology Centre (LSTC) is mandated to develop unique sources of competitive advantage by harnessing contemporary developments in science and technology, blending them with science-led product innovation and leveraging cross-business synergies. A convergence of ITC's R&D capabilities is being utilised to develop future products in nutrition, health and well-being. In agri sciences, ITC efforts are aimed at developing new crop varieties with higher yields, better quality and other traits relevant to the Company's businesses. Presently, the LSTC team has evolved with over 300 world-class scientists augmented by world-class experimental and measurement system capabilities.

Future-ready Talent
ITC's agenda of enhancing competitiveness and creating new engines of growth is powered by its future-ready talent bank. ITC succeeds in attracting and retaining talent through initiatives that focus on enhancing personal development and growth, an empowering work culture that facilitates high levels of engagement and performance and an enabling professional work environment. ITC's talent management programme strives to deliver its unique talent promise of "Building Winning Businesses. Building Business Leaders. Creating Value for India."

CREATING
MULTIPLE DRIVERS
OF GROWTH

ITC is the country's leading FMCG marketer, the second largest Hotel Chain in India and a trailblazer in 'green hoteliering', the clear market leader in the Indian Paperboard and Packaging industry, a globally acknowledged pioneer in farmer empowerment through its Agri Business. ITC Infotech, a wholly-owned subsidiary, is one of India's fast-growing IT companies in the mid-tier segment.

  • FMCG
  • Hotels
  • Paperboards & Packaging
  • Agri Business
  • Information Technology

FMCG

ITC is the leading FMCG marketer in India. Its FMCG businesses comprise Branded Packaged Foods, Cigarettes and Cigars, Personal Care Products, Education and Stationery Products, Lifestyle Retailing, Incense Sticks (Agarbattis) and Safety Matches.

Hotels

ITC Hotels, with its credo of "Responsible Luxury", stands apart not only for its exquisite signature properties, cuisine and service excellence but also for being the greenest luxury hotel chain in the world. All its super-premium luxury hotels are LEED (Leadership in Energy & Environmental Design) Platinum rated. With 4 distinct brands - ITC Luxury Collection, WelcomHotels, Fortune and WelcomHeritage - ITC's properties span the luxury, five star, mid-market to upscale and heritage leisure segments.

With more than 100 hotels in over 70 destinations in the country, each ITC Hotel is a true reflection of the culture and ethos of the destination, with one common legacy, 'Warmth'.

Paperboards & Packaging

India's leading paper and paperboards business, ITC caters to a wide spectrum of packaging, graphic, communication, writing, printing and specialty paper needs. A front runner in deploying cutting edge environmental practices, it introduced Elemental Chlorine Free and Ozone Bleaching technologies in the country. The pulpwood requirement of the business is largely sourced from sustainably managed plantations under its Social and Farm Forestry Programmes. All four of its manufacturing units are certified to Forest Stewardship Council (FSC) Chain of Custody standards.

ITC's Packaging and Printing business has positioned itself as a 'one-stop shop' packaging solution provider, offering a range of value added products using cutting-edge, contemporary technology. It is the largest and greenest packaging business in India. The business' three state-of-the-art manufacturing facilities in Chennai, Haridwar and Munger provide superior value to customers in paperboard and flexible packaging. ITC is the market leader and the largest convertor of paperboards into packaging in the country. It is also the greenest packaging business in India.

Agri Business

One of India's foremost agri businesses, ITC's leadership position is anchored in its enduring partnerships with farmers across the country. Its pioneering initiatives, extensive experience and intensive research have helped build a competitive and efficient supply chain that creates and delivers immense value to all the stakeholders across the agricultural value chain.

ITC's unique rural digital infrastructure network - ITC e-Choupal - is an example of how innovative private sector solutions can complement state interventions to create significant value for farmers. By promoting sustainable agricultural practices and providing efficient market access, ITC e-Choupal has led to the enhancement of farm productivity and empowerment of farmers. The sourcing strengths of this infrastructure lend competitive advantage to ITC's foods and other businesses. ITC is one of India's largest exporters of agri-products. Over 4 million farmers benefit from e-Choupal.


Agri Business Leaf Tobacco

In a spirit that truly embodies the Company's commitment to its stakeholders, ITC helps the Indian farmer grow quality leaf tobacco and links him to global markets. ITC is the largest buyer, processor and exporter of leaf tobacco in India. Achieving enhanced productivity continues to be a focus area of research and crop development initiatives of the business. It has made substantial progress in strengthening the pipeline of new hybrid combinations for deployment in growth zones.

Information Technology

ITC Infotech, a wholly owned subsidiary of ITC, is among the fastest growing mid-tier Indian IT companies. The company provides domain-specific solutions and e-enabled services as well as high-end engineering design solutions to leading customers worldwide. It caters to a range of industry verticals that includes banking, financial services and insurance; consumer packaged goods; retail; manufacturing; engineering services, media and entertainment; travel; hospitality; life sciences; transportation and logistics. Headquartered in Bengaluru, its global service delivery footprint spans more than 140 countries.

BUILDING WORLD-CLASS
INDIAN BRANDS

Over the last few years, ITC has strived relentlessly to create world-class Indian brands that are born out of deep consumer insights and are gaining growing consumer franchise. It is ITC's aspiration to be the number 1 player in the FMCG sector and progressively lead the Indian global market.

Branded
Packaged
Foods

ITC's Foods business offers a wide range of differentiated, value-added products to the discerning Indian consumer. One of the fastest growing foods businesses in India, ITC's offerings include Bakery and Confectionery products, Snack foods and Staples, Spices and Ready to Eat foods under 7 popular brands - Aashirvaad, Sunfeast, Bingo!, Yippee!, Kitchens of India, mint-o and Candyman.

Personal Care Products

Bringing world-class products to quality conscious consumers, ITC's personal care portfolio is anchored in extensive consumer research, R&D and product development. Its bouquet of brands - Essenza Di Wills, Fiama Di Wills, Vivel, Engage and Superia - offers consumers clearly differentiated benefits and superior value propositions.

By offering a judicious mix of innovative products and leveraging ITC's robust distribution network, the business is garnering market shares in a relatively short span of time.

Cigarettes

With an extensive portfolio of popular and premium cigarette brands, ITC continues to focus on value creation for the consumer and innovative product design backed by state-of-the-art manufacturing technology and a robust marketing and distribution network.
ITC's Armenteros brand of handrolled cigars is sourced from the Dominican Republic. This brand of custom-made cigars has been specially developed to suit the taste of the Indian cigar connoisseur.

Nicotine Gums

ITC has recently entered the Nicotine Replacement Therapy (NRT) space with Kwiknic nicotine gums. Kwiknic is available in a convenient on the go box that is equipped with tissue paper, which promotes hygienic disposal of the used gums. Kwiknic is available in two flavours - Paan and Mint.

Lifestyle Retailing

ITC's premium apparel brand for men & women - Wills Lifestyle - brings discerning consumer an elegant fashion wardrobe and an international shopping experience through a nationwide chain of exclusive stores. Catering to the popular segment, John Players embodies the playful and fashionable spirit of the modern youth. Incorporating an exciting mix of styling, colours and fits, it has become a preferred brand of today's fashion forward youth.

Available through exclusive stores & boutiques, departmental stores and multi-brand outlets, these brands have established a strong pan-Indian presence.

Education & Stationery Products

ITC's popular Classmate and premium Paperkraft stationery brands both use eco-friendly paper manufactured by ITC to offer a unique value proposition. While Classmate is India's No 1 student notebook brand, Paperkraft is the leading provider of executive stationery needs. The portfolio includes complementary categories like scholastic products, geometry boxes, writing instruments as well as children's art materials under the Colour Crew brand.

Safety Matches & Incense Sticks

ITC markets incense sticks and safety matches sourced from small-scale and cottage sector including women’s self-help groups. ITC's product development, marketing and distribution strengths help to enhance the competitiveness of these small enterprises. ITC's portfolio includes Mangaldeep, the second largest national brand of incense sticks, and Aim, the largest selling safety matches brand in India.

Towards a Sustainable
and Inclusive Future


The challenges posed by deep-rooted poverty and resultant income inequities, together with widespread environmental degradation and the threat of climate change make our society extremely vulnerable. These can also make future progress of business unsustainable. ITC believes that businesses can make a meaningful difference and contribute to a much more secure and sustainable future. Inspired by the opportunity to contribute to a larger national and societal purpose, ITC has crafted innovative models and invested in social initiatives that simultaneously build economic, environmental and social capital for the nation.


Investing in India's Future

Creation of a new generation of world-class businesses and brands demands tremendous staying power with substantial investment commitments over the long haul. ITC has invested significantly in cutting-edge manufacturing, logistics and hotel infrastructure, continuous nurturing of path-breaking Research & Development, and building a talented pool of resources, who are determined to succeed in a globally competitive environment.