ITC Limited Success Story | How does this Indian Conglomerate Company Make Money?

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What comes to your mind when you read conglomerate company? To put it in simple sentences, a conglomerate is a grouping of various companies operating in distinct industries under one corporate umbrella; typically consists of a parent firm and numerous subsidiaries. They often have a big global presence.

The concept of conglomerate companies is not something from a recent era but began some 200 years ago. You will be surprised to know that it was during the First World War when it actually started.

Weimar, a city in Germany, experienced a temporary economic crisis as a result of the First World War, which allowed business owners to purchase companies for dirt cheap. Hugo Stinnes, founded Stinnes Enterprises, the most significant private economic conglomerate in 1920s Europe, which included businesses in a variety of industries, including manufacturing, mining, shipbuilding, hotels, and newspapers.

India is no less when it comes to conglomerate companies it has formed. One such company is known to be one of the biggest conglomerate companies in India. ITC Limited, the name nobody is unfamiliar with, was founded in 1910 as a British-owned company registered in Kolkata.

Today, ITC is India's leading FMCG marketer. Not only FMCG, but ITC has diverse businesses in sectors such as Hotels, Paperboards and Packaging, Agri Business, and Information Technology.

In this article, we have curated all the important information regarding ITC's startup growth, it's business and revenue model, challenges, key products and services, shareholders, and future plans.

ITC - Company Highlights

ITC - About
ITC - Industry
ITC - Key People
ITC - Mission and Vision
ITC - Name, Logo, and Tagline
ITC - Startup Story
ITC - Business Model
ITC - Revenue Model
ITC - Investments
ITC - Mergers and Acquisitions
ITC - Challenges Faced
ITC - Online and Social Media Presence
ITC - Awards and Achievements
ITC - Advertisements and Social Media Campaigns
ITC - Competitors

ITC - About

The Imperial Tobacco Company of India Limited, under W.D. & H.O. Wills, which is a British-based Tobacco manufacturer was founded in 1910. The company later changed its name to India Tobacco Company Limited in 1970, and then to I.T.C. Limited in 1974. The business is now known as ITC Limited, with "ITC" no longer serving as an abbreviation.

ITC is present in a variety of industries, including FMCG, hotels, packaging, paperboards & specialty papers, and agribusiness.

ITC is the only corporation in the world of its size and diversity to be carbon, water, and solid waste recycling positive, demonstrating its desire to be an example of sustainability practices.

Furthermore, over 5.5 million individuals, the bulk of whom are among the poorest in rural India, have sustainable means of subsistence thanks to ITC's enterprises and value chains.

As of today, ITC has a market capitalization of US$35 billion and had an annual turnover of US$10.74 billion during 2019-20.  It has more than 60 facilities across India and 36,500 employees.

ITC - Industry

According to a survey, the industrial sector, which consists of businesses in manufacturing, power, gas, and water, established more than 47,800 new businesses in FY22.

The conglomerate industry in India is picking up fast and changing the economics of the country.

ITC - Key People

ITC Limited is headed by Sanjiv Puri, who is the Chairman and MD of the company.

Sanjiv Puri

Sanjiv Puri is the Chairman and Managing Director of ITC Limited. With effect from December 6, 2015, he was appointed as a Wholetime Director on the ITC Board. He later assumed the positions of Chief Executive Officer in February 2017 and Managing Director again in May 2018. He was chosen to serve as Chairman, and that date is May 13, 2019.

Sanjiv Puri holds degrees from the Indian Institute of Technology in Kanpur and the Wharton School of Business in the United States. Most recently, the XIM University in Bhubaneshwar awarded him an honorary doctorate.

Sanjiv Puri has held the position of Chairman of the Expert Group established by the Fifteenth Finance Commission of the Government of India to promote agri-exports, and he has also participated in the NITI Aayog's Farm to a Table discussion group on technology.

He received the Indian Institute of Technology, Kanpur's "Distinguished Alumnus Award of the Year 2018" for his achievements. Another honour bestowed upon him was the "IMPACT Person of the Year, 2020" Award from exchange4media, a prestigious online news source.

ITC - Mission and Vision

ITC Limited vision is to maintain its ranking as one of India's most valuable companies by performing at an international level and generating growth for the Indian economy and the company's stakeholders.

ITC's mission is, "To enhance the wealth generating capability of the enterprise in a globalising environment, delivering superior and sustainable stakeholder value"

ITC - Name, Logo, and Tagline

ITC's name has been changed a few times. The company was originally known as 'Imperial Tobacco Company of India Limited' when it was under British ownership. Later, the company ventured into partnerships and was renamed the Indian Tobacco Development Company Limited.

After Independence, the company was changed to I.T.C Limited. In present times, the company is popularly known as ITC, not as a short-form of anything.

ITC goes by the tagline, "Enduring Values"

ITC - Startup Story

ITC traces back to 1910 as a British-owned company located in Kolkata, West Bengal, India. The company used to call Imperial Tobacco Company of India Limited. Soon after a year, to source leaf tobacco, the company entered into partnerships with farmers from the southern region of India.

The "Indian Leaf Tobacco Development Company Limited" was established under the company's aegis in the Guntur district of Andhra Pradesh in 1912. The company had its first cigarette factory in Bangalore in 1913.

The company had its headquarters in the 'Virginia House' at Calcutta. After years of development and strategies, ITC decided to expand its footprint and purchased the Kidderpore factory of Carreras Tobacco Company in 1935. To drastically lower import prices, ITC assisted in the establishment of an indigenous industry to produce cigarette tissue paper in 1946.

Within three years, a printing and packaging facility was established by ITC in Madras. The company also purchased the manufacturing operations of Tobacco Manufacturers (India) Limited as well as Printers (India) Limited's related lithographic printing operations in 1953.

Right after the purchase of Printers (India) Limited, ITC was converted into a Public Limited Company. With 6% of the company's Indian shareholders, the first step toward Indianization was made in the same year. During this period, ITC also entered the consumer research market for the first time in India.

In order to achieve self-sufficiency in the production of cigarettes, technology was more heavily focused on throughout the 1960s when establishing cigarette machines and filter-rod manufacturing facilities. In a few years, the Indian shareholding grew further to 40%.

ITC started to enter the hospitality industry in 1975 and bought and renamed the ITC Welcomgroup Hotel Chola in Madras. The company selected the hospitality industry due to its potential to produce significant amounts of foreign exchange, develop tourism infrastructure, and produce a significant amount of direct and indirect employment.

As the shareholders kept growing, the company started to create more hotels in the following years. It was in 1979, the company entered the paperboards business by promoting ITC Bhadrachalam Paperboards Limited.

As the company kept growing, two more ventures were established by ITC - the ITC Classic Finance Limited and ITC Agro Tech Limited under its umbrella during the 1986s.

The Wills Sport line of casual clothing was introduced by ITC in the 2000s, and the company also entered the stationery and gifting industries by producing the Expressions line of greeting cards and Classmate notebooks.

ITC - Business Model

ITC business is a multi-industry company, and as a multinational company, it has different products and different target markets accordingly. The business model of ITC is to create products that benefit its target audience by giving them a vast range of products.

ITC sets its benchmark in various other sectors like FMCG, Agri-Business, Hotels, Paperboards and Specialty Boards, Packaging, and Information Technology.

Here let's take the look at the key products that covers in the business model of ITC

FMCG

ITC houses around 25 brands under its FMCG market, thus making them one of India's leading marketers in Fast Moving Consumer Goods Business(FMCG). It could be seen that the company's strategic goal is to ensure long-term success by combining and using the varied set of competencies present across all of its businesses to take advantage of new opportunities in the FMCG industry.

Some of the brands that help us with our bare necessities in today's age, are majorly by ITC, these are:

ITC Foods Brands  - To name a few:

• Sunfeast
• Aashirvaad
• Bingo
• Yippee
• B natural
• Sunfeast Milkshake
• Mint-o
• Candyman
• Sunbean

ITC Personal Care Brands;

• Salvon
• Vivel
• Engage
• Fiama
• Nim Wash
• EDW ESSENZA
• Charmis

ITC Stationery Brands;

• Classmates
• Paperkraft

ITC Incense Brands;

• Mangaldeep

ITC Safety Matches Brands;

• Homelites
• Aim

ITC Cigarettes Brands;

• Insignia
• India Kings
• Classic
• Gold Flake
• American Club
• Wills Navy Cut
• Players
• Scissors
• Capstan
• Berkeley
• Bristol
• Flake
• Silk Cut
• Duke & Royal.

Hotels

ITC business is also expanded in the hotel sector. The company launched its first hotel in 1975 by building on the assets of its excellent sustainability standards and pioneered the idea of "Responsible Luxury" in the hospitality industry. Presently, the company owns around 100+ hotels in various locations.

Some of the luxury and distinguished hotel brands by ITC are:

• ITC Hotels
• Mementos by ITC Hotels
• Welcome Hotel
• Storii by ITC Hotels
• Fortune Hotels
• WelcomHeritage Hotels

Paperboards and Packaging materials

The company is proud in meeting the needs of a broad range of industries, including those for FMCG cartons, electrical insulation papers, bio-based barrier coated boards, decorative laminate bases, writing and printing papers, and much more. ITC's paperboard products range in Virgin Boards, Recyclable Barriers Boards, Recycled Boards, Barrier Boards, and Graphic Boards.

ITC has also been a prominent contributor to paperboard packaging in South Asia. Some of the packaging services provided by ITC are cartons packaging, flexible packaging, tobacco packaging, innovation, and new product development.

Agribusiness

Due to its involvement in reforming and reinventing the rural agricultural area, ITC, which also operates in the agriculture sector, has solidified its place as a prominent corporate in the agricultural industry in India. ITC also started a farmer empowerment plan known as the e-Choupal to help farmers build a strong community.

Today, e-Choupal is the world's largest rural digital infrastructure. Some of the agri-products, that the company focuses on export and domestic trading are; Feed ingredients, Coffee, Marine Products, Food Grains, and Processed Fruits.

IT services

ITC Info Tech by ITC provides services in business and technology consulting. It offers its IT solutions to sectors like Banking & Financial, Services,  Consumer Goods, Manufacturing, Healthcare Travel, and Hospitality.

Apparel business

ITC has diversified its business in apparel and fashion as well. Fashion brands that are owned by ITC are John Players and Wills Lifestyle. However, the company had been shutting the stores of Wills Lifestyle due to losses.

Marketing and Media Centres

To build its brand and advertise its companies, goods, and services, ITC engages in a variety of marketing and promotional initiatives. The brand uses a variety of promotional techniques, including print, digital, and electronic media, in its advertising campaigns. It has launched several advertising campaigns that are broadcasted across various media, including radio, television, billboards, etc.

ITC has roped in many celebrities to endorse their brands like Shah Rukh Khan for its food brand 'Sunfeast', Alia Bhatt for its 'Sunfeast Dark Fantasy' biscuits, famous cricket player like Yuvraj Singh, and Bollywood actress, Soha Ali Khan for 'Classmate', Kiara Advani for 'Charmis', and Tara Sutaria for 'Savlon'.

R&D Activities

ITC has its own research and development centres. The R&D centre come under the brand name ITC Life Sciences and Technology Centre (LSTC). The centre is situated in Bengaluru, where it is involved in creating many innovative products and technology solutions to offer to its Indian customers.

CSR Activities

ITC has its own CSR policy where it aims to contribute as much as possible to building economic, social, and environmental capital towards the betterment of society in general. Women empowerment, Afforestation programme, Sustainable agriculture, Livestock Development, Watershed Development programme, Primary Education, Skilling & Vocational Training, Health & Sanitation, and Solid Waste Management are some of the CSR initiatives by ITC Limited.

ITC - Revenue Model

ITC mostly generates its revenue from the cigarette industry. Despite, the third wave of Covid, the cigarette sector's revenue is up 10.2%.

For FY2021-22, the company's overall Gross Revenue at Rs. 59101.09 crores increased by 22.7%, while EBITDA increased by 22.0% to Rs. 18933.66 crores. Profit Before Tax at Rs. 19829.53 crores grew by 15.5% over the previous year and Profit After Tax stood at Rs. 15057.83 crores (previous year Rs. 13031.68 crores). Total Comprehensive Income for the year stood at Rs. 15631.68 crores (previous year Rs. 13277.93 crores). Earnings Per Share for the year stood at Rs. 12.22 (the previous year Rs. 10.59).

ITC - Investments

ITC has made four investments till now. Their most recent investment was on 20 April 2022, when Mylo raised ₹1.3B. Other companies in which ITC has invested are Mother Sparsh Baby Care and Azgo.

ITC has invested around $1 million at Azgo in 2019 in corporate round funding.

ITC - Mergers and Acquisitions

ITC has bought two businesses. Sunrise Foods was their most recent acquisition as of May 25, 2020. They paid $21.5 billion to buy Sunrise Foods.

Century Textiles - Nainital paper unit is another company they acquired on 16 June 2011 at an undisclosed amount.

ITC - Shareholders

The equity shares of ITC are traded on the Calcutta Stock Exchange, the National Stock Exchange of India, and the Bombay Stock Exchange (CSE).  Global Depository Receipts (GDRs) issued by the corporation are traded on the Luxembourg Stock Exchange. ITC is a component of the BSE SENSEX and NIFTY 50 of the NSE, two of the most important stock market indices in India.

ITC - Challenges Faced

In 2021, ITC was facing issues in operating outlets because of lockdowns imposed during the second wave of Covid-19. The company thinks that because of the second wave lockdown, it had severe economic and social disruptions. The limited time hours given during the lockdowns posed a big challenge for the company as there was no material supply and limited customers at its various stores.

ITC Hotels suffered a lot during the second wave as there were restrictions imposed by the Government to curb the spread of the pandemic.

ITC - Online and Social Media Presence

Since ITC plays a key role in marketing and promotional activities, it knows how to keep its audience engaged and keep them updated through its various brand awareness strategies and methods, it surely has a very strong social media presence. The LinkedIn page of ITC has 2,438,418 followers, Instagram has 12.3K followers, and the Twitter page has 40.2K followers.

ITC - Awards and Achievements

As one of the leading Multinational Companies in India, ITC has received many awards and achievements. Take a look at the below list of some major awards won by ITC:

• Pulp & Paper International (PPI) Awards by Fastmarkets RISI
• First Prize At National Water Awards, 2022
• EFI CII National Award for Excellence in Employee Relations, 2021
• ICSI CSR Excellence Award, 2021
• ITC's Savlon wins big at Cannes 2017
• Excellence in Corporate Governance and Integration' - Porter Prize, 2017
• World Business Development Award 2012, RIO

ITC - Advertisements and Social Media Campaigns

ITC knows its game when it comes to marketing itself. In 2020, ITC launched a social media campaign to voice out the different products it makes and reflects the essence of the 'Made In India' initiative.

With the #ProudlyIndian Campaign, ITC wanted to grasp the Indian audience for being an important contributor to the nation with its myriad options of products, which are manufactured on Indian soil with cutting-edge technology centres and Indian farmers.

In 2021, ITC Vivel launched a campaign on Women's Equality day to salute all the homemaker women. With 'Ab Samjhauta Nahin' philosophy, the campaign highlights the gap between working professionals' and homemakers' expectations.

With its #RespectWorkForHome campaign, the brand celebrates the dedicated, persistent, and selfless work of housewives. The brand demonstrates the long-standing problem of discrimination based not only on a person's gender but also on the sort of labour performed.

ITC - Competitors

ITC competes with the following companies:

In the FMCG sector

• Hindustan Unilever Limited (HUL)
• P&G
• Coca-Cola
• Dabur
• Danone
• L'Oreal
• Colgate
• Nestle
• Godrej Consumer Products

In Cigarettes Sector

• Raghunath
• Godfrey Phillips India
• Vazir Sultan Tobacco
• Golden Tobacco
• Philip Morris International

In Hotels Sector,

• Taj Group of Hotels
• Oberoi
• Leela Hotels

FAQs

Is ITC private or government?

ITC is a private sector company that has its presence in Cigarettes, Hotels, Paperboards & Specialty Papers Packaging, Agri-Business, Packaged Foods, Branded Apparel, Personal Care, Stationery, Safety Matches and much more.

Who is the biggest shareholder of ITC?

Tobacco Manufacturers India Ltd is the biggest shareholder of ITC.

Is ITC an Indian company?

Yes ITC is an Indian conglomerate headquartered in Kolkata.