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FLOW OF PRESENTATION
COMPANY PROFILE VISION & MISSION VALUE POSITIONING OF ITC DISTRIBUTION NETWORK SUPPLY CHAIN ANALYSIS OF FMCG PRODUCT(CIGARATTE) & PEST AND SWOT ANALYSIS OF ITC. SYNERGIES FOR ITC EFFICIENCIES IN E-CHOUPAL NETWORK COMPARISON WITH HARYALI KISAN BAZAR FUTURE OF E-CHOUPAL CONCLUSION
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Introduction
ITC is one of India's foremost private sector companies Has a diversified presence in Cigarettes, Hotels, Paperboards &Specialty Papers, Packaging, Agri-Business, Packaged Foods &Confectionery, Branded Apparel, Greeting Cards and other FMCG products. ITC is one of the country's biggest foreign exchange earners (US $2 billion in the last decade). Ranks No. 4 among Indian listed Private Sector Companies by market cap. (@ April 09) No. 1 in FMCG Sector Rated as one of Indias Most Respected Companies (IMRB-Business world Survey 2006). Diversified group of companies with operations in various industry segments from cigarettes to apparels. Annual turnover is of the order US$2.4 billion 4/14/12 ITC. Touching your life. Everyday
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Values
ITC's Core Values are aimed at developing a customerfocused, high-performance Organisation. Customer Focus we are always customer focused and will deliver what the customer needs in terms of value, quality and satisfaction.
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POSITIONING OF ITC
UR YO . NG AY HI YD UC ER TO EV FE LI
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PRODUCT PROFILE
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PRODUCT LINE
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Retailer consumer
Vans go without knowing actual demand so after using this they can save cost as well as time.
Mobility based applications can bring down the cost of operation by 2030% from the manual basis of operation
Consists of diverse categories with different priorities More than 1000+ SKUs Buying Value $68 MM Warehousing space of more than 3.5m SFT around 55+ Locations Products manufactured at 45+ plants More than 650 trucks moved every day Direct distribution from factories to Distributors. Indirect movement through RDCs Combination of Rail/Road/Sea movement within the country depending on the product type. (Target is Safer, Faster, cost effective
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Market leaders in Cigarettes and Tobacco business & is among Indias most profitable companies Brands owned by ITC Ltd are Wills Classic, Wills Navy Cut, Gold Flake, Bristol and Scissors ITD also sells two luxury filter brands of its parent company Benson & Hedges and 555 Four manufacturing units for cigarettes at Bangalore, Saharanpur, Kidder pore, Munger
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PEST ANALYSIS
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SWOT ANALYSIS
Strength Weakness Cigarette market is 22,000 cr and ITC has Dependence on tobacco revenues Negative Connection of Tobacco lions share in it Strong brand recognition and product portfolio Distribution network Management Opportunity Low per capita consumption Of personal care products Click to edit Master subtitle style Rural Market E-Choupal Filter cigarette segment of less than 60mm size Threat Competition both Domestic & International Increasing Tax on cigarettes Excise duty on unfiltered cigarettes less than 60mm in length was increased 387% last year Hike was 142% for those between 61mm and 70mm long. Regulatory restrictions on cigarettes Ban on smoking
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CONFRONTATION
NAVY CUT,CLASSIC,INSIGNIA,INDIA KINGS,CAPSTEN,GOLD FLAKE,SISSORS,SILK CUT,BRISTOL,BERKELEY
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Diversification
ITC over the years has been investing cash flows from its cigarette business into various lucrative segments like foods, personal care, hotels and paper. With the paperboard division coming out of a major capex cycle and a reduction in losses from FMCG-others division from FY10E, we expect the non-cigarette businesses to become self-sufficient. The agriculture division continues to provide a strong support as an excellent raw material sourcing base. Hotels segment though is likely to register slower growth in FY10E due to economic slowdown and terror attacks.
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1190
561
488 141
USA
China
Pakistan
Nepal
India
World Avg.
Source : Based on Cigarette consumption data(2003) from World Cigarettes,ERC Group plc.
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18
It has 3 contract manufacturers (OCMs)Reliable Cigarette and Tobacco IndustriesPrivate Ltd. (RCTI) Asian Tobacco Company (ATC )Hyderabad Deccan Cigarette Industries(HDC) Huge distribution network with 19 marketing branches and 33 Godowns across nation Also caters to the exports mainly in United States and Middle-Eastern countries
CONT.
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GODOWNS (19)
BRANCHES (19)
Information Goods
RETAILERS
SECONDARY WHOLESALERS
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Factories Supply to 18 godowns Godowns & Branches Manage by C&F agents getting monthly remuneration No rent paid by ITC one branch 60 WDs , 5 AMs and 20 Area Executives Wholesale Distributors(WDs) Margin 2% of sales Appoints secondary Wholesalers
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PHYSICAL DISTRIBUTION
Demand Estimation collaborative forecasting( Sales force with dealers) Forecast based on last month sales Production plan made according to forecast Delivery to C & F agents within 7 days CFAs deliver goods to dealers on the basis of the branch office route plan Factory CFAs- Trucks CFAs Dealers Small Vehicles
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Started in the year 2000 Target Area so far 38,000 villages, 6500 kiosks, 9 states Wholly owned by ITC Why it become a success ? Only initiative to attempt to combine Services and an Effective Business Model successfully
Designed to address the life. 4/14/12 ITC. Touching your issues such as:
Everyday
Farm linkages in 14 states covering Soya, Wheat, Marine products, Coffee etc. Focus on value added agri commodities Unique CRM programme in commodity exports Leveraging IT for the transformational eChoupal initiative
Low Margins
Low Investment
Low Productivity
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Pricing Previous days closing price used as benchmark price for next day Mandi prices communicated to sanchalak through e-Choupal portal Sanchalak inspects the sample, assesses quality and gives farmer a conditional quote and a note (name/village/quality tests/approx. quantity/conditional price), if farmer decides to sell to ITC
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Inbound Logistics Farmer proceeds to the nearest ITC procurement hub with the note Some procurement hubs are ITC factories, others are purely warehouse operations ITCs aim is to have a processing centre within 30-40 km radius of its farmers
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Inspection and Grading At the ITC procurement hub, laboratory tests are conducted on a sample of farmers produce To change farmers attitude and appreciating produce quality, ITC is developing lab tests to reward farmers with reward points for better quality supply
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Inspection and Grading At the ITC procurement hub, laboratory tests are conducted on a sample of farmers produce To change farmers attitude and appreciating produce quality, ITC is developing lab tests to reward farmers with reward points for better quality supply
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Weighing and Payment Farmers produce is weighed on electronic weighbridge He is then given full cash payment Freight expenses are reimbursed Appropriate documentation at each stage and farmer is given a copy of that Samyojaks handle cash operations
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Hub Logistics Farmer transports his produce to the nearest processing centre or storage hub ITC incurs the transportation cost The farmer bears the risk of transportation until produce is delivered and the sale is completed
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Technological support Nodal platform catering to commodity blending, agricultural trading, echoupal &rural distribution 24,000 personalized business function points 110,000+ pre-built business function points Integrated Business Systems for Direct Agriculture Procurement, Rural Distribution, e-Choupal Management, Exports, Insurance, Aqua Processing & Commodity blending Support for 8 local languages
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A win-win Deal
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4/14/12 ITC. Touching your life. Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
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Generation of Goodwill & positive public opinion qBetter supply chain for ITCs Food & Agri Businesses Costs, Quality, Traceability qAccess to the Underserved Rural Markets Through a Virtuous Cycle created by Larger Incomes, and founded on Trust that is built qNew ITES Business Opportunities Click to Health,edit Master subtitle style Education, Entertainment, eGovernance
q
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C i g a Expanded FMCG distribution capability r e t Bran Lifest Educat Match t ded yle ion es & Food retail Station Agarb e s ing ery attis T for strategic partnerships with other FMCG brand A basis 4/14/12 Company Logo ITC. Touching your life. r owners
Everyday
F A R M E R S
M A R K E T S
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4/14/12 ITC. Touching your life. Everyday Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept.
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Primary Stakeholders
Farmer Community
Access to information Empowered decisions Improved agriculture Economic benefits through lower transaction costs and process efficiencies Served with dignity Knowledge bundled sale of goods and services Co-opted in product design Hope for a brighter future Lower procurement costs Direct interaction with farmers - Control on quality & supply security Low cost distribution channel Access to market intelligence Gain access to global markets through ITC and commission to compensate some of the loss revenue
ITC
Pakka
Last mile low cost solution Full Service approach Demand aggregation Third party seller Extensive use of technology Access to information about customers
ITC. Touching your life. Everyday
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Produce procurement
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E-choupal
Main objective Procurement
Synergies
Synergies with what DSCL is selling(inputs to agriculture plus other services 20-25 km area coverage Strategically placed near petrol pump
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FUTURE OF ECHOUPAL
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e-Choupal 3.0 The Deepening q NEW BUSINESSES: 1) Rural jobs and employability 2) Personalised agri services.
q
MORE INTERACTION: Through Choupal Saagars and Haats and via mobile phones NEW TECHNOLOGY: Use of especially enabled mobile phones, analytics, new partner
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e-Choupal 2.0
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CONCLUSION
ITC promoting their brands through advertisement campaign as well as door to door promotion. ITC is also focusing on Retailers and Wholesalers to promote their brand. The demand of their product in very low, because people dont know about their brands very well. ITC knows their strength and weakness in the personal care market, so they are applying new concept to overcome their weaknesses. ITC. Working for you. Working for India. ITC now offering more margins, exiting offers and long credit periodITC. Touching your life. wholesalers. to retailers and 4/14/12
Everyday