ITC Food's Growth and Future Prospects
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Case Details:
Case Code : MKTG135
Case Length : 20 Pages
Period : 2001-2006
Organization : ITC Ltd.
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : FMCG
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Background Note
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ITC was established on August 24, 1910 as the Imperial Tobacco Company of India Limited in Kolkata. Initially, the company was involved in the trading of imported cigarettes. In 1925, in a backward integration move, the company started a packaging and printing business.
The name of the company was changed to India Tobacco Company Limited (I.T.C. Ltd.) in 1974. In 1975, I.T.C. Ltd., through ITC-Welcomgroup, tied up with the US-based Sheraton Corporation6 to enter the hospitality industry. It acquired its first hotel in Madras (later renamed Chennai) in Tamil Nadu and called it the Welcomgroup Chola Sheraton.
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I.T.C. Ltd established ITC Bhadrachalam Paperboards Ltd. (IBPL) in 1975. The company started production at its integrated pulp and paper/board manufacturing facility at Bhadrachalam, Andhra Pradesh, in 1979.7
In 1990, I.T.C. Ltd. set up an International Business Division (IBD) for export of agri-commodities. I.T.C. started a greeting cards business under the brand name Expressions in the year 2000.
In the same year, I.T.C. also entered the fashion retailing business by extending its well known cigarette brand Wills. The retail outlets were called Wills Lifestyle and offered premium leisure wear for men and women under the Wills Sport brand.
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In September 2001, the company was renamed ITC Ltd (without full stops, and with
no meaning attributed to the alphabets). In 2001, ITC made an entry into the
foods business, and entered the business of safety matches, where it could use
the same distribution network as that of its cigarette brands, in 2002. In 2002,
IBPL was amalgamated with ITC to form the Paperboards & Specialty Papers
Division of ITC. This was done to "harness strategic and operational synergies."
In 2002, the company launched another clothing brand, John Players, which
targeted the urban youth.
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In 2003, ITC started marketing incense sticks manufactured by small scale and cottage units. In 2004, ITC was one of eight Indian companies to make it to the "Forbes 'A' List"8 which featured 400 of "the world's best big companies". In March 2005, the board of directors of ITC approved the company's five-year business plan (2005-06 to 2009-10) which involved an investment of Rs. 140 billion. The plan included setting up of new plants and upgrading existing ones in its tobacco, foods, apparel, paperboards, packaging, and hotels businesses.
As of early 2006, ITC was one of India's most valued and respected private sector companies with a market capitalization of over US$ 7 billion (Refer Exhibit I for ITC's financials and Exhibit II for more details on ITC's businesses)...
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