ABSTRACT

In report a detailed study about the fmcg sector in India is been done. ITC is one of the oldest fmcg company in India. In this study a comprehensive study has been made starting from the vision and mission of the company and the various strategies which the company is been using in the past, we have also given various recommendations to improve the sales of the company. We have analyzed the various strengths and weakness of the company by comparing it with its close competitors and come up porters five force model considering the entire sector and the various. Our study is been concluded deriving conclusions from SWOT Analysis and various matrixes viz. EFE, IFE BCG etc. We have analyzed the various financial aspects of the company and also have provided with certain recommendations which might improve the same.

1. INTRODUCTION
ITC was initially started as Imperial Tobacco Company of India Limited. It was started on August 24th 1910.in 1970 the name was changed to India Tobacco Company Limited and later to I.T.C Limited in 1974. In 1925, ITC started with the packaging & printing business as a strategy for backward integration. In 1975, it started off with the hotel business by acquiring a hotel in Chennai which was called ITC- Welcome group hotel Chola and now it is called as My Fortune, Chennai. It remains behind entering the hotel business is to create tourism

infrastructure, direct and indirect employment. n 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited. ITC acquired BILT Industrial Packaging Co. ltd (BIPCO) in 2004 which is a paperboard manufacturing facility near Coimbatore.ITC entered the agriculture industry is the year 1990.In the year 2002, ITC launched a brand called Paperkraft which is a premium range of notebooks. Classmate notebooks were launched in 2003. All stationery items were launched between the years 2007- 2009. Colour crew which is a new brand of stationery was launched in 2010. Wills sports a garment shop for both men and women was launched in the year 2000 and thus ITC entered the Lifestyle Retailing business. In 2002, John Players which is a company for mens outfit was launched by ITC. ITC is Indias earliest private sector company with a turnover of US $ 7 billion. ITC initially started with cigarettes and now we can find the presence of ITC in food industry, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, and Information Technology. Forbes magazine has rated ITC has one the most reputable company and Business Today has ranked ITC as the Indias most valuable companies. Business Week has ranked ITC among Asias 50 best performing companies.

1.1 VISION STATEMENT

Sustain ITC's position as one of India's most valuable corporations through world class performance, creating growing value for the Indian economy and the Company's stakeholders

1.2 MISSION STATEMENT

To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value

1.3 STRATEGIES
ITCs strategies are more focused to create value for the customers and the nation. It has a rich organization culture and believes in empowerment. The companys corporate strategies are 1. To concentrate on their existing portfolio that includes FMCG, hotels, agriculture, paperboards & packaging and information technology. 2. To make sure that they are competitive enough in all their business. 3. To create competitive power by using synergies derived from ITCs various business. 4. To develop a world class portfolio which suits the companys capacity with the help of the opportunities that is present domestically and through export markets. +2.1 DEVELOPED VISION STATEMENT Make ITC as one of the most valuable corporations in FMCG products through improved technology and new products and creating new value for both stakeholders and economy of the country. 2.2 DEVELOPED MISSION STATEMENT To be the leading player globally in the FMCG sector and to provide quality goods by sustaining the stakeholders. 3.EXTERNAL OPPERTUNITIES & THREATS 3.1 EXTERNAL OPPORTUNITIES 3.1.1 INCREASE OF DISPOSAL INCOME

Since India is growing rapidly, the country has seen a compounded growth rate of 7.6 % in the past five years. The middle class disposal income increases from Rs 200,000 to Rs 1,000,000 per year, by the year 2025 it is assumed that 41 % of the Indian population will be middle class people. 3.1.2 FOOD PROCESSING SECTOR The government of India has been constantly encouraging the food processing sector, as India is one of the major consumers and producers of food in the world. The government has given 100 % import free duty for food items and import tax free for food materials been imported in to the country, for a country like India where there are close to 49 million people who are directly or indirectly involved the sector is big. The food sector in India is growing at a rate of 10 % every year and the opportunities keep growing big day by day. 3.1.3 RURAL MARKETS The rural India has close to 40 % of consumption of all the fmcg products in India by 2012 the figure is expected to increase to 66 %, with 150 million households the rural market is thrice as big as the urban market and there are no one solid player which has been able to exploit the market. Area Rural Urban All-India 72.6 27.4 100 Household population 74.6 25.4 100

3.1.4 RURAL PEOPLE BECOMING MORE BRAND CONSCIOUS The rural population of India is the major consumers of Indian fmcg market, close to half of the Indian population lives in the rural area. Now since the country is expressing growth and the standard of living of people gradually increasing too the country is experiences a change in the preferences of goods purchased by the people. The brand image is slowly getting into the minds

of the rural people of India who are getting more brand conscious. The rural market of India is close to 1,000,000 million industries.

3.2 EXTERNAL THREATS

3.2.1 INCREASE OF PRICE OF FOOD ITEMS The price of food items are in the higher side due to the failure of monsoons and other factors, in the past year the price of wheat saw an increase of 10-15 %. 3.2.2 FDI IN RETAIL The recent government decision to allow fdi in retail sector will give a lot of chances for many of the foreign brands to have a try in the Indian market, government has given 100 % entry for single brand which provides an opportunity for all the foreign players. 3.2.3 SWITCHING COST OF SUPPLIERS ITC deals with products which have a less amount of switching cost, this gives the consumers the freedom to change their mind and try a lot of other products too. A recent survey shows if the fmcg company doesnt give anything new for the customers and keep them interested there are a lot of chances that the customers may change from their products. 3.2.4 EMERGENCE OF SMALL SCALE INDUSTRIES The government of India offers a lot of support to the small scale industries, as a result of this there are a lot of competition from the regional players who offer the products in a competitive price too. According to the Indian industries act of the small scale industries if owned by a company they have a tax rebate of 30 % for the first ten years.

4. COMPETITIVE PROFILE MATRIX

FACTOR R&D expenses ITC 1.3 billion dollar P&G 1billion dollar

Product innovation

Vivel 3 in 1 product of the Comes year

under

top

100

innovator award 1365 crore

Revenue

26000 crore

Brand awareness

Kitchen of India is No.2 in Started too late USA

Attrition rate(Top mgmt) Export

0% for past 15 yrs Ashirward atta 87% Table 4.1 CPM

8%

ITC S. No FACTORS WEIGHT

P&G

RATING WEIGHTED WEIGHT RATING WEIGHTED SCORE SCORE 0.15 3 0.45

R&D expenses

0.15

0.6

Product innovation

0.1

0.2

0.1

0.4

3 4

Revenue Brand awareness

0.15 0.2

3 4

0.45 0.8

0.15 0.2

1 1

0.15 0.2

Attrition rate(Top mgmt)

0.3

0.9

0.3

0.3

Export TOTAL

0.1 1.0

0.2 3.15

0.1 1.0

0.2 1.7

Table 4.2 COMPETITVE PROFILE MATRIX This shows the CPM matrix of ITC and P&G. This matrix considers the strength of weakness of the company and compares it with the rival company. In this report, P&G is the

rival company for ITC. The weighted score is found out for both the company by multiplying the weight and rating. The weighted score for ITC is 3.15 and for P&G is 1.7. The weight and rating is given by us. From this matrix, we find that ITC is doing well when compared to P&G on the various factors which we have considered.

5. EXTERNAL FACTOR EVALUATION MATRIX

KEY INTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE Opportunities 1.Increase in the disposal income 1. Government concentration on food sector 2. Government exemption 3. Untapped markets in the rural sector 4. Rural people becoming more brand conscious Threat 1. Increase of price of inflation is 14% 2. Government allowance of FDI 3. Switching cost for the suppliers 4. Government supporting small scale industries 5. Emergence of many local players as competitors 6. Number of substitutes is very high TOTAL 0.12 1 2 0.24 3.22 0.11 3 0.33 0.07 0.09 0.06 0.07 5 4 3 2 0.35 0.36 0.18 0.14 0.1 0.08 0.1 0.12 0.08 3 4 4 3 3 0.3 0.32 0.4 0.36 0.24

Table 5.1 EXTERNAL FACTOR EVALUATION MATRIX For EFE, we should consider the opportunities and threat for the company. The weighted score is calculated with the help of weight and ranking. The weighted score for ITC is 3.22 according to EFE matrix. If the weighted score is 4, it implies that the company is reacting well

to the external opportunities and threat. Since for ITC, it is 3.22 it means the company is aware of the opportunities and the threats. 6. INTERNAL STRENGTH & WEAKNESS 6.1 INTERNAL STRENGTH 6.1.1 DISTRIBUTION CHANNEL ITC is a company which is been listed in the Forbes best 2000 companies of the world. It is the only fmcg company from India to be listed in this prestigious list. This is one of the oldest companies which were started in the year 1910. ITC Biscuits- 1.8 million outlets in India it had seen 7 % growth within 3 years of launch. They supply their goods to 10-13 million retail stores and they supply close to 9 million kirana stores. 6.1.2 HIGH INVESTMENT IN R&D The company had always been backed from a lot of funding from the directors. In the year 2012 ITC has invested close to Rs 100 crores for their R&D. The R&D head quarters is in Bangalore which concentrates on growing hybrid potatoes, this initiate from ITC R&D has resulted in the growth and profitability of the firm. 6.1.3 ATTRITION RATE The top level management of ITC has been the back bone for their success, the director and the executive directors are continuously working for the company for the past 15 years, because of this the companies attrition rate is been grounded to zero. 6.1.4 QUALITY AWARDS ITC is a brand which is known for its quality of preparation of work, the company is able to retain its customers due to the extensive usage of quality. Recently the factory in Manpura received certifications for ISO 9001 (Quality Management System), ISO 14001 (Environment Management System) OHSAS 18001 (Occupational Health & Safety Assessment System) from

Messrs. Det Norske Veritas (DNV). The company also has launched six sigma methodology of production in the factories to ensure repeated quality.

6.1.5 ENVIRONMENTAL FRIENDLY PRODUCTS Class mates are one of those of one of the brands which had bought awareness about the eco friendly books. When they entered into the stationary market they started growing more trees for cutting down more trees. 6.1.6 OLDEST PLAYER IN THE MARKET ITC is a company which was started in the year 1910, they have been successful in the initial products of cigarettes which paved way for them to learn about the Indian peoples mindset and their cultures. This was the secret of success of the fmcg products and is the reason why they were able to break even in the fmcg sector in a short span of time. 6.1.7 KNOWLEDGE ABOUT THE MARKET In the cigarette industry only they had an extensive distribution channel which was their success factor, when they launched the other fmcg products these distribution channel was an added advantage for the company which resulted in success. 6.2 INTERNAL WEAKNESS 6.2.1 TOBACCO PRODUCTS ITC has 75 % per share in the Indian tobacco industry, there are no players who can come close to this mark, because of such an image in the market the other products which ITC comes up with will always be somehow connected with the success rate of the cigarette company, people will think before trying any of these products. 6.2.2 ESTABLISHMENT IN THE FMCG SECTOR

ITC products are one of the oldest players in the fmcg industry, but for their majority of the time they had only cigarettes as their products, in the food sector and stationary sector they are relatively new when compared to the other major players in the field.

6.2.3 LIMITED PRODUCT LINE ITC has a lot of untapped products in the personal care sector, their product line when compared to the other majors in the fmcg sector are limited and they dont have any personal care items for men.

7. INTERNAL FACTOR EVALUATION MATRIX

KEY INTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE Strengths 1. Distribution channel 2. R&D 3. Attrition rate 4. Quality 5. Eco friendly measures 6. Knowledge about the market 7. Oldest player in the industry 8. Product innovation 9. Brand awareness Weakness 10. Dependence of tobacco products 11. Limited product lines 12. Less efforts to enter into coconut oil industry 0.08 0.1 0.07 4 3 2 0.32 0.3 0.14 0.12 0.1 0.08 0.1 0.06 0.05 0.05 0.1 0.09 3 4 3 3 2 2 3 3 2 0.36 0.4 0.24 0.3 0.12 0.1 0.15 0.3 0.18

10

TOTAL

2.9

Table 7.1 INTERNAL FACTOR EVALUATION MATRIX For IFE matrix, the strength and the weakness of the company is considered. ITC has got a weighted score of 2.9 which is above average (2.5) . This indicates that the internal position of ITC is good.

8. SWOT ANALYSIS

STRENGTH

Distribution channel. High investment in R&D. Attrition rate. Reputed Quality Awards. Environmental friendly products. Extensive knowledge about the market. Being one of the oldest player in the Indian market.

WEAKNESS

Still dependent on the initial cigarette industry. Yet to establish as a major brand in the Fmcg sector Limited product line

11

 OPPORTUN ITIES

Increase in the disposal income of the middle class people. Government concentrating more on the food processing sector. Government exemption for major five fmcg products. The growth of untapped markets in the rural sector. Rural people of India becoming more brand consciousness

There is still untapped market in rural sector so ITC with its excellent distribution channel can grabe the untapped market STRENGTH People are becoming more brand conscious and ITC takes care of it by OPPORTUNITI providing them with quality products. ES ITC can improve its product line because the governmnet is providing tax exemption for five major fmcg products. WEAKNESS ITC can become a major brand in fmcg food sector with the help of OPPORTUNITI government's concentration more on food processing ES

THREATS

Increase of price in food products. Government allowance of fdi in retail, which will lead to competitation from foreign markets. Switching cost for the suppliers are vey less. Government supporting small scale industries which paves way for all local and domestic players. Emergence of many private labels from the retail industry. Number of substitutes is very high
ITc is been one of the oldest player in the fmcg sector in India hence this gives them an edge over the foreign players who invest in the indian fmcg sector. It will take time for the FDI to understand the consumer behaviour amd pattern ITC being a oldest player in the indurtsy will be able to understand the consumers better,

STRENGTH THREAT

The substitution rate for fmcg product is quite high and the product line of ITC is limited when compared to the other players in the industry. WEAKNESS The price of the raw materials lie milk, Oil is also increasing and fmcg has not yet established themself as a major player in the food business. THREAT

8.1 STRATEGIC POSITION AND ACTION EVALUATION MATRIX

Financial strength

12

The net profit if ITC has been increased to Rs.181.29 crore from Rs.150.88 crore from previous year, increased by 20.6% from previous year. Return on capital employed is 45.4% which is a 59% increase than previous year. Revenue of ITC is Rs.27788 crores with a growth rate of 15%

4.0

3.0

3.0

Industry strength FMCG sector growth rate is 16.5% among urban population and 17.2% among rural population. Deregulation in FDI by Indian constitution increased the investment in FMCG sector. Deregulation may give rise to many competitors. 1.0 3.0 3.0

Environmental stability Switching cost of customers is very less, as the number of competitors are more in FMCG sector. High inflation rate makes a major impact on credit payment. Switching cost of suppliers is low in FMCG sector. -3.0 -2.0 -4.0

Competitive advantage ITC has more diversified product range for their customers. Attrition rate is 0% in the top management for the past 15 yrs. ITC spends about Rs.100.96 crores in R&D projects. -2.0 -1.0 -3.0

CONCLUSION: Competitive advantage average = -6/3 = -2 CA ES FS

13

Environmental stability average = -9/3 = -3 Industry strength average = 7/3 = 2.33 Financial strength average = 10/3 = 3.33 DIRECTIONAL VECTOR COORDINATES: x-axis: (-2) + (2.33) = +0.33 y-axis: (-3) + (3.33) = +0.33

0.4 0.3 0.2 0.1 0 -0.4 -0.3 -0.2 -0.1 -0.1 -0.2 -0.3 -0.4 0 0.1 0.2 0.3 0.4

8.2 BOSTON CONSULTING GROUP MATRIX

14

8.2.1 STAR The packaged food comes under the star because it has high market share and high market growth Sunfeast cream biscuits is the market leader and has a share of 25% Yippee noodles has a market share of 10% Yippee pasta has a market share of 12.5% Ashiravad atta has a market share of 30% Bingo has a market share of 12%

15

8.2.2 CASH COW

16

Cigarette comes under cash cow The market growth of cigarettes is 56.54% and the market share of cigarette is 80.72%

8.2.3 CASH DOG ITCs agarbathis comes under cash dog because it has low market share and market growth The market share is 2% The market growth is 5%

8.2.4 QUESTION MARK ITCs personal care comes under this category The market growth is high which is around 12% The market share is 5%

8.3 INTERNAL EXTERNAL MATRIX

17

IE MATRIX
3.5

EXTERNAL VALUE EVALUATION

3 2.5 2 1.5 1 0.5 0 0 0.5 1 1.5 2 2.5

2.9, 3.22

3.5

INTERNAL FACTOR EVALATION

FIGURE 8.3 IE MATRIX According to the IE matrix, ITC comes under grow and build strategy. This implies that the strategy that the company follows right now is doing well so it can continue the same strategy for its business. It means intensive and aggressive tactical strategies. Strategies should focus on market penetration, market development, and product development.

8.4 QUANTITATIVE STRATEGIC PLANNING MATRIX

18

STRATEGIC ALTERNATIVES 1. Tap untapped market in rural sector with the excellent distribution channel . 2. People are becoming more brand conscious and ITC takes care of it by providing them with quality products. KEY FACTORS STRENGTHS 1. Distribution channel 2. R&D 3. Attrition rate 4. Quality 5. Eco friendly measures 6. Knowledge about the market 7. Oldest player in the industry 8. Product innovation 9. Brand awareness WEAKNESS 1. Dependence of tobacco products 2. Limited product lines 3. Less efforts to enter into coconut oil industry TOTAL OPPORTUNITIES 1. Increase in the disposal income 2. Government concentration on food sector 0.08 2 0.16 0.08 3 0.24 3 0.24 1 1.34 1.36 0.08 0.07 0.1 0.09 0.08 3 0.24 2 3 0.24 0.09 2 0.18 1 0.09 0.1 0.1 0.06 0.08 0.08 0.07 4 3 1 2 0.14 0.08 0.4 0.3 3 2 4 3 0.21 0.32 0.3 0.2 WEIGHT AS TAS AS TAS

19

3. Government exemption 4. Untapped markets in the rural sector 5. Rural people becoming more brand conscious THREATS 1. Increase of price of inflation is 14% 2. Government allowance of FDI 3. Switching cost for the suppliers 4. Government supporting small scale industries 5. Emergence of many local players as competitors 6. Number of substitutes is very high TOTAL

0.1 0.09

3 0.27

2 0.18

0.08

0.24

0.32

0.06

0.12

0.24

0.08

0.11

0.11

0.09

0.09

0.11

0.22

2.67

2.34

20

8.5 GRAND STRATEDY MATRIX

FIGURE 8.5 GSM ITCs FMCG sector in India falls in the first quadrant of the Grand Strategy Matrix. The firm is located in the first quadrant of this matrix has an excellent strategic position. Similarly, ITC has a huge market development through its vast product line. Its product line includes tobacco products, food products, personal care, agarbathies, lifestyle, etc. ITC also reached a strong competitive position using its market penetration strategies. ITCs FMCG segment has been posting a strong 20 per cent plus revenue growth for the past six to seven quarters. In the December quarter as well, this segments revenue grew 30.1 per cent (on 15-18 per cent volume growth). All its categories, namely, biscuits, soaps and wheat flour have grown well in the quarter. The company hopes to witness pick-up in the shampoos segment on the back of recent re-launches. The EBIT losses from this segment have also narrowed to Rs 24 crore as against Rs 68 crore in the March 2011 quarter. A break-even in this segment would boost sentiments significantly, which analysts expect by early FY14.

21

9. PORTERS FIVE FORCE MODEL

RIVALRY AMONG COMPETITORS

Attractiveness Low 1 No. Of competitors Large 2 3 4 High 5 Small REMARKS Competitors like HUL, P&G, Dabur

* *

Industry Growth

Slow

Fast

High

Fixed Cost Low Differentiation Low

* * *
Secret

Switching Cost

Openness of term sales

*
Large

Excess Capacity High

* *
Table 9.1 RIVALRY AMONG COMPETITORS

Strategic Stakes

Industry grows at a rate of 17% Since the demand for the product is high the companies Low go for economy of scales, this will lead to high fixed cost. There is no much differentiation as High all the product are same. There is not much differentiation High between the product The official statements of cash Open flow wont be revealed accurately Since Fmcg sector is always in Small pressure to demand product so the stock level is high People generally tend to invest more Low on fmcg since it is stable.

INTERPRETATION The value for rivalry among competitors is 2.85. It means that the competition in this sector is not high.
22

BARRIERS TO EXIT
Attractiveness Low 1 2 3 4 High 5 REMARKS

High

Low

Asset Specialization

High

Low

Cost Of Exit

High

Low

Government Restrictions Table 9.2 BARRIERS TO EXIST INTERPRETATION

Fmcg is a sector where the demand for a product will be really high. The industry has to invest in lot of asset to keep up demand Since the market is high and the products are in huge demand the company would have set up huge plants. The government do not have any restrictions in a company exiting, there are no hidden costs which have to be paid to the government.

The value for barriers to exist is 4.3. This implies that for the fmcg industry to exist the business is high because it has a number of barriers.

23

BARRIERS TO ENTRY
Attractiveness Low 1 Economies of scale Product differentiation Small 2 3 4 High 5 REMARKS High demand leads to production in large scale It is a must or else it might lead to boredom Consumers in India are becoming more brand conscious , even the people in rural areas It is low since the product by itself will not cost more If the distribution channel is low , the frequency of the product reaching the customer is tough Demand is high so capital should be high Not much technology is required . The raw materials needed is easily available.

* *

Large

Low

High

Low Brand identity Low Switching cost

High

* *
High

Access to channel distribution Capital requirement Access to technology Access to raw materials Government protection

Easy

Limited

*
Small

* * * *
Table 9.3 BARRIERS TO ENTRY

Large

Easy

Restricted

Easy

Restricted

None

Substantial

No protection

INTERPRETATION The value is 3.3 and this shows the barrier for the entry into this industry is not high.

24

THREATS FROM SUBSTITUTES

Attractiveness L o w 1 Availability of Close Substitutes Switching Cost Substitute's Price Value Profitability of the Producers of Substitutes Bette r High High Low H i g h 5 Low High Wors e Low REMARKS

* * * *

ITC has a number of substitutes for its product from players like HUL, P&G People wont lose much money by shifting to different products. The switching cost is less between the substitutes. Buyers can switch their products within the same company.

Table 9.4 THREATS FROM SUBSTITUTES INTERPRETATION The value is 1.74 and this implies that the threat from substitutes is not that high when compared with the other industry.

25

BARGANING POWER OF BUYERS

Attractiveness Low 1 Small Number of Buyers Many Availability of Substitutes 2 3 4 High 5 Large REMARKS

*
Few

*
Low High

Switching Costs

*
High Low

Buyer's Threat of Backward Integration Industry's Threat of Forward Integration Low

*
High

*
Low High

Contribution to Quality High Contribution to Cost

*
Low

*
Low High

Buyer's Profitability

*
Table 9.5 BARGAINING POWERS OF BUYERS

Fmcg sector is the 4th largest sector with annual growth of 17% Fmcg sector has a lot of substitutes like p&g, HUL. Switching cost is less because buyers are not going to lose much by changing the product There are not much products in which the suppliers can lead into backward integration Most of the fmcg products are complete by itself. ITC had won number of quality awards. The buyer has no involvement when it comes to cost There is not a big price difference between the products of different brands.

INTERPRETATION The value for bargaining power of buyers is 3.12. This implies that the bargaining power of buyers is on a average. The customers can bargain because there are number of competitors in this industry.
26

BARGANING POWER OF SUPPLIERS

Since the demand for the raw material is high, the suppliers have more bargaining power. Small Number of Suppliers Availability of Substitutes Many Attractiveness Low 1 2 3 4 High 5 REMARKS Suppliers are high because Large there are number of players in this industry The suppliers can sell to Few any players like HUL, P&G In the fmcg sector the switching cost for the buyers are really low since High most of the products by itself costs a relatively small amount. The chances of suppliers reaching out for backward Low integration is less, because they have done all they can do in the sector. The Fmcg are not highly High technological oriented ITC has won so many High quality awards for its outstanding quality. It is the raw material Low which also contributes to the cost The suppliers more over set the cost of the product, if there is an increase in High the cost of raw materials it will lead to an increase in the cost of the product.

* *

Low Switching Costs

*
High

Supplier's Threat of Backward Integration Industry's Threat of Backward Integration

*
Low Low

* * *

Contribution to Quality High Contribution to Cost

Low Industry's Importance to Supplier

Table 9.6 BARGAINING POWER OF SUPPLIERS INTERPRETATION The value for bargaining power of suppliers is 3.25. This shows that the bargaining power of suppliers is high as they can sell their materials to the competitors also if they dont get high margin.

27

GOVERNMENT ACTIONS
Attractiveness L o Hi w gh 1 2 3 4 5 Indust ry Protec tion Indust ry Regul ations Custo ms & Tariff Restri ctions Aboar d Lo w Hi gh

REMARKS

* *

The government has been providing tax exemption for 5 major fmcg product

Hi gh

Lo w

The government has reduced the barriers to start of a new fmcg industry, especially a food processing industry.

Hi gh

Lo w

The export duties for food products are less, import duties are nil for

Table 9.7 GOVERNMENT ACTIONS INTERPRETATION The value for government actions is 4. This shows that the government is supporting this industry and the growth of the industry is high and it contributes to the revenue of the country.

28

OVERALL ASSESSMENTS
Attractiveness Low High 1 2 3 4 5 Barriers To Entry Rivalry Among Competitors Barriers To Exit Power Of Buyers Power Suppliers Threat Of Substitutes Government Action Overall Attractiveness

REMARKS
Barriers is medium

* * * * * * * *

Competition is high Cannot exit the industry easily The buyers have bargaining power due to competition The suppliers can also bargain Threat is not much from competitors The government helps in the growth This industry attracts new players

Table 9.8 OVERALL ASSESSMENTS INTERPRETATION The value is 3.25 and this implies that the industry is growing and people get profit out the business and the government also helps in the growth of the industry and it contributes to the revenue of the country.

29

10. PROJECTED ANNUAL REPORT RATIO/YEAR

RETURN ON CAPITAL EMPLOYEED OPERARTING PROFIT MARGIN NET PROFIT MARGIN 11. REFERENCE
http://www.itcportal.com/about-itc/profile/index.aspx http://www.itcportal.com/about-itc/profile/history-and-evolution.aspx http://www.moneycontrol.com/financials/itc/ratios/ITC http://itcportal.com/about-itc/shareholder-value/annual-reports/itc-annual-report2012/food-business.aspx http://itcportal.com/about-itc/shareholder-value/annual-reports/itc-annual-report2012/pdf/ITC-Balance-Sheet.pdf http://ca.finance.yahoo.com/news/procter-gamble-quarterly-profit-soars-121153692-sector.html http://www.indiainfoline.com/Markets/News/Gillette-India-tumbles-after-weak-FY2012-earnings/4486473530 2008 2009 2010 2011 2012

36.60

34.60

42.64

44.94

46.95

31.57 21.56

32.84 21.18

33.02 21.30

34.08 22.91

35.55 23.97

30