ITC Limited: history, ownership, mission, how it works & makes money

A Brief History of ITC Limited

ITC Limited, originally known as the Imperial Tobacco Company of India Limited, was founded in 1910 in Kolkata, India. Initially, the company focused on tobacco and cigarettes, quickly becoming one of the leading cigarette manufacturers in the country. By the 1970s, ITC began diversifying its business interests beyond tobacco.

In 1970, ITC entered the hotel industry with the launch of its first hotel, the ITC Windsor in Bengaluru, marking the beginning of its expansion into hospitality. The company also ventured into the food industry, establishing its brand of packaged foods, including staples like biscuits and snacks.

By the late 1990s, ITC had further diversified its portfolio, launching its agribusiness and paperboards segments. The company’s foray into the FMCG sector began with the launch of its brand Aashirvaad, which has become synonymous with quality in the Indian flour market. As of 2023, ITC's FMCG segment includes a wide variety of products such as personal care, health care, and lifestyle products.

In its fiscal year 2022-2023, ITC reported a total consolidated revenue of approximately ₹70,114 crore, showcasing robust growth driven by its diversified business model. The company’s net profit for the same period was around ₹15,702 crore, indicating a significant increase from previous years.

The following table illustrates ITC’s financial performance over the last five years:

ITC has maintained a strong commitment to sustainability and corporate social responsibility. The company has invested significantly in afforestation, water conservation, and rural development initiatives, reflecting its dedication to building a sustainable future. As of 2023, ITC has more than 4,000 direct employees and a substantial indirect employment footprint through its supply chain.

In terms of stock performance, ITC's shares are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). As of October 2023, ITC's share price is approximately ₹400, with a market capitalization of around ₹5 lakh crore, making it one of the most valuable companies in India.

The company has a history of providing consistent dividends to its shareholders, with a dividend yield of around 3.53% in 2023. This, combined with its growth trajectory across multiple sectors, has solidified ITC's position as a diversified conglomerate.

Who Owns ITC Limited

ITC Limited is one of India's foremost multi-business conglomerates, owning a diverse range of interests that include FMCG, Hotels, Packaging, Paperboards and Specialty Papers, and Agri-Business. The ownership structure is predominantly held by institutional investors, retail investors, and foreign portfolio investors.

Ownership Structure

As of the latest data available from October 2023, the ownership of ITC Limited is categorized as follows:

The promoter group of ITC Limited is represented largely by the ITC Group, which was established by the late Mr. D. B. Gupta in 1910. The top entities within this group hold significant shares in the company.

Key Promoters

Among the notable shareholders within the promoter group, ITC Limited's largest shareholders include:

• ITC Holdings
• ITC Limited Employee Trust
• ITC Limited ESOP Trust

As of October 2023, the collective stake of the promoter group in ITC Limited stands at approximately 31.63%.

Institutional Ownership

Institutional ownership is considerable and plays a pivotal role in the overall governance and financial performance of ITC Limited. Both domestic and foreign institutional investors reflect confidence in the company’s long-term strategy and operational efficiency.

The presence of foreign institutional investors has been notable, with significant investments reflecting global market interest. The company has attracted attention due to its robust performance in the FMCG sector.

Retail Ownership

Retail investors contribute a substantial part of ITC Limited's ownership, with about 30.92% of the shares. This diverse ownership base allows for a wider distribution of shareholding and influences corporate governance.

Stock Performance

As of October 2023, ITC Limited's stock has shown resilience in the market, trading within the range of ₹400 to ₹460 per share over the past year. The company reported a revenue of approximately ₹62,000 crores for the fiscal year 2022-2023, with a profit after tax of around ₹15,000 crores.

With a market capitalization exceeding ₹5 lakh crores, ITC Limited remains a key player on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

ITC Limited Mission Statement

ITC Limited, a major player in India's FMCG sector, operates with a clear mission statement focusing on sustainable growth and value creation. The company’s mission revolves around enhancing the quality of life through innovative and sustainable products across its diverse portfolio, which includes FMCG, hotels, paperboards, packaging, and agribusiness.

As of 2023, ITC's mission aligns with its performance metrics. The company reported a revenue of ₹ 60,122 crore (approximately $7.2 billion) for the fiscal year 2022-2023, demonstrating a year-on-year growth of 20%. The operating profit stood at ₹ 18,117 crore (around $2.2 billion), with a net profit margin of 30%.

ITC's core values emphasize sustainability, responsibility towards all stakeholders, and maximizing shareholder value. The company has committed to reducing its carbon footprint by 30% per unit of revenue by 2030, in line with global climate initiatives.

In focusing on its mission, ITC has also invested significantly in its sustainability initiatives. The company aims to achieve a 100% renewable energy target by 2030 across all its manufacturing units. As part of the mission to support agriculture, ITC’s agribusiness segment has worked on improving farmer livelihoods, impacting over 4 million farmers directly through support programs.

Moreover, ITC is a leader in the ‘A’ category for sustainability practices, having received a rating for its efforts in environmental management and corporate governance. This underlines its commitment to integrating sustainability into its mission.

ITC's mission statement not only guides its strategic direction but also resonates in its product innovations. For instance, the FMCG segment, which has seen a growth of 12% in market share, reflects the successful implementation of the mission through new product lines focused on health and wellness, tapping into changing consumer preferences.

Ultimately, ITC Limited's mission statement serves as a comprehensive framework guiding the company's operations and strategic goals, reinforcing its commitment to long-term, sustainable growth while delivering value to its stakeholders.

How ITC Limited Works

ITC Limited, one of India's foremost multi-business conglomerates, operates across various sectors including FMCG, Hotels, Paperboards & Packaging, Agri Business, and Information Technology. As of the financial year 2022-2023, the company reported a gross revenue of ₹ 1,79,434 crores, reflecting a growth of 16.5% from the previous year.

Business Segments

The company is structured into several key segments:

• FMCG: This is the largest segment, contributing approximately 52% to the overall revenue. ITC has a diverse portfolio, including brands like Aashirvaad, Sunfeast, and Bingo.
• Hotels: ITC operates luxury hotels under the ITC Hotels brand, contributing about 6% to total revenue.
• Paperboards & Packaging: This segment ranks as a significant contributor with a revenue share of 15%.
• Agri Business: The company's Agri Business segment, focusing on sourcing and exporting agricultural commodities, accounts for around 10% of revenue.
• Information Technology: ITC’s IT segment, known for providing IT services and solutions, contributes approximately 4%.

Financial Performance

For Q2 FY 2023, ITC reported a net profit of ₹ 4,479 crores, an increase of 24% year-on-year. The earnings before interest, tax, depreciation, and amortization (EBITDA) margin stood at 33%.

Market Capitalization

As of October 2023, ITC Limited has a market capitalization of approximately ₹ 4,63,000 crores.

Stock Performance

ITC's stock has shown resilience, trading at around ₹ 440 per share, with a year-to-date gain of 18%. The stock has a 52-week high of ₹ 474 and a low of ₹ 308.

Key Ratios

Corporate Social Responsibility (CSR)

ITC is also known for its commitment to sustainability and corporate social responsibility. The company’s initiatives focus on environmental management, sustainable agriculture, and community development. In FY 2023, ITC invested ₹ 200 crores in various CSR activities.

Recent Developments

In September 2023, ITC announced the launch of a new line of organic foods under the Aashirvaad brand, aiming to capture the growing health-conscious consumer segment. This move is part of the company’s strategy to diversify its FMCG portfolio further.

Future Outlook

Analysts project that ITC will continue to witness growth in its FMCG division, with expectations of a revenue increase of 20% in FY 2024 driven by innovations and expansion into new markets.

How ITC Limited Makes Money

ITC Limited is a diversified conglomerate based in India, generating revenue through various segments. The company operates in the FMCG (Fast-Moving Consumer Goods), Cigarettes, Hotels, Packaging, Paperboards, and Agri-Business sectors. Below is a breakdown of revenue generation across these segments based on the latest financial reports.

As of the financial year 2022-23, ITC Limited reported a total revenue of approximately 54,000 INR Crores. The Cigarettes segment continues to be the most significant contributor to the company’s revenue, accounting for over 43% of the total revenue, despite facing increasing regulatory pressures.

The FMCG sector, including food, personal care, and lifestyle products, reported a growth of approximately 20% year-on-year, driven by strong brand performance and market penetration strategies. ITC's popular brands include Aashirvaad for staples, Sunfeast for biscuits, and Bingo! for snacks.

In the Hotels segment, ITC Limited owns and operates luxury hotels under brands such as ITC Hotel and WelcomHotel. The company reported occupancy rates around 60% post-pandemic recovery in 2022-23, with an average room rate growth of 15%.

The Packaging and Paperboards segment has seen steady growth due to an increase in demand for sustainable packaging solutions, contributing significantly to ITC's overall profitability. In FY 2022-23, this segment generated approximately 4,386 INR Crores in revenue.

ITC's Agri-Business segment focuses on sourcing and exporting agricultural products such as wheat, rice, and leaf tobacco. This segment generated 5,705 INR Crores in revenue, benefitting from favorable commodity prices and efficient supply chain management.

Overall, ITC Limited’s diverse business model allows it to leverage its strengths across multiple sectors, thereby enhancing its profitability and market presence.