ITC's Diversification Strategy

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Case Details:

Case Code : BSTR040
Case Length : 18 Pages
Period : 1994 - 2002
Organization : ITC
Pub Date : 2002
Teaching Note :Not Available
Countries : India
Industry : Varied

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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EXCERPTS Contd...

The Challenges Ahead

In 2001, ITC invested around Rs. 5 billion in its non-tobacco businesses. This investment was expected to increase to Rs 20 billion in the next five years.

By May 2002, there were 44 Lifestyle stores in India. The gross turnover from these stores was over Rs. 200 million, but due to their heavy start up costs, they were still not considered profitable. Expressions greeting cards, which were sold through 10,000 outlets in 180 Indian cities, were yet to bring in revenues. According to company reports, losses are on the rise in its branded garments, greeting cards and packaged foods ventures. Losses in businesses such as 'Aashirvad' wheat flour, Expressions greeting cards and Wills Lifestyle accounted for five per cent of pre-tax profits in 2002 and continue to be higher than the revenue generated by them. If losses continue to rise over the next few quarters, it may adversely effect the overall profit growth...

Exhibits

Exhibit I: ITC-A Brief History
Exhibit II: Income & Expenditure Statement
Exhibit III: Segment Information
Exhibit IV: Wills Sports
Exhibit V: Branded Wear Market
Exhibit VI: Expressions Greeting Cards
Exhibit VII: The Greeting Cards Industry
Exhibit VIII: Confectionery Market
Exhibit IX: Kitchens of India
Exhibit X: Branded Atta Market
Exhibit XI: Safety Matches Market

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