A DISSERTATION REPORT

ON

“CORPORATE SOCIAL RESPONSIBILITY OF ITC”

Submitted in partial fulfillment of the
requirements for the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

of
UTKAL UNVERSITY

Submitted By:
Priyabrat Soren
IMBA 6th Semester
Roll no: - 53255U180626

Under The Guidance Of

Mr. ABHIJIT MOHANTY
Assistant Professor, RCEM, Bhubaneswar

INSTITUTE OF ENTREPRENEURSHIP DEVELOPMENT

Sector-A, Zone-A, Plot No-123, Mancheswar Industrial Estate
Bhubaneswar -751010, Odisha
2021
 CERTIFICATE

This is to certify that the dissertation project entitled as “Corporate Social Responsibility
of ITC” is a bonafide work of Priyabrat Soren, student of IMBA 6th semester bearing
Roll no 53255U180626 at IED Odisha, Bhubaneswar submitted in the partial fulfillment
of the requirement for the award of the degree of Integrated MBA 6th semester under my
supervision & guidance.

No part of this project report has been submitted to any other Institute/ University for the
award of any degree.

Date: 08-07-2021 (Abhijit Mohanty)

Place: Bhubaneswar Assistant Professor, RCEM,
BBSR
Visiting Faculty, IED Odisha
 DECLARATION

I do hereby declare that the dissertation project report entitled “A dissertation report on
corporate social responsibility of ITC” is an original piece of work done by me under the
guidance of Mr. Abhijit Mohanty, Assistant Professor, RCEM, Bhubaneswar for the partial
fulfillment of the requirements of IMBA 6th Semester programme under Utkal University.

(Priyabrat Soren)

Roll no-53255U180626

IMBA 6th Semester

2018-19 Adm. Batch

 ACKNOWLEDGEMENT

A work is never a work of an individual. I owe a sense of gratitude to the intelligence and co-

operation of those people who had been so easy to let me understand what I need from time to

time for completion of this exclusive dissertation project.

I am grateful to my guide Assistant Professor Abhijit Mohanty, RCEM, BBSR and our Course

Coordinator Asst. Professor Ashutosh Ram for his constant guidance, advice and help which

enabled me to finish this project report in time.

I express my sincere thanks to all Faculty members and students of Institute of Entrepreneurship

Development Odisha, Bhubaneswar for their generous help in various ways for the completion

of this project in time.

I have been benefited from discussions and would also take the opportunity to thank my friends

whose support helped me a lot. A cordial and encouraging environment made it very easier for

me to complete the dissertation.

So, this acknowledgement is a humble attempt to earnestly thank her and all those who were

directly or indirectly involved in preparation of this dissertation.

 CONTENTS
Serial No. Topics Page no.
1. CHAPTER -1: GENERAL INTRODUCTION 1-2
1.1. INTRODUCTION TO THE STUDY 1
1.2. SIGNIFICANCE OF THE STUDY 1
1.3. OBJECTIVES OF THE STUDY 1
1.4. RESEARCH METHODOLOGY 1
2. CHAPTER-2: THEORETICAL CONCEPTS 3-9
2.1. DEFINITION OF VARIABLE UNDER STUDY 3
2.2. LIMITATIONS OF CSR 4
2.3. IMPORTANCE OF CSR 5
2.4. TYPES OF CSR 5
2.5. ADVANTAGES OF CSR 7
2.6. DISADVANTAGES OF CSR 8
3. CHAPTER-3: COMPANY PROFILE 10-18
3.1. HISTORY OF THE COMPANY 10
3.2. PRODUCTS PROFILE 12
3.3. SWOT ANALYSIS 13
3.4. ORGANIZATIONAL STRUCTURE 16
4. CHAPTER-4: CSR INITIATIVES 19-22
4.1. CSR ACTIVITIES CONDUCTED BY ITC 19
4.2. REASONS FOR THE SUCCESS OF CSR ACTIVITIES OF ITC 20

5. CHAPTER-5: DATA ANALYSIS 23-29

5.1. GRAPHS AND CHARTS OF COMPANY’S PERFORMANCE 23
6. CHAPTER-6: FINDINGS, SUMMARY, AND CONCLUSION 30-31
6.1. SUMMARY OF MAJOR FINDINGS 30
6.2. SUGGESTIONS AND RECOMMENDATIONS 30
6.3. CONCLUSION 30
7. CHAPTER-7: WEBLIOGRAPHY 31
1.1. Introduction to the Study

Social responsibility means a doctrine that claims that an entity whether it is Government or Private
Corporation has a responsibility to society. CSR is a concept that reduces costs and risks, increases the
brand value, reputation and the efficiency of employees, transparency, and clarity in the working
environment of the business house. In early 1950's & 60's, the literature was not heavily represented in
CSR domain. However, this decade 'marked a significant growth in attempts to formalize, or more
accurately, state what CSR means' (Carroll, 1999). According to Carroll, "CSR encompasses the
economic, legal, ethical and discretionary expectations that society has of organizations at a given
point in time."

The Companies Act, 2013 has introduced the idea of CSR to the forefront and through its "disclose-or-
explain mandate", which is promoting greater transparency and disclosure. Schedule VII of the Act,
which lists out the CSR activities, suggests communities to be the focal point. On the other hand, by
discussing a company's relationship to its stakeholders and integrating CSR into its core operations,
the draft rules suggest that CSR needs to go beyond communities and beyond the concept of
philanthropy. It will be interesting to observe the ways in which this will translate into action at the
ground level, and how the understanding of CSR is set to undergo a change. The idea of CSR first
came up in 1953 when it became an academic topic in HR Bowen's "Social Responsibilities of the
Business" Since, then, there has been continuous debate on the concept and its implementation.
Although the idea has been around for more than half a century, there is still no clear consensus over
its definition.

1.2. Significance of the Study

This research study is aimed at making the company realize that it’s doing the right thing by
contributing towards the society.

1.3. Objective of the Study

The objective of this study is to verify how ITC fulfills its social responsibilities while being a profit
making company. The objectives of this study are;

1. To study the efforts of Indian companies in this field and their impacts on the company
2. To find out how corporate social responsibility is serving as a determinant of corporate success

1.4. Research Methodology

Data Sources

The data is purely secondary in nature and the knowledge has been obtained only through various
articles available on various websites.

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There is no scope to collect primary data in any form as the topic is theoretical in nature and does not
include any kind of questionnaire to be filled. The research commences by searching for the articles
related to the topic CSR (Corporate Social Responsibility) and then, having a detailed knowledge of
the same.

Then, studying the CSR activities and efforts made by ITC in the field are being studied extensively
with the help of secondary data available from different reliable sources. Taking some examples of
Indian companies and explaining the efforts made by listing their contributions. After identifying
them, there is study of the results it had on the business and what positive results came out. Then
explaining by examples of various studies that how it has led to increase in profits and is one the
reason of corporate success. Also, there is special emphasis on an Indian company which can explain
the topic better and help to achieve the objectives.

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2.1. Corporate Social Responsibility (CSR)

Corporate Social Responsibility Initiatives are to assess and take responsibility for the company’s
effects on the environment and impact on social welfare. It addresses how companies manage their
economic, social, and environmental impacts, as well as their relationships in all key spheres of
influence: the workplace the marketplace, the supply chain, the community, and the public policy
realm. Corporate social responsibility (CSR) is a company’s obligation to the accountable to all of its
stakeholders and all its operations and activities with the aim of achieving sustainable development not
only in the economical dimension but also in the social and environmental dimensions. CSR is the
deliberate inclusion of public interest into corporate decision making, to the core business of the
company or firm, and honoring of a triple bottom line: People, planet, profit. CSR establishes
transparency and trust and fulfilling increased expectations of business. Companies express CSR (1)
through their waste and pollution reduction processes (2) by contributing educational and social
programs and (3) by earning adequate returns on the employed resources.

Definition of CSR by different authors

1) Corporate social responsibility (CSR) is how companies manage their business processes to
produce an overall positive impact on society. It covers sustainability, social impact and ethics,
and done correctly should be about core business – how companies make their money – not just
add-on extras such as philanthropy.
2) Corporate social responsibility (CSR) is a company’s commitment to manage the social,
environmental and economic effects of its operations responsibly and in line with public
expectations. It is part of a company’s approach to corporate governance and often touches every
part of the business—operations, human resources, manufacturing, supply chain, health and
safety, and more.
3) The European Union, in an attempt to offer a framework for companies wishing to invest in
sustainable development, published in 2001 a Green Paper on Corporate Social Responsibility
defining CSR as:
“The voluntary integration of companies’ social and ecological concerns into their
business activities and their relationships with their stakeholders. Being socially
responsible means not only fully satisfying the applicable legal obligations but also going
beyond and investing ‘more’ in human capital, the environment, and stakeholder
relations.”

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4) The International Organization for Standardization (ISO) is an international standard-setting body
that also addressed the definition of CSR through its ISO 26000 standards on Corporate Social
Responsibility. In these guidelines, ISO defines CSR as:
“The responsibility of an organization for the impacts of its decisions and activities on
society and the environment, resulting in ethical behavior and transparency which
contributes to sustainable development, including the health and well-being of society;
takes into account the expectations of stakeholders; complies with current laws and is
consistent with international standards of behavior; and is integrated throughout the
organization and implemented in its relations. “Objective of CSR

The present research work on impact of corporate social responsibility on FMCGs companies have
undertaken to carry out the following objectives

i) To study the conceptual frame work and implications of legal frame work of Corporate Social
Responsibility in India.
ii) To examine the consumers’ perception of Corporate Social Responsibility and its impact on Fast
Moving Consumer Goods companies with gains from CSR practices. 3) To analysis the
consumers’ perception of FMCG companies and its impact on CSR.

2.2. Limitations of CSR

1) CSR as mandate in Law -

a) It talks about spending 2% of average net profit on social causes based on the areas defined in
schedule VII, related to it limitation is both ways if the 2% is - small amount of money (for
medium corporate say CSR amount -few lacs or 1-2Cr) or its huge money (for PSUs and other
corporate giants, CR amount running in few hundred crores). It is limitation to spend such a huge
amount in one financial year (at this stage particularly, as companies have not planned/ no road
map) as it would require lot of dedicated resource or there's limitation with small amount to
showcase the impact of the intervention.
b) As a easy escape to comply with the law, corporate will donate their money to PM fund, Swachh
Bharat Kosh and Ganga cleaning projects, which a limitation with the law itself as this won’t
have any tangible or for that matter say immediate impact on the society.
2) CSR planning and Implementation:
a) As CSR precisely talks about corporate participation in social development, which is entirely of
contrast nature then from running business. So, there's a limitation of understanding and
synchronization in the demand and supply of intervention.

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b) CSR requires to connect with good NGOs for implementation of projects; there’s challenge in
finding good NGOs, though there are few organizations/forums like IICA- NFCSR, credibility
alliance, give India etc. which can connect you with good NGOs but connecting and reaching to
grassroots is still a limitation with CSR
c) Skill gap- there's huge skill gap between the NGOs and Corporate working when it comes to
reporting, documentation etc. on part of NGOs, So, there is limitation in getting quality reporting
till the time concerned NGO personnel reaches to required standard of skill, - n for this corporate
needs to invest good and dedicated 'Time' - which is again a limitation.

2.3. Importance of Corporate Social Responsibility

Corporate Social Responsibility (CSR) is when a company operates in an ethical and sustainable way
and deals with its environmental and social impacts. This means a careful consideration of human
rights, the community, environment, and society in which it operates.

A Corporation should know the importance of corporate social responsibility, and the benefits that
sustainable and ethical practices can bring to your business. It’s incredibly important that your
company operates in a way that demonstrates social responsibility. Although it’s not a legal
requirement, it’s seen as good practice for you to take into account social and environmental issues.
Social responsibility and ethical practices are vital to your success. The Global CSR study found that a
staggering 91% of global consumers expect businesses to operate responsibly to address social and
environmental issues. Furthermore, 84% say they seek out responsible products wherever possible.

The consumers are becoming increasingly aware of the importance of social responsibility, and
actively seek products from businesses that operate ethically. CSR demonstrates that you’re a business
that takes an interest in wider social issues, rather than just those that impact your profit margins,
which will attract customers who share the same values. Therefore, it makes good business sense to
operate sustainably.

2.4. Types of Corporate Social Responsibility

In this day and age, achieving success in business is about more than just having a healthy bottom line.
You also need to be a socially responsible company that takes an active interest in the social issues
affecting the community in which you operate. That way, you’ll build a reputation as a reliable,
trustworthy and reputable brand. The best part is that modern-day business owners have the option to
choose between the following four pillars of corporate social responsibility to base their programs on
in a way that will benefit both the company and the community as a whole.

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a) Philanthropic Efforts
Some of the world’s most successful companies are committed to philanthropy for the betterment
of the broader community. For example, Microsoft is closely aligned with the Bill and Melinda
Gates Foundation, whose aim is to make technology more accessible to different communities
around the globe. This way, Microsoft is helping to cultivate a future generation that will be able
to comprehend technology well enough to continue its improvement. If you run a small company,
your philanthropic efforts don’t have to be as large in scale as Microsoft’s. Many local
supermarkets sponsor the sports teams of local schools, while restaurants can organize and host
fundraising events to support local charities. Not only are such initiatives good for the community,
but they’re also good for the company image because they bring awareness to the brand.

b) Environmental Conservation
Providing aid in times of disaster and contributing to environmental conservation are also viable
forms of corporate social responsibility. These two acts also help to reduce the company’s carbon
footprint (and sometimes even the energy bill!), while helping people in need. Some good
examples of this are MassMutual and Budweiser’s highly promoted 2017 ads, which came in aid
of raising awareness and funds for the victims of natural disasters that rocked parts of America
that year. On the local front, businesses can help out by sponsoring food drives, soup kitchens,
and emergency campaigns. Meanwhile, you can reduce your carbon footprint by recycling office
paper, committing to the use of eco-friendly lights, and limiting the use of plastic utensils. Small
steps like these can build your profile as a socially responsible company.

c) Company Diversity
As a responsible business leader, it’s important to acknowledge the need for diversity in your
company and be sure to do it right so that everyone feels included. You should have overarching
labor policies that apply to everyone in order to avoid scenarios where higher ranked employees
take advantage of junior workers through acts of sexual harassment etc. These are serious issues
with huge consequences for any company. Therefore, it’s important to ensure that your company
policies are in line with the latest movement in equality and diversity, and take consistent action in
implementing those policies. You should also have stringent protocols that govern what should
happen if violations or complaints of any kind are lodged. That way, you’ll be able to maintain a
harmonious and productive workplace by keeping high morale while building a reputation as a
good company that takes care of its employees.

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d) Volunteering Commitments
The reality is that there will always be a charity or a segment of your local community that needs
help. Therefore, it’s important for companies to step up and roll up their sleeves when it comes to
developing the local community, as that’ll help them build a good business reputation. There are
numerous ways to do this, from giving your employees paid leave to specifically help out at a
local charity or initiating a drive to solve the homelessness situation in the community. By
specifically putting aside time to contribute to your local community, you will build a reputation
as a business that truly cares about the community and not just their bottom line.

2.5. Advantages of Corporate Social Responsibility

The benefits of CSR speak volumes about how important it is and why you should make an effort to
adopt it in your business. Some clear benefits of corporate social responsibility are:

a) Improved public image: This is crucial, as consumers assess your public image when deciding
whether to buy from you. Something simple, like staff members volunteering an hour a week at a
charity, shows that you’re a brand committed to helping others. As a result, you’ll appear much
more favorable to consumers.
b) Increased brand awareness and recognition: If you’re committed to ethical practices, this news
will spread. More people will therefore hear about your brand, which creates an increased brand
awareness.
c) Cost savings: Many simple changes in favour of sustainability, such as using less packaging, will
help to decrease your production costs. An advantage over competitors by embracing CSR, you
stand out from competitors in your industry. You establish yourself as a company committed to
going one step further by considering social and environmental factors.
d) Increased customer engagement: If you’re using sustainable systems, you should shout it from
the rooftops. Post it on your social media channels and create a story out of your efforts.
Furthermore, you should show your efforts to local media outlets in the hope they’ll give it some
coverage. Customers will follow this and engage with your brand and operations.
e) Greater employee engagement: Similar to customer engagement, you also need to ensure that
your employees know your CSR strategies. It’s proven that employees enjoy working more for a
company that has a good public image than one that doesn’t. Furthermore, by showing that you’re
committed to things like human rights, you’re much more likely to attract and retain the top
candidates. More benefits for employees. There are also a range of benefits for your employees
when you embrace CSR. Your workplace will be a more positive and productive place to work,
and by promoting things like volunteering, you encourage personal and professional growth.

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2.6. Disadvantages OF Corporate Social Responsibility

While there are a number of benefits and a valid reason why corporations should contribute towards
the society, there are also a number of reasons that make the process of CSR disadvantageous for the
organizations embedding it, such as –

a) Costs: The factor of costs impacts an organization in two ways when it embeds the system of CSR
into its operations. The first was in which costs is a factor is that when an organization looks for
and establishes methods that are different from their usual mode of practice, in order to meet the
requirements of CSR, they need to incur special costs for implementing such differed mode of
operation which becomes burdensome for the organization. The second way in which costs are a
disadvantageous factor is because it brings along with itself a number of expenses that a
corporation is required to fulfill such as training the employees, investing in dedicated programs
for the upliftment of the society as well as the safety of the environment, etc. which increases the
overall costs and expenditures for the organization.
b) Clashing of business objectives: It is a well-established fact that the main aim of a business
organization is to create profits, which is why it produces various products and services to the
customers, in order to be able to gain profits. Corporate Social Responsibility requires the
corporations to keep the interests of the people into consideration which can cause a conflict in the
business objectives of the corporation while making important decisions. For example, whether or
not to buy a land that is beneficial for the business needs, but such buying will not be beneficial
for the people living around that land.
c) Interests of the shareholders: We discussed above that when a corporation has to embed CSR in
their operations, the costs of operations tend to increase and such costs are obviously paid by the
funds of the shareholders which is why this point is often raised that the interests of the
shareholders of an establishment face disadvantage when the practices of Corporate Social
Responsibility are embedded in the system of the organization.
d) Competitive Disadvantage: The establishment of CSR in a corporation can also be
disadvantageous for an organization because an organization that has established CSR would incur
more costs to finish and complete their tasks and operations while those who do not embed the
concept of CSR into their operations will be able to provide their products at lower costs to their
customers in the market which would imply that a corporation ensuring the fulfilment of CSR
would be at a disadvantageous position in the market as compared to its various competitors in the
markets. Such a situation can also cause a company to face a number of losses in the market in
both short and long run.

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e) Impact upon the reputation of the Corporation: When an organization established the concept of
CSR as a part of its operations in the organization, they become bound to express and share a
number of shortcomings of their own products to the customers in the market. Because of such
sharing of information and shortcomings of the products or processes of a corporation, the
corporation becomes vulnerable to a number of negative impacts upon its own reputation in the
market and hence, CSR can lead to a drop in the established reputation of a corporation in the
market.
Corporate Social Responsibility is one of the most widely discussed issues in respect to business
organizations and corporations in the global markets and has both benefits and disadvantages for
its establishment and amalgamation within the organizational and operational setup of an
organization. Hence, embedding CSR in the organization becomes a difficult choice for many
companies.

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3.1. History of the Company

ITC Limited which previously stood for Imperial Tobacco Company of India Limited is an
Indian conglomerate with a turnover of US $ 639.40 billion. It ranks third in pre-tax profit
among India's private sector corporations. The company has its registered office in Kolkata.

The company is currently headed by Sanjiv Puri. It employs over 20,000 people at more than
60 locations across India and is listed on Forbes A-List Companies. The Training Centre of
the company is in Munger, Bihar. ITC is also known as "Chatkal" (especially in Munger).

ITC is one of India's foremost private sector companies with a market capitalization of over
US $ 2571.77 billion and a turnover of over US $ 639.40 billion. ITC is rated among the
World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by
Forbes magazine, among India's Most Respected Companies by Business World and among
India's Most Valuable Companies by Business Today. ITC ranks among India's `10 Most
Valuable (Company) Brands', in a study conducted by Brand Finance and published by the
Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by
Business Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,
Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products.
While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels,
Paperboards, Packaging and Agri - Exports, it is rapidly gaining market share even in its
nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and
Stationery.

As one of India's most valuable and respected corporations, ITC is widely perceived to be
dedicatedly nation-oriented. Former Chairman Y C Deveshwar calls this source of inspiration
"a commitment beyond the market". In his own words: "ITC believes that its aspiration to
create enduring value for the nation provides the motive force to sustain growing shareholder
value. ITC practices this philosophy by not only driving each of its businesses towards
international competitiveness but by also consciously contributing to enhancing the
competitiveness of larger value chain of which it is a part.

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ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of
the country's biggest foreign exchange earners (US $ 64 billion in the last decade). The
Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its
competitiveness by empowering Indian farmers through the power of the Internet. This
transformational strategy, which has already become the subject matter of a case study at
Harvard Business School, is expected to progressively create for ITC a huge rural distribution
infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Ltd, provides IT
services and solutions to leading global customers. ITC Infotech has carved a niche for itself
by addressing customer challenges through innovative IT solutions.

ITC's production facilities and hotels have won numerous national and international awards
for quality, productivity, safety and environment management systems. ITC was the first
company in India to voluntarily seek a corporate governance rating.

ITC employs over 26,000 people at more than 60 locations across India. The Company
continuously endeavors to enhance its wealth generating capabilities in a globalizing
environment to consistently reward more than 3, 39,000 shareholders, fulfill the aspirations of
its stakeholders and meet societal expectations. This over-arching vision of the company is
expressively captured in its corporate positioning statement:

"Enduring Value. For the nation. For the Shareholder."

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3.2. Product Profile

ITC has a diversified presence in

 Cigarettes: W. D. & H. O. Wills, Gold Flake, Navy Cut, Insignia, India Kings, Classic
Verve, Classic, Silk Cut, Scissors, Capstan, Berkeley, Bristol and Flake
 Hotels: ITC Welcome group Hotels, Palaces and Resorts is India's second largest hotel
chain with over 80 hotels. Based out of Hotels Division Headquarters at the ITC Green
Centre in Gurgaon, ITC Welcomegroup is also the exclusive franchisee of The Luxury
Collection brand of Starwood Hotels and Resorts in India
 Paperboards & Specialty Papers: ITC Bhadrachalam Paperboards Limited & ITC
Tribeni Tissues Division is now under one roof --> Paper Boards and Specialty Papers
Division. There are 4 Units under one umbrella - Bhadrachalam, Tribeni, Bollarum and
Kovai.ITC PSPD
 Packaging & Printing Business: India's Largest Packaging Solution provider with In-
house film manufacturing capability. Multi-location manufacturing facilities to cater to
domestic and export requirements. Product Range includes Cartons (Folding & Fluted),
Flexibles (Reels & Pouches), Shoulder Box, HL's & CBO, Printed Cork Tipping, Gay
wraps. ITC PPB
 Agricultural Industry: Agri-Business, Leaf Tobacco, Gold Ribbon, Blue Ribbon, Aqua
Kings, Aqua Bay, Aqua Feast and Peninsular
 Packaged Foods & Confectionery: Kitchens of India, Aashirvaad, Sunfeast, Mint-O,
Candyman, Bingo Snacks
 Branded Apparel: Wills Lifestyle, John Players, Miss Players
 Toiletries: Essenza Di Wills, Fiama Di Wills, Superia, Vivel Di Wills, Vivel
 Education & Stationery Products: Expressions, Classmate, Paperkraft
 Information Technology: ITC Infotech
 Safety Matches: iKno, Mangaldeep, VaxLit, Delite(Discontinued) and AimBrands
acquired from Wimco (Western India Match Company): Ship ,Homelite (Swedish
Matches)
 Incense Sticks: Mangaldeep, Spriha,Yantraani

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While ITC continues in its traditional businesses of Cigarettes, Hotels, Paperboards,
Packaging and Agri-Exports, it is gaining market share in its nascent businesses of Packaged
Foods & Confectionery, Branded Apparel and Greeting Cards. ITC's wholly owned
Information Technology subsidiary, ITC Infotech India Limited, is pursuing emerging
opportunities in providing end-to-end IT solutions, including e-enabled services and business
process outsourcing.

3.3. SWOT Analysis of ITC Limited – ITC SWOT Analysis

SWOT Analysis of ITC Limited focuses on Strength, Weakness, Opportunities, and Threats. ITC
Limited is an Indian conglomerate that operates in a variety of diversified businesses. ITC has six
separate industry verticals, FMCG, Hotel, Paperboards, Specialty Papers, Packaging, IT, and
Agribusiness.

1. Strengths in the SWOT Analysis of ITC Limited – ITC SWOT Analysis

ITC’s cigarette sector contributes a significant proportion of its sales to the FMCG. Increasing
Revenue of ITC Limited in the year by year is its main strength. In the year 2019, its revenue was
Rs. 52,035 crore.

Operating Income is 2.7 Billion US Dollars in 2019. Net Income is Rs. 12824 Crores in 2019.
Number of Employees in the ITC are 27,279.

Portfolio of Companies: under its name, ITC has 6 large and diverse businesses that boost its total
revenue and allow ITC to innovate and pursue other business opportunities. Powerful brand: ITC
is a large brand house with most of its products leading the segments in which it works. ITC owns
some of the most famous cigarette brands, such as the Gold Flake and Classic. It also owns
Sunfeast, one of India’s highest-selling biscuits. Similarly, the AashirvaadChaki Fresh Ata, the
Yippee! , Engage, John Players, and Bingo are all among the industry leaders in their respective
groups.

ITC’s hotel and property businesses are also doing well. With a portfolio like this, ITC has
become one of India’s most dominant conglomerates and is revered all over the world. Efficient
Social Business Initiatives: The ITC has developed a three-pronged strategy that focuses on
building national economic, social, and environmental resources.

ITC has introduced initiatives such as E-Choupal, ChoupalPradarshan Khet (CPK) that support
grass-roots people, i.e. farmers. Such initiatives have also enabled ITC to boost their brand
reputation as a conventional tobacco producer.

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 Inter and Intra-Divisional Synergy: ITC has effectively used the strengths of core companies to
push into newer products or categories. ITC has leveraged the powerful distribution network of
cigarette brands to build a market for its FMCG products.

In addition, ITC has leveraged the experience of food and bakery items from its hotel company to
become part of the Packaged Food group. ITC has a large and competent management team. Clear
brand image, outstanding promotional goods Diversified range of products and services, including
FMCG, hotel chains, paper & packaging, and agribusiness.

Over 6500 E-Choupal CSR programs and sustainability projects improve the brand identity of ITC
to more than 4 million farmers. ITC has reduced personnel to more than 25.000 employees Good
services for research and development.

2. Weaknesses in the SWOT Analysis of ITC Limited – ITC SWOT Analysis

High Proportion of Tobacco Product Revenues: ITC has made continuous efforts to separate the
FMCG sector from over-dependence on tobacco products and has been successful in doing so to
some degree. Nonetheless, tobacco products remain the biggest source of revenue contributing
more than 60 percent to FMCG’s overall revenue.

Tobacco Products Association has an impact on the brand: ITC has made a great deal of effort to
enhance its corporate image, but the fact that ITC has many tobacco products in its portfolio has
an impact on its corporate image. The increase in the Tobacco Tax has an effect on revenue: due
to the rise in the tax on tobacco products, rates and, subsequently, profits are affected. ITC is still
dependent on its tobacco sales, and people have cheaper alternatives and other brands. The hotel
industry has not been able to build an enormous market share.

3. Opportunities in the SWOT Analysis of ITC Limited – ITC SWOT Analysis

Acquisitions: ITC will continue to make strategic acquisitions, as it has done in the past, by
purchasing Savlon from Johnson & Johnson and B Natural from Balan Natural Foods. Keeping in
mind that the product fits into the current distribution network, ITC will try to increase its product
range and broaden its non-tobacco FMCG business and thus improve its revenue base. Growth in
purchasing power and changing lifestyles: ITC can tap into rising buying power and changing
customers’ lifestyles in India. It will help to raise sales for all of its companies.

Growing Personal Hygiene as well as Food Processing Industry in India: ITC should use its
distribution channel in the Personal Hygiene and Food Processing Industry to capitalize on the
growth of categories and thus increase revenue.

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 Tap opportunities created in the rural sector: the rising rural sector in India and other developing
nations are generating enormous opportunities to boost the company’s bottom line. Mergers and
acquisitions are planned to reinforce the brand. Increased people’s buying power, thus rising
competition. More exposure to hotel chains to increase market share.

4. Threats in the SWOT Analysis of ITC Limited – ITC SWOT Analysis

Intensifying rivalry in FMCG companies: ITC is facing intense competition in its FMCG market
from major MNCs such as HUL and P&G and Indian FMCGs such as Patanjali and Dabur. It
limits the market share of the ITC.

Regulations and Increased Taxation in Cigarette Business: The Tobacco and Cigarette Industry in
India continue to be regulated by strict government regulations and the tax system. This poses a
threat to the highly profitable ITC Cigarette Company.

Increasing health awareness: there has been an increase in health awareness, which has resulted in
a decrease in the demand for tobacco products in India. Anti-smoking programs throughout the
country also have an effect on cigarette sales. Intense and increasing competition among other
FMCG companies and hotel chains are also tentative threats for the company. FDI in the retail
sector has been made free by the Government of India, thereby allowing for international brands.

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3.4. Organizational Structure of ITC

Governance Structure

Board of Directors

Audit Compensation Nominations Investor Services

Committee Committee Committee Committee

Corporate Management Committee

Divisional/Strategic Business Unit

(SBU) Management Committees, each
Corporate Functions, each headed by a HOD
headed by a Divisional/SBU Chief
Executive

Businesses include: Corporate Functions include:

Planning and Treasury, Accounting, Legal,

FMCG, Hotels, Paperboards, Specialty Secretarial, EHS, Human Resources,
Papers & Packaging and Agri-Business Communications, Internal Audit and
Information Technology

ITC's Corporate Governance processes are designed to support effective management of multiple
businesses while retaining focus on each one of them.

The practice of Corporate Governance in ITC takes place at three interlinked levels:

Strategic supervision by the Board of Directors

Strategic management by the Corporate Management Committee
Executive management by the Divisional/Strategic Business Unit (SBU) Chief
Executives assisted by the respective Divisional/SBU
Management Committees

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Page | 17
The Corporate functions provide support and assistance to both the Corporate and Divisional
Management Committees. This three-tier governance structure ensures that:

 Strategic supervision (on behalf of the shareholders), being free from involvement in the task
of strategic management of the Company, can be conducted by the Board with objectivity,
thereby sharpening accountability of management;
 Strategic management of the Company, uncluttered by the day-to-day tasks of executive
management, remains focused and energized;
 Executive management of a division or a Business, free from collective strategic
responsibilities for ITC as a whole, focuses on enhancing the quality, efficiency and
effectiveness of the business.

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4.1. Activities conducted by ITC

ITC is one of India’s most valuable companies continuously strives to be a ‘Citizen First’ entity. ITC
has always attached critical importance to its responsibility to contribute to preserving and enriching
the environment. ITC’s contribution to sustainable development extends beyond Environment, Health
and Safety considerations. Through its philosophy of ‘Transforming Lives and Landscapes’, ITC is
empowering farmers, greening wastelands, irrigating dry lands, creating women entrepreneurs and
educating rural children. Through these initiatives ITC has touched the lives of over 2 million villagers
across the country.

Ensuring Occupational Health & Safety

In keeping with ITC’s commitment to provide a safe and healthy workplace for its employees, the
Company’s Occupational Health and Safety norms go beyond the requirements of the Factories Act,
1948. ITC also strives to go further than merely complying with International Labor Organization
(ILO) requirements on worker safety and health

Conserving Energy

ITC strives to conserve energy in all its operations by reducing specific energy consumption. It also
endeavors to increase the use of waste material for energy generation. ITC Units continuously explore
the potential for renewable energy. Different ITC Units have undertaken initiatives to use renewable
energy sources such as biomass, wind and solar power.

Reducing Greenhouse Gases

As part of ITC’s concern for global warming, the Company began efforts to become a carbon-positive
corporation. India is a signatory to the Montreal Protocol of 1987. The Government of India has
consequently formulated a policy to phase out various Ozone Depleting Substances (ODS) on a
priority basis. All ITC Units have detailed plans in place to conform to this policy.

Restoring the Ecological Balance

ITC has effectively leveraged its need for wood fiber to provide significant livelihood opportunities to
economically backward wasteland owners. The Company has undertaken extensive tree plantation, at
all its Units, and major afforestation and watershed development programmes across the country. So
far some 35 million saplings have been planted over 16,000 hectares, generating employment for
about 160,000 people. Apart from the obvious benefits of increasing the forest cover this effort also
directly contributes to moisture conservation, groundwater recharge and a significant reduction in
topsoil loss due to wind and water erosion. Leaf-litter continuously enriches depleted soils. This

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further reduces the consumption of fertilizers and pesticides, thus preventing the chemical pollution of
groundwater sources

Conserving Water

ITC has always endeavored to be a water-positive corporation by returning to the environment more
water that it uses. ITC’s guidelines on water management require that all Units minimize the use of
water through conservation and recycling. Treated effluent is reused or recycled wherever appropriate.
ITC strives to restore to the environment as much as possible of the precious water it uses. ITC Units
have efficient wastewater treatment plants that treat wastewater to standards of purity that are
significantly better than prescribed standards. ITC business units evaluate the potential for rainwater
harvesting and implement them wherever feasible. Rainwater harvesting initiatives have been
increasing over the years. The total rainwater harvested across all ITC units was around 250,000 KL in
2002-2003.

Enhancing Eco-Efficiency

The ITC Environment Health and Safety Policy and Codes of Practice require all Units to take EHS
issues into consideration in identifying and using resources. The Company continually strives to:

1. Maximize the efficient use of resources

2. Eliminate unnecessary toxic and hazardous resources
3. Give preference to renewable, recycled, recyclable, reused and reusable resources
All ITC Units consistently endeavor to reduce generation of waste and maximize its recycling.
Wastes are systematically segregated as hazardous, bio-medical, nuclear, non-hazardous, and
biodegradable and non-biodegradable, to be appropriately treated, recycled or disposed. Nearly
44% of solid waste from ITC’s paper business is currently recycled while solid waste production
has reduced by 12%.

4.2. Reasons for the Success of CSR activities conducted by ITC

1. Competitive Nature
They have been three years into the Indian foods market and ITC Foods are challenging for
heavyweights like PepsiCo, HLL and Britannia in three different segments simultaneously. The
launch of Bingo snacks was ITC Foods’ fifth line of foods business after staples, biscuits, ready-
to-eat and confectionery businesses. They have a good consumer response and this response to the
offerings show a better success ratio. They have a clear connect with consumers in an otherwise
tough market. To get the fundamentals right, ITC foods segmented consumer needs and identified
gaps in the market. Product development answers the gaps thrown up by consumer research.

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2. Robust Supply Chain
Their food business plan is backed by a robust supply chain and effective distribution to ensure
consistency in supply and quality. And their communication and brand cut through the advertising
clutter and define clearly the values associated with the product. Celebrity advertising with
Sunfeast biscuits, for instance, helped quick recall in a segment where it competed with old
established brands. Success in foods requires a keen understanding of the supply chain for farm
produce. A robust distribution network across India is also a big plus.

3. Consistency in Quality
The challenge in the FOOD market is to offer consistency in quality. That’s where Aashirvaad
scores over competitors who could not offer that quality consistency. The biggest certificate for
Aashirvaad atta is that sales picked up substantially purely on word of mouth from satisfied
consumers. The consumers are biggest ambassadors and advertisers. The pricing too has been
competitive. Consumers’ track on conversion levels from traditional atta market (where consumer
purchases wheat and grinds it) shows a 35% shift to our packaged brand.

4. High Market Share

ITC holds close to 70 per cent of the domestic market for cigarettes with the segment’s
contribution to the top line averaging 65 per cent and profits 85 per cent for the four years ended
March 2009. With strong pricing power to pass on excise duty hikes, operating margins have
averaged a healthy 25 per cent, much higher than rivals such as Godfrey Philips.

ITC may remain the market leader in the cigarette business, growing in high single-digits in terms
of volumes. ITC’s ‘mindshare’ among consumers, is going to be hard to dent by rivals such as
Philip Morris and Godfrey Philips. The business is likely to remain the major cash cow,
continuing to fund efforts to diversify into other businesses.

5. In-House Production
In-house production of cartons filters and paper, coupled with efficient raw tobacco procurement,
have made ITC a highly integrated player. In house production helps them to save time and cost.
There is no delay and dependability that can hamper the smooth supply of materials.

6. Diversified Portfolio
To diversify its revenues and profits, ITC has charted several forays into consumer products such
as garments, confectionery, consumer staples, bakery products, snacks and stationery products. In
the FMCG business, ITC has over the past couple of years moved from segments such as matches,

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 snacks and consumer staples ITC does enjoy a competitive edge in bakery products or consumer
staples by virtue of its well established agri-product supply chain such as atta into the more highly
competed soaps and personal products.

7. Contribution of E-Choupal
The agribusiness segment, procures rice, soya, coffee, wheat, tobacco, potatoes for trading and
internal consumption. ITC’s much-admired e-Choupal, which is part of this segment, essentially
provides information to farmers procures directly from them and also doubles up as a mechanism
for distribution of FMCG products and other services. For now, operating margin in this segment
tends to swing quite sharply with the commodity prices and is likely to remain on the lower single-
digit figures. Foods business needs a strong, quality-oriented and dedicated supply chain. Buying
wheat from the open market would mean different quality at different times. That’s where we had
immense support from ITC’s e-Choupal that ensured consistency in wheat quality.

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5.1. Corporate Social Responsibility Performance of ITC

ITC is driven by its inspiration to be an exemplary Indian enterprise serving larger national
priorities. The ability of a corporate to create larger societal value is inexplicably linked to the
robust growth of its businesses. To create a winning enterprise which is future ready, ITC has
invested significantly in building assets for tomorrow – be it in terms of state-of-the-art
integrated manufacturing and logistics facilities to produce and service ITC's world class
brands, be it in the form of iconic hospitality properties to add to the nation's tourism
landscape or in creating intellectual capital for the country through game changing research
and development. Such growth drivers together with an increasing competency matrix, a
talented and dedicated pool of human resources and above all, a deep commitment to create
value for the country is enlarging ITC's capacity to make a growing contribution to national
priorities.

1. Gross Income of ITC: 2010-20 (Rs in crores)

Gross Figure 5.1: Gross Income of ITC from FY 2010 - 2020

Year
Income 50,000.00
2010 18,382.24 45,000.00
2011 21,468.25 40,000.00
2012 25,173.82 35,000.00

2013 29,901.27 30,000.00

25,000.00
2014 33,238.60
20,000.00
2015 36,507.40 15,000.00
2016 36,582.67 10,000.00
2017 40,088.68 5,000.00
2018 40,627.54 0.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2019 44,995.65
2020 45,619.70 Gross Income

The above figure 5.1 presents Gross Income of ITC between FY 2010 and FY 2020 clearly
depicts that the gross income of company is rising since 2010.It has risen from 18382.24 in
2010 to 45619.70 in 2020.The figures for gross income has risen by 248.17% in the span of
10 years.

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2. Profit Before Tax of ITC: 2010-20 (Rs in Crores)

Profit
Figure 5.2: Profit Before Tax of ITC from FY 2010 - 2020
Year Before
Tax 25,000.00

2010 6,015.31
2011 7,268.16 20,000.00

2012 8,897.53
15,000.00
2013 10,684.18
2014 12,659.11
10,000.00
2015 13,997.52
2016 14,434.07
5,000.00
2017 15,502.96
2018 16,851.70 0.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2019 18,444.16
2020 19,166.81 Profit Before Tax

In the above graph 5.2 the Profit before tax of ITC has been presented from FY 2010 to
FY2020. It can be clearly seen that the profit before tax of company is rising continuously
from 2010 onwards with no deflection from the ordinary trend. It was 6015.31 in 2010 and
19,166.81 in 2020.

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3. Profit after tax of ITC: 2010-20 (Rs in crores)

Year Profit
After Tax Figure 5.3: Profit After Tax of ITC from FY 2010 -
2020
2010 4,061.00
16,000.00
2011 4,987.61
2012 6,162.37 14,000.00
2013 7,418.39 12,000.00
2014 8,785.21 10,000.00
2015 9,607.73
8,000.00
2016 9,328.37
2017 10,200.90 6,000.00

2018 11,223.25 4,000.00

2019 12,464.32 2,000.00
2020 15,136.05
0.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Profit After Tax

Interpretation- In the above graph 5.3 the Profit after tax of ITC has been presented from FY
2010 to FY2020. It can be clearly seen that the profit after tax of company is rising
continuously from 2010 onwards with little deflection from the ordinary trend. It was
4,061.00 in 2010 and 15,136.0 in 2020.

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4. Equity Dividend Ratio of ITC: 2010-20

Equity Figure 5.4: Equity Dividend Ratio of ITC from

Dividend FY 2010 - 2020
Year Ratio
1,200.00
2010 1,000.00
2011 445 1,000.00

2012 450
800.00
2013 525
2014 600 600.00

2015 625 400.00

2016 850
200.00
2017 475
2018 515 0.00
2019 575 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2020 1015 Equity Divident Ratio

Interpretation- In the above graph 5.4 the Equity Dividend Ratio of ITC has been presented
from FY 2010 to FY2020. It can be clearly seen that the equity dividend ratio of company is
falling continuously from 2010 onwards with a lot of deflection from the ordinary trend, the
trend slowly began to rise after 2012 and Recovered to a high position by the year 2020. It
was 1000 in 2010 and 1015 in 2020.

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5. Sales of ITC : 2010-2020 (Rs. in crores)

Year Sales
Figure 5.5: Sales of ITC from FY 2010 - 2020
2010 18,382.24 50,000.00

2011 21,167.58 45,000.00

40,000.00
2012 24,798.43
35,000.00
2013 29,605.58
30,000.00
2014 32,882.56
25,000.00
2015 36,083.21
20,000.00
2016 36,582.67
15,000.00
2017 40,088.68
10,000.00
2018 40,254.67
5,000.00
2019 44,432.67 0.00
2020 45,136.08 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Sales

Interpretation- In the above graph 5.5 The Sales of ITC has been presented from FY 2010 to
FY2020. It can be clearly seen that the sales are rising continuously from 2010 onwards with
little deflection from the ordinary trend. It was 18,382.24 in 2010 and 45,136.08 in 2020.

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 6. CSR Expenditure of ITC :2010-2020 (Rs. in crores)

Figure 5.5: CSR Expenditure of ITC from FY 2010 - 2020

350

300

250

200

150

100

50

0
2010-20112011-20122012-20132013-20142014-20152015-20162016-20172017-20182018-20192019-2020

Actual CSR Prescribed CSR

Interpretation- In the above graph 5.5 CSR EXPENDITURE OF ITC from FY 2010 to FY2020
clearly depicts that the Company has been heavily investing in CSR and it’s clear that the Amount
Invested in various sectors of CSR have been increasing yearly.

7. CSR Expenditure of ITC from FY 2010 to FY2020 on different focused areas

CSR projects (Rs. Lakhs) 2015-16 2016-17 2017-18 2018-19 2019-20

Hunger eradication 7482 8641 9386 10327 11502

Education 2919 3513 3727 4052 4621

Women empowerment 797 932 1055 1313 1841

Environment Sustainability 4027 4852 5781 6205 6461

Protection of National Heritage 158 189 216 278 333

Agri-development 2746 3139 3698 4283 4577

Disaster relief 1935 2279 2693 3064 3314

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Interpretation- In the above graph 5.5 CSR EXPENDITURE OF ITC from FY 2010 to FY2020
clearly depicts that the Company has been heavily investing in CSR and it’s clear that the Amount
Invested in various sectors of CSR have been increasing Yearly.

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6.1. Summary of Major Findings

ITC's overarching commitment to create significant and sustainable societal value is manifest
in its CSR initiatives that embrace the most disadvantaged sections of society, especially in
rural India, through economic empowerment based on grassroots capacity building.

ITC operates its CSR Activities only in limited area. They can seek help from the office lab or
from the engineers, that’s why they only perform their activities on that area only. Thus, I
would like to say that only one area operation does not contribute at its best. Because in that
case, only one area start developing and others are not. So they should introduce their
activities in nearby districts as well one by one. If they continue to perform it according to
their factory wise or factory location, then it would be very limited operation and overall
contribution will be very less.

6.2. Suggestion and Recommendation

1. The companies practicing CSR should provide information about the after effects of their
CSR initiative. This would help the stakeholders to understand the initiative better.

2. Companies should focus more on CSR initiatives as it leads to the growing profits for the
company.

6.3. Conclusion

After the completion of dissertation named ‘CORPORATE SOCIAL RESPONSIBILITY IN

EMERGING MARKETS’ I would like to conclude that in today’s competitive era CSR has
an important role to play. CSR initiatives practiced by the companies contribute to the profit
and success of the company. As an example, in the success of ITC, CSR initiative e- Choupal
has an important role to play as it is one of the success factors of ITC. This has been showed
with the help of graphs that depict the company’s performance since the e-Choupal has been
initiated (2000). With time many other companies have started taking interest in this kind
cause.

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7.1. Webliography

1. https://www.itcportal.com/

2. https://www.moneycontrol.com/financials/itc/profit-lossVI/ITC

3. https://mallenbaker.net/article/clear-reflection/definitions-of-corporate-social-responsibility-

what-is-csr

4. https://en.wikipedia.org/wiki/Corporate_social_responsibility

5. https://thecsrjournal.in/what-are-the-disadvantages-of-csr/

6. www.e-choupal.com

7. www.karmayog.org

8. www.itcportal.com

9. www.businessline.com

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