Distribution channel of ITC Cigarette

1. By: Pallavi Hajela 13020241098 Parva Soni 13020241099 Prajakta Kadu 13020241101 Prithvi Burgula 13020241102 Priya Pednekar 13020241103 Priyadarshini Permey 13020241104 Puravkumar Patel 13020241105 Rahul Halder 13020241106

2. ITC Limited Revenue Increase INR 45,102 Crores Founded- 1910 Headquarter- Kolkata Revenue- INR 45,102 Crores (12-13) Portfolio: Food Products Personal Care Cigarettes Apparel Stationery Hospitality Agricultural Products Information Technology Revenue Increase INR 45,102 Crores Gold-Flake Wills Kings Classic Lights Navy Cut Premium lights Bristol Premium Flakes Scissors Flake Liberty Silk Cut Benson & Hedges Major Cigarette Brands Major ITC Brands

3. Packaging Cigarette Pack “ Tukda ” Carton Sr # Cigarette Variant Qty. per tukda Qty. per pack 1 Goldflake (Lights and Kings) 20 10 2 Wills NavyCut 20 10 3 Flake 50 10 4 Wills Classic (All variants) 10 20 5 B & H 10 20 A single carton contains 10,000 cigarettes

4. Retailer The retailers are mostly Small temporary stores locally called “ tapri ” Small permanent store Grocery stores Bars & Restaurants Mr. Shekhar Opposite D-Hostel , Symbiosis , Hinjewadi He sells almost all brands of ITC He gets fresh stock almost every day He buys a pack for Rs 138 and sell it for Rs 150 V ery less demand for small cigarettes in and around MIDC We also contacted a small retailer from Delhi. He buys a pack of Wills Classic at Rs . 138 and sells the same Rs . 150 thus earning a margin of Rs . 12 per pack. He buys a tukda of any variant of GoldFlake (20 packs) at Rs . 1054. Bill of A Retailer

5. Wholesaler Santosh stores and Prakash stores , Hinjewadi The wholesaler buys from the distributor and sells the cigarettes to the small retailers. He earns a margin on each tukda sold and not on individual packs. The wholesaler keeps a regular stock of worth Rs . 2 lakh per week. Sr # Cigarette Variant Margin Earned per tukda (Rs.) 1 Flake 14 2 Goldflake (Lights and Kings) 12 3 Wills Classic (All variants) 10 4 Wills NavyCut 8 We also contacted a wholesaler from Delhi who sold cigarettes to the small retailer mentioned in the previous slide. He earns a margin of Rs . 16 per tukda of Goldflake he sells. Prakash Stores

6. The “Scooter- wala ” Once the distributor receives the cigarettes, he appoints certain agents to deliver it directly to the small retailers. Each agent is allotted a particular area. This agent daily travels to the allotted area on a bike with a red box containing cigarettes tied to it and sells the same to the retailers. For the agent, it is purely a business based incentive pay We managed to contact the agent who travels in the Hinjewadi area – Mr Ram Baros . He said that he receives 0.8% of the total sales he manages. He also mentioned that he sells cigarettes worth Rs.100000 daily. So he earns around Rs . 800 per day. Other than that he gets Rs . 3000/- per month as fuel charges. This amount has remained constant for the last 5 years.

7. Distributer We contacted the following distributor from the Pimpri Chinchwad market : Bombay Traders Kalewadi Phata Pimple Saudagar stocking unit. T he distributor refused to divulge the information of the profits earned by him, he helped us in understanding the distribution network of ITC Cigarettes. Monthly Targets Arrival of Goods From Factory Red Boxes for Agents

8. Factories ITC has cigarette manufacturing units at the following locations: 1. Kolkata ( Kidderpore ) , West Bengal 2. Saharanpur, Uttar Pradesh 3. Bengaluru, Karnataka 4. Hyderabad, Andhra Pradesh 5. Ranjangaon , Maharashtra Cigarette manufactured in Ranjangaon Cigarette manufactured in Bengaluru & Hyderabad

9. Margin Earned At Each Level Distribution Level Pack Tukda C arton Distributer - - - Wholesaler Rs 136.50 Rs 1365 Rs 68250 Retailer Rs 138.00 Rs 1380 - Customer Rs . 150 - -

10. Distribution Network Distributers Fig: Distribution Network for ITC cigarettes to Hinjewadi

11. Conclusion During the 20 minutes presentation, around Rs 5555 worth Cigarettes have been sold at Hinjewadi !!!!! Considering the fact that cigarettes worth 2 lakhs are sold every day at Hinjewadi . We assume the business takes place for eighteen hours every day Nearly 5 million people are involved in the commercial operation pertaining to tobacco Nearly 12 lakh people are involved in the cultivation of tobacco in Tobacco’s share in India’s is around 1.8 per cent

12. Acknowledgement Field study and research in and around Hinjewadi , Pune. http://www.livemint.com/Politics/2A6ThZPOTEdYqxQfSvEcWK/82161-mn-Indian-smokers-will-die-every-year8217.html http://content.time.com/time/health/article/0,8599,1711154,00.html http://www.itcportal.com/businesses/index.aspx http://www.itcportal.com/businesses/fmcg/cigarettes.aspx

13. Smoking is Injurious To Health It causes Cancer