CHAPTER 1

INTRODUCTION

The balanced scorecard, a framework that links business strategies with day-to-day
activities, is one solution that has worked wonders for many. A balanced scorecard aligns
measures with strategies in order to track progress, reinforce accountability, and prioritize
improvement opportunities. A balanced scorecard integrates four related perspectives:
financial, customer, internal business processes and learning and growth. Each of the four
perspectives is inter-dependent - improvement in just one area is not necessarily a recipe for
success in the other areas.

But the fact is that, all the other perspectives are dependent on the learning and
growth perspective. Measures in this perspective are lead indicators for improvements in the
internal processes, customer and financial perspectives. The Learning & Growth Perspective
focuses on the intangible assets of an organization, mainly on the internal skills and
capabilities of the employees that are required to support the value-creating internal
processes. The measurement of the level of satisfaction of the employees is an important
factor. Everything stems from the vision of the company.

Every employee must be aligned with the vision of the organization. This is what helps
the organization in achieving its goals. This is a very important aspect as far as any
organization is concerned, because employees are the key to success. The vision was closely
studied and broken down in order to understand the objectives and measures taken by the
organization to remain successful and competent. The main aspects of the balanced
scorecard, that is, employee satisfaction, employee retention and employee productivity were
also studied, giving special emphasis to employee satisfaction.

1.1 Statement of the Problem

With more and more players emerging in the market, ITC needs to maintain its
position and remain competent. In order to achieve this, the organization needs to identify
new methods and initiative. It will be necessary to bring out effective learning and growth
initiatives. The success of any organization depends on the level to which it is flexible and
innovative. For this, the company‘s vision was studied closely and new measures were
identified that will help the organization to remain the forerunner, in spite of the tough
competition. In identifying new measures and in incorporating it, it was necessary to learn

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about the present level of employee satisfaction as well as how they feel about the measures
that are already followed in the organization. So the measurement of employee satisfaction is
essential to the management. It was also necessary to understand the employee retention level
as well as the productivity of the employees in order to get a clear idea about the learning and
growth aspect of the organization. The various other aspects of learning and growth were also
identified and analysed.

1.2 Objectives of the Study

1) To give an overview about Balanced Scorecard.

2) To evaluate whether ITC is successful enough in implementing its vision through current
strategies.

3)To analyse how effectively ITC Ernakulam Division is harnessing its employee capabilities
for achieving organizational goals using learning and growth perspective of Balanced
Scorecard.

1.3 Scope of the Study

The project provides a good understanding of the learning and growth aspect of the
employees in the organization. So it helps to find out the effectiveness of the learning and
growth process of the organization in achieving the goals of the organization. It also helps to
study the measures that have already been taken towards achieving the vision of the
organization. This also facilitates the understanding of employee satisfaction in the
organization. The employee retention rate and the employee productivity were also measured.
These aspects are very important as far as any organization is concerned, because employees
are the key to success.

1.4 Research Methodology

1.4.1 Research Design :

Research design provides the glue that holds the research project together. A design is
used to structure the research, to show how all of the major parts of the research project work
together to try to address the central research questions. This study is a descriptive study.
Here the researcher goes through the state of affairs existing in the company. The design
chosen for the study is descriptive research design.

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1.4.2 Research Approach :
Research Approach refers to the approach or the methodology that is adopted to
conduct the research. The research approach that was used in the study was survey research
and observation. Since ITC has branches that are spread across India, it is not possible to
collect data from all the branches. Hence the researcher conducted a sample survey. The
employees of the India Tobacco Division, Ernakulam were taken for the study. The learning
and growth initiatives taken by the Company towards achieving their Vision were also
studied.

1.4.3 Data Sources:

The data required for the research purpose was collected from:
1. Primary data source
2. Secondary data source
Primary Data:
Primary data are collected by the researcher using various methods. The key point
here is that the data collected is unique to the researcher and the research, until it is published,
no one else has access to it. Methods used for collecting primary data were:
1. Questionnaire and
2. Personal interview
Secondary Data:
Secondary data is the data that have been already collected and readily available from
other sources. Such data are cheaper and more quickly obtainable than the primary data and
also may be available when primary data cannot be obtained at all. The sources of secondary
data were the HR department, annual report of the company, company website, journals,
magazines and other published records of the company.

1.4.4 Research Instrument:

The research instrument used for the study is questionnaire. A questionnaire is a
research instrument consisting of a series of questions and other prompts for the purpose of
gathering information from respondents. Although they are often designed for statistical
analysis of the responses, this is not always the case. A structured questionnaire was
developed to collect all the relevant information from the employees.

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 The questionnaire contains ten questions that were asked to measure the level of
satisfaction of the employees regarding the various aspects of the organization. This was
measured on a five point scale. Through this questionnaire, the satisfaction of the employees
regarding the working environment, superior-subordinate relationship, importance given by
the Company towards the learning and growth activities, training, performance appraisal
system, pay package, salary increment policy, promotion activities and value addition to their
career, were measured. The questionnaire also includes demographic questions like age of the
respondent, years of experience, academic qualification and marital status. Thus the
questionnaire includes all the factors that are necessary for measuring the employees‘
satisfaction in their workplace.

The other learning and growth aspect of the Company was studied by breaking down
the Vision and then identifying the objectives and the measures taken by the Company for
achieving the Vision.

1.5 Sampling Plan:

The determination of sampling unit, sample size and sampling procedure are given in
the definite form under sampling plan.
1.5.1 Sampling Unit:
ITC has many marketing divisions which adopt the same managerial strategies. In
order to study the learning and growth initiatives of ITC, we have selected the Ernakulam
division as the sample.
1.5.2 Sampling Procedure:
As there are only 74 members in the pay roll of the Ernakulam division, it was
decided to do a census survey in the division. Thus questionnaire was provided to all the
employees and managerial people in the division.
The sampling procedure that is used here is the direct contact method. This is the
method by which the researcher will have a direct face-to-face interaction with the
respondents.
1.5.3 Research Period:
The time period of the research is 2 months, that is, from 17/05/2010 to 17/07 2010. In order
to study the employee retention and productivity, the data for the past three years were also
used.

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1.6 Limitations of the Study
a. Since it is not possible to study all the branches of the company, there may be
variations in the measures adopted.
b. The employees may be busy and so may not be able to give sufficient time for
interview and for filling the questionnaire.
c. Being an outsider may also limit what is revealed to me. The employees may be
guarded in their conversations.
d. Out of the four perspectives of the Balanced Scorecard, only the learning and growth
perspective was studied.
e. Since the study requires more time and the support of the top management, only the
objectives and measures of the learning and growth aspect could be identified.
f. Though it is a study on Balanced Scorecard, more emphasis is given to job
satisfaction.
g. Even though there are three principal categories for the learning and growth
perspective, only employee capabilities is measured.

1.7 Chapter Scheme

This project report is presented in 6 chapters.
i. First chapter contains introduction which includes statement of the problem,
objectives of the study, scope of the study, research methodology, limitations of the
study and chapter scheme.
ii. Second chapter consists of industry profile which contains international scenario,
national scenario and the state scenario.
iii. Third chapter gives an overview about the profile of ITC Ltd which includes the
history and growth of the company till now, future plans, financial performance of the
company and the details of HR department etc.
iv. Fourth chapter contains theoretical background and it gives an overview about the
concept of balanced score card, learning and growth and the various aspects involved.
v. Fifth chapter includes data analysis and interpretation of data collected for this study.
vi. Sixth chapter contains the findings, suggestions and conclusion of the research.

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 CHAPTER II

PROFILE OF FMCG INDUSTRY

2.1 International Scenario

The wide range of consumable goods provided by the FMCG industry turns over a
large amount of money, while competition among FMCG manufacturers is become more and
more fierce. Investors are putting more and more into the FMCG industry, especially in India,
where the FMCG industry is the fourth largest sector, having a total market size of more than
US$13.1 billion, and has doubled by 2010. In New Zealand as well, the FMCG industry
accounts for 5% of Gross Domestic Product (GDP). The FMCG is an industry that is growing
tremendously and has a lot of potential.

The factors that made the FMCG industry a highly competitive one are low
operational cost, solid distribution networks, and emergence of new FMCG companies. In
addition, the growth of the world‘s population is another responsible factor for the huge
success of this particular industry. Some of the leading FMCG companies all over the world
are Sara Lee, Nestlé, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General
Mills, Mars etc.

Fast Moving Consumer Goods Industry not only provide the necessary goods for day
to day life, but the FMCG industry has also created tremendous job opportunities and careers.
It is a stable, varied, and highly profitable industry, and the jobs it provide range from sales,
supply chain, finance, marketing, operations, human resources, development, general
management, and so on.

The working force within FMCG manufacturing in the UK accounts for 14% of the
total workforce in UK.

Sales in the FMCG industry account for around £35.5 billion in 2010, spent on non-
food UK products alone, in grocery retail sectors in UK. Including sectors such as Food,
Drink and Pharmaceutical the output registered by FMCG accounts for 19% of the UK's
GDP.

The market growth over the past 5 years has been phenomenal, primarily due to
consumers‘ growing disposable income which is directly linked to an increased demand for

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FMCG goods and services. Indeed, it is widely acknowledged that the large young population
in the rural and semi-urban regions is driving demand growth, with the continuous rise in
their disposable income, life style, food habits etc. On the supply side, the wide availability of
raw materials, vast agricultural produce, low cost of labour and increased organized retail
have helped the competitiveness of players.

2.2 National Scenario

The Indian FMCG Industry

The Indian FMCG sector is the fourth largest in the economy and has a market size of
US$13.1 billion. Well-established distribution networks, as well as intense competition
between the organised and unorganised segments are the characteristics of this sector. FMCG
in India has a strong and competitive MNC presence across the entire value chain. It has been
predicted that the FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion
11.6 in 2003. The middle class and the rural segments of the Indian population are the most
promising market for FMCG, and give brand makers the opportunity to convert them to
branded products. Most of the product categories like jams, toothpaste, skin care, shampoos,
etc, in India, have low per capita consumption as well as low penetration level, but the
potential for growth is huge.

The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid
urbanization, increased literacy levels, and rising per capita income.The big firms are
growing bigger and small-time companies are catching up as well. According to the study
conducted by AC Nielsen, 62 of the top 100 brands are owned by MNCs, and the balance by
Indian companies. Fifteen companies own these 62 brands, and 27 of these are owned by
Hindustan Lever. Pepsi is at number three followed by Thums Up.

Britannia takes the fifth place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and
Parle (9). These are figures the soft drink and cigarette companies have always shied away
from revealing. Personal care, cigarettes, and soft drinks are the three biggest categories in
FMCG. Between them, they account for 35 of the top 100 brands.

India - A Large Consumer Goods Spender

An average Indian spends around 40 per cent of his income on grocery and 8 per cent
on personal care products. The large share of fast moving consumer goods (FMCG) in total

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individual spending along with the large population base is another factor that makes India
one of the largest FMCG markets.

Table 2.1 Showing the Top 10 Companies in FMCG Sector

Sl. NO. Companies

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries

9. Procter & Gamble Hygiene and Health Care

10. Marico Industries

The companies mentioned are the leaders in their respective sectors. The personal
care category has the largest number of brands, i.e., 21, inclusive of Lux, Lifebuoy, Fair and
Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21, aggregating Rs. 3,799 crore or
54% of the personal care category. Cigarettes account for 17% of the top 100 FMCG sales,
and just below the personal care category. ITC alone accounts for 60% volume market share
and 70% by value of all filter cigarettes in India.The foods category in FMCG is gaining
popularity with a swing of launches by HLL, ITC, Godrej, and others. This category has 18
major brands, aggregating Rs. 4,637 crore. Nestle and Amul slug it out in the powders
segment. The food category has also seen innovations like softies in ice creams, chapattis by
HLL, ready to eat rice by HLL and pizzas by both GCMMF and Godrej Pillsbury. This
category seems to have faster development than the stagnating personal care category.

Amul, India's largest foods company, has a good presence in the food category with
its ice-creams, curd, milk, butter, cheese, and so on. Britannia also ranks in the top 100

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FMCG brands, dominates the biscuits category and has launched a series of products at
various prices. In the household care category (like mosquito repellents), Godrej and Reckitt
are two players. Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt's
Mortein at Rs 149 crore. In the shampoo category, HLL's Clinic and Sunsilk make it to the
top 100, although P&G's Head and Shoulders and Pantene are also trying hard to be
positioned on top. Clinic is nearly double the size of Sunsilk.

Dabur is among the top five FMCG companies in India and is a herbal specialist.
Asian Paints is enjoying a formidable presence in the Indian sub-continent, Southeast Asia,
Far East, Middle East, South Pacific, Caribbean, Africa and Europe. Asian Paints is India's
largest paint company, with a turnover of Rs.22.6 billion (around USD 513 million). Forbes
Global magazine, USA, ranked Asian Paints among the 200 Best Small Companies in the
World. Cadbury India is the market leader in the chocolate confectionery market with a 70%
market share and is ranked number two in the total food drinks market. Its popular brands
include Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems.

The Rs.15.6 billion (USD 380 Million) Marico is a leading Indian group in consumer
products and services in the Global Beauty and Wellness space. There is a huge growth
potential for all the FMCG companies as the per capita consumption of almost all products in
the country is amongst the lowest in the world. Again the demand or prospect could be
increased further if these companies can change the consumer's mindset and offer new
generation products. Earlier, Indian consumers were using non-branded apparel, but today,
clothes of different brands are available and the same consumers are willing to pay more for
branded quality clothes. It's the quality, promotion and innovation of products, which can
drive many sectors.

Scope of FMCG Sector

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest
sector in the economy. A well-established distribution network, intense competition between
the organized and unorganized segments, characterizes the sector.

This sector has a good growth potential. The FMCG sector in Indian has shown Rs
92,100 crores in 2010. Hair care, household care, male grooming, female hygiene, and the
chocolates and confectionery categories are estimated to be the fastest growing segments,
says an HSBC report.

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Growth Prospects

With the presence of 12.2% of the world population in the villages of India, the Indian
rural FMCG market is something no one can overlook. Increased focus on farm sector will
boost rural incomes, hence providing better growth prospects to the FMCG companies. Better
infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit
from growing demand in the market. Because of the low per capita consumption for almost
all the products in the country, FMCG companies have immense possibilities for growth. And
if the companies are able to change the mind-set of the consumers, i.e. if they are able to take
the consumers to branded products and offer new generation products, they would be able to
generate higher growth in the near future.

At present, urban India accounts for 66% of total FMCG consumption, with rural
India accounting for the remaining 34%. However, rural India accounts for more than 40%
consumption in major FMCG categories such as personal care, fabric care, and hot beverages.
In urban areas, home and personal care category, including skin care, household care and
feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment,
it is estimated that processed foods, bakery, and dairy are long-term growth categories in both
rural and urban areas.

Indian Competitiveness and Comparison with the World Markets

The following factors make India a competitive player in FMCG sector:

1) Availability of Raw Materials

Because of the diverse agro-climatic conditions in India, there is a large raw material base
suitable for food processing industries. India is the largest producer of livestock, milk,
sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and
fruits &vegetables. India also produces caustic soda and soda ash, which are required for the
production of soaps and detergents. The availability of these raw materials gives India the
location advantage.

2) Labour Cost Comparison

Low cost labour gives India a competitive advantage. India's labour cost is amongst the
lowest in the world, after China & Indonesia. Low labor costs give the advantage of low cost

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of production. Many MNC's have established their plants in India to outsource for domestic
and export markets.

3) Presence across Value Chain

Indian companies have their presence across the value chain of FMCG sector, right from
the supply of raw materials to packaged goods in the food-processing sector. This brings
India a more cost competitive advantage. For example, Amul supplies milk as well as dairy
products like cheese, butter, etc.

Analysis of Indian FMCG Sector

Strengths:

1. Low operational costs

2. Presence of established distribution networks in both urban and rural areas

3. Presence of well-known brands in FMCG sector

Weaknesses:

1. Lower scope of investing in technology and achieving economies of scale, especially in

small sectors

2. Low exports levels

3. "Me-too" products, which illegally mimic the labels of the established brands.

These products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities:

1. Untapped rural market

2. Rising income levels, i.e. increase in purchasing power of consumers

3. Large domestic market- a population of over one billion.

4. Export potential

5. High consumer goods spending

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Threats:

1. Removal of import restrictions resulting in replacing of domestic brands

2. Slowdown in rural demand

3. Tax and regulatory structure

The performance of the industry was inconsistent in terms of sales and growth for
over 4 years. The investors in the sector were not gainers at par with other booming sectors.
After two years of sinking performance of FMCG sector, now the sector now the demand is
growing. With the rise in disposable income and the economy in good health, the urban
consumers continued with their shopping spree.

Recent Developments in Fast Moving Consumer Goods (FMCG) Sector

FMCG sector is no doubt registering an uptrend in growth. According to CNBC,

FMCG sector growth story will continue because of the positive budget. Nevertheless, there
are some barriers to the growth of the sector. Indirect taxes constitute no less than 35% of the
total cost of consumer products - the highest in Asia.

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 CHAPTER – III

COMPANY PROFILE

3.1 ITC Corporate Positioning Statement

―Enduring value. For the nation. For the Shareholder.‖

3.2 ITC Vision

―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.‖

3.3 ITC Mission

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

ITC is one of India's foremost private sector companies with a market capitalisation of
over US $ 22 billion and a turnover of over US $ 5 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.

As one of India's most valuable and respected corporations, ITC is widely perceived
to be dedicatedly nation-oriented. 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 the larger value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating
multiple drivers of growth anchored on its time-tested core competencies: unmatched
distribution reach, superior brand-building capabilities, effective supply chain management

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and acknowledged service skills in hoteliering. Over time, the strategic forays into new
businesses are expected to garner a significant share of these emerging high-growth markets
in India.

3.4 History of the Company

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco
Company of India Limited'. Its beginnings were humble. A leased office on Radha Bazar
Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th
birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee,
(now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000.

This decision of the Company was historic in more ways than one. It was to mark the
beginning of a long and eventful journey into India's future. The Company's headquarter
building, 'Virginia House', which came up on that plot of land two years later, would go on to
become one of Kolkata's most venerated landmarks. The Company's ownership progressively
indianised, and the name of the Company was changed to I.T.C. Limited in 1974. In
recognition of the Company's multi-business portfolio encompassing a wide range of
businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards
& Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting &
Stationery - the full stops in the Company's name were removed effective September 18,
2001. The Company now stands rechristened 'ITC Limited'.

Though the first six decades of the Company's existence were primarily devoted to the
growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies
witnessed the beginnings of a corporate transformation that would usher in momentous
changes in the life of the Company.

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward
integration for ITC's Cigarettes business. It is today India's most sophisticated packaging
house.

In 1975 the Company launched its Hotels business with the acquisition of a hotel in
Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's
entry into the hotels business was rooted in the concept of creating value for the nation. ITC
chose the hotels business for its potential to earn high levels of foreign exchange, create
tourism infrastructure and generate large scale direct and indirect employment. Since then

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ITC's Hotels business has grown to occupy a position of leadership, with over 70 owned and
managed properties spread across India.

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam

Paperboards Limited, which today has become the market leader in India. Bhadrachalam
Paperboards amalgamated with the Company effective March 13, 2002 and became a
Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this
division merged with the Company's Tribeni Tissues Division to form the Paperboards &
Specialty Papers Division.

ITC's paperboards' technology, productivity, quality and manufacturing processes are

comparable to the best in the world. It has also made an immense contribution to the
development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It
is directly involved in education, environmental protection and community development. In
2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co.
Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve
customer service with reduced lead time and a wider product range.

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint
venture. Since inception, its shares have been held by ITC, British American Tobacco and
various independent shareholders in Nepal. In August 2002, Surya Tobacco became a
subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya
Nepal).

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing

company and a major supplier of tissue paper to the cigarette industry. The merged entity was
named the Tribeni Tissues Division (TTD). To harness strategic and operational synergies,
TTD was merged with the Bhadrachalam Paperboards Division to form the Paperboards &
Specialty Papers Division in November 2002.

Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business
Division for export of agri-commodities. The Division is today one of India's largest
exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000
with Soya farmers in Madhya Pradesh. Now it extends to 9 states covering over 4 million
farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004 at

15
Sehore. On the rural retail front, 24 'Choupal Saagars' are now operational in the 3 states of
Madhya Pradesh, Maharashtra and Uttar Pradesh.

In 2000, ITC launched a line of high quality greeting cards under the brand name
'Expressions'. In 2002, the product range was enlarged with the introduction of Gift wrappers,
Autograph books and Slam books. In the same year, ITC also launched 'Expressions
Matrubhasha', a vernacular range of greeting cards in eight languages and 'Expressions Paper
Kraft', a range of premium stationery products. In 2003, the company rolled out 'Classmate', a
range of notebooks in the school stationery segment.

ITC also entered the Lifestyle Retailing business with the Wills Sport range of
international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of
exclusive stores later expanded its range to include Wills Classic formal wear (2002) and
Wills Clublife evening wear (2003). ITC also initiated a foray into the popular segment with
its men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of
the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has
gained recognition from buyers and retailers as the single largest B-2-B platform for the
Fashion Design industry. To mark the occasion, ITC launched a special 'Celebration Series',
taking the event forward to consumers. In 2007, the Company introduced 'Miss Players'- a
fashion brand in the popular segment for the young woman.

In 2000, ITC spun off its information technology business into a wholly owned
subsidiary, ITC InfoTech India Limited, to more aggressively pursue emerging opportunities
in this area. Today ITC InfoTech is one of India‘s fastest growing global IT and IT-enabled
services companies and has established itself as a key player in offshore outsourcing,
providing outsourced IT solutions and services to leading global customers across key focus
verticals - Manufacturing, BFSI (Banking, Financial Services & Insurance), CPG&R
(Consumer Packaged Goods & Retail) and THT (Travel, Hospitality and Transportation).

ITC's foray into the Foods business is an outstanding example of successfully

blending multiple internal competencies to create a new driver of business growth. It began in
August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes.

In 2002, ITC entered the confectionery and staples segments with the launch of the
brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour). 2003
witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC's

16
entered the fast growing branded snacks category with Bingo! in 2007. In just six years, the
Foods business has grown to a significant size with over 200 differentiated products under six
distinctive brands, with an enviable distribution reach, a rapidly growing market share and a
solid market standing.

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the

entire value chain found yet another expression in the Safety Matches initiative. ITC now
markets popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim
Metro.

ITC‘s foray into the marketing of Agarbattis (incense sticks) in 2003 marked the
manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands
include Spriha and Mangaldeep across a range of fragrances like Rose, Jasmine, Bouquet,
Sandalwood, Madhur, Sambrani and Nagchampa.

ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath &
body care products for men and women in July 2005. Inizio, the signature range under
Essenza Di Wills provides a comprehensive grooming regimen with distinct lines for men
(InizioHomme) and women (Inizio Femme). Continuing with its tradition of bringing world
class products to Indian consumers the Company launched 'Fiama Di Wills', a premium range
of Shampoos, Shower Gels and Soaps in September, October and December 2007
respectively. The Company also launched the 'Superia' range of Soaps and Shampoos in the
mass-market segment at select markets in October 2007 and Vivel Di Wills &Vivel range of
soaps in February 2008.

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3.5 Management Structure

Figure 3.1 Showing ITC’s Three-Tier Management Structure

At the top are Chairman and Board of Directors, who are responsible for the strategic
supervision of ITC, its wholly owned subsidiaries and their wholly owned subsidiaries. The
ITC board is a balanced board comprising Executive and Non-Executive Directors. The
Board ensures that the Company has clear goals relating to shareholder value and its growth.
It sets strategic goals and seeks accountability for their fulfilment. There are four board
committees, namely, the Audit Committee, the Nominations Committee, the Compensation
Committee and the Investor Services Committee.

At the second level is the Corporate Management Committee, which is responsible for
the strategic management of the company's businesses within Board-approved
direction/framework. It comprises all the Executive Directors and three or four key senior
members of management.

Third level consists of divisional CEOs of each business assisted by their own
divisional management committees. Corporate Functions of the Executive Management
Team includes Planning and Treasury, Accounting, Legal, Secretarial, Human Resources,
Communications, Internal Audit and Information Technology.

18
 The company‘s organizational structure and governance processes are designed to
support effective management of multiple businesses while retaining focus on each of them."
This three-tier governance structure ensures that:

For and on behalf of the shareholders the company believes in incorporating strategic
governance in its work culture so as to ensure that despite being free from involvement in the
task of strategic management of the Company, it can be conducted by the Board with
objectivity, thereby sharpening and ensuring accountability of management;

With mundane tasks of everyday executive management being delegated the

management remains focused on issues of immediate importance;

The Executive management of the individual businesses that are free of handling
strategic management responsibilities of ITC as a whole is then able to channelize their
energies and time in enhancing the effectiveness and overall growth of their individual units.

Corporate Governance as defined by ITC is a systemic process by which companies

are directed and controlled to enhance their wealth-generating capacity. A company employs
vast sums of societal resources during this process of wealth generation. ITC is of the firm
belief that the governance process being followed should ensure that these resources are used
optimally to meet the aspirations of its stakeholders and society. This is further reflected in
the deep commitment of the company to contribute to the ‗Triple Bottom Line‘, which is the
development of the nation‘s economic, ecological and social resources.

The company believes in empowering the executive management. But corporate

governance ensures a system of checks and balances to ensure that these powers that are
bestowed upon the executive management are used in a responsible manner so as to meet
shareholder and societal expectations. The core strengths of ITC's governance philosophy are
trusteeship, transparency, empowerment and accountability, control and ethical corporate
citizenship. The practice of each of these creates the right corporate culture that fulfils the
true purpose of Corporate Governance.

Design

Looking at the structure and culture of ITC, it can be said that its design is based more
or less on the Divisional Structure. ITC has a diversified presence in different industries and
each of its businesses act as an autonomous unit which are coordinated by the top level, i.e.

19
the board and corporate management committee. The divisional managers are responsible for
performance and hold complete strategic and operating decision-making authority. The top
management provides support services to the divisions. It acts as an external overseer,
evaluating and controlling performance. Hence the top management is free from being
concerned with the day-to-day operating details so they can pay attention to the long term.
Big picture, strategic decision making is done at the top level.

3.6 Corporate Governance

Over the years, ITC has evolved from a single product company to a multi-business
corporation. Its businesses are spread over a wide spectrum, ranging from cigarettes and
tobacco to hotels, packaging, paper and paperboards and international commodities trading.
Each of these businesses is vastly different from the others in its type, the state of its
evolution and the basic nature of its activity, all of which influence the choice of the form of
governance. The challenge of governance for ITC therefore lies in fashioning a model that
addresses the uniqueness of each of its businesses and yet strengthens the unity of purpose of
the Company as a whole.

Since the commencement of the liberalisation process, India's economic scenario has
begun to alter radically. Globalisation will not only significantly heighten business risks, but
will also compel Indian companies to adopt international norms of transparency and good
governance. Equally, in the resultant competitive context, freedom of executive management
and its ability to respond to the dynamics of a fast changing business environment will be the
new success factors. ITC's governance policy recognises the challenge of this new business
reality in India.

Core Principles

ITC's Corporate Governance initiative is based on two core principles. These are:

(i) Management must have the executive freedom to drive the enterprise forward without
undue restraints; and

(ii) This freedom of management should be exercised within a framework of effective

accountability.

ITC believes that any meaningful policy on Corporate Governance must provide
empowerment to the executive management of the Company, and simultaneously create a

20
mechanism of checks and balances which ensures that the decision making powers vested in
the executive management is not only not misused, but is used with care and responsibility to
meet stakeholder aspirations and societal expectations.

Cornerstones

Corporate Governance is the cornerstone of ITC's governance philosophy, namely

trusteeship, transparency, empowerment and accountability, control and ethical corporate
citizenship. ITC believes that the practice of each of these leads to the creation of the right
corporate culture in which the company is managed in a manner that fulfils the purpose of
Corporate Governance.

a) Trusteeship :

ITC believes that large corporations like itself have both a social and economic purpose.
They represent a coalition of interests, namely those of the shareholders, other providers of
capital, business associates and employees. This belief therefore casts a responsibility of
trusteeship on the Company's Board of Directors. They are to act as trustees to protect and
enhance shareholder value, as well as to ensure that the Company fulfils its obligations and
responsibilities to its other stakeholders. Inherent in the concept of trusteeship is the
responsibility to ensure equity, namely, that the rights of all shareholders, large or small, are
protected.

b) Transparency :

ITC believes that transparency means explaining Company's policies and actions to those
to whom it has responsibilities. Therefore transparency must lead to maximum appropriate
disclosures without jeopardising the Company's strategic interests. Internally, transparency
means openness in Company's relationship with its employees, as well as the conduct of its
business in a manner that will bear scrutiny. They believe that transparency enhances
accountability.

c) Empowerment and Accountability :

ITC believes that empowerment is a process of actualising the potential of its employees.
Empowerment unleashes creativity and innovation throughout the organisation by truly
vesting decision-making powers at the most appropriate levels in the organisational
hierarchy.ITC believes that the Board of Directors are accountable to the shareholders, and

21
the management is accountable to the Board of Directors. ITC believe that empowerment,
combined with accountability, provides an impetus to performance and improves
effectiveness, thereby enhancing shareholder value.

d) Control :

ITC believes that control is a necessary concomitant of its second core principle of
governance that the freedom of management should be exercised within a framework of
appropriate checks and balances. Control should prevent misuse of power, facilitate timely
management response to change, and ensure that business risks are pre-emptively and
effectively managed.

e) Ethical Corporate Citizenship :

ITC believes that corporations like itself have a responsibility to set exemplary standards
of ethical behaviour, both internally within the organisation, as well as in their external
relationships. ITC believe that unethical behaviour corrupts organisational culture and
undermines stakeholder value.

Figure 3.2 Showing the Governance Structure

22
The 3-tier governance structure thus ensures that:

(a) 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.

(b) Strategic management of the Company, uncluttered by the day-to-day tasks of executive
management, remains focused and energised; and

(c) Executive management of the divisional business, free from collective strategic
responsibilities for ITC as a whole, gets focused on enhancing the quality, efficiency and
effectiveness of its business.

Roles

The core roles of various entities at the 3 levels of corporate governance are as follows.

Board of Directors (Board):

The primary role of the Board of Directors is that of trusteeship to protect and
enhance shareholder value through strategic supervision of ITC, its wholly owned
subsidiaries and their wholly owned subsidiaries. As trustees they will ensure that the
Company has clear goals relating to shareholder value and its growth. They should set
strategic goals and seek accountability for their fulfilment. They will provide direction, and
exercise appropriate control to ensure that the Company is managed in a manner that fulfils
stakeholder aspirations and societal expectations. The Board must periodically review its own
functioning to ensure that it is fulfilling its role.

Non-Executive Directors are expected to play a critical role in imparting balance to

the Board processes by bringing an independent judgement to bear on issue of strategy,
performance, resources, standards of Company conduct, etc. The Board shall meet at least six
times a year and as far as possible meetings will be held once in two months. The annual
calendar of meetings shall be agreed upon at the beginning of each year.

Chairman – Yogesh Chander Deveshwar

Executive Directors

i) Anup Singh

23
 ii) KrishnamoorthyVaidyanath
iii) KurushNoshir Grant

Non-Executive Directors

i) Anil Baijal
ii) Shilabhadra Banerjee
iii) Angara VenkataGirija Kumar
iv) SerajulHaq Khan
v) Sunil BehariMathur
vi) Dinesh Kumar Mehrotra
vii) Hugo Geoffrey Powell
viii) Basueb Sen
ix) PillappakkamBahukutumbiRamanujam
x) Anthony Ruys
xi) BalakrishnanVijayaraghavan

The Board have the following Committees whose terms of reference shall be determined by
the Board from time to time:

Audit Committee:

To provide assurance to the Board on the adequacy of internal control systems and
financial disclosures. The Head of Internal Audit will act as co-ordinator to the Audit
Committee, but will be administratively under the control of the Director accountable to the
Board for the Finance function.

Compensation Committee:

To recommend to the Board compensation terms for Executive Directors and the
senior most level of management below the Executive Directors.

Nominations Committee:

To recommend to the Board nominations for membership of the CMC and the Board,
and oversee succession for the senior most level of management below the Executive
Directors.

24
Investor Services Committee:

To look into redressal of shareholder and investors grievances, approval of

transmissions, sub-division of shares, issue of duplicate shares, etc.

3.7 Corporate Strategies

a) It sustains multiple drivers of growth, matching internal capabilities with emerging
market opportunities
b) It pursues World class competitiveness in all businesses and across the entire value
chain
c) Best-in-class in terms of:
i) Internal Vitality
ii) Market Standing
iii) Profitability

d) It follows a strategy of Organization and Governance processes, geared to manage

multiple businesses.

3.8 ITC- Corporate Social Responsibility

1) Environmental

a) ITC has been Carbon Positive 3 years in a row.

b) Water Positive 6years in a row.

c) 100% solid waste recycling

2) Social

a) ITC's businesses generate livelihoods for over 5 million people.

b) ITC's Social and Farm Forestry initiative has greened over 80,000 hectares creating an
estimated 35 million person days of employment among the disadvantaged.

c) ITC's Watershed Development Initiative brings precious water to nearly 35,000 hectares of
dry lands and moisture-stressed areas.

25
d) ITC's Sustainable Community Development initiatives include women empowerment,
supplementary education, integrated animal husbandry programmes.

e) The first ITC Sangeet Sammelan showcasing the best in Indian classical music was held in
Delhi in 1971.

Being a responsible corporate citizen, ITC is doing so many activities for the welfare of
society and darks as a responsible corporate leader without any gap. Some of its major
societal activation for the welfare of different section of society is as follows-

a. Environment, health & safety (EHS)

b. Reaching out to society

c. Preserving national heritage.

d. Supporting sustainable development

a. Environment, health & Safety (EHS):

As a responsible corporate citizen, ITC accords the highest priority to environment,

occupational health, and safety. It is committed to protecting the environment in which it
operates. It is equally committed to ensuring very high standard of safety at the work place.

It is a relegations of ITC‖ high EHS standards that lit has been the recipient of several
National and international awards- such as-

1) ISO 14000
2) Sword of honour
3) Royal society of prevention of accidents awards.
4) National safety awards.
5) The corporate Environment award.
6) The golden peacock environment management award.
7) Excellence in pollution control management.
8) Prashanna Patra Award.
9) National Award for excellence in energy conservation.

26
b. Reaching Out to Society:

As a responsible corporate citizen, ITC promotes art, culture and education. Besides
working for the protection and enrichment of the environment and over all social
development, ITC also looks into:

1) Community development.
2) Education.
3) Protecting the environment.

c. Preserving National Heritage:

As a socially responsible corporate citizen, ITC endeavours to creates value for the
Indian society in multiple ways, one of them being ―Preservation of India‖ rich culture
heritage. ITC has made significant contribution to the promotion of Indian classical music,
theatre, art and cuisine.

3.9 Social Initiative of ITC

E-Choupal is one of the major initiatives of ITC Limited, a large multi business
conglomerate in India, to link directly with rural farmers via the Internet for procurement of
agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. E-Choupal
was conceived to tackle the challenges posed by the unique features of Indian agriculture,
characterized by fragmented farms, weak infrastructure and the involvement of numerous
intermediaries. The programme involves the installation of computers with Internet access in
rural areas of India to offer farmers up-to-date marketing and agricultural information.

The e-choupal model has been specifically designed to tackle the challenges posed by
the unique features of Indian agriculture, characterized by fragmented farms, weak
infrastructure and the involvement of numerous intermediaries, among others. ITC‘s Agri
Business Division, one of India‘s largest exporters of agricultural commodities, has
conceived e-choupal as a more efficient supply chain aimed at delivering value to its
customers around the world on a sustainable basis.

A powerful illustration of corporate strategy linking business purpose to larger

societal purpose, e-Choupal leverages the Internet to empower small and marginal farmers –
who constitute a majority of the 75% of the population below the poverty line. By providing
them with farming know-how and services, timely and relevant weather information,

27
transparent price discovery and access to wider markets, e-Choupal enabled economic
capacity to proliferate at the base of the rural economy.

Today 4 million farmers use e-Choupal to advantage – bargaining as virtual buyers‘

co-operatives, adopting best practices, matching up to food safety norms. Being linked to
futures markets is helping small farmers to better manage risk. e-Choupal has been specially
cited in the Government of India‘s Economic Survey of 2006-07, for its transformational
impact on rural lives.

ITC‘s strategic intent is to develop e-Choupal as a significant two-way

multidimensional delivery channel, efficiently carrying goods and services out of and into
rural India. By progressively linking the digital infrastructure to a physical network of rural
business hubs and agro-extension services, ITC is transforming the way farmers do business,
and the way rural markets work.

Table 3.1 Showing Details of E-Choupal

e-Choupal Now

States covered 10

Villages covered 40,000

No. of e-Choupals 6,500

Farmers e-empowered 4 million

ITC Limited has now provided computers and Internet access in rural areas across
several agricultural regions of the country, where the farmers can directly negotiate the sale
of their produce with ITC Limited. This online access enables farmers to obtain information
on mandi prices, and good farming practices, and to place orders for agricultural inputs like
seeds and fertilizers. This helps farmers improve the quality of their products, and helps in
obtaining a better price. Each ITC Limited kiosk having Internet access is run by a sanchalak
— a trained farmer. The computer is housed in the sanchalak's house and is linked to the
Internet via phone lines or by a VSAT connection. Each installation serves an average of 600
farmers in the surrounding ten villages within about a 5 km radius. The sanchalak bears some
operating cost but in return earns a service fee for the e-transactions done through his e-

28
Choupal. The warehouse hub is managed by the same traditional middle-men, now called
samyojaks, but with no exploitative power due to the reorganisation. Indeed these middlemen
make up for the lack of infrastructure and fulfill critical jobs like cash disbursement, quantity
aggregation and transportantion.

Since the introduction of e-Choupal services, farmers have seen a rise in their income
levels because of a rise in yields, improvement in quality of output, and a fall in transaction
costs. Even small farmers have gained from the initiative. Customized and relevant
knowledge is offered to the farmers despite heterogeneous cultures, climates and scales of
production. Farmers can get real-time information despite their physical distance from the
mandis. The system saves procurement costs for ITC Limited. The farmers do not pay for the
information and knowledge they get from e-Choupals; the principle is to inform, empower
and compete. At the same time ITC Limited has obtained benefits from the programme:

1. elimination of non value added activities

2. differentiated product through identity preserved supply chains
3. value added products traceable to farm practices
4. e-market place for spot transactions and support services to futures exchange

3.10 Working Areas of ITC Ltd

ITC is into eight (8) major areas of production, distribution and servicing. These are as
follows-

A. FMCG - Cigarettes and Tobacco, Foods

B. Hotels.

C. Packaging

D. Paper board & Specialty paper

E. Information Technology (IT)

F. Life style retailing

G. Agro-Exports

H. Group Companies

29
 A. FMCG

Cigarettes and Tobacco:

ITC buys nearly 50% of all cigarettes types tobacco grown in India. It has been India
―single largest integrated sources of quality tobacco for customer‖ in 37 countries over the
last 6 decades. ITC‘s Comprehensive and sophist6icated R&D facilities cover all aspects of
cultivation. Processing and packaging. ITC processes and delivers 100 million Kg of high
quality tobacco per annum. ITC also co-operates with government agencies to develop new
varieties of tobacco and to develop new areas for tobacco cultivation.

Tobacco Division

The company started in the year 1910 with the cigarettes business and devoted the
first six decades to the cigarettes business only which it later on expanded to other divisions
as well. Today ITC Ltd is the market leader in this segment with its wide range of brands like
Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley,
Bristol and Flake.

Foods

ITC made its entry into the branded & packaged Foods business in August 2001 with
the launch of the Kitchens of India brand. A more broad-based entry has been made since
June 2002 with brand launches in the Confectionery, Staples and Snack Foods segments.

The packaged foods business is an ideal avenue to leverage ITC's proven strengths in
the areas of hospitality and branded cuisine, contemporary packaging and sourcing of
agricultural commodities. ITC's world famous restaurants like the Bukhara and the Dum
Pukht, nurtured by the Company's Hotels business, demonstrate that ITC has a deep
understanding of the Indian palate and the expertise required to translate this knowledge into
delightful dining experiences for the consumer. ITC has stood for quality products for over
98 years to the Indian consumer and several of its brands are today internationally
benchmarked for quality.

The Foods business carries forward this proud tradition to deliver quality food
products to the consumer. All products of ITC's Foods business available in the market today
have been crafted based on consumer insights developed through extensive market research.
30
Apart from the current portfolio of products, several new and innovative products are under
development in ITC's state-of-the-art Product Development facility located at Bengaluru.

Leadership in the Foods business requires a keen understanding of the supply chain
for agricultural produce. ITC has over the last 99 years established a very close business
relationship with the farming community in India and is currently in the process of enhancing
the Indian farmer's ability to link to global markets, through the e-Choupal initiative, and
produce the quality demanded by its customers. This long-standing relationship is being
leveraged in sourcing best quality agricultural produce for ITC's Foods business.

The Foods business is today represented in 4 categories in the market. These are:

i) Ready To Eat Foods

ii) Staples
iii) Confectionery
iv) Snack Foods

B. Hotels:

ITC entered into hotels field in 1975. ITC have 46 hotels across 42 destinations all over India.

ITC-Welcomgroup - Redefining the Fine Art of Hospitality

ITC's foray into the hotels business began in 1975. Inspired by the vision to promote
India's rich tourism heritage and also contribute to the nation's then scarce foreign exchange
earnings, ITC's hotels business set about to create a unique value proposition that would
redefine the fine art of hospitality. Since then ITC-Welcomgroup has emerged as one of
India's premier hospitality chains offering hotels, resorts and palaces. They have over 100
hotels in more than 80 destinations. A select few among ITC‘s hotel properties are also
associated with Starwood‘s Sheraton brand with which ITC has enjoyed a three decade
partnership.

ITC-Welcomgroup properties are classified under 4 distinct brands:

a) The Luxury Collection

b) WelcomHotels

31
c) Fortune Hotels

d) WelcomHeritage

ITC Hotel – Luxury Collection

World Class Hospitality with an Indian Soul

Super deluxe and premium hotels, located at India‘s most important cities, offering an
unmatched and unique blend of luxury and Indian hospitality.

ITC‘s seven Luxury Collection hotels offer a luxurious window into the ambience and
architectural splendour of ancient dynasties. The seamless amalgam of history, the cultural
ethos of different regions in India and the mood of today‘s vibrant India, create some of the
most enriching experiences anywhere in the world.

WelcomHotels - Warm and Caring

WelcomHotels, synonymous with customer centricity and efficiency, make stays

special for today‘s discerning business and leisure traveller.

Focussed on unique service design, the ITC-Welcomgroup Sheraton Hotels provide

five-star comfort blended with warmth, reflecting the true essence of Indian hospitality. At
ITC-Welcomgroup‘s Sheraton Hotels in Jaipur, Chennai and New Delhi, the warmth of
personalised service makes every visit memorable.

Hotels of ITC

1) ITC Maurya, New Delhi

2) ITC Maratha, Mumbai
3) ITC Royal Gardenia, Bengaluru
4) ITC Windsor, Bengaluru
5) ITC Grand Central, Mumbai
6) ITC Sonar, Kolkata
7) ITC Kakatiya, Hyderabad
8) ITC Mughal, Agra
9) Sheraton Rajputana Hotel, Jaipur
10) Sheraton Chola Hotel, Chennai
11) Sheraton New Delhi Hotel, New Delhi

32
 12) Sheraton Park Hotel and Towers, Chennai
13) WelcomeHotel Rama International, Aurangabad
14) WelcomeHotel Vadodara, Vadodara
15) WelcomeHotel Grand Bay, Visakhapatnam

C. Packaging: -

ITC also producing packaging items like- Flip top boxes, car board outers, shells and
slides, soft cup and strap labels, bundle wraps, flap boxes, inner frames, coupon inserts
and variety and folding crotons.

The major unit (factory) which is producing packaging items- one is munger (Bihar)
and other is Tiruvottiyar near Chennai.

D. Paper Board and Specialty Paper:-

ITC has now integrates sits paperboard & specialty paper business into its newly created
(PSPD), to how new strategic & operational synergies. ITC is one of the world‖ most modern
and contemporary manufactures of packaging (paper board) boards, with a manufacturing
capacity of over 2,00,000 tones par year (1) packaging board coasted folding box boards,
solid bleached sulphates board, white unit chipboard, liquid packaging board (2) cast coated
papers and boards. The division also produced quality-

(a) Printing & Writing papers

(b) Eco- friendly papers

(c) Photo copier papers.

Specialty paper:-ITC is the premier manufacturer of specialty paper in India, with a

diversified product. Range ITC‘s specialty paper are used in the manufacturer of cigarettes,
decorative laminates. Electrical equipment, fireworks and automotive factory filters. They are
also used for fire printing, packaging and carbonizing.

The division pioneered the manufacturer of specialty paper for Indian cigarette
industry in 1949. It currently offers a comprehensive range of cigarette Tissues; plug Wray,
tipping base, printed tipping papers and metalizing base.

33
 ITC's Paperboard products include: Packaging boards - coated folding box boards,
solid bleached sulphate boards, white lined chipboards, liquid packaging boards, poly
extruded coated boards for food and barrier packaging, cast coated papers and boards.

E. Information Technology (IT):-

ITC has recently spun off its 20 year old information system division into a wholly owned
subsidiary to aggressively pursue growth opportunities in this sector. ITC Infotech India Ltd
offer a powerful customer value proposition based on its in depth domain‘s know ledge
gained from the experience of servicing a range of internal & external customers across
diverse domains. –FMCG, hoteliering, packaging, paper boards, specialty papers,
international trading etc.

ITC Infotech

ITC's wholly owned information technology subsidiary, ITC Infotech, is one of India's
fastest growing IT and IT-enabled outsourced solutions providers. The Company leverages
domain knowledge from its parent's market-leading position in Manufacturing, CPG & Retail
and Travel & Hospitality, as well as in other domains like Banking, Financial Services &
Insurance, to devise business solutions for global customers. ITC Infotech is a US $ 64
million company with over 1,700 employees. In addition to IT Solutions, Services and Co-
sourcing, the Company has a joint venture with ClientLogic in the BPO space that offers a
technical helpdesk with over 2,500 employees. ITC Infotech has offices in the United States,
Europe and the Asia Pacific, serving Fortune-listed customers across 42 countries.

F. Life Style Retailing: -

ITC also manufacturing readymade garments range of international quality of relaxed

wear under the brand name ―wills sport‖. It has 48 retail outlet across 38 cities in the country.
Recently he also lunched another brand name ―John Players‖ offers complete range of
contemporary men‘s wear- like shirts, Trousers, t-shirts & denims. It also lunches in Nov.
2002 under brand name ―the Classes Collection‖.

Lifestyle Retailing Business Division

ITC‘s Lifestyle Retailing Business Division has established a nationwide retailing

presence through its Wills Lifestyle chain of exclusive specialty stores providing the Indian

34
consumer a truly 'International Shopping Experience' through world-class ambience,
customer facilitation and clearly differentiated product presentation.

G. Agro-Exports:-

ITC international business division (IBD) is doing Exports activities of agriculture

products and processed foods etc. They export the following items to UK, US and to other
European countries- Soya meal, rice, aqua products, peanuts, coffee, wheat, sesame seeds,
black pepper, processed and frozen fruits and vegetables.

Agri Business

In the year 1990, the company leveraged its agri – sourcing competency & thus set up
the agri business division for export of agri-commodities. The Division is today one of India's
largest exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in
2000 now extending to 10 states covering over 4 million farmers & the company‘s vision is
to have a network of 20,000 e-Choupals, thus extending coverage to villages representing one
sixth of rural India. ITC's Agri Business Division is the country's second largest exporter of
agri-products with exports of over Rs. 1000 Crores (Rs. 10 billion) .

ITC's Agri business is progressively aligning its commodity portfolio with the
sourcing needs of the Company's Foods business to generate higher order value from its agri
procurement infrastructure.

ITC's Agri Business Division is the country's second largest exporter of agri-products
with exports of over Rs. 1000 Crore (Rs. 10 billion). Its domestic sales of agri-products are in
excess Rs. 1500 Crores (Rs. 15 billion). It currently focuses on exports of:

a)Feed Ingredients - Soyameal

b)Food Grains - Rice (Basmati &Non Basmati), Wheat, Pulses

c) Edible Nuts - Sesame Seeds, HPS Groundnuts, Castor oil

d) Marine Products - Shrimps and Prawns

e) Processed Fruits - Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit Products,

Fresh Fruits

35
f) Coffee & Spices - Coffee, Black Pepper, Chilly, Turmeric, Ginger, Celery and other Seed
Spices

H. GROUP COMPANIES

Subsidiaries

1) ITC Infotech

2) Surya Nepal Pvt Ltd

3) Landbase

4) King Maker Marketing Inc., Usa

5) Technico Pty Ltd, Australia

6) Russell Credit Ltd

7) Wimco Ltd

8) Srinivasa Resorts Ltd

9) Fortune Park Hotels Ltd

10) Bay Islands Hotels Ltd

11) Gold Flake Corporation Ltd

Joint Ventures

1) Maharaja Heritage Resorts Ltd

2) ITCFiltrona

Associate Companies

1) Gujarat Hotels Ltd

2) International Travel House

36
3.11 Details of the Ernakulam Division

This branch/division of ITC is called the Indian Tobacco Division (ITD). They have a
number of other divisions all over India. This is a division mainly aimed at the marketing
activities of the FMCG products of the Company. There are five sections and each section
takes care of one of the five areas.

The five sections are: Cigarettes, Foods, Personal Care, Modern Trade, and Stationary.

Branch Manager

Assistant Manager

Area Manager

Area Executive

Figure 3.3 Showing the Hierarchy of the Division

37
ITC’s Distribution Channel

Figure 3.4 Showing ITC’s Distribution channel

3.12 Research and Development

ITC is committed to delivering world-class products and services. This requires a

clear focus on continuously striving to create a higher value to customers by achieving
excellence in all Company's operations. Business excellence calls for a passionate focus on
technology, products, services, processes and an operating environment firmly anchored to an
impregnable foundation of Quality.

ITC firmly believes that quality is not a specifically assignable task. It needs to be
firmly rooted and institutionalized in the culture and value system of the Company. ITC
nurtures a culture of striving for continuous improvement in quality, be it in products,
services, systems or performance. The Company is committed to the establishment of
systems and processes to promote organisational creativity and innovation.

ITC's development of its Integrated Quality Management System (IQMS) is based on

its strong foundation of implementing ISO 9001:2000, ISO 14001, OHSAS 18001, SA 8000,
HACCP (for Foods) and IQRS (performance rating and benchmarking of the quality
management system). Likewise, ITC's strategic initiatives for developing its people have

38
been based on participative management concepts like QC (Quality Control), TQM (Total
Quality Management), KSS (Kaizen Suggestion Scheme), 5S, Six Sigma.

All ITC manufacturing units have ISO quality certification. Almost all contract
manufacturing units in the Foods Business and all large hotels have food safety and quality
systems certified by accredited 'third party' in accordance with 'Hazard Analysis Critical
Control Points' (HACCP) standards. Additionally, the quality of all FMCG products of the
Company is regularly monitored through 'Product Quality Rating System' (PQRS). The Leaf
Tobacco and Printing & Packaging businesses have achieved world-class ratings in the
'International Quality Rating System' (IQRS) for business excellence in which key processes
are rated against international benchmarks and certified by accredited 'third party'
independent assurance providers.

Table 3.2 Showing the R and D Expense for the Year 2010

For the year ended

31st March, 2010

Expenditure on R & D: (Rs. in Lakhs)

i) Capital 874.98
ii) Recurring 7708.34
iii) Total 8783.32
iv) Total R & D Expenditure as

a % of:

-Gross Turnover 0.33%

-Net Turnover 0.47%

39
3.13Future Plans of the Company
i) ITC aims for 14 per cent share in the biscuits market.

ii) Aashirvaad has been expanding the range and the latest offering includes its combo
packs of rice and gravies.

iii) ITC Foods has been quick to extend its range to unique offerings such as the Sunfeast
Orange Marie apart from the usual fare of glucose and Marie Light variants.

ITC Moves into Health and Education

The company has tied up with Apollo to provide telemedicine services at its Choupal
Sagars in Mhow and Sehore in Madhya Pradesh. These Sagars, which already have a doctor,
pharmacy and pathological lab, are linked to Apollo‘s specialty clinics in Ahmedabad.
Specialized consulting, when required, is done through this link. On the anvil are plans to
train health workers in the villages to run tests on instant testing devices like those for blood
sugar or blood pressure. IBD also plans to link the villages to Apollo‘s specialty clinic.

3.14 Financial Performance of the Company

The financial performance of the Company for the past three years is taken to analyse the
growth and profitability of the Company.

Company's Share Capital

249,54,14,504 Ordinary Shares of the Company, representing 65.36% of the Company's paid
up capital, as on 18th June, 2010 are in dematerialised form.

The paid-up share capital of the Company is Rs. 381,81,76,790 (Rs.381.82 crores) divided
into 381,81,76,790 Ordinary Shares of the face value of Re 1/- each.

Total No. of Shareholders as on 18th June, 2010 : : 3,46,645

No. of shareholders in dematerialised form : 3,00,880
No. of shareholders in physical form : 45,765

40
Table 3.3 Balance Sheet of the Company for Three Years (2008, 2009, 2010)

31st March, 2010(Rs. 31st March, 2009(Rs. 31st March, 2008(Rs.

in crores) in crores) in crores)
I. Sources of Funds
1.Shareholders’
Funds
a)Capital 381.82 377.44 376.86
b)Reserves & Surplus 13682.56 14064.38 13357.64 13735.08 11680.81 12057.67

2.Loan Funds
a)Secured Loans - 11.63 5.57
b)Unsecured Loans 107.71 107.71 165.92 177.55 208.86 214.43
3.Deferred Tax-Net 785.01 867.19 545.07
Total 14957.10 14779.82 12817.17
II.Application of
Funds
1.Fixed Assets
a)Gross Block 11967.86 10558.65 8959.70
b)Less: Depreciation 3825.46 3286.74 2790.87
c)Net Block 8142.40 7271.91 6168.83
d)Capital Work-in- 1008.99 9151.39 1214.06 8485.97 1126.82 7295.65
Progress
2.Investments 5726.87 2837.75 2934.55
3.Current Assets,
Loans and Advances
a)Inventories 4549.07 4599.72 4050.52
b)Sundry Debtors 858.80 668.67 736.93
c)Cash and Bank 1126.28 1032.39 570.25
Balances
d)Other Current 288.39 215.35 146.07
Assets
e)Loans and Advances 1304.54 1644.98 1515.50

8127.08 8161.11 7019.27

Less :
4.Current Liabilities
and Provisions
a)Liabilities 3498.30 2964.52 2786.97
b)Provisions 4549.94 1740.49 1645.33
8048.24 4705.01 4432.30
Net Current Assets 78.84 3456.10 2586.97
Total 14957.10 14779.82 12817.17

41
3.15 Global Honours

ITC constantly endeavours to benchmark its products, services and processes to

global standards. The Company's pursuit of excellence has earned it national and
international honours. ITC is one of the eight Indian companies to figure in Forbes A-List for
2004, featuring 400 of "the world's best big companies". Forbes has also named ITC among
Asia's'Fab 50' and the World's Most Reputable Companies

ITC is the first Indian company and the second in the world to win the prestigious
Development Gateway Award. It won the $100,000 Award for the year 2005 for its
trailblazing ITC e-Choupal initiative which has achieved the scale of a movement in rural
India. The Development Gateway Award recognizes ITC's e-Choupal as the most exemplary
contribution in the field of Information and Communication Technologies (ICT) for
development during the last 10 years. ITC e-Choupal won the Award for the importance of its
contribution to development priorities like poverty reduction, its scale and replicability,
sustainability and transparency.

Some of the notable recognitions are:

a) ITC Hotel Royal Gardenia, Bengaluru is the first Indian Hotel and world's largest, to get
the LEED Platinum rating - the highest green building certification globally.

b) The Company's Green Leaf Threshing plants at Chirala and Anapartiin Andhra Pradesh are
the first units of their kind in the world to get ISO 14001 environment management systems
certification.

c) ITC‘s cigarette factory in Kolkata is the first such unit in India to get ISO 9000 quality
certification and the first among cigarette factories in the world to be awarded the ISO 14001
certification.

d) ITC Maurya in New Delhi is the first hotel in India to get the coveted ISO 14001
Environment Management Systems certification.

e) ITC Filtrona is the first cigarette filter company in the world to obtain ISO 14001.

f) ITC has won the Golden Peacock Awards for 'Corporate Social Responsibility (Asia)' in
2007, the Award for ‗CSR in Emerging Economies 2005‘ and ‗Excellence in Corporate
Governance' in the same year. These Awards have been instituted by the Institute of
42
Directors, New Delhi, in association with the World Council for Corporate Governance and
Centre for Corporate Governance.

g) ITC Infotech finds pride of place among a select group of SEI CMM Level 5 companies in
the world.

h) The Corporate Social Responsibility Crown Award for Water Practices from UNESCO
and Water Digest for its distinguished work carried out in the water sector in India. ITC also
received the National Award for Excellence in Water Management 2007 in the 'beyond the
fence' category from the CII Sohrabji Godrej Green Business Centre for its leadership role in
implementing water and watershed management practices.

i) The Corporate Award for Social Responsibility 2008 from The Energy and Resources
Institute (TERI) in recognition of its exemplary initiatives in implementing integrated
watershed development programmes across 7 states in India. The company also won the
award in 2004 for its e-Choupal initiative. The Award provides impetus to sustainable
development and encourages ongoing social responsibility processes within the corporate
sector.

j) The Best Corporate Social Responsibility Practice Award 2008 jointly instituted by the
Bombay Stock Exchange, Times Foundation and the NASSCOM Foundation.

k) The only Indian FMCG company to have featured in the Forbes 2000 list. The Forbes
2000 is a comprehensive ranking of the world's biggest companies, measured by a composite
of sales, profits, assets and market value. The list spans 51 countries and 27 industries.

l) The "Best Supply Chain Practices Award" for time-effective and cost-efficient Logistics
Management in Organized Retail to ITC's Lifestyle Retailing Business Division (LRBD).
The awards were organized by Retailers Association of India (RAI) in association with ITW
Signode - the International leaders in packaging 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.

43
3.16 SWOT Analysis of ITC

ITC is one of India's biggest and best-known private sector companies. In fact it is
one of the World's most high profile consumer operations. Its businesses and brands are
focused almost entirely on the Indian markets.

Strengths

ITC leveraged it traditional businesses to develop new brands for new segments. For
example, ITC used its experience of transporting and distributing tobacco products to remote
and distant parts of India to the advantage of its FMCG products. ITC master chefs from its
hotel chain are often asked to develop new food concepts for its FMCG business.

ITC is a diversified company trading in a number of business sectors including

cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel,
personal care, greetings cards, Information Technology, safety matches, incense sticks and
stationery.

Weaknesses

The company's original business was traded in tobacco. ITC stands for Imperial
Tobacco Company of India Limited. It is interesting that a business that is now so involved in
branding continues to use its original name, despite the negative connection of tobacco with
poor health and premature death.

To fund its cash guzzling FMCG start-up, the company is still dependent upon its
tobacco revenues. Cigarettes account for 47 per cent of the company's turnover, and that in
itself is responsible for 80% of its profits. But now it has almost come out of this problem. So
there is an argument that ITC's move into FMCG (Fast Moving Consumer Goods) is being
subsidised by its tobacco operations. Its Gold Flake tobacco brand is the largest FMCG brand
in India - and this single brand alone holds 70% of the tobacco market.

Opportunities

Core brands such as Aashirvaad, Mint-o, Bingo! And Sun Feast (and others) can be
developed using strategies of market development, product development and marketing
penetration.

44
 ITC is moving into new and emerging sectors including Information Technology,
supporting business solutions.

E-Choupal is a community of practice that links rural Indian farmers using the
Internet. This is an original and well thought of initiative that could be used in other sectors in
many other parts of the world. It is also an ambitious project that has a goal of reaching 10
million farmers in 100,000 villages.

ITC leverages e-Choupal in a novel way. The company researched the tastes of
consumers in the North, West and East of India of atta (a popular type of wheat flour), then
used the network to source and create the raw materials from farmers and then blend them for
consumers under purposeful brand names such as Aashirvaad Select in the Northern market,
Aashirvaad MP Chakki in the Western market and Aashirvaad in the Eastern market. This
concept is tremendously difficult for competitors to emulate.

Chairman Yogi Deveshwar's strategic vision is to turn his Indian conglomerate into
the country's premier FMCG business. Per capita consumption of personal care products in
India is the lowest in the world offering an opportunity for ITC's soaps, shampoos and
fragrances under their Wills brand.

Threats

The obvious threat is from competition, both domestic and international. The laws of
economics dictate that if competitors see that there is a solid profit to be made in an emerging
consumer society that ultimately new products and services will be made available. Western
companies will see India as an exciting opportunity for themselves to find new market
segments for their own offerings.

ITC's opportunities are likely to be opportunities for other companies as well.

Therefore the dynamic of competition will alter in the medium-term. Then ITC will need to
decide whether being a diversified conglomerate is the most competitive strategic formation
for a secure future.

45
3.17 Details of the Human Resources Department

Objectives of HRM

a) Integration of HRM policy with business goals/objectives

b) Attainment of organizational objectives through human capital
c) Creation of flexible work hours/function
d) Creation of a flexible environment to be responsive to market ambience, as per the
need of the dizzily fast packed and changing environment.
e) Integration of people related issues with business issues, while bringing people related
issues to the fore and advocating primacy of business needs.

Human Resource Development

The Company‘s employees rose to the challenges posed by the rapidly changing
global economic landscape. Strongly aligned with the Company‘s Vision, they are committed
to sustaining the Company‘s position as one of India‘s most admired and valuable
corporations.

The Company‘s unique employee value proposition backed by its strong corporate
equity has enabled it to attract and retain quality talent. During the year under review, the
Company made significant investments in developing talent across the organization, from
frontline managers to business leadership.

The Company‘s human resource management systems and processes are geared
towards creating a responsive, customer-centric and market-focused culture that enhances
organizational capability and vitality, so that each business is internationally competitive and
equipped to leverage emerging market opportunities. The strategy of organisation,
particularly its ongoing emphasis on developing and supporting distributed leadership, has
ensured that each of the Company‘s businesses are managed by a team of competent,
passionate and inspiring leaders, capable of building an organisation hinged on a culture of
learning, innovation and world-class execution.

The Company believes that alignment of all employees to a shared vision and purpose
is vital for winning in the market place. It also recognizes the mutuality of interests with key
stakeholders and is committed to building harmonious employee relations. The collaborative
spirit across all sections of employees has resulted in significant enhancement in quality and

46
productivity. During the year under review, long-term agreements were successfully
concluded at several of the manufacturing units and hotel properties. Smooth commencement
of operations at Greenfield locations was ensured.

In an increasingly competitive environment, the collective dedication of nearly 24,000

employees is enabling delivery of superior and sustainable stakeholder value. In its Centenary
Year, the Company salutes the unflinching commitment of its dedicated team of employees,
both past and present.

ITC- HRM Policy

a) ITC believes that all its employees must live with social and economic dignity and
freedom, regardless of nationality, gender, race, economic status or religion.
b) ITC upholds international human rights standards, does not condone human rights
abuses, and creates and nurtures a working environment where human rights are
respected without prejudice.
c) The Corporate Human Resources function conducts non-discrimination reviews
annually on a sample basis with unit heads and through on-site assessments.
d) ITC Unit has appropriate systems and checks to ensure compliance with the Policy
and statutory provisions, including means for filing of grievances, collective
bargaining agreements and minutes from worker meetings.
e) ITC does not employ any person below the age of eighteen years in the workplace.
ITC prohibits the use of forced or compulsory labour at all its units. No employee is
made to work against his/her will or work as bonded/forced labour.
f) All major changes in operations involving work processes, manning norms and other
productivity linked issues are carried out after discussions with the employees and the
recognized unions at each location.
g) ITC is committed to providing a safe and healthy work environment to all its
employees. These policy guidelines on HIV/AIDS are an endorsement of this
commitment and, in particular, of the Company's commitment to specific programmes
and actions in response to the HIV epidemic.

Staff

ITC‘s greatest strength is its people- diverse and motivated people with the expertise and
insight to tackle the toughest client issues. ITC does not discriminate due to sex, age, creed,

47
and colour. They promote drug free environment, encourage development with excellent
training.

Code of Conduct

1) Dealing with People in the Organization - In dealing with each other, directors,
senior management and employees upholds the values which are at the core of the
Company‘s HR Philosophy - trust, teamwork, mutuality and collaboration,
meritocracy, objectivity, self respect and human dignity. Indeed, these values form the
basis of its HR management systems and processes.ITC focuses on meritocracy,
equity and upholding of Company values in all people processes including
performance management systems, appraisals, remuneration and rewards.
2) A Gender Friendly Workplace - As a good corporate citizen, ITC is committed to a
gender friendly workplace. It seeks to enhance equal opportunities for men and
women, prevent/stop/redress sexual harassment at the workplace and institute good
employment practices. Sexual harassment includes unwelcome sexually determined
behaviour such as: unwelcome physical contact; a demand or request for sexual
favours; sexually coloured remarks; showing pornography and any other unwelcome
physical, verbal or non-verbal conduct of a sexual nature.

ITC maintains an open door for reportees; encourages employees to report any
harassment concerns and is responsive to employee complaints about harassment or
other unwelcome and offensive conduct. A committee has been constituted to enquire
into complaints and to recommend appropriate action, wherever required.
3) Relationships with Suppliers and Customers - All directors, senior management
and employees must ensure that in their dealings with suppliers and customers, the
Company‘s interests are never compromised. Accepting gifts and presents of more
than a nominal value, gratuity payments and other payments from suppliers or
customers will be viewed as serious breach of discipline as this could lead to
compromising the Company‘s interests.
4) Legal compliance - It is the Company‘s policy to comply fully with all applicable
laws and regulations. Ensuring legal and regulatory compliance is the responsibility of
the Chief Executives of the Businesses and the Divisional Management Committees.
The Company does not accept practices which are unlawful or may be damaging to its
reputation. Divisional Management Committees must satisfy themselves that sound

48
 and adequate arrangements exist to ensure that they comply with the legal and
regulatory requirements impacting each business and identify and respond to
developments in the regulatory environment in which they operate.

Personal Conduct

All directors, senior management and employees have the obligation to conduct
themselves in an honest and ethical manner and act in the best interest of the Company at all
times. They are expected to demonstrate exemplary personal conduct through adherence to
the following:

i) Avoidance of Conflict of Interest - All directors, senior management and employees

must avoid situations in which their personal interest could conflict with the interest
of the Company.
ii) Transparency and audibility - All directors, senior management and employees
must ensure that their actions in the conduct of business are totally transparent except
where the needs of business security dictate otherwise. Such transparency shall be
brought about through appropriate policies, systems and processes, including as
appropriate, segregation of duties, and involvement of more than one manager in key
decisions and maintaining supporting records.
iii) Protection of Confidential Information - No director, senior management and
employee must disclose or use any confidential information gained in the course of
employment/ association with the Company for personal gain or for the advantage of
any other person.
iv) Company Facilities - No director, senior management and employee should misuse
Company facilities. In the use of Company facilities, care must be exercised to ensure
that costs are reasonable and there is no wastage.
v) Leading by Example - The organization‘s directors and senior management set the
professional tone for the Company. ITC‘s directors, senior management and
employees must constantly reinforce through their actions and behaviour that ITC‘s
stated beliefs of responsible corporate citizenship are rooted in individual conviction
and personal integrity.
vi) Protection of Confidential Information - No director, senior management and
employee shall disclose or use any confidential information gained in the course of
employment/ association with the Company for personal gain or for the advantage of

49
 any other person. No information either formally or informally shall be provided to
the press, other publicity media or any other external agency except within approved
policies.

Management Development

ITC recognises that a comprehensive management development strategy is the key to

enhancing individual, team and organizational effectiveness, as well as building strategic
capabilities and processes for organizational vitality and renewal. In ITC, management
development goes far beyond training and development as is commonly understood.

Management development initiatives include, in addition to formal training and

development programmes, a host of interventions such as cross-functional and multi-business
exposure, developmental assignments/ secondments, membership of task forces, special
assignments, systems and processes such as the appraisal system, the strategy of organization
itself, etc.

Core training and development inputs are imparted to every individual based on his
level of responsibility, in addition to training and development interventions relating to his
functional specialisation.

A key focus of ITC's management development efforts is the development of business

leadership across businesses in support of ITC's belief that an organization with a diversified
business portfolio can be managed effectively only when competent and effective leadership
is distributed across the organization.

ITC's Core Values are aimed at developing a customer-focused, high-performance

organisation which creates value for all its stakeholders:

Trusteeship: As professional managers, they are conscious that ITC has been given to us in
"trust" by all our stakeholders. They try to actualise stakeholder value and interest on a long
term sustainable basis.

Customer Focus: The employees are always customer focused and will deliver what the
customer needs in terms of value, quality and satisfaction.

50
Respect for People: The employees are result oriented, setting high performance standards
for ourselves as individuals and teams. They simultaneously respect and value people and
uphold humanness and human dignity.

The employees at ITC acknowledge that every individual brings different perspectives
and capabilities to the team and that a strong team is founded on a variety of perspectives.
The Company want individuals to dream, value differences, create and experiment in pursuit
of opportunities and achieve leadership through teamwork.

Excellence: ITC do what is right, do it well and win. They strive for excellence in whatever
they do.

Innovation: ITC constantly pursue newer and better processes, products, services and
management practices.

Nation Orientation: They are aware of their responsibility to generate economic value for
the Nation. In pursuit of our goals, they make no compromise in complying with applicable
laws and regulations at all levels.

Recruitment

The human resources are the most important assets of organization. The success or
failure of an organization is largely dependent on the calibre of the people working therein.
Without positive and creative contribution from people, organization can‘t progress and
prosper. In order to achieve the goals and perform the activities of an organization, therefore
we need to recruit people with requisite, skills, qualification and experience. While doing so
we have to keep the present as well as future requirements of the organization in mind.

Objective

1) To effectively manage the manpower recruitment in coherence with long term and short
term manpower planning of the organization through a standard recruitment and selection
policy.

2) To proactively and systematically identify the recruitment needs in time.

3) To ensure that all the recruitment are within the manpower budget and as per the laid down
policy.

51
4) To recruit people with required level of skilled and aptitude for learning and growth.

Identification of Vacant Positions

1. Total permanent manpower strength/budget for organization has been

sanctioned by the board of directors.
2. All the recruitment has necessarily to be made within the approved
budget/strength only.
3. Vacancies against the sanctioned budget may arise due to:
a) Retirement
b) Turnover
c) Natural Separation
4. Whenever a vacancy arise, the concerned department has to fill up the
prescribed manpower requisition form clearly indication the job description and
specification, time frame and send it to HR department.

Methods of Recruitment

a) Internal Method
b) Direct Method
c) Indirect Method

Internal Method

a) Promotion and Transfers

b) Job Position
c) Employee Referrals

Promotion and Transfers:

ITC prefer to fill vacancies through promotion or transfers from within wherever
possible. Promotion involves movement of an employee from a lower level position to higher
level position accompanied by changes in duties, responsibilities, status and value and value.

It may lead to changes in duties and responsibility, working conditions, etc., but not
necessarily salary. Internal promotions and transfers certainly allow people greater scope to
experiment with their career, kindling ambitions and motivating them to take a shot at
something they might otherwise never have considered. The system, of course, works best for
young executives who are willing to take risks.

52
Job Position

Job position is another way of hiring people from within. In this method, the
organization publicizes job openings on bulletin boards, electronic media and similar outlets.
Hindustan lever introduced its version open job position in early 2002 and over 40 positions
have since been filed through the process. HLL even allows its employee to undertake career
shifts, for example from technical position system.

Employee Referrals

Employee referral means using personal contacts to locate job opportunities. It is a

recommendation from a current employee regarding a job applicant. The logic behind
employee referral is that ― it takes one to know one‖ employee working in the organization in
this case, are encouraged to recommend the name of their friends working in other organization
for a possible vacancy in the near future. In fact, this has become a popular way of recruiting
people in the highly competitive information technology industry now a day. Companies offer
rich rewards also to employees whose recommendation are accepted after the routine screening
and examining process is over- and job offers extended to the suggested candidates.

Direct Method

a) Campus Recruitment

It is a method of recruiting by visiting and participating in college campuses and their

placement centres. Here the recruiter‘s visits reputed educational institutions such as IITs,
IIMs colleges and universities with a view to pickup job aspirants having a requisite technical
of professional skills. Job seekers are provided information about the jobs and the recruiter‘s
interne get a snap shot of job seekers through constant interchange of information with
respective institutions. A preliminary screening is done within the campus and the short listed
students are then subjected to the reminder of the selection process. In view of the growing
demand for young managers, most reputed organizations visit regularly and even sponsor
certain popular activities with a view to earn goodwill in the job market. Advantage of this
method include: the placement centre helps locate applicants and provides resumes to
organization; applicants can be pre-screened; applicants will not have to be lured away from a
current job and lower salary expectation.

53
Indirect Method

1) Advertisement

2) Head Hunters

Advertisement

This includes advertisement in newspapers; trade, professionals and technical journals;

radio and TV etc. In recent time this medium became just as colourful lively and imaginative
as consumer advertising. The ad generally gives a brief outline of the job responsibilities,
compensation package, prospects in the organization etc. This method is appropriate when (a)
the organization intends to reach a large target group and (b) the organization wants a fairly
good no. of talented people who are geographically spread out.

Head Hunters

There is an influx of executive search agencies also known as head hunters who
specialize in selection of professionals for very senior or top posts, where applicants are in
short supply and employers have no time to go round in search of the best talents. Such
vacancies are fewer and far between and organizations prefer hiring a head hunter who
maintains confidentiality of the employer and are specialize in recruiting the best talent strictly
as per the job specification. But, these specialists bodies charges hefty professional fees.
However, the high cost is outweighed by the benefit of recruiting the best talent without going
through the cumbersome and time consuming process of internal recruitment system.

Selection Procedure

1. Screening of Application:

a) All application received from various sources will be screened by the concerned
department and HR based on the job description and specification and the applicant
profile.
b) Shorting of prima facile suitable candidates who should be called for test/interview
shall be prepared.
c) The ratio between the number of vacancy and the number of candidate to be called for
test/interview should normally be 1:5.

54
2. Test:
a) Depending on the requirement of the job if required, management may conduct
written/aptitude/psychometric/physical or any other test as deem fit.
b) Short listed application will be send formal letter for appearing test at least 15 days in
advance.
c) Qualifying criteria for the test will be determined by the management depending on the
nature and requirement of the job.
3. Interview:

a) All the candidates short listed for interview will be informed through a formal call letter
for attending interview at least 15 days in advance.
b) The candidate will be interview by the interview panel.

4. Final Selection and Appointment:

a) Recommendation of the interview panel will be put up before the MD by the HR
Department for his approval.
b) Candidates for the officer and above after interviewed by the panel will be finally
interview by the MD.
c) Selection of candidates will be strictly on the basis of merit. Other things being equal
local candidate from state of Bihar will be given preference.
d) Appointment letter will be issued to the finally selected candidates after duly approved
by MD. However, in case appointment letter can initially be issued to the candidates
and the detailed formal appointment letter can be issued at the time of joining.
e) Before letter of appointment is issued to candidates HR department will ensure the
following:
1. Check and verify all the personal details furnished by the candidates.
2. Verify the certificates and other credentials.
3. Make necessary reference/antecedents verifications whenever required.

5. Joining Formalities:

(a)Employees joining shall first report in the HR department will facilitate in completing the
joining formalities such as filling of joining report and other necessary forms.
(b)HR department will ensure that the candidates will be allowed to join subject to their being
found medically.

55
Entry Level Recruitment

ITC visits premier Engineering and Management campuses every year to induct quality
talent for its various Businesses.

i) Manufacturing
ii) Marketing and Human Resources
iii) Trading, Sourcing and Logistics
iv) Finance

Manufacturing

ITC inducts talent for the Technical function from the 5 IITs (Chennai, Delhi, Kanpur,
Kharagpur, Powai) and some of the NITs. Engineers from disciplines such as Mechanical,
Electrical and Electronics, Production Engineering, Chemical and Civil are considered for
placement.

The process starts in August each year with a campus visit and a pre-placement
presentation. This provides an opportunity for young aspirants to learn more about the
Company, its history and achievements, its corporate strategy, details of its various
businesses and the kind of careers they can look forward to.

The selection process is objective and robust. A range of selection tools are used.
These include assessment centres, group tasks and in-depth personal interviews. Candidates
found suitable for employment are immediately given offers to join ITC in July of the
following year. After a comprehensive induction programme, they are assigned to various
businesses of the Company.

Marketing and Human Resources

ITC sources talent from the premier Management Institutes of the country for the
Marketing and HR functions. These campuses include the IIMs, ISB, XLRI, FMS, IIFT,
TISS, JBIMS and Symbiosis.

56
 The pre-placement presentation at campuses, normally in September/October each
year, provides an opportunity for young aspirants to know more about the Company, its
history and achievements, its corporate strategy, details of the various businesses and the kind
of careers they can look forward to.

During these visits, ITC also selects first-year students for Summer Internships during
April to July of the following year.

A team of ITC managers visits campuses once again between December and March
for final placement. The process consists of group discussions and personal interviews
preceded by psychometric tests and assessment centres. Employment offers are made to
selected candidates immediately. On joining ITC in July, candidates undergo an induction
programme before being assigned to one of the Company's businesses.

Trading, Sourcing and Logistics

ITC visits premier institutes such as IIMA, IIFT, IRMA and MANAGE to induct
talent for its Agri Business Division. Pre-placement presentations at campuses normally take
place in September/October each year. These presentations provide an opportunity for young
aspirants to know more about the Company, its history and achievements, its corporate
strategy, details of its various businesses and the kind of careers they can look forward to.

During these visits, first-year students are selected for Summer Internships with ITC
in April to July of the following year. A team of ITC managers visits these campuses once
again between December and March for campus interviews. The process consists of group
discussions and personal interviews preceded by psychometric tests and assessment centres.

Employment offers are made to selected candidates immediately. On joining ITC in

July, candidates participate in an induction programme. Thereafter they are assigned to
responsibilities in Trading, Sourcing and Logistics in the Agri Business Division.

Finance

ITC recruits entry-level talent for the Finance function from amongst qualified
Chartered Accountants and MBAs specializing in Finance.

57
 Candidates are short-listed for selection from a pool of applicants that apply to ITC
on-line through the Company's portal at www.itcportal.com. Recruitment of entry level talent
in the Finance Function takes place twice a year.

Preliminary interviews are held at selected locations. The short-listed candidates are
called to Kolkata for the final selection process which extends over two days. The selection
process comprises psychometric tests, assessment centres, group tasks and personal
interviews. The interviewing panel looks for a strong conceptual base in finance and
accounting. Effective inter-personal skills, integrity, intellectual rigour, a "will do" attitude,
creativity, leadership and high energy are other essential attributes.

Candidates who receive offers of employment undergo a comprehensive induction

programme before being assigned to the Internal Audit function. The tenure in the Internal
Audit function normally extends over a period of 3 years. Following this, they are assigned
operational responsibilities in one of the Company's businesses.

Training and Education

ITC's Human Resource philosophy focuses on meritocracy and capability

development. The Capability Development Agenda aims at strengthening the organisational
capability required in pursuit of ITC's Mission, its Strategic Agenda, the Three Horizon
Growth Strategy and Vision 2010. In line with this agenda, several customised training and
development interventions were offered at Corporate and Divisional levels aimed at
developing functional, behavioural, leadership and management capabilities. Ongoing core
programmes were also redesigned to reflect the new capability requirements. The
development approach had elements beyond training, with the objective of increasing
knowledge of systems and procedures, providing opportunities for on-the-job learning,
encouraging employee participation, etc. The training is mostly online.

The training matrix in the Company endeavours to provide a balance, with a strong
functional bias in the early years, and an emphasis on managerial and business skills in the
mid and late career stages. The programmes include high-level international training events at
key points. Training also seeks to continuously build awareness of other functions at every
stage of the process.

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Table 3.4 Showing Details of Training

Training Management Unionised

No. of employees 6,705 13,657

Man-days of training provided 15,479 24,741

Average hours of training provided 18 14

During 2005-06, ITC invested over 40,000 man-days in training employees across
categories. Apart from this, training was also provided to various employees of service
providers at different locations. The Company, on an average, provided 2 person-days of
training per employee in 2005-06.

The Company Encourage its Managers to Take Sabbaticals for Higher Education

The Company does encourage its managers to do so. In fact, the Company sponsors
identified managers to pursue a full time MBA programme at the IIMs, ISB and other leading
management institutes. Managers are identified on the basis of their performance and
potential. Whilst the manager is away pursuing a full time MBA programme, he continues to
receive his Consolidated Salary and is reimbursed the cost of his education to the extent of
75% of the expenditure actually incurred, subject to a maximum of Rs.10 lakhs. On
completing the MBA programme, the manager returns to a challenging assignment.

Specialists

ITC recognises the need to nurture specialism and expertise in areas that give the
Company a distinct competitive advantage. In keeping with this need, the Company has put
in place a unique strategy to attract and retain "specialists" that is anchored in the following
premises:

a) In each function, certain specific positions require nurturing of specialism and

knowledge. These positions require possession of unique authority over a critical

59
 aspect of the business, are not easily replaceable and require knowledge and skills that
are unique and not common across industries.
b) There are certain positions in any organization where longevity of the individual in
that position leads to acquisition of in-depth knowledge and experience which would
take another individual in that position years to acquire. Therefore, there is a need to
retain individuals in these key positions for as long as is possible.

In keeping with this approach, certain positions have been identified to be "specialist" in
nature. These include Scientist, Leaf Blender, Agronomist, Legal Resource in Trade Marks
and Tobacco and Health, Paper Maker, Forex Dealer, Commodity Trader, Chef, Food and
Beverage specialist, etc.

The remuneration of individuals in these specialist positions is de-linked from the

remuneration matrix applicable to the rest of the business and is determined by the criticality
of skill, individual competence and experience.

The Company strives to encourage individuals in these specialist positions to continue in

them, by rewarding and recognizing their contribution in that position, rather than have them
look to the traditional routes for career progression and enhancement.

Performance Management System

Cornerstones of ITC’s Performance Management System

The cornerstone of the performance management system is the Appraisal System. The
individual agrees his performance objectives at the beginning of the year with his boss. These
objectives naturally flow from the objectives of the unit/business. At the end of the year his
performance is assessed against the objectives set. The appraisal attaches as much importance
to ''how'' results were achieved as to the results themselves. The rating is determined by the
manager's boss and endorsed by his boss. Therefore, two individuals are involved in
assessing a manager's performance.
The appraisal process also gives the individual an opportunity to share in a formal
manner his own career aspirations and what he needs from the organisation to enhance his
own development. Based on an assessment of development needs, a development plan is
drawn up for each manager.

60
 Remuneration changes are made once every year based on the performance rating of
the individual. The entire process is transparent and objective.
Performance Appraisal

Performance appraisal is the process of

1) obtaining,
2) analyzing and
3) recording information

about the relative worth of an employee.

The focus of the performance appraisal is measuring and improving the actual
performance of the employee and also the future potential of the employee. Its aim is to
measure what an employee does.

A performance appraisal, employee appraisal, performance review, or (career)

development discussion is a method by which the job performance of an employee is
evaluated (generally in terms of quality, quantity, cost, and time) typically by the
corresponding manager or supervisor. A performance appraisal is a part of guiding and
managing career development. It is the process of obtaining, analyzing, and recording
information about the relative worth of an employee to the organization. Performance
appraisal is an analysis of an employee's recent successes and failures, personal strengths and
weaknesses, and suitability for promotion or further training. It is also the judgment of an
employee's performance in a job based on considerations other than productivity alone.

Performance Ranking Method

Ranking is a performance appraisal method that is used to evaluate employee

performance from best to worst. Manager will compare an employee to another employee,
rather than comparing each one to a standard measurement. This is one of the oldest and
simplest techniques of performance appraisal. It is quite useful for a comparative evaluation.
Useful when there are several reports from multiple assessors, but does not allow for
individuals to pinpoint their strengths or weaknesses for improvement. This system works
very much on global judgments of performance over all.

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Forced Distribution

This method is based on the assumption that the distribution of employees

performance is always able to be allocated in predetermined directions. Forced ranking is a
method of performance appraisal to rank employee but in order of forced distribution. For
example, the distribution requested with 10 or 20 percent in the top category, 70 or 80 percent
in the middle, and 10 percent in the bottom.

Rater is asked to select statement which is most or least descriptive of the employee.
It is similar to grading on a curve. Predetermined percentages of ratees are placed in various
performance categories. In a group of 20 employees, two would have to be placed in the low
category, four in the below-average category, eight in the average, four above average, and
two would be placed in the highest category. The proportions of forced distribution can vary.
Even if all employees in a unit are doing a good job, the forced distribution approach dictates
that a certain number be placed at the bottom of a graded continuum.

Determination of Career Progression in the Company

ITC believes the responsibility for career development rests both with the individual
and the organisation. While the organisation provides opportunities for learning and growth,
it is the individual's responsibility to ensure he enhances his competencies to shoulder higher
responsibilities. Career development therefore is a two-way process. Above all, the key factor
determining career growth is meritocracy and performance.

Remuneration

ITC believes that managerial remuneration is an important instrument in attracting and

retaining talent and a key component of the performance management system. Three features
of ITC's remuneration strategy are:

a) Remuneration must leverage performance and therefore the need for a strong linkage
between remuneration and performance when considering annual remuneration
reviews as well as when periodically adjusting remuneration for market.
b) Remuneration must be market-led. For this purpose remuneration is reviewed on an
on-going basis in relation to identified benchmark companies to ensure that
remuneration practices are in sync with the competitive situation.

62
 c) Remuneration must take into account "affordability" and the Company's capacity to
pay and updation. The policy is implemented at all locations of hence cannot be
divorced from business reality.

Remuneration of Directors

Remuneration of Chairman and other Executive Directors is determined by the

Compensation Committee comprising only Non-Executive Directors. The recommendations
of the Compensation Committee are considered and approved by the Board subject to the
approval of the Shareholders. The Chairman and Executive Directors are entitled to
Performance Bonus for each financial year up to a maximum of 200% and 150% of their
consolidated salary, respectively, as approved by the Shareholders, and as may be determined
by the Board on the recommendation of the Compensation Committee, based on qualitative
and quantitative assessment of Company performance.

Non-Executive Directors are entitled to remuneration by way of commission for each

financial year, up to a maximum of Rs. 6,00,000/- individually, as approved by the
Shareholders. Non-Executive Directors‘ commission is determined by the Board based, inter
alia, on Company performance and regulatory provisions. Such commission is payable on a
uniform basis to reinforce the principle of collective responsibility. Non-Executive Directors
are also entitled to sitting fees for attending meetings of the Board and Committees thereof,
the limits for which have been approved by the Shareholders. The sitting fees, as determined
by the Board, are presently Rs. 20,000/- for attending each meeting of the Board, Audit
Committee, Compensation Committee, Nominations Committee and Sustainability
Committee and Rs. 5,000/- for each meeting of the Investor Services Committee. Non-
Executive Directors are also entitled to coverage under Personal Accident Insurance.

Equal Remuneration

ITC's compensation philosophy does not differentiate on gender, caste or age. It is

linked to responsibility levels of the role that the incumbent is performing and based on
performance. As part of its compliance, ITC also ensures compliance with the Equal
Remuneration Act which mandates every employer to pay equal remuneration to men and
women employees for the same work or work of similar nature.

63
Elements of the Compensation Package

ITC's remuneration strategy is anchored in three basic principles: market-led,

performance leveraged and the capacity to pay. Remuneration is bench marked with
identified comparator organisations and reviewed periodically.

Apart from the monetary component which comprises Consolidated Salary and
Supplementary Allowance, managers are provided with quality accommodation, generous
loans for asset creation, medical assistance for self and family, leave travel assistance, etc. at
middle and senior levels. Managers are provided with company maintained cars and the
facility of a club membership for business purposes.

All managers are members of ITC's Retirement Funds, the Pension Scheme being one
of the most attractive in the country. Other benefits include the facility of holiday homes,
assistance for further education/self-development etc.
Benefits Provided by ITC to its Employees

a) Competitive Wages
b) Vacation, holiday and sick pay
c) Medical Insurance
d) Domestic Partner Benefits
e) Medical, dental and vision insurance
f) Short and long term disability
g) Employee assistance program
h) Flexible spending account
i) Business travel insurance
j) Employee stock purchase plan
k)Discounted access to fitness facilities

Governance Bodies and Diversity

ITC's approach to its human resource is premised on the fundamental belief of
fostering meritocracy in the organization, which promotes diversity and offers equality of
opportunity to all employees. ITC does not engage in or support direct or indirect
discrimination in recruitment, compensation, access to training, promotion, termination or
retirement based on caste, religion, disability, gender, age, race, colour, ancestry, marital
status or affiliation with a political, religious, union organization or minority group.

64
 The Board of Directors at the apex, as trustees of shareholders, is responsible for the
strategic supervision of the Company. There are 9 Non-Executive Directors and 4 Executive
Directors on the Board which is headed by the Chairman. An indicator of meritocracy is the
appointment of the current Chairman as Director when he was only 37 years old. The Non-
Executive Directors come from different fields, thereby ensuring multidimensional
perspectives in setting the strategic agenda.

The strategic management of the Company rests with the Corporate Management
Committee comprising full time Executive Directors and 4 members drawn from senior
management. The 4 members from senior management represent diverse functions like
Technical, R&D, Human Resources and Corporate Affairs.

The executive management of each business Division is vested with the Divisional
Management Committee (DMC), headed by the Chief Executive. The DMC draws resources
from different functions. Each DMC is responsible for and totally focused on the
management of its assigned business. About 60 senior managers across different age groups
and functional specialisations are represented on the DMCs and SBUs.

Policy to Prevent Discrimination at Workplace

ITC acknowledges that every individual brings a different and unique set of
perspectives and capabilities to the team. A discrimination-free workplace for employees
provides the environment in which diverse talents can bloom and be nurtured. This is
achieved by ensuring that a non-discrimination policy and practice is embedded across the
Company in line with corporate principles and benchmarked business practices.

Diversity and Equal Opportunity

ITC acknowledges that every individual brings a different and unique set of
perspectives and capabilities to the team. A discrimination-free workplace for employees
provides the environment in which diverse talents can bloom and be nurtured. This is
achieved by ensuring that a non-discrimination policy and practice is embedded across the
Company in line with corporate principles and benchmarked business practices.

65
Policy on Freedom of Association

ITC's culture is characterized by cooperative relationships and high employee

involvement that relies on building partnerships and interdependence. Adhering to these
principles has helped build, sustain and strengthen harmonious employee relations in the
organisation.

Policy Prohibiting Child Labour and Preventing Forced Labour from Workplace

The foundation of ITC's "No Child or Forced Labour policy" is based on the
Company's commitment to find practical, meaningful and culturally appropriate responses to
support the elimination of such labour practices. It thus endorses the need for appropriate
initiatives to progressively eliminate these abuses.

66
 CHAPTER IV

LITERATURE REVIEW

BALANCED SCORECARD

4.1 What is the Balanced Scorecard?

The Balanced Scorecard is a performance management tool that enables a company to

translate its vision and strategy into a tangible set of performance measures. However, it is
more than a measuring device. The scorecard provides an enterprise view of an organisation's
overall performance by integrating financial measures with other key performance indicators
around customer perspectives, internal business processes, and organisational growth,
learning, and innovation. Kaplan and Norton describe the innovation of the balanced
scorecard as follows: "The balanced scorecard retains traditional financial measures. But
financial measures tell the story of past events, an adequate story for industrial age companies
for which investments in long-term capabilities and customer relationships were not critical
for success. These financial measures are inadequate, however, for guiding and evaluating the
journey that information age companies must make to create future value through investment
in customers, suppliers, employees, processes, technology, and innovation.‖[1]

According to Kaplan and Norton (1996), ―The Balanced Scorecard provides managers
with the instrumentation they need to navigate to future competitive success‖ [1]. Many books
and articles referring to Balanced Scorecards confuse the design process elements and the
Balanced Scorecard itself. In particular, it is common for people to refer to a ―strategic
linkage model‖ or ―strategy map‖ as being a Balanced Scorecard. Although it helps focus
managers' attention on strategic issues and the management of the implementation of
strategy, it is important to remember that the Balanced Scorecard itself has no role in the
formation of strategy. In fact, Balanced Scorecards can comfortably co-exist with strategic
planning systems and other tools.

The grouping of performance measures in general categories (perspectives) is seen to

aid in the gathering and selection of the appropriate performance measures for the enterprise.
Four general perspectives have been proposed by the Balanced Scorecard:

1) Financial perspective
2) Customer perspective

67
 3) Internal process perspective
4) Innovation and learning perspective

Financial Perspective

The financial perspective addresses the question of how shareholders view the firm
and which financial goals are desired from the shareholder's perspective. The specific goals
depend on the company's stage in the business life cycle.

Customer Perspective

The customer perspective addresses the question of how the firm is viewed by its
customers and how well the firm is serving its targeted customers in order to meet the
financial objectives. Generally, customers view the firm in terms of time, quality,
performance, and cost. Most customer objectives fall into one of those four categories.

Internal Process Perspective

Internal business process objectives address the question of which processes are most
critical for satisfying customers and shareholders. These are the processes in which the firm
must concentrate its efforts to excel.

Learning and Growth Perspective

Learning and growth metrics address the question of how the firm must learn,
improve, and innovate in order to meet its objectives. Much of this perspective is employee-
centred.

4.2 Cause-and-Effect Relationships

The Balanced Scorecard relies on the concept of Strategy developed by Michael

Porter [1]. Porter argues that the essence of formulating a competitive strategy lies in relating a
company to the competitive forces in the industry in which it competes. The scorecard
translates the vision and strategy of a business unit into objectives and measures in four
different areas: the financial, customer, internal business process and learning and growth
perspective. The financial perspective identifies how the company wishes to be viewed by its
shareholders. The customer perspective determines how the company wishes to be viewed by

68
its customers. The internal business process perspective describes the business processes at
which the company has to be particularly adept in order to satisfy its shareholders and
customers. The organisational learning and growth perspective involves the changes and
improvements which the company needs to realize if it is to make its vision come true.

A strategy is a set of hypotheses about cause and effect. The measurement system
should make the relationships (hypotheses) among objectives (and measures) in the various
perspectives explicit, so that they can be managed and validated. The chain of cause and
[1]
effect should pervade all four perspectives of a BSC . For example, the strategy of an
engineering company could be to perform consultancy besides the regular work because it
provides a higher return. Return-on-capital-employed (ROCE) may be a scorecard measure in
the financial perspective. The driver of this measure could be expanded sales to new and
existing customers as a result of a high degree of loyalty among those customers. Thus, new
customers and customer loyalty is included on the scorecard in the customer perspective
because it is expected to have a strong influence on ROCE. A market analysis may have
revealed that there is a need for consultancy. In this case, providing consultancy is expected
to lead to new customers and higher customer loyalty, which, in turn, is expected to lead to
higher financial performance. So new customers, customer loyalty and consultancy (which
could be measured by the number of consultancy projects that has been carried out) are
incorporated into the customer perspective of the scorecard.

The process continues by asking which internal processes for the engineering
company are necessary in order to practice consultancy. To achieve this, the business may
need new quality consultancy products. The new products must first be developed and
afterwards tested on quality. Developed consultancy products and process quality on
consultancy products are factors that could be scorecard measures in the internal perspective.
The engineering company can develop consultancy products by training its operating
employees in the required skills. If the company also engages experienced consultants, this
will shorten the development time of the consultancy products. These experienced
consultants can act as mentor for the trained employees. Experienced consultants and trained
employees for consultancy are objectives that would be candidates for the learning and
growth perspective.

69
 Because Kaplan and Norton assume the following causal relationship: measures of
organisational learning and growth -measures of internal business processes - measures of the
customer perspective - financial measures, the measures of organisational learning and
growth are therefore the drivers of the measures of the internal business processes. The
measures of these processes are in turn the drivers of the measures of the customer
perspective, while these measures are the drivers of the financial measures. According to
Kaplan and Norton a good balanced scorecard should have an appropriate mix of outcomes
(lagging indicators) and performance drivers (leading indicators of the business unit‘s
strategy [1].

Key Performance Indicators

Metrics used in the BSC are typically called Key Performance Indicators (KPIs)
because they measure how well the organisation performs against predefined goals and
targets. There are two major types of KPIs: leading and lagging indicators. Leading indicators
measure activities that have a significant effect on future performance, whereas lagging
indicators, such as most financial metrics, measure the output of past activity. Leading
indicators are powerful measures because it gives managers more time to influence the
outcome.

BSC Usage in Small Medium Sized Enterprises

Nowadays, many large companies use a performance measurement system like the
BSC but many smaller companies have no performance measurement system. In a recent
study Sousa et al. indicate that the SMEs surveyed, recognise the importance of performance
[2]
and a performance measurement system but their level of use was significantly lower .
Speckbacher et al. found a significant association of size (measured as the number of
employees) and BSC usage; larger companies are more likely to have implemented a BSC [3].
However, the examined companies are large and not small or medium sized organisations.
Neely et al. pointed out that measurement is a luxury for SMEs. They concluded that the cost
[4]
of measurement is an important issue to managers in SMEs . Also, nowadays most SMEs
use an information system by which data for measures can easily be obtained, but the costs of
implementing and purchasing a scorecard system can still be an issue to managers.

70
4.3 Types of Balanced Scorecard

Speckbacher, Bischof and Pfeiffer found in their large-scale research with high response
under German companies quoted on the stock exchange a high support for ambivalence in the
BSC concept [3]. They defined three types of BSCs:

1) Type I BSC: a specific multidimensional framework for strategic performance

measurement that combines financial and non-financial strategic measures.
2) Type II BSC: a Type I BSC that additionally describes strategy by using cause-and-
effect relationships.
3) Type III BSC: a Type II BSC that also implements strategy by defining objectives,
action plans, results and connecting incentives with BSC.

50% of the examined companies that use the BSC appeared to work with a type I BSC,
21% with a type II BSC and 29% with a type III BSC. Only the companies that use type III
BSC are in position to fully benefit of the BSC as a performance management system that
bridges the gap between strategic plans and real activities. However, linking the reward
[1]
system to the BSC has some risks . The question arises whether or not measures on the
BSC are right. Are the data for the selected measures reliable? Could there be unintended or
unexpected consequences in how the targets for the measures are achieved? Despite the risks
of linking the reward system to BSC, it seems reasonable to assume that companies are able
to steer the organisation according to the strategy (described by BSC measures and cause-
[5]
and-effect chains) if they reward managers on the basis of BSC measures . The study of
Speckbacher et al. shows that companies implementing a more developed BSC (particularly
Type III) rely more on the BSC approach and are more satisfied with their BSC than those
with a less developed BSC.

In the majority of organisations, the implementation of the BSC is a difficult process. The
types defined can be interpreted as three typical evolutional steps in the process of BSC
implementation [3]. Half of the companies that use the BSC were not able to obtain cause-and-
effect relationships. One reason for this could be that those companies have only recently
started the process of implementation. It is also likely that a large number of the companies,
that are using the type I BSC, might find it too difficult to obtain cause-and-effect
relationships.

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The Process of Building a Balanced Scorecard

While there are many ways to develop a Balanced Scorecard, Kaplan and Norton defined
a four-step process that has been used across a wide range of organizations.

1. Define the measurement architecture - When a company initially introduces the

Balanced Scorecard, it is more manageable to apply it on the strategic business unit
level rather than the corporate level. However, interactions must be considered in
order to avoid optimizing the results of one business unit at the expense of others.
2. Specify strategic objectives - The top three or four objectives for each perspective are
agreed upon. Potential measures are identified for each objective.
3. Choose strategic measures - Measures that are closely related to the actual
performance drivers are selected for evaluating the progress made toward achieving
the objectives.
4. Develop the implementation plan - Target values are assigned to the measures. An
information system is developed to link the top level metrics to lower-level
operational measures. The scorecard is integrated into the management system.

Conditions for Implementing the Balanced Scorecard

Nowhere in their books and articles do Kaplan and Norton describe the conditions an
organisation must in order to be able to apply the Balanced scorecard. The way they describe
organisations that applied the BSC in numerous examples suggests that this method is
universally applicable.

According to Kaplan and Norton, the Balanced Scorecard enables companies to modify
strategies. Companies in a highly dynamic environment have to change their strategy
constantly, which, leads to frequently changing the measures in the BSC. In general, it is
difficult for an organisation to establish performance measures for activities with which the
organisation has very little or no experience. Therefore, as measuring effects is particularly
difficult in companies which constantly have to adapt to new situations, the BSC is not
applicable for companies in highly dynamic environments.

Implementing Balanced Scorecards typically includes four processes:

1. Translating the vision into operational goals;

72
2. Communicating the vision and link it to individual performance;

3. Business planning;

4. Feedback and learning, and adjusting the strategy accordingly.

4.4 Learning and Growth Perspective

The Learning & Growth Perspective focuses on the intangible assets of an organization,
mainly on the internal skills and capabilities of the employees that are required to support the
value-creating internal processes. The Learning & Growth Perspective focuses on:

a) Human Capital-Jobs and people issues

b) Information Capital- Systems and technology issues
c) Organization capital- Organizational climate and quality of work-life

The Learning and Growth objectives describe how the people, technology, and
organizational climate combine to support strategy. Measures in this perspective are lead
indicators for improvements in the internal processes, customer and financial perspectives.
The diversity learning and growth perspective reflects a statistical summary of the
organization‘s ability to maintain and enhance the capability of its diverse intellectual assets.
It includes priorities to create a climate that supports organizational change, innovation, and
growth. It enables the organization to ensure its capacity for long-term renewal by effectively
developing and utilizing its diverse workforce for improved performance, a prerequisite for
survival in the long run. In this perspective the organization should consider not only what it
must do to maintain and develop the know-how required for understanding and utilizing its
diverse workforce, but also determining what‘s needed to build a long-term sustaining
infrastructure to enhance its core competency base.

By doing so, the organization will be in a much better strategic position to satisfy its
employee and customer needs as well as to sustain the necessary efficiency and productivity
of its processes, which create financial value. Intense global competition requires that
organizations continually improve their capabilities for delivering value to customers and
share- holders. Organizational learning and growth come from three principal sources:
people, systems, and organizational procedures. Scorecards typically reveal large gaps
between the existing capabilities of people, systems, and procedures and what is required to

73
achieve breakthrough performance. To close these gaps, businesses have to invest in re-
skilling employees, enhancing information technology and systems, and aligning
organizational procedures and routines.

An innovative idea or core competency skill level does not have a race, color, creed, or
specific ethnicity. It simply reflects someone with this level of competency or skill.
Depending on the organization‘s ability to manage diversity and to create an environment
where people can do their absolute personal best work, employees will either stay or leave.
The degree to which the organization is willing to invest in all employees through its training,
career planning, mentoring, and succession planning efforts to build core capabilities and the
like will heavily influence the employee‘s perception of the workplace and the organization‘s
ability to meet its competitive challenges.

This perspective includes employee training and corporate cultural attitudes related to
both individual and corporate self-improvement. In a knowledge-worker organization, people
-- the only repository of knowledge -- are the main resource. In the current climate of rapid
technological change, it is becoming necessary for knowledge workers to be in a continuous
learning mode. Metrics can be put into place to guide managers in focusing training funds
where they can help the most. In any case, learning and growth constitute the essential
foundation for success of any knowledge-worker organization.

Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things
like mentors and tutors within the organization, as well as that ease of communication among
workers that allows them to readily get help on a problem when it is needed. It also includes
technological tools; what the Baldrige criteria call "high performance work systems."

The customer-based and internal business process measures on the balanced scorecard
identify the parameters that the company considers most important for competitive success.
But the targets for success keep changing. Intense global competition requires that companies
make continual improvements to their existing products and processes and have the ability to
introduce entirely new products with expanded capabilities. A company's ability to innovate,
improve, and learn ties directly to the company's value. That is, only through the ability to
launch new products, create more value for customers, and improve operating efficiencies
continually can a company penetrate new markets and increase revenues and margins – in
short, grow and thereby increase shareholder value.

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An effective strategic learning process has three essential ingredients:

1. A shared strategic framework that communicates the strategy and allows each
participant to see how his or her activities contribute to achievement of the overall
strategy;
2. A feedback process that collects performance data about the strategy and allows the
hypotheses about interrelationships among strategic objectives and initiatives to be
tested: and
3. A team problem-solving process that analyzes and learns from the performance data
and then adapts the strategy to emerging conditions and issues.

The learning and growth perspective on the balanced scorecard develops objectives and
measures to drive organizational learning and growth. The objectives established in the
learning and growth perspective provide the infrastructure to enable ambitious objectives in
the other three perspectives to be achieved. Objectives in the learning and growth
perspective are the drivers for achieving excellent outcomes in the first three scorecard
perspectives. The Balanced Scorecard stresses the importance of investing for the future, and
not just in traditional areas for investment, such as new equipment and new product research
and development.

There are three principal categories for the learning and growth perspective:

1. Employee Capabilities
2. Information System Capabilities
3. Motivation, empowerment and alignment

Employee Capabilities

Core Employee Measurement Group

The three core employee measurements are:

1. Employee retention
2. Employee productivity
3. Employee satisfaction

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 Results

Employee Employee
Retention Productivity

Employee
Satisfaction

Enablers

Staff Technology Climate for

Competencies Infrastructure Action

Figure 4.1 Showing the Core Measurements

Measuring Employee Retention

Employee retention captures an objective to retain those employees in whom the

organization has a long-term interest. The theory underlying this measure is that the
organization is making long-term investment in its employees so that any unwanted
departures represent a loss in the intellectual capital of the business. Long-term, loyal
employees carry the values of the organization, knowledge of organizational processes and
the sensitivity to the needs of the customers. Employee retention is generally measured by
percentage of key staff turnover.

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Measuring Employee Productivity

The simplest productivity measure is revenue per employee. This measure represents
how much output can be generated per employee.

Measuring Employee Satisfaction

The employee satisfaction objective recognizes that employee morale and overall job
satisfaction are now considered highly important by most organizations. Satisfied workers are
a precondition for increasing productivity, responsiveness, and quality and customer service.

4.5 Employee Satisfaction

Importance of Employee Satisfaction

According to Marc Drizin, an employee loyalty specialist, ―Employees are assets

with feet. They‘re the only resource companies who have made a conscious decision to return
[6]
the next day‖ . A 2003 J.D. Power and Associates survey concluded that there is another
customer builders need to focus on satisfying besides the obvious customers. Builders need to
focus on ―the rank-and-file managers and employees who work for them‖ [7].

The effects employee satisfaction has on an organization‘s business are numerous.

Some of the most relevant and profitable effects are described below.

Studies show that businesses that excel in employee satisfaction issues reduce
turnover by 50% from the norm, increase customer satisfaction to an average of 95%, lower
labor cost by 12% and lift pre tax margins by an average of 4% [8].

Not only are employee turnover, customer satisfaction, labor costs, and pre tax
margins improved by addressing employee satisfaction, but customers, products, and the
company itself are also positively affected.

Profit and growth are stimulated directly (and primarily) by customer loyalty.
Customer loyalty is a direct consequence of customer satisfaction. Customer satisfaction is
heavily influenced by customer perceptions of the value of services they receive. Value is
created by satisfied, loyal and productive employees.

77
 Employees who feel a sense of teamwork and common purpose, a strong commitment
to communication, and managerial empowerment are most able, and willing, to deliver the
results that customers expect [9].

Don Wainwright, president of Wainwright Industries, a winner of the Malcolm

Baldrige National Quality Award, made the point in 2001 that ―Jack Welch uses only three
indicators to run giant General Electric. He‘ll tell you that the most effective and only
numbers he needs to know are, in order of importance: employee satisfaction, customer
[9]
satisfaction and cash flow‖ . Studies completed in 1999 by the Hay Group for Fortune
magazine have shown that even the most admired companies – Intel, Coca-Cola, and GE to
name a few – each embrace the same basic company cultural values: teamwork, customer
focus, innovation, and fair treatment of employees [10].

Valued Employees

Enabling employees to freely contribute in an organization can have a substantial

positive effect on a company. Keeping employees informed and getting them involved in
decisions that affect their work builds trust and feelings of self-worth. Involving employees
helps employees feel that they are trusted and needed, which increases their contributions and
production. Jack Welch, a retired CEO of GE once stated, ―A company can boost
productivity by restructuring, removing bureaucracy and downsizing, but it cannot sustain
high productivity without cultural change, without totally involving the individual who is
closest to the work and therefore knows it better than those who manage it‖ (―The High-
Performing Contractor‖, 2004).

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 CHAPTER V

DATA ANALYSIS AND INTERPRETATION

The success of any organization depends on its employees. The employees need to
have a certain set of competencies to perform specific jobs. It is also necessary to have a clear
understanding of the competencies required to successfully perform the job.

Every employee must be aligned with the Vision of the organization. Learning and
growth helps to find out that in order to achieve the vision of the organization, how should it
sustain its ability to change and improve. It is based on the vision that their targets are fixed.
If we break down the vision into still smaller parts, it will be possible to understand the
objectives to be achieved, measures to be taken to achieve those objectives, targets to be met
and the initiatives to be taken from the part of the management and the employees.
Everything begins from the vision of the Company.

There are certain aspects for the learning and growth. The important aspects in the
learning and growth model that are to be analysed are:

1) Value Creation
2) To be highly competitive
3) To remain as the leader for years
4) Tax payment
5) Creating value for the stakeholders

The Vision of ITC is:

“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”.

When we break up the vision of the company and analyse it closely, there are various
objectives that can be derived from it. The various objectives that are stated are:

Objective 1 - To be one of India‘s most valuable and competitive corporations

Objective 2 -To maintain this position continuously over years to come and remain
competent

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Objective 3 - To serve the Indian economy through creating value

Objective 4 - To create value for the stakeholders of the organization and also to be loyal to
them

These objectives are to be achieved in order to remain one of the most valuable
company‘s in the years to come. There are certain measures that are taken by the company
for achieving these objectives. So, the objective of this study is to find out the various
measures that are necessary for achieving the objectives and to find out and create a learning
and growth model for the company for seven years based on this. This will help to understand
whether the steps taken by the company is sufficient for continuing as the leader in the
market.

Table 5.1 Showing the Objectives and the Measures

Objective Specific Measure

Sustain ITC‘s position as one of India‘s most Financial Data analysis-ROI, ROCE,

valuable corporations Dividend

Create value for the Indian economy Tax payment, CSR activities, awards and

recognitions received for these initiatives

Create value for its stakeholders Dividend payout

Analysis of the Objectives

I. The first two objectives are taken and analysed together as both these are quite
similar and same measures are used to achieve them. The first two objectives are:

Objective 1 - To be one of India‘s most valuable and competitive corporations

Objective 2 -To maintain this position continuously over years to come and remain
competent

In short, the main components of these objectives are:

a)Value Creation

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b) To be highly competitive

c) To remain as the leader for years

Value Creation

From an accounting perspective, profit can be defined as the amount by which revenues
exceed costs. In the simplest cases, this profit definition may be good enough to define value
creation as well. In order for value to be created, the business must return economic profits. If
the business is profitable from an accounting perspective but not profitable enough to provide
economic profits, the business will be worth less that the amount invested in it and value will
have been destroyed. Similarly, if the business is profitable and provides a fair return on the
amount invested but nothing more, the business will be worth an amount equal to that
invested and value will not have been created. Value creation is a never-ending cycle.
Without Constant inspection, value will not be created at the maximum pace.

Value creation can be viewed from two angles. It can be either:

a) The Company respecting and giving value to its employees or

b) The employees adding value to the Company or
c) The Company creating and providing value for its customers
Value creation is studied and understood in terms of profitability of the company that is,
whether the Company is making profit year after year and shows a steady growth.

Profitability is measured using:

1) Return on Investment (ROI)

2) Return on Capital Employed (ROCE)

Return on Investment

A performance measure used to evaluate the efficiency of an investment or to

compare the efficiency of a number of different investments. To calculate ROI, the benefit
(return) of an investment is divided by the cost of the investment; the result is expressed as a
percentage or a ratio. Return on Investment (ROI) is also called the rate of return (ROR) and
is a measure of the performance of any investment. It is the ratio between the financial
benefit or loss of an investment and the amount of money invested.

81
The return on investment formula:

ROI= (Gain from Investment – Cost of Investment)

Cost of Investment

Return on investment is a very popular metric because of its versatility and simplicity.
That is, if an investment does not have a positive ROI, or if there are other opportunities with
a higher ROI, then the investment should be not be undertaken. Non-financial factors like
innovation, people and ideas are difficult to quantify, rarely acknowledged in accounting
methods and not adequately measured, managed or reported on by organisations. However,
these are some of the critical sources of value that can be utilised by companies to improve
their competitive advantage.

Return on Investment of ITC shows a growing trend, which points towards greater
profitability of the Company. The gross income of the Company is also growing year after
year. The following graph shows the growing trend of the Company.

The gross income has increased tremendously from 2001 – 2010. The gross income
during the year 2009-10 is Rs. 26863 Crores.

Figure 5.1 Showing the ROI of the Company

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Return on Capital Employed

ROCE compares earnings with capital invested in the company. It is similar to Return
on Assets (ROA), but takes into account sources of financing. It is a ratio that indicates the
efficiency and profitability of a company's capital investments.

The formula for calculating ROCE is:

ROCE = EBIT

Capital Employed

ROCE should always be higher than the rate at which the company borrows,
otherwise any increase in borrowing will reduce shareholders' earnings.

Figure 5.2 Showing the ROCE of the Company

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 The growth of a Company is determined by looking at its sales and the earnings

growth rate. The following table shows the sales and the PAT of the Company for the five

years:

Table 5.2 Showing Sales and Profit for the Years 2006-2010 (Rs. in Crores)

Year 2010 2009 2008 2007 2006

Sales 18,567.45 14,985.81 14,032.20 12,313.83 9,798.33

Profit After Tax 4,061.00 3,263.59 3,120.10 2,699.97 2,235.35

The financial health of a company is dependent on a combination of profitability,

short-term liquidity and long term liquidity. Companies, which are profitable, but have poor
short term or long term liquidity measures, do not survive the troughs of the trade cycle. Also
firms, which are not profitable but are cash rich, do not survive in the long term either. Such
companies are taken over for their cash flow or by others who believe that they can improve
the profitability of the business. Thus, those companies that do succeed and survive over the
long term have a well-rounded financial profile, and perform well in all aspects of financial
analysis. Profitability ratios reflect the business environment of the time. The profitability
ratios of the Company are given in the following table.

Table 5.3 Showing the Key Profitability Ratios

Return on Total Assets (ROTA) 22.55%

Return on Capital Employed (ROCE) 28.76%

Net Profit Margin 21.30%

The Company‘s profitability ratios show that the Company‘s position in the industry is quite
strong and has the possibility of further growth over the years to come.

84
Table 5.4 Sowing the Company’s Performance against its Competitors in the Cigarette
Segment for the Financial Year 2009-10:

Sales (Rs PAT (Rs Market Cap (Rs

Company
cr.) cr.) cr.)

ITC Ltd. 18,567.45 4,061.00 114,537.58

Godfrey Philips India Ltd. 1,119.84 108.90 1,928.25

VST Industries Ltd. 470.54 62.05 857.88

Golden Tobacco Ltd. 86.82 0.25 179.08

RTCL Ltd. 1.20 0.16 5.39

This shows that the Company is way ahead of its competitors in terms of sales as well
as profit. ITC alone accounts for 60% volume market share and 70% by value of all filter
cigarettes in India. Earlier the tobacco business contributed to 100% of the Company‘s
revenue. It was completely dependent on the income from tobacco business. But after the
diversification of the Company into various other sectors, the dependence on the tobacco
revenue has decreased greatly over the years. It has thus slowly overcome its weakness of
complete dependence on the cigarette revenue.

The next objective is regarding serving the Indian economy. The objective is:

Objective 3 - To serve the Indian economy through creating value

ITC is a responsible citizen that gives great importance to serving the economy and
making it better. It is committed to protecting the environment in which it operates. It also
works for the development of the community and also to providing education for the
children. As a responsible citizen, it works towards the betterment of the Indian economy.

ITC's aspiration to create enduring value for the nation provides its employees the
inspirational motive force to sustain growing shareholder value. This compelling vision is
called "A commitment beyond the market". 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 the larger value chain of which it is a part.

85
 ITC, as a truly ‗Indian‘ company, whilst recognising the need to create a fair reward for
shareholders, goes the extra mile, in partnership with other participants in the economy, to
create conducive conditions for international competitiveness towards maximising value for
the Indian society.

The depth of ITC's commitment to the Indian economy is manifest in the way its diverse
businesses contribute to strengthening their related value chains – through R&D, extension
services, IT-enablement and the social and economic empowerment of the marginalised. The
most telling example of this commitment is ITC's path breaking initiative in building
sustainable rural partnerships, which carry the potential to transform the landscape of rural
India and the lives of our rural population.

ITC's "commitment beyond the market" encompasses the larger social canvas to include
the preservation of India's cultural heritage. ITC is particularly proud of its pioneering
contribution in the area of Hindustani classical music.

As a concerned corporate citizen, ITC is committed to the highest standards in the key
areas of Environment, Occupational Health and Safety (EHS). ITC strives to sustain and
continuously improve its EHS standards to match the finest international benchmarks.

The special feature that follows captures ITC's inspired commitment to create and sustain
a model that harmonises service to society with enhancing shareholder value.

The measures for achieving this objective are:

1) Tax payment

2) CSR activities, awards and recognitions received for these initiatives

Tax payment

The tax paid by the Company helps in the growth of the Indian economy. The tax
payment of the Company has been increasing over the years. The tax paid by the Company
during the years 2007, 2880 2009 and 2010 are as follows:

Tax paid by the Company for the year 2007 – Rs.1226.73 Crores

Tax paid by the Company for the year 2008 – Rs.1451.67 Crores

86
Tax paid by the Company for the year 2009 – Rs. 1562.15 Crores

Tax paid by the Company for the year 2010 – Rs. 1954.31 Crores

From the above data it is clear that the tax paid by the Company is increasing over the years.

CSR Activities

The Company is creating value to the Indian economy through its various CSR
initiatives. There are a number of CSR initiatives that the Company has taken up and for this
the Company has won numerous awards as well. Corporate Strategies are designed to create
enduring value for the nation and the shareholder, through leadership in each business and the
attainment of world-class competitive capabilities across the value chain.

Being a socially responsible corporate citizen, ITC endeavours to create value for the
Indian society in multiple ways, one of them being ―Preservation of India‖ rich culture
heritage. ITC has made significant contribution to the promotion of Indian classical music,
theatre, art and cuisine.

As a responsible corporate citizen, ITC promotes art, culture and education. Besides
working for the protection and enrichment of the environment and over all social
development, ITC also looks into:

i) Community development.

ii) Education.

iii) Protecting the environment.

ITC‘s CSR initiatives include:

A) Environmental

i) ITC has been Carbon Positive 3 years in a row.

ii)Water Positive 6years in a row.

iii)100% solid waste recycling

87
B) Social

i)ITC's businesses generate livelihoods for over 5 million people.

ii) ITC‘s globally recognised e-Choupal initiative is the world's largest rural digital
infrastructure benefiting over 4 million farming families. The e-choupal model has been
specifically designed to tackle the challenges posed by the unique features of Indian
agriculture, characterized by fragmented farms, weak infrastructure and the involvement of
numerous intermediaries, among others.

iii) ITC‘s Social and Farm Forestry initiative has greened over 80,000 hectares creating an
estimated 35 million person days of employment among the disadvantaged.

iv) ITC‘s Watershed Development Initiative brings precious water to nearly 35,000 hectares
of dry lands and moisture-stressed areas.

v) ITC‘s Sustainable Community Development initiatives include women empowerment,

supplementary education, integrated animal husbandry programmes.

vi) The first ITC Sangeet Sammelan showcasing the best in Indian classical music was held
in Delhi in 1971.

For its CSR initiatives, the Company has won several prestigious awards. These include:

a) ITC has won the Golden Peacock Awards for 'Corporate Social Responsibility (Asia)' in
2007, the Award for ‗CSR in Emerging Economies 2005‘ and ‗Excellence in Corporate
Governance' in the same year.

b) The Best Corporate Social Responsibility Practice Award 2008 jointly instituted by the
Bombay Stock Exchange, Times Foundation and the NASSCOM Foundation.

c) ITC is the first Indian company and the second in the world to win the prestigious
Development Gateway Award. It won the Award for the year 2005 for its e-Choupal
initiative which has achieved the scale of a movement in rural India. The Development
Gateway Award recognizes ITC's e-Choupal as the most exemplary contribution in the field
of Information and Communication Technologies (ICT) for development during the last 10
years. ITC e-Choupal won the Award for the importance of its contribution to development

88
priorities like poverty reduction, its scale and reliability, sustainability and transparency. The
company also won the award in 2004 for its e-Choupal initiative.

d) ITC has won the inaugural 'World Business Award', the worldwide business award
recognising companies who have made significant efforts to create sustainable livelihood
opportunities and enduring wealth in developing countries.

e) The Corporate Social Responsibility Crown Award for Water Practices from UNESCO
and Water Digest for its distinguished work carried out in the water sector in India. ITC also
received the National Award for Excellence in Water Management 2007 in the 'beyond the
fence' category from the CII Sohrabji Godrej Green Business Centre for its leadership role in
implementing water and watershed management practices.

f) The watershed programme also won the Asian CSR Award 2007 for Environmental
Excellence given by the Asian Institute of Management.

The CSR activities of the Company and the various awards that the Company has won for
these activities clearly indicate towards the fact that the Company is creating value for the
Indian economy. This shows that the Company‘s objective of creating value for the Indian
economy is necessarily undertaken and fulfilled.

Objective 4: To create value for the stakeholders of the organization and also to be loyal to
them

This objective is determined by analysing the financial data of the Company.

Shareholders are very important as far as any business is concerned. This objective helps
to understand how the Company treats and value its shareholders. A company can be said to
be creating value for its stakeholders if it declares maximum dividend. Dividends are
payments made by a corporation to its shareholder members. It is the portion of corporate
profits paid out to stockholders. When a corporation earns a profit or surplus, that money can
be put to two uses: it can either be re-invested in the business (called retained earnings), or it
can be paid to the shareholders as a dividend.

In order to keep up the expectation of shareholders and also for a secure future so that
their income increases, the Company has declared a dividend of Rs.3.50 per share (previous
year: Rs.3.10 per share), for the year 2007-2008.

89
 The dividend payout of the Company has been increasing over the years. The dividend
payout for the year 2008 was 13% more than the previous year. In the year 2009, it was 6%
more and in the year 2010, there was an increase of 23%.

The following table shows the dividend history of the Company for the past five financial
years.

Table 5.5 Showing the Company’s Dividend History

FINANCIAL YEAR DIVIDEND PER TOTAL DIVIDEND (RS.

SHARE(RS) IN CRORE)
2009-10 10.00 3818.18
2008-09 3.70 1396.53
2007-08 3.50 1319.02
2006-07 3.10 1166.29
2005-06 2.65 995.12

Form the table it is clear that the Company‘s dividend has been increasing over the
years. The Company declared the maximum dividend in the financial year 2009-10.

ITC's Core Values are aimed at developing a customer-focused, high-performance

organisation which creates value for all its stakeholders:

1) Trusteeship

2) Customer Focus

3) Respect for People

4) Excellence

5) Innovation

6) Nation Orientation

Shareholder Satisfaction Survey

The shareholder satisfaction survey is carried out to ensure the satisfaction of the
shareholders. In the Shareholder Satisfaction Survey that is conducted during every year, the
investors express a high degree of satisfaction towards the working of the Company.

90
Shareholder / Investor Complaints

The Company attends to Shareholder / Investor complaints and other correspondence

generally within a period of five working days except where constrained by disputes or legal
impediments.

The Company received just one complaint relating to non-receipt of share certificates
during the financial year ended 31st March, 2010. This shows that the Company shows great
interest in keeping the shareholders highly satisfied and also takes timely steps in resolving
their complaints.

Evaluation of Learning and Growth Perspective of ITC Ernakulam Division

Learning and growth perspective of the balanced scorecard focuses in the internal
activities of the organization, mainly the employees. The degree to which the organization is
willing to invest in learning and growth (development) of employees through its training,
career planning, mentoring, and succession planning efforts to build core capabilities and the
like will heavily influence the employee‘s perception of the workplace and the organization‘s
ability to meet its competitive challenges. All efforts in this direction will result in job
satisfaction, loyalty to work for long and increased productivity of the workers.

There are three principal categories for the learning and growth perspective:

1) Employee Capabilities

2) Information System Capabilities

3) Motivation, empowerment and alignment

This study specifically covers the employee capabilities. For measurement of employee
capabilities, Balanced Scorecard normally adopts the following measurements:

1) Employee Retention

2) Employee Productivity

3) Employee Satisfaction

Therefore in order to understand the learning and growth aspect of the division, it is
important to understand the level of satisfaction of the employees, the level of employee
retention as well as the productivity of the employees in the division.

91
Measuring Employee Retention

Employee Retention involves taking measures to encourage employees to remain in

the organization for the maximum period of time. Corporates are facing a lot of problems in
employee retention these days. Hiring knowledgeable people for the job is essential for an
employer. But retention is even more important than hiring. There is no dearth of
opportunities for a talented person. There are many organizations which are looking for such
employees. If a person is not satisfied by the job he‘s doing, he may switch over to some
other more suitable job. In today‘s environment it becomes very important for organizations
to retain their employees.

The top organizations could reach the top and remain there on the top because they
value their employees and they know how to keep them glued to the organization. Employees
stay in an organization only if he feels that remaining in the organization will help him in
attaining his career growth objectives.

Employee retention is measured by using the percentage of key staff turnover.

The formula for finding out the retention rate is:-

Total number of active employees during the year – Number of employees who

left the division during the year *100

Average active employees in the same year

Employee retention in the organization for the years 2008, 2009 and 2010 are measured in the
following way:

Total number of employees in the organization for the year 2008 was 68. The number of
employees who left the organization during the year was 4.

Average active employees in the year = 68+64 = 66

2
The retention rate for the year 2008 = 68-4/66*100 = 96%

Therefore the percentage of retention for the year 2008 was 96%.

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 At the starting of the financial year 2009, 7 more employees joined the Company.
Therefore, the total number of employees in the organization for the year 2009 was 71. The
number of employees who left the organization during the year was 4.

Average active employees in the year = 71+67 = 69

2
The retention rate for the year 2009 = 71- 4/69*100 = 97%

Therefore the percentage of retention for the year 2009 was 97%.

At the starting of the financial year 2010, 7 more employees joined the Company.
Therefore the total number of employees in the organization for the year 2010 was 74. The
number of employees who left the organization during the year was 2.

Average active employees in the year = 74+72 = 73

2
The retention rate for the year 2009 = 74- 2/73*100 = 98%

Therefore the percentage of retention for the year 2010 was 98%.

From this it is clear that the retention rate in the organization has been increasing over
the years. The number of employees in the organization has also been increasing as well.

Measuring Employee Productivity

Creating a work environment in which employees are productive is essential to

increased profits for your organization, corporation or small business. Principles of
management that dictate how, exactly, to maximize employee productivity centre around two
major areas of focus: personal motivation and the infrastructure of the work environment.

One of the key factors in leveraging human resources to produce the most is found
through motivational incentives. While the most obvious incentive for increasing employee
productivity is often thought to be based on salary and promotions, this is not always the
case. In fact, recent thought on the true nature of optimal human resource management has
concluded that in a large number of cases, salary has less to do with motivation than do other
important factors.

93
The simplest method of measuring employee productivity is to find out the revenue per
employee. The formula for calculation this is:-

Total turnover of the division during the year

Average number of employees who worked in the division during the year

The productivity per employee for the years 2008, 2009 and 2010 is calculated as follows:

The total turnover of the division for the year 2008 was 87 crores. The total number of
employees in the organization during the year was 68.

The productivity per employee = 87/68 = 1.28 crores

Therefore the productivity per employee during the year 2008 was 1.28 crores.

The total turnover of the Company for the year 2009 was 91 crores. The total number
of employees in the organization during the year was 71.

The productivity per employee = 91/71 = 1.28 crores

Therefore the productivity per employee during the year 2009 was 1.28 crores.

The total turnover of the Company for the year 2010 was 94 crores. The total number
of employees in the organization during the year was 74.

The productivity per employee = 94/74 = 1.27 crores

Therefore the productivity per employee during the year 2010 was 1.27 crores.

From this it is clear that the productivity per employee has been fluctuating. It has not
shown a steady increasing trend. It must also be noted that the number of the employees as
well as the turnover of the division has been increasing over the years.

Measuring Employee Satisfaction

Satisfied employees are the most important aspect for the growth of any organization.
Employee satisfaction is the terminology used to describe whether employees are happy and
contented and fulfilling their desires and needs at work. Many measures purport that

94
employee satisfaction is a factor in employee motivation, employee goal achievement, and
positive employee morale in the workplace.

Factors contributing to employee satisfaction include treating employees with respect,

providing regular employee recognition, empowering employees, offering above industry-
average benefits and compensation, providing employee perks and company activities, and
positive management within a success framework of goals, measurements, and expectations.

The best method for measuring employee satisfaction is by using employee

satisfaction questionnaire.

Measurement of Job Satisfaction at ITC Ernakulam Division

In order to find out the satisfaction level of the employees at ITC, a questionnaire
containing 10 questions were administered among the 45 employees of ITC. The respondents
were asked to record their satisfaction on 11 aspects related to employee satisfaction and their
responses were measured using a five point likert scale ranging from definitely agree to
definitely disagree. As all the questions were framed as positive statements, scores ranging
from 1 to 5 were awarded for definitely disagree to definitely agree respectively.

Table 5.6 Showing Frequency of Work Experience at ITC

Experience range Frequency Percent

0-1 year 13 28.9

1-2 years 13 28.9

2-3 years 9 20.0

More than 3 years 10 22.2

Total 45 100.0
Source: Sample Survey

This question is asked in order to understand how well the employee knows about the
organization-the working environment, the pay package and so on. It is to know about the
employee‘s level of understanding about the organization. The employees who have been
working for quite a long time will have a better understanding of the organization. This will
give a better insight into the climate of the organization.

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 The analysis of this question shows that 28.9% of the employees working in the
organization are either freshers or the same percent have been working for 1-2 years. 20% of
the employees have been working for 2 to 3 years. 22.2% of the employees have been
working for more than3 years. This shows that most of the employees are have been working
in the organization between 0 to 2 years. This means that the percentage of young population
in the organization is comparatively greater.

Table 5.7 Showing Frequency of Previous Work Experience

Previous
Experience
Frequency Percent

Yes 25 55.6

No 20 44.4

Total 45 100.0
Source: Sample Survey

This helps to understand the level of understanding about the work and the work
environment. Those employees having previous experience will have a better understanding
of the work than those who does not have previous experience.

This question is asked in order to understand what percentage of employees in the

organization has had previous work experience. The analysis of this question shows that
55.6% of the employees have previous work experience, whereas 44.4% of the employees do
not have previous work experience.

Table 5.8 Showing Frequency of Satisfaction Level with Working Environment

Response Frequency Percent

Definitely Disagree 2 4.4

Disagree 2 4.4

Neither agree nor disagree 8 17.8

Agree 12 26.7

Definitely Agree 21 46.7

Total 45 100.0
Source: Sample Survey

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Figure 5.3 Showing Frequency of Satisfaction with Working Environment

This question is asked in order to understand the level of satisfaction of the employees
regarding the working environment in the organization. The environment determines the
performance level of the employees. Working environment is one of the major elements that
determines the retention level as well as the success and performance of the organization. So
it is important to know about the working environment in measuring the satisfaction level of
the employees.

This statement is also measured using five point scale. The analysis of this statement
shows that 46.7% of the sample definitely agrees with the statement, 26.7% agree with the
statement, 17.8% neither agree nor disagree with the statement, 4.4% disagree and 4.4% of
the sample definitely disagree with the statement. 73.4% of the sample is satisfied with the
working environment of the Company whereas, 8.8% of the employees are not satisfied with
the working environment and 17.8% of the employees does not either agree or disagree with
this statement. This shows that majority of the employees are satisfied with the working
environment in the organization.

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Table 5.9 Showing Frequency of the Nature of Superior Subordinate Relationship

Response Frequency Percent

Disagree 1 2.2

Neither agree nor disagree 13 28.9

Agree 19 42.2

Definitely Agree 12 26.7

Total 45 100.0
Source: Sample Survey

This helps to understand the level of satisfaction regarding the superior-subordinate

relationship existing in the Company. This is one of the major aspects in determining the
level of satisfaction of the employees. Only a good superior-subordinate relationship can lead
to a progressive organization. This is necessary as it leads to a healthy and constructive
working environment. So this gives an insight into how the organization treats its employees.

This is also measured using five point scale. The analysis of this shows that 26.7% of the
employees definitely agree to the statement, 42.2% agree to the statement, 28.9% of the
sample neither agree nor disagree to the statement and 2.2% of the sample disagree with the
statement. None of the employees in the sample definitely disagree with the statement. 68.9%
of the employees in the sample are satisfied with their superiors as well as subordinates
whereas, 2.2% of the employees are not satisfied with the relationship with their superiors
and subordinates and 28.9% did not respond, that is, they neither agree nor disagree with the
statement. This shows that majority of the employees are quite satisfied with the superior-
subordinate relationship existing in the organization.

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Table 5.10 Showing the Frequency of Staff Perception about Importance of Innovation
and Learning

Response Frequency Percent

Neither agree nor disagree 6 13.3

Agree 12 26.7

Definitely Agree 27 60.0

Total 45 100.0
Source: Sample Survey

Figure 5.4 Showing Frequency of Satisfaction with Innovation and Learning Activities

This is to understand how much importance the Company gives to the innovation and
learning activities. This helps to understand whether the Company gives chance for their
employees to think freely and differently. It helps to find out whether the organization is
improving through learning and growth activities and to find out whether new ideas are
practiced for the betterment of the organization.

The analysis of this statement shows that 60% of the employees definitely agree to this
statement, 26.7% agree to this and 13.3% of the employees neither agree nor disagree to this
statement. None of the employees disagree nor definitely disagree with this statement. This is
a clear indication that the Company has definitely put in efforts to promote learning and

99
innovation activities. In short, 86.7% of the employees in the sample are satisfied and agree
that the Company promote innovation and learning activities and 13.3% of the employees
neither agree nor disagree with this statement. This shows that the Company definitely gives
importance to learning and growth activities. This may be the reason for the success of
diversification efforts of ITC. It could build many FMCG brands in a short span of time
because of innovation and the ability of its people to learn quickly.

Table 5.11 Showing the Frequency of Regularity of Training Programme

Response Frequency Percent

Neither agree nor disagree 10 22.2

Agree 20 44.4

Definitely Agree 15 33.3

Total 45 100.0
Source: Sample Survey

This helps to know whether the Company is providing regular training to the
employees. It also helps to understand whether the Company gives proper and regular
training to their employees. It helps to improve the performance of the employees.

This is measured using five point scale. 33.3% of the employees definitely agree with the
statement, 44.4% agree with the statement and 22.2% of the employees in the sample neither
agree nor disagree with the statement. There are no employees who disagree and definitely
disagree with the statement. 77.7% of the employees agree with the statement that the
Company provides them regular training whereas, 22.2% of them do not agree or disagree to
the statement. So this shows that there are no employees who feel that the Company does not
even provide training. Success of any corporation depends on the style of its staff. Staff can
develop a common style only through dedicated training.

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Table No 5.12 Showing Frequency of Training Effectiveness

Response Frequency Percent

Disagree 4 8.9

Neither agree nor disagree 9 20.0

Agree 18 40.0

Definitely Agree 14 31.1

Total 45 100.0
Source: Sample Survey

Figure 5.5 Showing Frequency of Satisfaction with Training

This helps to understand whether the employees are satisfied and happy with the
training given by the organization. It is also a measure of the effectiveness of training given
to them. It helps to understand whether the training procedure needs to be changed or the
prevailing training is sufficient for the employees to cope up with the present competitive
situations.

The analysis shows that 31.1% of the employees definitely agree to the statement, 40%
agree to this statement, 20% of them neither agree nor disagree and 8.9% of the employees
disagree to the statement. There are no employees who definitely disagree to the statement. It
is seen that 71.1% of the employees out of the sample are satisfied with the training provided

101
to them by the Company whereas, 8.9% of the employees are dissatisfied with the training
given in the organization. But 20% of the employees do not have any opinion about this
statement. So it is clear that the majority of the employees in the organization are satisfied
with the training given to them.

77.7% of the employees agree that they get regular training in the organization whereas
only 71.1% of the employees are satisfied with the training given in the organization. It
means that the organization is providing timely training to the employees but some of the
employees are not satisfied with the training provided to them. There is enough scope for
improving training effectiveness at ITC.

ITC should conduct a separate study on training effectiveness and out the factors which
reduces the training effectiveness and do necessary changes in the present training
programmes.

Table 5.13 Showing Frequency of Effectiveness of Performance Appraisal System

Response Frequency Percent

Disagree 2 4.4

Neither agree nor disagree 12 26.7

Agree 16 35.6

Definitely Agree 15 33.3

Total 45 100.0
Source: Sample Survey

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Figure 5.6 Showing Frequency of Satisfaction with the Performance Appraisal System

This gives an idea about the performance appraisal system followed in the
organization. Performance appraisal system is one of the most important tools that help to
measure and improve the performance of the employees in the organization. It is a part of
guiding and managing career development of the employees. Appraisal not only takes
productivity into consideration, but other factors affecting the employee in the workplace as
well. A sound performance appraisal system helps the employees to meet their career
development. So, this helps to understand whether the organization have a sound appraisal
system.

It is clear from the analysis that 33.3% of the employees definitely agree to this statement,
35.6% agree to this statement, 26.7% neither agree nor disagree to this statement and 4.4%
disagree with this statement. None of the employees definitely disagree with the statement.
That is, 68.9% of the employees are satisfied with the performance appraisal system followed
in the organization and so feel that it will meet their career advancement needs. 4.4% of them
are dissatisfied with the performance appraisal system and so they feel that it will not be of
any help for their career development and 26.7% of the employees do not have any opinion
regarding this statement. The analysis, thus, shows that the majority of the employees are
satisfied with the appraisal system and hence feel that it will meet their career advancement.

103
 Since 31.1% of the employees are not fully satisfied with the present appraisal process,
the organization must find a better appraisal system that can reflect the aspirations of all the
employees.

Table 5.14 Table Showing Frequency of Employee Satisfaction with Pay Package

Response
Frequency Percent

Neither agree nor disagree 12 26.7

Agree 20 44.4

Definitely Agree 13 28.9

Total 45 100.0
Source: Sample Survey

Figure 5.7 Showing Frequency of Satisfaction with Pay Package

Pay package is one of the most important aspects that affect the satisfaction of the
employees in the organization. It is certain that if an employee is not happy with his/her pay
package, he/she will be dissatisfied. It is the reward they get for their performance. It is thus
what drives them to perform well.

The analysis of this shows that 28.9% of the employees definitely agree with this
statement, 44.4% of them agree with this and 26.7% neither agree nor disagree. None of the
employees definitely disagree with the statement. This shows that 73.3% of the employees

104
are satisfied with their pay package whereas 26.7% of them do not have any opinion about
this statement that is they do not want to express their feeling towards this statement. Thus, it
shows that though majority of the employees are satisfied with the pay, a considerable 26.7%
need to be convinced that they are paid equitably.

It is found that the younger generation is not fully happy with the pay package. This
happens in most of the marketing firms where new employees feel that they are doing most of
the hard selling work but are paid less compared to their seniors.

Table 5.15 Showing Frequency of Level of Satisfaction with Salary Increments

Response Frequency Percent

Neither agree nor disagree 9 20.0

Agree 16 35.6

Definitely Agree 20 44.4

Total 45 100.0
Source: Sample Survey

The employees need to get increment in their salary. The organization must have a
proper salary increment policy so that the feel happy and satisfied. Or else it will lead to the
dissatisfaction of the employees and hence will lead to the poor performance of the Company
as a whole. So it is an important factor that affects the satisfaction of the employees. This
statement asked whether the employees are satisfied with the salary increment policy
followed in the organization.

The analysis of this statement shows that 44.4% of the employees definitely agree with
this statement, 35.6% of them agree with this and 20% neither agree nor disagree with this.
There are no employees who completely disagree with this statement. The analysis shows
that 80% of the employees are satisfied with the salary increment policy of the Company and
20% of them do not have any opinion about this statement. Therefore it is clear that majority
of the employees are satisfied with the salary increment policy of the organization.

105
Table 5.16 Table Showing Frequency of Level of Satisfaction with Promotion Policies

Response Frequency Percent

Neither agree nor disagree 9 20.0

Agree 17 37.8

Definitely Agree 19 42.2

Total 45 100.0
Source: Sample Survey

Promotion is one of the non-monetary incentives that help to maintain the interest and
satisfaction of the employees of an organization. There should not be any bias in the
promotion activities carried out in the organization. This will definitely lead to the
dissatisfaction as well as the employees will lose belief in the system of the Company.

It shows that 42.2% of the employees in the sample definitely agree with the statement,
37.8% of them agree with this and 20% of them neither agree nor disagree. None of the
employees feel completely dissatisfies as there are no employee who definitely disagree with
this statement. Therefore, 80% of the employees in the sample are satisfied with the
promotion activities followed in the organization and 20% of them did not respond to this
statement. Thus it is clear that the majority of the employees are satisfied with the promotion
activities of the organization.

Table 5.17 Showing Frequency of the Employees’ Pride in Working for ITC

Response Frequency Percent

Neither agree nor disagree 4 8.9

Agree 15 33.3

Definitely Agree 26 57.8

Total 45 100.0
Source: Sample Survey

106
Figure 5.8 Showing Frequency of Satisfaction with Value Addition

Value addition is an important aspect as far as any Company as well as employee is

concerned. The organization must add value to the employees working in it. For this, the
organization must have a value of itself. Only then can it add value to its employees. The
employees must feel that they have inherited something valuable by working in the
organization that will help in the further development of their career. They should have
gained something from the organization. This helps to understand whether the Company has
added value to the career of the employees.

The analysis of this responses revealed that 57.8% of the employees definitely agree
with the statement, 33.3% of them agree with the statement and 8.9% neither agree nor
disagree with the statement. None of the employees completely disagree with the statement,
that is, no employee feel that working in the Company has not added any value to their
career. In fact, 91.1% of the employees agree that working in the Company has added value
to their career whereas, 8.9% of the employees do not have any opinion regarding this
statement. Thus it is clear that majority of the employees are happy and satisfied that they are
working in a good organization and that working here has added value to their career. When
employees take pride in working for a Company, the labour turnover comes down
considerably.

107
 The researcher then tried to classify the respondents into 3 categories based on their
level of satisfaction as a group with low level of satisfaction, medium level of satisfaction and
high level of satisfaction. It was attempted in the following way. The frequencies of
satisfaction level of each respondent were computed by adding the individual scores obtained
by him for all the 11 questions. From the frequency distribution of the total score of
satisfaction of each respondent, the mean score of total satisfaction and its deviations were
found out. Then, the indexes for satisfaction for the three groups were computed in the
following manner:

First the mean and standard deviation were found out. Then the range is found using
the mean and standard deviation, using the formulas – mean +standard deviation and mean –
standard deviation. All those values which are falling below this range are considered to be
low. Those values which are falling within this range are considered to be medium and all
those values falling above this range are considered to be high.

Table 5.18 Showing Mean and Standard Deviation

N Minimum Maximum Mean Std. Deviation

Satis 45 37.00 54.00 45.0444 3.19769
Valid N (listwise) 45

The mean and standard deviation were found to be 45.04 and 3.19 respectively.

Mean + Standard Deviation = 48.23

Mean – Standard Deviation = 41.85

Thus, the range of the observations is from 41.85 to 48.23. So all the values falling
below 41.85 were considered to be low, those values falling between 41.85 and 48.23 were
considered to be medium and those values falling above 48.23 were considered to be high.

The frequency of distribution of the satisfaction of respondents were recoded to get

the new frequency of distribution of three classes of satisfactions namely low, medium and
high and the recoded distribution is named as satisfaction coded.

108
Table 5.19 Showing Frequency of Levels of Satisfaction

Level of
Satisfaction Frequency Percent
1.00 4 8.9
2.00 35 77.8
3.00 6 13.3
Total 45 100.0
Source: Sample Survey

It was found that 8.9% of the respondents were having low level of satisfaction,
77.8% were having medium satisfaction and 13.3% were having high level of satisfaction
thus proving that majority of the employees at ITC are having medium level of job
satisfaction.

In fact the majority of the employees working in the Company are below the age of 35
and have an experience of below three years. The young generation is highly ambitious and
would like to reach heights very quickly. Since this is their initial job, the salary that they get
is quite low. This definitely does not match their expectation. The Company also tries to
extract maximum work from them so that they can extract more out of them as they are full
of energy. This is also a reason for the majority of the employees in ITC having medium level
of satisfaction.

In order to analyse the nature of satisfaction, the level of satisfaction was cross
tabulated with the demographic details such as age of the respondent, qualification and the
years of service. The demographic characteristics are taken and tested whether any of these
are the factors in determining the satisfaction of the employees. It was found that level of job
satisfaction have no association with the demographic factors like age, educational level or
experience of employees with ITC.

Here an attempt was made to find out any association of these demographic factors on
individual components of job satisfaction as detailed in the questionnaire.

Thus it was found that age has association with satisfaction with working
environment, good superior-subordinate relationship, opinion about effectiveness of
performance appraisal system and perception of personal development.

109
 It was also proved that educational qualification and opinion about effectiveness of
performance appraisal system.

Table 5.20 Showing Cross Tabulation of Age and Working Environment

Iam satisfied with my working environment

Neither
Definitely agree nor Definitely
Disagree Disagree disagree Agree Agree Total
Age of the Less than Count 0 0 2 1 6 9
respondent 25 % within Iam .0% .0% 25.0% 8.3% 28.6% 20.0%
satisfied with my
working
environment
25-35 Count 1 0 4 10 9 24
% within Iam 50.0% .0% 50.0% 83.3% 42.9% 53.3%
satisfied with my
working
environment
35-45 Count 0 2 2 1 5 10
% within Iam .0% 100.0% 25.0% 8.3% 23.8% 22.2%
satisfied with my
working
environment
greater Count 1 0 0 0 1 2
than 45 % within Iam 50.0% .0% .0% .0% 4.8% 4.4%
satisfied with my
working
environment
Total Count 2 2 8 12 21 45
% within Iam 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
satisfied with my
working
environment

110
Table 5.21 Showing Result of Chi-Square of Age and Working Environment
Value Df Asymp.Sig.(2- sided)
Pearson Chi-Square 23.336a 12 .025

The Pearson Chi-Square value at 12 degrees of freedom and 95% confidence level is
significant as f value is 0.025.
From the cross tabulation table, it was found that employees in the 25-35 age group
are more satisfied with the working environment than the older people.

This might be because the Company gives them opportunities to express their opinion
and also to bring out their innovative ideas. The Company is also an employee friendly one.
They also bring out many contests where the employees can participate and win prizes. They
are rewarded for their talent.
Table 5.22 Showing Cross Tabulation of Age and Superior-Subordinate Relationship

Iam happy that I have good relationship with

my superiors and subordinates
Neither
agree nor Definitely
Disagree disagree Agree Agree Total
Age of the Less than Count 1 6 2 0 9
respondent 25 % within Iam 100.0% 46.2% 10.5% .0% 20.0%
happy that I have
good relationship
with my superiors
and subordinates
25-35 Count 0 4 11 9 24
% within Iam .0% 30.8% 57.9% 75.0% 53.3%
happy that I have
good relationship
with my superiors
and subordinates
35-45 Count 0 3 6 1 10

111
 % within Iam .0% 23.1% 31.6% 8.3% 22.2%
happy that I have
good relationship
with my superiors
and subordinates
greater Count 0 0 0 2 2
than 45 % within Iam .0% .0% .0% 16.7% 4.4%
happy that I have
good relationship
with my superiors
and subordinates
Total Count 1 13 19 12 45
% within Iam 100.0% 100.0% 100.0% 100.0% 100.0%
happy that I have
good relationship
with my superiors
and subordinates

Table 5.23 Showing Result of Chi-Square of Age and Superior-Subordinate

Relationship
Value df Asymp.Sig.(2- sided)
Pearson Chi-Square 21.320a 9 .011

The Pearson Chi-Square value at 9 degrees of freedom and 95% confidence level is
significant as f value is 0.011.
On examination of the cross tabulation table, it was found that the 25-35 age group
has demonstrated more loyalty with their superiors.

In the Company all the employees are treated equally. There is no distinction between
different levels of employees. Everybody has a friendly relationship with each other. The
Company has a discrimination-free workplace for employees that provide the environment in
which diverse talents can bloom and be nurtured. This is achieved by ensuring that a non-
discrimination policy and practice is embedded across the Company in line with corporate
principles and benchmarked business practices. The 25-35 age group may be more loyal to
the superiors because of the work environment and the empowerment that they get from the
seniors.

112
Table 5.24 Showing Cross Tabulation of Age and Present Performance Appraisal
System

I feel that the present performance appraisal

system meet my career advancement
Neither
agree nor Definitely
Disagree disagree Agree Agree Total
Age of the Less than Count 0 3 1 5 9
respondent 25 % within I feel .0% 25.0% 6.3% 33.3% 20.0%
that the present
performance
appraisal system
meet my career
advancement
25-35 Count 0 4 12 8 24
% within I feel .0% 33.3% 75.0% 53.3% 53.3%
that the present
performance
appraisal system
meet my career
advancement
35-45 Count 2 3 3 2 10
% within I feel 100.0% 25.0% 18.8% 13.3% 22.2%
that the present
performance
appraisal system
meet my career
advancement
greater Count 0 2 0 0 2
than 45 % within I feel .0% 16.7% .0% .0% 4.4%
that the present
performance
appraisal system
meet my career
advancement
Total Count 2 12 16 15 45
% within I feel 100.0% 100.0% 100.0% 100.0% 100.0%
that the present
performance
appraisal system
meet my career
advancement

113
Table 5.25 Showing Result of Chi-Square of Age and Present Performance Appraisal
System

Value Df Asymp.Sig.(2- sided)

Pearson Chi-Square 18.377a 9 .031

The Pearson Chi-Square value at 9 degrees of freedom and 95% confidence level is
significant as f value is 0.011.
On examining the cross tabulation, it was found that the 25-35 age group is more
satisfied with the performance appraisal system than the other age group employees.

The present performance appraisal system is considered to be effective and suitable

for the employees in the organization. This helps them to improve themselves and to advance
further in their career. The appraisal process gives the individual an opportunity to share in a
formal manner his own career aspirations and what he needs from the organisation to enhance
his own development. The employees‘ career growth is given importance.

It may be one of the other reasons for the 25-35 age group to show more loyalty to
their seniors.

Table 5.26 Showing Cross Tabulation of Age and Value Addition

I feel that working in ITC has added

value to my career
Neither
agree nor Definitely
disagree Agree Agree Total
Age of the Less than 25 Count 0 3 6 9
respondent % within I feel that .0% 20.0% 23.1% 20.0%
working in ITC has
added value to my
career
25-35 Count 0 8 16 24
% within I feel that .0% 53.3% 61.5% 53.3%
working in ITC has
added value to my
career

114
 35-45 Count 3 3 4 10
% within I feel that 75.0% 20.0% 15.4% 22.2%
working in ITC has
added value to my
career
greater than Count 1 1 0 2
45 % within I feel that 25.0% 6.7% .0% 4.4%
working in ITC has
added value to my
career
Total Count 4 15 26 45
% within I feel that 100.0% 100.0% 100.0% 100.0%
working in ITC has
added value to my
career

Table 5.27 Showing Result of Chi-Square of Age and Value Addition

Value df Asymp.Sig.(2- sided)

Pearson Chi-Square 14.104a 6 .028

The Pearson Chi-Square value at 6 degrees of freedom and 95% confidence level is
significant as f value is 0.028.

The cross tabulation shows that the 25-35 age group employees feel working in ITC
has added value to their career. They are the ones who have gained more from the Company
than the other employees.
Most of them have been working in the Company for nearly 3 years. Within these
years they feel that they have gained by working in the Company. This is because the
Company gives them opportunities to improve and to learn more. They are given a number of
development programmes which will help them to improve their performance and hence will
add value to their career.

115
Table 5.28 Showing Cross Tabulation of Educational Qualification and Present
Performance Appraisal System

I feel that the present performance appraisal

system meet my career advancement
Neither
agree nor Definitely
Disagree disagree Agree Agree Total
Educational Graduation Count 1 1 1 7 10
Qualification of % within I feel 50.0% 8.3% 6.3% 46.7% 22.2%
the respondent that the present
performance
appraisal system
meet my career
advancement
PG Count 1 11 15 8 35
% within I feel 50.0% 91.7% 93.8% 53.3% 77.8%
that the present
performance
appraisal system
meet my career
advancement
Total Count 2 12 16 15 45
% within I feel 100.0% 100.0% 100.0% 100.0% 100.0%
that the present
performance
appraisal system
meet my career
advancement

Table 5.29 Showing Result of Chi-Square of Educational Qualification and Present

Performance Appraisal System

Value Df Asymp.Sig. (2-sided)

Pearson Chi-Square 9.779a 3 .021

The Pearson Chi-Square value at 3 degrees of freedom and 95% confidence level is
significant as f value is 0.021.

116
 The cross tabulation shows that the employees who are post graduates are more
satisfied with the present performance system than those employees who are graduates. This
might be because the post graduate employees are able to better understand the usefulness
and the effectiveness of the appraisal system.

Factor Analysis

There are certain variables that influence the satisfaction of the employees in their job.
In order to find out these underlying factors that affect the satisfaction level of the employees,
factor analysis was done. In factor analysis, different variables, which have correlation with
the independent variables are combined together and are considered as a factor influencing
job satisfaction. Rotated Component analysis was used for the purpose.

The rotated component matrix provided 5 factors which are significantly correlated
with job satisfaction as stated below.

Factor 1:

- I am satisfied with the promotion activities

Factor 2:

- I am satisfied with the training given in the organization

- I am happy with the pay package

Factor 3:

- I am satisfied with the salary increment policy

Factor 4:

- I am happy that I have good relationship with my superiors and subordinates

Factor 5:

- The Company gives importance to learning and innovation activities

The first factor in the rotated component matrix can be summarized as ‗Career Growth‘.
Therefore the first factor is ‗Career Growth‘.

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The second factor can be summarized as ‗Compensation and Development‘.

The third factor can be summarized as ‗Incentives‘.

The fourth factor can be summarized as ‗Relationship‘.

The fifth factor can be summarized as ‗Learning and Development‘.

Table 5.30 Showing the Rotated Component Matrix

Component

1 2 3 4 5

Iam satisfied with my working .347 -.285 -.576 -.181 .149

environment

Iam happy that I have good .186 -.037 .033 .874 .204
relationship with my superiors and
subordinates

The Company gives importance to -.024 -.099 .017 .036 .841

innovation and learning activities

Iam getting regular training in the .354 .229 .015 -.623 .287
organization

Iam satisfied with the training .145 .562 .435 .032 .472
given in the organization

I feel that the present performance -.542 .375 -.467 .196 .293
appraisal system meet my career
advancement

Iam happy with the pay package -.101 .860 -.020 -.201 -.166

Iam satisfied with the salary .005 -.045 .791 -.037 .125
increment policy

Iam satisfied with the promotion .791 .167 -.126 .192 -.133
activities

I feel that working in ITC has -.808 .198 .019 .110 -.185
added value to my career

Career growth is an important aspect that determines that satisfaction of the

employees. Promotions are also an important aspect of a worker‘s career and life, affecting

118
other facets of the work experience. They constitute an important aspect of workers‘ labor
mobility, most often carrying substantial wage increases and can have a significant impact on
other job characteristics such as responsibilities and subsequent job attachment. Firms can
use promotions as a reward for highly productive workers, creating an incentive for workers
to exert greater effort. Promotions will only be an effective mechanism for eliciting greater
effort if workers place significant value on the promotion itself. Otherwise, firms would
simply use pay increases to reward effort and productivity.

Workers may value promotions because they carry an increase in job amenities such
as a bigger office or spending account (factors which are observable but for which we do not
have the information) or because they enjoy the acknowledgement of work well done and the
ego boost that comes with a promotion (factors which are not easily observable). Some
workers might enjoy the increase in authority over co-workers that often accompany a
promotion. Given all of the dimensions in which promotions can affect workers‘ careers and
compensation, more attention has been paid to the importance of promotions as a determinant
of job satisfaction.

The next factor contains two elements, namely, satisfaction with the training and
satisfaction with the pay package. Training and Development is the framework for helping
employees to develop their personal and organizational skills, knowledge, and abilities. The
focus of all aspects of Human Resource Development is on developing the most superior
workforce so that the organization and individual employees can accomplish their work goals
in service to customers. Training leads to improving employee satisfaction and morale.

All employees want to be valuable and remain competitive in the labour market at all
times. This can only be achieved through employee training and development. Employees
will always want to develop career-enhancing skills, which will always lead to employee
motivation and retention. There is no doubt that a well trained and developed staff will be a
valuable asset to the company and thereby increasing the chances of his efficiency in
discharging his or her duties. Thus it can be said that training is one of the important aspect in
determining the satisfaction of the employees.

Pay is the main aspect that determines the satisfaction of the employees. It is the
reward for the work done by them. If the pay package is not good, it will surely affect the
satisfaction of the employees. So there is a strong relation between salary and satisfaction.

119
 The next factor is incentives. This factor consists of one element, that is, satisfaction
with the salary increment policy. As the nature of work increases, there should also be
increase in the salary given to the employees. The salary must change and must be
competitive. This will definitely have an effect on the satisfaction of the employees.

The last factor is relationship between superiors and subordinates. All the employees
must be treated equally and it must be a friendly environment. Good relationship with the
superiors and subordinates is an important factor in determining the satisfaction of the
employees.

The next factor is learning and development. This is an important thing as far as an
organization is concerned. This brings about changes in the organization that is useful for the
improvement of the employees. This affects the satisfaction of the employees. Earning is not
just important to ensure to keep up-to-date with developments in the particular field. It is also
an important source of motivation, stimulation and job satisfaction. So it can be said that
there is relation between learning and growth and employee satisfaction.

The five factors that determine the satisfaction of the employees in ITC are:

COMPENSATION
AND DEVELOPMENT

INCENTIVES
CAREER GROWTH

JOB SATISFACTION

LEARNING AND RELATIONSHIP

DEVELOPMENT

Figure 5.9 Showing the Factors Affecting Employee Job Satisfaction

120
 CHAPTER VI

FINDINGS, SUGGESTIONS AND CONCLUSION

Findings

1. The present study reviewed the performance of ITC on the basis of the perspectives
provided in the Balanced Scorecard format. The study found that ITC is able to
achieve its objectives of:
(a) To be one of India‘s most valuable and competitive corporation
(b) To maintain its market position continuously over the years
(c) To serve the Indian economy through value creation
(d) To create value for the stakeholders of the corporation

through earnestly implementing its existing strategies

2. It was found that the Company‘s ROI and ROCE have been growing over the years.
3. The sales as well as the profitability ratios of the Company shows that the Company is
very stable and has a very strong position in the industry and has a high growth
potential to remain as the leader and as one of the most valuable corporations of the
Indian economy for the years to come.
4. The tax paid by the Company to the exchequer is increasing year after year, thus
contributing to the development of the Indian economy.
5. They are progressively reducing the contribution of their tobacco business in their
total turnover by progressively diversifying their business, introducing many products
in the FMCG sector and building many brands. ITC‘s entry into these new sectors has
made those sectors of the economy very vibrant.
6. The Company is committed towards creating value for its stakeholders. The Company
creates value for its shareholders as it declares maximum dividend. The dividend
payout of the Company has been increasing over the years.
7. ITC is a high performance organization, which gives equal importance to both its
customers and its shareholders. They have initiated several CSR activities. They
believe that they have a commitment towards its customers, workers and general
public. They have received a number of reward and recognitions for their CSR
initiatives.

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8. The employee retention of the division was analysed and it was seen that the retention
rate has been increasing over the years. The employees are satisfied with their
working environment and this is the reason for the retention rate to be quite high.
9. Employee productivity of the division is also quite high. The productivity per
employee has not shown much fluctuation over the years. The turnover as well as the
number of employees in the division has been increasing.
10. The result of the employee satisfaction survey suggests that by and large the
employees of ITC are satisfied. But the level of satisfaction is not that high but above
average. The factor analysis established that the five factors that affect the satisfaction
of the employees in ITC were identified to be: career growth, compensation and
development, incentives, relationship and learning and development.
11. The study found that ITC Ernakulam division has a considerable percentage of young
employees.
12. The majority of the employees working in the division have previous experience.
13. The majority of the employees working in the division are satisfied with their working
environment and are also satisfied with the superior-subordinate relationship of the
organization.
14. It was found that the Company gives importance to their learning and growth
activities. The people in the division have the ability to learn very quickly and are
very flexible. This has helped ITC in achieving success in their diversification efforts
and that they could build a number of FMCG brands in a very short span of time.
15. Majority of the employees are satisfied with the training given in the organization.
But the number of employees who are not satisfied with the training in the
organization is also high.
16. Majority of the employees are satisfied with the present performance appraisal
system.
17. Even though majority of the employees are satisfied with the pay package, there are
considerable number of employees who are not satisfied with their pay package. It is
found that it is the younger generation who are not satisfied with their pay package.
They also have only a medium level of satisfaction regarding their working
environment.
18. The majority of the employees are satisfied with the promotion activities and also feel
that working in ITC has added value to their career.

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 19. The analysis shows that the employees in the 25-35 age group are more satisfied with
the working environment.
20. The employees in the 25-35 age group are also satisfied with the superior-subordinate
relationship existing in the Company.
21. The employees are satisfied with the appraisal process and they feel that the Company
is giving importance to their career growth and that the Company has added value to
their career.

Suggestions

1. The Company has to give more emphasis on the training activities. There is a high
chance for improving the training effectiveness in the Company. ITC should conduct
a study on its training activities and put efforts to find out the factors which are
responsible for reducing the training effectiveness.
2. The considerable number of employees are not fully satisfied with the present
appraisal system. So the organization may study the effectiveness of the different
aspects of performance appraisal to identify the areas of weakness and if necessary,
redesign the system to make it more employee friendly. After all, the success of any
employee oriented system depends on employee perception and their co-operation.
What is important is creating a perception among the employees that the system is
useful and effective for their career advancement.
3. Many of the young employees who have prior experience are not happy with the pay
package. It is a factor that the management should consider at the time of appointment
of a new employee. It is not advisable to select youngsters with considerable prior
experience at entry level salaries. They may accept the offer at the time of
recruitment, but once they join the firm and find out that those people with lesser
experience is drawing more than them, they will get dejected.

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Conclusion

Creating value for the stakeholders and the Indian economy is the cornerstone of the
Company. The Company has a strong position in the market and has a good brand name and
a very good customer base. The people relate the Company to quality and reliability, which
are the most essential components of a business‘s success. So it is clear that they will grow
stronger and will remain the most valuable and competitive corporations in the years to come.

The Company has come forward to serve the Indian economy and environment. It has
initiated a number of programmes that are advantageous to the Indian economy. It has also
taken steps in preserving the essence of the Indian culture, which is really appreciable. The
Company‘s most important and notable initiative is e-Choupal that provides a great deal of
help to the rural society. Through all these initiatives, the Company is definitely serving the
Indian economy and has added great value to itself. It is clear from the various awards and
recognitions that the Company has received for these initiatives.

All these are made possible because of its employees and its efforts to retain the best
possible talent within the Company. ITC‘s greatest strength is its people- diverse and
motivated people with the expertise and insight to tackle the toughest client issues. ITC does
not discriminate due to sex, age, creed, and colour. They promote drug free environment,
encourage development with excellent training.

The Company has been supporting the best possible HR practices for this. It gives
great importance to the career development of the employees. ITC believes the responsibility
for career development rests both with the individual and the organisation. While the
organisation provides opportunities for learning and growth, it is the individual's
responsibility to ensure he enhances his competencies to shoulder higher responsibilities.

The different measures of the learning and growth aspect of the organization were
studied and were found that these were quite satisfactory, even though, some changes have to
be brought about.

The Company‘s Board and employees are inspired by their Vision of sustaining ITC‘s
position as one of India‘s most admired and valuable companies through world-class
performance, creating enduring value for all stakeholders, including the shareholders and the
Indian society. It takes each step carefully to ensure that its strategic capability is upgraded so

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that it can face the challenges proposed by increasing and intense competition in the market.
Effective management of diversity enhances the Company‘s adaptive capability and provides
the intrinsic ability to effectively manage business risk. The vision of enlarging the
Company‘s contribution to the Indian economy is manifest in the creation of unique business
models that foster international competitiveness of not only its businesses but also of the
entire value chain of which it is a part.ITC is driven by its values and Vision and is
committed towards building a much brighter future for its stakeholders, its customers and
also the Indian economy.

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APPENDIX

A STUDY ON

EMPLOYEE SATISFACTION

With special reference to

INDIAN TOBACCO COMPANY LIMITED, ERNAKULAM

QUESTIONNAIRE

Respected Sir/Madam,

I am a second year PGDM student at Bhavan‘s Royal Institute of Management,

Thiruvankulam. In partial fulfilment of my studies, I have undertaken a project on ―A Study

on Balanced Scorecard with special reference to ITC Ltd.‖ As a part of this, it is required to

conduct a survey on employee satisfaction in the Company. I would be grateful if you would

kindly make it convenient to spare a few minutes of your valuable time for filling up this

questionnaire for me. I promise that the data collected through this questionnaire shall be kept

confidential and will be used for academic purpose only.

With warm regards,

Rohini. S. Nair

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 1. How long have you been working in the organization?
a) 0-1 year
b) 1-2 years
c) 2-3 years
d) More than 3 years

2. Do you have previous work experience?

(a) YES (b) NO
3. If yes, state the reasons for moving into ITC

Neither
Definitely agree Definitely
Agree Disagree
No. agree nor disagree
(4) (2)
(5) disagree (1)
(3)
I am satisfied with my working
4.
environment
I am happy that I have good
5.
relationship with my superiors
The Company gives importance
6. to innovation and learning
activities
I am getting regular training in
7.
the organization
I am satisfied with the training
8.
given in the organization
I feel that the present
9. performance appraisal system
will meet my career
advancement
10. I am happy with the pay
package
I am satisfied with the salary
11.
increment policy

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 Neither
Definitely agree Definitely
No. Agree Disagree
agree nor disagree
(4) (2)
(5) disagree (1)
(3)
I am satisfied with the
12.
promotion activities
I feel that working in ITC has
13.
added value to my career

Please provide your personal details

14) Age

a) <25years b) 25 – 35 c) 35 – 45 d) >45years

15) No. of year of service

a) 1 – 2 years b) 3 – 4 years c) 5 – 6 years d) > 6 years

16) Academic Qualification

a) S.S.LC b) H.S.C/Diploma c) Graduation d) PG

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BIBLIOGRAPHY

[1] Robert S. Kaplan and David P. Norton, Balanced Scorecard: Translating Strategy into
Action. Harvard Business School Press, Boston, MA, 1996

[2] Sérgio D. Sousa, Elaine M. Aspinwall, A. Guimarães Rodrigues. Performance measures

in English small and medium enterprises: survey results. Benchmarking: An International
Journal, 13(1-2): 120-134, 2006

[3] Gerhard Speckbacher , Juergen Bischof, Thomas Pfeiffer. A descriptive analysis on the
implementation of Balanced Scorecards in German-speaking countries. Management
accounting research, p 61, 2003

[4] Neely A., Gregory M., Platts K., Performance measurement system design, A literature
review and research agenda. International Journal of Operations & Production Management,
80-116, 1995

[5] Malmi T., Balanced scorecards in Finnish companies: A research note. Management
Accounting Research, 12(2):207-220, 2001

[6] Modic, Stan. (n.d.). Take this job and shove it… Retrieved from
http://www.manufacturingcenter.com/tooling/archives/0304/0304straight_talk.asp

[7] Kash, Wyatt. (2003). The other customer: Employee satisfaction deserves customer
satisfaction-style scrutiny [Electronic version]. Big Builder, Nov 2003.

[8] Carpitella, Bill. (2003). Make residential construction the industry of choice. Professional
Builder, Oct 2003.

[9] Employee satisfaction and opinion surveys. Retrieved from :-

http://www.infoquestcrm.co.uk/employee_surveys.html

[10] Clark, Donald. (2001). Some training statistics tidbits. Retrieved from
http://www.nwlink.com/~donclark/hrd/trainsta.html

Company Websites
www.itcportal.com

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