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Marketing/MANAGERIAL COMMUNICATION

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Question
1)You are the General Manager of a Telecom company. Draw a communication flow
chart in your organization and also discuss the problems in implementing it.
2) As a Chief Executive Officer of a Agro based company, prepare a draft for your
speech in the forthcoming Annual General Body meeting highlighting your
company’s achievements, growth and future plan etc.

Answer
1-You are the general Management of a Telecom Company. Draw a communication flow chart in your organisation and also discuss the problems in implementing it?
Essential Types of Organizational Communication (With Diagram)
Oral   Written
(1) Personal instructions.
(2) Lectures, conferences, meetings.
(3) Grapevine rumours.
(4) Interviews.
(5) Face to face conversation.
(6) Telephone etc.
(7) Union channels.   (1) Rules and instructions handbook.
(2) Letters, circulars and memos.
(3) Posters.
(4) Bulletin and notice Boards.
(5) Handbooks and Manuals.
(6) Annual Reports.
(7) House Magazines.
(8) Union Publications.
(9) Personal letters and suggestions.
(10) Complaint Procedure.


organization communication flow chart
ranscript
•   1. Communication Flows in an Organization Downward Upward Lateral Diagonal External
•   2. Downward Workplace Communication: Enabling Downward communication consists of communications sent from management to workers, like emails and performance reviews. A manager explains a task to an employee A customer gives an order to a supplier Shareholders instruct management. Continuous ….
•   3. Enabling These forms have more than direction in common. Each one also provides enabling information in the workplace. When a manager instructs an employee, she enables the employee to do his job, and makes it possible for him to earn a living by doing something that has value for the employer. Another example: senior management finds out from shareholders, or the board of directors, how owners want to apply the money theyve invested. Continuous
•   4. Information moves downward Make a Budget reportMake a Budget report for the month to include the followingMake sure the report includes the exact amount and the qty.
•   5. Purposes Business Goals can be share Providing feedback on employees performance Giving job instructions Providing a complete understanding of the employees job as well as to communicate them how their job is related to other jobs in the organization. Communicating the organizations mission and vision to the employees. Highlighting the areas of attention.
•   6. Error-free downward communication Specify communication objective Ensure that the message is accurate, specific and unambiguous. Utilize the best communication technique to convey the message to the receiver in right form
•   7. Upward Communication Information flow from the lower levels of a hierarchy to the upper levels A second major flow of communication is upward, from employee to supervisor, supervisor to department head, department head to vice president, and so on.
•   8. Purposes Productivity Feedback Promotion Considerations
•   9. Lateral/Horizontal Communication that takes place at same levels of hierarchy in an organization. First, no superior/subordinate relationship exists here; its strictly a case of two people with roughly equal amounts of power and prestige. That makes this form of communication voluntary and discretionary.
•   10. Purposes It is time Saving It Facilities co-ordination of the task. It Facilities Co-ordination among team members It Provides emotional and social assistance to the organizational members. It help in solving Various Organizational problem It can also be used for resolving conflicts of a department with other department or conflicts within a department.
•   11. Diagonal Communication Communication that takes place between a manager and employees of other workgroups is called diagonal communication. It generally does not appear on organizational chart. For instance - To design a training module a training manager interacts with an Operations personnel to enquire about the way they perform their task.
•   12. External Communication Communication that takes place between a manager and external groups such as - suppliers, vendors, banks, financial institutes etc. For instance - To raise capital the Managing director would interact with the Bank Manager.
•   13. The Grapevine Grapevine communication is the informal communication network within an organization.
•   14. Channel Traditionally , the grapevine Mouth to mouth Email, Fax, Chat Cell Phone Facebook
•   15. Example Suppose the profit Amount of a company is known. Rumor is spread that this much profit is there and on that basis bonus is declared. CEO may be in relation to the production manager. they may have friendly relations with each other
•   16. Purposes Grapevine communication creates a social bond. The grapevine fills in a gap The grapevine in many ways helps keep people honest.
•   17. Communication Speed Where downward, upward, and lateral communication are structured and flow formally through specific channels, the grapevine goes through multiple channels and even multiple versions.




ORGANIZATION  communication flow chart

In an organization, communication flows in 5 main directions-
1.   Downward
2.   Upward
3.   Lateral
4.   Diagonal
5.   External
•   Downward Flow of Communication: Communication that flows from a higher level in an organization to a lower level is a downward communication. In other words, communication from superiors to subordinates in a chain of command is a downward communication. This communication flow is used by the managers to transmit work-related information to the employees at lower levels. Employees require this information for performing their jobs and for meeting the expectations of their managers. Downward communication is used by the managers for the following purposes -
   Providing feedback on employees performance   
  Giving job instructions   
  Providing a complete understanding of the employees job as well as to communicate them how their job is related to other jobs in the organization.   
   Communicating the organizations mission and vision to the employees.   
   Highlighting the areas of attention.   
Organizational publications, circulars, letter to employees, group meetings etc are all examples of downward communication. In order to have effective and error-free downward communication, managers must:
•   Specify communication objective
•   Ensure that the message is accurate, specific and unambiguous.
•   Utilize the best communication technique to convey the message to the receiver in right form   
•   Upward Flow of Communication: Communication that flows to a higher level in an organization is called upward communication. It provides feedback on how well the organization is functioning. The subordinates use upward communication to convey their problems and performances to their superiors.
The subordinates also use upward communication to tell how well they have understood the downward communication. It can also be used by the employees to share their views and ideas and to participate in the decision-making process.
Upward communication leads to a more committed and loyal workforce in an organization because the employees are given a chance to raise and speak dissatisfaction issues to the higher levels. The managers get to know about the employees feelings towards their jobs, peers, supervisor and organization in general. Managers can thus accordingly take actions for improving things.
Grievance Redressal System, Complaint and Suggestion Box, Job Satisfaction surveys etc all help in improving upward communication. Other examples of Upward Communication are -performance reports made by low level management for reviewing by higher level management, employee attitude surveys, letters from employees, employee-manager discussions etc.
•   Lateral / Horizontal Communication: Communication that takes place at same levels of hierarchy in an organization is called lateral communication, i.e., communication between peers, between managers at same levels or between any horizontally equivalent organizational member. The advantages of horizontal communication are as follows:
   It is time saving.
   It facilitates co-ordination of the task.
   It facilitates co-operation among team members.
   It provides emotional and social assistance to the organizational members.
   It helps in solving various organizational problems.
   It is a means of information sharing
   It can also be used for resolving conflicts of a department with other department or conflicts within a department.
•   Diagonal Communication: Communication that takes place between a manager and employees of other workgroups is called diagonal communication. It generally does not appear on organizational chart. For instance - To design a training module a training manager interacts with an Operations personnel to enquire about the way they perform their task.
•   External Communication: Communication that takes place between a manager and external groups such as - suppliers, vendors, banks, financial institutes etc. For instance - To raise capital the Managing director would interact with the Bank Manager.
Employee / Organizational Communications
its importance and basic internal communication processes, networks and channels. Highlighting important issues in current practices, the article concludes with 15 principles of effective communication and an interactive list of recommended readings.
“The greatest continuing area of weakness in management practice is the human dimension. In good times or bad, there seems to be little real understanding of the relationships between managers, among employees, and interactions between the two. When there are problems, everyone acknowledges that the cause often is acommunication problem. So now what?”
Definition of the Topic
Employee/organizational communications refer to communications and interactions among employees or members of an organization. I use the terms internal communications and organizational communications to mean the same thing. Internal communications also have been called internal relations
described two ways of seeing and defining internal communications. The most common approach focuses on internal communication as a “phenomenon that exists in organizations” . In this view, the organization is a container in which communication occurs. A second approach sees internal communication as “a way to describe and explain organizations” . Here, communication is the central process through which employees share information, create relationships, make meaning and “construct” organizational culture and values. This process is a combination of people, messages, meaning, practices and purpose , and it is the foundation of modern organizations .
The first approach has dominated, but the second perspective is gaining wider acceptance as more organizations recognize the crucial role of communication in dealing with complex issues and rapid changes in a turbulent global market.
Why Internal Communication Matters
Communication is one of the most dominant and important activities in organizations . Fundamentally, relationships grow out of communication, and the functioning and survival of organizations is based on effective relationships among individuals and groups. In addition, organizational capabilities are developed and enacted through “intensely social and communicative processes” (Communication helps individuals and groups coordinate activities to achieve goals, and it’s vital in socialization, decision-making, problem-solving and change-management processes.
Internal communication also provides employees with important information about their jobs, organization, environment and each other. Communication can help motivate, build trust, create shared identity and spur engagement; it provides a way for individuals to express emotions, share hopes and ambitions and celebrate and remember accomplishments. Communication is the basis for individuals and groups to make sense of their organization, what it is and what it means.
Communication Processes, Networks and Channels
Internal communication is a complex and dynamic process, but early models focused on a one-way transmission of messages. The, concerned with technology and information distribution, is a classic example.
In this S-M-C-R model, an information source [S] encoded a message [M] and delivered it through a selected channel [C] to a designated receiver [R], who decoded it.

Later versions of the model added a feedback loop from receiver to sender. Nevertheless, the model suggested that all meaning is contained within the message, and the message would be understood if received. It was a sender-focused model.
S-M-C-R model provided a richer interactional perspective. He emphasized relationships between source and receiver and suggested that the more highly developed the communication knowledge and skills of sources and receivers, the more effectively the message would be encoded and decoded. Berlo also acknowledged the importance of the culture in which communication occurs, the attitudes of senders and receivers and strategic channel selection. Later models emphasized the transactional nature of the process and how individuals, groups and organizations construct meaning and purpose
Today, the model is more complex due to new media and high-speed, multi-directional communications . However, the core components live on in formal communications planning and implementation. Organizational leaders and communication specialists first develop strategies to achieve objectives, construct relevant messages and then transmit them through diverse channels to stimulate conversations with employees and members. Increasingly, formal communications are grounded in receivers’ needs and concerns. Employees communicate informally with others inside and outside the organization through high-speed communications, too.
Communication Levels
Internal communication occurs on multiple levels. Interpersonal or face-to-face (F-T-F) communication between individuals is a primary form of communication, and for years organizations have sought to develop the speaking, writing and presentation skills of leaders, managers and supervisors. Group-level communications occur in teams, units and employee resource or interest groups (ERGs). The focus on this level is information sharing, issue discussion, task coordination, problem solving and consensus building. Organizational-level communications focus on such matters as vision and mission, policies, new initiatives and organizational knowledge and performance. These formal communications often follow a cascade approach where leaders at hierarchical levels communicate with their respective employees, though social media are changing communications at this level.
Communication Networks
A network represents how communication flows in an organization. Networks can be formal and informal. In a formal communication network, messages travel through official pathways (e.g., newsletters, memos, policy statements) that reflect the organization’s hierarchy. Informal communications move along unofficial paths (e.g., the grapevine, which is now electronic, fast and multidirectional) and include rumors, opinions, aspirations and expressions of emotions. Informal communications are often interpersonal and horizontal, and employees believe they are more authentic than formal communications . Employees and members use both networks to understand and interpret their organizations.
Communications also can be described as vertical, horizontal or diagonal. Vertical communication can be downward–flowing down the hierarchy of an organization–or upward, i.e., moving from lower to higher levels in the chain of command. Horizontal communication refers to communication among persons who have no hierarchical relationship, such as three supervisors from different functions. Diagonal or omni-directional communication occurs among employees at different levels and in different functions, e.g., a quality control supervisor, accountant and systems analyst. Evolving organizational structures and technologies create opportunities for new and conflicting communication flows.
Studies regarding the effectiveness of communication flows often reveal employee dissatisfaction with both downward and upward communications. Findings by the Opinion Research Corporation, which has examined employee perceptions of internal communication for more than 50 years, generally show that more than half of employees are dissatisfied or somewhat dissatisfied with both downward and upward communications . Less is known about the effectiveness of horizontal and diagonal communications.

Communication Channels
A communication channel is a medium through which messages are transmitted and received. Channels are categorized as print, electronic or F-T-F (interpersonal). Common print channels include memos, brochures, newsletters, reports, policy manuals, annual reports and posters. New technologies have spurred the use ofelectronic channels, e.g., email and voice mail, Intranets, blogs, podcasts, chat rooms, business TV, video conferencing, instant messaging systems, wikis and electronic town-hall meetings. Face-to-face channelsinclude speeches, team meetings, focus groups, brown bag lunches, social events and gatherings and management by wandering around.
the most used channel is listening, which consumes about half of our communication time (). Effective listening is crucial to learning, understanding, conflict resolution and productive team work. It helps leaders at all levels improve employee morale, retain employees and uncover and resolve problems. Yet, many studies suggest that most people are not good listeners, and few organizations devote resources to developing listening skills in managers and leaders
Selection of Media
Today, organizations and their employees and members have access to many communication channels. Selecting the most appropriate medium or media is an important issue for professional communicators once they have determined objectives and strategies, assessed relevant audiences and constructed messages. each medium, independent of content, engages receivers in different ways and affects the scale and pace of communication.
“hot” and “cool” media, each of which involves different degrees of receiver participation. Hot media (e.g., print channels, film, lecture, radio) require less active participation and involvement than cool media (e.g., TV, comic books, F-T-F channels). Hot media are more segmented and linear, while cool media may be more abstract and require more participation to understand.
Measureable Benefits
Internal communication continues to evolve in a dynamic world characterized by an explosion of new technologies, intense global competition and rapid change. Today, many would agree assertion that internal communication is an essential aspect of organizational change–it is “the key variable in almost all change efforts, diversity initiatives and motivation”). Some even argue that internal communication is the most “fundamental driver of business performance”
A growing body of evidence demonstrates that effective internal communications help increase employee job satisfaction, morale, productivity, commitment, trust and learning; improve communication climate and relationships with publics; and enhance quality, revenues and earnings. Here are some examples:
   Employees who are disloyal to their organizations, or lack commitment to helping organizations achieve their goals, may cost business $50 billion per year in quality defects, rework and repair costs, absenteeism and reduced productivity,
   Improving the quality, adequacy and timeliness of information that employees receive about customers, the organization or their own work can improve their individual performance by as much as 20-50 percent .
   More than 80 percent of employees polled in the US and UK said that employee communication influences their desire to stay with or leave an organization. Nearly a third said communication was a “big influence” on their decision).
   The 200 “most admired” companies spent more than three times as much on employee communications as the 200 “least admired” companies).
   Employees’ satisfaction with communication in their organizations is linked to organizational commitment, productivity, job performance and satisfaction and other significant outcomes).
   Organizations with engaged and committed employees were 50 percent more productive than those organizations where employees weren’t engaged. In addition, employee retention rates were 44 percent higher in organizations with engaged and committed employees ().
   Positive communication climate and effective employee communication strengthen employees’ identification with their organizations, which contributes to an organization’s financial performance and sustained success.
   creating a more compelling place to work for employees led to a significant increase in employee attitude scores, customer satisfaction scores and revenues).
   A significant improvement in communication effectiveness in organizations was linked to a 29.5 percent rise in market value (.
   Effective communication facilitates engagement and builds trust, which is a critical ingredient in strong, viable organizations .Engaged employees enhance business performance because they influence customer behavior, which directly affects revenue growth and profitability).
five theoretical approaches that evolved in the last century–the classical, human relations, human resources, systems and cultural approaches. Communication features or characteristics of each approach are briefly described. More comprehensive treatments may be found in many communication texts, e.g.,
.
Organizations confront many challenges in today’s turbulent global market. They must process continuous changes and shifting workplace demographics, assimilate new technologies, manage knowledge and learning, adopt new structures, strengthen identity, advance diversity and engage employees–often across cultures and at warp speed. Internal communication lies at the center of successful solutions to these issues, and professional communicators must play key leadership, strategic and tactical roles to help their organizations resolve them. This section briefly reviews four issues affecting current practice:
1. Organizational Identity
Identification is a big concern for organizations because of the difficulties of being heard in a noisy world and disappearing organizational boundaries . Thus, organizations seek to create an identity that distinguishes them from others and ties employees more closely to them. Organizational identity has its roots in social identity theory), which refers to an individual’s self-concept that grows out of membership in social groups. Group identity refers to an individual’s sense of what defines “us” versus others. Employees or members also can develop an identity with their organizations (Ashforth & Mael, 1989; Mael & Ashforth, 1992). Haslam (2000) found that communication reflects and creates social identities, and shared identity helps build trust and shared interpretations.
effective internal communication strengthened employees’ identification with their organizations, more so than perceived external prestige. A strong company identity can boost employee motivation and raise confidence among external stakeholders (As Williams (2008) noted, however, a new generation of employees, less inclined to identify with their employers, requires new approaches to identity building. This may include greater use of new dialogue-creating media and e-communication groups. It also may require more employee interactions with customers and social causes, improved leaders’ listening skills and higher quality F-T-F communication).
2. Employee Engagement
engaging employees more fully in their work is the most important issue facing organizations. Engagement refers to “unleashing the full energy and talents of people in the work place”). Long an issue, it is more crucial today due to a dynamic marketplace, an information-saturated work place and trust and morale problems exacerbated by waves of downsizing, restructuring and corporate governance problems in the past 15 years). Employees are inundated with so much information today that they are overwhelmed, confused and work with the “volume off” ().
Professional communicators can help by aligning words with actions, building relationships and conversing with employees rather than communicating at them, and helping guide authentic executive actions which reflect organizational purpose. Burton (2008) suggested that new technologies help engage employees by personalizing executive communications and reinforcing face-to-face initiatives.
The benefits of an engaged workforce are clear.  organizations with engaged and committed employees were 50 percent more productive than those where employees weren’t engaged. Employee retention rates also were 44 percent higher. companies with more engaged employees produce greater financial returns. Engaged employees contribute discretionary efforts, which they otherwise may withhold).
3. Measurement
Professional communicators agree that measurement of their work is crucial, but they share few standards for what or how to measure. As a result, many measurement practices are tactical in nature rather than strategic and ongoing (In addition, organizations are struggling to set objectives for new social media and to measure their effects in internal and external communication initiatives (
Though steady advances are occurring in evaluating internal communication projects and programs, better measures are needed to assess linkages among communications, longer-term outcomes and desired behavioral changes.
4. Social Media
the Internet and Intranets were radically altering the marketplace and the nature of stakeholder relationships. New social media facilitate a “powerful global conversation” in which everyone can participate and share opinions, ideas, knowledge and images with each other, and circumvent traditional gatekeepers.  that apart from F-T-F communication, no other channels “allowed people to say things more creatively, expressively, precisely, and powerfully than the Internet” and other new media (xii).
Social media refer to new electronic and web-based communication channels such as blogs, podcasts, wikis, chat rooms, discussion forums, RSS feeds, web sites, social networks (e.g., MySpace and Second Life) and other dialogue-creating media. Social media are revolutionizing communications and reconfiguring the long-time S-M-C-R model of internal communication (). New media increase the volume, speed and every-way flow of communication, connecting people, giving them a voice and stimulating discussions about topics of common interest (

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2-As a chief Executive officer of a Agro based company, prepare a draft for your speech in the forth coming Annual general Body Meeting highlighting your company's achivements , growth and future plan etc?


Chairman Speaks – 2014    
I have great pleasure in welcoming you to the 103rd Annual General Meeting of your Company.
A NEW GOVERNMENT: NEW HOPES & ASPIRATIONS
In the best traditions of democracy, a new Government was recently elected with a resounding mandate. Shri Narendra Modi's clarion call for Development through Good Governance touched a special chord in the hearts and minds of people. His vision and persona has ignited new optimism among almost all sections of society. There is renewed hope that a new resurgent India will be built over time, bringing pride and dignity to all. The spirit embodied in "Sabke Saath, Sabka Vikas" indeed holds a promise of inclusive and participatory growth.
This is potentially a turning point in history and an opportunity to collectively script a new destiny for our nation. As a Company deeply rooted in India's soil, ITC is committed to realising the Vision of a dynamic, prosperous and self-reliant India. It is your Company's avowed mission to be a world-class Indian enterprise serving national priorities. This is manifest in your Company's determination to go beyond the confines of business to create enduring value for the larger Indian society. It is with this strength of conviction in your Company's Values and Vitality that I once again pledge ITC's fullest support to the new Vision for fulfilling our shared goal of a new India of our dreams.
It is indeed heartening that, despite the constraints of time and a challenging economic environment, the Finance Minister Shri Arun Jaitley, has presented a comprehensive maiden Budget addressing key reforms with a welcome focus on physical and social infrastructure. This should lay the foundation for long-term growth whilst meeting some of the critical needs of the weakest in our society.
ITC: TRIPLE BOTTOM LINE PERFORMANCE
As in earlier years, let me first share some of the highlights of your Company's triple bottom line performance. Amidst a challenging economic context, your Company recorded yet another year of strong performance. Gross Income registered a new high at Rs.48,176 crores, while Net Profit increased by 18.4% to Rs.8,785 crores. The segment net revenue, other than cigarettes, has grown 16-fold since 1996 to Rs.21,845 crores. As a result, almost 59% of net segment revenue of your Company is now from businesses other than cigarettes.
Rs Crs
ITC  Financial Highlights 1996-2014
   1996   2014
Gross Income   5,188   48,176
Net Segment Revenue
(other than Cigarettes)   1,363      21,845
PBIT   536   12,662
Profit After Tax   261      8,785
Net Assets Employed   2,584      39,229
Market Capitalisation*   5,571      2,84,307
CAGR in Total Shareholder Returns in the period 1996-2014 : 25.9%
*As on 25th July, 2014
This year, the FMCG industry in India witnessed a marked slowdown. Notwithstanding such an adverse operating environment, your Company's new FMCG businesses recorded a robust growth of 16%, crossing the Rs.8,000 crore mark. The FMCG-Others Segment also recorded its maiden profit with a PBIT of Rs.22 crores representing a positive swing of Rs.103 crores. Your Company's relentless effort to build world-class Indian brands, backed by cutting-edge Research & Development and innovation, will continue to drive performance in the years ahead.
ITC's commitment to superior triple bottom-line contribution is manifest in its globally acknowledged initiatives that create impactful societal value. Your Company has sustained its position as the only enterprise in the world of comparable dimensions to be carbon positive, water positive and solid-waste recycling positive for several years now. Your Company's sustainable business models today support around 6 million livelihoods across the country. ITC's Sustainability Report has been published for the 11th year now. The latest edition is in accordance with the new G4 guidelines of the Global Reporting Initiative. Your Company is one of the foremost in India to report at the highest "Comprehensive" level, well ahead of the global deadline.
THE CHALLENGE - CREATING GROWTH WITH EMPLOYMENT AND EQUITY
We live today in challenging times. The economy continues to be in a tailspin with a second successive year of sub-5% growth. Persistent Inflation, high Fiscal, Trade and Current Account deficits have severely curbed the growth potential. The cutback in investments and piling-up of stalled projects also contributed to the dismal performance. The consequent de-growth of 0.7% in Manufacturing is therefore not surprising. Agriculture was the lone performer at 4.7%, though it continues to be at the mercy of vagaries of nature. The impending impact of the El Nino looms  large with a threat of destabilising the critical agricultural sector. Though Fiscal and Current Account deficits have been reined in somewhat, it has been at the cost of productive expenditure and dependence on a weak Rupee for exports. The new Government therefore has truly an unenviable task of resurrecting the economy, whilst ensuring that growth is equitable and can spur more than commensurate employment.
Foremost among the priorities is the need to find longer-term solutions to deal with Inflation, the Twin Deficits and Unemployment. It is a matter of concern that the country is yet to achieve international competitiveness in several segments crucial to the Indian economy. This is evident in the composition of India's trade basket. Imports are of high value-added goods and services, while exports are largely at the commodity end with relatively lower-value added products and services. Consequently, the value addition in the domestic economy is of a much lower order impacting the scale and quality of jobs. In the interest of longer-term macro-economic stability, it is desirable that the trade account gets balanced on the strength of export competitiveness rather than on capital flows to finance the deficit. The vulnerability on the external front is further accentuated by the build-up of accumulated international debt that is far ahead of the foreign exchange reserves. As a result, the ratio of foreign exchange reserves to India's total external debt has declined from about 114 % to 69% over the last 5 years.
Sizeable investments are required to take the economy to a higher growth trajectory and to build competitiveness of the Indian economy. Domestic savings alone will not be adequate to fuel high levels of economic growth. It is therefore crucial to attract and facilitate both domestic and foreign investment to invigorate the economy. This must be done in a manner that encourages international players to create the fullest value addition within the shores of the country enabling a multiplier effect on job creation.
Unfortunately, the ease of doing business and setting up enterprises in India is a major constraint that deters investment. The plethora of procedural clearances from local bodies, municipalities, district administration, state and central governments makes it virtually impossible to speedily implement projects. I was recently saddened by media reports that high net-worth Indian nationals in a position of leadership have invested significantly large capital in real estate assets overseas. This is symptomatic of the fact that even Indian capital has to seek lucrative opportunities abroad given the difficulty of investing profitably in the domestic economy, quite apart from perhaps a serious deficit in patriotic fervour. Efforts to eliminate the extensive procedural logjam will obviously take time. In the interim, value and job creating investments will need to be supported by incentives to reward the patient and the perseverant.
Compounding the situation are lacunae in policies that have unfortunately contributed to widening the twin deficits besides restricting the job-creating potential. In my address today, based on ITC's intimate engagement with the consumer market and the rural economy, I will dwell on a few areas where a balanced policy framework can lead to larger value capture for the Indian economy and stimulate a job multiplier of a significant order.
THE INDIAN GLOBAL MARKET : DOMINANCE OF INTERNATIONAL BRANDS
India's billion plus population represents potentially a huge consumption market. With rising disposable incomes and a growing middle as well as affluent class, there is a substantial growth momentum in the consumption of higher-end value-added products and services.
Over the years, India has progressively allowed free competition leading to the establishment of a growing Indian global market. Dating back to pre-Independence days and more so postliberalisation, brands owned by foreign enterprises have held sway over this expanding market.
Today, almost all the well-known international players market their brands in India. Consequently, a dominant part of the upper-end consumer spend has been captured by these brands. These range from high-end luxury products, white goods, consumer electronics, computers and branded software to items of daily consumption, including soaps, shampoos, tea, coffee, burgers, sanitary napkins, diapers, baby food, potato chips and many more. The list is unending and includes even packaged "idli" and drinking water. In comparison, the share of domestic brands is modest and largely confined to markets characterised by lower-income consumer groups with relatively much lower value addition.
JOBLESS CONSUMPTION GROWTH
Many of the international companies operating in India rely, in part or full, on their global supply chains to service the Indian market. This is primarily due to the difficulties faced in establishing competitive manufacturing units in India. Therefore, their ready access to well-developed supply chains overseas facilitated further by lowered import duties makes international sourcing more attractive. As a result, the country's consumption basket has a large share of imports either as finished products, sub-assemblies or components. Therefore, despite the presence of multinational entities in India, a substantial part of the value created remains outside the country. This is one major reason for the jobless consumption growth witnessed in recent times.
For a developing country like India, with millions in poverty and a young demographic profile that adds nearly 12 million to the job market every year, creation of sustainable livelihoods is a crying priority. From 2005 to 2012, only 2 million jobs were added annually, which is well below the asking rate. It is unfortunate that commensurate employment opportunities could not be created despite the high levels of growth witnessed in the economy during this period. The large growth in the consumption market was therefore unable to unleash an equivalent opportunity to reap India's Demographic Dividend.
Multi-National Corporations possess the unique competitive ability to switch supply chains globally depending upon currency fluctuations as well as opportunities arising from labour arbitrage. This does not always make for a stable employment opportunity and value addition in the domestic economy. International enterprises must therefore be encouraged to create supply chains in India that enable larger value capture in the domestic economy. This can be stimulated by  widespread reforms that progressively create conditions for the competitiveness of enterprises operating in India supported by a combination of tariffs and incentives to make value-addition in India commercially compelling.
LACUNAE IN ROYALTY POLICY
The problem of jobless consumption growth coupled with the widening twin deficits got further aggravated by a change in policy regime in 2009 permitting limitless repatriation of royalty to overseas holding companies. It has been reported that such payouts have increased by 70% since then to reach nearly Rs 40,000 crores. This outflow is equivalent to about 20% of India's annual Foreign Direct Investment. This transfer attracts a much lower withholding tax of around 10%, given India's bilateral agreements across the globe, thus rendering infructuous the 25% tax imposed in the Budget 2013 as a remedy.
With consumption expenditure expected to grow from the current level of USD 1 trillion to USD 3.6 trillion in 2020, such unrestrained outflows can assume even more alarming proportions. The lower rates of withholding tax on royalty payments will entail a considerable loss to the Indian exchequer as this method of profit repatriation escapes the full income tax rate that Indian companies are subjected to. Consequently, the revenue deficit will have to be ultimately borne by domestic industry through higher taxes, placing them at a competitive disadvantage.
International enterprises compete with other global and domestic players for a larger pie of the attractive Indian global market. Consequently, in their enlightened self-interest, they bring in brands, technology and know-how to continuously enhance their competitiveness, market standing and profits. Therefore, there is really no justification whatsoever to allow royalty, let alone limitless payouts, by the Indian subsidiaries to their overseas holding companies. This policy can thus become an instrument of tax avoidance causing considerable injury to the exchequer and the Indian economy.
Royalty payments should therefore be permitted only between unrelated parties based on purely commercial considerations, with little or no governmental intervention. This will facilitate Indian enterprises in accessing intellectual capital to compete effectively with international players in the Indian global market. Such a policy framework will go a long way in creating a level playing field for Indian enterprises besides ensuring that the twin deficits do not get further aggravated as India's private consumption market grows.
THE POTENTIAL IN FOOD PROCESSING & AGRO-FORESTRY
The Government has rightly identified employment generation and control of food inflation as issues of utmost priority. In this context, I would like to highlight today the potential of two sectors relating to the rural economy, namely food processing and agro-forestry. To my mind, supportive  policies in these areas can significantly contribute to job creation, enhance rural incomes, help manage food inflation and promote sustainable agriculture.
Food Processing
It is well acknowledged that the control of food inflation rests primarily on the management of supply-side constraints that fuel its growth. Even though India produces enough food, consumer prices are high due to enormous wastages that also result in lower farmer incomes. Such wastages can be as high as 40% in the case of perishables. India processes only 2% of its agri-produce compared to 40% in countries such as Malaysia and Thailand. A big push to India's Food Processing sector will be a force multiplier in creating large-scale employment, enhancing farm incomes and combating agri-wastages. Given that supply chains in this sector tend to be predominantly local and regional, jobs created will be largely in Small and Medium Scale Enterprises contributing to regionally balanced employment.
Unfortunately, high prices of processed food restrict demand and are a key constraint in the growth of this sector. This is primarily due to the cascading effect of taxation along the value chain. Fiscal policies have subjected processed foods to taxes, even though food itself is generally not a taxed commodity. Consequently, there is lower demand for processed food leading to low investments in this very important sector.
A paradigm change can take place if demand for processed food products is substantially increased by lowering prices through a zero-tax regime on this industry. This will help in paring down prices, enhancing demand thus making it attractive for investment. A conducive policy can help create over 9 million jobs in the food processing sector, 60% of which can be in the rural and semi-urban areas. Over time, growth in the processed food sector will drive investment in the agri value chain and lead to productivity enhancement and waste reduction. This will also stimulate creation of infrastructure such as cold chains, storage and modern logistics. Together with other reforms related to agriculture such as the Model APMC Act, improved access to quality inputs like seed, fertiliser, finance, irrigation and extension services, this would enhance farm incomes and unclog the supply side bottlenecks to eventually control food inflation in a sustainable manner.
Your Company's extensive engagement with Rural India that has empowered over 4 million farmers is an example of the transformational potential of the processed food sector. The ITC e-Choupal has helped in raising rural incomes and productivity by developing competitive value chains linked to ITC's Foods businesses and by promoting sustainable agriculture. This gives me the confidence to reiterate that a concerted policy impetus to develop India's food processing sector through a zero-tax regime can bring about dimensional change by creating jobs, enhancing rural incomes and containing food inflation.
Agro-Forestry
The second area of immense potential linked to India's Agriculture relates to Agro-Forestry that effectively addresses the traditional conflict over land-use for food, fuel, fodder, fibre and forests. By synergising tree-growing with crop production, both food and wood security can be ensured, thereby contributing to the conservation of precious natural resources. Farmers get multiple benefits by using their scarce land resources to maximise returns through both agriculture and tree-planting, considerably enhancing their incomes. Unfortunately, the enormous potential of agro-forestry has been thwarted by a myopic policy that has prevented job creation in India whilst promoting avoidable imports.
India currently imports USD 5 billion worth of wood and wood-based products such as furniture, construction timber, pulp & paper, packaging, plywood and so on. Many of these imports attract duties as low as nil to 5%. The tariff policy, as it stands today, makes imported wood more attractive than growing trees in India. This prevents livelihood creation in the country and "exports" jobs to countries that grow trees and sell wood-based products. At the same time, these imports contribute to enlarging the Current Account Deficit.
Conducive policies ought to be crafted to boost India's natural advantage in agro-forestry and promote employment-generating wood-based industries. I am given to understand that agroforestry has the potential to create over 15 billion person-days of employment. To give a fillip to this sector, agro-forestry must be extended all the benefits available to agriculture including long term institutional credit and unrestricted movement of such produce within India. In addition, raising import duties on wood and wood-based products to an appropriate level will encourage growing of trees, thereby enhancing employment as well as supplementing green cover. In addition, R&D must be promoted for the evolution of improved wood species that are disease and climate resistant. This could be further supplemented by suitable fiscal and financial incentives. Access to competitive sourcing of wood locally will stimulate related crafts and industries on a much larger scale. Agro-forestry is also an important source of carbon-neutral biomass energy which can substantially reduce dependence on fossil fuels. Besides, it is an ideal source for distributed energy systems which can effectively meet the needs of smaller rural communities.By providing a crucial policy foundation, the entire wood-based value chain can substantially support the nation's quest for sustainable and inclusive means of growth.
As you are already aware, your Company's extensive Social and Farm Forestry Programme has greened over 1,60,000 hectares, creating over 70 million person-days of employment. An innovative agro-forestry initiative has further enhanced farm incomes supporting sustainable livelihoods and maximising productive land-use. Your Company's experience is a pointer to the tremendous opportunity that can be unleashed by conducive policy in this sector.
BUILDING WORLD-CLASS BRANDS FOR A DEVELOPED INDIA
In my address to you last year, I had emphasised that tomorrow's world will belong to those who create, nurture and own intellectual property. Such assets indeed form a superior basis for sustaining competitive advantage over the long run. Ownership of Intellectual Capital will be the springboard that will propel India from a Developing Economy to a Developed Nation. It will transform the country from a provider of labour, commodities and relatively lower value-added goods & services to a position of leadership in innovation, thereby earning global respect.
For a country with proven intellectual prowess, creative capability and entrepreneurial ability, it is a sad augury that the nation is bereft of globally competitive Indian brands. As a result, the country is rendered poorer by its inability to service even its own home market effectively. It is mission critical today to create National Champions who will build world-class Indian brands through ownership of intellectual property. It is only then that a virtuous cycle of innovation and investment will create new opportunities for growth with the generation of higher order sustainable livelihoods.
The Hon'ble Prime Minister has articulated the Government's resolve to revive Brand India on the strength of 5 Ts – Tradition, Talent, Tourism, Trade and Technology. To that I humbly add another T – for Trademarks – Indian Trademarks that are manifest in worldclass Brands and built on the strength of superior intellectual property. A successful global brand is a badge of honour for the country it belongs to, and a sustained source of wealth creation. Popular brands reflect the innovative capacity of the countries of their origin. When a country's institutions build world-class brands, they enrich their economies, enabling sustainable growth and higher-income livelihood opportunities.
I have confidence that Indian enterprises truly have the mettle to create world-class brands. Not very long ago, countries like Japan and Korea had a similar dream amidst every adversity. Today, their brands have conquered the world and earned global respect. Admittedly, building winning brands is not an easy task. Successful global brands have been steadfast in nourishing their consumer franchise through ongoing innovation and remaining well ahead on the learning curve. Therefore, the challenge of building brands in competition with such established players is no mean task. The countries that have accomplished this seemingly impossible mission have done so through close collaboration between the governments and their companies over the long haul.
Indian companies, on their part, must invest in cutting-edge R&D to build intellectual capital. The Government can provide the right signals by refocussing the incentives to more result-oriented outcomes. Currently, weighted tax deduction on R&D expenditure is based merely on inputs without any linkage to outcomes in the form of consumer franchise. Such incentives are best linked to revenue generation through the sale of branded products. For instance, a percentage of sales of the Indian brands could be an effective basis for crafting the incentive.
Your Company has tirelessly endeavoured to build world-class Indian brands. In a relatively short span of 10 years, a vibrant architecture of popular brands has been crafted organically. Some of them are already clear market leaders in their segments. In aggregate, these new consumer brands currently represent an annualised consumer spend of over Rs.10,000 crores. Going forward, your Company's foray into the Dairy and Beverages segments will further enrich this portfolio.
Your Company is committed to investing in India's future. You would be happy to know that 65 projects involving a built-up area of 28 million sq. ft with an outlay of over Rs.25,000 crores are currently under implementation or in an advanced stage of planning. These projects are distributed across a majority of States and will create livelihood opportunities all over India. The shareholders present here today would be pleased to know that West Bengal has a high share of these projects with an outlay of over Rs.3500 crores, encouraged by the conducive policies of the State. Such assets will impart substantial strength to your Company's competitive capacity. Therefore, it is my belief that your Company can aim for a revenue of Rs.1,00,000 crores from the new FMCG businesses alone by the year 2030 and realize its vision of being the No.1 FMCG player in India.
It is a matter of pride that your Company's brands have anchored the development of competitive value chains benefitting some of the poorest regions of the country. In conjunction with your Company's social investment programme for integrated rural development, these brands have enabled the empowerment of millions of disadvantaged in India's villages by generating sustainable livelihoods. Your Company's CSR programme includes farmer empowerment through the globally acclaimed ITC e-Choupal, large-scale Watershed Development, Social Forestry, Animal Husbandry, Women's Empowerment and Primary Education which together have transformed rural lives, winning global acclaim and recognition.
CREATING NATIONAL CHAMPIONS
India's challenges require a quality of growth that creates, captures and retains larger value in India. It requires organisations to consciously strengthen value chains that extend to the country's rural areas and backward regions empowering the weakest. Winning Nations across the world, especially from emerging economies, have supported the creation of National Champions who are prime drivers in creating sustainable wealth and livelihoods. Global winning brands such as Sony and Samsung are the fruits of that visionary support. It is time that India takes bold steps to create, nurture and support many a National Champion who will create enduring value for the country with passion.
Your Company is privileged to be able to pursue a path less travelled to create multiple drivers of growth supported by winning brands and an abiding vision to put Country before Corporation. It is our collective aspiration that your Company should be one such National Champion in the  service of the Nation. In this journey, I draw strength from Team ITC and from their dedication and commitment.
As I conclude, may I on behalf of the Board and the employees of your Company once again thank you, our valued shareholders, for your continued support and encouragement.
Thank you, Ladies & Gentlemen.
For a country with proven intellectual prowess, creative capability and entrepreneurial ability, it is a sad augury that the nation is bereft of globally competitive Indian brands. As a result, the country is rendered poorer by its inability to service even its own home market effectively. It is mission critical today to create National Champions who will build world-class Indian brands through ownership of intellectual property. It is only then that a virtuous cycle of innovation and investment will create new opportunities for growth with the generation of higher order sustainable livelihoods.
The Hon'ble Prime Minister has articulated the Government's resolve to revive Brand India on the strength of 5 Ts – Tradition, Talent, Tourism, Trade and Technology. To that I humbly add another T – for Trademarks – Indian Trademarks that are manifest in worldclass Brands and built on the strength of superior intellectual property. A successful global brand is a badge of honour for the country it belongs to, and a sustained source of wealth creation. Popular brands reflect the innovative capacity of the countries of their origin. When a country's institutions build world-class brands, they enrich their economies, enabling sustainable growth and higher-income livelihood opportunities.
I have confidence that Indian enterprises truly have the mettle to create world-class brands. Not very long ago, countries like Japan and Korea had a similar dream amidst every adversity. Today, their brands have conquered the world and earned global respect. Admittedly, building winning brands is not an easy task. Successful global brands have been steadfast in nourishing their consumer franchise through ongoing innovation and remaining well ahead on the learning curve. Therefore, the challenge of building brands in competition with such established players is no mean task. The countries that have accomplished this seemingly impossible mission have done so through close collaboration between the governments and their companies over the long haul.
Indian companies, on their part, must invest in cutting-edge R&D to build intellectual capital. The Government can provide the right signals by refocussing the incentives to more result-oriented outcomes. Currently, weighted tax deduction on R&D expenditure is based merely on inputs without any linkage to outcomes in the form of consumer franchise. Such incentives are best linked to revenue generation through the sale of branded products. For instance, a percentage of sales of the Indian brands could be an effective basis for crafting the incentive.
Your Company has tirelessly endeavoured to build world-class Indian brands. In a relatively short span of 10 years, a vibrant architecture of popular brands has been crafted organically. Some of them are already clear market leaders in their segments. In aggregate, these new consumer brands currently represent an annualised consumer spend of over Rs.10,000 crores. Going forward, your Company's foray into the Dairy and Beverages segments will further enrich this portfolio.
Your Company is committed to investing in India's future. You would be happy to know that 65 projects involving a built-up area of 28 million sq. ft with an outlay of over Rs.25,000 crores are currently under implementation or in an advanced stage of planning. These projects are distributed across a majority of States and will create livelihood opportunities all over India. The shareholders present here today would be pleased to know that West Bengal has a high share of these projects with an outlay of over Rs.3500 crores, encouraged by the conducive policies of the State. Such assets will impart substantial strength to your Company's competitive capacity. Therefore, it is my belief that your Company can aim for a revenue of Rs.1,00,000 crores from the new FMCG businesses alone by the year 2030 and realize its vision of being the No.1 FMCG player in India.
It is a matter of pride that your Company's brands have anchored the development of competitive value chains benefitting some of the poorest regions of the country. In conjunction with your Company's social investment programme for integrated rural development, these brands have enabled the empowerment of millions of disadvantaged in India's villages by generating sustainable livelihoods. Your Company's CSR programme includes farmer empowerment through the globally acclaimed ITC e-Choupal, large-scale Watershed Development, Social Forestry, Animal Husbandry, Women's Empowerment and Primary Education which together have transformed rural lives, winning global acclaim and recognition.
CREATING NATIONAL CHAMPIONS
India's challenges require a quality of growth that creates, captures and retains larger value in India. It requires organisations to consciously strengthen value chains that extend to the country's rural areas and backward regions empowering the weakest. Winning Nations across the world, especially from emerging economies, have supported the creation of National Champions who are prime drivers in creating sustainable wealth and livelihoods. Global winning brands such as Sony and Samsung are the fruits of that visionary support. It is time that India takes bold steps to create, nurture and support many a National Champion who will create enduring value for the country with passion.
Your Company is privileged to be able to pursue a path less travelled to create multiple drivers of growth supported by winning brands and an abiding vision to put Country before Corporation. It is our collective aspiration that your Company should be one such National Champion in the  service of the Nation. In this journey, I draw strength from Team ITC and from their dedication and commitment.
As I conclude, may I on behalf of the Board and the employees of your Company once again thank you, our valued shareholders, for your continued support and encouragement.

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