ITC chairman YC Deveshwar said brands had a big role to play in the countrys economy. In India a host of items of daily use were actually foreign ownership brands draining out royalty for intellectual property rights.
Every developed country has its own brand of products for daily use in its domestic market. Such countries also have global brands with which it earns wealth for the country through royalty for intellectual property rights. Brand is a huge asset, Deveshwar said pointing out that ITCs aim in developing brands was also intended to foster growth in a new direction.
He said ITCs planned investment would be spread across all sectors but the company sees cigarette to become a small part of its business in the near future. Deveshwar said even if the company was ready to make investments, there were bottle necks like availability of land and government clearances, which were creating obstacles for investment.
ITC has able to invest only R2,000 crore in FY 13 and it targets to invest R6,000-7,000 crore in FY 14. Deveshwar said there were 40 projects which were at various stages of implementation. The company was continuously lining up new projects.
He however didnt want to say about the new projects, which the company has planned but said that ITC would gradually get into every area of non- cigarette FMCG.
New FMCG is already a R7,000 crore business and it is nearing breakeven. This year we will break even. Next year we will make profit, Deveshwar said.
Although the company envisages every segment to be financially independent and run business on its own cash flow, Deveshwar admitted that cigarette business was still providing the conglomerate the required cash flows with which it was funding its segments like new FMCG and agri business as well.
The leadership of our cigarette brands provides the basis for the cash flows that are enabling the creation of world-class Indian brands in multiple consumer segments. They are also the basis for building the capital-intensive hotels and paperboards businesses. Along with packaging, information technology agri business, these together constitute vital assets that enable the company to be the net earner of foreign exchange, Deveshwar said.