ITC to enter all FMCG segments, says Deveshwar

Written by fe Bureau | Kolkata | Updated: Jul 31 2014, 08:28am hrs
ITC chairman YC Deveshwar on Wednesday said the conglomerate will enter all segments that can be called FMCG. Anything that can be categorised as FMCG sooner or later, ITC will enter that, Deveshwar told the media after the companys annual general meeting (AGM). He said the company would first enter the beverage segment since it is a relatively lower hanging fruit.

In dairy, the company has started with the back-end of the vertical through creating large cattle farms since it wants to develop its dairy business organically. We want to create new economic activity through an organic growth plan in the dairy sector, Deveshwar said. But investments, he said, were not moving fast which created bottlenecks for growth.

If investments cannot move fast that is a bottleneck. The company is committed to investing in Indias 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 R25,000 crore are currently under implementation or in advanced stages of planning. These projects are distributed across a majority of states and will create livelihood opportunities all over India, Deveshwar told shareholders, adding that West Bengal had a high share of these projects with an outlay of over R3,500 crore.

We want to grow in new areasin areas of fruit juices, tea, coffee, chocolate and dairy products. This is the best time to absorb the high cost of gestation of the new businesses in which the company is planning to enter, Deveshwar said.

He said it was a good move to diversify into other categories way back in 1996 and the move has proved to be yielding in the context of its core business cigarettes coming under pressure. He said though ITC was internally ready with e- cigarettes, which can be looked as a business of intellectual property rights, the government was not ready with the policy. But, even under stress, cigarettes would continue to be ITCs mainstay because it gives us cash flow and enables the company to invest in other areas, Deveshwar said.

Declaring its first quarter results on Tuesday, ITC said the steep increase in excise duty on cigarettes for the third year in succession, along with a further increase in value added Tax (VAT) on cigarettes by some states, would exert further pressure on legal cigarette industry volumes and sub-optimise revenue potential from the tobacco sector.

The chairman said going forward the companys foray into the dairy and beverages segments will further enrich the FMCG portfolio. Such assets will impart substantial strength to the companys competitive capacity. Therefore, it is my belief that the company can aim for revenue of R1,00,000 crore from the new FMCG business alone by the year 2030 and realise its vision of being the number one FMCG player in India, he said.

Even as revenues from hotels were muted, the company continues to expand its hotel business with 3,000 rooms to be added by 2017, N Anand, a director in the company, said. He said eight hotels were under construction and 15-18 were on the drawing board.