ITC: Bingo!

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: After taking a beating on the bourses and witnessing a decline in cigarette volumes by 2% in the first quarter due to a price rise brought about by increased taxes, ITC seems to be on the right track again. Consumers appear to have accepted the price rise and volumes are set to go up. This is critical as the tobacco business contributes 40% of ITC’s sales and 72% of its EBITDA. But then, ITC is rapidly morphing into a diversified company with more focus on its new FMCG business. The food unit contributes 62% of its FMCG unit. The biscuit business, where ITC is placed third, is expected to grow by 40% in the next three years. It has opted for an aggressive strategy in the snack foods business and Bingo has already captured 16% of the marketshare. Now, the company is planning to acquire local players to augment its presence. These businesses are expected to turn around by 2011, by when the company’s dependence on tobacco revenues would have reduced. In fact, by 2011, ITC would have a totally different look, with other units in the agri and paper businesses also contributing.

M&M: Stepping on gas

This $800 m company plans to be a billion-dollar one by 2010 and is targeting a $1 bn m-cap from the current $600 m. While it is scouting for acquisitions in the forgings and technology businesses overseas, the Logan has quietly become the largest selling car in its segment. It’s centralised sourcing strategy, which allows M&M to have a strict control over raw material costs, gains analyst’s attention. Raw materials, as a percentage of net sales, actually declined to 68.4% in the first quarter from 69% in the previous year. This is despite costs increasing across the board. And though the net profit dipped by 6% y-o-y in the Q1, experts believe that its strategic investments in subsidiaries and its growing international presence in the auto and related sector will make M&M a player of global reckoning.