ITC to spend $2 billion on capacity expansion, product quality upgrade

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August 13, 2021 1:30 AM

The chairman informed that the conglomerate's integrated rural healthcare solution will be under its social investment initiatives. “It is not a commercial venture,” he added.

“It is a medium-term horizon, it should be about a few years,” chairman and MD Sanjiv Puri said on the timeline of the proposed investment.“It is a medium-term horizon, it should be about a few years,” chairman and MD Sanjiv Puri said on the timeline of the proposed investment.

Cigarette-to-FMCG-to-hotel major ITC on Thursday said it is planning to invest around $2 billion over the medium term for capacity expansion and setting up new plants across businesses and bringing in contemporary technology to upgrade product quality.

“It is a medium-term horizon, it should be about a few years,” chairman and MD Sanjiv Puri said on the timeline of the proposed investment.

Puri, who was talking to the media, said the investment was needed for “capacity gearing” in the FMCG business, agri business and paperboards, paper and packaging business. “As the volumes of a particular category increase and utilisation reaches the threshold (level), we will have to add additional lines,” he pointed out.

The diversified conglomerate is setting up a packaging plant in Gujarat, while a nicotine derivative plant will be built in Karnataka. It is also in the process of commissioning a state-of-the-art spices facility for domestic markets as well as exports. The company requires fresh investment from time to time to upgrade quality, and for that it has to bring in contemporary technology. Further, it is investing in launching a Super App during the year, called ITC-MAARS or Metamarket for advanced agriculture and rural services.

On the current market scenario, the ITC chairman said there is very clear sequential recovery across categories whether it is staples or discretionary. “Sequentially, July was better than the previous months and August has been better than the previous months,” Puri said.

Asked about the outlook for the third quarter, which is the festival season, he said signs are “reasonably encouraging” right now. “If all of us collectively go to a situation where the subsequent waves are small and do not really spike, it is certainly encouraging…However, these are early days, so it is best to watch for a little more time to conclude.”

To a question on the probable areas for acquisitions going forward, Puri said the company is looking into the acquisition opportunities in segments like food and personal care products, among others. Addressing shareholders at the company’s AGM on Wednesday, he said the company was “proactively exploring” inorganic opportunities as part of the next horizon vision.

The chairman informed that the conglomerate’s integrated rural healthcare solution will be under its social investment initiatives. “It is not a commercial venture,” he added.

ITC receives interests for managing hotels overseas

Puri said ITC is pursuing the possibilities of running overseas hotels under management contracts as it had received interests from outside India. “As far as outside of India is concerned, we have received interests, which were pre-Covid, for managing certain properties outside of India. Those are the possibilities which are being pursued. It did not progress the way it was anticipated because of the Covid situation. Some of these destinations are based where people are not visiting these days or the traffic is less. Therefore, at the right time it will be progressed, but these opportunities are also there,” Puri told reporters here.

Currently, the company is developing a mixed-use development project, comprising a luxury hotel and a super-premium residential apartment complex, in Colombo. The project construction activity has been adversely impacted largely due to disruptions in the aftermath of the terror incidents in 2019 and then by the Covid pandemic.

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