ITC’s FMCG business to include newer categories, acquisitions, says Puri
New Delhi: Cigarettes to packaged consumer goods conglomerate ITC Ltd on Friday reiterated its plans to expand its fast-moving consumer goods business by adding newer segments under its portfolio and even looking at strategic acquisitions, the company said during its 108th annual general meeting in Kolkata.
“To accelerate growth in the FMCG businesses, the endeavour is not only to fortify the existing categories towards delivering industry leading performance but also to foray into newer categories and sub-segments. This would be supported by multi-dimensional investments as well as strategic opportunities for acquisitions,” ITC’s Sanjiv Puri told shareholders during his maiden AGM address as the chairman of the company.
The move is in line with ITC’s efforts to reduce its dependence on the tobacco business riddled with excessive taxing and regulation, and instead build a large stable of consumer goods brands to compete with the likes of Hindustan Unilever, PepsiCo and Britannia.
For the year ended March 2019, ITC posted a net revenue of₹44,415 crore, with profit after tax of ₹12,464 crore. For the same year, the revenue for its FMCG-others business, including branded packaged foods, personal care stationery products, lifestyle retailing, incense sticks and matches stood at₹12,505.28 crores.
To be sure ITC already sells packaged foods, personal care, and stationery under its consumer goods portfolio, spanning brands such as Aashirwad, Sunfeast biscuits, Yippie noodles, B Natural juices, Vivel soaps, Bingo chips and incense sticks. Last year, the company also forayed into dairy products. Over 50 products were launched last year to strengthen existing categories and enter newer segments, the company said.
“In the last two to three years, ITC has expanded its FMCG portfolio by foraying into new segments. This includes the luxury ‘Fabelle’ Chocolates collection, dairy & dairy beverages under the ‘Aashirvaad Svasti’ and ‘Sunfeast Wonderz’ brands, frozen foods from the ‘ITC Master Chef’ collection, skincare with the premium ‘Dermafique’ among others.
As a result, newer FMCG businesses contribute 25% to ITC’s segment revenue; while EBITDA for the segment jumped over 50% to ₹688 crore in FY19, the company said on Friday. Some of its key brands also achieved scale. In the last financial year, its packaged foods brand Aashirvaad touched ₹4,500 crore in sales; Sunfeast is over Rs.3,800 crores; Bingo! became a ₹2,500-crore brand.
The company, said Puri, is also scaling its manufacturing infrastructure, by “investing in building state-of-the-art manufacturing infrastructure across the country to rapidly scale up the FMCG businesses…” This includes the creation of 20 Integrated Consumer Goods Manufacturing and Logistics (ICML) facilities that will aid the company with economies of scale, freshness and close-to-market distribution.
ITC’s consumer goods reach six million retail outlets today, a network it will continue to expand, according to Puri. “Substantive investments are being made in expanding this network and in developing alternate and emerging channels such as modern trade, on-the-go, food services, end-to-end cold chain, e-commerce and so on.”
ITC Ltd had earlier set a target of achieving ₹100,000 crore in revenue from the sale of fast-moving consumer goods by 2030.