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ITC to double sales of non-cigarette FMCG biz
The Hindu - 17 Sep 2013

ITC is increasingly focussing on its non-cigarette FMCG business, which is  now on the path of profitability, with healthy growth rates. It is already  growing at a faster clip than the cigarette major’s core business area. The  company plans to double its turnover from this business segment within five  years.

Stating this, ITC’s director-in-charge of non-cigarette FMCG business,  Kurush Grant, told The Hindu that the share between the cigarette and  the non-cigarette business is 58:42 per cent in terms of top line.  “Non-cigarette business is growing at a faster clip,” he said adding that new  launches were in the pipeline but he was unable to share details.

ITC’s non-cigarette business includes branded packaged foods, personal  care, lifestyle apparel, education and stationery, incense sticks and safety  matches. The brands include Aashirvaad, Sunfeast, Bingo, Candyman, Kithchens of  India, Vivel, Wills Lifestyle and Bingo. Mr Grant said that all of the brands  were now available pan-India.

To a question whether this segment was recession-proof, he said that “These  are items that everybody uses in small amounts but the base is very broad since  lots of people use the items on a daily basis”.

Pointing out that this new FMCG segment was targeting a turnover of Rs.15,000 crore by 2017-18 against Rs.7,000 crore in 2012-13, Mr. Grant said  that the branded packaged food business was fairly big and ITC enjoyed a few  advantages. These include sourcing raw materials from the farmers through the  e-choupal network, getting the recipes and expertise from the chefs at its  hotels “who know how to bring out the best taste … these are natural advantages  which we leverage to get the right quality and deliver differentiated offerings  to the customer..”

Non-FMCG segment

ITC estimates the Indian FMCG industry at Rs.2.5-lakh crore with a  compounded annual growth rate (CAGR) of 17 per cent over the last five years.  “We have bettered industry growth rate,” he said. The company said that in  2012-13, its non-FMCG segment revenues grew by 26.5 per cent with a positive  swing of Rs.114 crore at the PBIT (profit before interest and tax) level.

In terms of annualised consumer spend, Aashirvaad and Sunfeast are over  Rs.1,000 crore each, Classmate (a stationery product) is Rs.1,000 crore while  Bingo, Candyman and Vivel are Rs.500 crores each.

On the lifestyle sector, Mr. Grant admitted that there was a great  discretionary factor at play in this segment.

“We are still in the growth phase, we have quite a few brands and overall  we are doing well”

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