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ITC to enter all FMCG segments, says Deveshwar
The Financial Express - 31 Jul 2014

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 company’s 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  India’s future. You would be happy to know that 65 projects involving a  built-up area of 28 million sqft with an outlay of over Rs. 25,000 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 Rs. 3,500  crore.

“We want to grow  in new areas…in 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 ITC’s 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 company’s foray into the dairy and beverages segments  will further enrich the FMCG portfolio. “Such assets will impart substantial  strength to the company’s competitive capacity. Therefore, it is my belief that  the company can aim for revenue of Rs. 1,00,000 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.

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