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ITC sets aside Rs.25k cr for Indian Trademarks Corp
The Financial Express - 28 Jul 2012

ITC on Friday unveiled an ambitious strategy to invest Rs. 25,000 crore in the next five to seven years in a slew of ventures including a foray into the health and nutrition R&D space. Addressing shareholders at the company's annual general meeting, chairman Yogi Deveshwar said the company was currently working on 40 projects and awaiting clearances for a few more. It was ITC's aspiration, Deveshwar said, to become the top FMCG player and also to create a storehouse of valuable Indian brands, turning the firm into an "Indian Trademarks Corporation".

The chairman confirmed at a press conference that funding investments would not be an issue given the company's cash reserves are now close to Rs. 8,000 crore. "Half of this amount may be used to pay dividends, but ITC has already invested Rs. Rs. 2,700 crore this year and we hope to mobilise more resources over the next few months," he observed, ruling out a rights issue to grow the non-cigarette FMCG businesses. Cash being thrown up by the cigarettes business, he said, would be channeled into new projects. The entry into the nutrition and health R&D space, he said, was driven by the need for research platforms designed to create unique nutritional interventions that can address cardiovascular problems and diabetes. "ITC's growing presence in agriculture, food and personal care products is enabling a synergy of R&D capabilities to deliver future products aimed at nutrition, health and well-being," Deveshwar said. ITC already has an R&D platform based in Bangalore.

Non-cigarette FMCG businesses currently contribute 56% of the company's net revenues and are growing at a much faster rate than ITC's traditional businesses, the chairman said. "We hope to treble the turnover of this segment from Rs. 5,500 crore in the next 5-7 years to around Rs. 15,000 crore," he said. Deveshwar believes the consumption story in India is still alive, though "what is not alive is the investment story".

ITC's dairy business is set for launch from Munger in Bihar while several animal husbandry projects are in place. The firm's paper and packaging division is awaiting environmental clearances for executing a Rs. 3,500-crore project, and a R250-crore project is under way at Bhadrachalam.

Although profits for the hotels division halved in the June quarter to Rs 26 crore, ITC plans to go ahead with two luxury properties in Kolkata and at the Classic Gold Resort near Gurgaon. Projects in the pipeline include properties at Hyderabad, Noida, Amritsar, Coimbatore and Bangalore. Meanwhile, the super luxury ITC Grand Chola at Chennai is ready and awaiting commercial clearance.

ITC is building two integrated foods logistics hubs in West Bengal across an 18-acre and 39 acre plots at an investment of Rs 500 crore. Deveshwar confirmed that two large plots in Chennai and Mumbai, received after Wimco was restructured, would be used to develop food parks.