ITC today outlined investment opportunities up to Rs 23,000 crore across its diversified business portfolio over the next decade.
The company is likely to invest close to Rs 8,000 crore over the next seven to 10 years to drive growth in fast moving consumer goods (FMCG). The company is a major player here and the sector is expected to triple in size to over Rs 3,55,000 crore by 2018, said chairman Y C Deveshwar, addressing shareholders at the annual general meeting.
Foods, personal care, education and scholastic products, and tobacco are part of the FMCG segment. The foods business of the company would turn around this year, Deveshwar said.
In the paper, paperboards and packaging business, the company is eyeing an investment opportunity of up to Rs 6,000 crore in the next five to seven years.
As for hotels, “At conservative estimates, India needs 50,000 rooms in the next two to three years,” said Deveshwar. “This sector, too, carries an investment opportunity for ITC, of up to Rs 9,000 crore in the next seven to 10 years to fuel its growth.”
New properties were already under construction in Chennai and Kolkata and plans were afoot in several other locations. Land has been the biggest block. “If we have land, we can build many more hotels,” Deveshwar said.
EIH, LEELA
ITC has made gains of Rs 600 crore from its investments in East India Hotels, which runs the Oberoi chain of hotels, and Hotel Leelaventure, of Rs 550 crore and Rs 50 crore, respectively, said the chairman, at a press conference after the meeting.
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“ITC’s holding in Hotel Leela is around 8.48 per cent; if we take our investment subsidiary into account, then it would be 10.68 per cent,” he said. The holding in EIH is at the threshold limit of 14.98 per cent, a shade less than the 15 per cent that would trigger a mandatory open offer, according to the Securities and Exchange Board of India regulations.
“It’s a smart investment,” Deveshwar said, while ruling out the possibility of a hostile takeover. “Even globally, people first attempt not to be hostile, and we don’t want to go for it at all.”
ITC’s investment subsidiary, Russell Credit, has been accumulating shares in EIH since 2000, now held with ITC. In Hotel Leela, it started buying from late 2008. The EIH stock was hovering around Rs 35 a share in 2000 and Leela around Rs 19 when ITC started buying. The EIH stock today closed at Rs 127.65 on the Bombay Stock Exchange, while Leela closed at Rs 49.75.
At the company’s previous AGM, Deveshwar suggested joining hands for joint ownership or marketing. In November 2009, Deveshwar had said they were rethinking their strategy in EIH. That was in the light of a possible deal between the Oberois and Analjit Singh. However, the EIH chairman, P R S Oberoi, recently denied plans of selling stake in the company.