ITC to invest around Rs 4200 cr in tobacco business

ITC will invest 20-30 per cent of its Rs 14,000 crore investment, translating to Rs 2,800-Rs 4,200 crore, in its tobacco business.

Anup Singh, executive director, said the company has earmarked 20-30 per cent of its investment in tobacco business and the capital expenditure would go towards technology upgradation and enlargement of existing facilities.

Singh was speaking on the sidelines of the Indian Chamber of Commerce (ICC) annual general meeting.

He also said the company has approached the state government for acquiring more land adjacent to its Kidderpore factory. ITC has production facilities in Bangalore, Saharanpur and Kidderpore.

The move to plough in bulk of the investment in the tobacco business comes at a time when the company had been endeavouring to increase the share of its non-tobacco business.

Tobacco still accounted for around 75 per cent of ITC's revenues. However, the expansion plans in the tobacco business would be restricted to the domestic market, Singh said.

He said investment in tobacco would also go towards changing the packaging style. The investment in tobacco was part of ITC's major investment programme of Rs 14,000 crore, approved by the board recently. The investment would be made over the next five years. Singh said, the plan entailed setting up an integrated pulp plant for its paper business.

The company had also mentioned that it was eyeing acquisitions abroad. On whether the acquisitions would be in the hospitality space, Singh said it was likely to be so. Singh added that the hotels business would be beefed up for the Commonwealth Games to be held in India in 2010.

For the nine months ended December 31, 2004, the capital employed in the cigarettes business was Rs 1,146.67 crore, Rs 970.35 crore in hotels, Rs 646.01 crore in agri-business and Rs 1,339.75 crore in paperboards, paper and packaging.

ITC's investment plan till 2009-2010 aimed at positioning each of the businesses in the ITC portfolio as a leader in its respective market.

ITC has also sought approval from shareholders for an enabling provision to enter the personal care products business, which would feature prominently in its retail expansion drive.

Investments were also planned for its e-choupal rural sourcing and distribution network.