ITC to scale up FMCG biz

ITC Limited is planning to aggressively scale up its FMCG business and expand the portfolio by staging an entry into the home and personal care market, in an attempt to be the leading FMCG player in the country.

According to the 2006-07 directors' report in the company's annual report, this would be achieved through a combination of synergistic investments in brand building and further enhancement of supply chain and sales and distribution capabilities.

These interventions combined with information technology enabled transaction backbone and the e-choupal rural distribution network, are expected to provide the basis for a low cost distribution capability for consumer products.

Over the medium to long term, these initiatives are expected to provide the basis for sustainable growth in shareholder value by establishing ITC as the leading FMCG player in India, the directors said in their report.

While ITC sources refused to comment ahead of the company's AGM, the personal care business was reportedly set for launch as the company had recruited scientific staff for the division.

The business unit for personal care was however yet to be launched and announcements relating to its reporting structure, the launch date and the CEO or divisional chief executive to manage the business, are awaited.

The ITC board had approved the company's foray into the personal care business some weeks ago and the company had informed stock exchanges about it then.

The ITC basket of non-cigarette FMCG goods included branded packaged foods, lifestyle retailing, greeting, gifting and stationery, safety matches and incense sticks (agarbattis).

ITC's FMCG sales grew by 68 per cent during 2007-06 over 2005-06 to touch Rs 1704 crore during the year.

The branded packaged foods business, which saw sales rising 51 per cent over the previous year, is expected to accelerate growth through cheaper agri-sourcing using e-choupals, in-house cuisine expertise, product development capabilities and branding, sales and distribution competencies.

The vision for this business group was to establish itself as the 'most trusted provider of food products in the Indian market'.

The present range comprised more than 150 food products under six brands.

According to ITC, it planned deeper penetration into grocery and modern format stores in towns and would use e-choupals for distribution and sourcing in rural areas.

ITC would follow up its salty snacks range under the Bingo brand through robust product development and would use its farm linkages to ensure access to high quality raw materials to build it into a sustainable competitive advantage, said sources.

The company's biscuits unit aimed launch of value added products to help neutralise as far as possible the impact of increase in input costs.

ITC's lifestyle retailing business would expand its retail footprint through new stores in upcoming malls and invest in enhancing capability in design and product engineering.

ITC's stationery business aimed to tap the increased budgetary allocation under the government's 'Sarva Shiksha Abhiyan' programme to scale up its notebooks business significantly by offering a superior and differentiated product range, leveraging the investments in incremental paper manufacturing capacity currently underway and a strong distribution network in the coming months.

In a parallel move, the 'Mangaldeep' brand of incense sticks (agarbattis) would further develop its partnership with small and medium enterprises to help them raise quality and process standards, said the report.