ITC may use handcarts for 'choupal Fresh'

ITC Limited would be keen on acquisitions but company chairman Y C Deveshwar said he felt mergers and acqusition (M&A) options in the FMCG category in general and the paper industry appeared to be limited.

In the near term, ITC was exploring a model which would allow it to retail fresh foods, fruits and vegetables through branded vendor-owned and vendor-driven carts for selling fresh fruits and vegetables.

The vegetables would be routed through ITC's Choupal Fresh network, its fresh food retail chain that operated as a wholesale-cum-retail store.

The FMCG brands in the market were too small and localised to drive real deals in this sector, he indicated.

ITC felt it was better to develop its own national brands from scratch and felt it had a winning formula on its hands given the success and penetration achieved by its Bingo salty snack foods brand since its launch on March 15.

In the paper industry the problem was that the assets on sale had outdated plant and machinery and would require either rebuilding from ground-up or installation of new machines for the right product quality at the right cost. The paper industry also suffered from major raw material shortages and price fluctuations which ITC felt it could overcome better in known locations.

In the hotels segment, the company was building three hotels in bangalore, a 825-room property in Chennai, a premium hotel in Ahmedabad, as well as hotel wing extensions in Kolkata, Gurgaon and Noida, the last two being contiguous to its golf courses. Another option was being explored at Bangalore, he added.

The lack of transparency in real estate transactions and difficulty in securing land as well as permissions were holding back the company.

Deveshwar said ITC would rather explore partnerships and place its products on the shelves of established stores rather than set up discount or mid-market modern retail establishments.

ITC was sitting on a cash bank of close to Rs 4,000 crore and if things went according to plan, the company would be able to fully utilize this cash on high-growth projects over the next 4-5 years, he added.

As ITC saw it, the mid-market organised retailing segment would supplement its established footprint in the premium segment through its Wills Lifestyle stores and John Players, Miss Players and Wills Lifestyle brands in the urban milieu, as also its presence in the rural retail segment through its rural procurement and selling hubs called e-choupals and 18 large rural malls in thre states called choupal-sagars.