ITC aims for 8 new food plants, to invest Rs 4,000 cr

Noodle biz grew by 30% & gained 29% market share in past year, juices hold 7% share

Consumer goods conglomerate ITC will be setting up eight new integrated food processing units by 2019, with investments in excess of Rs 4,000 crore.

The planned investments are a part of its long-term plan to invest Rs 25,000 crore, a majority of which will be allocated towards its food business, V L Rajesh, divisional chief executive, ITC Ltd said.

The company which sells cigarettes and owns luxury hotels, besides doing business in a number of other sectors, has already acquired land for the proposed plants in West Bengal, Assam, Karnataka, Tamil Nadu and Maharashtra.

An integrated plan at Kapurthala in Punjab, which currently produces atta (flour) and fruit juice, has been set up with investments to the tune of Rs 1,400 crore.

According to Rajesh, ITC’s interest in the packaged food business is because of the fact that the food-processing business has huge potentials in India.

Nearly 88 per cent of the Rs 34 lakh-crore food industry remains unorganised in the country.

ITC is currently working to launch at least 20 new products by the end of 2016 in categories that it is present already. “We will be venturing in to a few of the new categories as well. Our offering in the dairy whitener space will be ready by next month”, he said.

Chairman Y C Deveshwar set a target of making it the biggest player in the fast-moving consumer goods space in India by 2030, with Rs 1 lakh crore in revenues from new FMCG business.

It had filed 351 patents in agriculture and consumer goods categories, Deveshwar told investors in 2015. “We have envisaged an outlay of Rs 25,000 crore in 65 projects across the country that include setting up of factories,” he said.

Apart from focusing on new categories, ITC has gained significant market share during the past two years in the instant noodles market where it operates through the brand Yippee. “Our market share has doubled to 29 percent in 2016 compared to what it was in the pre-Maggi ban period”, Rajesh said. Yippee’s sale grew 30 percent in the past one year, after growing by 45 percent during 2014-15.

Apart from aggressive marketing and innovative offering, an established distribution channel and sales team helped it achieve success in the food business, he said. Currently, ITC products reach two million retail outlets across the country.

ITC had ventured into the Rs 2,400-crore domestic juice market by buying B Natural, a brand that ITC bought in 2014, with Rs 100 crore from Bengaluru-based Balan Natural Foods.

Currently, it holds seven per cent share of the juice market and aims to grab 11 per cent share by end-2016. “We are expanding our juices portfolio and our latest offering is Punjab da Kinnow, targeted at the northern Indian consumers,” Rajesh said.

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AN AMBITIOUS PLAN

• Non-cigarettes biz grew 7.1 % in Oct-Dec 2015 to Rs 2,341 cr
   
• ITC’s focus on food business grew in last few years, says chairman Y C Deveshwar
   
• Six new integrated food manufacturing plants is a part of Rs 25,000-cr investment plan
   
• Juices hold 7% share, target is to grab 11% by mid-2017
   
• Cigarette volume declining every quarter since March ‘14