ITC chairman announces investment of Rs 20,000 cr for 'medium term'

Company has 'unwavering confidence' in country's economic growth, says Sanjiv Puri

ITC will invest Rs 20,000 crore over the next five years as it has “unwavering confidence” in India’s economic growth, said Sanjiv Puri, chairman and managing director, on Friday.

Puri told shareholders at the company’s 113th annual general meeting ITC was committed to assist the country in becoming the world’s third-largest economy through building a “future tech, climate positive, innovative and inclusive national enterprise of pride”.

“Our confidence in the India story is unwavering and is reflected in your company’s investment outlay of about Rs 20,000 crore in the medium term,” he said.

At a press conference later in the day, Puri said: “We remain optimistic of the opportunities in India despite near-term challenges.”

 

Elaborating on the investment, he said the fast-moving consumer goods (FMCG) business would account for the larger component of the investment outlay at 35-40 per cent, and paperboards and packaging would be at 30-35 per cent. The balance would be spread over other businesses including agri.

In paperboards and packaging, the existing manufacturing site at Bhadrachalam in Telangana is “fairly” saturated.

Puri said the site had lasted decades. “So, we are going for a big site and then we will expand in a modular fashion.”

ITC has 11 integrated consumer goods manufacturing and logistics facilities.

“Some are fully utilised, some have headroom for greater production and even machinery addition because we are creating civil infrastructure for being a large player in FMCG,” Puri pointed out.

In FMCG, investment will be in adding machinery, upgrading product quality, and bringing in variety and innovation, apart from new sites. Two sites are under construction now – in Sehore (Madhya Pradesh) and Lucknow (Uttar Pradesh).

In 2021, ITC had announced a $2 billion investment for the medium term, and some of it is done. “But as we are seeing, in the next few years, the trajectory is upwards.”

Shortly, the conglomerate will be launching a brand “Right Shift”, targeted at consumers above 45. It will be nutrition-dense and will have a portfolio of products including snacking items and drinks. “The portfolio will expand over time,” Puri said.

On the broader trend, Puri said rural was seeing “green shoots”, but still remained monitorable. “It should get better with monsoons coming in.”

Puri said apart from FMCG, the infotech business had huge headroom for growth.

“The focus is to build ITC Infotech into a very large engine of growth. Just like FMCG has scaled up among our newer businesses, we want Infotech to scale up. That’s why investments are being made on capacity building.”

On an initial public offering, he said “these are certainly within the realms of possibility. But there is nothing on the anvil right now”.

On the demerger of the hospitality business, Puri said it was on track and the process should be concluded in about six months.

Export has been a “growth vector” for ITC and brand strength has enabled the company to take its products and services to more than 100 global markets.

“Foreign exchange earnings of your company and its subsidiaries have more than doubled since FY20 to over Rs 9,500 crore,” Puri told shareholders.

ITC is pursuing “strategic investment” in neighbouring markets. The FMCG facility set up by the company’s subsidiary, Surya Nepal, and ITC Ratnadipa, set up by wholly owned subsidiary WelcomHotels Lanka Private Limited, served as examples.

“As part of the asset-right strategy for ITC Hotels, opportunities with focus on proximal markets will continue to be explored over time,” Puri said.