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ITC eyeing strategic acquisitions in FMCG business
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SME Times News Bureau | 12 Jul, 2019
Diversified conglomerate ITC Ltd
is engaging with and investing in start-ups while looking at strategic
opportunities for acquisitions to accelerate growth in the FMCG
business, its Chairman-cum-Managing Director (CMD) Sanjiv Puri said on
Friday.
"Today, around 25 per cent of ITC's segment revenue is
from newer FMCG businesses... To accelerate growth in the FMCG
businesses, the endeavour is not only to fortify the existing categories
towards delivering industry leading performance but also to foray into
newer categories and sub-segments," Puri said, addressing shareholders
at the company's Annual General Meeting here.
"This would he
supported by multi-dimensional investments as also strategic
opportunities for acquisitions," he said delivering the Chairman's
speech.
He said that over the last two to three years, ITC has
expanded its fast moving consumer goods (FMCG) portfolio by foraying
into new segments. Over 50 products were launched last year to
strengthen existing categories and enter newer segments.
"A strong pipeline of products is constantly being readied for progressive launch," Puri said.
The
CMD said the company seeks to be an engine of growth for the Indian
economy through a vibrant portfolio of future-ready businesses "that are
well poised to serve the emerging needs of a growing market through
world-class Indian brands."
"In terms of annual consumer spend,
'Aashirvaad' is today over Rs 4,500 crore; 'Sunfeast' over Rs 3,800
crore; 'Bingo!' nearly Rs 2,500 crore; 'Classmate' over Rs 1,400 crore;
'YiPPee!' over Rs 1,100 crore while 'Vivel', 'Mangaldeep' and 'Candyman'
are over Rs 500 crore each," he said.
The company was expanding
its footprint in value-added products while marketing
"attribute-specific" products like high curcumin turmeric, low-sugar
potato and organic pulp. It is also promoting wax-free apples.
He
said the company's Life Sciences and Technology Centre (LSTC) has been
mandated to develop future ready products and processes. Around 830
patents have already been filed.
"Your company (ITC) is engaging with start-up ecosystem and, where appropriate, making investments," he said.
To
cut down on imports and create livelihood opportunities by promoting
bamboo cultivation in India, the company is in the process of building a
"bamboo-to-agarbatti value chain" anchored by the Mangaldeep brand.
It has already established an all-women nursery in Tripura.
"Currently
180 billion bamboo sticks are imported to India for the agarbatti
industry. Substitution of bamboo imports with domestic cultivation has
the potential to generate employment opportunities of around 22 million
person days per annum, translating to additional farmer income of around
Rs 1,300 crore," he said.
Puri said ITC is making substantive
investments to expand its formidable distribution network through which
it places products in over six million retail outlets.
It is also
developing alternate and emerging channels such as modern trade,
on-the-go food services, end-to-end cold chain and e-commerce, among
others.
He said the integrated fruits, vegetables and
perishables value chain has enabled the company to foray into new
segments with a wide range of offerings including frozen food,
dehydrated onions, potatoes, mango pulp and prawns.
The company
is pumping in money to build a state-of-the-art manufacturing
infrastructure across India for rapid growth of its FMCG businesses, and
establish an extremely competitive supply chain in order to contribute
to the country's Make in India vision.
"The 20 Integrated
Consumer Goods Manufacturing and Logistics (ICML) facilities being
progressively built will provide formidable strength to the company's
FMCG brands by enhancing cost efficiency, economies of scale, freshness
and close-to-market distribution," he said.
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