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Last updated: 12 Jul, 2019  

ITC.9.Thmb.jpg 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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