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Diversified conglomerate ITC Ltd will soon foray into new categories like fruit juices, tea, coffee, chocolate and dairy products, its Chairman YC Deveshwar said here on Wednesday.
He was responding to shareholders queries on how it will cope with pressure piling on the cigarettes business because of high incidence of taxation.
"We are building the ITC of tomorrow and will enter into new segments like fruit juices, tea, coffee, chocolates and dairy products," he said during the 103rd AGM of the company.
"We are at the take-off point... and building the company for the next 100 years," the Chairman added.
Initially there will be a gestation period for these businesses and the company will have to absorb high costs.
"But this is a good time to absorb high costs of gestation and move ahead," Deveshwar said.
According to him, the future ITC will be built based on the cash flows of the cigarette business and the other businesses are being made ready.
Initially, it will not be possible for a company to have multiple factories. It will have one factory from where it will reach the consumer thereby incurring high transportation costs.
"As it grows it builds distribution and reaches near the consumers. We are now reaching a stage where we can have multiple factories and be close to the customer," Deveshwar said.
Diversification a Good Move
Pointing out that the cigarettes segment was under pressure because of increasing taxation, he said that it was a good move to diversify into other categories way back in 1996.
Shareholders had earlier in the day asked if the company was reducing its dependence on cigarettes.
"It amuses me that people are raising concerns now... In 1996, when we decided to diversify people opposed me....I am happy that we did not take note of the dissenting voices," he added.
According to Deveshwar, it is not easy for companies to transform overnight. Such transformations take a long time.
"It is not easy to build brands. In most areas there are international brands.... However, ITC has done well. We have built a fair degree of consumer franchise," the chairman added.
E-cigarettes:
ITC is willing to launch e-cigarettes once there is a clarity on the policy, YC Deveshwar, said. According to him, the company would, if required, take up the matter with Central government also. "Internally we are ready... but we do not have a policy here in India still," Deveshwar said.
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