Companies

ITC aims for eight-fold jump in turnover

Our Bureau Kolkata | Updated on July 12, 2019 Published on July 12, 2019

Sanjiv Puri, Chairman, ITC Ltd

Expects new FMCG businesses, market leadership in existing segmentsto drive growth

 

Diversified conglomerate ITC Ltd is looking at an eight-fold jump in turnover from the new FMCG businesses, even as it plans investments in start-ups that could be strategic fits.

According to Sanjiv Puri, Chairman, ITC Ltd, the jump in turnover is expected to be driven by the entry into newer categories and leadership in existing ones. He, however, did not provide a timeframe for the leap in turnover.

The company’s non-cigarette FMCG turnover is about 25 per cent of its total turnover or ₹12,000 crore and an eight-fold jump would take the company closer to its target amount of ₹1,00,000 crore. “At the current run rate, we would look at an 8x growth in turnover over the long term,” Puri said.

He added that new capacities including integrated consumer goods manufacturing units and logistics facilities will also be coming-up depending on the demand scenario.

“There are some categories and sub-categories where we have taken leadership position. There are some where we are yet to achieve the pole position. We are looking at these categories,” he said.

In FY19, ITC had new launches across 50 categories, and so far this fiscal, it has made 26-odd launches. Around 40-50 new launches are expected this fiscal across FMCG categories.

“A consumption slowdown was witnessed towards the second half of the last fiscaI. It continues. But, the structural drivers for the economy are in place. The fact that we are confident of consumption picking up is evident from the fact that we are not pulling back on investments. We are gearing up for the opportunities in the (FMCG) segment,” the Chairman said.

Investment in start-ups

According to Puri, ITC has put in money into two alternative investment funds, which in turn will be investing in start-ups. He did not share the investment made in these funds.

This apart, ITC is also open to making direct investments in start-ups, primarily those in the FMCG segment spread across categories such as personal care and food.

Apparel business

Restructuring of the apparel business is expected to be completed by the end of this fiscal. Post restructuring, the company will take a call on future plans, Puri said.

“Restructuring of the vertical is on and is expected to be completed by the end of this year (fiscal). Profitability and other issues can be looked into post that,” Puri said after the company’s annual general meeting here on Friday.

As a part of the restructuring exercise, the company had, earlier this year, sold its mass-premium apparel brand ‘John Players’ to Reliance Industries.

It has also rebranded the Wills Lifestyle stores to ‘WLS’, while a number of unprofitable stores have been closed down.

From 140-odd stores, the number of stores under the premium WLS brand has come down to 65-70 now.

According to Puri, apparel continues to be among the weakest links among different verticals. The diversified conglomerate is unable to leverage either its agri-value chain or its distribution network for the apparel business.

ESAR scheme

The company has come up with an employee stock appreciation rights scheme (ESAR) after the special resolution for the issue of employee stock options (ESOP) was defeated last year.

According to Puri, ESOP is the “preferred choice” for the company when it comes to retaining talent. The ESAR scheme impacts the cash position of the company. But, ESOPs don’t.

Calculations based on previous numbers show that the cash impact of the ESAR scheme will be to the tune of ₹300-400 crore, he added.

Published on July 12, 2019
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