ITC lines up Rs 10,000-cr investment to boost food processing business

Kolkata: Cigarettes to fast-moving consumer goods (FMCG) firm ITC on Monday said it would invest around Rs 10,000 crore in the coming years to strengthen its business in the food processing sector. 

Sanjiv Puri, chief executive officer (CEO) of the company, said of the allotted investment, much of it would be in West Bengal. This is a part of the company’s Rs 25,000-crore-investment package that it has planned to invest on 65 projects, including 20 integrated factories for consumer goods across the country.

“The biggest headroom to grow is in the FMCG space; that’s where the opportunity is the highest and that’s where our internal capabilities can be leveraged. We will look at newer areas as we go along,” he said on the sidelines of Horasis Asia 2017 meeting, here.

However, Puri did not mention the categories under FMCG space his company would expand into.

Recently, the Kolkata-based company forayed into the fruit and vegetables segment with its Farmland brand of low-sugar potatoes. In the past, it has also ventured into seafood and juice segments. “Nearly 58 per cent of our revenues come from the non-tobacco products; 80 per cent of our capital employed is in the non-tobacco sectors and 90 per cent of our employees are in the non-tobacco areas,” he said.

By 2030, the company has targeted a revenue of Rs 1 lakh crore of which, FMCG is expected to be one of the biggest contributors. 

Puri said with the incidence of taxation going up in the legal cigarette business, the trade in the country continues to face stress on this front as the consumption of illicit cigarette is on the rise. “The biggest challenge for the cigarette industry is the illegal business. It is around 23 per cent of the industry. And, we are among the fastest growing countries for illicit cigarettes. A FICCI report shows the exchequer loses Rs 9,000 crore of revenue,” he said. According to Puri, the consumption of legal cigarettes in the country is getting affected on account of increased taxes which in turn raises the prices of legal cigarettes.

In July, ITC hiked the prices of its cigarettes by 5-7 per cent across brands to make up for higher taxes after the implementation of goods and services tax. Analysts said it had impacted the company’s sales volume but is likely to recover in the second half of the current financial year.

“The losers in this process are farmers, government and Indian manufacturers. It is a big challenge to the industry. We believe that a moderate form of taxation could help the industry fight this menace,” he said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.