FILE PHOTO: A man talks on his mobile phone as he walks past an ITC office building in Kolkata. Picture taken September 4, 2012.
Credit: Reuters Photo
The recently-announced demerger of ITC Hotels from the parent company will unlock value for ITC shareholders, improve asset efficiency ratios and sharpen capital allocation, said chairman and managing director of ITC Limited Sanjiv Puri while addressing the 112th annual general meeting of the company on Friday.
Last month, the ITC board had given in-principle approval to demerge the vertical and spin it off into a new entity.
For the demerged entity, Puri said that the continued interest of ITC in it will provide long-term stability and instil a sense of assurance among partners, investors and employees while enabling the new entity to leverage ITC’s institutional strengths, including the timeless goodwill, world-class brands and governance processes.
The company has pivoted to an asset-right strategy. With 120 hotels at the moment under ITC fold, managed properties comprise 55% of the total rooms, Puri explained.
Big bet on FMCG biz
Puri told stakeholders that the fast-moving consumer goods business has immense growth potential on the back of the rising per capita income and increasing consumer preference for trusted brands. “The ITC next strategy for the FMCG business is to build a future-ready portfolio. With more than 25 brands, the annual consumer spend is around Rs 29,000 crore”, he said, adding that the addressable market for the FMCG vertical of ITC is $5 trillion.
Regarding the cigarette business, he said the company has been introducing new brands with stability in the taxation regime, sales volumes are increasing. ITC continues to strengthen the cigarette business, he added.
Financial performance & growth plans
On overall financials during FY23, Puri informed that ITC’s gross revenue was up by nearly 18% and EBITDA by over 26%. Non-cigarette segment EBITDA grew by over 43%, reflecting robust performance across all businesses. The company’s non-cigarette businesses today account for 67% of revenue and 28% of segment EBITDA.
Puri said the FMCG business is linked to the agri-value chain. ITC MAARS has rapidly expanded to 9 states, supporting more than 6,00,000 farmers through 1,150 FPOs.
New vectors of growth are being nurtured at the convergence of megatrends in digital and sustainability. On the foodtech front, Puri said, “having established the product market fit successfully in Bengaluru with 3 brands - ‘ITC Master Chef Creations’, ‘ITC Aashirvaad Soul Creations’ and ‘ITC Sunfeast Baked Creations’ - delivered through 19 cloud kitchens, we are now gearing up to take the offering to other cities.“