ITC chalks out USD 2 billion investment plan to fuel post-pandemic growth

NEW DELHI: Cigarettes-to-hotels major ITC Ltd is looking to invest $2 billion (around Rs. 15,000 crore) over the medium term towards setting up a few new units and up-gradation of existing facilities, said chairman and managing director Sanjiv Puri.

The company is setting up a new plant in Andhra Pradesh to scale up its spices business catering to both domestic and exports markets. Other greenfield projects will include setting up a packaging plant in Gujarat, a nicotine derivatives manufacturing facility in Mysuru primarily for export to the US and the UK to capture the growing demand for nicotine-based oral and vaping products there, added Puri.

“We need to beef up capacity to meet demand and also invest to remain competitive. We also have to upgrade technology, enhance digital capabilities, and invest in new growth areas such as sustainable packaging (plastic substitutes) and our planned Super App, ITC MAARS to unlock the potential of small farmers. The investment would be for capacity gearing of existing verticals like food processing and adding new lines to support volume growth, too,” Puri told reporters.

However, these investments don’t factor in the acquisitions that the company is exploring in the FMCG space. ITC is eyeing acquisitions in smart homes, convenience food, personal care, health, wellness & hygiene segments.

“We may not enter into too many categories, but go for those which align with emerging consumer needs and is value accretive,” Puri said. The company will also be introducing more ‘digital first’ brands to leverage the growing e-commerce space.

Besides FMCG, the Kolkata-based conglomerate has aggressive plans for its hotel business to make the most out of the expected post-pandemic hotel boom.

Reiterating his stance at the annual general meeting where he told shareholders that the company would focus on an “asset-right” strategy, Puri said that the next phase of growth will come from managing hotels rather than building new ones. ITC director Nakul Anand, who heads the hospitality business, said the company has signed 6-7 new properties under the Welcomehotel brand for management contracts and six more are in the pipeline. The target is to add 34-35 Welcome Hotels over the next 3-4 years. That apart, the company plans to add 4-5 new properties every year, starting 2022 under its newly launched brand Storii in the boutique category.

In terms of overall business recovery, Puri said there is a clear sequential recovery across categories including discretionary. Demand for hygiene products is still at an elevated level but much lower than last year during the first wave of Covid-19 pandemic. “July has been better than the previous month, and August is better than the previous month, so it is progressive,” said Puri, without completely ruling out near-term uncertainties amid a feared third wave.