ITC To Channel Rs 20,000 Crore Into Future Expansion, Says Sanjiv Puri

ITC Ltd. on Friday unveiled a five-year investment plan totalling Rs 20,000 crore across its various businesses, underscoring its strong belief in India's growth potential.

Despite facing global headwinds and subdued domestic consumption, the investments made across all of ITC's businesses to improve structural competitiveness and build a future-ready enterprise have positioned the company to capitalise on the emerging market opportunities, according to Chairperson and Managing Director Sanjiv Puri.

"Our confidence in the India story is unwavering and is reflected in our company's investment outlay of about Rs 20,000 crore in the medium term," he said, during his remarks at ITC's 113th annual general meeting on Friday.

Of the Rs 20,000 crore war chest, the cigarettes-to-hotels conglomerate will invest Rs 7,000-8000 crore towards FMCG business, and another Rs 7,000 crore for paperboard and packaging business. The rest will be spent on agriculture and other businesses.

"The investments are largely for capacity augmentation, upgradation, modernisation and innovation," Puri said.

In the last financial year, ITC reported a 6.8% increase in gross revenue to Rs 69,446 crore, excluding the agri business, which faced an impact because of regulatory trade restrictions amid food security concerns and inflation.

The paperboards, paper and packaging segment also faced headwinds from muted demand in global markets, prevalence of low priced Chinese supplies and surge in wood costs. On a net basis, revenue declined 1.1% to Rs 64,713 crore.

Non-cigarette revenue now accounts for about 65% of ITC's net revenue, according to Puri.

To ensure a future-ready fast-moving consumer goods portfolio, ITC has introduced nearly 100 innovative and distinct products last year. These offerings are strategically focused on key evolving segments, including health and nutrition, hygiene, protection and care, convenience, on-the-go solutions and indulgence, he said.

ITC's FMCG products now reach 250 million households, with consumer spends of Rs 32,500 crore annually. The company has also expanded market coverage by two times, with three out of four retailers now selling its FMCG products.

"While near-term challenges remain a concern for the FMCG industry, ITC's innovative capacity, future-ready portfolio, resilient and agile supply chains, digital investments and focus on penetration-led growth position us well in the addressable market potential of Rs 5 lakh crore in our operating categories," Puri said.

After a period of sustained headwinds, Puri said the hotels business emerged "structurally stronger", clocking a revenue of nearly Rs 3,000 crore and Ebitda crossing Rs 1,000 crore in the last fiscal. "The robust pipeline of managed properties will take the overall footprint to over 200 hotels in the coming years."

In line with the 'asset-right' strategy, ITC has opened 32 hotels over the past 24 months, bringing its total to nearly 140. The return on capital employed for the hotel segment has increased by approximately 1,100 basis points as compared to the pre-Covid period.

Puri said the emerging trends, such as micro-tourism, immersive experiences and multiple short vacations, would add new dimensions to the tourism industry. Currently, the supply of hotel rooms in India stands at just 0.1 per 1,000 people, significantly lower than the global average of about 2.2, indicating substantial potential for growth.

ITC's cigarettes business witnessed consolidation on a high base after a period of sustained growth momentum, Puri said.

Revenue grew 8.5% in fiscal 2024 to Rs 30,597 crore, with a compound annual growth rate of 14.2% over the last two years, and volume surpassing pre-pandemic levels. "Tax stability and deterrent actions by authorities helped regain some volumes from illicit trade," he said.

Puri underscored that the growing competitiveness of ITC's brands allowed the company to take its products and services to more than 100 global markets. Foreign exchange earnings of the company and its subsidiaries have more than doubled since fiscal 2020 to over Rs 9,500 crore.

The Kolkata-based company is also proactively pursuing strategic investments, particularly in neighbouring markets, such as the FMCG facility set up by a subsidiary, Surya Nepal Pvt.

ITC Hotels will also continue to explore opportunities, with a focus on proximal markets, as part of its asset-light strategy, Puri said.