ITC lines up Rs 20,000 crore capex, aims to improve FMCG margins

Kolkata: ITC plans to invest ₹20,000 crore across businesses in the medium term (around five-six years) after recently setting up eight manufacturing plants for fast-moving consumer goods (FMCG), sustainable packaging and export-oriented value-added agricultural products, said chairman Sanjiv Puri.

Addressing shareholders at the company's 114th annual general meeting held virtually on Friday, he said the conglomerate incurred capital expenditure of ₹4,500 crore in the past two years "encouraged by the promise of the Indian economy". He did not disclose the areas in which the company plans to make fresh investments.

Puri said ITC evaluates acquisitions from time to time when there is something that is value accretive and fits its strategy. The company has made multiple acquisitions in the past few years, including recent ones this year such as frozen food company Prasuma, organic packaged staples brand 24 Mantra Organic and Century Pulp and Paper.


ITC, the country's largest cigarette manufacturer, has also emerged as a leading FMCG company.

Puri said that it intends to improve FMCG margins by 80-100 basis points every year. "It may not be a linear increase but this is a trajectory we expect will sustain," he said.

A basis point is a hundredth of a percentage point.

The company's FMCG portfolio accounts for an annual consumer spend of more than ₹34,000 crore, reaching over 260 million households and also exported to 70 countries. ITC has launched 300 FMCG products in the past three years, which will continue, said Puri.

"Segments like health and wellness, nutrition, functional foods, organic and naturals are poised to become megatrends of the future. New generation channels are also transforming the market and accentuating these trends," he said.

Puri said the year gone by saw challenges from a weak external sector, dumping of cheap imports and inflationary pressures leading to softening of demand. "However, the future outlook remains promising, on the back of the continued thrust on reforms, strong domestic drivers and macro-economic stability," he said.

He said while commodities are still at an elevated cost, aggregate inflation is modest. "We expect progressive improvement in demand," said Puri. ITC is also exploring horticulture and growing potatoes, spices and mangoes, he said. It has embedded AI in every facet of value chain-from product development to marketing, sourcing of agricultural materials, logistics and last-mile sales force execution, Puri said.