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| ITC open to idea of demerging critical biz verticals |
| Press Trust of India / New Delhi Nov 25, 2009, 21:46 IST |
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Cigarette to hotel major ITC today said it is open to demerger of its business verticals into separate entities if needed as they grow in size.
"We never exclude any options from our approach... No chief executive can ever put the options to a closure for the future generations of ITC. So all options are always open," ITC Chairman Y C Deveshwar told reporters here on the sidelines of a CII Sustainability Summit here.
He was responding to a query that the company's different business verticals are getting critical and if ITC would consider to demerge them as separate entities.
ITC has presence in wide range businesses, including cigarette, hotel, paper, agriculture and FMCG.
Deveshwar, however, said ITC will not simply go for demergers unless the exercise created value for shareholders and the company.
"...Whatever we do, we would do it with the objective of ensuring that we do not lose on our synergies and that we create more wealth and that our triple bottomline objective continue to get a supportive from whatever we do," he added.
Despite the long gestation period for the new FMCG businesses to be profitable, Deveshwar said ITC was committed to become a leader in the segment.
"We have made our strategic intentions clear that we would like to emerge as one of the foremost leaders in FMCG areas, although even today in the FMCG areas (where ITC is present) we are number one," he said, adding other than its traditional areas, ITC would like to gain leadership position in new areas as well.
"Whether it takes 10 years or 20 years (to be profitable in new FMCG businesses).. (for) a company that has been in existence for 100 years, a decade of timespan to create a portfolio that is going to last another one century is a very short timespan in my view," Deveshwar said.
When asked if the company would pump in more investments in FMCG business, Deveshwar said: "In FMCG area, we intend to invest with the strategic intent that the FMCG business would be an important leg of ITC's sustainability into the next century."
He said ITC at present has huge cash reserve and it would neither raise funds nor borrow.
On demand side, he said the company's sales of FMCG products grew more in rural areas than in urban areas and were "very little affected by the downturn".
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