ITC evaluating inorganic expansion, aims to boost non-cigarette verticals

Firm's acquisition of Kolkata-based Sunrise Foods is a step forward in its bid to strengthen spice business

Cigarettes-to-hotels major ITC Ltd is evaluating inorganic expansion of its portfolio and strengthening of the spice business.

In a filing with the BSE, ITC said, “The company, as part of its business strategy, is always exploring inorganic growth opportunities, and enquiries received from market participants are suitably evaluated.” The company was responding to a clarification sought from the stock exchange over the acquisition of Kolkata-based spices major Sunrise Foods.

ITC clarified, however, that it had not entered any exclusivity agreement for the acquisition.

Sunrise Foods has four factories at Kolkata, Bikaner, Jaipur and Agra and has a strong presence in nine states in the eastern and north-eastern parts of the country. It is also present in Nepal and Bangladesh. Sources said its revenue in the last fiscal year was estimated at about Rs 1,000 crore.

ITC, which has been focussing heavily on a larger play in its non-cigarettes businesses like packaged food, hotel, consumables and others, already has a strong back-end sourced spices business under the Aashirvaad brand which is available in the country as well as exported. ITC entered the branded spices business way back in May 2005.

In the last fiscal year, ITC had introduced new blended spices variants catering to regional tastes and preferences such as ‘Chicken 65’ & ‘Mutton Chukka Masala’ in Tamil Nadu and ‘Garam Masala’ in Uttar Pradesh. During 2018-19, ITC also entered new geographies namely in north India and Gujarat thereby strengthening a pan-India presence.

On the export front as well ITC expanded the business primarily in food-safe markets like US, EU and Japan, leveraging its backward integration and customer focused strategies.

The company had also scaled up its Integrated Crop Management (ICM) programme which enables the company to produce food safe spices in a sustainable manner and is also partnering with various state governments for production of food safe spices.

During 2018-19, the agri business of ITC, which is made up of spices, wheat, soya, coffee, water and others, registered a 52.17 per cent growth at Rs 4,345.84 crore.

In its peer category, Emami Agrotech also entered the spices business last year with a range of spices under the Mantra brand.