Itc Non-Tobacco Investments To Rise Three-Fold

ITC Ltd would be redefining its investment strategy for the next five years to build up its non-tobacco operations into viable business units with investments that would may be as much as four times the sum being invested in the tobacco business.

The non-tobacco businesses had received investments of around Rs 500 crore in the last five years. A lion's share of this investment had been hogged by the hotels division, which had been working on an investment plan of Rs 1,500 crore over three years to add 1,500 hotel rooms in the premium category.

The Grand Maratha Sheraton in Mumbai, for example, had been financed out this kitty. The balance investments had gone into paper, packaging, printed materials and smaller lines.

Under the new strategy, the investment in these non-tobacco lines has been scaled up 300 per cent to Rs 2,000 crore in the next five years.

The cap on the hotels business would be remaining more or less in place till the ongoing expansion process was completed, like the commissioning of Kolkata's Sonar Bangla hotel in the premium category.

With this cap in place, other businesses would received unprecedented levels of investment, sources pointed out.

As much as Rs 800 crore would go towards building up the information technology business. A global development centre with SEI CMM Level 5 certification has already been commissioned in Bangalore.

The operations of this division incorporate a Microsoft centre for excellence in e-commerce and strategic alliances with Sun Microsystems and Parametric Technologies besides Microsoft.

The lifestyle retailing division will be setting up 50 top of the line stores across the country by March 2002 besides a master design facility at Gurgaon and a customised online fashion consultancy business.

Sources said the tobacco business would be supported through investments in the region of Rs 500 crore or so in the next five years.

The size of the tobacco business in 2000-2001 was Rs 7,890 crore in sales out of ITC's total sales of Rs 8,678 crore, against the previous year's tobacco sales of Rs 7,170 crore out of a total of Rs 7,953 crore.

Tobacco had received investments of around Rs 1,000 crore in the previous five years to build it up to a line focussed on higher value filter cigarettes packed in upmarket hinge-lid boxes.

"The investments in this sector have started paying off and the company will be using its strengths to build other lines," said sources.