ITC to invest $2 billion across segments in medium-term, says MD

Super app 'ITC-MAARS' among new growth areas; investment figure does not take into account inorganic opportunities

Diversified conglomerate, ITC, will be investing $2 billion in the medium term in beefing up capacity across business segments and new vectors of growth.

“We are looking at about $2 billion of investment in the medium-term horizon,” ITC chairman and managing director, Sanjiv Puri, said at a media interaction.

“The investment would be made for building capacity to meet market demands in existing segments, inducting state-of-the-art technology, investments in digital in some the newer areas that we have identified,” Puri explained.

The investment figure, however, does not take into account inorganic opportunities.

Among the newer growth areas for investment is the super app 'ITC-MAARS' that Puri announced at the company’s annual general meeting on Wednesday.

It is focused on rural India and the primary focus is agriculture, said Puri. The app would have hyperlocal personalization; artificial intelligence would be used to give personal advisory to farmers and it would also give all the supporting ecosystem like input and output markets.

For ITC, it would improve efficiencies. “It will bring power to our food brands because we will have better quality and efficient sourcing,” said Puri.
 

Investments would also be made in setting up new facilities. For instance, ITC is diversifying its tobacco business to manufacture and export nicotine and nicotine-derivative products under a wholly-owned subsidiary, IndiVision. The facility for manufacturing nicotine and nicotine salts will be near Mysuru, Karnataka.

In agri business, ITC is in the process of commissioning a state-of-the-art spices facility to cater to the domestic and exports market. In Gujarat, the company is setting up a packaging plant. “There is a huge demand there because our customers are based there,” said Puri.

A major chunk of ITC’s investments in the past decade was across fast moving consumer goods (FMCG), paper, paperboards and packaging and hotels.

In 2010, ITC had announced an investment of Rs 25,000 crore over a 7 to 10-year timeframe; FMCG accounted for about Rs 8,000 crore, paper, paperboards and packaging Rs 6,000 crore and hotels Rs 9,000 crore.

Bulk of the FMCG investment was in building the integrated consumer goods manufacturing and logistics (ICML), which is now complete. In hotels, too, ITC has adopted the “asset-right” strategy.

Puri said that with the “asset-right” strategy, the number of hotels would double in the medium-term.

“Welcomhotel has been refreshed and Storii is a new brand that we are launching,” he said.

ITC is looking at taking the Welcomhotel footprint to 34-35 over the next 3-4 years; end of last year, there were 12.

Responding to a question on properties outside India, Puri said, “We have received interest. This was pre-Covid for managing certain properties outside of India. Those are possibilities that are being pursued.”

ESG overhang and taxation on tobacco have been weighing on the ITC stock for a while now.

On a question regarding the strategy for creating shareholder value, Puri, said, “The most important point for us is to put our heads down and focus on making our businesses competitive, delivering competitively superior performance in each one of our businesses. That’s what we have been focused on and we will continue to do that. That is the most important task for us.”