ITC to invest nearly Rs15,000 crore to expand, upgrade

ITC Ltd is planning to invest around Rs14,851 crore to expand and upgrade operations, including through acquisitions, under its next stage growth strategy, chairman Sanjiv Puri said while addressing shareholders at the company's 110th annual general meeting.

Puri said the investment is aimed at beefing up capacity to meet demand, to remain competitive and in technology and quality upgradation. The company has also identified new vectors of growth, he added.
ITC will also be looking for acquisitions as part of its expansion plans, the spend on which will be over and above its planned investment, Puri said.
ITC Ltd, which metamorphosed itself from a cigarette company will explore opportunities to craft "disruptive business models" under the `Next' strategy.
Addressing a virtual press conference, the ITC chairman said the investment would be to beef up capacity to meet demand, to remain competitive and in technology and quality upgradation and new vectors of growth that it has identified.
Besides, ITC is also looking for acquisitions as part of its expansion plans, the spend on which will be over and above its planned investment, he added.
The company has identified certain future consumer trends, and any opportunity that aligns with these areas and is value accretive, then we will go forward, Puri said.
"Now, in terms of investments for those kinds of figures, we have been sharing from time to time, I mean, for building capacity to meet market demands in existing segments for inducting state-of-the-art technology in contemporary investments in Digitals and some of the newer areas that we have identified.
"We are looking at medium term, we are looking at about $2 billion. That's the kind of figure we have. And, of course, inorganic is something that cannot be sized depends on library dollars," said Puri.
Though Puri did not share the exact timeline for the investments but said it is a "medium term horizon" and would take a few years.
"The investment would be for capacity gearing as the volume of a particular category increases and utilisation reaches a threshold then we have to add additional lines, that is the one vector and second we have to upgrade the quality from time to time, we need to replace and bring contemporary technology," Puri said. 
Giving a glimpse of the new opportunities, Puri said, the "new growth areas" would include plastic substitutes and super App ITC MAARS that will help unlock the potential of small farmers.
Puri said the company’s board is concerned about the conglomerate’s share price not appreciating despite good financial performance and payout of more than Rs50,000 crore as dividend in the past five years. Over the last one year, ITC shares have gained only 3 per cent, underperforming the sector benchmark Nifty FMCG, which has gained 15.52 per cent in the same period.
He said the company’s earnings per share increased 47 per cent between 2016-17 and 2019-20, while margins of the non-cigarette FMCG business have improved 640 basis points (6.4 percentage points) in the past four years.