Why ITC Is Investing Rs 20,000 Crore Over the Next 6 Years — A Closer Look at Its Big FMCG Bet

FMCG major ITC Ltd plans to invest Rs 20,000 crore across its business verticals over the medium term, spanning the next five to six years.

The announcement comes after the company inaugurated eight new manufacturing facilities focused on fast-moving consumer goods (FMCG), sustainable packaging, and export-oriented, value-added agricultural-products.

Puri made the announcement while addressing the 114th general meeting of the company virtually on Friday.

Banking on the economic outlook of India, ITC in the last two-years has spent over Rs 4,500 crore on capex, he added, though he didn’t reveal the sectors in which the new investments would be pumped in.

The Kolkata-headquartered FMCG giant has made some key acquisitions in the past few years, including frozen food company Prasuma, organic packaged staples brand 24 Mantra Organic and Century Pulp and Paper.

Puri also informed about the company's target at improving FMCG margins by 80-100 basis points per year (a basis point is a hundredth of a percentage point).

It may not be a linear increase but this is a trajectory we expect will sustain," he said. ITC, the second largest FMCG brand of the country, sees an annual consumer spend upwards of Rs 34,000 crore, reaching more than 260 households across India and exported to 70 countries.

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Over the past three years, the company has introduced 300 new FMCG products- a momentum company intends to continue, according to Chairman Puri.

"Segments like health and wellness, nutrition, functional foods, organic and naturals are poised to become megatrends of the future. New generation channels are also transforming the market and accentuating these trends," he mentioned.

Further, Puri commented upon settling headwinds, with commodity prices still high, overall inflation is relatively moderate. "We expect progressive improvement in demand," he said. He also shared that ITC is expanding into horticulture, including the cultivation of potatoes, spices, and mangoes.