ITC aims at top spot with aggressive expansion plan

Plans to get there through brand-building, enhancing supply chain.

ITC is planning to aggressively scale up its FMCG business and expand its product portfolio in an attempt to be the leading FMCG player in the country.

According to company executives, this would be achieved through a combination of synergistic investments in brand-building and enhancement of the supply chain and sales and distribution capabilities.

The new FMCG businesses of ITC grew by 68 per cent in 2007.

ITC is planning to launch nearly 14 new variants of its existing packaged food brands including Bingo, Sunfeast, Aashirvad and Kitchens of India.

Ravi Naware, CEO of ITC’s foods business, said, “We are constantly developing new products as upgradation is imperative in any FMCG business. We will introduce about 14 variants in our existing brands. The new products will build on the health platform, easy preparation and convenient foods.”

In 2007, ITC’s branded packaged foods business recorded a sales growth of 51 per cent over the previous year. The company made a foray into the organised salty snacks market with the launch of Bingo range of potato chips and finger snacks. Its range of offerings thus exceeded 150 distinct food products under six brands

Bingo currently has 16 variants, while Sunfeast has 18 variants.

ITC also intends to introduce a complete range of personal care products in an attempt to widen its product portfolio and strengthen its position in the Rs 2,700 crore skincare market.

According to Sandeep Kaul, CEO of the personal care business of ITC, “Although we offer premium products in terms of benefits and price points, we have noticed good sales for our personal care products within a few months of launch. We would soon announce the annual sales figures.”

ITC launched ‘Vivel Di Wills’ and ‘Vivel’ range of soaps in February 2008. In September last year, the company had launched three variants of Fiama Di Wills, a premium range of shampoos, following the success of Essenza Di Wills, its exclusive range of fine fragrances and super premium personal care products.

At the same time, the greetings, gifts and stationery business (GGSB) division of ITC is set to significantly expand its product portfolio by diversifying into writing instruments and offering customised solutions to the corporate houses.

The stationery business contributes about Rs 180 crore to the company’s revenues and according to a company executive, “We are aiming to achieve Rs 1,000 crore revenue from this business arm within three years.”

ITC’s stationery business is growing by over 100 per cent per annum and with the addition of new products, including office and letter writing instruments, these targets are within reach, the executive claimed.

The Classmate brand alone contributes about Rs 150 crore.

Data estimates the market for school and education sector at Rs 5,000 crore. Large global chains such as Staples and OfficeOne have already made an entry and this market is poised for further segmentation.

Simultaneously, Wills Lifestyle, the garment retailing arm of ITC, is aiming at a growth of 30 per cent, and has embarked on a major rejuvenation and brand makeover plan through a series of new-look stores, launch of premium product-lines, and tie-ups with leading architecture and management companies for superior product presentation inside stores.

The aim is to offer innovation in sync with changing consumer preferences as well as make a lifestyle statement and build the brand around a more desirable look and shopping experience.

The revamp is expected to help the company grow by 30 per cent. During 2007, ITC’s lifestyle retailing arm grew by 52 per cent in both the premium and popular segments.

According to Atul Chand, vice-president - marketing and retail of ITC, “We will revamp our existing 50 stores and give them a new look in terms of design and architecture.

The pilot project has been carried out at two stores in Mumbai and one in Delhi. This will be extended to all the existing stores.”

The company plans to take its total number of stores to 100 in one year from the current 50. It is also looking at setting up Wills Lifestyle stores in tier-II cities including Siliguri and Raipur.

The new stores would reflect the ongoing brand makeover exercise.

ITC Q3 net up 16% at Rs 831cr

Improved returns from businesses like hotels and paper and firm control in the FMCG business amidst stagnating tobacco revenue enabled ITC post a 15.8% rise in net profit at Rs 831 crore during the third quarter ended December 31, 2007 on the back of 11% growth in turnover at Rs 3,458 crore.

Analysts said non-cigarette FMCG revenues grew nearly 50%, thanks to growth in business of new FMCG businesses like foods, lifestyle retailing and stationery to Rs 655 crore from Rs 436 crore in Q3FY07, losses were restricted to Rs 64 crore as against Rs 46 crore in Q3 of the last fiscal.

The tobacco division, reeling under a high taxation regime, reported sales of Rs 1,693 crore and segment profit of Rs 961 crore as against net sales of Rs 1,520 crore and segment profit of Rs 828 crore in Q3FY07.

The company attributed this to significant increases in taxation but said significant investments in product design, innovation and manufacturing technology, and improved marketing and distribution processes had fortified the market standing of its brands.

ITC said that with cigarettes facing the full impact of VAT in most states, central sales tax and trade taxes in UP along with the increase in excise duties on cigarettes in excess of 6% led to indirect taxes during the quarter growing by Rs 513 crore, thanks to increase in taxes of 29% per pack over the corresponding quarter of the previous fiscal.

This meant taxation was at nearly 132% of the value of the product (ex-factory price net of taxes), and this would drive consumers to switch to cheaper and inferior forms of tobacco, resulting in lower revenue from the sector.

Hotels revenue moved up to Rs 313 crore and segment profit to Rs 137 crore in Q3 as against revenue of Rs 281 crore and profit of Rs 118 crore in Q3FY07.

Paperboards and packaging revenue increased to Rs 603 crore and segment profit to Rs 118 crore as against revenue of Rs 543 crore and profit of Rs 104 crore in Q3FY07.

The agribusiness, despite success of the e-choupal and Choupal Sagar model, saw revenue drop to Rs 662 crore from Rs 731 crore in Q3FY07, but segment profit increased to Rs 27 crore from Rs 21 crore in the third quarter of the last fiscal.

Earnings per share stood at Rs. 2.21 against Rs 1.91 in Q3FY07.

While packaged foods sales rose 60% led by the success of the Bingo snacks range, biscuits sales moved up 58% thanks to excise relief announced in Budget 2007 for low- and mid-priced biscuits.

ITC expands Fiama Di Wills brand to soaps

ITC today announced an expansion in its personal care goods portfolio by introducing soaps under the Fiama Di Wills brand. The company had launched Fiama Di Wills shampoos and shower gels earliert this year to mark its entry into the personal care business.

Packaging for the soaps has been developed by a European design firm and the fragrance has been developed by an international house in France. It is named 'Fiama Di Wills SkinSense Soft Green' and it helps enhance retention of skin proteins to create a beautiful look, says the company. It is available in a 100 gms pack priced at Rs 40.

Other launches by ITC under the Fiama Di Wills brand include 'Polishing Drops' conditioner, which contains avocado oil and burdock extract that according to company claims make the hair feel smooth and shiny.

The company's FMCG business accounts for 14% of its revenues Rs 12,369 crore. Its other brands in the FMCG space include Aashirwad, Bingo, Sunfeast and Mint-o-fresh. ITC is competiting with other biggies like Hindustan Unilever and Nestle India in the personal care and foods business.