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Sunday, April 15, 2007

ITC to invest Rs 15,000 cr for expansion


ITC Ltd, the country's biggest cigarette maker, plans to invest about Rs 15,000 crore in the next 5-7 years in other areas such as hotels, agri-business and FMCG as it seeks to transform its image to a diversified corporate conglomerate.
"The company is giving impetus on segments such as FMCG, agro business, paper and packaging, hotels and the infotech business, for which it has earmarked an investment of Rs 15,000 crore in the next five-seven years," sources said.
As part of ramping up non-tobacco divisions, ITC plans to rev up its social farm forestry projects in states like Andhra Pradesh and Karnataka, which will involve 12 lakh farmers by 2012-14, up from current three lakh.
With almost 60-70 per cent of its raw materials coming from its social forestry projects, ITC has already embarked on a capacity enhancement programme for paper production.
Its Bhadrachalam paper manufacturing plant would produce 4 lakh tonnes annually by April 2008 from the current 3 lakh tonnes and the total Elemental Chlorine Free (ECF) pulp production would increase to 2.2 lakh tonnes annually by the last quarter of 2007, from the current 1 lakh tonnes.
Sources said ITC is focusing on taking modern retail to rural India and plans to enhance its reach through e-choupals (direct marketing channel for farmers) and Choupal Sagars (rural retail stores). At present, ITC has about 6,500 e-choupals covering 40,000 villages and 40 Choupal Sagars.
Sources said the company's investments would be mainly funded through internal accruals. Investments on the different non-tobacco divisions, which account for 51 per cent of its total revenues, would be on a need-base basis.
ITC has already announced Rs 5,000 crore investments in its hotels division in the next three-four years to add 3,000 rooms in addition to the current 5,500 rooms. Recently, it had tied up with Starwood Hotels & Resorts to bring the latter's premium brand, the Luxury Collection to India.
Sources said ITC's increased focus on non-tobacco divisions was also aimed at doubling its revenues in the next five-seven years. In the nine-month period ended December 2006 ITC's net sales stood at Rs 8,902.96 crore, while profit after tax was Rs 2,049.28 crore.