ITC Looks for Wider Play in FMCG, IT & Agri Businesses

5,000-crore cash in its books and plans to invest it in sectors it operates

ITC will look at a wide range of companies in FMCG, IT and agri-products to make investments by way of its treasury operations. “We currently have a liquidity in our books to the tune of . 4,000-5,000 crore of funds,” said ITC chairman YC Deveshwar. “We would like to deploy it as equity investments in sectors where we operate, have a thorough understanding and hence feel safer about our investment,” Deveshwar told newsmen after the company’s 100th AGM in Kolkata on Friday. ITC’s investments in East India Hotels (EIH) and Hotel Leelaventure have yielded handsome returns. Citing the case of its investment in EIH, Deveshwar said the company had bought shares at µ35 which has currently appreciated a lot. ITC, which holds little less than 15% in EIH and Leelaventure, had at one point created a takeover threat in both these companies. “It’s actually a compliment to rivals if we invest in them. As far as I know, some of them are actually happy with our investment,” said Deveshwar.
ITC currently has such investments in cigarette company VST Industries and food company Agro Tech Foods, which makes Sundrop oil and ACT II popcorn. Asked whether ITC may increase its stake up to 25% in EIH and Leelaventure as per the new takeover code, Deveshwar said the company may increase if the share price is attractive. “It will be decided by the treasury. If required, we may also sell shares if prices are attractive.”
EIH stock gained 12.5% on Friday to close at . 96.05 on the Bombay Stock Exchange, while Hotel Leelaventure fell 0.5% to close at . 45.75. This apart, Deveshwar said ITC is soon planning to enter the dairy business by rolling out products like pasteurised milk, skimmed milk powder, cheese, milk chocolates and butter. “We are starting a project in Munger in Bihar where we are engaged in animal husbandry project to improve the yield of cattle. We will eventually establish a diary over there. The first products to be launched in the market will be ghee and skimmed milk powder,” said Deveshwar.
Earlier in the day, Deveshwar said in AGM that it plans to turn its personal care and branded food business profitable over the next six year. “I will ensure these businesses become profitable before I hang up my boots. Already some %of the products are generating profit,” he said. Deveshwar has already announced that he intends to retire by 2017 as the chairman of the company. ITC has reduced its losses in the personal care and branded food business to . 76 crore in the first quarter of the current fiscal.