ITC to invest Rs 20,000 crore in 5 years to expand FMCG & paperboard capacity: CMD

Chairman & Managing Director Sanjiv Puri says demand scenario in rural market is being monitored; better monsoon will help in revival.

Diversified conglomerate ITC Ltd. has come up with a Rs 20,000 crore capex plan for the mid-term to expand its capacities in fast moving consumer goods (FMCG), paperboard and other businesses. Chairman and Managing Director Sanjiv Puri, today revealed in a press briefing that the company will be investing the sum over the next five years.

While “35-40% of the coax will be focused on expanding and upgrading capacities in the FMCG business, 35% of it will be invested in the paperboard and packing business. The rest will be distributed among other business segments and corporate,” Puri said.

As per the plan, ITC’s capex in FMCG over the next five years shall range between Rs 7,000-8,000 crore. These investments will be focused on building Integrated Consumer Goods Manufacturing and Logistics facilities (ICML) with an aim to reduce time and distance between factory and the market. Currently, ITC has 11 ICMLs and two are under construction.

While it will be investing some Rs 7,000 crore in the paperboard and packaging business, which will also include a Greenfield plant for paperboard and packaging materials as its plant in Bhadrachalam (Andhra Pradesh) that has served the company for decades “is now fairly saturated”.

Talking about the inflation scenario and rural demand, Puri said the demand situation in rural market is being monitored and a good monsoon will help in its revival. The real market has been lagging its urban counterparts for several quarters since 2021. While in January-March 2024 quarter, volume offtake in rural India overtook urban areas after three years, extreme heat conditions in April-June have impacted demand in several parts of the country foe consumer goods makers.

One of the key factors that has affected demand of FMCG products in rural India is steep inflation of daily essentials and rising cost of food items have out further pressure on low-income households. According to Puri, food inflation continues to be sticky.

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