ITC's assets grow 72% in five years

In the past five years, ITC's assets have grown 72 per cent to Rs 24,000 crore in tandem with its growth plans.

ITC's gross block of assets as of March 2016 stood at Rs 24,338 crore compared to Rs 14,099 crore as of March 2011; net fixed assets have grown from Rs 9,678 crore to Rs 16,700 crore.

Non-cigarette fast-moving consumer goods (FMCG), hotels, paperboards, paper and packaging are the businesses that account for a major share of the company's assets.

Of the aggregate net fixed assets of Rs 16,700 crore, 20 per cent is currently deployed in non-cigarette FMCG business, which is what the company is betting on for future growth.

"ITC's FMCG businesses are relatively new and, accordingly, the balance sheet reflects the investments that are underway to build new capabilities, develop innovative products apart from the ongoing capital expenditure towards setting up state-of-the-art plants/factories. These investments are expected to go a long way in strengthening ITC's competitive advantage in the FMCG space," said a spokesperson.

ITC aspires to be the No 1 player in the non-cigarette FMCG business and the firm eyes Rs 1-lakh crore annual revenue from the segment by 2030.

Multiple projects with an investment outlay of Rs 25,000 crore are underway. In the next three years, 20 manufacturing hubs will be set up across the country. State-of-the-art cold chains to cover farm produce, including fresh, frozen and dehydrated fruits and vegetables, will be part of these manufacturing hubs.

ITC has land - part of its tangible assets - for these hubs and more, in possession.

It's not only the non-cigarette FMCG business that is expanding. ITC has been investing in its hotels business - approximately 30 per cent of net fixed assets - when most of the top players in the sector have gone asset-light. Around 45 per cent of the net fixed assets of the hotels business represents capital work in progress, which include ITC Royal Bengal and ITC Kohinoor.

The paperboard, paper & packaging business is understood to constitute 25 per cent of the net fixed assets of the company, which is commensurate with the size and scale of its operations and is comparable with domestic peers.

"In the paper, paperboard and packaging segment, ITC makes high-end value-added products. The company has increased its capacity of paperboards three years ago and, consequently, the division currently accounts for one-fourth of the company's overall capital employed," said Jayanta Roy, senior vice-president, ICRA.

Since ITC is a diversified company, its assets are not comparable with any of the peers in any of the verticals it operates - be it tobacco, hotels, FMCG or paperboard & paper.

"ITC has a diverse portfolio with a few capital-intensive business segments like hotels, cigarettes and paper, and as such is not comparable with companies operating in any single business that it is present in," Roy noted.