Ready-to-drink milk-based beverages and frozen desserts to be launched in FY19E in addition to atta, noodles, wafers, biscuits, fruit juices and other fruit-based beverages
ITC rolled out its largest integrated food manufacturing and logistics facility at Kapurthala, Punjab on December 14, 2017, as per media sources. This unit would have the wheat mandis as well to procure the grain from farmers, in addition to FMCG units. The facility is spread across 8 lakh sq.ft with initial investment of Rs1,500cr and would be producing atta, noodles, wafers, biscuits, fruit juices and other fruit-based beverages.
In addition to FMCG products, ITC would launch a range of ready-to-drink milk-based beverages and frozen desserts from this new plant to accelerate its dairy business. The first dairy-based product is expected to be launched in the second or third quarter of next fiscal year. ITC’s expansion plan in dairy business is a part of its long-term goal of reaching Rs100,000cr revenue from the non-cigarette business by 2030.
The company had earlier announced an investment of Rs25,000cr in 65 projects and expects one or two facilities to be operational every year.
ITC enjoys leadership position in all the segments it caters to, and is continuously trying to gain market share in its FMCG segment through new product launches and newer segments. Cigarettes, where it has ~80% market share has been marred by the aggressive tax incidence under GST. Additionally, the uncertainty of timelines for tax rate revision under GST makes the company more prone to volume volatility. Further, though, the FMCG segment is set to gain from the supply chain benefits post GST implementation and shift in demand to the organised players, we remain cautious on its profitability.
ITC Ltd is currently trading at Rs 265.15, up by Rs 1.25 or 0.47% from its previous closing of Rs 263.9 on the BSE.
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