For those tracking the diversified, Kolkata-headquartered ITC Limited over the past few decades, the transformation of what was primarily a cigarettes company has been nothing short of dramatic. Ever since its iconic former chairman, the Late Y.C. Deveshwar, laid the foundation of the new ITC many years ago by resolving to reduce its dependence on tobacco and move into the FMCG space, the company—now under the stewardship of Sanjiv Puri—has been in the midst of an aggressive strategic plan that has already seen it emerge as India’s third-largest FMCG player, after Adani Wilmar and Hindustan Unilever. Puri, who takes a keen interest in the FMCG play, makes his vision clear when he tells us that his ambition is to make ITC the No. 1 FMCG company in India.
Puri has reason to be confident about the Rs 64,500-crore giant’s game plan on this front. Armed with over 25 “mother brands” spread over branded packaged foods, personal care, education and stationery, and matches and agarbattis, ITC’s FMCG business has an addressable market size of a hefty Rs 5 lakh crore, which Puri says is among the highest in the FMCG sector. With a consumer spend of Rs 24,000 crore and FMCG revenues of Rs 16,000 crore, ITC’s FMCG play is proving to be just the right booster that will complete its transformation journey. As Krishna Gopalan writes in the cover story, the share of cigarettes has fallen dramatically from 49 per cent to 39 per cent of consolidated revenues in just five years. The foods business powers the FMCG ambition, with powerful brands like Aashirvaad, Sunfeast, Yippee and Bingo driving it. The biggest advantage ITC has is its agri business, which gives it access to wheat, milk, potatoes, fruit pulp and spices. No surprise that the ITC stock, which was languishing for long, has rocketed 46 per cent in the past year, while the S&P BSE Sensex gained 8 per cent.
Meanwhile, as the Indian start-up ecosystem grapples with a sudden change of weather, with the funding tap drying up and the power shifting back to the hands of investors, we bring you an extensive package on the start-up sector. Binu Paul examines how, pushed by venture capitalists (VCs) who are demanding better governance and a path to profitability, start-ups are turning frugal, resorting to aggressive cost cuts, lay-offs and strategic course corrections. VCs, who were jostling to invest in start-ups earlier, have now turned cautious, demanding much greater accountability and slowing down the pace of their investments. Clearly, it’s time for a reality check in the start-up space.
Start-ups aside, I would also urge you to read Anand Adhikari’s story on the relatively new entrants in the BFSI space. Despite a tough competitive environment, players like DBS Bank India (armed with the acquisition of Lakshmi Vilas Bank), the Godrej Group, the Poonawalla Group and the Piramal Group are making aggressive forays into lending, drawing on group synergies and balance sheet strength. The financial services space just got a whole lot more interesting.
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