For some time now, ITC Ltd has had a problem. Try as it might, it couldn’t seem to break through the Hindustan Unilever (HUL)-Nestle India-Britannia Industries triumvirate in India’s fast-moving consumer goods (FMCG) segment. At 110-years-old, ITC the tobacco company has seen wild success—it controlled 77% 77% Statista Revenue of ITC Ltd Read more of the cigarette market as of 2019. ITC, India’s second-largest FMCG company, is another matter.

Even though it has been around for two decades now, ITC has remained a few steps behind its peers. It may be the third largest by revenue in the packaged foods segment, but its Ebitda Ebitda Ebitda Earnings before interest, taxes, depreciation, and amortisation margins of 7.1% in the year ended March 2020 were less than half of Britannia’s. And less than a third of Nestle’s in the year ended December 2019.

In the personal care segment, which accounted for just a tenth of ITC’s FMCG revenue in the year ended March 2020, it is a minnow compared to the likes of HUL.

Whether ITC can measure up to its rivals is a question that has long plagued the Kolkata-headquartered, $33 billion-market cap company. But there are signs that it has finally rounded the corner.

In the quarter ended September 2020, ITC saw its FMCG revenue rise 15% year-on-year to Rs 3,800 crore ($515 million). But more impressive was the sharp improvement in its profitability, with Ebitda margins expanding 290 basis points to 9.7%—its highest ever.

The growth was a culmination of smart acquisitions, recent tweaks to its distribution strategy, and a pandemic-related hygiene and personal care push.

Between April and September this year, ITC unveiled 70 70 Business Standard ITC launches 70 products in non-cigarettes FMCG space, beats previous high Read more new products. That’s more than the company’s 60 product launches in the previous 12 months. This included multiple products that cashed in on consumers’ increased preoccupation with hygiene and a rise in at-home consumption—such as single-use sanitiser sachets, surface-disinfectant sprays, germ-protection wipes, a fruit and vegetable cleanser, organic wheat flour, and ready-to-cook chapatis.

In May, it also bought Sunrise Foods, a company that has been in the spice business for nearly a hundred years, for Rs 2,150 crore Rs 2,150 crore The Hindu ITC acquires Sunrise Foods for Rs 2,150 crore Read more ($290 million). Sunrise is its largest purchase to date.


Seetharaman G

Starting out as a business journalist in 2008, Seetharaman has written about energy, climate change, retail, banking, and technology. He has worked with Business Today, a fortnightly, and the Sunday edition of The Economic Times.

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