Apr 23, 2012, 09.00 AM | Source: CNBC-TV18
The FMCG business is fast turning into ITC’s big growth driver. The FMCG segment is even outperforming the cigarettes division says YC Deveshwar, chairman, ITC.
In an interview to CNBC-TV18, Deveshwar says he is expecting Rs 1,500 crore in the topline by FY2017.
"Many of our categories within the others have now turned around. The major drag now is our three-year old personal care business which requires a huge amount of investments. I am very satisfied with the progress and the growth rate of above 25%,” he says.
Deveshwar further adds that the growth rate of other businesses other than cigarettes is growing faster by a significant margin and also the bottomline of the other businesses is growing at a significant pace.
"That is transforming the total composition of our portfolio. We expect to generate a profit of Rs 1500 crore from other FMCG divisions. We have a target of Rs 15,000 crore for our topline," a confident Deveshwar adds.
The ITC chairman says that at the end of the day, it is the sentiment that drives economic growth, and it’s unfortunate if many business leaders appear on the front pages of newspapers and say - everything is gloom and doom.
Below is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying videos.
Q: Are there any visible signs of consumption drying up as far as the rural economy is concerned?
A: At the end of the day, it is the sentiment that drives economic growth. It’s unfortunate if most of our business leaders appear on the front pages of newspapers and say - “Everything is gloom and doom” because then we are talking ourselves into a slowdown.
Q: Do you believe corporate India is talking itself into a slowdown?
A: It has on occasions. This is something that we have to be very careful about because who have a lot of credibility. They have to know how important they are and every word that they speak, what multiplier that speech has and it can ricochet back to them from elsewhere.
Q: You are almost sounding like the government. The Prime Minister chided corporate India for being too negative and for being too anti-government?
A: This is also a factor. The consumption story has not been completely extinguished. At the end of the day, coalition politics is now becoming very evident, political self interest has overtaken the economic self interest of our society. Corporate India is also trying to influence various political parties to at least have a minimum common understanding.
So, at the end of the day there is something in the structure of our democracy and our politics that we are unable to separate the collective good from our segmented self interest.
Q: Do you believe that sentiment is far worse than reality?
A: Initially I did feel that. For example, let me take ITC’s own case. We want to invest and we have projects. What is standing in the way is some of the approvals, which are not always related with the Centre, it’s also related with issues of land, issues of permissions with the state governments and so on and so forth. So, it is an all embracing problem on our society and there is no point of badgering only the central government because we may be finding it easier to punch at the wrong bag as the problems are quite spread out.
Q: The biggest problem in the coalition equation at this point in time is in the state that you are currently headquartered in. Mamata Banerjee is the biggest issue at this point in time as far as this coalition government is concerned? How hard is it for you operating in the state?
A: We have no problem in operating with the state. They are actually very supportive of ITC. ITC is the only company in the top 500 companies that has not left Kolkata and Bengal and we want to continue to be there. I have to say that we have no reason to complain, but even there we find it extremely difficult despite the government wanting to help us out due to the issue of land.
Q: On the India story, the government is projecting between 7-7.5%? Corporate India says - we would be happy if we do between 6-7%. You are operating across the board pretty much with a pulse on the rural economy as well as the urban economy. What’s your own sense?
A: Firstly how we operate and how we plan is by creating a robust strategy. Under all circumstances we must do better than our competitors. That’s what we are concerned with because at the end of the day there are so many other factors beyond the control of our company. That is why I never offer a comment after a Budget because I accept my limitation that it is not possible after listening to a Budget speech to come out on television and begin to articulate what is good and what is not so good, because the challenges of our society are huge.
The thing is a lot of people are now investing overseas which is becoming very fashionable. Let me say that unless an investment overseas is going to stimulate the Indian economy, back home by virtue of the fact that you have now got access to markets overseas, India is going to be a source of fulfilling that demand and you are going to create livelihoods in India. But servicing Indian capital overseas and creating livelihoods overseas I am afraid that if you ask me even at this stage of life I am in, I would say that I would hesitate.
Q: You are sounding like a nationalist?
A: No, I am an Indian and I am very proud to say this.
Q: But why is it wrong for an Indian company to have global aspirations or to deploy assets and capital outside of India and more importantly corporate India is saying at least in sectors like mines, coal, etc when we are being forced outside?
A: Look at it like this. If you are looking for energy security for India and you want to go and get mines overseas or you are looking for security for raw materials for India, for manufacturing in India, all of this is very good as part of the Indian strategy. But if your thought process is I want to make money out of my capital, I don’t care where I invest, then it’s as good as being a foreigner and investing somewhere and creating livelihood somewhere.