Inflation a key monitorable in the near term, says ITC annual report

Inflation will be a key monitorable for ITC in the near term, the company said in its annual report for financial year 2021-22 (FY22).

In its director’s report, the diversified conglomerate said the operating environment during the year was challenging and marked by heightened uncertainty and volatility due to the Covid-19 pandemic, continued geopolitical tension, inflationary headwinds on the back of commodity super cycles, and extended supply chain disruptions.

The recovery momentum was weakened in the course of the year by new strains of the coronavirus and an unprecedented spike in commodity prices due to global supply chain disruptions, container shortages and port congestion, it further said.

Despite the inflationary challenges during the year, the company highlighted that the non-cigarettes fast-moving consumer goods (FMCG) business had seen a margin expansion of 650 basis points over the last five years.

ITC's FMCG brands crossed annual consumer spend of Rs 24,000 crore and the year also saw about 110 new product launches from the segment.

ITC, which forayed into the non-cigarettes FMCG space about two decades back, has mostly grown organically. But acquisitions would be an additional pillar of growth. 

The company mentioned that acquisitions would be guided by considerations such as strategic fit, valuation, financial viability, and ease of integration.

ITC’s previous acquisitions in the FMCG space were Sunrise (in spices), and Savlon and Nimyle in the hygiene space. During the year, the company also picked up minority stakes in D2C start-ups.

The company believes that with enhanced scale and margin expansion, the FMCG businesses could make higher contributions to the company’s profit pool.