ITC’s latest investor note reveals that consumers spent over INR 29,000 crore on ITC’s fast-moving consumer goods (FMCG), excluding tobacco, during the fiscal year 2022-23.
During the last fiscal year, the consumer spending on the Kolkata-based company’s 25 core brands exceeded INR 24,000 crore, marking an increase of over 20% compared to the previous year.
During the pandemic, the rate of growth exhibited a notable decrease, with a 9% growth rate in FY22 and an 11% growth rate in FY21.
Consumer spend represents the total sales revenue generated by brands, inclusive of channel margins and taxes, and serves as a crucial metric for evaluating business performance. It is important to note that a company’s gross sales in the fast-moving consumer goods (FMCG) sector may be lower than the overall consumer spend figure. In the previous fiscal year, ITC reported a gross sales figure of INR 19,122.5 crore for its non-cigarette FMCG segment, reflecting a notable increase of 19.5% compared to the fiscal year 2022.
According to ITC’s statement, the FMCG business achieved a remarkable growth in EBITDA (earnings before interest, taxes, depreciation, and amortization) for the fiscal year 2023, with a substantial increase of 34.9% to reach INR 1,954 crore. Despite facing challenges of elevated commodity and input prices, the company managed to improve its EBITDA margin from 9.1% in FY22 to 10.2%. This margin expansion can be attributed to a variety of strategic measures implemented by ITC, including initiatives such as premiumisation, enhanced supply-chain agility, prudent pricing strategies, digital advancements, effective cost management, and the utilization of fiscal incentives such as production-linked incentives (PLI).
The conglomerate is placing its bets on the FMCG business as the main catalyst for future growth, aiming to reduce its reliance on the cigarette business, which has faced heightened scrutiny from regulatory bodies for a number of years. This strategic move aims to mitigate risks associated with the cigarette industry.
ITC in the note said it shall continue to pursue opportunities for inorganic growth in FMCG “that are value accretive and synergistic”. In the personal care business, ITC has acquired brands like Savlon, Nimyle and Charmis.