Recently ITC sent its annual report and annual report of its subsidiaries are available at ITC website.
An observations on capital allocation worried me, look forward to views of fellow VP members.
As per exchange notification by ITC Ltd, Blazeclan was acquired for approx. Rs. 485 Crores and was informed to have Rs. 295 Crores as annual revenue.
Whereas, as per published annual accounts, consolidated revenue in FY2024 was 201 Cr and in FY2025 reduced to approx. Rs. 198 Cr.
On top of it, it is a loss making business, even after 15 years of its incorporation and is in IT/ITES industry.
Question arises:
-
Why company overstated revenue numbers in exchange notification (for FY2024) vs those in published annual accounts
-
Valuable cash spent on acquisition of a loss making business, is it really worth.
-
Post acquisition Blazeclan has been proposed to merge with ITC infotech also, this will hide it’s subsequent standalone performance from scrutiny - is it a deliberate attempt to hide some financial goofup.
-
Above all, is management really serious on judicious allocation of capital or it is just another value trap where marketing stories are entirely different vs in reality actions of management.
Disc: Invested