There has been lots of questions about ITC and its Capex on FMCG. I wrote a bit about this on the HUL&ITC forums… some are replicated here along with updated numbers.
Snapshot of ITC fundamentals, Capex and valuation numbers last 10 years. Its not dissected( as Dhiraj did above) into parts but ITC as a whole.
ITC started speaking about 25,000 Cr Capex around 2012 or so…
They wanted to do the investments across all verticals… Since they they did a Capex of around 22815 Cr ( 2012 to till March 2019). Please note that this will also include maintenance capex… Though I made a split based on know methods ( refer the plot above)… Lowest estimate could be simple sum of all depreciation which is about 10,000 Cr. I do expect that they might have done similar Capex in FY 20 as well.
What I find interesting is that they were building 20 ICMLs ( Integrated Consumer Goods Manufacturing and Logistics facilities ). ITC is investing in 20 state-of-the-art Integrated Consumer Goods Manufacturing and Logistics facilities (ICML) across the length and breadth of the country to enable the FMCG Businesses to rapidly scale up. These ICMLs would enable ITC to constantly craft and deliver best-in-class products, enhance cost efficiency whilst enabling greater value realisation to the farmer, help reduce India’s Agri wastage and provide ITC’s brands a competitive edge in terms of scale, freshness and close-to-market distribution.
Out of these 20, 13 are already built and they started operations ( from Sanjiv Puri Interview to Shereen Bhan (CNBC TV 18). I do believe once these facilities came to light it would certainly improve the FMCG margins as it provides the scalability and better margins. ITC was also tweaking its distribution channels for a while now.
Idea is to cover crop to product, meaning fresh procurements to complete packaging and distribution.These ICMLs were located in such strategic locations. Its a long process and I believe it will be completed in next 2-3 years.
I do believe they switched the hotel model to leasing than owning them outright. So Capex might get toned down in the coming days and its time for past Capex to produces some good results.
Im also a big dividend lover like @dd1474 which makes ITC very attractive.
Discl: I hold a large chunk of ITC in my PF at higher level. Also planing to add more. So my views could be completely biased.