Wills Lifestyle shouldn’t be seen as loss making franchise. It is surrogate marketing expense for their most profitable cigarette brand.
Just noticed this
Looks like they are trying to detach Wills from brand. So it should be up for sale soon.
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most stores will be shut except those in their hotels just to clear existing stocks. The CEO mentioned this in his recent interview: In Conversation With Mr. Sanjiv Puri, Chairman & MD Of ITC Limited - YouTube
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This is a very different and prudent way of looking at things. Appreciate yet again on your thought process. Indeed, the spending on hotels (although very large in absolute terms but manageable as a percentage of FCF) is meagre compared to what if the management had done a big scale acquisition which would have not worked as expected…and that too outside India.
I agree with you on what lens to wear when trying to understand capital allocation/misallocation by various managements and nothing is actually in black or white.
Point is, if the management is ethical and want to move in right direction - sooner or later, they will find their way. Provided, it is ethical, keep looking in progressive direction and willing to recognize & hence rectify past mistakes, if any.
Disc: Invested in both ITC and GCPL. Not a buy/sell recommendation.
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Spoke to couple of my friends who work at ITC Infotech and below is the gist of it.
- ITC Infotech has very few project and very less in cloud and infrastructure. They have infact 2 or 3 projects in cloud which is the hottest property in town.
- Infotech does lot of POC’s (Proof of concepts), Most are free POC and lot of them don’t end up in getting contract from customers for those POC.
- BAT( British American Tobacco) had given them few projects to ITC Infotech and they couldn’t deliver to their satisfaction so they cancelled those
and moved it to Wipro.
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ITC Infotech forms insignificant part of ITC financials. These should not matter to valuations at all.
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Agreed. I spoke to people just incase the speculative news of Demerger becomes reality then investors will have first hand information to decide whether they want to keep up the ITC Infotech shares.
Nothing else. Infotech is miniscule part of ITC and doesn’t contribute anything significant to their top/bottom line.
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ITC is my biggest holding. I draw comfort from PPFAS also having ITC as their biggest holding. Of late, I have started having doubts about the “culture” of the organization. Since cigarettes has been such a wonderful cash generating business, it seems to me that ITC folks are not very conservative (scrimpy or thrifty) about the way in which they do business. Since they never needed to be (due to the cash gushing out of the cigarettes business). For example, recently I came across this article
on D.Muthukrishnan ji’s twitter timeline. The article says that ITC will do a unique pilot in Bengaluru by giving a 500 gm sample of sona masoori rice. I was really excited since this seemed pretty novel marketing and the opportunity size in rice is huge. But I was not able to find aashirvaad rice on amazon on ITC e-store and on relooking at the article I realized it was from September, 2018.
This habit of coming up with cool stuff but not following it up and going in search of another cool idea is what bothers me the most about ITC.
Going by the above feedback, ITC infotech also seems to be one cool thing with not much practical utility. Why can’t they learn to outsource like other successful FMCG companies. Here is an FMCG company that has maximum vertical integration from obtaining raw material to manufacturing and packaging but whose profit margins are nowhere close to companies that outsource most of their work. There is some merit in the argument that ITC will over time improve its FMCG margins but the absence of efficiency as a guiding principle (this is what I mean by culture) might see ITC FMCG lag behind in margins even in the long term inspite of doing a lot of things in-house.
People generally say that since ITC Hotels is now going to follow “Asset Right” model (I hate these euphemisms, were you Asset Wrong earlier:) ) and hence capital allocation has improved. But I feel good capital allocation is much more subtle than that. Since ITC is now going to be competing with well entrenched FMCG players and not going to run a virtual monopoly like its cigarette business, it needs a change in mindset and I am not sure a change in mindset is as easy as declaring an “Asset Right” strategy or is even possible.
I had read somewhere in the early part of this thread some people saying similar things about ITC management but had not paid much heed then. I still think ITC is undervalued, but probably not by as much as the numbers make it appear.
P.S. If you find there’s something wrong with the post, kindly message me before flagging it. I really value valuepickr forum and community a lot and feels a bit disheartening to have your post flagged and removed. Thanks 
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Let’s hope ITC management doesn’t buck under pressure, again.
Also, most noise on this speculation is being made on zeebusiness.
ITC diversification though started in 1960s/70s and most of them failed … Finance , Retail etc
Then late 2000s they decided they will stop venturing into multiple industries and focus on existing ones … FMCG , Support to FMCG ( Agri , Paper & Packaging, ITC infotech ) , Hotels
Rest all experimentation across sectors stopped … That was big shift … otherwise they had plan to be telecom , airlines and many such ventures which large corporate venture in like Birlas , Tata etc
Thereon there was single focus on becoming large “Indian brand” owners in FMCG space …
That was like mission statement internally when YCD was Chairman - that foreign MNC charge 4%-6% from Indian consumers as Royalties we should create brands that will be Indian consumers give best quality and best price … But YCD had weakness for hotels as he had built his career in Hotels so that too got good allocation
Coming back to FMCG product explosion …
Now while FMCG products / brands were well built, distribution was not able to gear up as FMCG brand building is long gestation - it takes 20 years even too be meaningful …
HUL launched pespodent in 1990s , but yet it was tough to beat Colgate or even get high Mks . In that context ITC did well with brands like Yippe , Ashirwaad , Sunfeast Engage and Bingo etc , but failed in many personal care brands …
Traditional Distribution was overloaded and cannot keep pace continuous launches as each launches require long time nurturing like one would do with babies …
ITC will have take tough call in FMCG sometime just like it did with industries shortlisting - Shortlist on categories it want to focus on and move way from craze of creating Indian brands in every category …
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As per the AR of FY 2019-20, ITC Infotech made close to Rs220 Crores as profit (195Cr by ITC Infotech India, 10Cr by ITC Infotech UK and 20Cr by ITC Infotech USA). This is close to a mid-sized IT firm’s PAT. So, I find it unlikely that it is as bad as your friends mentioned.
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Sorry to mention this. But this is just a very trivial noise for investors. Investors need to remove these noises from investing process, else one be shaken out of their best investments. Such trivial information keeps accumulating into your sub-conciousness and overwhelms you to take wrong investing decision.
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Does any one knows why ITC is not scheduling conference call after result. I believe Generally most of the large cap company does this then why ITC is not doing this?
Thanks for sharing this … Can you please share the latest sheet if you have based on the latest data if possible
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Hi,
ITC Windsor, Bengaluru the first hotel in the world to achieve the LEED Zero Carbon Certification.
Thanks,
Deb
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A single judge bench of the Delhi HC dismissed a injunction application filed by Britannia Industries against ITC Ltd for a deceptive looking trademark used by ITC in its recent biscuit launch which is “Sunfeast Farmlite 5-Seed Digestive".
Britannia was aggrieved that the packing of these biscuits was deceptively similar to its “Nutri
Choice Digestive” biscuits.
The Judge after hearing the submissions of both sides dismissed the application as prima facie it could not be found that ITCs packing was deceptively similar and that they are guilty of infringement and passing off.
Have attached the order for reference.
Disc : Invested in both ITC and Britannia.
britania-chs05042021sc5542020114707-391507.pdf (3.0 MB)
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Average demand for hotel rooms has increased from 26,300 rooms per day in financial year 2008 to 91,800 rooms per day in financial year 2019
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ITC launched ITC eStore.
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Such a disappointing experience on the eStore. With the benchmarks of e-commerce experience set by Amazon and Flipkart, this store works to turn people off from the ITC brand. With so much cash generated by the business, they should invest proportionally in their tech strategy or not do anything at all. This is bad!!
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Not OP but I don’t see any major issue with the site design. However, average urban consumer has no visible reasons to prefer this over one-stop-shops, say Amazon Fresh or Big basket.
I find that it is not available nationwide. I tried PIN codes from multiple states and most don’t work. I dug in a bit deeper and it looks like they haven’t on boarded all their distributors yet.
The platform and other tools they use are quite good. How well this will work compared to other marketplace platforms is a question. But all FMCG brands should have their own shopfronts online given the proclivity of certain behemoths to copy best-selling products and destroy competition.
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