INDIA- FMCG and cigarette company ITC has reported a below-projection net profit of Rs 5,190 crore (US$622.7 million) despite a 2% increase in total revenue to Rs 19,446.5 crore (US$23.3 billion) for the year ended March 2024 owing to subdued demand and competition from cheaper Chinese goods. 

Despite trade restrictions on agricultural commodities and competition from cheaper Chinese products, ITC’s FMCG revenues increased by 7.2% in the reported year. 

The reported net profit was a decline from Rs 5,242.6 crore (US$629 million) reported in the previous year, which reflects a decrease in demand in the Indian retail market.  

The company reports that demand challenges were particularly evident in its packaging business wing, as revenues dropped by 7%. ITC’s cigarette business wing saw a 7% increase in revenue. FMCG revenues increased by 7.2%, significantly lower than the 19.4% increase in FY23. 

The mixed performance from different business wings resulted in the total revenue increase of 2% in the year reported. 

The reported decline is mostly attributed to increased competition from lower-priced Chinese goods. 

However, the FMCG market in India remains promising and resilient despite challenges caused by high inflation. The company remains optimistic despite the current challenges. 

The FMCG-Others Segment delivered a resilient performance despite weak demand conditions and a significant increase in competitive intensity from regional/local players. Sustained margin expansion on the back of premiumization, delayering operations, agile cost management, and judicious pricing actions led to robust growth in operating profits,” the company said in a statement.  

The company’s resilience despite a challenging market environment is attributed to its distribution strategy, which is more pivoting towards FMCG. The diversification strategy has helped ITC avoid depending on a single product line, helping offset market challenges. 

Revenue shares from the company’s cigarette business have more than halved since the company entered the FMCG market in 2014, from 63% in FY14 to 33% in the reported year.  

The company revealed a customer-centric approach inspires this diversification strategy. 

Sanjiv Puri, ITC’s Chairman and MD, said, “We want to be present in every sphere where a consumer is consuming products.” 

The diversification strategy is underpinned by the need to marry consumer demands with enterprise strengths, hence the FMCG pivot. 

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