Diversified conglomerate ITC’s hotels business is witnessing growing interest amongst property owners to partner with its brands, resulting in healthy generation of leads and pipeline of management contracts.
“Your company’s hotels business continues to leverage its ‘asset-right’ strategy to be amongst the fastest growing hospitality chains in the country with over 130 properties and 12,000 rooms under distinctive brands,” ITC Ltd said in its annual report for the financial year ended March 31, 2024.
Notably, the board of directors of the cigarette-to-soap maker on August 14, 2023 approved the proposed demerger of the hotel business into a separate entity, ITC Hotels.
ITC shareholders earlier this month approved the conglomerate’s plan to carve-out its hotels business with an overwhelming majority. According to the scheme, all the equity shares of the new entity, ITC Hotels, will be listed and/ or admitted to trading on the NSE and BSE. ITC Hotels is presently a wholly-owned subsidiary of ITC Ltd.
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In its annual report, released on Friday, the company said ITC Hotels’ focus is on sweating existing assets, increasing the footprint of management contracts and creating additional revenue streams to engender the next horizon of growth and value creation.
“The business is witnessing growing interest amongst property owners to partner with its iconic brands resulting in healthy generation of leads and pipeline of management contracts. The business is confident of rapidly scaling up revenues through this route going forward,” it said.
In the last 24 months, 25 hotels were opened under the brand portfolio, out of which 24 are managed properties.
The hotels segment EBITDA stood at ₹1049.88 crore for FY24, exceeding the ₹1000-crore mark for the first time. Segment PBIT for the year stood at ₹753.77 crore, witnessing growth of around 39 per cent over FY23.
During the last financial year, ITC’s non-cigarette FMCG business crossed consumer spends of ₹32500 crore, which grew around 12 per cent year-on-year from ₹29,000 crore in FY23.
“The FMCG-Others segment (non-cigarette FMCG segment) turned in a strong performance in the backdrop of weak demand conditions and significant increase in competitive intensity from regional/local players. Sustained margin expansion on the back of premiumisation, delayering operations, agile cost management and judicious pricing actions led to robust growth in operating profits,” the company said.
The company said in rural markets it continued to deploy market-specific interventions to enhance direct coverage on the basis of socio-economic indicators and market potential. “This has been supported through a hub and spoke distribution model with the continued expansion of rural stockists network to 1.3 times over the last two years,” it said.
ITC’s digitally-enabled sales have grown rapidly in recent years and, together with Modern Trade, now account for 31 per cent of its non-cigarette FMCG portfolio compared to 17 per cent in FY20. The company attributed it to the surge in internet usage particularly through smartphones, widespread adoption of digital payments, wide assortment of products and faster deliveries continue to drive the rising salience of e-commerce channels.
During FY24, Surya Nepal, a subsidiary of ITC Ltd, forayed into the biscuits category with the launch of premium biscuits under the trademark ‘Sunfeast Dark Fantasy Choco Fills’. A biscuits manufacturing line has been commissioned at Surya Nepal’s facility near Biratnagar in eastern Nepal with commercial production commencing in August last year. “The brand has received encouraging consumer response,” ITC said.
The conglomerate’s non-cigarette FMCG segment revenue for last fiscal grew by 9.6 per cent on a high base with segment EBITDA growing at a faster pace of 19.7 per cent to ₹2338.50 crore. Segment EBITDA margins expanded by 94 basis points to 11.2 per cent during the year.