MONETISING BUSINESS – ITC may Share Its Dealer Network for a Fee

Tobacco-to-FMCG major plans to let smaller FMCG companies and startups use its network, may also buy stakes in them
ITC plans to offer it distribution network, covering al parts of the country through some 4.3 million shops, to startup and smaller FMCG companie that want to go national for a fee to create a new revenue stream, two senior industry officials aware of the development said. The tobac co-FMCG-hospitality major i even open to the idea of acquiring stake in some of these smalle companies, they said.“The way ITC has a packaging business where it does packag ing for rival FMCG brands apar from its own, it also wants to monetise its distribution net work,“ one of them said.

ITC, which is looking to shore up its non-tobacco revenues at a time when cigarette sales are un der pressure due to recurrent tax increases, has now created a separate division for distribution. Earlier, distribution was part of the firm’s cigarette division called India Tobacco Division (ITD).

B Sumant, who was the divisional chief executive of ITD, has been redesignated as the chief executive for tobac co and distribution, a new role which ITC has created, the sources said. His prime responsibility will be to lead the distribution business and he will report to ITC executive director (FMCG) PV Dhobale and president (FMCG) Sanjiv Puri.

Hemant Malik, who was earlier the chief operating officer of ITD, has been promoted to the post of its CEO. He will report to Sumant.

ITC declined to comment.

On its website, the company has confirmed the new role of Malik, although there was no mention about Sumant’s new role or creation of the new distri bution business as of press time Sunday.

One of the persons quoted earlier said that besides monetising its distribution network, the restructuring will also help ITC increase focus on its cigarette business that has been under pressure for past few quarters.

While nearly 60% of ITC’s net revenue is generated from the non-cigarette business, cigarettes still contribute significantly to its profits despite sales volume sliding by up to 15% in the past two quarters due to price increases due to higher taxation.

Another person said the move is in line with ITC’s recent focus on promoting relatively younger talent for bigger roles with the approaching retirement of chairman YC Deveshwar by 2017.

Sumant, 52, and Malik, 49, are both lifers at ITC, joining the firm soon after completing engineering and MBA, respectively. Earlier this year, ITC had promoted a battery of executives, including Sanjiv Puri, 52, as president (FMCG business) and VL Rajesh, 47, as divisional chief executive for packaged food.

Source: The Economic Times

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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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