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ITC faces cost overrun due to delayed expansion

Tobacco-cum-FMCG major ITC Limited is facing cost overrun due to delayed expansion of its cigarette-manufacturing unit at Kidderpore in Kolkata.

business Updated: Dec 19, 2007 14:57 IST

Tobacco-cum-FMCG major ITC Limited is facing cost overrun due to delayed expansion of its cigarette-manufacturing unit at Kidderpore in Kolkata.

"The delay will obviously lead to a cost overrun", an ITC official said.

The company had proposed to expand its cigarette manufacturing capacity at the Kidderpore plant by acquiring nearly three acres of land from Kolkata Port Trust on lease basis.

However, delay in obtaining clearance from the shipping ministry for the land is mainly responsible for the delaying of the project, the official added, while declining to divulge the extent of cost overrun.

ITC, which had planed the expansion of cigarette manufacturing capacity last financial year, had pegged the cost of the project at Rs 300 crore.

The port trust has now agreed to give nearly three acres of land to ITC on 99 years lease.

Meanwhile, the company has also sought 37 acres of land near Sankrail in Howrah for setting up an integrated food-processing complex for which state government would acquire the land and subsequently transfer it to ITC on long-term lease.

ITC, which had been a traditionally cigarette making firm, had made a paradigm shift in its operations by entering the FMCG sector.

The official said that although the non-tobacco business was contributing more revenue than the tobacco still more than 75 per cent of the company's profits are being generated from cigarette sales.