ITC to Tap `New Areas' in Consumer Products

ITC Ltd., India's biggest tobacco maker and second-largest hotel operator, plans to tap ``new areas'' in consumer products to cut dependence on its tobacco business, which faces high taxes and advertisement curbs.

The Kolkata-based company plans to sell ``fast-moving consumer goods,'' Chairman Y.C. Deveshwar told reporters in New Delhi today, without specifying the products or by when it plans to start selling the new products.

ITC, set up in 1910, has in the past six years added businesses such as food, matches, apparel, deodorants, greeting cards and rural retail stores to reduce its reliance on tobacco, which contributes to about half of sales. Analysts such as Abhijeet Kundu expect ITC to start selling soaps and detergents, putting it in direct competition with the local units of Unilever and Procter & Gamble Co.

``It may turn out to be a good move in the long term but may delay the projected breakeven of its non-tobacco business because of higher advertisement spending,'' said Kundu, an analyst with Prabhudas Lilladher Securities in Mumbai, who has a ``buy'' rating on ITC stock. ``The introduction of soaps and detergents may hurt Hindustan Lever in the long term.''

Stock Performance

Shares of ITC fell 5.8 rupees, or 3.3 percent, to 168.35 rupees at the close on the Bombay Stock Exchange. The exchange's benchmark Sensitive Index declined 2.5 percent today.

ITC, 32 percent owned by British American Tobacco Plc, is aiming to exploit the access it has to shops in the nation's 4,378 towns and 638,000 villages to sell products ranging from food to match boxes.

``It is our objective to strive to gain a position of leadership not only in areas we have already entered but newer areas,'' Deveshwar said. ``Our people are hard at work. Our product development, our research and development activity is working round the clock.''

In July 2005, ITC started selling perfumes and deodorants.

ITC plans to set up fresh-food stores in 54 locations in the country over the next three years, Deveshwar said. ITC opened its first fresh-food store, called Choupal Fresh, in August in the southern Indian city of Hyderabad.

The company has set up a network of 6,400 Internet kiosks called e-Choupals and 11 supermarkets called Choupal Sagars. The e-Choupals give farmers access to a company Web site where they can see prices of agricultural produce, browse for new seeds or equipment and check the weather.

The Choupal Sagars buy farm produce and offer a range of services such as soil testing and advice to farmers on new farming practices, buying produce from cultivators and selling them a range of products such as toothpastes and mobile phones.

Cabinet approves sugar exports against licence

NEW DELHI (Reuters) - India, expecting a bumper sugar output in the new season that began in October, on Monday permitted sugar exports by those who had imported raw sugar with an obligation to re-export it within a specified time period.

"The cabinet reviewed the issue of export of sugar and took a decision that those having limited advance licence obligation be permitted to export sugar," cabinet spokesman P.R. Dasmunshi told reporters.

"The cabinet would further review the decision shortly."

He did not say when the decision would take effect.

The government had allowed traders to import close to two million tonnes of raw sugar in the last two years against an obligation to re export it. Of this, close to one million tonnes is still to re-exported, traders said.

Traders said they had expected the ban to be totally lifted as output in the new season was very promising. Crushing of sugar in the new season is at it its peak in most mills.

The ban on sugar exports was imposed in July to curb rising prices due to tight supplies, and was due to run until the end of the financial year in March.

In recent weeks ministers have suggested the ban could be lifted early, but there have also been trade rumours such a move was being resisted by a finance ministry worried about rising inflation.

Agriculture Minister Sharad Pawar told reporters last week the time was appropriate to take a look at lifting the ban on sugar exports. Pawar said sugar output in 2006/07 (October-September) was likely to be 22.7 million tonnes, up from 19.3 million tonnes in the last season.

India's population of more than one billion people annually consumes about 19 million tonnes of sugar.

Shanti Lal Jain, director-general of the Indian Sugar Mills Association, had said last week India might lift the ban between Dec. 18-21.

The industry expects India to export 2 million tonnes sugar in the current season if the ban is totally lifted, although exporters will find global prices are much lower than they were in July.

Global sugar prices have fallen from an average $400 a tonne when the ban was imposed to $349 a tonne now, traders said.

RELIANCE

Above 1300-1310 reliance goes into uncharted territory and can go berserk fib levels can be seen by the chart.
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Reliance finds huge oil reserves in block D6

Reliance Industries Ltd has discovered huge oil reserves in its gas-rich D6 block in Krishna Godavari basin off the east coast, its minority partner Niko Resources of Canada has said.

"The MA-2 well has encountered the thickest hydrocarbon column discovered to date in D6," Niko Resources said in a release. Niko Resources has 10 per cent interest in the block KG-DWN-98/3, also known as D6. Reliance is the operator of the block with 90 per cent interest.

"MA-2 reached a target depth of 3581 metres and penetrated a gross hydrocarbon column of 194 metres consisting of 170 metres of gas/condensate and 24 metres of oil in the cretaceous section," the release said.

MA-2 is located approximately 2-km from the previous MA-1 oil discovery well.

"Application has been made for the commerciality of the MA field and approval is expected to be granted in the near future. The full field development plan will be submitted after approval of the commerciality and the oil development is to be fast tracke d with initial production targeted in the second quarter of 2008," it said.

The MA-1 well in June 2006 reached a total depth of 3,783 metres and hit 26 metres of net oil pay and 72 metres of net gas pay.

Reliance has till date made about a dozen gas discoveries in D6 and put combined reserves in the block at around 50 trillion cubic feet (Tcf). MA-2 is the second oil discovery on D6 after MA-1.