ITC's Diversification Strategy

By May 2002, there were 44 Lifestyle stores in India. The gross turnover from these stores was over Rs. 200 million, but due to their heavy start up costs, they were still not considered profitable. Expressions greeting cards, which were sold through 10,000 outlets in 180 Indian cities, were yet to bring in revenues. According to company reports, losses are on the rise in its branded garments, greeting cards and packaged foods ventures. Losses in businesses such as 'Aashirvad' wheat flour, Expressions greeting cards and Wills Lifestyle accounted for five per cent of pre-tax profits in 2002 and continue to be higher than the revenue generated by them. If losses continue to rise over the next few quarters, it may adversely effect the overall profit growth...