Digital and sustainability at the forefront of ‘ITC Next’ strategy: CMD Sanjiv Puri

Puri said digital interventions were being implemented to ensure higher order efficiencies, heightened impact and faster go-to market.

“These include ‘Project Astra’ for smart sourcing, the ‘ITC One Supply Chain’ for smart logistics across businesses, Project Manthan for Industry 4.0 implementation in manufacturing as well as customised apps such as the UNNATI and VIRU to facilitate digital ordering and trade engagement,” he said.

Similarly, to engage with consumers on social and e-commerce platforms, ITC has established marketing command centres called Sixth Sense in Bengaluru and Kolkata. The centre, informed Puri, plays a critical role in identifying emerging trends in real time, enabling ITC to speedily launch differentiated products and creatively engage with consumers. It has generated more than 2,000 ‘moment marketing’ ideas, leading to campaigns with over 1 billion impressions, he claimed.

ITC has also been pushing sales from e-commerce and its direct-to-consumer platform in the wake of the pandemic. The company’s sales through e-commerce have doubled in the past one year backed by these initiatives, while ITC e-Store now offers its services in 11 metro cities.

As the pandemic accelerated the pace of the digital adoption amongst consumers, ITC also rejigged its strategy and repositioned its premium brands such as Dermafique’ and ‘Fiama’ as the digital-first brands. 

“Your company is also progressively introducing more ‘digital first’ brands to leverage the growing e-commerce space,” said Puri.

Ambitious FMCG plans

ITC with its ambition to build a “formidable FMCG business” took several initiatives in FY21, which helped the company garner consumer spends of over Rs 22,000 crore and reach more than 150 million households.

According to Puri, the company’s EBIDTA margins from its FMCG business in the last four year improved considerably by 640 basis points, while revenue increased from about Rs 10,500 crore to nearly Rs 15,000 crore. In the year gone by, ITC’s FMCG Revenue recorded an industry-leading growth of about 16 percent on a comparable basis, he said.

The FMCG business’s gross revenue and profit after tax for FY21 stood at over Rs 48,000 crore and Rs. 13,000 crore, respectively.

“Sustained investments are being made to build and strengthen ITC’s world-class Indian brands, which will derive fresh impetus from the strategic revitalisation of the FMCG businesses as well as the synergies of ITC’s institutional strengths, to realise our aspiration to be India’s no.1 FMCG Company,” said Puri.

With an eye on sustained growth in FMCG, ITC has revitalised its product portfolio to make it future-ready, while business segments that were incongruent to its growth aspirations such as the lifestyle retailing business have been shrunk.

“The overarching strategy for new platforms of innovative products is to first validate the concept and business model in select beachheads and then progressively scale up segments, creating new vectors of growth for the future,” informed Puri.

The company’s acquisition of Savlon and Nimyle which operate in the health and hygiene space and launch of frozen snacks under Master Chef are a few examples of this strategy. Savlon has progressively grown by 13 times and Nimyle by nearly four times since their acquisition, said Puri.

ITC is looking at more inorganic growth opportunities, Puri said. “As part of the next horizon vision, your company is proactively exploring inorganic opportunities. This was manifest in the earlier acquisition of Savlon and Nimyle brands, and more recently of Sunrise Foods,” he told shareholders.

However, it will also extend its current brands such as Aashirvaad and Sunfeast to tap market opportunities. 

“Aashirvaad, for example, a strong centre-of-plate brand, provides a platform for a larger play in staples and also addresses value-added adjacencies such as organic atta and pulses, gluten free and sugar release control atta as well as vermicelli and instant meals,” he informed.

Third wave looms large

Though ITC has witnessed recovery in the recent weeks as the second wave subsides, the possibility of a third wave remains a worry.

“The recovery over the last couple of months is encouraging, though the possibility of subsequent waves creates near-term uncertainties,” said Puri.

It had reported a robust performance in the first quarter of the financial year 2021, despite the second wave which impacted its operations, backed by better-than-expected cigarette sales. 

The company reported a 37 percent jump in net revenue to Rs 12,217 crore in Q1 as compared to Rs 8,911 crore reported in the corresponding period last year. Its net profit for the period stood at Rs 3,013.5 crore (standalone) -- a rise of 28.6 percent as opposed to Rs 2,343 crore in Q1FY21.

ITC’s revenue from the cigarette segment, its mainstay, jumped 33 percent during Q1FY22 to Rs 5,122 crore in comparison to Rs 3,854 crore a year ago. The company registered a 37 percent jump in earnings before interest and tax (EBIT) in Q1FY22 to Rs 3,221 crore.