Sanjiv Puri reveals ITC's future strategy

Puri said ITC will focus on health and wellness products within the FMCG vertical. He also said the company will attempt to reinforce the existing categories in the FMCG segment.

Diversified conglomerate ITC Ltd on Friday said it will foray into new categories and sub-segments in the FMCG vertical, which will be supported by multi-dimensional investments.

Addressing the company's shareholders at its annual general meeting here, ITC chairman Sanjiv Puri said the company is seeking to be an engine of growth for Indian economy through a vibrant portfolio of future-ready businesses.

"Today, around 25 per cent of ITC's segment revenue is from newer FMCG businesses... To accelerate growth in the FMCG businesses, the endeavour is not only to fortify the existing categories towards delivering industry-leading performance but also to foray into newer categories and sub-segments.

"This would be supported by multi-dimensional investments as also strategic opportunities for acquisitions," he said.

Later, talking to reporters, Puri said ITC will focus on health and wellness products within the FMCG vertical.

"A whole range of products are being developed in the health and wellness space," he said.

He also said the company will attempt to reinforce the existing categories in the FMCG segment.

"We want to make FMCG a large business... Take it to Rs 1 lakh crore in the long-term," he said.

At present, the turnover of the vertical is Rs 12,000 crore.

Puri said the target is to be the leader in every segment in which it operates.

"That will drive the investments. We will invest in areas where we are leaders, and in areas where we will acquire leadership position in a period of time," he said.

The top company official also said the older categories of the FMCG business have garnered scale.

Puri said the hotels division has seen an improved performance, while the paper business had a "stellar" year.

"The agri business had some impact on its margins," he said.

On shareholders' demand about demerger of the cigarette and non-cigarette FMCG businesses, Puri said it depends on what can create a better value.

"Our aim is to create a unique source of competitive advantage through diversity of the businesses and create new opportunities for growth," he said.

About investments in start-ups, Puri said, "So far, we have restricted ourselves to alternative investment funds...Later, we would make direct investments in start-ups in the FMCG space."

Earlier, in his address to shareholders, Puri said in the last two to three years, ITC has expanded its FMCG portfolio by foraying into new segments.

Over 50 products were launched last year to strengthen existing categories and enter newer segments, he added.

Reiterating the company's vision, he said, "ITC seeks to be an engine of growth for the Indian economy through a vibrant portfolio of future-ready businesses that are well poised to serve the emerging needs of a growing market through world-class Indian brands."

These businesses also anchor competitive value chains that empower millions of farmers and trade partners, generating livelihoods for more than 6 million people in the country, Puri said.

"In terms of annual consumer spend, 'Aashirvaad' is today over Rs 4,500 crore; 'Sunfeast' over Rs 3,800 crore; 'Bingo!' nearly Rs 2,500 crore; 'Classmate' over Rs 1,400 crore; 'YiPPee!' over Rs 1,100 crore while 'Vivel', 'Mangaldeep' and 'Candyman' are over Rs 500 crore each," he said.

Puri said ITC has been able to create unique competitive advantage by leveraging on its enterprise strength.

"ITC's formidable distribution network enables it to place products in more than 6 million retail outlets," he said, adding substantive investments are being made in expanding this network and in developing alternate and emerging channels such as modern trade, on-the-go food services, end-to-end cold chain and e-commerce, among others.

He also said the integrated fruits, vegetables and perishables value chain has enabled ITC to foray into new segments with a wide range of offerings including frozen food, dehydrated onions, potatoes, mango pulp and prawns.

ITC is investing in building state-of-the-art manufacturing infrastructure across India to rapidly scale up the FMCG businesses, build an extremely competitive supply chain and contribute to the country's 'Make in India' vision, Puri added.

"The 20 Integrated Consumer Goods Manufacturing and Logistics (ICML) facilities being progressively built will provide formidable strength to the company's FMCG brands by enhancing cost efficiency, economies of scale, freshness and close-to-market distribution," he said.

Photograph: Rupak De Chowdhuri/Reuters