In the Company’s 112th AGM address Sanjiv Puri, Chairman and Managing Director, ITC Ltd, shared his Vision on ITC: Nation First - Transforming for our Shared Tomorrows. Relevant Excerpts from the speech is below:
The ITC Next strategy seeks to architect the next horizon of competitiveness, growth and profitability in the face of global uncertainties. The agility displayed particularly over the last 2 years attests to the robustness of the ITC Next strategy and stands testimony to the exceptional perseverance displayed by ITC’s dedicated employees. ITC remains committed to making the right strategic choices and adapting to changing macro-economic circumstances.
Over the past few years, ITC has traversed a remarkable journey of transformation across each of the multiple drivers of growth. During FY23, ITC’s Gross Revenue was up by nearly 18 per cent and EBITDA by over 26 per cent. Non-cigarette Segment EBITDA grew by over 43 per cent reflecting robust performance across all businesses. ITC’s non-cigarette businesses today accounts for 67 per cent of Revenue and 28 per cent of Segment EBIDTA. During the period FY 17 to FY 23, the turnover of FMCG Others grew 1.8x, whilst Segment EBITDA margins expanded by 770 bps. Export earnings since FY17 crossed US$ 5 billion, of which agri products contributed more than 60 per cent thus effectively linking the Indian farmer to global markets. ITC’s world-class FMCG brands, Paperboards, Packaging and agri products are now exported to over 100 countries.
ITC Investing in Structural Competitiveness and New Vectors of Growth
The ITC Next strategy seeks to energise this transformation with multiple interventions.
· ITC’s Businesses continue to build on their future-ready portfolio of differentiated, high quality products and services to address evolving needs of customers and consumers.
· New vectors of growth are being nurtured at the convergence of mega trends in digital and sustainability, harnessing ITC’s enterprise strengths. ITCMAARS, Sustainable Packaging and FoodTech are vectors born out of this approach. FoodTech synergises ITC’s strengths in Foods, Hotels and Digital. Having established the product-market fit successfully in Bengaluru with 3 brands - ‘ITC Master Chef Creations’, ‘ITC Aashirvaad Soul Creations’ and ‘ITC Sunfeast Baked Creations’ - delivered through 19 cloud kitchens, we are now gearing up to take the offering to other cities. I will touch upon the other vectors later in this address.
· Structural competitiveness is being strengthened through focused investments in establishing market-aligned innovation platforms, an agile, resilient and efficient supply-chain, a digital-first culture and smart operations across businesses.
· Institutional synergies are being consciously nurtured to create new levers of unique competitive advantage.
· Besides physical and digital infrastructure, ITC continues to invest in creating Intellectual Capital through cutting edge R&D and proprietary intellectual property, also manifest in ITC’s world-class brands.
ITC commissioned 5 state-of-the-art factories and 1 iconic hotel. Reflecting our optimism in India’s growth story, ITC is making investments in 4 more facilities.
Investments in FMCG infrastructure
In my address last year, I had highlighted the investments in Integrated Consumer Goods Manufacturing and Logistics Facilities (ICML) at strategic locations towards deriving economies of scale and scope, creating agility in market responsiveness and optimising logistics with delayering of operations. Recently, we commissioned our 11th ICML in Khordha, Odisha. The integrated Ancillary
Manufacturing and Logistics Facilities in Pudukkottai and Kapurthala utilise robotics and automation to enable seamless market servicing and superior operational efficiencies. These ICMLs now span a built-up area of more than 6 million sq.ft., and together with other facilities, ship out more than 56 million packs of ITC’s products every day. With a view to optimising cost and quality, ITC’s agri value chains are being integrated, enabling proximal sourcing in the vicinity of the ICMLs.
Investment in DigiArc ecosystem
ITC’s vision to be a FutureTech company is powered by ‘Mission DigiArc’ a next-generation smart digital architecture. The DigiArc ecosystem today encompasses 200 factories, 50 warehouses, nearly 3,000 distributors and 2.6 million retailers driving real-time, data-led intelligence across the extended enterprise. Embedded with cutting-edge technologies in AI/ML together with Centres of Excellence in Industry 4.0, Advanced Analytics and Data Sciences as well as the 6th Sense Marketing Command Centre, DigiArc empowers mainstreaming of the digital-first culture to create new sources of competitive advantage.
Investment in omni-channel distribution
ITC’s Trade Marketing & Distribution highway has transformed into a smart omni-channel network including 6 D2C platforms. This network leverages proprietary algorithms for sharp targeting markets, geo whitespacing, and enhancing responsiveness and efficiencies. Today, nearly 6,00,000 retailers are digitally connected through UNNATI B2B app. Effectiveness of sales execution improved by 17 per cent in one year; sales through digital channels increased by 7x over FY20 levels; coverage increased by 2x and rural stockists tripled in the last three years.
Investment in value added Agri
ITC’s Agri Business is building on its portfolio of Value-Added Products across multiple value chains including spices, coffee, frozen marine products, processed fruits and organic produce. The Business is also gearing up for a full play in Medicinal and Aromatic Plants. This year, ITC set up a state-of-the-art export-oriented spices facility in Guntur, Andhra Pradesh. This plant, together with the Integrated Crop Management programme of ITC, initiated in partnership with various State Governments, will provide formidable competitiveness, support agri value chains, whilst empowering farmers. In addition, ITC’s subsidiary, ITC IndiVision Limited has recently commissioned a world-class facility for the manufacture and export of nicotine and nicotine derivative products, conforming to stringent US and EU Pharmacopoeia standards.
Investment in paperboards, paper and packaging
The Paperboard Business, together with the Packaging Business, is at the forefront of developing sustainable packaging solutions and a range of planet-friendly, biodegradable and recyclable products have been launched on existing platforms under the ‘Filo’, ‘Omega’, ‘Bio-seal’ and ‘Oxyblock’ series. These eco-labelled products have recorded a 2x increase in revenue over last year. Pioneering work has been undertaken to create a new platform with exciting market opportunity for substituting plastic packaging with plant-based premium moulded fibre products that are capable of solving complex engineering and aesthetic requirements. Accordingly, ITC is investing in a state-of-the-art manufacturing facility in Sehore, MP, to manufacture technologically sophisticated products with promising applications in pharmaceutical, cosmetics, electronics and other sectors.
The Business is an acknowledged icon of environmental stewardship, with focus on decarbonisation, sequestration and livelihood generation. The recent state-of-the-art High-Pressure Recovery Boiler commissioned at Bhadrachalam will reduce coal usage by one-third while improving ITC’s share of renewable energy by 6 per cent.