FMCG exports to make substantial contribution to ITC's growth: Sanjiv Puri

ITC launched 110 products in FY22 to mark its capacity for innovation, he says

Diversified conglomerate ITC on Wednesday said it would continue to focus on delivering competitively superior performance in every segment and allow the market to determine its stock valuation.

The appreciation in the ITC stock, company performance, and high dividend payout were highlighted by many shareholders at the company’s annual general meeting (AGM) on Wednesday. This was a sharp departure to the earlier two AGMs when shareholders had raised concerns about the stock’s underperformance.

On Wednesday, the stock closed at Rs 298.1 on the BSE after touching a new 52-week high of Rs 299.55. On a one-year basis, the ITC stock is up over 40 per cent, while the S&P BSE Sensex is up just 4.6 per cent. Much of this outperformance in the ITC stock is from late January.

Speaking at the company’s AGM virtually, ITC Chairman and Managing Director Sanjiv Puri said, “Many of you are happy that the share price has done well. The focus of the management is to make sure the businesses are competitive. We are investing and building businesses for today, tomorrow, and the day after.”

“We are investing and working to make our businesses such that they continue to grow and demonstrate sustained value accretion over a period of time. That’s the principle,” he added.

In the past, Puri pointed out that there were factors like environmental, social, and governance and anxiety around cigarette taxation. During the Covid-19 pandemic, certain business segments had faced disruption.

“The resilience of the enterprise and its employees has been demonstrated in the manner which has had the company bounce back and deliver competitively superior performance across every segment,” he said.

Shareholders wanted clarity on the demerger of businesses. Puri said, ITC Hotels and Paperboards were once separate companies. “So nothing is really cast in stone.”

He said the company had announced three years back an ‘alternative structure’ for hotels, but it was held back because of the pandemic.

“We have said that in line with industry recovery dynamics, we will take it forward. The industry seems to be in a positive trajectory now,” he said.

To a query on Infotech, Puri said, “What is more important is that we are able to organise ourselves for sustained growth. Where a business needs a lot of enterprise synergy, it has to be organised in a specific way and when it matures, an alternative way can be looked at. We will be flexible and open to it.”

ITC’s diversification strategy has been focused on creating multiple drivers of growth.

“In many of the businesses or segments we have been around in, we have leadership positions. Our younger businesses are fast-moving consumer goods (FMCG) and information technology. Both hold immense promise of value creation in the future,” said Puri.

In terms of size, non-cigarette FMCG is around Rs 16,000 crore. “That puts us among the top ones in the FMCG segment,” said Puri.

He also said that the carefully selected FMCG portfolio, with substantial headroom to grow, was estimated to have a total addressable market potential of Rs 5,00,000 crore by 2030, which is amongst the highest in the Indian FMCG space.

Exports from FMCG were also expected to make a substantial contribution to ITC’s growth.

“In recent years, we have established distribution arrangements overseas, enabling appreciable progress of exports of ITC’s ‘Proudly Indian’ brands to over 60 countries. Over time, such exports will make a substantial contribution to the growth of a company’s value-added FMCG portfolio,” he observed.

In his speech, Puri flagged challenges from geopolitical tensions and severe economic stress caused by runaway inflation and supply-side disruptions.

Near-term challenges notwithstanding, the company was optimistic about the prospects of the Indian economy.

“ITC’s future-ready and purpose-driven businesses and brands are well poised to seize the emerging opportunities and make meaningful contributions to national priorities,” he added.