ITC to launch super app this year to tap small farmers' potential: Chairman

The product will offer a wide range of agricultural solutions while its micro-services structure will enable plug-in by a range of agtech solutions

Diversified conglomerate, ITC, said on Wednesday that it will be launching a super app, ITC MAARS or 'Metamarket for Advanced Agriculture and Rural Services' during the year to unlock the potential of small farmers.

Addressing shareholders, ITC chairman and managing director Sanjiv Puri said that ITC-MAARS will lend new wings to ITC e-Choupal and create a robust ‘phygital’ eco-system to deliver seamless customised solutions to farmers, anchored by FPOs (farmer produce organisations), while creating new revenue streams, strengthening sourcing efficiencies and powering ITC’s world-class Indian brands.

ITC-MAARS will offer a wide range of agricultural solutions while its micro-services structure will enable plug-in by a range of agtech solutions, Puri added.

The entire suite will consist of hyperlocal services, AI-based personalised advisories and online marketplaces. The company has already started pilots.

“Some pilots at scale on an integrated chilli value-chain initiated in Andhra Pradesh, have validated the concept and benefited farmers with an additional income of 26 per cent in the ongoing season,” Puri said.

The super app will be built under the e-Choupal platform. A showcase project for the company, the e-Choupal, over the past two decades, has not only boosted farmers’ incomes, but is also an important part of ITC’s agri-sourcing infrastructure.

Puri today shared broad contours of what he called the “ITC Next Strategy” for different business segments.

“As a core element of the ITC Next strategy, your company will continue to explore opportunities to craft disruptive business models anchored at the intersection of digital and sustainability, the two defining trends in the ‘new normal’, leveraging its institutional strengths,” Puri told shareholders.

In agri business, ITC has recently embarked on its next phase of transformation. A new vertical has been created in the business with the objective to foster demand-responsive value-chains, promote climate-smart agriculture and digitally empower farmers, Puri said.

In the non-cigarettes FMCG segment, where ITC is aspiring to be a leader, it will look at inorganic opportunities.

“As part of the next horizon vision, ITC is proactively exploring inorganic opportunities,” said Puri.

This was manifest in the earlier acquisition of Savlon and Nimyle brands, and more recently of Sunrise Foods, he said.

Sunrise was acquired by ITC in 2020. Puri said that it will enable ITC to address the growing opportunities in branded spices in underpenetrated markets.

Earlier acquisitions of Savlon and Nimyle have also grown significantly; Savlon by 13x and Nimyle by nearly 4x.

“ITC will continue to evaluate such value accretive inorganic opportunities as an additional pillar of growth,” Puri said.

The hotels business was among the segments severely impacted by the Covid-19 pandemic. But Puri said, structural interventions were put in place to enable new revenue streams together with aggressive cost management both at a strategic and tactical level.

The ITC Next horizon for the hotels business is premised on pursuing an ‘asset-right’ strategy while simultaneously leveraging ITC’s world-class properties to drive growth, said Puri.

In the medium term, the asset-right strategy is expected to double the number of properties in the hotels business.

Puri also said that the company would continue to examine alternate structure in the segment in line with industry recovery dynamics and opportunities for value creation.

Responding to shareholders, on the concerns around the stock price Puri pointed out that one of the speakers had said that the most important deliverable from a management perspective is performance.

“And it is performance that is ultimately recognized,” he said.  Elaborating on ITC's performance, Puri said, “If we take, FY17 to FY20, our EPS has gone up by 47 per cent, our return on capital employed has gone up from 61 to 72 per cent, our margins on FMCG have improved by 640 bps.”  

To put the figures in perspective, Puri pointed out that in the last five years, the company had paid out nearly Rs 50,000 crore as a dividend.

“This reflects the strengths of the company’s operations. We are a debt-free company. We have also made a very transparent dividend distribution policy. So, there are a number of things that have happened,” he said.

 However, the concern is still there, he admitted. “The market is not reflecting this performance.”

The ITC stock has been underperforming for a while. In the last year, returns on the ITC stock are about three per cent versus 46 per cent by 46 per cent by the benchmark Nifty-50 index.

One reason, Puri said, was ESG investing. “There are people who are opting out of certain sectors,” he said.

Then, the cigarette industry faced a huge amount of taxation. “In fact, taxation, at one point, multiplied more than three times,” he said.

The short-term issue is that last year, three of ITC’s segments were impacted- cigarettes, education & stationery, and hotels.

“But the team did a terrific job to recover quite well,” he said