Plateful of vision: Sanjiv Puri takes us through ITC's ambitious menu

Puri notes that tax stability in recent years has allowed the cigarette industry to recover from illicit trade, a trend that has been unfolding over several quarters

“I am, by and large, a simple, home-cooked Indian food person. Even when I am in our hotels, that’s all I eat,” says Sanjiv Puri, chairman and managing director of ITC. But he makes an exception for this occasion and we sit down for an indulgent lunch — an event in the making for a couple of quarters.
 

We are at Club Prive, the private membership club on the 25th floor of the impressive ITC Royal Bengal in Kolkata. The cityscape serves as a backdrop, featuring vast wetlands, crisscrossing flyovers and towering structures — a burgeoning hub for social and commercial activities. The club’s contemporary enclave seamlessly blends into this setting.
 

The preset menu, curated by Chef Vijay Malhotra, reflects the boss’s preferences — Indian cuisine, of course.
 

The kebabs arrive as our conversation starts to flow — galouti and murgh malai for me; akhrot aur shakarkandi ki tikki and makkai dhale for Puri, a vegetarian for over a decade. B-Natural, the fruit beverage brand from the ITC stable, makes the rounds. I opt for mixed fruit, while Puri sticks to “just water”.
 

We are meeting a day after ITC’s third-quarter results, which surpassed Street estimates, although cigarette volumes fell short of analyst expectations, imp-acting the stock price. Puri is his usual composed self, perhaps a result of the meditation and yoga he packs into his routine.
 

I enquire about the market’s response to declining cigarette volumes.
 

“It needs to be seen in the context of the base,” Puri replies. He notes that tax stability in recent years has allowed the cigarette industry to recover from illicit trade, a trend that has been unfolding over several quarters. “Structurally, I don’t think the thesis about volume recovery and stability in taxes has gone away.”
 

At this point, large thalis lined with katoris (bowls) arrive. They are brimming with seasonal vegetables, jhinga dum anari and gosht nihari. Puri samples kathal, sarson ka saag, lotus stem, while maintaining his focus on the conversation, interrupted only by a moment of indulgence with makki ki roti.
 

Having joined ITC in 1986, six months after graduating from IIT Kanpur, Puri, 61, has navig-ated diverse roles — from steering ITC Infotech in Bengaluru to serving as managing director of Surya Nepal in the early 2000s. Though he was born in New Delhi, he has barely lived in the national capital.
 

For the last several years, he has operated out of Virginia House, the imposing British Raj-era ITC corporate headquarters on Chowringhee. He moved to the corner office as chief executive officer in February 2017, was re-designated managing director in 2018 and appointed chairman on May 13, 2019 (after Y C Deveshwar died).
 

Months into the top job, Covid-19 struck. “It created its own set of challenges, but ITC demonstrated a lot of resilience,” he says. “We stuck to our strategic path of building the levers of competitiveness and profitability in each of our businesses through the new vectors of growth.”
 

“Competitiveness”, “profitability” and “growth” are words that keep coming up during our lunch. That’s no surprise, given that for the last five years, Puri’s mantra has been “ITC Next”, a strategy focused on driving competitiveness, profitability and growth in each of its businesses.
 

The results, he says, are visible, with “newer” businesses also starting to contribute more to the bottom line.
 

“If you look at last year’s (FY23) figure, 28 per cent of our  earnings before interest, taxes, depreciation, and amortisation (Ebitda) came from non-cigarettes. The figure five years back was 18 per cent,” Puri says.
 

ITC straddles various businesses – cigarettes, fast-moving consumer goods (non-cigarettes), ho-tels, paperboards, paper and packaging, agri, infor-mation technology…. In revenues, the share of the non-cigarettes business is at more than 60 per cent. 

Puri’s tenure in the driver’s seat is marked by significant milestones: from acquisitions to the demerger of hotels, and achieving the top spot in the food space in domestic sales.
 

So what’s next in the food category? “Our (FMCG) portfolio today has an addressable market of  Rs 5 trillion by 2030 or 2035,” he says. “There’s huge scope to grow. We would like to see it double, and then double again.”
 

“And the timeline?” I ask, gulping down the juice. He doesn’t commit to one, but says, “We would like to do it sooner than later.” The aim is to grow organically ahead of the industry. And if in-organic opportunities present themselves, those will get added to the portfolio.
 

Acquisitions is an important element in Puri’s reset gameplan, but it has to be “relevant” or “strategic”. However, unlike ITC’s past strategy of building a non-cigarette business mostly from scratch, Puri recognises the potential of inorganic growth, especially in non-cigarettes FMCG and information technology.
 

ITC Infotech is about as old as the FMCG business, but is in the mid-tier – unlike the other non-cigarettes businesses, which are in the top rung. Things are likely to change, though.
 

“The first milestone (for ITC Infotech) is $1 billion (Rs 8,296 crore),” says Puri. In FY23, revenues stood at Rs 3,321 crore.
 

Would he be able to achieve that in five years? Why not, Puri says, nibbling on the food. “The IT industry tends to grow at a fast rate. There is a temporary lull now, but it’s my belief that sooner than later, it will bounce back.”
 

As the meal continues, Puri discusses plans for scaling up. “In paperboards, we have to create a site equivalent to Bhadrachalam because that is going to be saturated.” That will entail “significant” investment. Bhadrachalam in Telangana is the existing site for ITC’s paperboards and specialty papers manufacturing unit.
 

Growth is a recurring theme across ITC’s businesses. The agri business story unfolds in two parts — the core, focusing on grains and trading, and value-added agriculture, which is receiving significant attention.
 

A cutting-edge facility has been commissioned to manufacture and export nicotine and nicotine derivative products. Anticipated export shipments are slated to commence in Q4 FY24.
 

The hotels division, which is being demerged, boasts an ambitious pipeline: 200 hotels with 18,000 keys over the next five years, with two-thirds of these keys in the managed portfolio.
 

The feather in the cap for hospitality was serving at the G20 and B20 summits, and Puri is happy with the appreciation they earned. The B20, he says, was a “fairly complex” arrangement with a sit-down for 800 people in one hall.
 

A pivotal aspect of the ITC Next strategy involv-es identifying opportunities at the intersection of digital, sustainability and enterprise strengths. Embracing food tech and ITCMAARS, a phygital ecosystem providing agri solutions for farmers, is part of it. It’s the synergies that create value for all stakeholders, Puri says, and “that is what we protect and nurture”.
 

Dessert brings a sense of parity — it’s chawal ki kheer and gajar ka halwa for both. We have been talking for two hours and Puri has a flight to catch, so we wrap up. 
 

As he rushes off, I wonder whether the wait for the next meeting will be longer than this one. After all, more responsibility is coming his way. As president-designate of the Confederation of Indian Industries, he is set to take charge later this year.