ITC adopting disruptive business models as part of strategy reset, says MD
ITC has extensively reset its strategy and will explore opportunities to craft disruptive business models to set up structural drivers helmed by digital and sustainability for its next horizon of growth and make the company future-ready, Chairman Sanjiv Puri said on Wednesday.
The company is pursuing an accelerated journey to build a dynamic FutureTech’ enterprise by investing in cutting-edge digital technologies to shape a new paradigm of competitiveness, create innovative business models and tap newer opportunities, he said while addressing shareholders at ITC’s virtual annual general meeting.
As part of the next horizon vision, the company is “proactively exploring inorganic opportunities” even as it has shrunk “business segments that were incongruent to our growth aspirations, such as the Lifestyle Retailing Business” while the existing growth platforms comprising megabrands will be scaled up and fortified.
Puri, who led the gathering to a minute’s silence to pay homage to those who lost lives to the pandemic said,”The Black Swan event accentuated the undercurrents of digital and sustainability as predominant megatrends.”
After the second wave of the pandemic, week-on-week improvement in market conditions consequent to the easing of restrictions augurs well for a pick-up in the recovery momentum but the possibility of subsequent waves still looms near-term uncertainties.
“The recovery over the last couple of months is encouraging, though the possibility of subsequent waves creates near-term uncertainties,” he said adding ITC will constantly monitor and proactively address these dynamic changes with agility.
About ITC Next, Puri said each of the company’s businesses has pivoted to create new frontiers for the future, with enhanced competitiveness as well as focus on cost management to strengthen leadership or rapidly attain the top positions in the case of newer 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,” he said.
“Your company’s digital transformation is being built on a foundation of an agile Digital First’ culture. New frontiers are being explored across the entire value-chain ecosystem to add significant impetus to digital marketing, digital commerce, digital products and digital operations,” said Puri.
The company is working on a smart ecosystem with an “Integrated Real-Time Operations Platform” that continues to be deployed across the organisation, enabling next-generation supply chains and smart manufacturing with digitally enabled factories.
Multi-dimensional digital interventions are being implemented to ensure higher order efficiencies, heightened impact and faster go-to-market, he added.
About the FMCG business, Puri said it is focusing to build a formidable business at scale and several of its brands have already achieved leadership positions.
“These purposeful brands anchor large categories and have immense headroom to grow given the relatively lower household penetration currently, and particularly with per capita incomes rising in the future. Sustained investments to drive innovation and accessibility will continue to fuel growth and enhance market standing,” he said.
In FMCG segment, several “strategic interventions” are being executed to achieve “sustained, competitive and profitable growth”.
Moreover, in the segment, ITC sales through e-commerce channels have more than doubled during the pandemic-impacted FY21. ITC also strengthened its direct to consumer platform, ITC e-Store’, reaching consumers in 11 metros.
Besides, ITC, which has earlier acquired brands such as Savlon and Nimyle, is “proactively exploring” inorganic opportunities as part of the next horizon vision.
While talking about its recent acquisition of Sunrise Foods, Puri said it will enable ITC to address the growing opportunities in branded spices in underpenetrated markets.
Over the agri business, Puri said it has recently embarked on its next phase of transformation. A new vertical has been created in the business and the objective is to foster demand-responsive value-chains, promoting climate-smart agriculture and digitally empower farmers.
ITC is working with farmers to develop robust models for value-added segments, such as IPM Chillies, organic mango pulp traceable to farms, speciality coffee certified for fair trade, end-use specific wheat flours and so on.
“The customised crop development programme with farmers in Madhya Pradesh, aimed at deepening expertise in Medicinal and Aromatic Plant Extracts, has also been expanded,” he said.
On Paperboards, Paper & Packaging Business, Puri said ITC is a market leader and has made significant progress with recent strategic investments in areas.
“This segment offers immense opportunities with the global bio-degradable packaging market estimated to grow to nearly USD 121 billion by 2025,” he said.
On its hotels business, which was among the most impacted by the pandemic, Puri said this period also gave opportunity to reimagine the business model and emerge stronger.
ITC will continue to examine alternate structures in this segment in line with industry recovery dynamics and opportunities for value creation.
“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,” he said.
Accordingly, the Welcomhotel’ brand has been refreshed, receiving encouraging interest from property owners, while a new boutique brand christened The Storii’ is being introduced to offer the new-age traveller curated nature experiences.
“The Business is well poised to leverage emerging opportunities as mobility increases in the future,” he said.
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