afaqs!

A new ITC is in the making, says Sanjiv Puri

By Arnab Dutta , Business Standard, New Delhi | In Marketing | September 12, 2017
ITC has diversified over past two decades into many businesses that now generates 58% of its revenue.

Once heavily dependent on the cigarettes segment, corporate behemoth ITC has diversified over the past two decades into many businesses that now generates 58 per cent of its revenue. However, to stay future ready and hedge against volatility, it is now looking at newer segments which it expects would bring in higher growth. Sanjiv Puri, chief executive officer, ITC, shares his plans with Arnab Dutta. Edited excerpts:

You are understood to be moving from shareholders value to societal value...

We redefined our vision more than two decades back. We not only decided to make growing contribution to the economy, we set our focus on moving beyond shareholder value to societal value. Shareholder value is the foundation on which this enterprise was built so it has to be taken care of. But it was adoption of a strategic vision which allows delivering societal value, without compromising the other. Market driven supply chain is a focus area for us now.

What are your focus areas?

We have adopted eight set of themes that will help us transform faster.

Food will be a key growth area with innovative and distinct offerings coming up every few months. Integrating all our businesses for expertise and significant investments in existing categories will be done.

We will be investing in physical infrastructure through 65 projects for which Rs 25,000 crore has been estimated. Out of the 20 new integrated manufacturing and logistics hubs, three are ready and two more will be rolled out in next few months.

As these projects complete, improved productivity will aid growth.

We will be investing in agri backend to scale up existing categories, apart from venturing into newer ones.

The firm will also be improving distribution, trade and marketing through digital technologies to go deeper into the markets.

For health care services that we have recently announced, we are still gathering the team. It will be limited to health care services such as medical facility at the initial stage.

Talent will be encouraged to grow as professionals and they will be offered entrepreneurial opportunities.

The company would also look at growing the spices business with expertise from our hotel chefs. At present, 1,000 acres are under cultivation in Andhra Pradesh and we wish to increase to 5,000 acres.

What about the company's foray into health care?

While the business plan is not ready, the initial plan is to set up a multi-specialty hospital. Once it is ready, we will be able to decide on our future course of action in the segment.

How much will the share of cigarettes go down?

While, as policy, we don't make forward-looking statements, 80 per cent of the capital employed and 90 per cent of our workforce deployed are in our non-cigarettes businesses. What I can say is, given the fact that investments are now disproportionately skewed towards newer businesses, particularly the younger ones, like the FMCG (fast moving consumer goods), will grow much faster.

Also, with macro-level policy changes like the GST (goods and services tax) and Make in India, we hope the economic growth will boost our businesses as well. Even now, non-cigarettes business is growing faster, but I think the gap will be higher in the coming days.

What about the future?

The eight set of themes will cut across all our business segments like hotels, information technology, agri-commodities, FMCG and paper and paper board, among others. What we are really driving towards is being more competitive and increasing the gap with our competition in terms of products and quality and efficiency. That's the reason behind focusing on physical infrastructure. While there is a cost to it now and initial challenges, we are really working on in creating a new ITC.

© 2017 Business Standard