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Sanjiv Puri’s ‘ITC Next’ strategy to drive into commanding position in FMCG industry market

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Powered by mega brands such as Aashirvaad, Sunfeast, Bingo!, Classmate, and Savlon, ITC is set to drive into a commanding position in what some analysts have estimated to be a Rs 5 lakh crore addressable FMCG industry market segment by 2035, with Chairman Sanjiv Puri putting in motion a carefully crafted ‘ITC Next’ strategy.

This re-crafted strategy, built around portfolio revitalisation, rapid platform-based innovation, aggressive digitisation, deeper synergies with other group businesses, structural leverages and a sharper focus on margins.

As an FMCG major, ITC is the only company that is dominant across a range of product categories from branded atta to biscuits; snacks to spices; noodles to dairy; chocolates to coffee; juices to frozen snacks and vegetables; deodorants to hand and body wash; sanitizers and masks to floor cleaners; and from notebooks to agarbatti, that none of the other Indian or multinational brands can claim to be present in.

Puri’s ‘ITC Next’ strategy pivots around a multi-pronged approach to revitalize the company’s current FMCG portfolio by fortifying and scaling up its proven megabrands, leveraging adjacencies through horizontal brand extensions, and nurturing new platforms with innovative products that will scale up to be leaders in their respective categories.

Mega brands and adjacencies

ITC has a plethora of megabrands such as Aashirvaad, Sunfeast, Bingo! and Classmate that already command leadership positions in the market.

The strategy of creating value added adjacencies could be best illustrated by the new Aashirvaad portfolio including Aashirvaad Nature’s Super Foods range comprising ragi flour, multi-millet mix, gluten free flour, organic atta and pulses as well as chapatis, instant meals and the Aashirvaad Svasti dairy range.

ITC is also fostering new platforms and strengthening its new brands including Fabelle chocolates, Sunbean coffee, B Natural juices, Nimyle home cleaners, Savlon hygiene products and so on. The overarching strategy for new platforms of innovative products is to first validate the concept and business model in select beachheads. Having gained a dominant market penetration, these new lines of products and brands will gain strength to occupy adjacent markets with different opportunities, building a larger brand with each new product, creating new and steady vectors of growth for the future.

ITC under Puri is unwavering in its resolve to build a formidable FMCG business. With innovation as the new lifeblood, the company today is one of the largest incubators of world-class Indian brands.

The Company’s wide range of FMCG portfolio has demonstrable headroom to expand rapidly in the FMCG industry overall addressable market segment of Rs 5 lakh crore.

For instance, the total size of the packaged snacksmarket for the overall industry is set to vault 4.5 times from about Rs 32,000 crore to an estimated Rs 1.43 lakh crore by 2035. The market for overall spices industry is projected to grow from about Rs 22,000 crore currently to Rs 1.1 lakh crore in 15 years, a growth of five times. Similar industry growths are expected in other categories such as biscuits, branded atta, noodles, deodorants, personal care products and the cleaners categories.

Most of ITC’s FMCG products occupy the first or the second positions in their respective categories giving them unique opportunity to corner most of these segment growths.

Aashirvaad, India’s number one branded packaged atta, itself has a consumer spend of over Rs 6,000 crore.

Digital, consumer-centric and future-ready

Puri’s strategy to make ITC future-ready manifests in his focus on driving the three megatrends emerging out of the pandemic – innovation, digitalisation and sustainability. The Company’s R& D Centre, the ITC Life Sciences and Technology Centre (LSTC) in Bengaluru helped ITC to launch 120 differentiated products amid the pandemic to meet emerging preferences. To further support this goal, the company has set up 9 state-of-the-art integrated consumer goods manufacturing facilities (ICML) to create structural advantages.

Digitalisation is being accelerated pan-ITC through the use of new technologies such as Industry 4.0, Artificial Intelligence, Machine Learning, Big Data, Industrial Internet of Things (IoT), etc. These technologies are also being deployed across the entire supply chain spanning sourcing, manufacturing, trade engagements and e-commerce, including its own ordering platform the ITC e-store. The FMCG business has further driven enhanced competitiveness through a multi-channel distribution strategy which have been strengthened by-customised apps.

Power of Synergies

The ‘ITC Next’ FMCG strategy has also been bolstered by synergies flowing in from the company’s other businesses.

A good example of synergies is ITC’s foods business deriving a significant competitive advantage from agribusiness’s sourcing capabilities. The culinary expertise of ITC’s Hotels business has also enabled ITC to craft differentiated food offerings.

Stronger growth, better margins

The robustness of Puri’s strategy for FMCG is evident from the segment EBIDTA (earnings before interest, taxes, depreciation and amortisation) increasing by by 82 per cent this Q2 from Q2 FY 20, as outlined in ITC’s second quarter financial results.

The FMCG businesses have been posting steady growth ahead of industry peers. During the last four years, ITC’s revenue from FMCG increased from around Rs 10,500 crore to nearly Rs 15,000 crore.

ITC’s FMCG business during 2020-21 grew 16 per cent versus the industry average of 8.5 per cent.

There has also been a steady improvement in profitability in the FMCG segment, with EBITDA margins having improved by more than 640 basis points between 2016-17 and 2020-21.

‘ITC Next’ strategy for other businesses

In August, at the company’s annual general meeting, Puri unveiled the extensive ‘ITC Next’ strategy to architect the structural drivers that will power ITC’s next horizon of growth and ensure that the enterprise remains future-oriented, consumer-centric and nimble.

ITC’s other businesses too have pivoted to create new frontiers for the future, with enhanced competitiveness as well as sharper focus on cost management to strengthen leadership or rapidly attain the top positions in the case of newer segments.

Some of the key drivers of growth, as identified by Puri, for ITC’s other businesses include an asset right strategy for Hotels powered by a repositioned WelcomHotel brand as well as newly launched brands such as The Storii and Mementos done with management contracts. Two management contracts have already been signed under the Mementos brand.

Similarly, in the Paperboards business, the company is concentrating on sustainable packaging and value-added paper, while in agriusiness, the emphasis is on Next Generation agriculture driven by the ‘super app’ ITC MAARS and value-added agriculture.

Special strategic thrust is also being provided to ITC Infotech, the wholly owned subsidiary which is on a strong growth and profitability trajectory over the last few years.

Business

India Set To Lead The World In 6G, Says Telecom Minister Jyotiraditya Scindia

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In a bold declaration at the inaugural address of the Indian Mobile Congress 2024 (IMC) on Tuesday, Union Telecom Minister Jyotiraditya M. Scindia has said that India will lead the world in the adoption of 6G.

In his address at the event, Scindia emphasized that India is now prepared to lead the world in the development of 6G technology.

India’s Technological Rise: From Following to Leading

“It is our belief and commitment that India, which followed the world in 4G and marched with it in 5G, will lead the world in 6G,” Scindia stated.

The minister highlighted India’s remarkable achievements in the telecommunications sector over the last ten years, the country has become a global leader in innovation and technology.

“It’s a fundamental change in approach towards technology development,” he said, attributing this transformation to Prime Minister Narendra Modi’s leadership.

Telecom Sector Growth Under PM Modi’s Leadership

“Prime Minister who has always put people at the heart of progress Sabka Sath, Sabka Vikas Sabka Vishvas aur Sabka Prayas combined with his second motto, One Earth, One Family and One Future. It is combination of these two mottos that leads India under PM Narendra Modi leadership one of the leading sectors in the committee of Nations,” Scindia said.

Scindia underscored government’s initiatives to bridge the digital divide, particularly through the BharatNet program, the world’s largest rural broadband connectivity initiative to connect every panchayat of the nation. Over the past three years, the government has invested more than USD 10 billion and laid 7 lakh kilometres of fiber across rural India.

Digital Payments and UPI: Pillars of India’s Digital Economy

He cited staggering growth in mobile and broadband connectivity, with mobile connections rising from 94 million to 1.16 billion, and broadband users growing from 60 million to 924 million in just a decade. India’s optical fibre cable (OFC) networks has expanded from 11 million kilometers to 41 million kilometres over the last ten years, he added.

The minister further said that this growth is accompanied by the success of India’s digital payment systems, the 4G stack, and the Unified Payments Interface (UPI), which serve as pillars of India’s digital economy are expected to contribute significantly to the global digital infrastructure.

Scindia further noted that the government’s efforts to ensure that policy frameworks keep pace with the rapidly evolving digital landscape. “The recent changes to the Telecommunications act 2023 is a case in point. It has been drawing light upon hither to undressed areas such as a high potential sector of satellite communications, addressing the challenges of the digital leader. The most important being cyber security. The telecom sector much like other growth critical sectors in India is aggressive, is ambitioushe said.

“The telecom sector much like other growth critical sectors in India is aggressive, is ambitious and its outlook in our Journey from Amritkal to Shatabdikal is to lead the world,” Scindia said. By mid-next year, India will have achieved 100 per cent saturation of 4G across the entire country, covering even the most remote villages, the minister said.

He emphasised PM Modi’s vision of India as a first mover in 6G technology, underscoring the nation’s resolve to lead the world in future telecom innovations.

“The attitude put forward by the prime minister of not just embracing, but raising ourselves to becoming the first mover in the 6G technology,” he added.

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Indian Markets Gave Better Returns Than China In Last 5 Years, Says Sebi Member

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Sebi Whole-time Member Ananth Narayan G on Monday reminded investors that Indian equities have consistently delivered 15 per cent returns over the last 5 years whereas the same has been zero or even negative in China.

Terming the Indian markets “sone pe suhaga” for delivering higher returns for lower risks, Narayan also flagged a few areas of caution for investors and asked them to be conscious of the risks.

“There’s a lot of talk about China markets over the last few days. But over the last five years, while Indian markets have given around 15 per cent compound annual growth rate consistently, Chinese markets are nowhere close to that. It’s almost zero. In fact, in some cases, like in Hong Kong, it’s actually negative,” Narayan said.

Speaking at an event marking the start of the Investor Awareness Week at NSE, Narayan said FY24 was a “remarkable” year for India, with the benchmark indices returning 28 per cent and the volatility just 10 per cent.

“That’s like ‘sone pe suhaga’. It’s like the best of all worlds: low risk and very high return,” Narayan said, underlining that there are side effects of this as well.

Making it clear that it will not be the same going forward and investors should not assume it to be a one-way street, Narayan said such handsome returns can lead to complacency and pointed to a lot of youngsters opening up demat accounts to join the bandwagon.

Educating people about risks is very important, Narayan said, giving the analogy of driving a car. “There has to be a light push on the accelerator to get more investors to provide risk capital for the economic growth, we also need to be aware of risks and use the brakes if need be.” He said that 40 per cent of the small and midcap scrips have shot up by 5 times in the last five years, because of an imbalance between inflow of investor money and supply of new paper.

On its part, the capital markets regulator is trying hard to ensure that fund-raising clearances are done early so that there is a steady stream of quality paper supply in the market.

From a broader, longer-term perspective, Indian markets will only go north from here given the economic growth prospects in the country, Narayan said, issuing specific advice to investors.

Investors need to have the right intermediaries to capitalise on this opportunity presented by India, and not fall for the unregistered and fly-by-night ‘finfluencers’ who might be driven by vested interests, he said.

Using the oft-repeated idiom of “all roads lead to Rome”, Narayan remarked that Rome is not a traveller-friendly place and one may get scammed there as well. Therefore, it is important to seek advice from the right people for the investors, he said.

He also said that it is in investors’ interests to trade less and stay invested for longer for higher returns, and added that studies prove the same.

Sebi, which has flagged certain areas like derivatives recently, is not against speculation or participants taking short-term trades, but it would want investors to understand the risks, Narayan said.

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Ratan Tata Rubbishes Rumors Of ‘Critical Health’; Says No Cause For Concern

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Ratan Tata Rubbishes Rumors Of 'Critical Health'; Says No Cause For Concern

Tata Group’s Ratan Tata has denied rumours of his critical health that have been reported and have surfaced in the recent hours.

Ratan Tata’s associates took to his official Instagram account to debunk the news of him being ‘Critical’.

In the post, Ratan Tata said, “I am aware of recent rumors circulating regarding my health and want to assure everyone that these claims are unfounded. I am currently undergoing medical check-ups due to my age and related medical conditions.

There is no cause for concern. I remain in good spirits and request that the public and media respect refrain from spreading misinformation.

For more than fifty years, Ratan Tata has led the Indian business community’s entrance hall. The 86-year-old has been suffering from illnesses associated with ageing. Tata has participated in social life to the best of his limited ability despite his health issues.

Recently, on the occasion of Gandhi Jayanti, on October 2, Ratan Tata, expressed his congratulations to the Prime Minister on this occasion. “I congratulate the honourable Prime Minister on the 10-year commemoration of programmes that have benefitted millions in rural India.”

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