Thread by @MlnDollarMinds

#ITC - SANJIV PURI: Chairman and Managing Director at a webinar organised by Kotak Securities

Key takeaways from his address

Time for thread 👇🏻👇🏻👇🏻

@dmuthuk (1/n)

FMCG business: setting up for the long-haul. ITC highlighted the sharp margin improvement witnessed over recent quarters, underlining aspirations to achieve industry- leading profitability in the FMCG business.

(2/n)

*FMCG contd*: The company has pushed ahead on the strategic imperative to focus on low penetration/low per capita consumption categories which offer long-term growth runways.

(3/n)

*FMCG contd*: Mr Puri highlighted increased consumer preference for health/hygiene/nutrition as a structural undercurrent pre-Covid as well, which has only accelerated over recent months, driving ITC’s heightened innovation intensity here.

(4/n)

*FMCG contd*: He also noted the low branded penetration in Spices and Atta categories, implying meaningful opportunity for conversion.

(5/n)

*Increased aggression in personal care*. Ceding that the personal care portfolio has been a relative laggard, ITC articulated efforts in recent years to repurpose the portfolio and align better with future opportunities.

(6/n)

*Increased aggression in personal care contd*:

(1) heightened focus on hygiene on the back of Savlon & Nimyl brands,

(2) premiumization through liquids given the under-penetration of shower gels, etc.,

(3) strengthening presence in fragrances under Engage brand,

(7/n)

*Increased aggression in personal care ... contd.

(4) increased innovation intensity around hygiene, newer formats (pocket perfume, encapsulated fragrance), and

(5) clutter breaking communication to drive brand purpose.

(8/n)

*Levers for value unlocking*.

Sharp step-up in FMCG profitability, renewed focus on capital allocation with new dividend policy and realignment of hotels business towards managed properties were noted as key efforts by the company to drive value unlocking.

(9/n)

Levers for value unlocking ...contd*

Hoping for a favorable taxation environment going forward, he recounted historical periods where sharp tax hikes dented revenue growth for the legal industry and accelerated share gains for illicit cigarettes.

(10/n)

De-merger of FMCG*.

Noting that the FMCG is currently self- sustainable for organic growth, He did not discuss immediate plans for a possible de- merger. He highlighted benefits of an integrated entity with respect to synergies, easier incubation of capabilities, etc.

(11/n)

*Upside to the proposed farm laws.*

Given the fragmented farmer community & the transactional relationship between farmers & buyers, itc noted likely upsides to the proposed farm laws along with other related policy intervention.

(12/n)

Upside to the proposed farm laws ... contd.*

These interventions, if implemented, were called out as a win-win situation for farmers and agriculture-value chain players, driving meaningful efficiencies.

(13/n)

Upside to the proposed farm laws ... contd.*

Mr Puri also highlighted ITC’s flagship mode ‘e-Choupal’ which leverages technology to provide inputs to farmers, procure directly from them, and connect prospective buyers/sellers. (14/14)