ITC CMD Sanjiv Puri sees signs of volume growth as inflation moderates

28 Aug 2023 , 01:51 PM

ITC is witnessing signs of volume growth as inflation is slowing down, and its chairman and managing director, Sanjiv Puri, expects the trend to remain over the coming quarters.

This will undoubtedly result in an increase in volume, but it won’t happen immediately, Puri said on the fringes of the B20 Summit hosted by the CII.

Puri commented on the ITC’s decision to demerge its hotel division, saying that by creating a wholly-owned new subsidiary, ITC Hotels Ltd., it will benefit the current shareholders.

‘It will be a pure-play endeavour with a hospitality-focused focus that can take advantage of ITC’s institutional capabilities. And ITC will be able to take advantage of the synergy in its FMCG or hotel industries, Puri told PTI.

It is a ‘very robust’ strategy that will help the hotel industry advance faster while maintaining synergies, and it will boost ITC’s financial KPIs, he added.

However, he added, ‘India is now in a lot better position relative to the rest of the world, and I would like to commend the government for overseeing management of inflation and being really aggressive in taking the proper actions to control it.

ITC and several other FMCG manufacturers have reported volume growth and profitability improvement for the June quarter. Aashirvaad, Bingo, Sunfeast, YiPPee, Fiama, Vivel, and Savlon are just a few of ITC’s 25 brands.

Puri responded, ‘So we are already seeing green shoots of pickup on volumes as inflation is moderating,’ in response to a question regarding the recovery of consumer mood and volume growth, particularly in the rural market. I believe that when inflation slows, market prices are rising or the environment is getting better.

He voiced his worries about the operating environment’s ongoing weather instability. ‘At this time, the El Nino is the watchable. August’s rains have not been particularly promising. That is the aspect that requires our attention. But generally, I believe we have handled it fairly well,’ Puri remarked.

The company, which has its headquarters in Kolkata, reported an increase in total net profit of 16.08% to Rs 5,180.12 crore in the June quarter. However, its agribusiness section caused a 6% decline in revenue, to Rs 18,639.48 crore.

Its sales from the FMCG-others segment, which includes companies that manufacture commodities, snacks, meals, dairy products, beverages, clothing, educational materials, and personal care goods, increased by 16% to Rs 5,172.71 crore.

India has ‘tremendous’ potential for the agriculture industry, according to Puri, and the opportunity is huge.

By 2050, it is predicted that the world will need 70% more agri produce to meet all of the planet’s needs. ‘We have the largest arable land, we account for just over 3% of the global trade in agriculture, and because of… headroom to grow by vertical growth activity, and huge headroom to go through value addition and opportunities events,’ he said.

The agriculture value system has to ‘improve productivity, improve market links, and build resilience,’ he added, adding that this is an area of opportunity.

And they are actually the three actions that must be taken. In ITC, we are working to make a difference in the first component of climate-smart agriculture, which focuses on production and quality.

ITC anticipates that its hotel division will go public within the next 15 months. At Rs 600 crore in FY24, our hotel business recorded its best-ever first quarter.

In accordance with the demerger plan, ITC Hotels will issue equity shares to ITC shareholders directly, with about 60% of those shares being held directly by ITC shareholders in proportion to their ownership of ITC, and the remaining about 40% remaining with ITC.

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