Localised lockdown impacting ITC’s recovery pace, outlook uncertain: Puri

ITC would respond with agility to strengthen its market standing while sharply focusing on cost reduction measures, Puri reassured shareholders

Topics

ITC | ITC cigarette | Coronavirus

Despite progressive normalisation in segments other than hotels and education and stationery products business, ITC Chairman, Sanjiv Puri, said on Friday at the company’s annual general meeting, that the near-term outlook was uncertain and localized lockdowns were impacting the recovery momentum.

Addressing shareholders, Puri said, the current spate of localised lockdown is impacting the recovery momentum. The near-term outlook remains uncertain as consumer trends and industry dynamics constantly evolve in the backdrop of the yet unfolding impact of the pandemic and shape of economic recovery, he added.

However, ITC would respond with agility to strengthen its market standing while sharply focusing on cost reduction measures, Puri reassured shareholders.

Most of the segments that diversified conglomerate, ITC, operate in, faced challenges in the wake of the pandemic induced restrictions. The nationwide lockdowns particularly impacted performance in the hotels, cigarettes, education and stationery products, paperboards and packaging businesses.

However, the FMCG-Others segment (non-cigarettes FMCG) delivered comparable revenue growth of 19 per cent, whilst segment EBITDA demonstrated strong growth of 42 per cent during the period, Puri said.

ALSO READ: Coronavirus LIVE update: India accounts for 1 in every 8 active Covid cases

It was driven by revenue growth of 34 per cent in staples, convenience foods and health & hygiene products, which represent 75 per cent of the portfolio.

Puri said that even during the pandemic, the company’s innovation engine was at work 24X7 and it rapidly introduced over 40 high quality, first-to-market products and variants.

ITC

In keeping with the times, the manufacture of Savlon sanitisers was ramped up by 275 times to cater to the surge in demand.

ITC expects agri-reforms initiated by the government to open up new opportunities and it is stepping up farmer engagement in wheat, potato, chilies, fruits and vegetables through a crop value chain cluster model to connect small farmers to markets.

The company expects to support nearly 3000 FPOs with more than a million farmers across 24 crop value chain clusters in 21 states, shaping competitive agri-value-chains and enhancing farmer incomes, Puri said.

“These value chains will be anchored by ITC’s large investments in food processing, its vibrant brands as well as exports,” he added.

The company’s agribusiness segment revenue is about Rs 10,200 crore. But perhaps, the biggest challenge that ITC faces in the wake of the pandemic is from the hotels business.

Puri said, in the first 11 months of the year, the hotel business delivered a strong performance, with the new iconic properties gaining an excellent response before the debacle crippled the hospitality sector.

While ITC is responding with its “WeAssure” programme, designed in collaboration with medical professionals and disinfection experts, to reinforce hygiene and safety standards at its properties, it also plans to stay focused on its asset-right strategy, sweat existing assets and examine alternative structures for value creation.

ITC, which largely relied on building hotels, adopted the asset right strategy about a couple of years back and the target is to have a 50:50 mix of owned and managed properties.

ITC’s non-cigarette segment revenue is around Rs 31,000 crores and accounts for nearly 60 per cent of ITC’s total segment revenue. The balance 40 per cent accounted for by cigarettes faced headwinds in the wake of the pandemic with disruptions in March and weakness in demand.