Expect progressive improvement in demand, says ITC CMD Sanjiv Puri

Business Standard

25-07-2025

ITC Chairman and Managing Director Sanjiv Puri on Friday expressed cautious optimism about demand outlook, saying the company expects progressive improvement with the easing of interest rates, improved weather conditions and benign inflation at an aggregate level. Softer demand environment has weighed on businesses.
On the performance of the fast-moving consumer goods (FMCG) business, Puri said at the company's annual general meeting (AGM) that on account of weak external sector combined with food inflation and dumping of products, at an aggregate level the economy has seen softer demand.
'Rural is better and it's improving.'
He added that there was a spike in inflation in the second half of the year, which is when the problem with growth was also visible.
Elaborating on the strategies adopted by ITC, Puri said, the company had taken a lot of actions to bring in internal efficiencies. Pricing actions were calibrated in the wake of a soft demand environment and the product-mix was enriched.
He said, 'The outcomes will be visible in the quarters ahead.'
In the non-cigarettes business, FMCG leads the revenue mix.
Citing an analyst report, Puri said, the company's FMCG business had the highest addressable market size of Rs 5 trillion and it had been created in a very capital-efficient fashion.
'This has happened because we are able to leverage institutional strengths and create value for the future,' he said.
Demerger demand
Enthused by the demerger of ITC Hotels effective January 1, 2025, shareholders quizzed the ITC chief on the possibility of spinning off other businesses.
Puri backed the company's conglomerate structure, citing the institutional synergies built over the years and the shareholder value it has delivered.
'We look at the business strategy, competitive context, maturity of the business, the opportunities and the pros and cons of the current structure — whatever is best is what we recommend for the approval of the shareholders,' he said.
Highlighting reports by a leading consulting organisation in 2002, 2006, and in 2017 on the performance of conglomerates, Puri said, 'There's always a debate, does separateness create larger value versus a conglomerate structure. Now, this report actually says that in 50 per cent of the cases, they have delivered superior total shareholder returns.'
He added that the reason for superior shareholder creation is not a function of the degree of diversification, but how diversity is managed. He said, 'Our distributed leadership, the governance structure we have, and the mechanism to leverage institutional synergies, is something that ITC has demonstrated, and it's a strength for us.'
However, he also said, 'Nothing is cast in stone. We continuously review this, and whatever is right, will be done at the right time, just like we did for hotels.'
As an example of ITC's institutional synergies, Puri pointed to the food tech business, which leverages capabilities of foods, hotels and digital technologies. The food-tech platform has scaled up to 60 cloud kitchens across five cities and is now being progressively introduced across India.
Food-tech is among the newer vectors of growth for ITC as are agri initiative ITC MAARS, and sustainable packaging.
Navigating global challenges
Speaking on global challenges, Puri told shareholders that enterprises of the future will need to navigate the TURN – Turbulence, Uncertainty and Rapid change calling for Novel strategies.
He said, 'Future readiness is not merely about adapting to change, it is about anticipating, innovating and proactively shaping the future. And, this is what the ITC Next Strategy has set out to achieve, redefining the next horizon of growth and competitiveness, creating larger value for stakeholders.'
'In this milieu of turmoil, the extraordinary ascent of India as the fastest-growing major economy and now the fourth largest in the world, indeed gives justifiable pride,' Puri added.
Last year, the company had outlined an investment of Rs 20,000 crore for the medium term betting on the Indian economy. Puri reiterated the company's commitment on Friday and said that the company has invested Rs 4,500 crore in the last two years.
He said, encouraged by the promise of the Indian economy, the company has invested in 8 world-class manufacturing facilities in the recent past. 'These span areas such as FMCG, sustainable packaging and export-oriented value-added agricultural products.'