ITC, a diversified corporation, said on Wednesday that it will develop a smart app called ITC MAARS, or 'Metamarket for Advanced Agriculture and Rural` Services,' later this year to help small farmers realize their full potential.
ITC chairman and managing director Sanjiv Puri told shareholders that ITC-MAARS will give ITC e-Choupal new wings and create a robust ‘phygital' eco-system to deliver seamless customized solutions to farmers, anchored by FPOs (farmer produce organizations), while also generating new revenue streams, improving sourcing efficiencies, and powering ITC's world-class Indian brands.
Puri said that ITC-MAARS will provide a wide range of agricultural solutions, with its micro-services framework allowing for plug-in by a variety of agtech solutions. Hyperlocal services, AI-based customized advice, and online markets will make up the whole package. The firm has already started pilots.
“Some large-scale trials on an integrated chilli value chain, which began in Andhra Pradesh, have validated the idea and provided farmers with a 26 percent increase in revenue this season,” Puri added.
The e-Choupal platform will be used to create the super app. The e-Choupal, a corporate flagship project, has not only increased farmers' earnings over the last two decades, but it is also a vital element of ITC's agri-sourcing infrastructure.
Puri presented the general contours of what he dubbed the "ITC Next Strategy" for several business segments today.
He informed shareholders that as part of the ITC Next strategy, the firm would continue to explore possibilities to build innovative business models rooted at the confluence of digital and sustainability, the two defining trends in the ‘new normal,' using its institutional assets.
ITC has just entered the next phase of its transition in agribusiness. Puri said the company has launched a new vertical with the goal of fostering demand-responsive value chains, promoting climate-smart agriculture, and digitally empowering farmers.
ITC would explore for inorganic possibilities in the non-cigarette FMCG category, where it aspires to be a leader.
Puri stated, "ITC is aggressively seeking inorganic prospects as part of the next horizon concept." He cited the acquisitions of Savlon and Nimyle brands in the past, as well as Sunrise Foods more recently.
In 2020, ITC purchased Sunrise. It will help ITC to meet the expanding possibilities in branded spices in underserved markets, according to Puri. Savlon and Nimyle, two previous purchases, have also expanded significantly: Savlon by 13x and Nimyle by approximately 4x.
“As an additional pillar of growth, ITC will continue to examine such value accretive inorganic opportunities,” Puri added.
The Covid-19 pandemic had a particularly negative influence on the hotel industry. However, structural interventions were implemented to allow new income streams, as well as rigorous cost control on both a strategic and tactical level, according to Puri.
Puri explained that the ITC Next perspective for the hotel sector is based on following an "asset-right" approach while using ITC's world-class properties to generate growth. The asset-right approach is intended to double the number of properties in the hotel sector in the medium future.
Puri also stated that the business will continue to investigate alternative structures in the segment in light of industry recovery dynamics and value creation potential. He also responded to shareholders' worries about the stock price by pointing out that one of the speakers had stated that performance is the most important deliverable from a management standpoint.
“Ultimately, it is performance that is recognized,” he added. Puri elaborated on ITC's success, saying, "From FY17 to FY20, our EPS has increased by 47%, our return on capital employed has increased from 61 to 72 percent, and our FMCG margins have improved by 640 basis points."
Puri put the statistics in context by pointing out that the firm had paid out almost Rs 50,000 crore in dividends in the previous five years. “This demonstrates the company's operational strengths. We are a debt-free organization. We've also established a fairly open dividend distribution policy. So there have been a number of events,” he explained.
However, he stated that his concern remains. “This performance is not reflected in the market.” For quite some time, the ITC stock has been underperforming. Returns on the ITC stock have been at 3% over the last year, compared to 46% for the benchmark Nifty-50 index.
The cigarette business was then subjected to a significant amount of taxes. “In reality, taxes multiplied more than three times at one point,” he added. The short-term problem is that three of ITC's business sectors were affected last year: cigarettes, education and stationery, and hotels. “However, the team did an excellent job of recovering,” he added.
