ITC's Sanjiv Puri foresees improved margins and green shoots in rural demand

Diversified group ITC Ltd on Monday (September 25) said the company is looking to improve its fast-moving consumer goods (FMCG) margins by a substantial 80-100 basis points each year in the medium term.

Speaking exclusively to CNBC-TV18's Shereen Bhan at the JPMorgan India Investor summit, Sanjiv Puri, Chairman and Managing Director of ITC Ltd,

"Going forward, I think we are saying 80, or more like 100 basis points, is what we would like to do year on year."

He notes that, historically, India often grappled with higher inflation compared to other parts of the world. However, in a remarkable shift, the country has displayed superior management of inflation, even in the face of global economic turmoil triggered by the COVID-19 pandemic.

He emphasises that, although India's inflation rate remains higher than desired, it has steadily decreased from previous levels. Puri cites this as a promising sign, underscoring that the most challenging phase of inflation appears to be receding into the past.

Despite the persistent challenge of high commodity costs, which have remained elevated compared to the pre-COVID era, Puri remains confident that inflation is on a declining trajectory. Recent spikes in inflation, largely attributed to surges in the prices of perishable commodities, are seen as temporary fluctuations that are now ebbing away.

Puri noted that ITC has consistently held growth rates within the upper quartile, showcasing a remarkable ability to weather economic challenges and maintain robust expansion.

While specific figures were not provided due to the diverse array of categories within ITC's portfolio, Puri emphasised that their volumes have surpassed industry benchmarks, a testament to their adaptability and resilience. Additionally, Puri shared encouraging news from rural markets, signaling the emergence of "green shoots" of growth.

Puri said ITC's future endeavors will revolve around strengthening its presence in the FMCG sector, as well as the paper board industry. These sectors are set to constitute the major chunk of their growth strategy.

Moreover, ITC is making inroads into the agri sector, particularly in value-added segments, to diversify its offerings and capitalise on evolving market trends, he added.

Additionally, across all its business verticals, ITC is prioritizing capital expenditure for technology upgrades and replacements, underscoring its commitment to staying at the forefront of innovation and efficiency, Puri said.