ITC analyst meet rough notes so far
Big picture pointers
· Non cigarettes 20x in the past 20 years sales, bottom line 18x
· Carbon positive for 16 years, water for 19 and solid waste recycling 14 years
· Top 3 contributors to the exchequer over the last 10 years
· 5 corporate strategies
a) Innovation
b) Cost optimization
c) Sustainability 2.0
d) Digital- Future tech enterprise
e) Creating world class talent
· 350 scientists as part of development centre
· Speed at which they have got products in the market is unparalleled, Eg savlon product diversification
· End to end cost management
· By 2030 5x of net water consumption to society
· 5 lac acres biodiversity conservation 2030
· Using Tech in all aspects of business
· Crowd sourced ideas- 2100 ideas currently for process improvement or product development
· Leadership team attrition low at 1%
· Preneurial culture with challenger mindset
· Variable component of employee compensation higher than industry
· Dividend payout 80-85% announced earlier
· Targeting double digit top and bottomline growth incrementally
Cigarettes business points
· Tobacco Per capita consumption 60% of world average vs only 11% in cigarettes
· Other tobacco products are bidis and chewing products like Khaini, Zarda and Guthka
· India 8% legal cigarettes of total tobacco consumption vs 80% of tax revenues coming from cigarettes
· So 2% of global cigarette consumption, per capita consumption among the lowest in the world
· 4th largest illicit tobacco market in the world
· In period of tax stability 10% sales growth (april 2018- Jan 2020) vs 5% between FY13-FY17 when tax incidence was high.
· Imperatives- maximize cigarettes within tobacco basket, counter illicit, reinforce market leadership
· 4 pillars of cigarette growth-
a) Future ready portfolio- looking at market as an aggregation of niches, 10% of volumes from new launches
b) Agile innovation- innovate and take premium portfolio far and wide… not just classic and Gold Flake…micromarket strategy approach eg Navy Cut, Bristol, Capstan, Flake etc in regional market
c) Integrated seed to smoke value chain- filtersnd capsule end to end one of the very few in the world in-house capsules manufacturing in the last 4-5 years
d) Excellence in execution- 7m outlets reached in cigarettes, more than 2x that of nearest player, market share 100 bp higher post second wave, 10+ new launches in the last 18 months, automation
Other FMCG
· Consumer spend last year INR 22,000 cr, vs 14728 cr on net sales basis
· Key trends- Trusted brands. Health wellness and hygiene, indulgence, on the go, natural/ organic, digital natives
· 174m households reached in foods
· Areas of focus
a) Revitalizing portfolio and managing actively
1) Fortifying core
2) Value added adjacencies like what they are doing for Ashirwaad, Savlon
3) Categories of the future where there is huge headroom to grow and huge unbranded segment.
4) Bring inorganic growth as a significant incremental vector of growth
b) Digital consumer investment
c) Go to market capabilities
d) Accelerating exports
e) Speed to market
· Challenge to grow margins this year because of steep RM inflation but likely to resume margin expansion in subsequent years
· Ashirvaad atta- 18% CAGR in the last 10 years, 6000 cr consumer spend. Category has benefited from loose to packaged, unbranded to branded… Atta is still only 15% branded
· Communication on Ashirvaad atta is different in North and South-
a) North- Convert wheat and loose atta buyers
b) South- Increase usage occasions
· Sunfeast Cream biscuit is No 1 in cream biscuits, (5 year CAGR 28% in creams) Mom’s Magic cookies 500 cr consumer spend sales.