By Rameesh Kailasam & Rajesh Mehta
Conventional companies, however excellent their products might be, need to constantly innovate and progress. At the same time, record-breaking growth often triggers retrospective analysis. Let us take the case of ITC which hit a 52-week high of Rs 273 earlier this year. Pundits were out with their expertise to justify the stock surge. Something similar happened when the company’s share price crossed and settled well over the Rs 300 mark. Why is ITC stock moving upward despite so-called unfavorable market conditions and inflationary pressures?
It is critical to also understand what is technologically cooking inside the company as we often tend to miss certain on-ground and earthy factors that actually led to ITC’s growth and stock surge in recent times. This key factor is a continued strategic focus and investments in innovation, technology adoption, and digitalization led by Chairman Sanjiv Puri, coupled with the intersection of digital and sustainability, strong synergies, and robust manufacturing and supply chains.
Over the years, the company has been working towards building a future tech enterprise with a connected smart ecosystem across every node of the value chain encompassing digital marketing, digital commerce, digital products, and digital operations. ITC’s efforts in this area have made it a pioneer in the adoption of digital technologies across strategic impact areas spanning intelligent new-age insights that reimagine consumer experience, business model transformation, smart operations, and employee experience.
Puri-led initiatives such as ‘Young Digital Innovators Lab’ and ‘DigiNext’ to establish a data-driven and digital-first culture across the organization, and the constitution of the in-house Industry 4.0 Center of Excellence are a few examples highlighting the company’s vision to leverage cutting-edge tech and innovation to drive growth across verticals. Let’s examine some of the landmark steps taken by ITC in this direction.
In the last few years, the company has worked on boosting its value-added agri portfolio by expanding regenerative agriculture initiatives through climate-smart programs and accelerating the adoption of advanced technologies. Recently, ITC launched its super app called MAARS, which is a crop agnostic integrated phygital ecosystem embedded with a full stack agri-tech platform with FPOs as the pivot. Based on information on crop type, geography, soil health, and climate, ITC MAARS provides personalized and hyperlocal crop advisories to farmers. It works in a dynamic way and changes the advisory in case of a sudden change in climate or other conditions.
The super app offers a full range of agricultural solutions, while its micro-services structure enables plug-in by a range of agri-tech solutions. With the help of MAARS, ITC plans to create new revenue streams, strengthen sourcing efficiencies, and power some of its leading brands, while benefitting farmers. So far, the app is being used in seven states and it has facilitated 200 FPOs benefitting over 20,000 farmers. In the coming years, ITC plans to support 4,000 FPOs benefitting 10 million Indian farmers. These interventions have helped the company record a strong export growth in wheat, rice, spices, and leaf tobacco and increase the segment revenue by nearly 29% in FY22.
ITC’s Paperboards and Specialty Papers Business Division (PSPD) is leveraging digital technologies such as IoT, advanced analytics, and image analytics to strengthen its position in the global pulp, paper, and paperboard sector. These multi-dimensional digital interventions, envisioned and executed under the guidance of Puri, encompass Industrial IoT for smart operations, integrated data infra/ platform, AI/ML algorithms for ‘golden batches’ in the process, AI/ML based image analytics, and IoT-based crop monitoring and advisory.
The division is also actively collaborating with partners from startup ecosystems and solution providers to build solutions custom-fit to business requirements. So far, over 50 use cases have been developed and implemented across various spheres of the business that have enabled PSPD to expand its margin by 230 basis points over the last two years.
Mobile-first solutions for hotels
In its hotels business, ITC continues to leverage its digital investments to facilitate customer acquisition, enhance guest experience, enable smart revenue management, and drive operational efficiency through a mobile-first approach with a full-stack ITC Hotels app. To accelerate growth in this segment, the company has adopted an ‘asset-right’ strategy that provides greater thrust on management contracts through refreshed and new brands. ITC launched nine hotels last year and has a healthy pipeline of new properties which will be opened in the coming quarters. Thanks to these interventions, the segment has exhibited exemplary agility to tap alternate customer cohorts and garner new revenue streams in the last couple of years. According to ITC, the segment revenue doubled in FY22, while its PBIT turned positive in the second half of the financial year.
Future-ready FMCG brands
ITC’s portfolio of future-ready FMCG brands reflects the strength of purposeful and agile innovation that is embedded in the market-aligned R&D platforms of its Life Sciences & Technology Center. The company has been nurturing innovations in high-impact areas, such as nutrition, wellness, hygiene, convenience foods, agriculture, and sustainability. With the help of these innovations and partnerships with 30 startups, ITC has built a portfolio of 25 leading brands in a short span of time and has been quickly building and taking new products to the market. The company’s FMCG businesses garnered an annual consumer spend of over Rs 24,000 crore in FY22, and it has now planned to take its ‘world-class’ products to overseas markets.
Overall this is a classic case study of how an innovative and technology-driven yet balanced future-looking approach can slowly move even conventional companies and usher an era of growth.
(The authors are respectively, CEO, Indiatech.org and a public policy consultant. Views are personal.)