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Achieving Rs 1 lakh crore in FMCG continues to be ITC's aspiration, says Sanjiv Puri
CNBC TV18 - 26 Apr 2018

Achieving Rs 1 lakh crore  in fast-moving consumer goods (FMCG) continues to be ITC's aspiration, said  Sanjiv Puri, CEO, to CNBC-TV18.

He said Rs 100,000 crore revenue for  FMCG by 2030 may be delayed by two to three years, but will continue to be the  company's target.

Puri also added that tax environment  is now more stable post GST disruption.

Edited Excerpts:

You came in when it was the  aftermarket demonetisation. You took over in February of 2017 and have seen the  Goods and Services Tax (GST) rollout and all of this has had a fair degree of  disruption on the business ecosystem. Given where we stand today and the fact  is that consumption continues to be the big growth driver, the big growth  engine, what are you seeing in terms of the macros before I start to talk to  you about the micros?

First of all, let me say that GST was  a very welcome step. It is indeed truly a transformative reform that is going  to create a common Indian market and it augurs well for the economy. So whilst,  there were some hiccups and I would say that hiccups were perhaps less than I  thought that we would have. But the good thing is that they are behind us and  we are much more stable today.

Do you get a sense that at least on  the taxation front, on the regulatory front, that we are now in a stable  regime? Is that what you are factoring in because the cess is now and the  changes with the cess are over and done with, GST collections are picking up,  so the pressure to revise the cess perhaps has abated somewhat, what is your  own sense on the tax environment?

It is difficult to predict but I am  an optimist. So, I hope this is what will happen during the year. The good  thing also is that the monsoon is predicted to be normal. So that itself should  give a little fillip to the consumption. With the recovery that is happening  now and with all the events of last year behind us, I think it augurs well for  the year ahead.

Is the recovery largely on account of  the base effect or do you believe that we are now headed back in the trajectory  of the pre-demonetisation times?

I would say, it is certainly at that  level and with the fillip in agriculture and the investments that the  government is proposing now in the rural sector, I think probably it is going  to take us to a little better trajectory. It should build up step by step.

Let me then ask you about the micros  and start by asking you about the cigarette business because while it continues  to contribute about half your revenues, it is 90% of the EBIT. What is the  trend now in terms of volume growth? Do you believe that decline that you have  been witnessing quarter after quarter is now on the way to being arrested?

As you know, the big concern that we  have always had with the cigarette industry is that with high increase in  taxation, which is about more than 200% in the last few years, the unintended  consequence is that the legal industry takes the blow and illegal grows. Today,  one in four cigarettes in India is illegal and also the ratio of taxes between  cigarettes and other forms of consumptions, which are often made in unorganised  sector and often escape paying taxes etc, is over 50 times now. So that also  gets a shift.

With the GST in place now and tax  that probably isn't your number one risk or number one concern today, is it?

In a stable environment, yes, illegal  does not grow and overtime it gives an opportunity for the legal industry to  recover. It does. But that depends on the tax regime. If it is stable, I think  the legal industry should recover. The illegal industry will not get a fillip  like it has been getting in the past.

It is odd because I don't want to  talk about whether you are likely to see a growth in volumes because obviously  it has other implications but purely from a business perspective and this is  what the market wants to know.  Because if I look at the trend, Q4 of FY16  0.5%, Q1 of FY17 3%, then minus 1% in Q3 of FY17, minus 7% in Q2 of FY18, so  what can we now expect in terms of the trajectory for volume growth for the  cigarette business?

It is difficult to forecast.

Is the worst behind you?

I am hopeful, yes and I hope that  there is a better appreciation of the fact that high doses of taxation or sharp  increases only increase the illicit industry. We are seeing this in the media,  there is virtually hardly any day - in fact in the last two years, there was a  report recently that said that illicit has gone up by 136%.

FICCI had estimated in 2014 that the  loss to the exchequer is Rs 9,000 crore. If you were to extrapolate from where  we are today, the figure is going to be much larger. At the end of the day, by  illicit gaining, no stakeholder in the economy gains. Neither the government  gains, neither the farmers gain. because the illicit cigarettes also come from  across the border, they don't use Indian tobacco and Indian manufacturers don't  gain.

So in a stable regime, certainly the  industry will have opportunity to recover and specific forecast that even with  that assumption, we do not give forecast. So I cannot give you but if you look  at historical trends and if there is a stable regime, the legal industry does  recover and illicit is contained to where it is.

I know you are constrained from  giving us the guidance but let me ask you and then I would like to focus on the  big fives that Sanjiv Puri is focusing on. So let me ask you to start with the  first and that has to do with the cigarette business, what is the big vision  that you now have as far as this part of the business is concerned, which  continues to be the profit driver for ITC?

Fundamentally, what is most important  to us is that we should not be seeding ground to anybody else whether it is  competitors and more importantly through illegal or through other forms of  consumption. We do understand that there are societal concerns. We do  understand that there is a need to regulate and control the industry, which is  fine. But what we say is that the regulatory environment should not be  discriminatory, it should not be such that gives a fillip to either other forms  or through illegal.

The reason I asked you that is  because when we last spoke, you said and this is taking YC Deveshwar legacy  forward that it is not just about creating shareholder value, it is also about  creating societal value. In the context of being able to create societal value  then, what is the vision as far as the cigarette business is concerned because  whether it is in terms of fresh capital deployment which is being pushed  towards new businesses, the FMCG business for instance, what can we expect in  terms of strategy and vision as far as the cigarette business is concerned,  that is my last question on this before I move to the other areas?

As far as cigarette business is  concerned, it will be allowed to perform in the sector the way it needs to  perform. It is not that because there is more capital employment in other  segments that this segment is starved. This is a segment that has got surplus  capacities today. Industry has got surplus capacity and it is a fairly mature  business. So therefore, it will get what it wants but naturally the order of  investments will not be similar to new businesses. So that is why capital  deployment is higher in other segments. It is 80% in the non-tobacco segment  today.

As far as this business is concerned,  as I said, we understand that there are going to be regulations which is fine.  We do not think it is in anybody's interest for us to seed grounds to illegal  to other forms or for competition, so we will defend our position and we will  advocate for that.

I will talk to you about FDI in  tobacco which is another issue that has come back on the table but I will  address that in a bit. Let me talk to you now about the FMCG business because  that is where most people are keen to understand what the strategy is going to  be going forward. Give me a sense of what we can expect in terms of new  categories that you intend to get into? When we last spoke, you have spoken  about four categories, you have already launched your frozen shrimp business,  you have already started your foray into the skincare business via an  acquisition of Charmis.  So give me a sense of what next as far as new  categories in the FMCG business?

Let me step back first and say that  if you look at how the FMCG is performing, we continue to grow much ahead of  industry and so is the case this year and this is on the back of comparatively  much stronger performance in the previous year, which had certain events which  led to a muted growth. We grew 13% in FMCG that year and we are sustaining the  momentum, and this year we have entered in to four new categories.

We have put in about 30 plus new  products into the market. In the year ahead, we will see an equal number of new  categories that we will get into. A larger number of new product launches and  some of the categories that you will see us - one of them that is getting  rolled out as we speak is frozen snacks. It should be in the market very soon  under the ITC Masterchef brand. Right now, we are doing the institutional  piece, which will be followed by the rail consumer side of it. Then, we will be  coming out with the dairy beverages very soon and there will be another  two-three categories that we will get into during the course of the year.

Those are - we are yet deciding which  two or which three to do. We have a pipeline. So nearer the time by the second  quarter, we will take a final call which ones to go with.

Frozen snacks you will get into and  the dairy based beverage segment is what you are going to foray into. You said  frozen snacks you have already rolled out on the B2B side and B2C you will roll  out shortly, how soon do we see the dairy beverage being launched?

It should happen by Q2.

Skincare, you have acquired Charmis.  Do you intend to build momentum in this category which is a competitive segment  and do you intend to be on the premium side or do you intend to be on the mass  side?

Both. Our  entry into this popular segment is through Charmis. Charmis is a well-known  brand but it is a brand that has not been sufficiently invested in the recent  past. So, we will certainly build it over time. We have also entered - as we  are speaking, we are rolling it out - the premium skincare category with a  brand, called Dermafique and it is completely designed for the Indian skin  types. So it has been designed in our life sciences and technology centre.

Is this an acquisition or is it a  licensing arrangement?

It is not a licensing arrangement. It  is a home grown brand. It is developed entirely by life sciences and technology  centre and tested on Indian skin types and we have had superior performance to  the benchmarks and that is why now we are ready to roll it out. We are going to  start. I know it is a competitive category, so we will start in very  selectively and then build it overtime.

Given the fact that you are entering  these very competitive segments, what is the outlook in terms of pricing power,  what is the outlook in terms of advertising and marketing spends? Are we likely  to see that go up significantly given the fact that these are new forays and  new launches that you are taking forward?

We will support each brand to the  extent that it is required. We have a lot of gestating categories, our  advertising spends in comparable categories are more than what industry does  and that will be sustained. Now, what type of investment each one of these  category requires at this point of time and what it requires in future will  depend on the manner in which we roll out and the manner in which we execute  this strategy.

What is the broad investment plan for  the FMCG business for this financial year?

Our advertising and marketing spends.

Not just advertising and marketing,  all together?

You are talking of capital investment  as well?


It is like the capital investment.  Let me answer that first piece. It is a little bit of a rolling target because  there is infrastructure that we have created. We have commercialised four  Integrated Consumer Goods Manufacturing and Logistics (ICMLs) last year. We are  going to do three this year. Each one of them is designed for a much higher  capacity and the lines are put in as the market demands it. So it is better to  look at a combined picture. So we are going to have investments of between what  we have done and what we are going to do is going to be in the region of over  Rs 10,000 crore.

Over Rs 10,000 crore in this  financial year?

No, not in this financial year. I am  saying, by the time we are done, we are right now constructing the number of  ICMLs and there will be some happening after that. So when we complete all of  this, it is going to be over Rs 10,000 crore.

When we spoke - the target for the  FMCG business is a fairly aspirational one at Rs 1 lakh crore in revenues by  2030, are you on track to be able to get to that number? I am looking at your  revenue picture for FY16, Rs 9,751 crore, FY17, Rs 10,522 crore, nine months  FY18, Rs 8,277 crore, are you on track to meet that number or is it more  aspirational in nature?

You are right, it is an aspirational  target but nonetheless we are committed to that target and that is how we are  gearing up the enterprise and that is the reason why we continue to widen and  deepen our portfolio. We continue to strengthen our reach, our direct  distribution, we are entering newer categories and all of this is directed  towards achieving the goal that we have.

The growth rates, I do understand  need to be much higher to be able to get to that figure by 2030 so it may get  delayed by 2-3 years, that is fine but we are gunning for that figure and that  is how we are organising ourselves to get there. We are not giving up on that  target. It is a question of time, maybe a little bit here and there but that  ambition remains.

What about the road to profitability  as far as this business is concerned? If one looks at the margin picture, FY16,  0.9%, FY17, 0.3%, nine months FY18, 0.9%, I understand that these are  businesses that you want to invest in and to some extent, the investment will  continue over the next few years but what is the aspiration now when it comes  to profitability?

It is like this that if I look at my  business models and the cost structures around which these categories are being  involved, I think they are fairly competitive. The ICMLs for example, when we  are bringing our manufacturing closer to the demand centres and we also create  the backward linkages in that region, so we get a very competitive value chain.

"Yes, in the short-term,  there are costs of having additional capacities but ultimately it will make us  more efficient and we are very confident that we are in the right direction as  far as that is concerned."

Besides this, there are gestating  costs of newer categories. If you look at our portfolio, we have categories  that I would say not even nascent, we are incubating. We are building on the  brands and therefore at the right time, we will get to the market. So there are  costs associated with that.

But as our older categories,  Aashirvaad is a Rs 4,000 crore plus brand, Sunfeast is Rs 3,000 crore, we have  three brands that have crossed Rs 1,000 crore mark, which is Bingo, Yippee and  Classmate. So as our earlier brands have started to get scaled, I think they  are now in a position at a profit and loss (P&L) level to more than support  the investments that we are going to make in the newer categories. So we will  see a much better trajectory but yes, it will be a while before we get to the  benchmark level of profitability where we will be.

What is a while? Five years, more  than five years, what are you factoring in, what is the blueprint?

I cannot give you a guidance there.

Given the fact that you have talked  about this backward integration that is a big focus area for you, the fact that  operational efficiencies are being eked out whether it is through your  logistics model, transportation model, so on and so forth, so what can be then  expect in terms of the margin picture. How much do you believe you will be able  to squeeze out on account of all of this and push up the margins?

I think the years ahead will give you  the picture and I can certainly say for sure that trajectory is going to only  get better as we go forward but specific numbers, I would hesitate from putting  it because as a policy we do not give guidance.

Let me ask you two specific  questions. One criticism perhaps or comment or observation has been that you  have been slow on going to market. Maybe the gestation time takes too long, is  that something that you are now looking at correcting, is that something that  you are actively pursuing?

No, I would firstly disagree that we  are slow to the market. I am not sure if there is anybody else who in a year  enters four new categories and says that in the next year itself we will enter  at least those many if not more number of categories and anybody else who puts  in more than 30 products into the market in a year and says in the year ahead,  we are going to put significantly more than that number. So I won't say we are  slow at getting to the market. I think we are fairly aggressive.

We are building many categories  simultaneously. In fact, internally, the debate we have is that are we too  fast? Are we getting into too many categories too fast or should we pace it out  a little more? So we do have a robust pipeline but we are continuously  calibrating that and I would say in the number of categories that we are into  and the speed with which we are getting into, I wouldn't say we are slow. There  is hardly any case where so many brands organically have been built in such a  period. I have not come across any other case which has built 25 mother brands,  got market leadership in some segments and become number two in many segments  in such a short period of time and bulk of what I am saying has happened in a  little over a decade.

You talked about how you build the  momentum on organic growth. How aggressive is the inorganic strategy going to  be when it comes to your existing categories as well as the new categories? You  have done a few, for instance B Natural, you spoke about Charmis. What is the  inorganic plan now as far as ITC is concerned?

We are absolutely keen and open to  inorganic.

Across all businesses - paper,  hotels?



Hospitals I leave aside for the  moment. For all our existing businesses and more particularly FMCG, we are open  to it but we would like to do so only when we have something that has a  strategic fit with what we are doing. We don't want to buy something just for  the sake of buying, a strategic fit is required. We also have 25 mother brands.  So we have a plan to grow each one of these brands. So we do not want to create  multiple brands for the same positioning etc. that become more inefficient to  manage in the future. So when there is a synergistic opportunity, we will  definitely do it and provided it comes at a right value. If I buy something  that is very expensive, it is only going to erode value.

Is there anything on the radar today  that is looking attractive?

Not specifically. We have just done  one another small acquisition a few days back.

You spoke of the fact that you do not  know any other company that pushes out as many products across different  categories as you do into the market. Is there an assessment now of what is  working for you, which brands are doing well for you? Is there a blueprint that  in categories where you are not in the top three, maybe you want to review and  assess whether you should continue or not? Are you deploying capital bases,  certain parameters and certain indicators across these brands. What is the  vision?

Absolutely. This is a continuous  review and I wouldn't say there are categories which we are not doing well at  all. At stock keeping unit (SKU) level yes, we do have an ongoing process of  review and churn and fortunately in all the categories that we have got into  maybe in the entire category we have not progressed because we have focused in  certain sub-segments.  For example, even if I look at snacks wherein  bridges we are the market leader but we have just entered the extruded snack  segment.

So when I look at my performance from  the total snack industry, the percentage may appear small but that is also the  headroom for me to grow but then if I look at where I am focusing, bridges for  example I have done extremely well and now I have gone into extruded snacks.

"In chips, I am making  good process. So there are pieces in which I am not there and there is no  significant category that I have today. In the larger FMCG space where we need  to pullback."

There is of course one example in the  past where greetings cards for example, we pulled back; we thought that is not  an industry for the future, so we pulled back on that and apparels business in  which we are not happy with how we are doing, so we are on to a serious  restructuring there. We have two brands - Wills Lifestyle and John Players.

So restructuring would mean?

It's around the retail food brand,  the business model and so on.

But you are retaining these  businesses?

For the moment we have not taken any  decision to do anything otherwise.

But you may be open to the idea of  giving them up?

Right now nothing is on the table.  Right now we are looking at optimising it.

Looking at optimising it which would  mean closures of stores etc. what would it mean. Would it mean curtailing  investments across these businesses?

Restructuring - I won't just relate  it to closing stores or opening new ones. It's more around looking at the way  the entire operation is been done and restructuring it end-to-end and it may  entail some realignment of distribution models, some realignment of the retail  footprint. It may lead to reduction, it may lead to increase. I do not know  what the outcome is right now.

By when will you have clarity?

Within the year we should be.

Broadly, if you can give me a sense  of what the expectation or the aspiration is for the home and personal care  side of the business as well as for the foods business because food is the  strong hold at this point in time with most of the brands there that you have  identified are pushing and delivering on targets for you. So what is the  aspiration broadly if you can share with us for personal care as well as for  food both in terms of revenue and hopefully profitability on the personal care  side?

Each one of them, we are expecting it  to scale up. While foods is a much larger business for us, personal care has  done extremely well in the last year and we had some great successes in  deodorants, pocket perfumes and lipstick perfumes.

That is going to be something that  you are going to invest more and more launches are expected as well?

Yes, we have just done some more  variants recently and we are expanding the whole perfumes range. We have also  gone into higher price points beside the lower price points. So that is a  segment that is doing well for us. Liquids are doing well for us. In shower  gels, we are the number two player. Savlon is growing quite well. We are also  happy with the progress of both Fiama and Vivel after we restaged more than a  year back. So we are happy with the progress in personal care and it's  extremely encouraging and we believe over time it's also going to scale up.

Moving away from FMCG and to you  about some of the other businesses. On the hotel side, at least from market  perspective there seems to be a sectoral rerating that we are currently seeing.  What is your outlook both in terms of occupancy, in terms of profitability, in  terms of supply, demand and what happens with pricing going forward?

For sure, the movement is upward, the  trajectory is upward for now and I think the potential is enormous because  India is not even 1% of the global tourism as you know, so there is huge  potential. So we expect that this trend should  continue and that is also reflected in our results as you have seen for the  nine months and we hope that the trajectory will improve going forward and the  good thing is that this is a time when we are actually sitting in a fairly  healthy pipeline of new properties.

"Some of them are - ones  that we are constructing ourselves; ITC Kohinoor is going to open in the next  couple of months in Hyderabad and year after that we will have ITC Royal Bengal  and so on. So there are some that we are constructing and we also have a  healthy pipeline of managed properties."

So having created certain iconic  properties and iconic cuisine, the brand for ITC hotels per se, we believe that  it is a right time now for us to go more aggressively on management contracts  and that is where our increasing focus will be.

So you are moving towards an asset  light model?

I would say asset right because we  already have enough assets. So it is a right mix, it's the optimal mix is what  we are moving towards. We are 50-50 right now in terms of rooms but we would  like it to be much more on the managed properties as well so that both of these  gives us opportunity to grow much faster. If I was to concentrate only on my  properties, my growth is going to be much slower and more capital intensive.

What would the aspiration be in terms  of rooms given the fact that there is likely to be change in strategy with more  managed hotels coming under the fold?

We would like to see our rooms  perhaps something like double in about five years.

What about acquisitions in this  business? The government is looking at strategically divesting across all  sector. The India Tourism Development Corporation (ITDC) properties are up for  grabs, Taj Mansingh seems to have gone cold. What is the story as far as  acquisitions are concerned?

As and when there are opportunities  and if we believe there is value in it, we will be open to it. The more recent  one, you would perhaps be aware of the Park Hotel at Goa, so the honourable  Supreme Court has given a judgment where within the next few months, the property  will be handed back to us. It has gone through a long period of litigation  after we acquired the hotel.

In terms of profitability for the  hotel business, given the fact that you are moving towards this asset right  model. Is that going to give you a bump up or a boost in terms of  profitability?

It is certainly going to give us an  improvement in return on capital employed. It will come partly from the fact  that the rates as well as the occupancy itself is improving. So that is going  to improve it plus when we have optimal mix of managed and owned properties -  that itself will improve our return on capital employed for sure.

Since we are talking about return on  capital employed, let me ask you some specific question in terms of your  capital allocation policy. What are you going to be looking at, what parameters  will you look at as you decide how much capital goes to which business or which  brand. Is there a Sanjiv Puri matrix that is ready on the table?

First of all, we have said that each  one of the segments that we are into we are going to invest to make sure each  segment is globally competitive. So we will invest whatever the segment is  required and we have the capacity to do so and of course when we say invest it  must meet our norms of returns on capital employed.

What are those norms?

I cannot give you. These are internal  figures. So, there are parameters and as far as overall profitability is  concerned, I cannot benchmark say agri business with paper business or paper  business with hotels. I have to benchmark each one of them to the industry that  it is operating in. A hotel must be benchmarked to a hotel, agri business to  agri business.

So if you look at where we are, I  have the highest profitability as far as the paperboard and packaging is  concerned, I have the best profitability in the agri business, I have  comparable profitability in the hotel business and comparable despite the fact  that I have more gestating properties today as a proportion than anybody else.

So even in that situation I am comparable.  So we are doing well as far as the profitability of our traditional businesses  are concerned and when I am saying traditional businesses those are the one  that we have started about a couple of decades back.

"FMCG is a newer business,  it reflects aggressive investment so over a period time I hope we will get to  the same stature in that segment also."

In terms of dividend payout - are you  now looking at improving your dividend payout as well because if I look at the  dividend payout ratio within you and your peers, FY17 at 56% for you, HUL at  82%, Nestle at 68%. Are we likely to see more generous dividend payout?

The decisions on this are made  annually by the board in line with the policy of dividend payout but ITC is in  an investment mode and we have one traditional segment which is a cigarette  segment which is a large segment for us. We have to create the other segments  to be as large both in terms of profitability and revenues. So we need to  invest. Therefore, we also need to have resources to invest in the future.

So shareholders shouldn't get excited  about the fact that they are going to get…

I think if we look at shareholder  returns over five-ten-twenty year period, I think shareholders would be happy  with the returns that they have got. There have been some stresses in the  recent past largely related to one segment which has faced a lot of  uncertainty, but as a trend we have created shareholder value which we will  continue to do so but we also need to conserve capital to be able to invest for  the future.

When we last spoke, you had  identified eight themes or eight verticals that you are going to bet on and  there are some new businesses that you intent to get into. Let me ask you about  the announcement that was already made which has to do with the foray into the  healthcare space by way of multi- specialty hospital. Where do things stand on  that front today?

It is still in early stages so I  cannot give you a definite plan.

Is there a pullback or is there a  pause or do you want to reassess the decision to want to get into this business?  Could you look at a potential acquisition, I mean Fortis is on the block still.  It is seeing bevy of suitors. Was that a consideration for you?

No, that was not a consideration and  there is no decision yet to either go ahead or pullback because earlier was a  shareholder approval. Based on the shareholder approval, now we have to get  into this segment and look at all the options that are available. The first  step for us is to assemble a team and we have certain principles that were  articulated by the board that we want to create a healthcare facility that is  going to be based on patient centric protocols. So we needed to put the right  kind of team in place that would think that way and evaluate all the options.  So let me say that part of the team is just got into place, some more will  happen over next few months. Once the team is in place they will deep dive into  this segment, evaluate all the options and then go back to the board and then  we will take a final decision.

So a foray is still a question mark  whether or not you will finally get into the business or not?

Of course because what happened  earlier was only a shareholder approval. After that a business plan has to be  made and the board has to be finally convinced that yes, it is a right thing to  do and then only will the final go ahead happen. o there was no go ahead  earlier in that sense. It was a shareholder approval.

Do you expect that decision this  year?

Hopefully by in another year's time,  yes, we should have an idea. It is more than likely that we will do something  in this segment but final decision will have to be made after the business plan  is made and then taken to the board.

Let me ask you about the  agri-commodity side of the business as well because there are some interesting  developments there as well. The Prime Minister has an aspiration of doubling  farm incomes. Most people are sceptical about where things currently are, how  to get to that point but I believe you are doing some interesting work with  some pilot projects across two states, what is your own sense?

We have a large agricultural business  and through the e-Choupal, we have been working with farmers for decades  together. We have a very deep relationship and through e-Choupal we connect  with 4 million farmers and we are a large source of agri-commodities after the  IFCI, we are the larger source of wheat. So we don't restrict our activities to  sourcing, we work with farmers.

The whole idea is to be able to  create societal value, create inclusive and competitive value chain. So in that  context when the Prime Minister made this call for doubling farm incomes, so as  part of our engagement with farmers, we also initiated projects in Uttar  Pradesh (UP) and Bihar and said let us work with the farmers round the year,  not just on the crop that we are dealing with and make a package that we  believe can achieve this target.

"Farmers in India are  extremely resilient and extremely smart and many of them picked up these  practices and there is about close to 30,000 of them in UP that have reported  doubling of farm incomes and about 15,000 in Bihar."

Over a period of time, these benefits  will accrue to many more farmers because whenever we do the transfer of  practices, we do a demonstration in a plot and ask the farmer that you must get  10-15 of your neighbours to come and watch it. So other people are in various  stages of assimilating the practices but over time, the beneficiaries will be  much larger. These learnings we will try and take to other regions also.

We are quite happy with the results.  The other point let me also make on the agricultural business - we have so far  or largely focused on sourcing and working with farmers.

In the recent past and more so now we  have created a separate vertical within the agricultural business, which  focuses on value added agriculture. So we export now food, spices, which meet  all the global norms, this is through a PPP project in Andhra Pradesh.

Then we export organic mango puree  then we have shrimps, so we are looking at more and more areas where the  agricultural business would add value. So that is going to be a focused area  and again leveraging the synergy between - that we pride ourselves in, we are  also going to take some of this value added produce to the Indian consumer like  we have done with prawns, like we have done with farm land potatoes where we  have a variant, which is low sugar and a variant that has got natural  anti-oxidants and then like we have done with apples. Indian apples but these  are wax-free apples. So we have that one available in the market.

What is the export aspiration?  Deveshwar has spent his innings here at ITC, wanting to create Indian brands  and he has always been opposed to this idea of royalty being paid to MNCs, what  is the export aspiration for ITC for taking Indian brands global?

Over time it would definitely happen  as our Indian brands become big and they are able to support their overseas  expansion, it would happen. We do have exports today but it is a limited  intervention today, limited intervention because we don't aggressively market  these products in other markets. So we have just started to aggressively market  in certain neighbouring countries like Nepal and apart from that, we are  exporting some of our brands to many countries like 20-30 countries. Aashirvaad  Atta goes into many countries, Choco Fills goes into many countries and so on  and so forth. A lot of our products are exported but without aggressive  marketing.

Is that likely to change?

Not immediately. In the future,  certainly yes as our brands have become big enough and they on their own should  be able to support the overseas expansion.

You have mentioned Patanjali. So what  is the story there in terms of how aggressive Patanjali continues to be in the  market place and how you intend to combat that?

I think we are happy that there is  another enterprise that is developing Indian brands. We always advocate it. So  we are very happy. Competition is always good in the market and there are  lessons that all of us have taken from Patanjali.

What is the number one lesson that  you have taken from Patanjali?

On speed itself. It is a lesson to  understand how you can do so many things simultaneously.

Speed is one, what is the other?

The other would be on how you can  manage a brand across many categories which most marketers would hate to do.

You have the power of spirituality  mixed with commerce. I don't know how that will work for somebody like ITC but  that is a thought.

But yes, there are limitations to  what we can do but certainly it is a lesson that flies in the face of  conventional marketing wisdom and I think we have to, as business leaders,  acknowledge that whatever be the reason.

Foreign direct investment (FDI) in  tobacco, there was a meeting on the April 11, don't know whether the government  is going to rethink, review, obviously you don't want FDI.

I don't know what will happen but let  me comment from a perspective of FDI in general. Where do you need FDI? You  need FDI in segments, which require investments, segments that need to grow.  Segments that do not have enough capacity and so on and so forth. So you have  to evaluate all these things from these perspectives and then you will arrive  at what is the logical answer to this.

E-commerce - there is a possibility  of Walmart coming into Flipkart via the FDI route, what about you and  e-commerce as something that you would like to consider?

They are channel partners for us so  we would like to use them as channel partners. In niche segments, we do have  some B2C, for example in kitchens of India, we do have some B2C in our frozen  prawns, so in niche segments, it may happen but otherwise e-Commerce players  are our channel partners.

What is the top five for Sanjiv Puri  for the year ahead or for the next five years?

I think we have to continue around  four-five themes that we have got ourselves, which is about strengthening the  portfolio and making it more accessible.

Continuing to strengthen the  innovation engine which has given us encouraging results so far. Continuing to  make investments that will make ITC future ready so that we would not only get  scaled but we also become cost competitive.

"The fifth piece is going  to be around there is a lot of opportunity that there are huge opportunities  for enterprises. So we would like to pursue that aggressively. We have done  some very interesting work in the last year with very encouraging results."

So we would like to pursue it and of  course the last thing is we always say that it is not just about shareholder  value, it is about societal value. So we would like to continue to take a few  steps forward in our journey of creating an inclusive sustainable and  competitive value chain.

You mentioned about doubling the farm  income but there are many other areas we have done and one important one is on  water security. We have got this huge investment on watershed management and it  runs into huge number of structures and we irrigate nearly about 9 lakh acres  as of now but from integrated watershed management, we have now moved to, in  certain selective areas, water stewardship where we are looking at the entire  water balance and the water required for the community and then making a  strategy on how we make that sustainable.