ITC’s focus is on post-covid era

ITC Ltd said it will expand the capacity of some of its existing facilities as demand for products such as packaged foods, and health and hygiene items surged amid the coronavirus crisis.

Chairman Sanjiv Puri said the company is also preparing to meet greater demand for such products even after the crisis is over.

The pandemic has boosted demand for packaged foods, including snacks, ready-to-cook items, and frozen foods, as people are stuck at home.

ITC has nine integrated consumer goods manufacturing and logistics (ICML) facilities that cater to the manufacturing and storage of its packaged consumer goods.

“The infrastructure is there; we need to add machines and lines over a period of time to scale up capacity with incremental investment,” Puri said in a virtual media conference.

“Because of the surge in demand for packaged foods, I believe this trend of the packaged foods settling at a higher level even post-pandemic will stay, and therefore we are also making certain investments which we are adding to our existing facilities; there are also certain ICMLs that are under final stages of completion. So, capacity gearing up is happening. It will cater to the elevated level of demand that we will witness post the pandemic,” he added.

Puri said ITC is closely monitoring demand trends. For instance, it has swiftly ramped up supplies of sanitizers by repurposing a perfume factory during the lockdown.

“The expansion of our capacity that has happened is way beyond the buffer capacities. Our hand wash (production) is five-six (times) of what we were producing. The capacity expansion has happened in-house, by commissioning some additional facilities, by repurposing facilities and it has also happened along with some of our partners,” he said.

ITC owns popular brands such as Aashirvaad flour, Yippee! Noodles, Bingo Chips, Savlon soaps, Engage deodorants, and Sunfeast cookies.

“The surge we are seeing may not sustain to this degree because as things normalize, people will also have exposure to buy alternatives, but certainly, it will give some impetus to the penetration of packaged food,” he said.

He said covid has also led consumers to use more health and hygiene products. While demand will gradually taper off from the current levels, it will still be higher than the pre-pandemic level.

“When the pandemic ebbs—certain categories will settle at an elevated level i.e. elevated from a-pre pandemic level, but they may not have a surge that was experienced during the pandemic—health and hygiene is one such category. Clearly, the awareness has gone up—of simple things like hand washing and cleanliness will definitely go up,” he said.

While demand for non-essential items such as deodorants and personal care products has fallen, signs of recovery are visible as the restrictions under the nationwide lockdown have been gradually lifted, Puri said.

In fact, this is also likely to help the sale of packaged gifting items this festive season—especially juices, biscuits, chocolates, that ITC sells, given consumer preference for packaged and hygienic foods.

ITC also took steps to scale down its lifestyle retailing division Wills Lifestyle last year.

Puri indicated that the company has found little synergy in the retailing business.

“The business had not scaled up in line with expectation. So, we have restructured it. Unless we get a specific business idea on how we can win in this segment, we are not going to kind of expand or grow it,” he said.