COVID black swan event: ITC says must gear up for new normal; FMCG giant plans to tide over pandemic

The FMCG major will now focus on using agility, technology, and cost reduction measures to tide over the impact of the COVID-19 crisis.

Cigarettes-to-hotel major ITC said that it is gearing up to work in the next normal even as the coronavirus pandemic has hit the economy severely. The FMCG major will now focus on using agility, technology, and cost reduction measures to tide over the impact of the COVID-19 crisis, it said, acknowledging that the last few months have been tough for certain businesses in the non-essentials space. “For companies to survive in this new normal, they would have to reimagine the future. ITC has broken this up into three phases – survival, reboot and next normal,” Sanjiv Puri, Chairman and MD, ITC at the company’s 109th annual general meeting on Friday. The company remains optimistic of creating value for stakeholders despite the occasional hiccups in business and called coronavirus a Black Swan event.

“During the first quarter, the nationwide lockdowns particularly impacted your Company’s performance in the Hotels, Cigarettes, Education and Stationery Products (ESPB), Paperboards & Packaging businesses,” Sanjiv Puri said. Even then, ITC delivered a 19% comparable revenue growth in its FMCG-others segment. The same has been driven by staples, convenience foods, health and hygiene products. As coronavirus hit countries across the globe, companies saw a surge in demand of hand sanitizers and ITC, which manufacturers Savlon range of sanitizers, also benefited from the hike and ramped up its production by 275 times. The company also launched about 40 new products amid the lockdown.

Road ahead

While the government has been gradually lifting lockdown restrictions across the country, localised lockdowns are still a major hindrance in full recovery. “The current spate of localised lockdowns is impacting the recovery momentum,” Sanjiv Puri said. The near-term outlook for the company hence remains in a grey zone as consumer trends and industry dynamics constantly evolve in the backdrop of the yet unfolding impact of the pandemic. The way economic recovery pans out will also shape demand. 

Meanwhile, ITC clocked Gross Revenue and PBT (before exceptional items) for FY20 at around Rs 46,300 crore and Rs 19,300 crores respectively.