Reviving the whole value chain is the key: Sanjiv Puri

FMCG major ITC on Thursday said that 70-80 of its factories have now resumed operations and are operating anywhere between 20 per cent and 60 per cent of their capacity. The FMCG major has 120 manufacturing locations in the country, which include third-party plants.

The company also believes that restarting of the entire manufacturing and agri value chains, outside the containment zones, would be important to kick-start economic activity, as the country grapples with the Covid-19 pandemic.

Speaking to reporters on Thursday, Sanjiv Puri, Chairman and Managing Director, ITC, said, “The government has been very proactive in dealing with the Covid-19 pandemic. But as we understand from experts, this fight against Covid-19 will be long and there are economic costs associated with the lockdown. As the Prime Minister sometime back said, we have to look at both lives and livelihoods. So in this temporary new normal, economic activity has to also start, as we deal with the issue of livelihoods.”

“The government’s notifications have given broader relaxation for economic activity outside containment zones and the focus has been on getting manufacturing revived. Getting the entire manufacturing value chains to operate end-to-end, which also includes distribution and transportation of the products and getting the agri-value chain functional, will be key. Also, whatever is getting manufactured needs to reach the end consumer,” he added.

Puri said that it’s the collective responsibility of the stakeholders to follow the protocols of safety and hygiene. The company believes additional clarifications are needed in terms of manufacturing operation norms in urban regions.

For ITC, the key focus, during the ongoing challenging times, has been to maintain and enhance the supply of essential items by operating factories, distribution points, as well as agri buying points, to cater to the surge in demand of essential products like staple and hygiene products.

“Capacity utilisation is in the range of 20-60 per cent depending on each location. We are mainly producing items that have immediate visibility of demand. At this time, the focus is to conserve cash and streamline costs,” Puri added.

Revival strategies

At the same time, the company is working on revival strategies and plans to bounce back stronger. “We do believe the current crisis will pass and the focus is on how to bounce back much more stronger and take advantage of some of the emerging opportunities. We also need to look at redesigning some of our services. We are going through a difficult patch where there will be a severe impact on the economy. But the long-term fundamentals of the Indian economy are intact,” Puri said, adding that the focus has to be on adaptability and agility for business continuity.

The company has also been focusing on fast-tracking innovations such as the launch of Savlon Surface disinfectant spray, which was done in a matter of four weeks or re-purposing its perfume factory to enhance production capacity of Savlon sanitisers.

Asked about recovery in the economy, Puri said, “It all depends on economic activity revival. How much of economic activity is revived...would really determine the extent of the impact. The impact appears to be quite substantive in the first quarter.”

Replying to a query on major shifts in consumer behaviour, Puri said, “Based on early signs that we have picked, there is a big consumer shift towards health and wellness and hygiene products. Consumers are increasingly looking for products that they can trust and so strong brands will be very important in future. We are also focussing on purposeful digital engagement with consumers as digital adoption is moving ahead at an accelerated pace.”

Given that economic activities have come down to very low levels, the issues of lives and livelihoods remain the key concerns and facilitation will be required from the government to get manufacturing in areas outside the containment zones to reasonable capacity levels, believes Puri.

A long lockdown means more stress on economic activities and more support from the government will be required. “It is directly correlated,” Puri said, adding that there will be companies, especially MSMEs, who will face liquidity crunch; at the same time sectors such as hotels and airlines will also require capital support.

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