ITC digital transformation brings 22% rise in EBITDA

ITC is making significant investment in digital transformation across the value chain in order to enhance efficiency, according to B Sumant, Executive Director of ITC.
ITC and digital transformationRajasekhar VV is the CIO of ITC. ITC has reported gross revenue of Rs 59101.09 crore (+22.7 percent), EBITDA of Rs 18933.66 crore (+22 percent), profit before tax of Rs 19829.53 crore (+15.5 percent) and profit after tax of Rs 15057.83 crores for FY 2021-22.

The company has accelerated its digital transformation over the last two-to-three years. It has helped in bringing process efficiency and achieved cost optimization.

ITC is using AI and ML tools to sharpen social listening skills and to customize products for its consumers. ITC is also gaining from process efficiency in manufacturing. ITC is using big data analytics and algorithms to strengthen its distribution footprint.

ITC is customizing advertisements and communication campaigns to target consumers through digital media platforms. ITC is using insights from social listening to customize its offerings. The diversified conglomerate has rolled out close to 110 products over the last one year.

ITC created Sixth Sense, the company’s marketing command centre, which uses digital tools for social listening to observe the key trends, issues, needs, and concerns on people’s minds through social media forums.

The Sixth Sense works with a variety of agencies and tech partners to optimise the cost of customer acquisition and that of ad spends.

ITC’s Chairman Sanjiv Puri, who has led ITC Infotech in the past, has been driving a digital-first culture in ITC. His vision of ITC as a future-tech enterprise has catalyzed the creation of Smart ecosystems with digitalisation being pursued at every node of business, according to BusinessLine.

Sanjiv Puri has spearheaded the setting up of a Young Digital Innovators Lab consisting of digital natives drawn from across ITC’s businesses to crowdsource digital strategies. He has also formed a dedicated digital council of senior ITC managers — the DigiNext, which ideates and supports high-impact digital interventions.

ITC has been using digital solutions to improve internal process efficiency. ITC has deployed Project Zen which helps integrate right from demand forecasting to inventory planning to manufacturing. ITC does not reveal its IT budget.

ITC calls the digital umbrella initiative in manufacturing Industry 4.0. Digital investment and Industry 4.0 technologies have enabled ITC Paperboards and Specialty Paper Business to expand margin by 230 basis points over the last two years.

The Paperboards, Paper & Packaging Segment recorded growth of 36 percent in segment revenue and 54.7 percent in segment results. The business achieved margin expansion of appx. 270 bps leveraging the integrated nature of the business model, Industry 4.0 and other digital interventions.

ITC is undertaking digital initiatives on the distribution front using big data analytics and algorithms to break up its network of 2.5 million direct retailers into cohorts based on size, range, locality, population around the retailer, etc. This would help salesmen visiting the retailers to suggest what kind of an assortment of products to be kept at his outlet. It also has B2B apps called Unnati and VIRU to help retailers place orders.

The company’s digitally powered eB2B platform – UNNATI was scaled up during the year covering nearly 3 lakh outlets within a short span of time since national launch facilitating sharp and direct engagement with retailers, superior analytics and deeper brand engagement.

“We work extensively with e-commerce players and our share of e-commerce sales is much higher than that of the industry. We have more than doubled the share of e-commerce to our sales. We undertake aggressive marketing on these platforms and we have dedicated teams to handle these platforms,” Sumant said.

ITC’s sales through the e-commerce channel grew by 50 percent during the year, taking the channel salience to 7 percent. ITC e-store, the company’s exclusive D2C platform, is now operational in 15 cities and offers over 700 ITC FMCG products across over 45 categories.

ITC uses the digital platform for raw material sourcing and for better price discovery. It has a number of projects for sourcing optimization and has been able to get significant benefits because of sharper procurement.