Kanpur, told him to try his luck at Virginia House in Kolkata’s Chowringhee, where ITC is headquartered.
“The appraisal process was off the beaten track; the focus was less on my academics or professional experience and more on my overall personality. That helped me in making up my mind once I got the offer,” Puri, 54, says. He has been moving all over the country since then but he has been used to it from childhood as his father is from the Indian Forest Service. The last seven years in Kolkata have been his longest stint in any city so far.
When did he sense that he was being groomed for the top job? Puri says he didn’t realise then, but the top management was constantly throwing new challenges at him perhaps to figure out whether he has it in him. His first major break came in 2001 when he became managing director of ITC’s subsidiary, Surya Nepal, which became the largest private sector company in that country. Five years later, Y C Deveshwar (now the non-executive chairman) asked him to lead ITC Infotech and formulate its strategy of transformation. “I didn’t know anything about the business at that time. Now that technology has become an integral part of all businesses, that three-year stint has come in very handy indeed,” he says with a smile.
The other valuable lesson, he says, he learnt from Deveshwar (who gave up his CEO job after 21 years at the helm) is the art of distributed leadership, which enables and empowers the teams. “The chairman used to give the right inputs. I intend to follow the same management mantra,” Puri says.
We are served what looks like a chosen sample of ITC Maurya’s signature dishes — an assortment of multicoloured rotis, biryani, vegetables, dal and chicken. I am told the food reflects ITC’s “health and wellness” focus.
I ask him about the difficulties in steering a company, which still depends on cigarettes for over 70 per cent of its profits. After all, cigarettes are being seen as a sin-business, resulting in steep taxation and even a recent public interest litigation (PIL) seeking divestment of shares held by public sector insurers in ITC. Puri avoids any reference to the PIL but admits ITC’s cigarette sales growth has taken a huge knock and that he understands the general perception problem about tobacco as a business. But he is firm about “not ceding ground” as long as the business is legal. The real problem, he says, is the huge arbitration opportunity created by unreasonable taxation.
“Look at the result: Illegal cigarettes now form close to 23 per cent of the overall cigarette industry. In fact, legal cigarette sales have been going down in double digits. Is that what we want?” says Puri. While other forms of tobacco consumption has grown 56 per cent from 1981-82 to 2014-15, legal cigarette consumption has declined by 28 per cent within the same period.
But ITC, he says, realised the emerging challenges early enough and has been in transition mode for over two decades now to de-risk its business profile. He reels out figures to justify his argument. As much as 57 per cent of ITC’s net segment revenue is from the non-cigarette business, which accounts for 77 per cent of operating capital employed and 90 per cent of the company’s employee base.
Besides, ITC has become a leading FMCG marketer, it owns the second-largest hotel chain (10 new properties with 3,000 rooms are coming up), is the market leader in the paperboard and packaging industry and is the country’s foremost agri-business player. This is apart from ITC Infotech for which he has drawn up some ambitious expansion plans.
Puri is a sparse eater and seems more interested in vigorously countering the “unfair perception problem” that ITC faces. As an example of the company’s credo of doing business by doing good, he cites the example of the fledgling dairy business. The company has created an ecosystem that has helped farmers improve the productivity of 1.5 million milch animals, which is way beyond the size of ITC’s dairy business. The company has created six million sustainable livelihoods and pioneered social and farm forestry, which covers 250,000 hectares now.
He isn’t finished yet. Puri says he believes that a world-class brand cannot be created if the environmental and societal equity is ignored. “We have always been conceptualising our business models based on three parameters — financial, environmental and social,” Puri says. Someone points out to him that the rotis are turning cold.
I take the opportunity to ask him about the audacious goal of Rs 1 lakh crore revenue by 2030 that Deveshwar has set for the fast moving consumer goods business. After all, the target is more than 10 times the company’s current revenue from the consumer goods segment, which has faced a slowdown in recent times. Puri says that figure is an “aspiration and a couple of years change here and there wouldn’t mean much”.
But FMCG is clearly the business that has the maximum potential to grow. It already has 25 mother brands with a cumulative consumer spend of over Rs 12,000 crore. ITC, he says, is exploring entry into “every category that can be called FMCG” and is set to launch its seafood, fruits and vegetables foray in a couple of months. It is investing Rs 25,000 crore in 65 projects, a substantial chunk of it related to processed food, to take advantage of the economic upturn, which he says is not too far away. A bulk of the money will be for preservation and processing of perishable farm products as only 10 per cent of India’s farm products, including milk, is processed at present. The company is investing in state-of-the-art cold chains that will allow it to sell fresh, frozen and dehydrated farm products. “Food offers the biggest growth potential given our robust agri-back-end and we will do all that it takes to become India’s largest foods company (it is at third position now),” he says.
Then there are products that ITC is incubating right now, which, he thinks, will be engines of growth. Among them are Fabelle chocolates, which will shortly be retailed at Wills Lifestyle stores and other top-end retail chains. Sunbean Gourmet coffee is another. Launched in 2016, this will also follow the same route. Puri says ITC believes in initially catering to the premium segment of the market instead of looking at the lower end, which is crowded. Won’t the premium play affect volumes? “Price has to be aligned with the value that a consumer gets and we are confident of providing superior value,” is the answer.
He asks whether I would like the conventional dessert or try out B Natural juices and Fabelle chocolates instead (they are on our table in a jiffy), and then goes into great detail about why he thinks both should be winners in their respective segments. It’s over two hours now since our meeting began, and Puri remembers he is getting late for another important meeting. “If you have time, please take a look at the Fabelle boutique store in the lobby,” he says. Apart from other talents, one surely has to eat, sleep and breathe marketing to be able to lead a conglomerate like ITC.