ITC chairman Sanjiv Puri reaffirmed on Wednesday that the company is open to reorganizing its various operations, including hotel demergers and the bourse listing of ITC Infotech, a part of the FMCG-to-hotel-to-tobacco conglomerate.
Puri also made it plain to the company's shareholders at the AGM that anything it did would be focused on maximizing shareholder value. He expressed the worries of ITC stockholders regarding the stock's underperformance. Veteran shareholders like Manoj Gupta and Tamal Mazumdar highlighted the subject of hotel demerger and ITC Infotech IPO as part of an organizational reorganization during the AGM.
Puri responded to questions about hotels by saying, "We stated last year in our annual report that we would look at other structures, which we are repeating this time." We recognize that, given the current state of the hotel business, this is not the appropriate moment to do so.
Hotels, too, rebounded strongly, according to the ITC chairman, and were cash-positive in the second part of FY21. And he believes it is again based on how the pandemic performs and how confident the firm is in its ability to respond to the issue.
According to him, the hotel industry is the hardest hit. However, it provides a chance to consider alternative revenue streams. “We're also looking for ways to improve operational efficiency. And it's occurring right now. Our asset-light strategy will enable us to develop more quickly while reducing capital intensity,” he continued.
Puri noted that ITC Infotech, a wholly-owned subsidiary of ITC, is making significant success and that it would allow the corporation to expand this business. “And these (listed) things are examined from time to time, and if it is thought that it is the proper thing to do, it will be pursued.”
Nothing is set in stone, according to the ITC chairman, and the business will evaluate restructuring from time to time in light of macroeconomics, comparative environment, and organizational strategy. “In terms of bonus shares, buybacks, mergers or demergers, or whether or not to combine, we are all dedicated to producing long-term shareholder value. We will do what is best for the company's long-term success; businesses must exist not just for today, but also for tomorrow and the day after,” he added. The governing theme, according to Puri, will be long-term wealth generation. And it will do anything it wants inside that framework.
He highlighted how ITC financial performance and criteria have been connected to stock prices in terms of the share price. Before the pandemic, ITC's EPS had increased by 47%, its return on capital employed had increased from 65% to 72%, and its FMCG margin had increased by 640 basis points.
“To put the statistics in context, the business may have paid out Rs 50,000 crore in dividends in the last five years. This shows the company's operational strength. We are a debt-free organization. We've also established a fairly open dividend distribution policy. However, I share your worries. What is being reflected, the market is not reflecting these performances", he said.
Source: Times of India