From generic to proprietary, ITC’s agri division to step up focus on value-added agriculture

In Q2FY26, ITC reported a 1.3% dip in revenue. While transition into the new GST era did have an impact, it was the 31% dip in revenue of the agri-business which actually led to the overall revenue going down. The company, in the Q2 earnings call said, timing differences in crop procurement, customer call-offs for the value-added agri exports due to tariff confusion were the culprits.

However, MD and chairman, Sanjiv Puri, is extremely upbeat about his agri portfolio. “We have pivoted with the philosophy of creating a future-ready, value-added portfolio. Value-added is manifested in stuff that is attribute-specific, processed, horticulture and organic,” explained Puri in an interview with Fortune India. The focus, he says, would be to develop value-added, proprietary agri products. “The idea is to go from generic to proprietary,” he added.

Apart from growing tobacco, the company in the past years was primarily using the agri division to deliver advantage to its food business, which constitutes the bulk of its Rs 22,000 crore FMCG division. “But we are more and more processing what we call value-added agriculture,” says Puri.

A major part of the value-added portfolio are biological extracts, which the company not just infuses into its own products but also exports. “The first one we have done is pharmaceutical-grade nicotine. The other piece we are progressing now is medicinal aromatic plants. Proprietary is something we are investing right now, but it will take some time to grow that.”

The agri business is also focusing on spices, aqua, coffee and attribute-specific wheat, which is either high in protein or sustainably sourced. Puri says that the company’s R&D centre in Bengaluru is not just striving to come up with differentiated products, but also agri solutions that are proprietary to ITC. “Our R&D starts from the seed to the product. Just like value chains are formed from farm to fork, our R&D is also farm to fork.”

The company’s agri business strategy, according to Puri, is in line with emerging consumer needs. “Consumer aspirations are changing on what they want to eat, what type of produce they want to eat – organic or sustainably sourced. Our strategy is also aligned to emerging regulatory needs, where we need to be ahead of the curve. Our platform, ITC Mars, also gives us the capacity for, whenever the EUDR compliance is done,” he explains.

Puri believes that the company’s investments in the agri business will immensely help in building an organisation of the future. “The importance of good quality agri inputs for good quality food products is heavily underestimated. The importance of agriculture in food safety is also underestimated. For us, when we are sourcing from the farm gate, we have traceability, we can classify and grade the crops. In Aashirvaad (atta) for instance, we are able to get traceability of the type of varietals and that helps us to segment. We are ensuring we are sourcing safely as we know about soil health and water quality,” he explains.

Growing the right kind of crops and sourcing strategically has enabled the organisation better cost efficiencies, claims Puri. “We are able to look at cost of delivery to the place of production. We are using digital tools to our advantage. ITC Mars is able to help us bring down logistics costs because we have built FPOs around the areas from where we source. There are also AI tools like Astra which give data on weather, plantations and also advise what to buy so that you get maximum cost efficiency.”

ITC’s future-ready farming strategies are also benefiting the farmers, says Puri. “When we do this, we make sure we are not doing it for our benefit. At the farm gate if we don’t take care of the farmer, we can’t build relationships and trust. Everything we have done, farmers have benefited.” ITC Mars, he claims, helped farmers get 23% higher returns after one year of usage.

Puri talks about the company’s climate-smart practices. “We are also building resilience through climate-smart agriculture. It is important to derisk our agri business. At the same time, wherever we have done it, not only has resilience increased, but farm incomes have also increased. In the initial pilot, 70% of the farms have gone into high resilience and high yield.”

“At every stage, we make sure we develop attribute-specific wheat as there has to be value for the farmer, value for the enterprise. That’s why we can work along with the ecosystem of the farming community and align them for our needs with a high degree of trust.”