ITC (Indian Tobacco Company)
This is a collection of articles archived for the excellence of their content. |
Contents |
History
India Tobacco Company
Chinki Sinha , Remade for India “India Today” 21/8/2017
Modest start
ITC began its business life in 1910, operating out of a modest office in Radha Bazar Street in Calcutta. At the time, this office was just a small outpost of what was a multinational corporation-the Imperial Tobacco Company of India Limited, which was headquartered in Britain. As the ownership of the company became progressively more Indian, the company's name was changed, becoming the India Tobacco Company in 1970 and ITC Limited in 1974. From then on, as the company's portfolio expanded beyond tobacco to include fast moving consumer goods such as food, personal care products, clothing, stationery, incense and safety matches, among others, not to mention its booming hotel business, the company was rechristened ITC Limited, with 'ITC' no longer an acronym.
The company's journey from that beginning to a multi-business enterprise is truly representational of the science of staying relevant, reading the signs and adapting.
Expansion plan
In the mid-70s, ITC ventured into the hotels and paperboards businesses. The group leveraged its consumer insights and marketing skills to expand its hotels business, and over the years reshaped the landscape of the Indian hotel industry. The hotels business was launched in 1975 with the acquisition of a hotel in Chennai, later rechristened ITC-Welcom group, Hotel Chola and subsequently My Fortune, Chennai. ITC has over a hundred owned and managed properties spread across India under four brands-ITC Hotels, Luxury Collection, WelcomHotels, Fortune Hotels and WelcomHeritage. It took its first step toward international expansion with an upcoming super premium luxury hotel in Colombo. In addition, ITC Hotels also recently tied up with RP Group Hotels & Resorts to manage five hotels in Dubai and India.
Under the leadership of two successive CEOs, J.N. Sapru and K.L. Chugh, in the mid-'80s ITC entered the financial services business, setting up a new division named ITC Classic Finance Ltd in 1986. In 1988, the company made a foray into the edible oils business. In 1990, ITC acquired the specialty papers company Triveni Tissues Ltd while ITC Global Holdings was set up in Singapore in 1991. But success did not come without attendant challenges. In 1996, a retrospective excise duty of Rs 803 crore was demanded of it and there also ensued a battle for control of the company.
That was when, under Y.C. Deveshwar's leadership, the company redefined its vision to build an exemplary Indian enterprise. The company was restructured and it echoed 'India First' in its new strategy of creating a value chain. ITC is now among the top three in India in terms of contribution to the exchequer. Over the past 21 years, the company's contribution to the Indian exchequer has been about Rs 2.7 lakh crore.
Coming up next
ITC is currently aiming to become India's foremost FMCG company. It aspires to achieve a turnover of Rs 1 lakh crore by 2030. The company is aggressively betting on the future, having invested significant sums to set up the ITC Life Sciences & Technology Centre (LSTC) in Bengaluru, for the purpose of research and development. Product development in the personal care arena will be inspired from research focusing on 'Indianness'-essentially, a blend of Indian genetics as well as environmental factors of prime relevance to the Indian consumer of personal care products. The LSTC has already filed more than 630 patent applications.
ITC is also investing in creating national assets by setting up 20 integrated consumer goods manufacturing and logistics facilities. It has also invested in the construction of 10 signature hotel properties. That aside, the company is also looking to enhance its leadership in the farm-to-fork value chain by putting up state-of-the-art climate controlled infrastructure and expanding its value chain to cover farm produce, including fresh, frozen and dehydrated fruits and vegetables.
Diversification into non-cigarette businesses
Namrata Singh, May 13, 2019: The Times of India
From: Namrata Singh, May 13, 2019: The Times of India
If there’s one company that has created successful brands from scratch after a late start, it’s ITC.
A late entrant in FMCG and packaged foods, ITC challenged domestic and multinational companies alike, following a clear vision of its legendary former chairman Yogi C Deveshwar, to quickly scale the non-cigarette businesses of the company.
How does a company create an impact in a sector dominated by multinational companies? ITC stuck to the classic textbook approach to build the FMCG business, which today boasts of a portfolio of Rs 1,000-crore plus brands, Aashirvaad being the biggest with a turnover of over Rs 4,000 crore.
“ITC did in foods, what HUL (Hindustan Unilever) did in personal care,” said an FMCG industry expert. Because foods is largely a local subject, ITC managed to create a bigger disruption in foods where consumer trial is high, something that HUL couldn’t do in decades. ITC tapped into those categories where the share of the unorganised market was high, such as atta, where there was a need for consumer branding. “ITC mastered this art in foods. In personal care, however, there is less of unorganised play and brand loyalty is a big factor. This has been a challenge for ITC,” said the expert.
Devendra Chawla, another FMCG expert who heads Spencer’s Retail, said: “It can take years to build a distribution network in towns and villages. It takes time to learn sourcing right in food and not everyone gets consumer insights right. On all these counts, ITC has excelled. In foods, a local company has a better understanding of the consumer behaviour. A true farm-to-fork strategy with recent acquisitions has helped ITC grow nascent categories by leveraging on these strengths.” When ITC forayed into foods in 2002 with the launch of the ready-to-eat range ‘Kitchens of India’, followed by Aashirvaad atta, the industry was bereft of major technological disruptions.
Marico CEO & MD Saugata Gupta, said: “ITC did everything right because they believe in doing everything in the classical copybook way. They invested in backrooms, supply chain and innovation. They managed to create a disruption through quality products created in India, which were then rapidly scaled up.”
Every year was marked by a significant brand/category launch, leading to a non-cigarette FMCG business of Rs 11,000 crore today. ITC did not shy away from leveraging capabilities from its existing businesses. It also outspent other FMCG companies when it came to advertising, according to Abneesh Roy, senior VP, Edelweiss Financial Services.
ITC Hotels
2023
Uditprasanna Mukherjee, July 25, 2023: The Times of India
Kolkata: Sanjiv Puri-led ITC has finally proposed to demerge its hotel business into a separate company 19 years after it was established. The board of the conglomerate approved the muchtalked-about demerger of the hotel division.
According to a filing by the company, ITC will hold 40% in the hotel company while the rest 60% will be with shareholders of ITC on aproportionate basis.
ITC Hotels was set up as a separate company during the 1980s and later in August 2004, ITC Hotels was merged with the mother company ITC. At the company’s AGM in 2021, Puri first indicated a possible restructuring of the hotel business. Details of the proposed reorganisation, including the scheme of arrangement, shall be placed for approval of the board at its meeting to be convened on August 14, 2023.
The board has also approved incorporation of a wholly owned subsidiary of the company, to be named ITC Hotels.
The hotels division made a major turnaround in 2022-23. It had posted a segment revenue of Rs 2,585 crore in 2022-23 from Rs 1,285 crore in 2021-22, a growth of 101%. The profit of the segment was at Rs 542 crore in 2022-23, one of the highest in its history, from a loss of Rs 183 crore in the year-ago period. Now, the hotels division has over 120 hotels and 11,600 keys.
ITC said that the board of directors of ITC, at its meeting evaluated and discussed various alternative structures for the hotels business towards crafting the next horizon of growth as also enhancing value creation for all stakeholders.
At ₹6. 1L Cr, ITC Most Valued FMCG Co Briefly
For a brief while during Monday’s session, ITC had become the most valued FMCG company in India, surpassing HUL. However, after the Kolkata-headquartered FMCG major announced demerger of its hotels business, the stock fell sharply to close almost 4% lower. Market players said it was ‘buy on rumour, sell on news’ strategy that brought ITC down after the demerger announcement. At close of Monday’s session, with a market capitalisation of Rs 6. 11 lakh crore HUL was the fifth most valued company in India, followed by ITC at Rs 6. 10 lakh crore, BSE data showed.
