ITC Limited: Nation First

The case traces the evolution of ITC Limited (ITC) from its inception in 1910 as a cigarette marketing company and a subsidiary of British American Tobacco Limited (BAT) to an independent ‘Indian’ diversified company – a wide range of businesses that apart from tobacco business, includes hotels, paper, packaging, agricultural commodities, information technology, packaged foods, and personal care. The case is located in 2021 as ITC faces tough questions from the shareholders on its recent diversification amidst the pursuit of its goal to transform itself into the country’s largest FMCG company.

The Early Years section traces the genesis of the company as Imperial Tobacco Company and the consolidation of its manufacturing and marketing operations. The next five sections trace ITC’s evolution under its five Indian chairmen. The Haksar Years begins with a description of Ajit Haksar’s career at ITC, including his time at BAT, which shaped his beliefs about the role of professional management and his definition of his role as the company’s first Indian chairman. The section outlines context in which BAT’s stake in ITC was diluted, and ITC’s eventual diversification into hotels and paperboards business. The Sapru Years describes the consolidation of market leadership in cigarettes business following a change in taxation regime and the company’s foray into agri-business. The Chugh Years captures the tumultuous relationship between BAT and ITC, announcements of diversification into core sectors like power and the aborted takeover attempt by BAT. The Deveshwar Years traces Y C Deveshwar’s initiatives to consolidate and strengthen the core businesses, venture into new businesses such as information technology and the company’s growing focus on social imperatives. The company’s foray into foods and personal care segment in line with its goal to become the #1 FMCG company in the country is also covered. The Puri Years details the developments in the company under the executive leadership of Sanjiv Puri. The section ends with Puri becoming executive chairman following the demise of Deveshwar. The final section, The Years Ahead, ends with details of challenges faced by Puri including pressure from ESG (environmental, social and governance) investors and questions on the company’s continued engagement with the cigarette business.