April 30 2007
News - From cigarettes to agri products
[ITC is committed to sustaining its position as one of India’s most valuable corporations].
When YC Deveshwar addressed his first annual general meeting of shareholders of ITC Ltd in 1996, his 3000-plus word speech dwelt solely on tobacco and cigarettes. In fact, the word tobacco appears around a 100 times and cigarettes around 50.Over the past six years, the company has forayed into several new areas. And, last year, when he addressed his 11th AGM, cigarettes and tobacco had vanished from his talk. The most frequently used word seemed to be “vision”.Well, ITC still makes cigarettes and exports tobacco, but these no longer play the dominant role of over 85% in revenues or profits as they used to do even a few years ago when segment reporting became mandatory. ITC is now playing out a vision that Deveshwar has developed over the years, implementing it steadily and methodically.
The vision is about empowering the Indian farmer by giving him the tools for a better life and linking him to world markets. Of making Indians proud of having an Indian company making world-class products. And of course, of making ITC’s shareholders proud to be part of a company that does things like growing forests and managing watersheds not to win awards for corporate social responsibility, but to mesh business and life in a socially responsible fabric.
As Deveshwar told FE, “ITC is committed to sustaining its position as one of India’s most valuable corporations through world-class performance and creation of growing value for its stakeholders and the Indian economy.”
Today, as ITC’s vast and deeply rooted network of over 6,500 e-choupals covering nearly 400,000 villages across nine states, begun way back in 2000, generates inward and outward business for ITC, every big company with extra cash is dreaming of food retail, of creating a farm-to-table chain. But as the likes of Reliance open their big stores with fanfare, ITC is not worried. It has been running some unique rural malls quite successfully for a few years now—and is ready to provide the backend supply chain to any new player in retail.
“ITC has facilitated agro extension services on a large scale, and this has led to better crops and better yields. With our experience in agro-procurement and the development of quality agro-products, ITC is open to providing back-end support to other non-competing retail units,” Deveshwar told FE.
Whether it is the main segments like hotels, paper & paperboard and agribusiness, ITC is creating businesses that, if treated as standalone companies, could equal or outrank industry peers.
Deveshwar is clear about this: “ITC’s performance has to be judged in the business segments we are engaged in - and in each, we are leaders either in top-line or in bottomline growth.”
Recently, ITC got talking about cigarettes again after a long gap, in the notes to its results for the quarter to December 31, 2006. (Of course, cigarettes find a mention in the annual report every year.) The trigger this time? The green signal for states to impose value added tax on cigarettes and tobacco products other than bidis, for which the hated foe so far had been excise.
For Deveshwar, the future is clear: “ITC would like to be the most trusted and the largest food company in the country today. In agri business and in each of the branded food segments that we are engaged in, ITC has achieved leadership positions within a very short time since we have launched these businesses.”
online available at- http://www.financialexpress.com/fe_full_story.php?content_id=162679
