One of India’s oldest companies and till recently the company that held the maximum weightage in the Nifty 50 index of listed companies – ITC Limited, is going through a major overhaul.
Established in 1910 under the British rule and named “Imperial Tobacco Company of India”, it was primarily devoted to the manufacture and sale of cigarettes for its first six decades of existence. The company, however, was renamed ITC Limited, where ITC is no longer an acronym.
The company has come a long way since its inception and has diversified into FMCG products which include foods, juices, dairy products and personal care products. The company also has interests in stationary products, paper products, packaging and printing, has a division for hotels and even operates an IT company.
Manufacture and sale of cigarettes however continued to be its mainstay, always contributing in excess of 50% total revenues of the company that completed 100 years almost a decade ago. However, now, more than two decades after Virginia House (which is the head office of ITC in Kolkata) began its diversification program that would expand its consumer product lines beyond tobacco; cigarettes contributed less than half to ITC’s gross sales for the first time in its history. ITC’s cigarette division contributed 45.8% to its gross revenue in 2018-19. That compares with a 52% share a year ago and 61.82% and 62.70% in financial years 2016-17 and 2015-16 respectively.
The foods division, comprising cookies, snacks, juices etc. now contributes 21.3% of revenues while agri-business generated 13.4% of gross turnover for fiscal 2018-19 while just five years ago these divisions contributed 12.8% and 8% respectively.
ITC’s core tobacco business has been affected in recent years by steep increases in taxes and trading volumes in illegal cigarettes. Therefore, ITC has been concentrating on the non-cigarette businesses and has achieved double digit growth in those sectors, more than industry rivals, and according to its Chairman, Sanjiv Puri, has grown over 21 fold since 1996. FMCG products, which include packaged food items, soaps, shampoos, shower gel, apparels, and branded stationery, generated sales of about 12,500 crore ₹ in FY 2019.
Staying with ITC, but on a different note, total remuneration of its Chairman and MD, Sanjiv Puri, jumped 52% from 4.05 crores to ₹ 6.16 crores per annum in FY 2018-19.
Sanjiv Puri was recently elected as the company’s chairman with effect from May 13th of this year after YC Deveshwar, the company’s longest serving chairman and CEO passed away. The remuneration of Deveshwar in 2018-19 was 16.62 crore ₹ and in 2017-18 it was 29.85 crore ₹, making him one of the most well paid executives in the country at that time.