ITC launches 70 products in non-cigarettes FMCG space, beats previous high

 Diversified conglomerate, ITC has launched as many as 70 products in the non-cigarettes fast moving consumer goods (FMCG) space cashing in on the changing dynamics of the pandemic-stricken consumer space, beating its previous high of 60 launches.

The 70 launches were made in the first half of the financial year alone and were mostly focused on hygiene, health & wellness, naturals and convenience, which were in high demand as Covid -19 raged across the world. The number of launches exceeds what ITC had done in the whole of the last financial year; in 2019-20, ITC had 60 launches, while in the year before, the number stood at 50.

In order to cash in on the continued traction for hygiene products, ITC launched a range of products under the Savlon brand – disinfectant sprays, fabric disinfectant sprays, spray and wipes, germ protection wipes, Hexa sanitiser and advanced body washes – some of which were manufactured during the lockdown.

The brand is now on course to record an annual consumer spend of Rs 1,000 crore in FY21.

Some of the other launches that captured the changing consumer behavior were: ready-to-cook chapattis (Aashirvaad), Select milk with a daily report card (Aashirvaad), immunity juices (B-Natural), frozen vegetables (Farmland), among others.

In the quarter ended September, the non-cigarettes FMCG segment got a leg-up with highest quarterly revenues at Rs 3,794.95 crore for all segments, except education and stationery products business.

The company attributed it to deployment of innovative delivery models, use of alternate channels, expansion in reach, agility in execution and leveraging digital technologies to service market requirements.

Pre-tax profits from the segment were at Rs 252.68 crore compared to Rs 90.46 crore in the year ago period; in the previous quarter, the profits stood at Rs 125.41 crore.

As consumers opted for contactless transactions, sales through e-commerce platforms more than doubled during the quarter gone by, to nearly 5 per cent of segment revenue. Sales in modern trade channels, however, grew at a slower pace as localised lockdowns impacted footfall and consumers preferred neighbourhood/online stores as safer options.

An Edelweiss report said that ITC’s FMCG business has shown good operating profitability since FY19 onwards and the trend is expected to improve going forward.

However, while non-cigarettes FMCG got a boost, the cigarettes business was impacted in the quarter due to localised lockdowns, pulling down the overall performance.

Net revenue saw an year-on-year decline of 14.4 per cent; sequentially, however, it was up 33 per cent.

A Motilal Oswal report said that cigarette volumes were likely to have declined 12 per cent, which was below the expected 7 per cent decline. The net EBIT margin for the cigarettes business contracted 880 bps year-on-year to 63.4 per cent, it said.

Apart from lockdowns, high taxes on cigarettes, too, have been an overhang. The company said that the 13 per cent tax hike which cane into effect from February 20 added to pressure on legal industry. Additionally, there are concerns with ESG that persist on cigarettes, as globally, cigarette companies are being screened out by ESG investors.

A missed opportunity: ITC could build India's digital, agri-business model

 Although one in four of all adult Indians use tobacco, the country’s addiction runs far deeper. The government, too, has a toxic dependence. It’s called ITC Ltd.

Formerly known as Imperial Tobacco of India, later renamed India Tobacco Company, and finally truncated to just ITC, the 110-year-old conglomerate is 29.4% owned by British American Tobacco Plc. About 28.5% is controlled by various Indian state-run insurance companies and a government-controlled bad bank.

And therein lies the problem. The large quasi-state ownership is acting as a value trap. It’s preventing the $25 billion enterprise from being carved up into a pure cigarette company, owned by BAT, and a supply-chain platform like China’s Pinduoduo Inc., which is nearly four times bigger in enterprise value. It's a missed opportunity, not just for ITC’s minority shareholders, but for India.

Now that the country is giving farmers the freedom to sell their produce outside state-designated market yards, a corporate buyer like ITC that has distribution capabilities in the smallest of Indian towns (thanks to cigarettes) has a shot at building a meaningful digital, agri-business franchise. One that’s able to obtain better prices for producers.

As for the core tobacco business, London-based BAT has tried in the past to raise its stake and take over the cigarette maker, but local managers have seen it off using Indian financial institutions’ voting power. However, many investors are now wondering if empire-building by ITC’s management, in the garb of protecting national interests, has gone too far.

A cash-strapped New Delhi, which is delaying fiscal support to an economy expected to lose a 10th of its real output this year to Covid-19, also needs to rethink its stance: What additional harm will befall if BAT wins ITC’s successful cigarette division, paying a hefty control premium to acquire smokers, a vanishing breed in developed markets?

In return, India can wrest a time-bound commitment from the new owner to steer the revenue toward, say, 25% reduced-risk products like the Swedish snus and heat-not-burn devices. That will mean a fall in future healthcare costs from lower tar consumption. ITC scored 0.62 in Foundation for a Smoke-Free World’s 2020 Tobacco Transformation Index, better than China National Tobacco Corp., but way behind BAT, Philip Morris International Inc. and Swedish Match AB. “Companies that offer reduced-risk products are mostly focusing their efforts on selected high/medium income countries, where overall smoking rates are lower and cigarette sales are already declining,” says the new study. India can negotiate a better outcome with BAT.

Let the $3.3 billion cash pile plus the non-tobacco parts — hotels, information technology, finance, fashion, potato crisps, paper, safety matches and what not — get sequestered under a separate holding company. The Indian managers get to keep what they can turn into a digital, agri-business-led supply chain, and sell the rest. This way, the government will extract much-needed budgetary resources. The value trapped in the conglomerate will get released.

The deadlock between two equally poised large shareholders is hurting minority owners. The stalemate has gone on for too long. A quarter-century ago, the fight was over whether ITC should be setting up power plants. The state-led economy had just started liberalizing and there was an acute shortage of electricity. The Indian cigarette maker was sitting on a cash hoard. Had BAT wrested control, it wouldn’t have allowed the funds to be put into unrelated businesses. But BAT’s tenuous hold weakened after a currency-control violation saw a change in leadership at the Kolkata-based firm.

Yogesh “Yogi” Deveshwar, the new chairman in 1996, took the government’s help to defeat BAT’s plan for a separate unit to sell international brands like 555 State Express and Benson & Hedges cigarettes in India. Since then, the local business has increasingly charted its own course. Now, BAT can’t even try to mount a bid for all of ITC because tobacco has been made off-limits for foreign direct investment since 2010. That, too, was done to keep ITC in Indian hands.

To what end, though? As much as 84% of ITC’s $2.8 billion pretax profit last year came from cigarettes, but four-fifths of the $325 million-plus capital expenditure was in snacks, hotels and paper. The dividend payout ratio did jump last year to 81%, yet the previous 18 years’ average is just 50%, almost 20 percentage points lower than BAT’s distribution.

The U.K. associate, which has just one representative on the Indian firm’s board, has returned $2.1 billion to its own shareholders via buybacks over the past six years. No such luck for ITC investors. They can’t be offered a buyback, lest it increases BAT’s shareholding. Widows and pensioners get a 6% dividend yield, 5 percentage point more than on the benchmark Nifty 50 index. It’s a bit like collecting pennies in front of a value-crunching steam roller. In the past 10 years, ITC shares have lost 11% of their dollar value, while an investment in Nestle India Ltd. has tripled.

The opportunity ahead is clear. Agri-business offers the chance “for building a digital platform linking retailers with consumers, something that Chinese companies like Pinduoduo have done successfully," said Gaurav Patankar, head of emerging market equity strategy at Bloomberg Intelligence. As Mukesh Ambani, India’s richest man, and the 152-year-old Tata Group mimic platforms from the likes of Tencent Holdings Ltd. and Alibaba Group Holding Ltd., ITC can plug another gap, provided New Delhi gives up its addiction.

Tobacco is toxic. India is finding that tobacco nationalism is an even harder habit to quit.

ITC evaluating inorganic expansion, aims to boost non-cigarette verticals

Cigarettes-to-hotels major ITC Ltd is evaluating inorganic expansion of its portfolio and strengthening of the spice business.

In a filing with the BSE, ITC said, “The company, as part of its business strategy, is always exploring inorganic growth opportunities, and enquiries received from market participants are suitably evaluated.” The company was responding to a clarification sought from the stock exchange over the acquisition of Kolkata-based spices major Sunrise Foods.

ITC clarified, however, that it had not entered any exclusivity agreement for the acquisition.

Sunrise Foods has four factories at Kolkata, Bikaner, Jaipur and Agra and has a strong presence in nine states in the eastern and north-eastern parts of the country. It is also present in Nepal and Bangladesh. Sources said its revenue in the last fiscal year was estimated at about Rs 1,000 crore.

ITC, which has been focussing heavily on a larger play in its non-cigarettes businesses like packaged food, hotel, consumables and others, already has a strong back-end sourced spices business under the Aashirvaad brand which is available in the country as well as exported. ITC entered the branded spices business way back in May 2005.

In the last fiscal year, ITC had introduced new blended spices variants catering to regional tastes and preferences such as ‘Chicken 65’ & ‘Mutton Chukka Masala’ in Tamil Nadu and ‘Garam Masala’ in Uttar Pradesh. During 2018-19, ITC also entered new geographies namely in north India and Gujarat thereby strengthening a pan-India presence.

On the export front as well ITC expanded the business primarily in food-safe markets like US, EU and Japan, leveraging its backward integration and customer focused strategies.

The company had also scaled up its Integrated Crop Management (ICM) programme which enables the company to produce food safe spices in a sustainable manner and is also partnering with various state governments for production of food safe spices.

During 2018-19, the agri business of ITC, which is made up of spices, wheat, soya, coffee, water and others, registered a 52.17 per cent growth at Rs 4,345.84 crore.

In its peer category, Emami Agrotech also entered the spices business last year with a range of spices under the Mantra brand.

ITC ties up with Jubilant FoodWorks to deliver food items via Domino's app

In a first-of-its-kind partnership between a quick service restaurant and a fast-moving consumer goods company, Jubilant FoodWorks, the master franchisee of the Domino’s brand in India, is partnering with ITC to deliver essential commodities at the consumers doorstep.

The partnership follows ITC’s and Jubilant FoodWork’s aim to maximise sales and distribution channels while encouraging consumers to stay at home and receive essentials during the Covid-19 outbreak.

According to the partnership, a combo pack of ITC-owned Aashirvaad atta and spices such as chilli, coriander and turmeric powder will be available on Domino’s app starting today. Buyers can log into the app under the Domino’s Essentials menu and order the items. While ITC will provide the items, Domino’s will be delivering the products. As of December 31, 2019, Domino’s had 1,325 restaurants in the country across 282 cities and towns.

“Customers can order using the Domino’s App and their order will be delivered safely and hygienically using Zero Contact Delivery. We are happy to partner with ITC Foods for this initiative enabling consumers to procure and receive certain essentials while staying safe at their homes”, Pratik Pota, chief executive officer and whole-time director at Jubilant FoodWorks said.

This service will be available for consumers first in Bengaluru and then it will be expanded to Noida, Mumbai, Kolkata, Chennai and Hyderabad. As part of its growth strategy for the brand, Jubilant FoodWorks has prioritized expanding geographical footprints, drive innovation, value for money and strengthening the brand offline and online.

In the third quarter of last fiscal year, Jubilant FoodWork’s 14 per cent growth was primarily driven by a strong performance in delivery, especially online sales which now contribute to 87 per cent of the total delivery sales. The Domino’s App saw 4.1 million downloads during the third quarter of the last fiscal year. On a cumulative basis, the Domino’s app has seen a download count of 127 lakh.

“We have redoubled our efforts to expand availability of food products by leveraging various avenues and channels that connect seamlessly with consumers. This valuable partnership with Domino’s during this pandemic will enable us to fulfill the rising demand for food products like Aashirvaad atta and spices”, Hemant Malik, divisional chief executive of the foods division at ITC Ltd said.

To avail this service, customers need to use the latest version of the Domino’s app and click on “Domino’s Essentials” section. Customers will then be able to select the Combo Pack and use digital payment mode to complete the order. Domino’s Safe Delivery Expert will follow the Zero Contact Delivery practice to deliver the package. This service method will ensure that customers are able to receive their order without coming in contact with the Safe Delivery Expert.

At the onset of the Covid-19 outbreak in the country, ITC has been focusing on coming up with contingency and business continuity plans and has been producing and supplying essential items only.

The Aashirvaad brand of atta has already become a Rs. 4,500 crore brand for the company and is the market leader in the branded atta segment.

ITC sets up Rs 150 cr coronavirus fund for vulnerable sections of society

FMCG major ITC on Friday announced setting up of a Rs 150-crore coronavirus contingency fund for vulnerable sections of society.

Apart from setting up of the fund, the company said it will collaborate with authorities to provide assistance to district health and rural healthcare eco-system that reaches out to the weakest sections of society.

"Over the past few weeks several initiatives have been implemented in response to the crisis. We are now happy to announce that ITC is setting up a contingency fund of Rs 150 crore to address and manage the challenges arising out of this adversity," the company said in a statement.

This fund will be utilised primarily to provide relief to the vulnerable and most needy sections of society who have been harshly impacted by the pandemic and have faced significant disruption in their livelihoods, it added.

The resources under this fund will be channelised towards the protection and well-being of the ground forces who are doing commendable work to reach medicines, groceries, other essential goods for people across the country during the lockdown, "by providing protective personal gear and hygiene products to such frontline warriors," it said.

Stating that many of the vulnerable sections reside in rural India, the company also said it has geared its value-chain to lend support to the government in its efforts to fight this threat to the people of India.

In order to ensure adequate availability of essential food and hygiene products in the country in these trying times, ITC said, "we are working with state authorities and local administration to ensure that manufacturing and distribution activities continue uninterrupted with bare minimum people."

It further said, "while we practice restraint and social isolation as a group, we will continue to ensure the safety and well-being of our employees, workforce and value chain partners."

ITC is committed to support the government's efforts and play its part in fighting this pandemic with compassion and resilience, it added.

Stocks to watch: Affle (India), ITC, Century Plyboards, insurance counters

At 08:43 am, Nifty futures on the Singapore Exchange (SGX) were trading 303 points or 2.53 per cent lower at 11,684 levels.

Here's a look at the top stocks that may remain in focus today -

Earnings today: As many as 76 companies are slated to release their December quarter results today. The list includes names such as Affle (India), Borosil, Century Plyboards, and Hawkins Cookers.

ITC, other cigarette firms: Shares of ITC and other cigarette and tobacco firms are expected to trade actively as the government proposed to increase excise duty on tobacco in the Union Budget.

Life insurance firms: The life insurance sector felt an unprecedented jolt when the Union Budget introduced the new optional regime for personal income tax, which while lowering rates takes away most deductions and exemptions which individuals could avail for subscribing to insurance products.

Oil-linked stocks such as OMCs, paint, tyre and aviation may remain in focus as crude oil prices extended decline on Monday, dragged down by worries about lower demand in the world’s largest oil importer China following the coronavirus breakout.

M&M: Mahindra and Mahindra (M&M) on Saturday reported a 4 per cent increase in tractor sales at 23,116 units in January. The company had sold 22,212 tractors in the same month last year.

Tata Motors: India’s largest commercial vehicle manufacturer Tata Motors Ltd reported an 18% year-on-year (YoY) fall in total domestic sales to 45,242 units in January, as against 54,915 units in the same month a year ago.

Coal India: State-owned Coal India Ltd (CIL) on Saturday said it produced 451.52 million tonnes of coal in April-January period of the ongoing fiscal, a decline of 3.8 per cent. The company had produced 469.65 million tonnes (MT) of coal in the year-ago period, CIL said in a filing to the BSE.

PVR: CRISIL has upgraded its rating on the non-convertible debentures and long-term bank facilities of PVR Limited (PVR) to

'CRISIL AA/Stable' from 'CRISIL AA-/Stable'.

HCL Tech: IT major HCL Technologies is looking to increase the workforce at its Lucknow facility by 50 per cent by the end of next financial year 2020-21.

ONGC, Oil India: ONGC, IOC and other oil PSUs will invest over Rs 98,521 crore in the coming fiscal starting April 1 in exploring for oil and gas, refineries, petrochemicals and laying pipelines to meet needs of the world's fastest-growing energy consuming nation.

Cochin Shipyard: The company has taken 100% stake in an SPV which it formed along with Hooghly Dock and Port Engineers Limited for modernisation and renovation of the two dry docks on western bank of the Hooghly river, an official said.

ITC hits fresh 52-wk low; brokerages say increase in NCCD a big blow

ITC continued to bleed for the second consecutive day on Monday, after the Finance Minister, while presenting Union Budget 2020-21 on Saturday, proposed to increase the National Calamity Contingency Duty (NCCD) on cigarettes, hookah, chewing tobacco, snuff and tobacco extracts and essence. The stock slipped over 5 per cent and hit a fresh 52-week low of Rs 207.20 apiece on the BSE.

Stocks of other cigarette and tobacco manufacturers shares also declined in trade. While Godfrey Phillips India slipped over 4 per cent to Rs 1086.50, VST Industries fell over 2 per cent to Rs 4,128 levels.

Brokerages have lowered their estimates for ITC post the Budget announcement, saying a sharp increase in cigarette taxes is a heavy blow to the company. Credit Suisse noted that specific tax on cigarettes will increase up to 16 per cent across various slabs, which can prompt ITC to take a 10-15 per cent price hike in a very weak macro environment leading to a volume decline.

"Even after taking price hikes of over 10 per cent, cigarette earnings before interest and tax (EBIT) is likely to be flat in the best case in FY21. Additionally, risk of GST cess hike does not go away," the brokerage said in its note. Consequently, it has downgraded the stock to neutral with the target price of Rs 225 from Rs 230 earlier. JP Morgan, too, has downgraded the stock to Rs 235 apiece. Tax hike would impact volume growth and weigh on stock multiples, it said. The brokerage lowered FY21/22E earnings per share (EPS) estimates by 3 per cent.

In the past 12 months, shares of ITC have underperformed the market by falling 22 per cent against 7 per cent rise in the Nifty50 index. The NIfty FMCG has remained unchanged during the period.

Among domestic brokerages, analysts at Prabhudas Lilladher cut their weight on ITC from 2 per cent to 1 per cent (significant underweight) as imposition of excise duty is a structural negative. ITC will have to increase prices by 3.9-7.6 per cent across various cigarette segments, which will impact volume growth. "We note that cigarette volumes are under pressure due to poor demand in rural India. We now estimate 1 per cent decline in cigarette volumes in FY21 and 3 per cent increase in FY22," they wrote.

Moreover, the brokerage beleived that this trend of increasing taxes under NCCD opens a Pandora box for further tax increases in future. The brokerage has cut target price to Rs 296 and expect the stock to continue underperforming, noting that valuations remains compelling.

Koatk Securities, however, note that the effective tax increase will be in the range of 5.4-13.8 per cent for different stick lengths and VST Industries and Godfrey Phillips will have a much higher contribution from 64 mm sticks and this would hurt them more than ITC. "We were baking in around 10 per cent portfolio-level increase in tax/stick for FY2021E, so this shouldn’t hurt our estimates much for ITC," they said.

The company on Friday reported a 29.03 per cent increase in consolidated net profit at Rs 4,047.87 crore for the third quarter ended December 2019. The company had posted a net profit of Rs 3,136.95 crore in October-December quarter of the previous fiscal. Net sales during the quarter under review rose 5.71 per cent to Rs 13,220.30 crore as against Rs 12,506.05 crore in the corresponding period in previous fiscal.

Revenue from cigarettes stood at Rs 5,944.86 crore in the October-December quarter, up 5.31 per cent from Rs 5,645.05 crore in the corresponding period last fiscal.

Union Budget 2020: Fake invoicing under GST a non-bailable offence

In order to crack down on fake invoicing and fraudulent input tax credit (ITC) refunds under the goods and services tax (GST), the Budget has introduced strict penal provisions under the GST legislation, making it a non-bailable offence. The move has already been approved by the GST Council.

Besides, Finance Minister Nirmala Sitharaman announced that the new GST return framework and e-invoicing would be implemented from April 1, to improve compliance and plug the tax revenue leakages.

According to the government, the masterminds of fraudulent ITC rackets involve people like daily wagers, rickshaw pullers etc. As per the changes in the law, those fraudulently availing ITC without invoice or bill in cases where the amount of tax evaded or the amount of ITC wrongly availed or utilised or refund claimed worth over Rs 5 crore will be punishable with imprisonment for a term which may extend to five years and with fine and shall be cognizable and non-bailable.

ALSO READ: Budget 2020: FM proposes hike in Customs duties, outlines road map for more

“Further, the scope of Section 132 has been expanded by extending the provisions to a person who causes to commit and retains the benefits arising out of different offences,” said Abhishek

A Rastogi, Partner at Khaitan & Co.

GST collections touched Rs 1.11 trillion in January, the second highest monthly collection since the roll out, the third straight month of GST receipts crossing the Rs 1-trillion mark.

“With an eye on the future of Indirect tax regime in India, this year’s Budget has aimed at simplification of tax compliances. New GST return framework and E-invoicing would be implemented from April 1, 2020, primarily in an attempt to plug the tax revenue leakage on account of fake invoicing and fraudulent claims of input tax credit,” said Anita Rastogi - Partner, Indirect Tax & GST, PwC India.

ITC Q3 net profit rises 29% to Rs 4,047.87 cr; net sales up 5.71%

FMCG major ITC on Friday reported a 29.03% increase in its consolidated net profit at Rs 4,047.87 crore for the third quarter ended December 2019.

The company had posted a net profit of Rs 3,136.95 crore in the October-December quarter of the previous fiscal.

Net sales during the quarter under review stood at Rs 13,220.30 crore, up 5.71%, as against Rs 12,506.05 crore in the corresponding period a year ago, ITC said in a regulatory filing.

Total expenses for the said period were at Rs 8,779.14 crore as compared with Rs 8,340.61 crore, up 5.25%.

Shares of ITC Friday settled at Rs 235.25 apiece on the BSE, up 0.60% from their previous close.

ITC Q2 net profit up 37% to Rs 4,173.72 crore; net sales 6.16%

FMCG major ITC on Thursday reported a 37.06 per cent rise in consolidated net profit at Rs 4,173.72 crore for the second quarter ended September 30.

The company had posted a net profit of Rs 3,045.07 crore in July-September quarter a year ago, ITC said in a regulatory filing.

Its net sales rose 6.16 per cent to Rs 12,759.44 crore during the quarter under review from Rs 12,018.61 crore in the corresponding quarter a year ago.

Total expenses rose 4 per cent to Rs 8,455.16 crore in July-September from Rs 8,129.19 crore in the year-ago period. Shares of ITC on Thursday closed 0.82 per cent lower at Rs 248.95 apiece on the BSE.

Succession issue may come up for discussion at ITC board meet today

The board of tobacco-to-hotels major, ITC, will meet for the first time since the demise of its chairman and non-executive director, Y C Deveshwar, on Monday. The agenda before the board, circulated much ahead of Deveshwar’s demise on Saturday, was to approve the audited financial results for the quarter and financial year and recommendation of dividend. However, it was most likely that the issue of succession would come up for discussion at the meeting.

ITC had split the role of executive chairman between chairman and chief executive officer in 2017. Deveshwar had slipped into a non-executive role from executive chairman and Sanjiv Puri became the chief executive officer (CEO). At the request of the nomination and compensation committee and the board, for an orderly transition, Deveshwar had agreed to continue as chairman in a non-executive capacity and also play the role of mentor to the executive management.

In 2018, Puri was elevated to managing director. Sources said Puri who been given full executive role, could be considered for chairman and managing director. Even though Deveshwar had moved away from handling day-to-day affairs of the company, he had set an ambitious target for the management to grow the fast-moving consumer goods (FMCG) business to Rs 100,000 crore by 2030. 

However, industry observers pointed out that the FMCG sector was facing a challenging time with one of its worst slowdown, though the market expected a revival after the elections.

A legacy of growth: ITC stock multiplied nearly 50x under Y S Deveshwar

One chair will be empty on Monday when cigarettes-to-hotels major ITC declares its fourth quarter and full-year results for the financial year 2018-19. That would be of Yogesh Chander Deveshwar or YCD. For some, he was simply ‘Yogi’.

In his two decades of being at the helm, ITC reported remarkable financial growth. For shareholders, the company has given annualised returns of nearly 20 per cent in Deveshwar’s tenure as executive chairman of ITC between 1996 and 2017.

Revenues have grown at a compound annual growth rate or CAGR of over 14 per cent, while net profit was up 19 per cent every year between FY96 and FY17.

Y C Deveshwar obit: ITC's never-say-die diversification strategist

Y C Deveshwar died on Saturday leaving behind an ITC very different from the one he inherited. Deveshwar donned the role of ITC's executive chairman in 1996. He slipped into a non-executive role in 2017.

During his tenure as executive chairman, the company's revenues grew ten-fold to Rs 51,582 crore and profit before tax, 33 times to Rs 14,958 crore; total shareholder returns grew at a compounded annual rate of 23.3 per cent.

But perhaps his biggest achievement would be that the consumer spend on the new FMCG brands today is more than twice ITC's size in 1996.

Today's ITC, therefore, is not just defined by its cigarette brands --- India Kings, Classic and Goldflake --- but is also identified by Sunfeast (cookies and biscuits), Bingo! (snacks) and Aashirvaad (staples and ready meals).

The iconic Wills brand has undergone a metamorphosis in less than a decade, as ITC wanted to dissociate the label from the cigarette business to promote the apparel retail venture, Wills Lifestyle, without any charge of surrogate advertising.

Deveshwar's philosophy was to grow the top line; his pride was in creating 'Indian' brands. He was often heard referring to ITC as India's Trademarks Corporation.

Diversification wasn't exactly new to ITC, but Deveshwar took it to a different level.

Since the late 1960s, almost every ITC chairman had tried his hand at diversification. But by the time Deveshwar took charge, most of the diversifications had failed or were faltering; the only businesses with some scale were paperboards and hotels.

Deveshwar, of course, had more on his plate than just failed diversifications.

The Enforcement Directorate (ED) believed that ITC had inflated profits by over-invoicing imports. A retrospective excise demand of Rs 803 crore, amounting to three times the annual profit of the company was raised on the very first day that Deveshwar assumed charge as Chairman and CEO.

The shareholders and the members of the board stood divided on the future direction of the company.

But Deveshwar responded with prompt rationalisation of ITC's business portfolio. It began with the exit from financial services (which was sold to ICICI in 1998), followed by exit from edible oils, overseas restaurants and real estate.

The options before Deveshwar were two: to focus on core business (tobacco) or to diversify. Deveshwar chose the latter, but it wasn't easy.

The backdrop was complex --- on the one hand was ITC's legacy of failed diversifications, on the other, BAT was upping the ante. After an aborted attempt at a bigger foothold in the company, and ITC's failed diversification, the single-largest shareholder wanted the Indian company to stick to its core business. But Deveshwar pursued diversification into non-cigarette FMCG and information technology stubbornly.

Today ITC is at number three in foods. In the next couple of years, it aims to have the top slot in the segment.

But there are bigger goals ahead of the company as cut out by Deveshwar, and that's to grow the FMCG business to Rs one trillion by 2030.