Before 1991, how did government controls and a protected market shape ITC’s business?
First of all, we could only pursue businesses for which we received permission from the government. That’s how our paperboard, packaging and hotels businesses came about. We were already present in agribusiness, and we had started exporting a little.
However, because of excessive regulation, businesses did not have enough freedom, and therefore, Indian industry was not really competitive. Access to technology was limited. And since it was a closed economy, its size was small. So, the opportunity for businesses was also limited. That meant industry was to some extent subscale and not globally competitive. But despite all that, since the time of ITC’s first Indian chairman in 1969, which was in the pre-liberalisation period, we decided to focus on national priorities, which remains our credo.
I would say, given the size of opportunities in India at that time, the company still made progress in its diversification.
Were hotels and paperboards the main diversification plays before 1991?
Besides hotels, paperboards and agri, ITC also forayed into financial services, set up the international business division and established ITC Agrotech with a popular brand, Sundrop, during the mid-’80s. However, the businesses that we continued with subsequently were agri, hotels and paperboards.
Liberalisation brought competition into core business. Did it prompt ITC to accelerate the pace of diversification?
Businesses always mirror the size of the economy. ITC’s diversification has moved with the growth of the economy. It started from the time of ITC’s first Indian chairman, A N Haksar. Around the period of liberalisation and after, ITC forayed into many businesses — from edible oil to financial services and international trading, as well as batteries.
When YC Deveshwar became chairman in 1996, he decided rightly to focus on a few areas of the diversifications where we had enterprise strengths and the resources to scale up. That’s when we exited certain businesses.
We started to focus on fewer businesses because now the competitive landscape was no longer Indian; it was global.
You had to become globally competitive, requiring deep focus and resources. And we accelerated our growth in those areas.
The Indian economy also provided the opportunity. As the size of the economy grew and per capita incomes improved, aspirations also changed. Therefore, consumption improved in the economy, and that in turn fuelled opportunities. We sharp-focused on businesses where our enterprise strengths matched with growing opportunities in the economy.
But the real acceleration in ITC’s non-cigarettes businesses was after 2000 with the non-cigarettes FMCG…
We started lifestyle retailing in 2000. In 2002, Aashirvaad atta was launched in branded packaged foods and we kept adding newer categories in FMCG over time. The personal care products business followed in 2005.
It took 17 years for non-cigarettes FMCG to get to revenues of ₹10,000 crore. We decided to shut lifestyle retailing in between as it did not align with our enterprise synergies. But in the next nine years up to FY26, we went from ₹10,000 crore to ₹24,000 crore.
So our rate of growth accelerated after we sharpened our focus on achieving new horizons of growth and profitability in each business —what we articulated under the ITC Next strategy. This also coincided with more opportunities having opened up in the Indian economy. It also reflects the fact that from 2000, and particularly from 2015 to 2025, per capita incomes improved quite a lot, opening up significant opportunities for us.
Growth has picked up not just in FMCG. Agri and paperboards have grown, too. The acceleration of the information technology business is a more recent phenomenon.
In hotels, we were earlier more focused on building properties. The ‘asset-right strategy’ has helped us accelerate growth in recent years.
From the Foreign Exchange Regulation Act (FERA) to competition and diversification, what have been the biggest challenges that ITC has had to navigate in the last 35 years?
We have gone through a lot of challenges over the period, and many of these have been episodic — they’ve occurred at particular points in time.
But as an enterprise, we have remained fairly focused and steadfast in our commitment. We have demonstrated patience in overcoming difficulties and truly embraced ‘antifragility’ because after every difficulty, we emerged much stronger. This has been our hallmark.
The biggest challenge has always been how to remain competitive, whatever be the context. The business landscape has now become hyper-competitive. We moved from a pre-liberalisation era to a liberalised era and now to a hyper-competitive world.
As a company, we have made progress in every era, and we continue to do that. The character of any institution is captured in its culture, and we have been steadfast in retaining the ethos of ‘responsible competitiveness’.
This has been our focus and is reflected in the development of business models that prioritised creation of long-term stakeholder value. And that has earned us the trust of all stakeholders. Our partnerships have thrived and we succeeded in building enduring trust with our customers.
The trust that we have earned over a long period of time has been one important ingredient of our success. Additionally, irrespective of the challenges, we’ve always stuck to the principle of “Quality First”.
ITC has truly been a learning organisation that adapted to changed circumstances with agility.
We have also been very entrepreneurial in continuously looking at opportunities — not just about getting into newer segments, but even within existing segments, by identifying emerging areas. We have never compromised on the principle of making businesses competitive and invested ahead of the curve.
The focus has been on strengthening competitiveness through innovation, technology and sustainability.
Lastly, but of course most importantly, we focused on building entrepreneurial talent. For an organisation’s value systems to thrive, talent development and continuity of talent are very important. For decades, we have been investing in nurturing talent and building leaders of tomorrow. And this has been so historically. That’s why you find a large percentage of the leadership today are ITC lifers. We have also embraced lateral talent and over the years, have attained a healthy balance between the two.
Along with the challenge of remaining competitive, we have faced other adversities. But our core principles and focus have helped us overcome the adversities faced over the years. And we always remained true to our purpose.
At which phase of ITC’s journey did you join?
I joined in January 1986. I was in manufacturing then and one of the first things that we had to deal with was liberalisation and globalisation. We had to move from some older-generation technologies all the way to state-of-the-art processes. This necessitated everyone to change their mindset about manufacturing.
Earlier, in a way, a lot of solutions were what we used to call ‘jugaad’, because you couldn’t source many things. You had to manage with what was available. But once the economy opened up, you had to become world-class. That meant your thinking, your mindset, had to change.
As young managers at that time, we were sent overseas to evaluate solutions and ideate. We were sent to the Asian Institute of Management in Manila, where we studied advanced manufacturing, with the primary purpose of learning and implementing best practices.
Were the best practices primarily related to cigarette manufacturing?
It was largely cigarettes then, but all the businesses went through their transformation.
Our capacities in paperboards were subscale, and the supply chain was import-dependent. All the pulp used to come from overseas. So not only were jobs getting exported, but the business was relatively uncompetitive.
We decided to develop a domestic fibre value chain through a large-scale plantation programme, bring in pulping technology, become cost efficient and scale up the manufacturing capacity.
ITC took on established multinational companies (MNCs) when it entered non-cigarettes FMCG. How tough was it to break into that market?
It was tough because, as a challenger in every segment, we were competing with long-standing brands that had been around for 50 years, maybe 100 years.
First of all, we consciously forayed into areas where we could leverage our institutional strengths. In particular, our foods business leveraged the institutional synergies such as the sourcing capability of agribusiness, cuisine expertise of hotel chefs, our distribution highway as well as other inherent capabilities.
Second, we said that quality cannot be second-best. And again, our agri backend was a powerful lever for us. Aashirvaad today is what it is because of the quality of wheat we source, which is possible because our agri division is able to “grow the buy”, rather than just buy what is grown.
Innovation, distribution, quality and leveraging institutional strengths are the principles that we have followed across products — whether it is snacks, beverages, staples, personal care, stationery or incense sticks. We invested ahead of time in the ITC Life Sciences and Technology Centre, and we continue to invest in cutting-edge innovation.
What is the next big growth chapter for ITC?
All our businesses are well positioned and have distinct growth levers. We will continue to scale up and grow in the respective segments and improve market standing in each. The aspiration is to be the leading player in segments where we are yet to attain leadership.
From an opportunity landscape, sectors like information technology, where we are relatively small, have huge potential. Each sector we are in, including FMCG, agriculture, hotels, fresh foods and paperboards have a huge headroom to grow.
