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The Legacy Left By Y C Deveshwar
Businessworld - 07 Feb 2017

Sutanu Guru on the retirement of Deveshwar from ITC and the future of professional managers

So Y. C. Deveshwar has hung up his boots after leading ITC for 21 long years. There can be no doubt whatsoever that he will be rated as one of the best professional managers produced in contemporary India. Back in 1996, Deveshwar was chairman of Air India, and believe it or not, the airline was profitable. But ITC, where he had worked before taking up the Air India challenge, was in deep trouble. The parent company of ITC, BAT had failed to acquire full control of Indian operations. The messy battle had led to the humiliating exit of the then chairman K. L. Chugh, apart from a huge tax claim imposed by the government. ITC was overwhelmingly dependent on tobacco for both revenues and profits.

Twenty-one years later, ITC still makes tons of money from tobacco and cigarettes. But Deveshwar has transformed the company into a truly diversified conglomerate. After settling down as the chief executive, he took the risky gamble of making ITC an FMCG company that would rival HUL. Many analysts thought that was a foolhardy step. But the gamble has paid off and ITC is one of the largest FMCG companies in the country. More than Rs 10,000 crore of the total revenue of Rs 50,000 crore comes from FMCG sales. Deveshwar has also succeeded in transforming the hotels division into a giant entity with more than 100 properties. The market capitalization of ITC has grown 50 times since Deveshwar took over. Most peers, colleagues and analysts say that the stupendous success of Deveshwar is his ability to effortlessly wear both the entrepreneurial and managerial hats. Worldwide, the most successful managers have been entrepreneurs at heart.

Just two other professional managers in contemporary times who still their companies come to mind when one looks at success stories like Deveshwar. One is A M Naik, chairman of L&T who has been at the helm since 1999. Incidentally, Naik is also scheduled to retire this year. Any which way you look, Naik has made an already successful L&T into a powerhouse of a diversified conglomerate. He has also been ruthless, not shying away from cutting jobs and shedding businesses that didn't fit with the strategic plans of the company.

Another success story is Aditya Puri of HDFC Bank. In fact, Puri scores over Deveshwar in the sense he has been at the helm for a longer duration; 23 years to be precise. In the heydays of K. V. Kamath when ICICI Bank was racing ahead, most felt that HDFC would always remain an also ran. But Puri has proven to be the quintessential marathon man. Total income of the bank is still lower than that of ICICI. But in every other parameter, HDFC is the most successful and profitable bank in the country. In fact, with a market capitalization of almost Rs 3 lakh crore, HDFC is one of the most valuable banks in the world. There is something else going for Puri. While Deveshwar and Naik took over established companies, Puri has built HDFC almost from scratch.

Traditionally, India has not seen too many iconic professional managers as family run businesses have been run by promotors and their families. There have exceptions like the Tata group which has thrown up a large number of successful CEOs. But the times are changing. The day is not very far away when like in America and Europe, inheritors of corporate empires might move on and let professionals run the show. That is when India will see a whole new generation of iconic CEOs like Deveshwar, Naik and Puri.