ITC Chairman Y.C. Deveshwar has been in the hot seat for 11 years now. During this time, he has transformed the company from a tobacco and hotels major into an FMCG powerhouse that is challenging the entrenched players in this segment. In a long and freewheeling chat with Business Today’s R. Sridharan and Arnab Mitra, he discusses this transformation and his plans for the future. Excerpts:
Can we just rewind to 2001. You had then told BT (June 21, 2001) that you were targeting 40 per cent revenues from non-tobacco businesses, but you have actually done much better than that. How do you look back on the last six years?
If you remember, people were then talking about core competence. Core competence is a good idea because it means that you are relying on your strengths— sticking to the product that you’re good at making. In ITC’s case, it is a combination of manufacturing and process skills and brand building. Diversification was not always a good word and in that sense, the analysts did not always come out in support of our strategy. We wanted to have multiple drivers of growth, but many people, including a large shareholder, disagreed. But we were clear about where we wanted to go, and we’re getting there.
ITC runs hotel chains, it is present in the FMCG segment, it has a paper division, and it has an IT arm. Do you have a master plan where all these disparate parts fit in?
On the surface, cigarettes are different from hotels and atta, but it just needed someone to piece it all together. We started with the packaged food business and introduced the packaged Bukhara. At lunch and dinner times, people lined up for meals at our restaurant. So, we packaged it leveraging our restaurant strength. We have chefs who deal with the Indian palate every day. What did we do with Bingo? We created flavours that wooed the Indian palate— mustard for the east and paneer tikka for the north, etc. When we created the Aashirvaad brand of atta, we did not just buy wheat; we bought 18 grades of wheat, using the e-choupal network. Then we blended them—based on feedback on regional tastes from our chefs— using our tobacco blending skills. Result: what we sell in the west is not what we sell in the north and the east. We created mass customisation in a commodity. We simply identified our core competence and then encouraged people to piece it together.
How do you manage such a diverse portfolio?
I don’t. I have individual CEOs who run each division. But each of them can depend on ITC’s institutional skills to take his business forward.
What’s next on your agenda?
Our goal is to be the #1 FMCG company in the country. We’re already the #1 company if you include cigarettes, but if you take away the cigarettes, we still aspire to be #1. Whether that will be in the next 10 years or 15 years depends on a number of variables.
Other companies set up foundations and trusts to implement their CSR programmes, but ITC has built its social outreach initiative into its business model. Why?
We want to be one of the major economic engines in the Indian society. We want to make a contribution in the Indian economy and that is why we follow the triple bottom line approach. What would I like to do? I would like to leave an institution, and not just a company, that makes a growing contribution to the Indian economy. That is why we go the extra mile to link societal benefits to shareholders’ benefit. The vision is not only a one-dimensional creation of shareholder wealth but actually serving the shareholder by serving society. It is a more satisfying mission to my mind than to say that my shareholder is rich and I’m getting much richer. We serve four million farmers and many hundreds of thousands of tribals have got their livelihood because of ITC. It is not charity, but an intrinsic part of ITC’s day-to-day life. In the process, we create much higher value.