Setting an ambitious target of Rs 1 lakh crore revenue for ITC as India's top FMCG player by 2030, its outgoing chief executive Y C Deveshwar today said growth of tobacco business will continue to be good for shareholders of the diversified group.
He rejected suggestions that the non-tobacco businesses of the group should be made to grow faster than the tobacco business, but rued that ITC's investment plans were getting delayed due to a long time required for getting approvals.
Addressing the shareholders of ITC at their Annual General Meeting (AGM) for the last time in his joint capacity as Chairman and CEO, 69-year-old Deveshwar said the strategy to pursue multiple drivers of growth has led to a 17-fold growth in the company's non-cigarette businesses since 1996, registering a net segment revenue of Rs 23,000 crore.
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"Compared to the size of ITC in 1996, the non-cigarette businesses alone represent a size akin to creating 5 ITCs of that time," said Deveshwar, who has been heading the company for almost two decades.
Deveshwar joined ITC in 1968 and assumed office as its Executive Chairman in January 1996.
During the April-June quarter, ITC's revenue from cigarettes increased 6.42 per cent to Rs 8,230.60 crore from Rs 7,733.43 crore in the year-ago period.
He, however, said, "Some shareholders are saying growth of the tobacco business should be less while that of others (non-tobacco) should rise (but) that is not the objective".
Deveshwar, who will relinquish his executive roles in February and would become a non-executive chairman, said, "We are not competing within the company".
"The growth of the tobacco business will be good for the shareholders of the company," he said.
The tobacco business is increasingly coming under prohibition by various government regulations but continue to be the prime revenue driver.
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Deveshwar further said ITC has seen a 10-fold increase in revenue to over Rs 51,000 crore since 1996, while Profit Before Tax grew 33 times to over Rs 14,900 crore.
"In the last two decades, market capitalisation has grown over 50-fold to touch an all-time high of Rs 3,00,000 crore recently. Total Shareholder Returns during this period clocked a Compound Annual Growth Rate of 24 per cent," he said.
When Deveshwar took charge at the helm in mid-90's, ITC was confronted with formidable challenges with diversification efforts either failing or languishing. Its revenue was less than Rs 5,200 crore and Profit Before Tax was Rs 452 crore.
He is credited for leading ITC's transformation from a cigarette maker to a diversified group with presence ranging from FMCG, hospitality, paperboard and packaging, IT and agri businesses.
Spelling out the future plans, Deveshwar said, "Your company aspires to be the No 1 player in the new FMCG businesses and has set a revenue target of Rs 1,00,000 crore by 2030."
"What may be uppermost in your mind is the question as to how ITC will achieve this audacious goal. Undoubtedly, such an aspiration in an intensely competitive market calls for an orchestra of effort that demands significantly superior enterprise strengths.
"It is, therefore, very reassuring that your company has, over the years, built an impressive array of competitive strengths, whilst several others are in early stages of formation," he said.
At today's AGM, shareholders voted on a proposal to make Deveshwar non-executive director and chairman for a period of three years with effect from February 5, 2017, after he decided to hand over the baton to a "youthful leadership". While it was his last AGM as Chief Executive Officer, Deveshwar told shareholders, "I hope to continue to address you in the coming years as Chairman of your company".
ITC was in a unique position to explore new opportunities in the area of perishables including fruits and vegetables, he said in the chairman's speech at the AGM.
In this regard, ITC was exploring the opportunity to invest in state-of-the-art cold chain top cover farm produce including fresh, frozen and dehydrated fruits and vegetables.
Also, there are plans to cultivate medicinal and aromatic plants, he said.
"The company's traditional, new and developing enterprises will help in achieving the Rs 1 lakh crore FMCG goal by 2030," he said.
