It is expected that ITC chairman Y C Deveshwar will face an outright rejection of his leadership, or what others on the ITC board describe as the lack of it, seven-and-a-half months after he was greeted on the first day of his troubled chairmanship with a Rs 800 crore excise notice.
Instead, a proposal may be floated at an ITC board meeting scheduled for Friday jointly by other board members to run the Rs 4,000 crore-plus tobacco major, currently in its most controversial year ever and facing a slew of charges from various government agencies, through a powerful executive board.
This would be suggested as an "interim" solution till BAT Industries Plc, the United Kingdom-based parent of ITC Ltd, is able to directly manage the company through its single largest stake in ITC, which is believed to be over 35 per cent according to a latest estimate.
This is the second time in about a year that ITC is seeing a clash between the single largest shareholder and the chief executive. K L Chugh was deposed last year in an open battle involving battles in the media and financial institution boardrooms.
Deveshwar is being accused of an absolute lack of leadership. BAT has been making the point in negotiations with financial institutions over the last few weeks.
It appears that the ITC executive board overwhelmingly agrees, and the fact that the chairman is abjuring any responsibility, in his public pronouncements as well as in those before the government agencies, for the murky trading deals reports on which have sullied ITC's spanking clean image in the last two years.
It appears there are three other major areas of dissatisfaction with Deveshwar's chairmanship.
First, he is seen essentially as a defector in a war of attrition between BAT and Chugh. He was initially close to Chugh, and defected mid-way through the battle. BAT was not comfortable with this and said so in a statement at the time. The FIs had selected Deveshwar as chairman.
Second, in a related factor, BAT feels uncomfortable in going ahead with a joint venture with ITC to launch its premium brands if Deveshwar is at ITC's helm, because it suspects the chairman to be an inappropriate leader.
Third, top ITC executives have problems with Deveshwar's basic style of corporate governance. He is seen to be ruling through a coterie, and in too "centralised" a manner.
Paradoxically they accuse him of virtual administrative paralysis, of being unable to take decisions, and of relying on a board that has too many non-executive personnel to take those decisions for him. Among those cited as "too close" to him are executives of the hotel division (Deveshwar is chairman, ITC Hotels and this has long been his stronghold within ITC). K S Vaidyanathan, executive vice president (corporate affairs), is also considered to be a close confidant. But the central accusation is one of denying responsibility, even in part, for the ITC crisis. The top brass appears surprised over the fact that the chairman is not dealing with the charges made by the government agencies head-on.
Other executives who have been cross-examined by government agencies or are fighting ITC's case have complained of lack of the chairman's support.
A group of executives close to Deveshwar however have an opposite story to tell. They claim that the question of Deveshwar's claiming responsibility does not arise when he was not responsible. Between November 1994 and April 1995, Deveshwar was handling the uncontroversial flagship tobacco division, and before that, around the time that the company unearthed irregularities in rice trading deals, he was in charge of strategic planning and helping out McKinsey draw up a big picture for the tobacco giant.
At that point of time, G K P Reddy and R K Kutty were directors in charge of the international business division. The practice was that directors in charge of divisions would report to the ITC board and when the two brought the matters of the IBD before the board, Deveshwar objected to crucial issues. Those close to Deveshwar say that Chugh overrode the objections.
But through the claims and counter-claims it becomes obvious that Deveshwar is at best some peoples' leader, not every ITC executive's.
The company continues to perform well. It has just recorded higher profits in the first quarter (according to some analysts, that is because ITC has raised prices twice in this period).
But it is doing so in an atmosphere of leadership vacuum, which, according to ITC insiders, has lasted the last three years -- two years of simmering tension between Chugh and BAT, and then seven and a half months of Deveshwar's troubled captaincy.
