ITC's century-old, rich and troublesome legacy

As ITC, one of the oldest corporate houses of India, steps into its 101st year, it has many firsts to its credit. For instance, the only company in the world of its size to be carbon positive, water positive and solid waste positive.

The corporate social responsibility activities signify a constant endeavour to shed the colonial legatee as a cigarette maker to that of a diversified multinational company. Yet, cigarettes continue to be the mainstay. They account for 45 per cent of revenues and 83 per cent of pre-tax profits.

The company is likely to invest close to Rs 8,000 crore over the next seven to 10 years to drive growth in the fast moving consumer goods sector, a move aimed at keeping pace with the exponential growth. Over recent years, ITC has rapidly scaled up presence in newer FMCG segments like branded foods, lifestyle retailing, education and stationery products, personal care products, safety matches and agarbattis, among others.

While diversification is a key word, ITC is struggling to cope with the increasing taxation and regulations on cigarettes. “While the economic importance of tobacco has been acknowledged, the cigarette industry in India has been contending with the twin challenges of discriminatory and punitive taxation and increased regulation,” says the company’s latest annual report of ITC.

One argument used by ITC is that only 15 per cent of tobacco is consumed in India in the form of cigarettes, while the spate of taxation is entirely targeted at only this segment.