Sometime in 2012 — five years before he stepped down as executive chairman of ITC — Y C Deveshwar told Outlook that “sometimes, not taking a risk may be the biggest risk” for a corporation. He had walked that talk throughout his stint at ITC, a company he joined in 1968 after graduating from IIT-Delhi and stayed on till he breathed his last on Saturday, with a four-year gap in-between when he shifted to Air India.
There is no doubt that not taking those calculated risks would have been the biggest danger to ITC’s survival as well as growth. Taking risks and delivering was perhaps an in-born ability of Deveshwar — YCD to most and Yogi to friends. His talent was spotted quite early by A N Haksar, ITC’s first Indian chairman. That’s the reason why he became the head of a factory at 28, head of a division at 31 and a director at 37 with the experience of running multiple businesses — packaging, hotels and tobacco.
The skills he acquired came in handy during his baptism-by-fire days soon after he took over as chairman in 1996. Just a day before he took charge, ITC received a retrospective excise duty demand of Rs 803 crore (which was three times the annual profit at that time) and was locked in a grim battle with the Enforcement Directorate over alleged inflation of profits by over-invoicing imports. If that wasn’t enough, the company’s diversification into sundry businesses such as hotels, paper, edible oil, financial services and international trading ran into serious problems.
And there was more. ITC’s largest shareholder British American Tobacco (BAT) was unhappy with the diversifications and wanted to take control of the company.
Deveshwar, however, wanted what he called responsible diversification and managed to convince the government as well as financial institutions to keep BAT at bay and let ITC remain an independent, board-managed organisation. After that there was no stopping Deveshwar, who transformed ITC forever. During his time as executive chairman, the company’s net revenues grew 17-fold to Rs 42,777 crore and profit after tax nearly 40 times to Rs 10,289 crore. Total shareholder returns grew at a compounded annual rate of around 20 per cent.
Besides numbers, perhaps, Deveshwar’s biggest achievement was to transform ITC from a cigarette company to a diversified enterprise. The rationalisation of ITC’s business portfolio began with the exit from financial services (which was sold to ICICI in 1998); edible oils, overseas restaurants, real estate followed. But he decided to stay on with the hotels and paper boards business and brought them inside an integrated structure — so that they could receive adequate support from ITC’s cash flows.
The foray into fast moving consumer goods business was the most audacious one. Today’s ITC is not just defined by its cigarette brands — India Kings, Classic, and Goldflake; it is also identified by Sunfeast (cookies and biscuits), Bingo! (snacks), and Aashirvaad (staples and ready meals). The consumer spend in the new FMCG brands is more than twice the size of ITC in 1996.
In less than a decade, the iconic Wills brand underwent a metamorphosis, as ITC wanted to dissociate the label from the cigarettes business to promote the apparel retail venture, Wills Lifestyle, without any charge of surrogate advertising. It was all in sync with Deveshwar’s philosophy of growing the top line; his pride was in creating ‘Indian’ brands. Often enough Deveshwar would refer to ITC as India’s Trademarks Corporation.
Today, ITC is at number three in foods. In the next couple of years, it aims to have the top slot in the segment. In 2017, Deveshwar slipped into a non-executive role.
But not before setting goals for the company, the primary being, to grow the FMCG business to Rs 1 trillion by 2030.
Deveshwar will also be remembered for his vision that led to creation of the ITC e-Choupal in 2000. The company’s agri business was reshaped to enhance competitiveness of Indian agriculture and create capacity in rural areas.
The company has created 1,20,000 hectares of social and farm forestry. The e-Choupals also drove ITC to pursue business models that today support over 6 million livelihoods, many amongst the weakest in society. It provided a platform for farmers to secure agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. Its success even prompted Harvard Business School to carry out a case study on it. In his later years, Deveshwar often talked about his legacy — the model of institutional leadership at ITC, which should be implemented at India’s public sector companies.
The company, he had said, had government shareholding, but not government control, and the ownership was widely held and divorced from management. This model enabled companies to be highly efficient and have priorities which were aligned to national priorities.
To Deveshwar, ITC was a national asset — no less than that.