ITC FINAL 1
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Transcript of ITC FINAL 1
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ITC In Trouble
Presented yManoj tarte 1214AMS81
Ravindra Uparkar 1214AMS83
Deepika Vijaykumar 1214AMS85
Bhavya Visharia 1214AMS8
Jimit Vora 1214AMS87Nilesh Wagh 1214AMS88
Swapnil Wagulde 1214AMS89
Jayesh Ware 1214AMS90
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ABOUT ITC
Founded in 1790 by Henry Overton Wills.
Started by the UK-based tobacco major BAT.
ITC Limited company headquartered in Kolkata.
Headed by Yogesh Chander Deveshwar.
Revenue is $6 billion and a market capitalization of over $30 Billion.
Started as Imperial Tobacco Company.
Initially, it was majorly in the business of cigarette manufacturing andtobacco procurement.
ITC diversified business to other industries such as hotels, stationeryand FMCG products.
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1971: Marine product.
1974: Company name change.
1975: First hotel in Chennai.
1977: Textile Industry.
1981: Diversified into cement Business.
1989: Bukhara Restaurant.
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ITC DIVERSIFICATION
ITC started UK-based tobacco major BAT called Peninsular.
1910 setup full-fledged sales organization named Imperial Tobacco Company(Imperial).
BAT set up another cigarette manufacturing unit in Banglore in 1912
called Indian Leaf Tobacco Company (ILTC).
BAT had transferred its holdings in Peninsular and ILTC to imperial.
1975 ITC setup in first hotel in chennai.
1977 company diversified into Textile industry.
1981 company diversified into Cement business.
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Crisis Situations
Conduct interrogations FERA violations by ITC
arrest were under section 35.
ED arrested a few more ITC executives .
Poor corporate governance practices.
Excise Duty Violation Charges Against ITC.
ILTC imperial decide to diversify into new business.
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Share Price Manipulation Charges Against ITC .
ED issued chargesheets to a few top executivesin Kolkata, Delhi, Hyderabad, Guntur and
Mumbai.
ITC restructured its management and corporate
governance practices in early 1997.
Cont.
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ALLEGATIONS
ITCs legal troubles could be traced back to itsassociations with the US based Suresh Chitalia
and Devang Chitalis.
1989 ITC started Bukhara chain of restaurants in theUS jointly with its subsidiary ITC International
and some Indian (NRI) Doctors.
Venture ran into huge losses, ITC decide to make
good the losses and honour its commitment of
providing 25% return on the investment to NRI
Doctors.
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FERA SECTIONS VIOLATED BY ITC
Late 1960, Indian govt begun putting pressure on
multinational companies to reduce there holding.
Documentary evidence of FERA violations by ITC from
the raids Oct 30th1996.
The arrest were made under section 35 of FERA toconduct interrogations on FERA violations by ITC in
international trading deals during 1991-95.
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ILTD transferred $83 million into India account maintain by chitalia
group.
Daily instruction to manipulate the invoice related to export
$6.5million transferred from ITC global to the chitalias
ITC also made payments to non-resident shareholders.
ITC transferred funds in an unauthorized manner.
Use of funds retained abroad for personal use by ITC executives
Cont
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Strength
Cigarette market is 22,000 cr and
ITC has lions share in it
Strong brand recognition and
product
Distribution network management
Weakness
Dependence on tobacco revenues
Negative Connection of Tobacco
Opportunity
Consumption Of personal care
productsRural Market
Filter cigarette segment of less than
60mm size
Threat
Increasing Tax on cigarettes
Competition both home & hostRegulatory restrictions on cigarettes
Ban on smoking
SWOT ANALYSIS
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Trusteeship
Transparency
Empowerment
Ethical Corporate Citizenship
Corporate Governance Structure
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MPs accused ITC of poor corporate governance practices andlack of transparency
Suspended the committee of Directors and appointed an interim
management committee.
ITC divided decision making at 3 levels.
1. Board of directors for shareholders.
2. Responsibility of the board on the recomendations of
subcomitees.
3. Strategic management by directors for reviewing strategic plans.
Corporate Governance Structure
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Setting Things Right
Criticism of corporate governance practices and the legal
problems ITC some drastic step in its board meeting.
ITC suspended the powers of the Committee of Directors
and appointed an interim management committee.
ITC develop new management structure comprised three
tiers1. Board of directors
2. Core management committee
3. Divisional management committee
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ITC being a very large company and working across
different sectors of business. ITC is a professionally managed
organization and the core value underlying corporate
philosophy is trusteeship.
ITC recognize society as an important stakeholders in this
enterprise and therefore it is part of responsibility to practice
good corporate citizenship.
It clearly delineates the roles responsibilities and authorities
of the key entities in the governance structure of the company.
Conculsion
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