The house that Yogi Deveshwar built
There are exits and then there are exits. In the last few days, Reserve Bank of India governor Raghuram Rajan announced he wouldn’t be seeking an extension when his term ends in September. That move led to consternation at the loss of a fine professional.
When celebrity investor and salary ceiling breaker Nikesh Arora announced he was leaving SoftBank after he was told founder, chairman and chief executive officer Masayoshi Son wasn’t going to hang up his boots for another 5-10 years, it was treated with a wink and a nudge, and a mental count of the millions he would make as severance package.
By contrast, Yogesh Chander Deveshwar’s exit from the top job at India’s largest conglomerate ITC Ltd was a tame affair. There was no shock, no surprise, no drama. The man friends called Yogi ended all that 20 years ago. A no-nonsense quintessential company man who believed intrigues and conspiracies had little room in corporate boardrooms, Deveshwar had written this script long ago and he was just following it.
It was the same approach he brought to douse the fires at ITC when he took over in 1996. That year, as liberalization opened up new areas for Indian business, ITC found itself facing massive legacy issues emanating from poorly planned diversifications and a way of doing business which was dodgy, to say the least.
Indeed, that year marked the most tumultuous phase in the company’s history with a slew of disputes ranging from unpaid tax notices to criminal cases filed by the government of Singapore and trade-related litigation in the US. In addition, there was an ongoing battle with its principal shareholder British American Tobacco (BAT), which was keen to take control of the Indian company.
Just how stressful those days must have been for the new chairman can be gauged from the events of 1 November 1996, when Kishan Lal Chugh, the company’s former chairman whom Deveshwar had just succeeded, and Jagdish Narain Sapru, Chugh’s predecessor, were produced in front of the chief metropolitan magistrate in Kolkata. When their bail pleas had been rejected, both men were remanded to custody on charges of violating the Foreign Exchange Regulation Act. India Inc. was waking up to the beginnings of a rules-based regime but for ITC, it was a shocker. This was a storied company and along with Hindustan Lever (now Hindustan Unilever), the employer of choice for young management graduates from top business schools.
Deveshwar must have felt he had been pitchforked into a battlefield. Typical of the man, he proceeded to settle the long-pending tax dispute with the excise department with the minimum of fuss, though it took him several years to do that.
He also went on to clean up the books of the company long mired in disputes and litigation. And he manoeuvred successfully between the British stakeholder, foreign institutional investors and government-owned institutions to end BAT’s avowed aim to up its stake in ITC to 51% and gain control over a cash cow.
The IIT Delhi and Harvard Business School alumnus has been an ITC lifer, having joined the company in 1968. There was a brief three-year period between 1991 and 1994 when he went on loan to head Air India as chairman and managing director (yes; in those heady days of liberalization’s first flush, these things happened). That job also added to the Deveshwar legend—his great skill in managing politicians of all hues. For the Air India job came to him thanks to then civil aviation minister Madhavrao Scindia. Through the years that’s been a Deveshwar trait, his management of the political environment is masterly.
But that shouldn’t mask his real strength, his business acumen. His real genius came to the fore in ITC’s move into the FMCG (fast-moving consumer goods) industry based on the insight that the same small store in the smallest towns of India would carry biscuits and wafers as they were stocking the cigarettes with which the company dominates the market. Indeed, ITC went rural long before the concept of marketing beyond the big towns was discovered by marketers.
Come February 2017 when Deveshwar slips into the non-executive chairman’s role and the company has its first CEO, it will mark the beginning of a new era at ITC. The fact that his possible successors—Sanjiv Puri and B. Sumant—come from its FMCG business shows the distance the cigarette market leader covered under Deveshwar.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.