Yogesh Chander Deveshwar. (Mint)
Yogesh Chander Deveshwar. (Mint)

Obituary | Corporate chieftain Yogi Deveshwar’s indelible yet incomplete legacy

It is entirely to Deveshwar’s credit that 60% of the company’s net revenue comes from non-cigarette biz

NEW DELHI : Some legacies are easy to assess, especially if they happen to be those of corporate chieftains. Check the growth in sales, the profitability numbers and the returns to the shareholders. Easier still, apply the standard test of the yield on a hundred rupees invested in the company at the beginning of the person’s tenure.

When it comes to Yogesh Chander Deveshwar, who passed away on Saturday at the age of 72 after a brave battle against cancer, these standard metrics aren’t wholly adequate.

Not because his scores aren’t impressive. The numbers, in fact, stack up quite nicely. ITC’s revenues over his 21-year tenure as chief executive officer (CEO) went up from 5,200 crore to 51,500 crore, while shareholders returns grew 23.3% compounded annually under his watch. That ensures his place in India’s business hall of fame.

The Padma Bhushan in 2011 signalled his importance to the nation as well, besides being a hat tip to the man who had repulsed all attempts by ITC’s largest single shareholder British American Tobacco (BAT) to take control of the Indian business. BAT still has a 29% stake in the Indian company, but its influence over the Indian business, following Deveshwar’s coup in 1996, has been minimal.

He had inherited a right royal mess that year when he came back after a brief but successful stint as the head of Air India to succeed K.L. Chugh as ITC’s CEO at a time when the Kolkata-based company was grappling with tax and trade-related disputes both within India and abroad. Deveshwar moved swiftly to resolve each of these issues using tact, firmness, and his legendary networking skills, especially in the upper echelons of government.

While the actual untangling took some time (it wasn’t till 2013 that the Supreme Court finally ruled in ITC’s favour in the 17-year-old excise case), those years were well spent as Deveshwar applied his genius to squeeze every bit of efficiency out of the cigarettes supply chain. At its heart, the business of selling cigarettes is simple enough—own the panwala, woo the customer and the market is yours. Deveshwar turned that into a fine art, urging his top managers to get out into the smallest of Indian towns to understand and address the needs of the distributors. Today ITC’s distribution network extends to nearly four million outlets directly and indirectly and is the bedrock of several subsequent business expansions.

Once the cigarettes business was sufficiently streamlined, Deveshwar turned his attention to leveraging this enormous distribution network and the company’s marketing skills for success in other businesses such as fast moving consumer goods (FMCG), hotels, paperboards & paper, packaging and agri-business.

Many of these had been seeded by his predecessors but it was Deveshwar who brought the strategic focus and the investment muscle needed to turn them into substantial contributors to the company’s top-line growth. If today nearly 60% of the company’s net revenue comes from non-cigarette businesses, and 56% of its $7.1 billion of export earnings over the last 10 years have come from agri-products, it is entirely to Deveshwar’s credit.

Ever restless, he also gave his support in 1999 to a project that aimed at helping farmers by using information and communication technologies.

Conceptualized by S. Sivakumar, who headed the agri-business division, it needed a strong backer. Once again, Deveshwar exhibited a rare quality to look into the future and back a good idea irrespective of its commercial possibilities. Today, e-Choupal is arguably the world’s largest rural digital platform with more than four million farmers benefitting from it.

In the years that followed, Deveshwar steered the company into products as wide ranging as potato chips and branded atta. Typical of his style of functioning, with each launch, it would storm its rival’s citadel, rapidly building brand recognition and market share. Its success at broadbasing its portfolio contrasts sharply with that of BAT, which remains almost entirely a tobacco company having had little success with its diversification attempts over the years.

That is also where Deveshwar’s legacy enters troubling territory. The inescapable truth is that much of ITC’s profits even after two decades of sustained diversifications, comes from sales of its cigarettes such as Classic, Gold Flake, Navy Cut, India Kings and Scissors. As much as we laud Deveshwar for setting ITC firmly on the path to complete dominance in its core business of tobacco, we have to be mindful of the harm the product itself has caused.

Given his nationalistic fervour, it would be fair to say he would have been happier if the move into the non-cigarette businesses that he charted early in his role as chairman of ITC had come to a fruition in his lifetime with ITC’s profits from other businesses large enough to allow it to slowly phase out the cigarettes business.

Brutally honest at all times and known to speak his mind, Deveshwar would have been the first to concede that in this respect his is a partial legacy.

The unfinished task of driving it to his avowed goal now remits to his successor Sanjiv Puri whose background is not coincidentally from the company’s FMCG business.

Deveshwar had also served as a non-executive independent director on the board of HT Media Ltd.

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