NEW DELHI/MUMBAI :
ITC Ltd, India’s largest cigarette maker, on Monday named managing director Sanjiv Puri, 56, as its chairman. He will take over the legacy of Y.C. Deveshwar, the company’s longest serving chairman who died on 11 May.
Puri was set to take over the role by 2021-22, and was being mentored by Deveshwar for the post of chairman.
Deveshwar helped ITC diversify from a cigarettes company to one with business interests in retail, packaged foods, paper and packaging. He also grew its revenue ten-fold to ₹51,500 crore during the two decades that he was at the helm of the company.
The task is now cut out for Puri, an old ITC hand, and an alumnus of the Indian Institute of Technology, Kanpur and Wharton School.
He has spent three decades working across various functions at the firm, including heading its subsidiary in Nepal.
Puri swiftly moved up the ladder to head some of the company’s biggest businesses, including its packaged consumer goods segment.
Puri, who joined ITC in 1986, is expected to take forward the task of further diversifying the company’s business.
It was under Deveshwar that ITC envisioned an ambitious target of growing its consumer goods business (non-cigarettes) to ₹1 trillion in revenue by 2030 to reduce its reliance on the tobacco business. Cigarettes currently account for slightly over 40% of the company’s revenue.
However, higher instances of taxation and regulatory hurdles pose challenges to the sale of cigarettes.
For instance, tax incidence on cigarettes has nearly tripled between 2011-12 and 2017-18, according to a note by brokerage firm Jefferies.
Puri’s wide experience in working across roles, especially fast-moving consumer goods (FMCG), where ITC hopes to generate more business from, is likely to help.
Puri started off as brand manager for various categories.
In 2001, he became a general manager at Surya Nepal Pvt. Ltd, ITC’s subsidiary in the neighbouring country.
In 2014, Puri was elevated to the role of president of the company’s FMCG businesses.
During this period, Puri also led the entry of the company into new business segments such as juices and dairy and spearheaded the acquisition of brands such as Savlon and Shower to Shower.
Analysts and industry observers who track the company say ITC has done well in diversifying its portfolio and little will change with Puri at the helm.
“I don’t think anything will change for ITC given the scale they have created, the cashthey have generated and given that they are open for acquisitions as well. I see no problem for them unless things get worse on the cigarettes front and, of course, cash flows get affected," an analyst with a Mumbai-based brokerage firm said on condition of anonymity.
“They have a longer-term view for the consumer business, they want to go for scale, which is great for long term and not for the near-term business and shareholders."
“It was expected that this will happen (that Puri will lead the organization)," said Naveen Trivedi, an analyst at HDFC Securities.
Trivedi added that ITC is on track to grow its non-cigarette consumer goods business further.
“What Deveshwar was able to do was bring in a big vision to the company," said another senior executive in the FMCG business, who did not wish to be named. “While their styles were very similar in the way they envisioned the future for ITC, the one difference was perhaps the way Puri was able to bring about more technology into the company. But I think what has been the standout aspect of Deveshwar has been efforts such as e-choupal and rural push. That could be hard to replicate," he added.
On Monday, the company also announced its earnings for the fourth quarter of the fiscal. Profit rose 19% to ₹3,481 crore from a year earlier. Revenue rose 13% to ₹11,992 crore.
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