ITC FINAL 1

download ITC FINAL 1

of 16

Transcript of ITC FINAL 1

  • 8/13/2019 ITC FINAL 1

    1/16

    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

  • 8/13/2019 ITC FINAL 1

    2/16

    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.

  • 8/13/2019 ITC FINAL 1

    3/16

    1971: Marine product.

    1974: Company name change.

    1975: First hotel in Chennai.

    1977: Textile Industry.

    1981: Diversified into cement Business.

    1989: Bukhara Restaurant.

  • 8/13/2019 ITC FINAL 1

    4/16

    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.

  • 8/13/2019 ITC FINAL 1

    5/16

    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.

  • 8/13/2019 ITC FINAL 1

    6/16

    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.

  • 8/13/2019 ITC FINAL 1

    7/16

    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.

  • 8/13/2019 ITC FINAL 1

    8/16

    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.

  • 8/13/2019 ITC FINAL 1

    9/16

    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

  • 8/13/2019 ITC FINAL 1

    10/16

  • 8/13/2019 ITC FINAL 1

    11/16

    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

  • 8/13/2019 ITC FINAL 1

    12/16

    Trusteeship

    Transparency

    Empowerment

    Ethical Corporate Citizenship

    Corporate Governance Structure

  • 8/13/2019 ITC FINAL 1

    13/16

    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

  • 8/13/2019 ITC FINAL 1

    14/16

    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

  • 8/13/2019 ITC FINAL 1

    15/16

    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

  • 8/13/2019 ITC FINAL 1

    16/16