c

 


   
 c

 

 
 
 c

ITC was started by UK-based tobacco major BAT (British American Tobacco). It was called the
Peninsular Tobacco Company, for cigarette manufacturing, tobacco procurement and processing
activities. In 1910, it set up a full-fledged sales organization named the Imperial Tobacco
Company of India Limited. To cope with the growing demand, BAT set up another cigarette
manufacturing unit in Bangalore in 1912. To handle the raw material (tobacco leaf)
requirements, a new company called Indian Leaf Tobacco Company (ILTC) was incorporated in
July 1912. By 1919, BAT had transferred its holdings in Peninsular and ILTC to Imperial.
Following this, Imperial replaced Peninsular as BAT's main subsidiary in India.

By the late 1960s, the Indian government began putting pressure on multinational companies to
reduce their holdings. Imperial divested its equity in 1969 through a public offer, which raised
the shareholdings of Indian individual and institutional investors from 6.6% to 26%. After this,
the holdings of Indian financial institutions were 38% and the foreign collaborator held 36%.
Though Imperial clearly dominated the cigarette business, to reduce its dependence on the
cigarette and tobacco business, Imperial decided to diversify into new businesses.

It set up a marine products export division in 1971. The company's name was changed to ITC
Ltd. in 1974. In the same year, ITC reorganized itself and emerged as a new organization divided
along product lines (Hotel, packaging, paper and agro business, financial service, IT). During the
late 1990s, ITC decided to retain its interests in tobacco, hospitality and paper and either sold off
or gave up the controlling stake in several non-core businesses.

ITC divested its 51% stake in ITC Agrotech to ConAgra of the US. Tribeni Tissues (which
manufactured newsprint, bond paper, carbon and thermal paper) was merged with ITC.

By 2001, ITC had emerged as the undisputed leader, with over 70% share in the Indian cigarette
market. ITC¶ popular cigarette brands included Gold Flake, Scissors, Wills, India Kings and
Classic.

 verview of FERA Violations and excise duty evasion by ITC

 áp ILTD transferred $4 million to a Swiss bank account. The amount was later transferred to
Lokman Establishment, which in turn transferred the amount to a Chitalia company in
the US.
áp ITC also made payments to non-resident shareholders in the case of certain settlements
without the permission of the RBI. This was against Sections 8(1) and 9(1)(a) of FERA.
áp ITC under-invoiced exports to the tune of $1.35 million, thereby violating the provisions
of Sections 16(1)(b) and 18(2).
áp ITC transferred funds in an unauthorized manner, to the tune of $0.5 million outside India
by suppressing facts with regard to a tobacco deal. This was in contravention of Section a
(1) read with Section 48.
áp ITC acquired $0.2 million through counter trade premium amounting to between 3 and 4
percent on a total business of 1.30 billion, contravening Section 8(1).
áp The company had debts to the tune of 25 million due to over-invoicing in coffee and
cashew exports during 1992- 93 to the Chitalias, contravening Section 9(1)(c) read with
Section 26(6).

'   






 



ITC



c 
 



     


 
  

 



  


  

  
 

 
 
  
 
 
 
   

 
 
      
 
 
 

  

 
 
  


   


c


    
    
    
  
 
  c   

c ! "c!#$

p ´   %


  
 



   


 &

p 
     %

 

 





p c     

 c

' 

 
 
 
 %
   c      


  


 

 

   
 %

        

 
  
 

  
%
 

c

 

p Ä




 c

' 





  c( 


   

 

 
  



 





) c


 
  

 
 





 

    
 

  c

' 



STAKEH LDERS AND THEIR IMPACT

SIGNIFICANCE

Shareholders: Profitability & Growth

Government  n-time payment of taxes, duties

Statutory compliance

Customers Trust on brand providing value as stated

Employees Personal Development and Growth prospects

Individual's future linked to Company's growth
Job security

Community Environmental impact of existing operations and

expansion projects
Livelihood generation

Suppliers Continuity and growth of business

Transparency in system