The Hindu Business Line : ITC looks to emerge on top in paper, hotel biz

Already a market leader in tobacco, it has called for a rational tax policy so that the sector can exploit its full potential for growth to create more jobs. The tobacco basket can shrink but values per kg can increase if taxes go down, giving a boost to total revenues, said the ITC Chairman, Mr Y.C. Deveshwar.

Addressing newspersons here on Friday, Mr Deveshwarsaid while the tobacco basket per se may shrink in the newly emerging regulatory environment, if taxes are rationalised, total revenues from this segment can grow through value addition and growth, and thereby supplement nation's economic goals. We need to stretch organisational efforts to create economic assets for the nation, he said. There has to be more value addition at the farmer's end, like in pulp, and for this one needs reform, and also invest more in villages.

He advocated the coming together of many capabilities available within the organisation. Suggesting that ITC's approach was different from some of the peer group companies in the FMCG sector, which have planned to grow strongly in specific areas by shedding some businesses, he said our approach calls for growth in all businesses as the number one, essentially to create widespread employment opportunities.

He clarified that the company, as a matter of conscious policy, was now in pursuit of a first-ever "triple bottomline" approach: economic, ecological and social. "Clearly, a premium needs to be placed on those companies that create economic progress with minimal adverse impact on the ecology by deploying technologies that use the planet's resources efficiently." In fact, the company's `Citizen First' initiatives have been subjected to a meaningful social audit conducted by a recognised audit firm, confirming that it was serious about corporate social responsibility.

Mr Deveshwar said the company's new initiatives, especially in farm forestry (promotion of forest and wood-based industry), were geared to effectively leverage its own need for wood fibre (for paper manufacture) to provide significant opportunities to economically backward wasteland owners. He said the company was now working closely with the Andhra Pradesh government and select NGOs, and has identified poor tribals with wastelands for organising them into self-supporting forest user groups. A comprehensive package of support and extension services are being provided by the company.

Envisioning a great future for the company in the foods business, which he described as an agri-commodity-driven venture in synergy with the e-Choupal initiative, he said profitability was largely dictated by size. We need to build a commercial relationship with the farmer, so that our sourcing gives us that competitive edge in the market, he said.Sounding upbeat on the hotels business front, Mr Deveshwar said the company, which already has the land, was still planning a second deluxe category hotel in Chennai, and most likely a second hotel in Hyderabad, for which land has to be acquired. Growing steadily in all three categories of super deluxe, Welcome hotels and Welcome-heritage/Fortune group of hotels, he said the company would invest own resources only in the super deluxe category.

Earlier, addressing the shareholders, who were seeking special dividend and bonus shares, in view of the company's cash flow position, the Chairman said the resources were being conserved as a contingency fund, considering the legacy litigations prior to the 1983 period, and the huge excise demand (Rs 803 crore) in 1987. Once the litigations (involving around Rs 2,200 crore) are out of the way, we may be in a position to distribute the funds, he assured the shareholders.

Favouring a balanced use of resources, he said the cash was also being conserved for future opportunities (read acquisitions) in any of the sunrise business segments.