ITC Limited

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ITC Limited – formerly India Tobacco Company Limited – is the cigarette market leader in India.1

British American Tobacco (BAT), through its subsidiaries Tobacco Manufacturers (India) Limited, Rothmans International Enterprises Ltd, and Myddleton Investment Company Ltd, is ITC’s largest shareholder. Until 2024 it held just under 30% of shares.234 In March 2024 BAT reduced its holdings to 25.5%. This still allows it to hold board seats and have influence over the future direction of the company.5 BAT was under pressure from its shareholders to sell shares in ITC to enable BAT to reduce its debt and resume share buybacks.6

According to several media reports, BAT had previously tried to increase its stake in ITC on several occasions.789 However, ITC “thwarted all attempts”, with the Indian ban on all foreign direct investment in the cigarette industry (which took effect on 8 April 2010), allegedly a direct result of ITC’s lobbying of the Indian health and finance ministries.10

Government-owned insurance company Life Insurance Corporation of India is the second largest shareholder in the company with  a shareholding of around 15%.411

Background

Headquartered in Kolkata, ITC was established in 1910 as the Imperial Tobacco Company of India Limited.12 The company name was changed to India Tobacco Company Limited (1970), I.T.C. Limited (1974), and finally to ITC Limited in 2001. The name changes reflect ITC’s attempts at “shedding the cigarette tag” by diversifying into non-tobacco goods and services.1314

In addition to tobacco, the company manufactures food products and stationery, and is active in the hospitality industry, packaging industry, and the agricultural and information technology sectors.11 As of 2020, ITC has 34 fully and partially owned subsidiary and associate companies.11

In March 2017, the media reported that ITC had been given shareholder approval to explore healthcare services, with the aim of establishing multi-speciality hospitals in India.15 In July 2017, ITC announced that it had amended the company’s Articles of Association to incorporate “healthcare” under its purview and was searching for a CEO to take the initiative forward.1617 Sanjeev Puri was appointed ITC’s Chairman in May 2019. He succeeded Y.C. Deveshwar. Puri became CEO in 2017 and Managing Director the following year.18

In 2016 ITC reported that cigarettes represented 62% of the company’s gross revenue (42% of its net revenue).1319 ITC’s popular brands of cigarettes and cigars include Insignia, India Kings, Lucky Strike, Classic, Gold Flake, Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut and Duke & Royal.12

In 2023, in a corporate presentation, a slide stated that ITC was “reinforcing market standing” with its factory made cigarettes (FMCG) and listed ‘recent introductions’ as well as existing brands.20

Joint Venture with BAT in Nepal

In 1985, BAT and ITC set up a joint venture in Nepal, the Surya Nepal Private Limited (Surya Nepal).2122

Membership and Affiliations

ITC is a leading member of The Tobacco Institute of India (TII), “a representative body of farmers, manufacturers, exporters and ancillaries of the cigarettes’ segment of the tobacco industry in India”.2324

TII has also reported being a member of the following organisations:23
International Tobacco Growers Association (ITGA), International Tobacco Documentation Centre, UK Tobacco Merchants’ Association (TMA), USA Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FICCI), Associated Chambers of Commerce and Industry of India (ASSOCHAM), PHD Chamber of Commerce and Industry (PHDCCI), Indian Chamber of Commerce & Industry (ICCI), Federation of Andhra Pradesh Chamber of Commerce & Industry (FAPCCI), Chambers of Commerce: Andhra, Karnataka and Maharashtra.

ITC representatives were speakers at the annual tobacco industry event, the Global Tobacco and Nicotine Forum, in 2012, 2013 and 2014.

Controversial Marketing Strategies

ITC has been criticised for using direct and indirect advertisements to promote their tobacco products despite the Indian tobacco advertisement ban.252627 Some of the criticisms were:

  • illegal display of advertising billboards and posters2526
  • glamourising cigarette smoking to target youth and low socio-economic groups (for example by associating cigarette brands with success, wealth, achievement and western lifestyles)25
  • using brand variant extensions (for example a ‘light’ version)25
  • point of sale marketing targeting minors (for example by placing cigarettes and cigarette advertising in close proximity to candies and snacks)2526
  • camouflaging tobacco marketing by coupling it with other ITC products25
  • misleading retailers to display tobacco advertisements near their shops2627
  • paying retailers to promote and market tobacco products2627
  • indirectly targeting women (for example including women in the advertisements and using images that create an aura of elegance, sexual allure, culture and style)2526

Tactics to Subvert Tobacco Control Campaigns and Policies

Intimidating government with litigation or threat of litigation

ITC has legally challenged tobacco control laws on two occasions:28

  • 2016 – As a member of TII, challenged expansion of Pictorial Health Warnings (PHWs) to 85% in a court case filed collectively with a retailer, farmer and a smoker.
  • 2003 – Challenged implementation of the Cigarettes and Other Tobacco Products Act  and appealed against prohibition of smoking in public places.

More information about other tobacco industry challenges against tobacco control measures internationally, go to Legal Claims.

Tactical Temporary Closure of ITC Cigarette Factories

ITC shut down its cigarette factories twice as a response to government initiatives to implement PHWs on tobacco packs, as detailed below:

  • December 2010 – The Indian government announced that it would introduce new PHWs from 1 December 2010, including one about mouth cancer. ITC and Godfrey Phillips India Limited, the two leading cigarette manufacturers at the time, halted cigarette production for a month from the supposed date of implementation, stating they did not receive clear instructions on the graphic warnings to be included. This led to a delay in implementing the new PHWs and slowed down the rotation of PHWs to every two years, rather than annually.293031
  • April 2016 – ITC, and the other two cigarette companies that are members of TII, closed their factories as a response to the government’s decision to expand pictorial health warnings from 40% to 85% of the surface of cigarette packs.3233

Mobilising support through allies

ITC has tried to influence tobacco control actions and policies by mobilising support from the following groups:

Tobacco Institute of India (TII)

The media  reported several occasions on which TII lobbied against tobacco control measures. For example, the organisation:

  • sent repeated representations to the Union Ministry of Health and Family Welfare asking it to withdraw the large mandatory pictorial health warnings2433
  • organised large media campaigns generating doubt about effectiveness of PHWs and organised farmers’ protests against the expansion of PHWs on cigarette packs from 20% to 85%34
  • demanded the Indian government include them in the national delegation to the 7th Conference of the Parties (COP 7) of WHO Framework Convention on Tobacco Control (FCTC), held in New Delhi in November 2016, stating tobacco control policies should not be biased towards views of “tobacco control activists and NGOs”35
  • publicly criticised FCTC for refusing COP ‘Observer’ status to the Federation of All India Farmers Association36
  • objected against the increase of cigarette tax under the Goods and Services Tax scheme, claiming it would be detrimental to tobacco farmers37

Federation of Indian Chambers of Commerce and Industry (FICCI)

FICCI sent representations against the expansion of pictorial health warnings to the Ministry of Health and Ministry of Commerce.24

The Associated Chambers of Commerce and Industry of India (ASSOCHAM)

ASSOCHAM lobbied against the tobacco control act, stating that this was in order to “save livelihood of crores of tobacco farmers and farm workers, bidi workers, tribals and retailers”.24

Corporate Social Responsibility initiatives

In India, large companies are legally obliged to spend a certain percentage of the profits on Corporate Social Responsibility (CSR) activities.38

The Economic Times reported that ITC spent 1.2% of its 2014 net profit on Corporate Social Responsibility (CSR) activities.39

ITC’s 2017 annual report highlighted rural development and sustainable agriculture practices as examples of the company’s social investments.11

In the financial year 2019-20, ITC spent INR 326.49 crores on CSR activities.11 COVID-19-related CSR activities have been a key industry tactic during the pandemic. ITC set up a COVID Contingency Fund of INR 150 crores for supplying food and personal hygiene products to District Authorities and other government bodies as well as personal protective equipment (PPE) kits to district hospitals.40 Public officials in Bangalore publicly thanked ITC for their CSR contributions.41

CSR practices like those of ITC have been criticised as “one more tool for unscrupulous companies to circumvent the public health laws”.42 In lieu of tobacco advertising, which has been banned, it is argued that CSR activities function as “proxy advertising” for ITC to improve its corporate image.42

Diversification into Newer Nicotine Products

In its 2021 annual report, ITC stated that it had established a wholly-owned subsidiary, ITC IndiVision, and would be setting up a facility in Karnataka, for the manufacture and export of “nicotine and nicotine derivative products”.43 These were reported to be mainly for the US and European Union markets, in order to capitalise on the increasing demand for nicotine products in those countries.44

These products include e-cigarettes (also known as electronic nicotine delivery systems, or ENDS) and nicotine pouches. It was not clear which companies would be purchasing these products from IndiVision.

Product Regulation

As of January 2022, “the production, manufacture, import, export, transport, sale, distribution, and advertising of e-cigarettes” is prohibited in India.

The Policy Scan Project, by the Institute for Global Tobacco Control (at Johns Hopkins University) tracks and reports regulatory approaches to e-cigarettes, heated tobacco products (HTPs) and nicotine pouches around the world. See the GTC Policy Scan webpage for more details.

For up-to-date information on tobacco regulation more generally, see the Tobacco Control Laws website, published by the Campaign for Tobacco-Free Kids (CTFK).

TobaccoTactics Resources

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References

  1. ↑Euromonitor International, Cigarette market company shares, 2022, accessed June 2023 (paywall)
  2. ↑Tobacco Reporter, Indian government to sell ITC stake, 25 February 2016, accessed October 2019
  3. ↑S. Mitra, British American Tobacco has no plan to increase stake in ITC, Business Standard, 15 January 2014, accessed May 2017
  4. ↑abMarketscreener, ITC Limited, accessed July 2023
  5. ↑India’s ITC settles higher as BAT’s $2 bln share sale sails through, Reuters, 13 March 2024, accessed March 2024
  6. ↑BAT to buy back $895 mln shares in 2024 after ITC share sale, Reuters, 12 March 2024, accessed March 2024
  7. ↑S. Reckhi, R. Banerjee, Raising the Stake, indiatoday, 31 December 1994, accessed June 2017
  8. ↑BAT not averse to raising stake in ITC, The Times of India, July 2002, accessed May 2017
  9. ↑I. Gupta, T. Surendar, Remaking Indian Tobacco Co., Forbes, 30 June 2010, accessed October 2019
  10. ↑J. Kothari, Why is the government brazenly batting for ITC, Moneylife India, 2 November 2012, accessed January 2018
  11. ↑abcdeITC Company Ltd, Annual Report 2020, 2020, accessed March 2021
  12. ↑abITC Limited, FMCG: Cigarettes, 2017, accessed May 2017
  13. ↑abMoneyControl, ITC hasn’t kicked the butt, but journey from ‘health hazard’ to healthcare is complete, 29 September 2017, accessed October 2017
  14. ↑ITC Limited, Company Profile: History and Evolution, 2017, accessed June 2017
  15. ↑Shareholders approve plans to enter health care: ITC, The Times of India, 17 March 2017, accessed May 2017
  16. ↑U.P. Mukherji, ITC to enter healthcare sector with hospital, The Times of India, 29 July 2017, accessed October 2017
  17. ↑ITC looking for a CEO to enter healthcare, The Economic Times, 28 July 2017, accessed November 2017
  18. ↑ET Online, ITC appoints managing director Sanjiv Puri as chairman, The Economic Times, 13 May 2019, accessed February 2021
  19. ↑ITC Limited, ITC Limited: One of India’s Most Admired and Valuable Companies, ITC Corporate Presentation, 2017, accessed May 2017
  20. ↑ITC Limited, Quarterly Results Presentations: Q4 FY 2022/23, available from itcportal.com
  21. ↑ITC Limited, Company Profile: History and Evolution, 2017, accessed June 2017
  22. ↑Surya Nepal Private Limited, Company Profile, 2017, accessed May 2017
  23. ↑abThe Tobacco Institute of India, About Us, 2017, accessed October 2017
  24. ↑abcdA. Jithendra, U. Bhojani, How The Tobacco Industry Wins Friends And Influences Policy, 2 June 2015, accessed October 2017
  25. ↑abcdefgR. Bansal, S. John, P.M. Ling, Cigarette advertising in Mumbai, India: targeting different socioeconomic groups, women, and youth, Tobacco Control, 2005(14):201–206, doi:10.1136/tc.2004.010173
  26. ↑abcdefA. Kalra, P. Bansal, T. Lasseter et al, India fumes as Big Tobacco targets young people in bid to recruit new smokers, The Independent, 19 July 2017, accessed October 2017
  27. ↑abcS. Patel, H. Rendell, S. Maudgal et al. Tobacco industry tactics with advertisements at the point of sale in Mumbai, Indian Journal of Cancer, 2013:50(3);245-249, doi:10.4103/0019-509X.118743
  28. ↑Tobacco Free Kids, Tobacco Control Laws: India, 2017, accessed October 2017
  29. ↑India cigarette firms stop production over health warnings, The Independent, 4 December 2010, accessed October 2017
  30. ↑ET Bureau, ITC, Godfrey Phillips India shutter factories over warning pics, The Economic Times, 3 December 2010, accessed October 2017
  31. ↑India tobacco firms halt production over health warning, BBC News South Asia, 3 December 2010, accessed October 2017
  32. ↑B. B. Chatterjee, Cigarette Factories – Shutdown, ITC Limited, 2 April 2016, accessed October 2017
  33. ↑abTobacco Companies Shut Factories; Opposing Cigarette Larger Pictorial Warnings, Punjab Today, 01 April 2016, accessed October 2017
  34. ↑A. Pasricha, India’s Tobacco Industry, Farmers Resist Warnings on Cigarettes, VOA News Asia, 6 May 2016, accessed October 2017
  35. ↑W. Mukherjee, Tobacco Institute doesn’t want Tobacco policy development to be left to activists alone, The Economic Times, 30 August 2016, accessed October 2017
  36. ↑WHO tobacco conference rejects applications for observer, Press Trust of India, undated, accessed October 2017
  37. ↑Cigarette industry body wants GST Council to roll back tax increase, The Economic Times, 17 October 2017, accessed October 2017
  38. ↑Yadav, P. Lal, R. Sharma et al, Tobacco industry corporate social responsibility activities amid COVID-19 pandemic in India, Tobacco Control 2022;31:777-780, doi:10.1136/tobaccocontrol-2020-056419
  39. ↑W. Mukherjee, India’s Best Companies for CSR 2014: Here’s how ITC’s social outreach programme works, 28 April 2015, accessed November 2017
  40. ↑W. Mukherjee, ITC announces Rs 150 crore COVID-19 contingency fund for vulnerable sections of society, The Economic Times, 27 March 2020, accessed March 2021
  41. ↑L. Laurence, STOP COVID-19 Monitoring Brief: The tobacco industry, its interests and allies. Edition 5, Stopping Tobacco Organizations and Products (STOP), 18 June 2020, accessed March 2021
  42. ↑abN.V. Rao, Neethi V Rao: Corporate social responsibility in India, thebmjopinion, 9 May 2014, accessed October 2017
  43. ↑Indian Tobacco Company, ITC Report and Accounts 2021, available from itcportal.com
  44. ↑W. Mukherjee, ITC diversifying tobacco business into manufacturing of nicotine and nicotine salts, The Economic Times, 14 July 2021, accessed January 2022

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