The Telegraph
Since 1st March, 1999
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ITC hopes to go the Wal-Mart way
- Deveshwar open to phased withdrawal from tobacco, Wills brand to be taken overseas

Calcutta, July 25: ITC chairman Y. C. Deveshwar today unveiled his vision of positioning the tobacco major as the “Wal-Mart of India” — a retailing powerhouse “with the lowest-cost fulfilment capability”.

Over the last few years, ITC has been focusing on its fast moving consumer goods business, and has introduced a gamut of products ranging from incensed sticks to readymade garments.

ITC is also expanding its e-choupal network at a “break-neck speed” and has plans of using it as “a distribution superhighway” for consumer goods in rural India. ITC would even distribute goods produced by others through this click-and-mortar network.

The e-choupal network now straddles 12,000 villages in Madhya Pradesh, Karnataka, Andhra Pradesh and Uttar Pradesh. With 2,150 installations — each costing around Rs 3 lakh — the network connects 13 lakh farmers in the country.

The company is test-marketing various products through this network. Deveshwar said: “We could even sell motorcycles and bicycles through e-choupals.” ITC is giving final touches to its plans of distributing insurance products through the channel.

Alongside its efforts to establish itself as a leading player in the consumer goods segment in India, ITC is eyeing overseas markets as well for its apparel business.

Deveshwar said the company had bought out the ‘Wills’ brand for apparels in the United States and Japan, and was in the process of registering it in many other countries in the developed world.

Cigarettes, however, still contribute three quarters of ITC’s revenues, but the company is trying to reduce its reliance on the segment due to the pressure on the industry from lawmakers.

Speaking at the company’s annual general meeting today, Deveshwar said if regulations forced ITC to exit the tobacco business, it would, but it would be through an “orderly withdrawal without affecting the livelihood of the people connected with the industry”.

Being the head of a diversified company, Deveshwar looks at every business dispassionately. He said: “We would not hesitate exiting from any business if we do not gain a leadership position within a reasonable length of time.

“We have exited financial services and AgroTech in the past, but at the same time have also turned around the paper and paperboard business despite having sub-optimal financial results for many years.

“We are committed to every business, but if a segment does not perform, we’ll first change the leader, then seek a strategic partner, and if nothing worked, exit it altogether. But in every business we must be prepared to see through the first few years when we look only at the topline.”

While seeking to reposition itself as a consumer goods company, ITC wants to invest in water resource management in rural India in partnership with other companies or governments.

Deveshwar said, rough estimates indicate that creating artificial water-bodies in 1 lakh villages would entail an investment of Rs 6,000 crore. “We cannot do it on our own, and are looking at partnerships.

“I have spoken to M. S. Banga (the chairman of Hindustan Lever Ltd) during my recent visit to Mumbai. His response was positive. I have given him material on what we are trying to do on villages. He has promised to get back to me soon.”

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