ITC readies for battle to retain its turf

Y C Deveshwar, who in his own words has reached the evening of his life, has two battles to fight before his term as the chairman of diversified conglomerate ITC Ltd comes to an end: one against "foreign funded anti-tobacco non-governmental organisations", and another against "the public perception" that, post the Maggi fiasco, looks suspiciously at all snack foods.

"All pressures are coming from NGOs. I am trying to combat them but its unfortunate that we have not been successful," Deveshwar said in a resigned voice during a press conference, adding that he feels these organisations are being able to influence government decision.

While ITC has been blaming high taxation and measures like pictorial warnings and restrictions on sale of loose sticks, describing these as illogical moves allegedly promoting sale of smuggled cheap cigarettes, it is for the first time Deveshwar has opened up on his conspiracy theories.

"My guess is there are two kinds of NGOs: one type are people who are not happy about our foray into fast moving consumer goods and second (with funding) coming from overseas countries where there is no health warning," he said.

Deveshwar said, "In the US, there is no pictorial warning. But NGOs funded by that country are insisting on it. The best way to kill Indian brands is to cover them with ghastly pictures so that foreign brands with no such pictorial warnings would sell," Deveshwar said, hinting that such NGOs are selective in their protest protecting foreign companies.

"Why there is duty-free cigarettes at Indian airports? Because there, foreign brand sell."

Despite such pressures, ITC would not be leaving the tobacco business.

"We won't be doing that. If we stop making cigarettes, it would be taken over by smuggled cigarettes as consumption is growing in the country even as share of tax paying legal cigarettes are shrinking," he said.

Even as ITC prepares itself for a regulatory regime that would only make cigarettes an increasingly difficult business to be in, the spillover effect of negative public perception against instant noodles to other form of processed foods is also taking a toll.

"Before the whole controversy over instant noodles broke, we had a share of 18-20%. But unintended consequence of this controversy has left consumers confused and they thought all were bad. And not only the noodles market, some of the other packaged products market are beginning to show the consumers are wary."

The company might have to fight this perception by resorting to media campaigns telling the world that its products are safe, he said.