ITC Limited India

Background

ITC Limited (ITC), headquartered in Kolkata, is the main cigarette manufacturer in India. ITC’s commonly sold cigarette and cigar brands include; Insignia, India Kings, Lucky Strike, Classic, Gold Flake, Navy Cut, Players, Capstan, Bristol, Flake, Silk Cut, Duke & Royal. In 2016, cigarettes provided 62% of the gross revenue of the company.

ITC, established in 1910 as a subsidiary of British American Tobacco (BAT), was first titled Imperial Tobacco Company of India Limited, acronymic as “ITC”. It underwent several title changes, India Tobacco Company Limited (1970), I.T.C. Limited (1974) and ITC Limited (2001), the final name change reportedly to “shed(ding) the cigarette tag”. The company’s multi-business portfolio includes:

Image 1: ITC Colombo ground breaking ceremony with the participation of Basil Rajapaksa (Minister for Economic Development), Y K Sinha (High Commissioner of India to Sri Lanka), Y C Deveshwar (Chairman, ITC Limited), Lakshman Yapa Abeywardena (Minister for Investment Promotion), A.J.M. Muzammil (Mayor of Colombo), Ajith Nivard Cabraal (Governer, Central Bank of Sri Lanka) and Daya Ratnayake (Army Commander).

• Fast Moving Consumer Goods (FMCG) and Tobacco products – a range of products including food, personal care products, stationary and incense sticks
• Packaging and Printing – was initiated as a support industry for their cigarette production. They also provide packaging to other Indian and multi-national tobacco companies, such as British American Tobacco (BAT), Philip Morris International, Agio Cigars and Vazir Sultan Tobacco (VST) Industries.
• Hospitality – ITC Hotels, a chain of luxury hotels, initiated its first international venture in Sri Lanka (Image 1) under its fully owned subsidiary Welcome Hotels Lanka Private Limited. To read the relevance on tobacco industry merging its businesses with the hospitality industry, please see the page Hospitality Industry Manipulated against Tobacco Control Policies.
• Paperboards and Speciality Papers – was established to supply material to ITC packaging. It’s raw material is produced by a forest cultivation project, which won them the membership of the WWF’s Global Forest and Trade Network.
• Agri Business - Is engaged in cultivating, processing and exporting tobacco leaves.
• Information Technology – ITC Infotech India Limited, established in 2000, provides offshore outsourcing to “global customers”. The list of partner organisations for the information technology business in 2017 can be found in their website.

Investors

The two main investors of ITC are the Government of India and the British American Tobacco (BAT). As of 2017, BAT held 24.68% via its subsidiary Tobacco Manufacturers (India) Limited. According to media BAT unsuccessfully attempted to increase its shares in ITC in several occasions. The second largest (14.35%) shareholder was Life Insurance Corporation, the Indian government-owned insurance company. There are four other government-owned insurance companies (General Insurance Corporation of India, The New India Assurance Company Limited, The Oriental Insurance Company Limited and National Insurance Company Limited) among the top 10 investors of ITC. Thus, as of 2017, Indian government owned around 31% of ITC shares, receiving criticisms for the “irony” of its attempts to control tobacco while being the “biggest investor” of the industry.

Governing Board

ITC is governed by a Board of Directors headed by a Non-Executive Chairman. In 2017, Board included all Indians except for the BAT representative David Robert Simpson. A complete list of ITC’s Board of Directors can be found on the [1]. In 2017, the list included Nirupama Rao, the former (2004-2006) Indian High Commissioner for Sri Lanka as a Non-executive Director.

Overseas Tobacco Subsidiaries

ITC owns a tobacco company in Nepal, Surya Nepal Private Limited (Surya Nepal), in partnership with BAT.

Controversial Activities

Temporary Shut-down of Cigarette Factories

As of 2017, ITC shut down their cigarette factories twice. This was as a response to the government’s initiatives to implement Pictorial Health Warnings (PHWs) on cigarette packs as detailed below:

• December 2010 – Indian government planned to implement 20% pictorial health warnings in tobacco packs from 1st December 2010. ITC and Godfrey Philips India Limited, the two leading cigarette manufactures in India, 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.
• April 2016 - ITC and two other cigarette companies (Godfrey Philips India Limited and VST Industries Limited) closed their cigarette manufacturing factories as a response to the government’s decision to expand pictorial health warnings from 20% to 85% of surface of the cigarette packs.

Involvement in Healthcare Services

In 2017, media reported ITC has decided to explore health care services, with the aim of establishing multi-speciality hospitals in India.

Establishing Apparel Brands Based on Cigarette Brand Names

Image 2: Logos of the two ITC apparel chains based on the cigarette brand names

ITC established two main apparel chains based on BAT cigarette brands as detailed below (Image 2).

Wills Sport, Classic and Clublife

“Wills Navy Cut”, commonly known as “Wills”, was the first filtered cigarette brand of ITC. Introduced to the Indian market in 1963, it was promoted through a campaign tag-lined “Made for each other” depicting a young couple in different day-to-day scenes. In 2000, it established an apparel chain branded “Wills Sport”, entering into sports-wear and casual wear market (Image 2). The apparel chain was later expanded to “Wills Classic” (formal wear – 2002) and “Wills Clublife” (evening wear – 2003).

In 2004, with the implementation of new legislations in India restricting advertisement and promotion of tobacco, ITC announced that they will “dissociate” the brand name “Wills” from the cigarettes and make it “inconspicuous” to avoid claims on ‘surrogate advertising’. However, even though the word “Wills” was separated from the “Navy Cut”, it remained prominent in the packaging (Image 3), earning criticisms from the health advocates.

Image 3: The change of Wills Navy Cut package

An Apparel Chain Targeting Youth

• 

  Image 4: Popular Bollywood Actor Hrithik Roshan in a John Players advertisement.
  John Players Men’s Wear - In 2003, ITC established a global mid-price ranged Men’s wear chain branded “John Players”. According to ITC officials, it "caters to the fashion-conscious youth at affordable price". The brand name was a direct take on of the commonly sold BAT cigarette brand “John Player”. ITC refused they are ‘brand stretching’ stating absence of a cigarette similarly named in India and the use of suffix “s” as reasons. However, ITC has a commonly sold cigarette brand named “Players” in the Indian market. The apparel brand was in the Indian market since 2001.

Using the same colour scheme (red and white) as the logo of the BAT “John Player” cigarette pack, “John Players” apparel chain runs a prominent advertisement campaign targeting youth, sometimes even involving popular Bollywood actors (Image 4).

• ”Miss Players” - In 2006, the “John Players” apparel chain was expanded to include female wear for young females, introducing a brand named “Miss Players”. As mentioned earlier, ITC sells a cigarette brand named “Players” in the Indian market.

Fabricating Support through Front Groups

ITC is reportedly 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”. However, TII does not list its members in its website. As of 2017, TII reported to be a member of the following organisations: 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) | The 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 & Maharashtra

Media reported several occasions in which TII attempted to influence tobacco control actions and policies. A few selected examples are listed below:

• Implementation of PHWs - “sent repeated representations to the Union Ministry of Health and Family Welfare asking it to withdraw the notification mandating large-size pictorial health warnings”; conducted massive media campaigns generating doubt about effectiveness of PHWs and organised farmers’ protests against the expansion of PHWs on cigarette packs from 20% to 85%.
• Influencing Conference of Parties - demanded the Indian government to include them in the national delegation to the 7th Conference of Parties (CoP 7) of WHO Framework Convention on Tobacco Control (FCTC) held in New Delhi in November 2016.. Further, TII publicly criticized FCTC for refusing the observer status to Federation of All India Farmers Association, a known front group with vested interests, to CoP 7.
• Tax increase - objected against an increase of cess on cigarettes stating it would be detrimental to tobacco farmers

Corporate Social Responsibility (CSR) Initiatives

ITC has been criticised for using their CSR initiatives to engage tobacco farmers.

TobaccoUnmasked Resources

• British American Tobacco (BAT)

The local language translations

Relevant Link

ITC Limited website: http://www.itcportal.com/