As a result, the company has been able to develop a young leadership pipeline to step into his shoes. “Deveshwar was working on a succession plan for the last couple of years. As a result, a strong pipeline of young leaders has already been put in place,” said sources.
Cigarettes-to-hotel major ITC’s chairman Y C Deveshwar has decided to step aside from his executive role to a non-executive from February next year. The longest-serving chairman of India’s largest cigarette maker had been working on a succession plan at the top management for the last couple of years
As a result, the company has been able to develop a young leadership pipeline to step into his shoes.
“Deveshwar was working on a succession plan for the last couple of years. As a result, a strong pipeline of young leaders has already been put in place,” said sources.
The young leadership pipeline includes Sanjiv Puri, the company’s executive director, B Sumant, president of FMCG business, S Sivakumar, head of agri and IT divisions, Hemant Malik, head of FMCG trade marketing and distribution, VL Rajesh, head of foods business and Sandeep Kaul, chief executive of the cigarette business.
Among these young leaders, say insiders and observers, Puri, who was appointed a director on the board of ITC effective December 6, 2015, is the front-runner to succeed Deveshwar.
“Puri currently holds higher post among other persons,” said the sources. In a top-level change last year, ITC elevated Puri as director of its FMCG business, a position carved out for him. He took charge from P Dhobale, who was a director on the board of the company and had responsibility for the group’s FMCG businesses.
Prior to his appointment as director, Puri, 53, was president of FMCG businesses — cigarettes, foods, personal care, education & stationery products, matches and agarbattis since December 2014. He handled a wide range of responsibilities including business leadership positions, manufacturing, operations as well as in information & digital technology.
In a stock exchange filing on Tuesday, ITC informed that after being at the helm of the company for more than two decades, Deveshwar, 69, will shed his executive role from February 5, 2017 and will become a non-executive chairman for three years.
As Deveshwar is also the company’s chief executive, ITC may create a post of a separate CEO, said persons tracking the company.
Analysts and observers tipped Puri as the likely successor of Deveshwar as the company has identified its fast-growing non-cigarette FMCG division as the major growth engine for the company.
“Previous consecutive excise duty hikes on cigarette and potential of greater excise duty hikes in the future, larger pictorial warnings on packs and a ban on the sale of loose cigarettes in certain states are some of the challenges the company is facing currently. The possible implementation of a 40% goods and service tax (GST) continues to be an overhang,” Nomura said in a recent research note on ITC.
The company has been investing heavily on creating major brands in non-cigarette FMCG division. During the company’s annual general meeting last year, Deveshwar said the diversified conglomerate was planning to garner a revenue to the tune of R1,00,000 crore from the ‘new FMCG’ business by 2030.
The new FMCG business includes its non-cigarette fast moving consumer goods business that includes packaged foods, personal care, apparel retailing, educational and stationery products and safety matches and agarbattis.
ITC Ltd had reported a 5.67% year-on-year rise in its standalone net profit to Rs2,495.20 crore for the quarter ending March 31, 2016, from Rs2,361.18 crore for the year-ago period.
The company’s scrip on Wednesday closed at Rs354.55, down 1.12% on BSE from the previous close.