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10 Blunders – 1 Arrogant Company – Millions of Shareholders Suffering (The story of ITC)


Dear Board Members,

As a minority shareholder while I sift thru the 368 page Annual Report (AR) of my company, it seems and appears to be a manifesto of a large political party that is proud of what its done in the past and what it hopes to do even if nothing sounds or appears to be value accretive for the shareholders. 

Markets are wise and perceptions are strong and the 1.5 million investors who have reposed their faith and trust in you, seem to be losing the confidence in Your leadership. Else ITC that was once the most respected company wouldn’t have performed so miserably on the bourses inspite of the 368 page chest thumping manifesto.

I must say you are failing miserably while sitting in the comfort of your mahogany and leather lined offices, a mutual appreciation club of 14 people presiding over an annual revenue of over 50,000 Crores each one building large personal empires thru generous grant of stock options and over the top compansation while I am seeing my wealth erode by the hour.


The unbridled power that you wield without being questioned by a real promoter / entrepreneur has spelt a real disaster as I fear that my company is being taken on the same self destruct path that General Electric, Nokia, Blackberry and Exxon Mobil have been taken in the last 2 decades and the less said the better as to how value destructive this journey has been for them because there was no one to shake up Jack Welch at the right time (he became the greater God without being one). For way too long these companies and their respective managements suffered from Hubris not able to see a fast approaching train while being frozen on tracks, not able to course correct – eventually leading to their demise. 

While I will ask some specific questions, the crux of this note is that if you cannot protect my wealth thru the alleged magic of your strategy and leadership – You don’t have the moral right to hold these positions and lead my company.


The First Blunder 

The biggest blunder of diversifying into hospitality and continue to burn cash and capital in this black hole using cash generated by the cigarette business (which is the only meaningful cash flow division) is nothing short of financial hara-kiri on minority shareholders. You have acted no differently than most of real estate developers who want to own a hotel / hotel chain from their free cash flows because its sexy to own one when it’s the most unprofitable industry and most susceptible to economic mood swings. ‘Dala Bhukara’ is fine – I appreciate it and love it too, You should have stopped at that, but then it was simply stupid to burn thousands of crores of my money by assuming that every hotel will be as successful as dal bhukara. I would like You to share with the public – Who is advising you to spend thousands of crores of shareholder wealth to build these large hotels (and overspending on most of these).

Who (employee or consultants) is regurgitating on excel sheets – the potential of new hotels and how are these people made accountable? The AR must include a detailed P&L and BS of each of my subsidiaries hereafter clearly mentioning the ROCE on a quarterly basis.

At Rs.17.9 lacs revenue per room per annum of revenue you have missed the bus of being any formidable hospitality brand even while you can’t stop gloating on all the award and accolades that the hotel division has got. Mind You – most of these are all subscription based awards (awards and accolades is a paid international scam at the cost of the hospitality industry) the sooner we realize this the sooner we will stop burning cash. I would like to know how much money has been burnt in annual subscription of these awards.

ITC Grand Bharat with 104 keys is generating a mere revenue of 28 Cr p.a, that’s is lesser than some successful Lemon Tree Hotels on a revenue per key per annum basis.

It is pertinent to ask what’s the spend per key of all the hotels that have been built grounds-up in the last 10 years. If it is anything more than 2 Cr per key (all in) there is something dramatically wrong with our projects team and financial forecasters. How many hotels have performed in line with approved financials from the time of board sanction of these projects within the next 5 years. This is an important analysis that You should seek and make the same public.


The entire rigmarole of Fortune Hotels with 4000 rooms is generating a mere profit of 2.76 Cr – who is responsible for this and why is this abysmal performance being tolerated at my cost?

Welcome Heritage does a NP of  a mere 40 lacs with 36 hotels , 900 rooms and the management bandwidth at my cost.

Which international brand / concept are we benchmarking ourselves against to justify our investment in the business and which of my employees has his/her skin in the game in this business and how is the executive compensation tied to the performance of the Hotel Division.


The Second Blunder

Small irrelevant businesses that we have ventured into must be taking immense bandwidth and time (board meetings, audits, finalization of accounts, consolidation) why are we in the businesses such as Antrang Finance that generates a mere 6 lacs a year. I would like to know the details of every business / subsidiary that generates less than 50 Cr of NP after taxes. In the scheme of things and larger objectives there should be a board resolution passed that defines / disallows continuity, if certain thresholds aren’t met by any subsidiary.

The Third and Series of Blunders

Our acquisition history and parameters are abysmal. That eeks of internal misjudgements. I might not need to tell you that a series of these judgemental calls, gone wrong with alarming regularity, might be perceived to be fraud. Nimyle, B Natural, Savlon – have you ever calculated the price paid for acquiring these businesses and the value accretion/destruction that these businesses are doing for me. Your endeavor to build on these brands might be noble but the subsequent performance is abysmal.

Enron wasn’t a fraud at the beginning , But they lost their way alongside because they didn’t know when and where to diversify and how to wisely allocate capital and burnt cash and rapidly eroded shareholder wealth. Don’t take my company down that path or history will find it difficult to forgive You.

When I read about the ITC Sangeet Research Academy I couldn’t stop laughing for 5 minutes. The cacophony of the music of frustration is still ringing in my brain. While I would like to know the total cumulative annual spend in this musical initiative since 1977, I kept wondering that the music for all the gurus and the budding musicians is playing fine while the music for the shareholders is dimming with an alarming speed or might already have stopped a few years ago. What a paradox..


The Fourth Blunder

The FMCG division launched in 2000 generates just 3-5% PBT, thats a meagre 6% segment ROE (vs >35% of other FMCG players) – put Your hand on your heart is this justified. The QOQ and YOY narrative, propagated by You that ‘we are becoming a global FMCG brand’ is fine – how is it value accretive for me – because our operational performance is miles short of our competitors.

Are our employees lackadaisical and suffering from sloth because they don’t have a real BOSS or there is something drastically wrong with our strategy and execution. How have we benchmarked ourselves against the top 5 competing FMCG companies?

I would like to know if the salary growth of all the people earning over 35 lacs per annum is directly correlated to Revenues and EBIDTA of those divisions and if NO – it tantamounts to the very premise where we begun – My cash business is being used to fund the inefficiencies of the entire company without a credible benchmarking against other brands / businesses that are doing well. How are we different today from an inefficient PSU. 

The so called Dividend Yield is a paradox – How would You justify the same to investors who entered the stock on ~14th July 2017. Yes agreed i am getting some 7-10 Rs a year in dividend while losing a major part of my capital. 

The Fifth Blunder

For a Balance Sheet of my company’s size you have failed repeatedly to disclose Your CAPEX plans and capital allocation plans in advance – isn’t that taking the executive power to a level of unsanctioned discretion? While I am suffering with my capital erosion you guys are building personal empires of reputation and brand building.

ITC Infotech @ 2300 Cr per annum of revenue and single digit PAT must be the most underperforming IT company in the country. Do we take pride in investing businesses that underperform and continue to make the shareholders believe that the future is bright (why has the board not thought of divesting this and all such small divisions) and if NO – what’s the boards commitment on revenues and PAT in the next 5 years for this company.

The Sixth Blunder

You recently acquired Sunrise at approx. 3.7 X the FY 1920 revenues of 591 Cr at a PE of 37.

How does this deal add to my geographical diversification? How is this value accretive to me? And why would you pay this valuation when you aren’t able to sustain a 15 PE for my company? How did the board approve an acquisition at 37 PE while struggling to keep my valuation even at 15 times.

Why could we not expand our own spices division to strategically expand our geographical reach with internal talent and resources and had to go thru the path of an expensive acquisition.

Norway’s food major Orkla acquired Eastern Condiments (almost double the size of Sunrise) at 2.1X Sales and at 18.5X earnings. Which team was responsible for the due diligence of Sunrise and it would be in the interest of the shareholders if the negotiation documents and files are brought out in public domain.

For a minority shareholder watching from a distance, this is nothing short of an internal fraud. If my company is receiving Outstanding Performance Award by CII for its spices, does our management not have the wherewithal and talent to setup and expand our products’ geographical reach rather than paying a hefty premium just to capture a market share.


The Seventh Blunder

The executive compensation keeps going up and shareholder wealth keeps coming down. It’s a shame that in the last approx. 12 years the revenue has gone up from 16000 Cr to 50000 Cr and the employee cost is almost stagnant at 9% or has marginally inched up. Where is the operational leverage? Where is the demonstration by the management to incrementally and geometrically increase revenue and thereby profitability for every additional crore spend in Executive Compensation?

Some of the most progressive companies on the planet (such has Amazon) have a cap on executive compensation at less than 160000 USD per annum and all additional comp is through stock awards.

Our compensation system acts as a disincentive for executive outperformance and in the absence of a real my-baap of my company, I – THE MINORITY SHAREHOLDER am suffering.

In 12 years the revenues are up approx. 3.12 times and employee cost is up 3.26 times. And most likely the perks, hidden benefits, Pension Plans, Travel Plans, Drivers, Cars, Leave Encashments are not even a part of this metric. I would like a declaration / system – where every penny spent on every employee is a function of CTC that’s declared and filed without any benefit being accrued under any other account head.

Do you – dear Board Members understand the concept of operational leverage?


The Eighth Blunder

Our stakes in EIH and Leela have a MTM loss of approx. 1250 Cr in just one last FY. What’s the rationale in holding onto these investments when we don’t really know how to manage our own hotels in the first place or make them world class by any stretch of financial performance. Not a single rupee should be allowed to be invested in the hospitality business to fund losses or any further CAPEX. And every business balance sheet should fend for itself for its OPEX and CAPEX without dipping into our cash generated from the primary business – Cigarettes.

The Sri Lanka investment of 1800 Crores (~236 M USD) so far, baffles me as a shareholder. And I understand that the project is far from complete. Who are we building this empire for and how will we get our investment back? Do You have a plan besides just an excel sheet to justify this black hole.


The Ninth Blunder

Our abysmal ability to engage with capital markets / investors / analysts is nothing short of abject neglect (no mybaap syndrome). If you had succeeded in creating any mentionable shareholder value – this attitude is pardonable. But while You are all doing exceptionally well, with your compensation and hefty sitting fees and perks, the lack of investor and market engagement is taking me and my shareholding for a ride. Why cant we have a mature set of professionals who have the knowledge and the art of engaging with investors and the media.


The Biggest Blunder

You are conducting an average of 41 committee meetings a year. Take out the weekly offs and holidays, You are meeting approx. every 5th day. FOR WHAT? And what are you achieving for me? Except strategically destroying my wealth and value of my shareholding at my cost and charging exorbitant sitting fees? Gentlemen the average age of my board is approx. 65.6 Yrs. God give You all a happy healthy life but don’t treat my company like a retirement resort.

You talk of Triple Bottom Line repeatedly trying to be the ‘pallbearer’ of goodness – While every section of society gets a mention – the shareholder is left out of that focus – high and dry. If I was on Your mind – You wouldn’t waste a single rupee in reputation management through charity and social activities and alleged multiple bottom-line spiel till the interest of minority shareholder is protected and demonstrably served.

While every corporate house has declared salary cuts in view of the pandemic – there is no evidence of any salary cuts in my company. on the contrary you have recently chosen to reward yourself for destroying shareholder wealth. Is that morally and ethically correct even while the latest Tax filings reveal that our advance tax returns are lower by almost 50%. That portends that the Net Profit is likely to fall dramatically – At whose cost?? – MINE!

Another large conglomerate / business house indulged in empire building, international acquisitions at obnoxious valuations, over leveraging, failed product/car launches all at the cost of minority shareholder and to sate the ego of a few top guys in position of authority and they have reached a precipice of existential crisis.

Its becoming increasingly irritating to be repeatedly reminded through media, about the deep value and future potential of my company under Your leadership – Lets stop behaving like the state that talks of glorious vision in year 2050 (safe distance away) – because by that time none of us will likely be alive. Its not to take the credit away for many good things that are happening in my company but pls remember Good is not Good enough because we need to be Great. I must confess we are far from Great and not even looking in that direction.

Pls get Your act together and don’t allow my company to get to a point of no return. A few more mistakes and a little more neglect – And you would have succeeded in destroying one of the finest companies in the country to a mere HAD BEENS…… Remember markets are unforgiving and it would take no more than a few quarters to get our share-price to double digits.

God Bless You and God bless ITC

A distraught shareholder…………

Co authored with 
Ravi Sharma @caraviusharma ;
Uday Bhaskar

244 thoughts on “10 Blunders – 1 Arrogant Company – Millions of Shareholders Suffering (The story of ITC)”

  1. Excellent eye opener. The bear cartel is manipulating this counter since long. Observe daily buy and sell quotes minutely.Stock price is being systematically brought down.This is not possible without getting inside information.And this prudent management never once thought of questioning it.

  2. Diversification from the tobacco business was the need of the hour and non performing / loss aking businesses have been closed down in the past – ITC Classic Finance / Punjab Anand Batteries etc. What stops them doing this now?

  3. If you have these views,it makes better sense to sell the share and get out.Lot of shareholders seem to have done that.The share value has lost 50% value in the last 5 years

  4. If you have these views,it makes better sense to sell the share and get out.Lot of shareholders seem to have done that.The share value has lost 50% value in the last 5 years

  5. You have exposed the so called professional management of ITC. Looks like when you don’t have any accountability you can do anything. ITC management is exactly doing this. Time to change the management through minority shareholders action. Vote for removal of management.

  6. Excellent article ,which clears all doubts of now and future's as well.

    You have so much intelligence for annual reports analysis, why don't you write for such article for some of the great companies of future ,going by their presence performances.
    That will be truly valuables to all your admirers and mass as well.

  7. I have invested heavily in ITC in last decade and sitting on huge losses. Whereas other fmcg companies like hul, dabur and recent entrant tata consumer are having dream run on stock exchange

  8. Sir I appreciate your effort. But I would like to share my interpretation of your data.
    Definitely, in Q1 minimum quantity of cigarettes sold (50% excise duty and ITC own 85% profits dropped) so they didnt pay any advance tax (or please share how much latest advance tac filing) .
    A laid back management/ old age home board – I cant sense this from the market. ITC is more dynamic in product launches.
    OMG, Savlon is a bad acquisition. I think its one of the best acquistion in corporate India with recent launches.
    Why ITC need to acquire spice? ( they failed lot of times with masala spices) . Do you think keralites will change to aashirvad from eastern, tamil from sakthi or aachi, bengali from sunrise?. My question to ITC management why didnt you acquire eaastern? Acquisition cost of 100% company differs from selling part of the company. Moreover sunrise EBITDA is 100 cr and eastern also the same. Revenue sunrise is 595 cr and eastern is 890 cr.
    Hotels: Management face savingly accepted they failed and moved to ASSET right approach. Even I agree its big failure
    ITC manages its companies with its sub-segment head. Board is just for thumb-sucking.
    I dont care about board age etc until they are dynamic in the market. If HUL captured major handwash/sanitiser/disinfectant i would have been the first person to exit by saying its a PSU/Govt company.

    Reasonable queries to ITC management:
    In spice segment: Sambhar powder which they launched 5 years back in tamil nadu disappeared all of sudden. So marketing cost everthing is in drain ( i accept that sakthi/aachi never allowed them to get large market share but cost of failure)
    They gloat themselves we are very close to farmers, dont know why they left pulses besan poha organised segment to TATA sampann.
    Why are u allowing VST/ Godfrey to grab your market share.
    What is R& D for smoke free products ( like phillip morris)

    Like this, I can write lot more.

  9. Great article, exposed the incompetent people sitting at the top.i thought ITC is a professional company, but now dream is shattered. Infact iam planning to accumulate the shares, you saved my money. Instead of putting my money, rather i would put it horse race.

  10. Very well articulated conveying the dismay of shareholders.However, the diversification process & forethought is good,given the continuous drive against tobacco,both fiscal & otherwise.However, implementation appears to be sluggish .

  11. Well said.Generally individuals go reckless and splurge money when there is lot of cash in hand. But it is not expected from a company managed by very senior and seasoned board members. Nor it is a PSU, where many disastrous investments are forced upon for polirical or social reasons.

  12. Agree with many points. In FMCG business, we find products of new players well distributed. ITC FMCG products are not visible across the stores in many locations.

  13. Agreed with the points. Next 2-3 quarters if performance is same or down then it's time to take difficult decision by minority share holder

  14. Agree with many points. In FMCG business, we find products of new players well distributed. ITC FMCG products are not visible across the stores in many locations.

  15. Nice post but I think company are trying to generate more cash making businesses unlike companies like nokia and blackberry who stopped thinking about future and innovation. I am bullish on itc not because of cigrettes but for fmcg i think it has huge potential.

  16. My whole perspective on itc is changed after your article. Meticulously crafted article. But I feel the least itc can do is to demerge itc hotel business. ITC really needs to focus on converting revenue to profit in FMCG sector.
    Holding itc since 2017

  17. Nice is a pointers.There is a good value accretion logic that's well articulated in frequent disclosures. Unfortunately, a company can't fully divulge is strategy… A judgement call needs to be taken by the investor considering risks for a company that's dominant in each of the business that its participating in & exiting the ones it didn't attend a chance (fashion for e.g).
    Minorty shareholders should only get into investment where there is conviction – else we will be wasting our time whining.

    Good luck with your investing 👍

    Discl: invested in ITC, but not an evangelist of it

  18. You talk about ITC as if it’s a fly by night company. My family has been shareholders for more than 30 years in this 107 year old professionally managed company, which has performed consistently good. The current fall in stock price is due to ESG investing, and not company performance.
    If you really want to understand the company’s strategies, why don't you meet up with the management?
    As some body else responded, you always have the option to exit if you don’t like the stock.

  19. Nice article , but I have some observations :
    1) ITC hotels are loss making , they never hidden it , also more over their hotels are located in prime real estates , it is not easy / necessary to dispose them unless there is desperate need of money.

    2) ITC. infotech is not an commercial IT company but an in-house it service provider , not easy to get the technology right unless you cater to multiple clients , but in this case handles mostly CRM, own product portfolio wrt to FMCG. Intact ITC infotech helps ITC in avoiding leakages. Outsourcing so much of customer N dealer information and product related analytics to third party IT provider will cost them bomb. Wrong choice to delist itc infotech.

    3) FMCG requires tonnes years of experience if not few decades , HUL , nestle have more then 100 years and Britannia has 90 years of exp . Only exception to less years of experience reqd is Marico even it is nearly 50 in existence . What ITC doing is capturing 25000 cr revenue form all these monarks. Long way to go .
    Had ITC been been selling only cigarettes for last 20 years and generating profits by now it wld have been acquired by govt . It’s important to diversify for a profitable company.

    4) Compared to Nokia and other tech companies they got disintegrated in very quick span of time. Nokia had 70% market share in 2010 and by 2012 they were gone . And Enron had promoter too. So feel comparing ITC to them is apples to orange comparisons .

    5) ITC will face pressures from shareholders for more years For sure but it is not possible to abandon the ship when other giants are feeling pressure from it. It’s matter of few years until other competitors starts unbuckling. So, feel ITC will follow its own path until it reaches its objective with the cushion of cigarettes n cash .

  20. Outstanding Article. I am a Chartered Accountant and been a banker for over 3 decades. The crowning glory of this article being, when good is not good enough and one ought to be great. Indeed there is a possibility to see this company into the Had Beens category unless immediate course correction measures are undertaken.

  21. Can anyone send this to NSE and ask immediate intervention. Or at least to news papers. These shits will eat my company. Lets start compain to educate share holder's

  22. Really Astonished after reading.. Very worth ful analysis… Hard earned money of small shareholders must be protected very very wisely… Every penny counts to us… Really serious investigation must be ordered in respect to SUNRISE buy out… Rest the management must be utmost careful for spending… Please follow INFOSYS NARAYANA MURTHY.

  23. Really Astonished after reading.. Very worth ful analysis… Hard earned money of small shareholders must be protected very very wisely… Every penny counts to us… Really serious investigation must be ordered in respect to SUNRISE buy out… Rest the management must be utmost careful for spending… Please follow INFOSYS NARAYANA MURTHY.

  24. Had been part of ITC Infotech quite recently and had to leave due to multiple circumstances. Idiocy at its pinnacle I have seen there. They are just surviving using the ITC brand name as otherwise would have been faded in oblivion long back. Every word of ITC Infotech is true.

  25. An excellent disection of the company's performance. Super article. If it is true, it should reach the management and proper correction should be made to save the interest of the investors.

  26. There are few transactions in progress which there are investment even in a steel company where it's only for round tripping for cash. This are instances of cash being removed form the company for personal gains.

  27. Key executives on board shall take this blog as "SHOW CAUSE NOTICE," which may not be from legal point of view. Come Tuesday 6th October and ITC script…where it will head towards…to be seen…!

  28. A minority share holder has placed facts that are irking his mind with respect to why a company like ITC is going down the gutter.
    Now it is HIGHTIME that the Board comes out and answers the questions raised by him in the PUBLIC in NEWSPAPER.
    I expect the compliance within a fortnight.

  29. The speed of the boggy is as fast or as slow as the engine. The downward spiral is more pronounced after the demise of YCD

  30. Haha a share down 50 percent and people start berating manaemt but if you so much trouble with share just click sell button and be away with it… It finally your call and management is not going to answer us retail share holder and second view that keep on buying 50 share per month and hopefully one day you will be in profit… I myself is in loss but this is not only share

    Take a look at hdfc amc.. May be 40 percent from high.. Indusind bank… Hdfc hasn't moved in ages… Sun lupin… Atleast there is no doubt on integrity of management in itc case… Just think of indiabulls edelweiss share holder.

  31. Most of the top management in ITC are corrupt, worse than some government departments. Don't see any changes in coming days as an current employee.

  32. Excellent insight in to functioning of ITC. It's clear example of non core expansion and diversification for just sake of it. Companies should stick with their core competencies and avoid unnecessary divesrion from the goal of value accretion for the shareholders who are real owners of the company.

  33. Like LV Bank, retail investors should not only kick out this corrupt & inefficient management but also demand for investigation by the appropriate authority.

  34. High time they demerg the business. There are no promoters in the company. Now last thing is govt has a stake which might be sold any time. I thought price kept in this level by brokers to get this stake at a cheap price.

  35. Sell loss making business and focus on core business then only it creates value for shareholders otherwise it will next ILFS

  36. WOW. Unbelievable insights and analysis. Very well articulated. I have invested heavily in ITC as its a big belemoth too hard to fail. I wish i had pit same money in Infosys. ITC has ignored the shareholders and management and board is useless. As said in the article they are enriching themselves and not poor shareholders. Blunder after blunder. Today after reading this i really got the insights. Time to book a huge loss and get out.
    Amazing Manu. What a insight!

  37. WOW. Unbelievable insights and analysis. Very well articulated. I have invested heavily in ITC as its a big belemoth too hard to fail. I wish i had pit same money in Infosys. ITC has ignored the shareholders and management and board is useless. As said in the article they are enriching themselves and not poor shareholders. Blunder after blunder. Today after reading this i really got the insights. Time to book a huge loss and get out.
    Amazing Manu. What a insight!

  38. An excellent questioning! Why dont the shareholders like u n me raise these by way of asking an extraordinary general body meeting or ask for voting all these issues raised Give wide publicity in the media for this

  39. If anyone can take this to next level. Where ITC management is forced to answer legitimate queries with facts in an open investor forum or con- call?

    Till then whoever likes this article should circulate this in all social media forums so that management comes clean.

    I have also lost heavily by investing in equity shares of this company since last 3 years having averaged at all price levels. Don't know how bad is the actual inside situation. But definitely article is an eye opener.

  40. It is truw that ITC BOD & Management team must introspect within, must understand the feeling of stakeholders & decide the business recovery strategies to regain lost GLORY of ITC..

  41. Valid points from an investors point of view. It is a wakeup call, indeed!

    Board should respond positively, giving honest explanations and their future plans to arrest further erosion!

    The question in the blog viz., "How are we different today from an inefficient PSU?" – summarizes nicely everything.

    ITC may have its own operational problems but the co should spell out to shareholders its bottlenecks instead of covering up and giving a rosy picture.

    I am also a small investor, for information.

    Oct 05,2020

  42. When millions of share holders are not happy about the shoddiest performance of the so called arrogant company, the company should come out in public and offer their views and possible remedies on the blunders rightly pointed out by the author.

  43. Excellent article ,which clears all doubts of now and future's as well.

    You have so much intelligence for annual reports analysis, why don't you write for such article for some of the great companies of future ,going by their presence performances.
    That will be truly valuables to all your admirers and mass as well.

  44. Well said the board should at least rise from their deep slumber and act immediately before it is to late this article needs to be given wide publicity in the print media so to gather a big storm against the board all small shareholders please support this move strongly

  45. Totally agree with author…most inefficient use of cash. RoE, RoC both absymally low. Hiving off FMCG and hotels into separate companies is vital to stem the rot of shareholder wealth destruction.
    Buybacks are the need of the hour.
    Hope the Board sits up from their slumber…!

  46. Great sir my self invested in itc and waste shares raising and itc falling never sold profit 4 lakhs gone principle amt 2 lakhs gone no bottom in sight and itc having good cig brands but their distribution is very pathetic not complaint having 20yrs exp in same industry no indepth coverage leaving thousands of villages and thousands thousands of ol and no controls seen in marketing heavy salaries every one in marketing feels great i have written regarding this to itc ho no reply whether they have read that or thrown away no idea problem is ego great old company still feel like british kings and nizam kings but no internal planning to grow just launching so many lacking indepth distribution they will not listen to any one not looking at ground what is happening but as yku said small investors lost all and the funny thing is some brkkarage given target of 353 hope they might requested them to give false story so that small investors will be shaved 100lercent

  47. There are no strong shareholders. 29odd% is held by UTI and LIC+govt insurance companies. index funds.

    It's a fantastic article so well articulated, positively shaking the Board to do something.

    Aa noted, it will just take a few quarters of continuing sub-par performance to kill the company

    My Compliments for articulating the points in a most simple manner, leaving no scope for miscommunication

  48. Very nice article, I hope the chairman presentation in AGM is more like a sales man selling tea kind of a note. I don’t think so he knows anything that is happening in the ground level, their own employees are eating money, by creating artificial demand in the market. Likewise what happened during CORONA, they black marketed the products, every year this happens I don’t understand why this happens, I saw a many their company executives are millionaires, how they become so wealthy, in short span, I heard they even throw un socialised parties promoting drugs, women, and else more, proper proofs are available with a leading news channel.
    They are making use of share holders hard earned money for their enjoyment and earning.
    Each and every employee of ITC is corrupt from top to bottom. I challenge, if not so why there’s no enquiry for the expenditure they show in product development activities , that is all a scam it is being distributed from top to bottom among bosses.
    Cigarette business is not dead, their own crookedness killed the cigarette business, leading Marlboro to grow in length and breath of the country.
    This has more or less became like a monestary.
    Women are treated to the ugliest status in this company , there is no room for women safety here, being a women, my cry would be values, and it is the last spoken words in this world. But they advertise values, india, traditions ( nothing is true)
    Finally I would conclude by saying this is a mentally ill, unstable personnel run company.

  49. Yes, New young Talent should be brought on the Board.
    Beyond a limit compensation should be only by way of stock options.
    Unrelated business should be sold off

  50. Correct when small employees thrown out say lack of performance in the same way people who planned things in a wrong way better to resign and pave the way for new people

  51. Each and every sentence i read written by you just gave me goosebumps and now i am actually clueless about how the top officials at itc are going to manage the money and should i considere withdrawing my hard earned money that i have put into it. Ypu should seriously mail it to management

  52. This is a wake up call to the management team. Some of the truths have come out. Its better to early rectify than never.

    Your meetings and eating the company shareholders are not accounted.

    Some external audit is need of hour. Also to check the political donations/concessions which are not accounted till.

  53. Good analysis! Same was the case with M&M till recently. Only after the management announced its intention to take measures to improve capital efficiency, stock has performed in last few months. Before that, M&M was also a laggard for more than 5 years.

  54. Superbly articulated…what a depth of 368 pages study it would've been, I'm quite sure the Chairman himself wouldn't have read 10% of his annual report!

    It's high time, SEBI or Company Board or MCA is earnestly requested before Lakshmi Vilas Bank or an Enron, both so similar to Red Tapeism so prevelantly inherited in this company called ITC!

  55. I am afraid , I may not agree with the findings . But I respect his views .
    ITC s share price was 245+ in Jan 2020. Then it faced two big problems. First Heavy tax by Govt and then Covid and lockdown. It has 100+ factories / establishments and so the lockdown impact is high .
    However Q1 results are either met or better as compared to analysts expectations.
    Company s performance is good .
    ITC entered in to FMCG 10 yrs back . It captured 15000+ cr market and their brands are at either No 1 or at No 2 positionsin market which is a great achievement, and it is all entirely internal , indigenous / Indian with no external support / involvement. Considering Competition from HUL , an international company and Britannia , with long years of presence , may be 60 + or even more , it is a great achievement.

    Once FMCG starts giving full returns , ITC s share price also will go up .
    What , Savlon is a bad acquisition? . It is the best acquisition. It is performing exceedingly well .
    It just acquired Sunrise , I saw good comments from Analysts . So we should give some time before commenting.

    I understand his concern above it share price .
    We saw one Company s share price moving from 850 to 2200 in just 4 / 5 months . That is because, their Investments started paying back .
    Many companies share prices did not move for many years and they are at their highs today .

    Once ITCs FMCG starts paying , it will also move up . Also ITC has given Bonus shares almost once in every 5 years . Dividend, I need not talk as it gave good dividends.
    In my view this is a temporary phase .
    I am also a minority share holder for 15 years and my investment has grown considerably.

  56. This is a great insight and I think even if ITC management act on 50% of these suggestions thought, they will be 1L crore company in 1-2 years. How can we small share holders remove these stupid management?

  57. Very nice and eye opener article and management should take this seriously and must take some bold steps to reward shareholders who are showing great confidence in the company even after dismal performance by its share price

  58. Whether this great analysis of our friend open the eyes of our directors and raise their ears to listen their mistakes by stepping long foot giving no value of returns to the minority shareholders and think wise and deliver right things to reward atleast now rather thinking for after 10 years as already company has crossed over 60 year still we think our company is young don't think it as retired one pl directors act swiftly

  59. Superb article, LIC should withdraw it’s share from this fraudulent conglomerate.
    Dear chairman please read all this, may not everything is true or time bound, there’s a good suggestion from the above about your employees, if you correct that, your company would see next glorious 100 years.

  60. Very good analasys but there is no worry why because they are giving good dividend and equity 1200cr but reserves 64000 cr so bonus possible iam holding ten thousand shares

  61. Well written Manu! Am hopeful CEO change will happen sooner than expected. ESG will wear off. Hotels cash burn. Will take 3 years for stock prices to change course.

  62. Have you noticed that in the FMCG business, for any brand to get launched, you have to have a brand name that is easy to pronounce for semi-urban or rural households. (old brands are an exception as they have been around for 4-5 decades). They've been fine with Aashirwad and Bingo – but what about Fiama Di Wills, Essenza Di Wills, Vivel, Fabelle, Sunfeast ?? Did someone not give them a feedback? Forget potential customers, even the shopkeepers don't order some of these as they can't get hold of the brand names..

  63. From the value invester point, these questions to the board are useless. A value investor should seek for the alternative rather than fighting with non performing asset. If the investor don't see any future based on the board decisions its wise to move out.

  64. manu sahib
    even i am a shareholder of itc but only to the extent of the bourses…your blog would be with the board of directors by now….we all would like to have a point by point rebuttal and explanation along with their point of view and vision…infact to embolden the trust of shareholders and general market sentiments the chairman should come out on printmedia and social media platforms to give cofiden…ce

  65. This is a fantastic letter to the ITC management. I am one of the thousands of small stock holders having acquired them and holding them dear to my heart for 3 decades. I am crushed to realize late that my hard earned money is going down the drain may be because of the sagging competence in management of the much respected company

  66. Views expressed are the pain of all the stock holders, who have lost their hard earned savings to almost 40 to 50 % during last couple of years. Seems Company Board has become paralysed and is inept to act.

  67. The Problems of ITC stem from the Exit of A.N. Haksar as Chairman on retirement.

    His successor J.N. Sapru, though his Brother in Law was not his choice but that of the PMO exercising their 37% shareholding.

    All Businesses started then Financial Services, International Businesses, Edible Oils, Real Estate were wound up as unviable. ITC never had the talent in house and it's a mystery why they ventured into it.

    His successor K.L.Chugh again a Government Nominee was an unmitigated disaster and with him the Core Strength of ITC – Its Marketeers left. The GOI had to ensure Chugh left.

    Y.C. Deveshwar was also a pedestrian choice. He ran a printing shop in Madras and was picked up for the Hotels Business. His only claim of success was providing some scale to the Hotels Business. It after all gives ITC a Cash Pile from Depreceation and constant renovations.

    The successors to Deveshwar are two Production Engineers, one Accountant and one Hotels Front Office Expert.

    No Visionary, No Marketing Champion – It doesn't add up to revive the Haksar days.

    BAT its parent is a pale shadow of its past and cannot contribute much to its future.

    With its entrenched management supported by the GOI for reasons best known to them, the future will get bleaker and will go the way a lot of Big Names of the past like Andrew Yule, James Finlay, Balmer Lawrie, et al have gone.

    Till then its downhill unless tectonic changes happen. Maybe a takeover by Kraft Heinz or Mondelez like the entire food business in Europe happened may offer some hope.

    Managers need Dignity. Sans that there will only be also rans at the helm

  68. have you thought on HUL and Hero Motor corp. These companies came out of deep slumber of more than 15 years and took a giant step and now are being revered by the investors. i hope people are aware about the life span of cigarette market because of health awareness. we must also not forget the uncertain policies of govt on the sin tax imposed on cigarette. why as a govt we have not been able to check the illegal import of cheap cigarette eating market share of itc. we should also keep in mind the cheapest valuation of this stock ( P/E and P/B) which should be comforting for investor with added advantage of dividend yield of approx 5-6%. Therefore if some is not happy with the stock please move out and buy any other stock. Personally I feel This is a great stock and need patience as the FMCG push will take little more time ( 2 years or so ) to set. I am crazy about the stock. thanks

  69. All top management busy in investing in the startup, which are started by ex employee's of ITC, and also nurturing them by investing there contacts and time. High time they are investigated for there corrupt adventures. I heard some big projects have been handed over to these startups by ITC, instead of reputed company, every thing has changed after YCD…..

  70. Thank you Suman Bingi for that sane perspective !
    If ESG investing had not become fashionable, the ITC stock would be trading at 350 today !!
    The irony is that ITC's balance sheet and free cash flows are stronger today than when the stock was priced at double of today's level !

  71. I wish all these queries were raised and emailed in the last ITC Board Meeting, if not already done. Very relevant questions which needs answers. Like the LVB and Dhanalaxmi bank shareholders, we should find ways to kick out poor Board.

  72. I was blindly investing in it seeing all economic news inside story is scary I think time to sell and run from the company thanks a lot for this we minority share holders can not even ask questions

  73. A great article and insight Manu sir.. I think you should send a letter to the board, with a copy to SEBI. I hope other minority shareholders too join you in turning down board recommendations during the AGM, if it doesn't satisfy or bring confidence to the minority shareholder.

  74. Very good post Sir. I am curious to know the Return on the massive hotel they have built in Chennai "ITC Grand Chola" with highly priced rooms and less than one mile away from Park Hyatt and Lemon Tree(less than 3 miles from Radisson and Trident).Do they really get that many visitors paying so much? The thing is huge.The chocolate brand Fabelle they have started is truly good in taste(tasted before they started mass selling), hope that at least win there.

  75. Great insight and internal audit. I sold all my ITC holdings today, because when mngmnt is least bothered why should I burn my money.Thanks buddy.
    CA R.C.Shah

  76. Very well explained. Very realistic. The concerned executives should be made accountable. They cannot be whiling away the shareholders funds and enjoy at our cost which is highly unethical. The company should be run on professional manner. I wish this reaches all the shareholders of the company

  77. On top of everything else pensions have been frozen. I retired as Vice-President after working for 21 years and my pension (after commutation) has been Rs. 10553 per month from the beginning. The post retirement medical benefits do not even cover pensioners’ medical insurance premium.

  78. Why don't you send this to SEBI? Because we have tried asking these questions a countless times in ITC earnings call. And all they want to do is to paint a rosy picture and talk about some ESG bullshit. Its a red flag when a cigarette company itself starts talking about ESG bullshit and the manager Mr. Puri bats for ESOPs even when they are not performing. It is a good business, but doesn't mean management cannot kill it with scandals. Sir, it would be great if you could send this to SEBI or BAT for further resolution.

  79. The management does not know what customers want. The sales persons on the field have lot To Offer the management on customer needs and feed back. But management never want To listen. Sales guys are not allowed To talk in sales meetings. Bosses talk and sales rep listens. Any sales guy dar es To talk is finished. Management knows only what their agencies tell. Our system is fuedal as we See in Up & Bihar

  80. The only question is why cant BAT being largest shareholder ask ITC all this questions, so management gets answerable?
    All govt institutional shareholders will never ask till they are getting good dividend. As minority shareholder we should take questions to BAT and BAT in turn should ask management.

  81. To protect the interest of the minority share holders interest these should be investigated by the appropriate authority. If any malafide intention is found on the part of the management they should be brought into book. Prima faci sheer callousness is seen.Board is taking advantage of virtual AGM to avoid the wrath of the cheated retail investors. Like LV Bank , corrupt, callous and inefficient management should be kicked out.

  82. Great insights. Being minority share holder, I would urge ITC mgt to take serious note of these insights n work hard on turnaround plan. Show some strength in QoQ profits. Act now or be ready to become another Nokia. Cut unwanted expenses , award shares than cash salary, focus on revenue generation n gaining more market share in profitable businesses only.

  83. When dealers are blocking cig before budget seeing since 20 years no controls this happening from salesmen no contros no checking all officers in marketing will not visit market in full and enjoy by sitting infront of dealers with laptops enjoying tea how can you expect big people really work for company this happening since 20years when i entered the same industry

  84. ITC has grown its FMCG Margin to 7.5% in just 4 years ; ITC is gaining Market Share in Every FMCG segment

    ITC is close to post Double Digit Margin in next two years

    One Has to Show its Patience .

    Don’t Trust Any Blog. They r paid.

  85. Being an Ex employee..I can share more internal insights.. useless bunch of jokers sit on top… without much knowledge about their business..and if u question.u r out of favour..I was a top performer in all my previous organizations..and had promotions every two years irrespective of the bosses..but unfortunately I had to wait 8 years in ITC.before I decided to call it quits..and in a new organization again I was a star performer..

  86. While majority of the concerns raised is true i think we should give some more time for the FMCG to flourish. In the mean time SEBI should look for any frauds or illegal gratification on the part of the top management

  87. ITC suffers from a conglomerate discount. Maybe time to break up the company. Its performance also suffered from the dominant leader syndrome – larger than life abd unwuestioned boss Deveshwar who held on for too long

  88. Dear chairman,
    Kindly go through all this comments, please change your mindset, accept your personal failures, go through the legendary Deveshwar foot steps.

  89. Dear Sir. I am a shareholder just like you and feel the frustration. You have put in a lot of efforts to highlight what is wrong.

    CHAIRMAN OF ITC – I am sure you have read this blog. I want you to invite Mr.Manu to ITC and have a one to one chat with him and take his point of view and put out a paper to assuage minority shareholders. Please do this. This shows transparency.

  90. Excellent articulation of all blunders. I got to read this because I raised the question about ITC to one of
    my friends. He forwarded this to me. Hope this shakes board and executives ot ITC. Else writing is om the wall.

  91. On top of the above even the employees not taken care.Emagine employee works for almost 30 years gets gratuvity of Rs 70000.00 absolutely no other benifit because company doesn't have proper record.They are for themself.Least botherd of Share holder no employees

  92. SEBI should devise a practical methodology of seeking shareholders opinion for such sustained dismal performance, and pull out the lethargic management and board members, replacing them with efficient and committed persons.

  93. Second make two written complaint against head of compensation committee and board for approval of the purchase of this little known spice company

  94. Throw this management out similar to Laxmi Vilas Bank. Start with next appointment of independent director all of whom are dummy and whose only motive is large number of meeting

  95. Thank you for this timely and insightful article. Unfortunately in India as against US investor activism is very low. We all need to change this together and create a forum questioning wrongful and wealth destructive practices at companies

  96. Very well articulated arguments. We can conclude that ITC has just become a dhobi ka kutta..not able to bask in the glory of its cash cow cigarette business because of the rise of ESG investing and not able to keep pace with its powerful competition in the FMCG business! And so its valuation has suffered. But I agree with @Suman Bhogi that given time the FMCG business can prosper. My concern is about the allegations of corruption levelled against the management. I hope fervently that ITC does not go down the same path as another behemoth ILFS, which also boasted of 'professional management'! Lack of accountability to a strong promoter can certainly lead to problems of entrenched management.

  97. I heard all marketing people in this company are good traders, they have there own businesses associated with ITC and majority employees go to office for share trading.
    Strictly mobiles out of office. CAN YOU DO THIS🤜

  98. Mr Chairman, try not to save your musical chair , stop playing nasty games in the company, evaluate performers vs show Men try to understand the difference.
    Legendary Deveshwar added value to this company, you along with a bunch of clowns making it a Circus.

  99. Hi Manu! Well researched detailed report. Aporeciate your effort to bring it to the attention of share holders like me. Some of the KPIs performances are startling.
    In my view all investments, acquisition and diversification must be questioned by the TOP management and shareholders equally every quarter may be after after a cooling period of 1 to 2 or 3 years. If the outcomes are far short of the assumptions made during its approval process to get it through on the decsion making table then the strategy and operating TEAM must be questioned and time bound course correction is done on a MISSION mode.
    I believe there are GATE keepers – "investment committee" in the management system. If there are repeated failures then the TEAM members of this sacred committee whose job is to challenge every assumption that the division is putting forward to protect company's (cash cow cigarette business) capital and shareholders interest must be questioned.
    It is high time most of the division which have crossed 5 years of support must be detached from the oxygen cylinder – cigarette business and its business team must be made responsible for it's own survival mode. This will bring in more accountability, more creative business solutions, prudent investment decisions and above all ownership as for survival each team and its member will fight tooth and nail thereby delivering better performance.
    In my view the management must sensitize its management team about value created for themselves espl at management level and the value they have created for their shareholders over last 5 years. If it is falling short in creating value for its shareholders more than the they gave created fur themselves then there is a BIG question mark in the philosophy of the company, in its approach and functioning.
    My company has huge potential and can come out of the abysmal performance and can create tremendous value for itself in the competitive market and its share holders but it needs to be shaken off. Its management should bring in a guiding principle that the value added to any management employee wrt its compensation including shares cannot be more than the value created for its shareholders.
    Also i agree there should be a cap on top management compensation.
    I liked the debate you have started. All long-term strategic management actions that does not add value must be questioned so that the management takes necessary actions to course correct for the benefit of its business and all stakeholders.

  100. Very well written article ! No doubt ITC Board / management needs to do soul searching and seriously consider some of the valid suggestions given. Time is running out before share value gets further eroded !

  101. Hello Team,

    Please send email to itc
    Name Designation Phone No. Email ID
    Mr. R. K. Singhi Executive Vice President
    & Company Secretary
    Mr. R. Tandon Executive Director &
    Chief Financial Officer
    Mr. K. S. Suresh General Counsel 033-22888154
    Mr. N. Anand Executive Director 0124-4171021
    Mr. B. Sumant Executive Director 033-22880181 b.
    Mr. S. Puri Managing Director 033-22886890

  102. Good Rishi this people enjoying & time pass learnt free income eating enjoying without work hard wrong decesion spill no body , if do not maganable please surrender go to home ,bull shut I fed up holding stock

  103. Very good eye opener for small investors to question the current management. Some bloggers were asking to leave the company & invest elsewhere. Is it right on your part to advise in this manner when every small investor lost his wealth ? Am an investor since 2015,and averaging continuously with the hope that it will come out of this moribund state. Management has its job cutout to answer to each and every question raised here.

  104. It is a known fact that the top management of ITC is worth peanuts they just suck up too the leaders and ensure their survival through subscription of suck up!! This company's share value only goes up in time for the leadership shareholders to vest their options!

  105. Who cares, do you think management will read all this stories, Investment is subject to market risk it's clearly said, many bluechips are still 50% down, don't waste your time , noone will listen, it's your decision to come to stock market, why didn't you go for mutual funds giving good returns ,it's due to our greed we buy for quick returns n repent.

  106. An eye opener for the shareholders. If the company is becoming too big to handle, please do not hesitate to put up a " for sale" board. Lot of better businessmen can run it more efficiently to deliver lot more better profits to shareholders and bring back their lost wealth.

  107. I sent a suggestion to itc about giving discount coupons to share holders as done by many others like bata,Titan,Apollo etc.
    It was not even acknowledged, leave alone any action on that…
    Earlier it was a customercentric coy…now …

  108. The problem with ITC has always been that loyalty to top bosses mattered much more than the merit or performance at Management levels. As a result, the top management (even Board members) is filled with old timers who have performed almost nothing except buttering up their bosses / CEOs. Anyone who was outspoken or questioned the age old Yes-Boss culture was shunted out. Now, this culture worked well till Cigarettes business was a cash mountain, in fact the earlier Board Members used to tell ITC Managers: No need to perform out of way, just keep everyone happy as our Cigarette business is like "Maharaja Patiala of cash, never ending". Now its facing a highly competitive market in FMCG segment and that old YES BOSS culture of Tobacco days, will not sustain..

  109. These unscrupulous board of directors of ITC who feed on our flesh should be thrown in the litter bins & replaced by the likes of Y.C Deveshwar.

  110. what an insightful article and a open criticizm of useless board meetings but this is how they earn..Nothing gonna change as sitting fee is more important for them than the growth of the company. they will cook their books as long as they can and continue this trend until one day they collapse and pull us all down with them

  111. Excellent analysis by Manurishi Gupta. I will like to add that it is essential for ITC Foods, ITC Personal Care, ITC Paper, ITC Hotels and Agro business division to be transformed into "Digital" business in a marketplace of food, personal care products dominated by ecommerce players like JioMart, Amazon, Flipkart, Big basket and Airbnb. Modern ecommerce, especially JioMart etc has started to act as manufacturer, FMCG and retailer, all rolled into one. This is the phenomenon of disintermediation that happens when markets gets digitized. Similarly Airbnb, an aggregator of hotel rooms is much more profitable than ITC hotels that own it's inventory of rooms but has very little customer data , ML and forecasting abilities to sell all the inventory every night throughout the year. Digitization requires efforts to store customer data, do analytics on that data and run businesses profitably . I3L or ITC Infotech can be repurposed to solve the core digitization problem of ITC and this had been pointed out umpteen number of times. However, I4L is run with a old mindset of earning per FTE revenue in a T&M model or a Fixed Price (FP) model while it solvrs digitization problem for companies around the world except ITC. The stated aim of making an Infosys out of I3L is not only far fetched (given I3L's current revenue of Rs 2300 cr and profit of less than Rs 100 cr) but also past it's sale date. I3L's top management consists of people from outsourcing industry. I3L needs people with expertise of "problem solving" and help digitization of ITC. This is one key reason to nurse back other (consumer) businesses to health. Not repurpising I3L will result in death and decay of both I3L and ITC's consumer facing businesses. I haven't talked of tobacco division as tobacco is "sin good" and it is better that profits and reveues must shrink to drive away the scrouge of cancer from our society. It's high time that investors start to punish those businesses with large exposure to tobacco.

  112. A very intrusive analysis by blogger Manu Rishi Guptha of ITC's performance in recent years.ITC must benchmark it's performance against its peers in FMCG industry like Hindustan Unilever which shows it is lagging miserably on every parameters.Split the conglomerate into independent reporting entities of major divisions.Don't treat the Cigarette business as a cash cow for funding marginal businesses.

  113. Pls don't tell these guys to sell the Hotel business now else they shall make another blunder. They should try to seel the ITC Infotech Business first atleast IT is doing better in current market scenario. We'll have to wait for the Economy to take an upward before these people start to think of selling the Hotel business. These guys do NOT even have dedicated page in leading e-comm websites. I wonder do we really need an MBA or a 25+ yrs of experience to figure that out ?? Crazy but just cut their half salary and convert it into Performance linked Incentives and see the magic.

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