Is ITCs succession plan gaining speed?

Is ITCs succession plan gaining speed?

IndustryConglomeratePredecessorW.D. & H.O. WillsFoundedAugust 24, 1910(as Imperial Tobacco Company of India)HeadquartersKolkata, West Bengal,IndiaKey peopleY C Deveshwar, (Chairman)ProductsTobacco,hotels,paperboards & specialty papers,packaging,agri-business,packaged foods&confectionery,IT, branded apparels,personal care, stationery,safety matchesand otherFMCGproducts

Deveshwar as a chair-personIn 1996, when Deveshwar took over, he inherited twonon-tobacco businessesfrom his predecessors: hotels and paper board. Thereafter, the "general" battled to create new drivers for growth: non-cigarette fast-moving goods and information technology.And his tenure ends in 2012.During this,in 2010 three new members, Kurush Grant, Nakul Anand and Pradeep Dhobale, were inducted on the board. Succession plan timeline 201020112012By 2017The strategic move-Re-appointment of Deveshwar as chair-person2011

At that time, the challenge was to transform ITC into an FMCGcompany.

In 2015, it is the over 100-year-old cigarettes business, the main profit driver for ITC, that is enmeshed in problems. The sharp rise in excise and VAT duty over the past three years has impacted volumes, and the spectre of further regulatory tightening, including a ban on loose cigarettes, in the Budget on February 28, hangs heavy over its Nehru Road, Kolkata, headquarters.

Further strategies adopted by Deveshwar-With thecigarettes businessin the slow lane, the relatively new non-cigarette FMCG arm is gaining importance. To spur growth, ITC inked an agreement to acquire two high-recall brands, Savlon and Shower to Shower, from Johnson & Johnson recently. The deal, estimated at between Rs 180 and Rs 200 crore, marks ITC's presence in the personal hygiene space. This is the second acquisition by the company in 10 months after the buyout of B Natural juice for Rs.100 crore. With a strategy based on acquisitions and organic growth, ITC's plan is to take the non-cigarette FMCG business to Rs 1,00,000 crore over the next 15 years from Rs 8,100 crore in 2013-14.

The main challenge for ITC in achieving these targets, however, lies elsewhere that is if the is company ready with the next rung of leaders to drive growth?

ITC had begun to plan its future well ahead of Deveshwar's reappointment in 2011. Of the new board members appointed between March 2010 and January 2011, Grant was given the responsibility for overseeing the FMCG business, Dhobale was made the head of paperboards, paper, packaging, finance and IT, and Anand was entrusted with hospitality, travel and tourism at the strategy level. Much of ITC's succession planning, however, remained out of public view. It gained traction towards the end of 2014, when Grant and Dhobale's roles were swapped, while Anand was given additional charge of lifestyle retail.

It is widely believed that Grant or Dhobale or Anand will succeed Deveshwar. But, ITC has been extremely tight-lipped about the future. For one, Deveshwar's current term will end only in 2017, which means there is still a window of two years and things could go any which way. All three of them -Grant, Dhobale and Anand- are in their late fifties. ITC is busy creating a second line of leaders to take care of its rapidly expanding business.Creating new roles-

Last year, alongside the reshuffle in portfolios of executive directors, ITC also made some other key changes. Sanjiv Puri, who was earlier handling the India Tobacco Division, was made president of the FMCG businesses. That meant representation of the FMCG business at the corporate management level which is responsible for strategic supervision.Among other changes, B Sumant moved in as divisional chief executive of India Tobacco Division; Ranvir Bhandari assumed the role of vice-president (operations) of the hotels business and V L Rajesh became the chief operating officer for food.

Each of these segments has a chief executive and many of these roles were created to suit the changing nature of ITC's business. For instance, Sumant who moved to the India Tobacco Division will pay special attention to marketing and distribution, the key link to ITC's growth plans.Experts say the success of ITC's investment of Rs 25,000 crore over the next five years will depend on the strength of its distribution network.While ITC has underplayed these changes, saying the reshuffle is an ongoing process, the churn inside the company over the past few years has been conspicuous. Among the not-so recent changes, but key to ITC's growth, are those of S Sivakumar, divisional chief executive of the farm business, and Sandeep Kaul, who was made chief executive of personal care products segment. Sivakumar has been responsible for spearheading ITC's celebrated e-choupal model and Kaul is responsible for the development and launch of one of the newest segments in the non-cigarette FMCG business, including Savlon and Shower to Shower which were added to his portfolio recently.

As the company expands its non-cigarette FMCG business, the challenges for its leadership are also growing. So is the second-in-command ready to take up the challenge? When the ITC board cleared Deveshwar's extension as chairman, the resolution also said that he could, during his tenure, become a non-executive chairman to pave the way for succession planning. Whether that is likely during his current tenure, or after 2017, is something ITC's Nominations Committee must be mulling over.