India Tobacco Corp. in Export Drive (fwd)

[Robert Weissman <rob@essential.org>]

                                      Thursday 13 August, 1998 
 
The Economic Times (India)

           ITC plans fresh global trade drive 
           Our Calcutta Bureau 

           12 AUGUST 
           HAVING rationalised and restructured its businesses to a large
extent, ITC Ltd,
           has decided to give a special thrust to its international trading
businesses. 

           The company which already has a presence in commodities trading,
is now the
           process of seeking out a world class partner with strong global
presence.
           Yogesh Chandra Deveshwar, ITC chairman said on Wednesday that the
           company is determined to expand this business, now that it has a
well-knit
           corporate governance system in place. 

           ITC did suffer a setback in its international businesses when its
wholly owned
           Singaporean subsidiary, ITC Global Holdings pte, went into the
red. That
           company is now under the judicial custody of KPMG Peat Marwick,
which has
           put ITC's outstanding dues at around $50 million. Besides,
dealings with the
           US-based Chitalias had also caused considerable harm to the
company's global
           operations. 

           Even though the ITC board, does not accept any legal liability on
account of
           these overseas dues in ITC Global, it has nevertheless proposed a
financial
           assistance of $26 million to judicial managers in Singapore,
subject to, of course,
           to necessary approvals and consent from government authorities
both in
           Singapore and in India. 

           Some ITC sources said that commodity trading will now be
undertaken in a
           more professional manner by bringing in a partner with extensive
knowledge of
           products and markets world-wide. Besides, by signing up with an
international
           trading house of considerable repute, the company will ensure
transparency at all
           levels. 

           Mr Deveshwar said the company had also taken a conscious decision to
           periodically review all its businesses for better positioning and
ensuring greater
           competitive edge. ``We will grow businesses where we have
strengths, at the
           same time exiting from areas which are no longer core to our
activities'', the
           chairman said. 

           Mr Deveshwar, in his address at the shareholders' meeting in
Calcutta on
           Wednesday, said the decision to exit from financial services and
edible oils
           businesses were based on the need to focus in areas of strength
and ability to
           nurture core capabilities over time to sustain a leadership
position in the industry.
           ``We will do only such businesses where we can be industry
leaders,'' he said. 

           Mr Deveshwar said that the company had appointed well-known
consultants to
           review the business strategies and recommend areas where forays
can be made.
           According to him, this was necessary since no area of business
could succeed at
           all times. ``It is in these times that there will be other
activities which will cushion
           the impact and help the company to sustain reasonable
profitability,'' he said. 

           Mr Deveshwar said that a hard-nosed, determined and responsible
exit was the
           only answer to plug the sustained cash drain suffered by the
company in the
           areas of financial services and edible oils. 

           He said that a focused approach at rationalising the business was
responsible for
           being able to retain very satisfactory growth, despite a drain of
around Rs 1,200
           crore suffered for disengaging the company from financial
services and meeting
           pre-deposit requirements of Cegat, which is currently hearing the
disputed excise
           case. 

           Among the new initiatives planned are favourable exploitation of
the goodwill
           which the company has built up over the years and extension of
the trade mark
           business, while strengthening paper, printing and packaging and
hotels and
           hospitality businesses, Mr Deveshwar said. 

           The ITC chairman said that despite present problems, the company
had decided
           to invest in ITC Bhadrachalam. He said that it was imperative
that the parent
           extend support to its progeny in this hour of need. Bhadrachalam
has one of
           finest plants in paperboard and it is only a matter of time
before it recovers, he
           said. The company has proposed to invest about Rs 150 crore in
Bhadrachalam.

           The long-term investment plans include Rs 900 crore in tobacco
and the
           cigarette business and another Rs 1,200 crore in hotels. ``We
will grow the
           hotels business through the twin route of green field and
acquisitions,'' the
           chairman said. 

           Apart from these investments, the company is also focusing on crop
           development to enhance quality and productivity of tobacco farms.
Investment of
           around Rs 375 crore have been planned for leaf processing plants
and modern
           storage facilities. 

           To achieve its goal of sustaining leadership in areas of
activities, the company has
           put in place an elaborate corporate governance system. This
refers to the
           structure, systems and processes of the corporation that are
considered most
           appropriate to enhance its wealth generating capacity, Mr
Deveshwar said. The
           formalised governance code prescribes the highest ethical
standards in the
           conduct of the company's business, he added.