History of ITC Group

Introduction

Ever wondered how a humble tobacco company transformed into one of India’s most respected and diversified conglomerates? The story of ITC Limited is one of resilience, innovation, and a constant drive to stay ahead of the curve. 

With over a century of operations, ITC has continually reinvented itself, adapting to shifting market dynamics and societal expectations. Today, ITC is a global player with a strong presence in FMCG, hospitality, paperboards, agriculture, and IT services. ITC has continually redefined itself and today it is synonymous with quality, sustainability, and leadership, setting benchmarks across industries.

In this detailed blog, we’ll uncover the history of ITC, understand ITC and its business, explore its transformation, and understand how its subsidiaries and innovations have supported its growth story. This is the story of how ITC grew into one of India’s most respected and sustainable businesses.
 

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About ITC and Its Evolution

Originally known as the Imperial Tobacco Company of India Limited, which was back then the ITC full form in official records. The company was founded in 1910 in Kolkata. While its full form, ITC, signified its beginnings in tobacco, the name was later changed to ITC Limited in 1974. The change was more than symbolic, it represented ITC’s ambition to break free from its tobacco-centric identity and evolve into a multi-business conglomerate. 

Today, while ITC retains its iconic initials, the company no longer identifies solely with tobacco, instead embracing a broader vision of sustainable growth and innovation.

Humble Beginnings: The Foundation of ITC

Early Years in the Tobacco Industry

ITC’s journey began during the British colonial era. Recognizing the vast tobacco-growing regions in India, the company entered the market to cater to the demand for cigarettes and other tobacco products. Key milestones in this phase include,

• In 1910, ITC was incorporated in Kolkata as the Imperial Tobacco Company of India Limited.
• In the early years, ITC primarily imported cigarettes for distribution in India.
• In 1926, it established its first cigarette manufacturing plant in Bangalore, reducing dependency on imports and strengthening its domestic presence. During this period, the tobacco industry flourished under colonial trade policies, and ITC quickly established itself as a market leader.

Rise to Market Leadership

By the mid-20th century, ITC had established itself as India’s leading tobacco company, known for its quality and expansive distribution network. The company’s ability to adapt to evolving market demands cemented its position as a trusted brand among Indian consumers.

However, ITC’s leadership soon realized that relying solely on tobacco products would limit its long-term potential. This realization marked the beginning of ITC’s journey toward diversification.
 

The Strategic Shift: Diversification in Action

The 1970s: A Decade of Transformation

The 1970s marked an important period in ITC history. Economic reforms and societal shifts encouraged ITC to diversify its operations, reducing its tobacco dependence. During this decade in ITC history, these below-mentioned changes happened,
 

1. Name Change:

 ITC shed its original name and adopted the acronym ITC Limited in 1974, signalling its intent to diversify.

2. Entry into Hospitality:

The company entered the hospitality sector with the launch of ITC Hotels in 1975, marking its foray into non-tobacco businesses. The first property, ITC Chola (now ITC Grand Chola), became a landmark in Chennai.

This decade set the stage for ITC’s evolution into a multi-sector enterprise.

Diversification into New Sectors

Do you feel curious about ITC’s diversification strategy? You shall be as it transformed ITC into one of India’s largest conglomerates. Here’s about the history of ITC and diversification that made the way towards multiple sectors.

Entering Hospitality: A Visionary Step

When ITC decided to enter the hospitality industry in 1975, it was a bold and visionary move. Launching its first property, ITC Chola (now the iconic ITC Grand Chola) in Chennai, ITC set out to redefine luxury hospitality in India.

The decision to start was about showcasing Indian heritage and hospitality to the world.

From the outset, ITC Hotels distinguished itself with an unwavering commitment to luxury, sustainability, and eco-friendly practices. Over the years, the brand has expanded to include a portfolio of premium and luxury hotels that reflect its core philosophy of “Responsible Luxury.” Some standout properties include:

• ITC Maurya, Delhi: Known for its grandeur and culinary excellence, including the world-renowned Bukhara restaurant.
• ITC Grand Bharat, Gurugram: A luxurious retreat combining opulence with eco-consciousness.

Pioneering Green Building Practices

ITC Hotels has been a leader in sustainable hospitality, with several properties achieving LEED Platinum certification, the highest standard in green building practices. From energy efficiency to water conservation, every aspect of ITC’s hotels reflects its dedication to reducing environmental impact.

With its blend of Indian heritage, luxury, and sustainability, ITC Hotels are leaders in the hospitality industry, attracting domestic and international travellers.
 

FMCG: A Strategic Move

ITC’s foray into the Fast Moving Consumer Goods (FMCG) sector in the early 2000s was transformative. Building on its vast distribution network originally developed for its tobacco products, ITC rapidly became a key player in the FMCG industry.

Iconic Brands That Changed the Market

ITC launched a range of innovative and high-quality products that resonated with Indian consumers. Some of its most notable brands include,

• Aashirvaad: Dominating the staples segment with its atta (wheat flour) and spices, it has become a household name.
• Sunfeast: Offering biscuits, cakes, and noodles that cater to diverse tastes and preferences.
• Bingo!: A youth-centric snack brand, widely popular for its quirky flavours and bold marketing.
• Fiama, Vivel, and Engage: Personal care brands that combine quality with affordability, addressing the growing demand for grooming products in India.

Why ITC’s FMCG Strategy Worked?

• Focus on Quality and Innovation: ITC’s R&D efforts ensured that its products met high-quality standards while addressing the unique needs of Indian consumers.
• Leveraging Existing Distribution Networks: ITC’s well-established cigarette distribution system gave its FMCG brands a significant competitive edge in reaching even remote areas.
• Consumer-Centric Approach: ITC developed products that resonated with a diverse demographic by studying consumer behaviour and preferences.

Today, ITC’s FMCG division is one of its most significant revenue contributors, solidifying its position as a leader in the Indian market.
 

Key Milestones in ITC History

ITC’s journey is marked by significant achievements and milestones that have shaped its growth. Some of the most noteworthy include,

• 1910: The company was started as the Imperial Tobacco Company of India Limited.
• 1926: Establishes its first cigarette manufacturing facility in Bangalore.
• 1974: Renamed ITC Limited, signalling its diversification efforts.
• 1975: Launch of ITC Hotels, starting with ITC Chola in Chennai.
• 1990: Enters the agri-business sector and launches the e-Choupal initiative.
• 2001: Makes its debut in the FMCG sector with branded foods.
• 2020: Acquires Sunrise Foods, strengthening its position in the spices market.

Each milestone in the history of the company’s business reflects ITC’s ability to adapt to changing market dynamics while staying true to its core values.

ITC Subsidiaries: Driving Innovation Across Sectors

ITC’s diverse portfolio is supported by its dynamic subsidiaries, each contributing to the conglomerate’s growth in unique ways.

1. ITC Infotech

This global IT services provider specializes in digital transformation, IT consulting, and product engineering. ITC Infotech’s expertise in next-generation technologies has reinforced ITC’s position in the digital economy.

2. Technico Pty Limited

ITC’s foray into agri-biotechnology is spearheaded by this Australian subsidiary, known for its innovative seed technology. This acquisition has enabled ITC to advance sustainable farming practices globally.

3. Sunrise Foods

Acquired in 2020, Sunrise Foods has strengthened ITC’s FMCG portfolio, particularly in the spices segment, a fast-growing market in India.

4. Surya Nepal

This subsidiary manufactures branded apparel and tobacco products, expanding ITC’s footprint in the South Asian market while maintaining its focus on quality and innovation.
From its pioneering initiatives in hospitality and FMCG to its transformational e-Choupal program, ITC Limited continues to redefine what it means to be a diversified conglomerate.

With sustainability at its core and a relentless focus on innovation, ITC has not only adapted to changing market dynamics but has also led the way in creating positive social and environmental impacts.

As ITC moves forward, its commitment to sustainability, excellence, and innovation ensures that it remains the winner in India’s corporate environment. Whether you’re an investor, a consumer, or simply someone who admires visionary companies, ITC’s story is one of growth, resilience, and purpose, a story worth knowing as it unfolds.
 

ITC’s CSR Activities

The company’s commitment to responsible growth is evident through its initiatives aimed at environmental conservation and social empowerment.

Innovation in Sustainability

ITC has pioneered green technologies, such as biodegradable packaging and low-energy manufacturing processes, further solidifying its reputation as a sustainability champion.
 

Challenges and Strategic Responses

As one of India’s largest conglomerates, ITC Limited has faced its fair share of challenges. From navigating regulatory hurdles to tackling fierce competition, ITC has consistently demonstrated resilience and strategic foresight to maintain its growth trajectory.

Regulatory Pressures on Tobacco

Despite ITC’s diversification into sectors like FMCG, hospitality, and agribusiness, tobacco products still contribute a significant portion of its revenue. However, this dependence comes with challenges,

• Strict Regulations: Stringent government policies, increasing excise duties, and anti-tobacco campaigns have significantly impacted the profitability of ITC’s cigarette division.
• Public Health Awareness: Growing consumer awareness about health risks associated with smoking has led to declining demand in certain segments.
• Strategic Response: ITC has proactively mitigated these challenges by:
• Diversifying Revenue Streams: Expanding aggressively into non-tobacco sectors like FMCG, agriculture, and IT services.
• Innovating in the Tobacco Segment: Introducing premium products and focusing on efficient manufacturing processes to maintain profitability.
• FMCG Competition
• The FMCG market in India is highly competitive, with established players like HUL, Nestlé, and Dabur trying their best for consumer attention. ITC faced an uphill battle to carve its niche in this industry.
• Consumer Preferences: Changing trends and increasing demand for value-added, health-focused products required ITC to innovate rapidly.
• Market Penetration: Competing in both urban and rural markets posed challenges in distribution and brand visibility.
• Strategic Response: ITC leveraged its strengths to tackle FMCG competition,
• Strong Distribution Network: ITC’s pre-existing distribution network for cigarettes became the backbone of its FMCG operations, ensuring widespread reach.
• Innovation-Driven Growth: Launching successful brands like Aashirvaad, Bingo!, and Sunfeast helped ITC stand out in crowded markets.
• Consumer-Centric Strategies: ITC prioritized understanding consumer behaviour, enabling it to develop customised products and effective marketing campaigns.
• Economic Cycles in Hospitality
• The hospitality industry is inherently cyclical, with performance heavily influenced by economic conditions. During downturns, ITC Hotels often faces challenges such as,
• Decreased Travel: Economic slowdowns, pandemics, or geopolitical issues reduce both leisure and business travel.
• Operational Costs: Fixed costs like maintenance and staffing make it challenging to remain profitable during low-demand periods.
• Strategic Response: ITC Hotels navigates these cycles by,
• Focusing on Sustainability: By reducing operational costs through energy-efficient practices and renewable energy, ITC Hotels enhances long-term profitability.
• Targeting Diverse Markets: Offering products and services catering to different segments, from luxury to business travellers, ensures a steady revenue stream.
• Leveraging Brand Strength: Properties like ITC Maurya and ITC Grand Bharat continue to attract high-value clientele, reinforcing the brand's resilience.

Why is ITC a Strategic Investment Choice?

Investing in ITC provides a compelling opportunity for both income-focused and growth-oriented investors. Here’s why ITC Limited stands out as an ideal investment choice,

1. Strong Brand Equity and Diversified Portfolio

ITC has built a strong diversified portfolio that spans tobacco, FMCG, agribusiness, paperboards, and hospitality. This diversification shields the company from sector-specific downturns and ensures stability across market cycles.

• Leadership in FMCG: ITC’s FMCG brands, such as Aashirvaad, Fiama, and Classmate, have achieved significant market penetration.
• Sustainability Focus: ITC’s environmental and social initiatives strengthen its reputation and align with global investment trends favouring ESG (Environmental, Social, and Governance) compliant companies.

2. Consistent Dividend History

ITC is well-known for its consistent dividend payouts, making it a reliable choice for income-seeking investors. With a track record of steady financial performance, ITC offers investors a sense of security, even during volatile market conditions.

• Attractive Yield: ITC has maintained an impressive dividend yield compared to peers, reflecting its strong cash flow generation.
• Shareholder Value: The company’s focus on returning value to shareholders has built long-term investor confidence.

3. Growth Potential in FMCG and Beyond

ITC’s aggressive expansion in the FMCG segment positions it for strong growth in a rapidly evolving market.

• FMCG Contribution: The segment now contributes a growing share of ITC’s overall revenue, driven by brands that cater to diverse consumer needs.
• Global Expansion: ITC’s acquisition of Sunrise Foods and its innovative e-Choupal platform signal its intent to dominate both domestic and international markets.
• Digital Transformation: Subsidiaries like ITC Infotech enhance ITC’s presence in the global IT services industry, providing additional revenue streams.

The Long-Term Vision

ITC’s commitment to sustainability, innovation, and inclusive growth makes it a future-ready corporation. From being a leader in eco-friendly practices to empowering rural communities, ITC is a force working for good.
Whether you’re seeking stable dividends, exposure to a diversified portfolio, or a stake in a company that prioritizes sustainability and growth, ITC remains a strategic investment choice for investors looking to balance security and profits in their portfolios.

A Century of Excellence

The history of ITC is a remarkable journey of continuous adaptation, innovation, and success in an ever-evolving business environment. From its origins in the tobacco industry to its current status as a diversified conglomerate, ITC’s journey reflects its commitment to excellence, sustainability, and social impact.
Whether you’re an investor, a business leader, or simply someone inspired by success stories, ITC’s legacy offers valuable lessons in adaptability, innovation, and responsible growth. As the company continues to shape the future of the Indian industry, its story remains a shining example of what visionary leadership and strategic thinking can achieve.