ITC Group Through the Years: A Closer Look at Its Expansion and Impact
ITC Group is a well-established Indian consumer brand with a significant presence in the corporate sector. It is recognised for its diversified businesses, broad industry footprint, and large-scale operations. ITC’s legacy has developed over a century, shaped by its focus on consumer engagement, corporate governance, and sustainability. Over the decades, the company has undergone multiple phases of transformation, expanding its presence across industries. This blog outlines ITC’s history from its origins as a tobacco trading firm to its current role as a diversified business group.
The Early Years
ITC Group began operations on 24 August 1910 in erstwhile Calcutta, British India, as the Imperial Tobacco Company of India Limited. It emerged as a region-specific arm of Imperial Tobacco, formed through the merger of W.D. & H.O. Wills and 12 other British tobacco firms.
The Imperial Tobacco Company of India was initially set up to import and distribute Britain-made tobacco products in colonial India, aiming to tap into the country’s expanding tobacco market. However, the company soon decided to leverage domestically grown agricultural resources and partnered with farmers in Guntur, Southern India, to source leaf tobacco. This decision led to forming a subsidiary company, the Indian Leaf Tobacco Development Company Limited, in 1912.
Despite sourcing raw leaf tobacco from India, Imperial Tobacco continued importing cigarettes manufactured in Britain and distributing them in the colonial Indian market. This changed in 1926 with the establishing of its first Indian factory in Bangalore, the capital of the erstwhile Mysore State. Within another decade, Imperial Tobacco acquired Carreras Tobacco Company’s cigarette manufacturing factory at Kidderpore, Calcutta. As a result, the company transformed from a British-owned importer and distributor into a manufacturer of tobacco products in India.
During the 1920s, the company diversified into the packaging and printing business as part of a backwards integration strategy. Operations under this vertical expanded further, establishing a new printing and packaging unit in Madras in 1949.
Post-independence: The Indianisation Process
India’s independence in 1947 marked a shift in leadership at the Imperial Tobacco Company of India, reflecting a broader transition seen across several British-owned firms operating in the country. In 1969, Ajit Narain Haksar, a Harvard Business School alumnus, became the company’s first Indian chairperson. Haksar initiated the major Indianisation drive of Imperial Tobacco of India’s business operations. He was also the first chairperson to emphasise the “Country before Corporation” philosophy within the ITC. Under his leadership, the company was rechristened as the ITC Limited, reflecting its expanding interests beyond tobacco.
From Tobacco to Diversification
ITC entered printing and packaging in 1925 as a backwards integration initiative, but its diversification beyond tobacco began in earnest in 1975 with its foray into the hospitality sector. The company acquired a heritage property on Cathedral Road, Chennai, and rebranded it as the ‘Hotel Chola’. Previously a guesthouse, this property had hosted C Rajagopalachari and Mahatma Gandhi in 1919. During his stay, Gandhiji announced the launch of the ‘Satyagraha’ movement against the Rowlatt Bill introduced by the British colonial government.
In 1979, ITC entered the paperboard manufacturing industry by setting up the ITC Bhadrachalam Paperboards Limited. This was also a natural progression of the company’s operations in the printing and packaging business.
These diversifications allowed ITC to align its ambitions with India’s evolving socio-economic landscape. The capital-intensive hospitality and paperboard business benefited from the company’s cash-rich tobacco business, enabling sustained investment. Additionally, these sectors allowed ITC Group to reduce its dependence on the increasingly scrutinised tobacco industry.
The ITC Group of companies further diversified into agri-business in the late 1980s and early 1990s, building on its previous experience of working with tobacco farmers. Brands such as Adarsh oilseeds and Sundrop cooking oil were launched in 1988, followed by Real Gold, a refined mustard oil, in 1990.
The e-Choupal Initiative and FMCG Foray
In 2000, ITC launched the e-Choupal initiative as part of its commitment to sustainability and social empowerment. This groundbreaking programme leveraged emerging IT tools and rural Internet connectivity to help farmers make informed decisions.
Today, the programme touches the lives of over 4 million farmers across 35,000 villages through 6,100 locally managed kiosks in 10 states. These kiosks provide farmers real-time information on market prices, raw materials and agricultural practices.
The initiative also catalysed ITC’s entry into the non-tobacco Fast-Moving Consumer Goods (FMCG) sector by securing a direct supply chain from farmers. Its vast distribution network, originally built for tobacco, gave an edge in rolling out consumer products.
By 2017, the ITC Group of Companies launched over 23 prominent FMCG brands, including Aashirvaad, Sunfeast, Paperkraft, Mangaldeep, Essenza Di Wills, Fiama and Sunbeam. The group also acquired brands like Savlon, B Natural, Charmis and Nimyle. In 2020, ITC strengthened its presence in the spices segment by acquiring Sunrise Foods.
Modern-day Ventures: Embracing D2C and Strategic Restructuring
ITC’s recent ventures include entering the direct-to-consumer (D2C) space with investments in brands such as Mother Sparsh, Mylo and Yoga Bar in 2020. Though the COVID-19 pandemic posed challenges, especially to its hotel business, ITC responded with strategic restructuring. On 1 January 2025, the company demerged its hospitality vertical, forming a new entity, ITC Hotels Limited. This move unlocked significant shareholder value with ITC Group retaining a 40% stake in the newly formed entity.
Today, ITC Hotels is the third-largest hotel chain in India, with 115 properties and ambitious plans to expand to 200 properties by 2030.
Final Takeaways
A major part of ITC Group’s business journey coincides with the journey of independent India, the transformation of Indian economic policies and changing socio-economic realities of Indian demography. Tracing the ITC history also serves as an in-depth case study on India’s experience with nation-building. The legacy of ITC not only reflects a unique corporate brand entity in the Indian business landscape but also portrays its ever-dynamic attitude to adapt and evolve with changing business realities.
Sources
This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
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