India King: The Legacy of YC Deveshwar

WILLIAM BEN HOGAN (1912-1997), considered one of the greatest players in the history of golf, once came up with this gem: “The most important shot in golf is the next one.” I witnessed it first hand at the Jack Nicklaus-designed ITC Classic Golf Resort in Gurgaon in 2002 at a professional-amateur event featuring some top names from India’s corporate firmament at that moment, including Coca-Cola’s Alex von Behr, Ranbaxy’s Tejendra Khanna, P&G’s Bharat Patel, GE’s Pramod Bhasin, aspiring writer and Morgan Stanley executive Ruchir Sharma, among others. That unusually misty morning of March was a nightmare for golfers as the fog intensified on the fairway and visibility dipped to just a few metres. At one corner of the tenth hole, ITC Chief Executive and Chairman Yogesh Chander Deveshwar was teeing off along with Sanjay Rishi of American Express and Rana Kapoor of Rabo Bank. I hopped on and prodded the 54-year-old Deveshwar about whether the ball could really find its mark hovering through the fog and filthy air. He beamed and uttered something memorable: “The air is thick, yet friendly… the ball will find its mark… it’s an 18-hole green and we have time [with friends]… ” It’s a golf lesson that Hogan could be proud of—making the most of any situation—at times, from the worst imaginable locations. A chunk of it involves strategy by accepting your circumstances, however dire, and forging ahead by visualising scenarios through teamwork. Deveshwar, or YCD as he was fondly called, was out there in the biting cold in his company-promoted golf course to take the bull by its horns.

In business too, Deveshwar stood his ground. In the face of headwinds, some very serious sorts, he pugnaciously defended a company that he helmed as chairman and CEO from 1996 to 2017. Through two decades of his leadership, ITC’s revenue grew ten-fold, from Rs 5,200 crore to Rs 51,500 crore, while shareholder returns grew at a compounded annual rate of 23.3 per cent. ITC’s market capitalisation at the end of 2015-16 stood at $45 billion, almost 50 times its market value in 1996.

A lifer at ITC, Deveshwar signed up with the then India Tobacco Company Limited as a management trainee in 1968 (the name changed to ITC in 1974). In March 1995, UK-based global tobacco major British American Tobacco (BAT), still a 29 per cent shareholder in ITC, sent shockwaves across India Inc claiming a lack of confidence in the leadership of Krishan Lal Chugh, the chairman of its Indian subsidiary ITC. Once known as the Imperial Tobacco Company, BAT was batting for a majority stake in ITC as it had lost faith in the company’s diversification in the power generation business. For the record, BAT even came up with instances of financial irregularities in the company. In reality, however, BAT wanted cash-rich ITC’s funds for its own benefit. So in a bitter corporate battle, strategised largely by Deveshwar, BAT had to bite the dust as the Indianness of ITC shone through with some sparkling indigenous content and strong communication. Here was hard-boiled resistance to a hostile takeover by a multinational company, which harks back to India’s freedom struggle and the Swadeshi movement. And Deveshwar stood in the midst of it, often heard dubbing ITC as “India’s Trademarks Corporation”.

Again, to Deveshwar’s credit, equations on both sides have changed over the years. Of course, policy helped. In 2013, India closed its doors on new foreign direct investment in cigarettes. The ban applied to new proposals and existing equity stakes held by overseas companies. At that juncture, BAT had a 32 per cent stake in ITC and told Business Standard: “We are very happy with our investment. We have no intentions of increasing our stake in ITC. Our business in India is done only through ITC and therefore the government ruling will have no impact on our business in India.”

Having set his house in order, the Lahore-born Deveshwar went on a diversification spree with his “let’s put India first” clarion call. He transformed the Kolkata-based cigarette maker to a conglomerate with interests across wide-ranging sectors from fast-moving consumer goods to paper and packaging, hotels to agriculture to information technology. When he took the reins of the company in 1996, nearly 75 per cent of the revenues came from the tobacco business, it has subsided to slightly over 40 per cent today. In his watch, ITC envisioned an ambitious target of growing its non-tobacco business to Rs 1 lakh crore by 2030, significantly reducing its reliance on the tobacco side.

Deveshwar ensured that ITC became a global exemplar in sustainability. He oversaw an afforestation programme of nearly 700,000 acres

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Alongside, Deveshwar ensured ITC became a global exemplar in sustainability “and the only company in the world to become carbon positive, water positive and solid waste positive for over a decade,” according to Sanjiv Puri, the newly-elevated chairman and CEO of the company. It was Deveshwar who oversaw an afforestation programme of nearly 700,000 acres that supports a paper mill, a watershed initiative spread over 870,000 acres across 14 states and nearly 43 per cent of the company’s energy requirements met through renewable sources.

Also, the pioneering farmer empowerment drive, ITC e-Choupal, wherein the company links directly with rural farmers using the internet for procurement of agricultural and aquaculture products, sits as the world’s largest rural digital infrastructure and is a case study at the Harvard Business School. All this perhaps goes on to show why Harvard Business Review ranked him as the seventh best performing CEO in the world in 2012, alongside industry stalwarts like Apple’s Steve Jobs.

But Anand Nayak, former HR head of ITC, having nurtured a 40-year association with Deveshwar until his retirement in 2015, says that the nuances of strategy he learnt under him as part of his corporate management committee were far superior than anything he had learnt from a Harvard management programme. He worked with Deveshwar since the latter headed ITC’s packaging division based out of Madras in 1977.

According to Nayak, Deveshwar’s greatest strength was to articulate his mission in a way so as to tell people within ITC that they were working for a commercial enterprise which had an overarching objective of putting India first and creating value for the country. That ability to craft an inspiring mission motivated people to give their best. Moreover, Nayak highlights another important aspect of Deveshwar’s management as “his ability to craft strategy, to use human resource as a source of unique competitive advantage”. He had a whole new approach toward leadership. “He did not believe that leadership was concentrated with the top leadership team but it is required in different levels of the organisation and he referred to this as distributed leadership. So he created a strategy for the organisation to give people with potential the opportunity to lead various businesses on their own. Churning out leaders became our strategy. He structured the business in a way so as to grow the business as well as develop talent.”

In many ways, this helped in diversification as Deveshwar moved to incubate newer businesses in the existing ones. It was the responsibility of the leadership of the existing businesses to make the new business succeed. For instance, the entire food or personal care businesses were incubated in the tobacco business. In effect, the leadership of the tobacco business willingly let go of their own talent and resources to help the new businesses grow. Deveshwar instilled a sense of pride in the incubation of new businesses.

When Deveshwar took over ITC in 1996, nearly 75 per cent of its revenues came from the tobacco business, it has subsided to slightly over 40 per cent today

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At the same time, with distributed leadership he empowered his leaders to work as independent business units where he would guide them but not interfere. Perhaps, it is this sense of empowerment that led to accountability across various business divisions of the company leading to stellar performances. Take the case of Pradeep Dhobale, a former director with ITC who retired in 2015. “In 1999, ITC Bhadrachalam [its paper division] was making losses with not enough money to even pay salaries. While handing over the mantle to me to lead the business, he said, ‘I am giving the lives of 2,000 families in your hands. Please take care of them.’ No mention of performance requirements in terms of production, revenues or profits. Just a concern for people,” he elaborates.

Again, in a leadership role, Dhobale was exposed to Deveshwar’s ability to see the big picture. He was among the first of global tobacco tsars to sense its impending decline. As ITC’s helmsman, he wasn’t just looking at shareholder value but the overall gain to the environment, society and nation. “In the paper business that I was heading, we wanted to expand our plantation activity to secure raw material for pulp production. He saw the potential in it to create employment in rural areas and benefits for the environment. So he set us targets which would be 10 times more than what we needed. From 2,000 hectares per year, we were given resources to scale it up to 20,000 hectares per year,” Dhobale explains.

To get a grip on Deveshwar’s equations with the outside world, such as ITC’s vendors, Open spoke to Mayank Jalan, CMD of Keventer Agro, in Kolkata. Though Jalan’s father and Deveshwar were close friends, Jalan Jr got the opportunity to know him in 2011 when West Bengal Chief Minister Mamata Banerjee called a gathering of industrialists in south Kolkata’s Alipore. Mayank saw himself seated next to Deveshwar. “For 15 minutes, he asked me about my work, vision, philosophy and suggested to do something around food processing in West Bengal. ‘Why don’t you set up a noodle-making factory for me?’ he asked, and within two days, I got a call from his office and met him in Virginia House [ITC’s Edwardian headquarters in Kolkata]. We started investing without any commercial agreement. Much later, an offer was made and it was so fair that there was no negotiation over it,” says Mayank, again demonstrating how the ITC legend valued people over all else. Today, Keventer Agro packs Yippee! noodles for ITC from its 120-acre food processing complex at Barasat near Kolkata.

Mayank was awed by Deveshwar’s attention to details. When ITC was launching its Fabelle range of chocolates, Deveshwar gave him a 45-minute demo on what chocolates are all about. “He was talking about procurement of cocoa beans, supply chain, market dynamics and the chocolate-making process [without any formal training].” Deveshwar carried this trait to the board room where he was “a commanding presence”, according to Nirupama Rao, former foreign secretary and a non-executive independent director on the board of ITC.

But the most endearing trait of the ITC patriarch remains his ability to conduct business with a human touch. In his last message to Rao, he regretted that he could not attend the debut April 26th concert of the South Asian Symphony Orchestra, which she and her husband had founded. “But he made sure that his son-in-law came to the event and he met me to convey Yogiji’s [Deveshwar] greetings.”

Even in Jalan’s case, a couple of years ago when he was travelling on a flight from Kolkata to Delhi, to his surprise, he found Deveshwar on the other side of the aisle. “As soon as I saw him, I got a little conscious as he was a business great and I was travelling [casually] with my family. But for the entire duration [of the flight], my two- year-old son was the one who got to spend time with him. His humility struck me. He could get on with any age group.”

But Anand Nayak’s story is touching. Fifteen years ago, his then 21-year-old son had a serious heart problem and his wife happened to be speak to Deveshwar during Diwali when he gauged something was amiss. Upon asking what the matter was, she broke down and said that their son had to undergo a complicated heart valve replacement. “Within five minutes, I got a call from Deveshwar from Delhi saying that he had heard the news, adding that ‘I just want to assure you that you can take your son to the best place in the world and have his surgery done’. Very few chief executives will really take the trouble and be willing to do such a thing. He has done this for many people,” says Nayak adding that in a personal crisis, the IIT-Delhi and Harvard Business School alum, would personally reach out to people. “This made us committed to him, the head of the ITC family.”

Maybe it was because of his reputation as an ace trouble-shooter that he left ITC briefly between 1991 to 1994 to take on the stewardship of the ailing Air India, conferred to him by the then Civil Aviation Minister Madhavrao Scindia. Again, he did not know how to fly a plane, leave alone the operational expertise of airlines. All he had was the acumen he had gathered from ITC’s successful running of luxury hotel chains. His gumption showed with Air India making Rs 1 crore profit a day under his leadership. In 1993, it was the sixth most profitable airline in the world, a far cry from the deep-debt carrier it has turned out to be today. And all this when inbound tourist arrivals fell 10 per cent between December 1992 and March 1993 owing to the Babri Masjid demolition, and a two-month long flight engineer association strike that impacted air travel.

In many ways, the career trajectory of YC Deveshwar profoundly mirrors what he said to me on that wintry March morning at the ITC Classic Golf Course in Gurgaon. With way too many variables in the air, the elements or otherwise, focus on what you have in hand. And do so with a human touch.

Yogesh Chander Deveshwar passed away on May 11th at the age of 72. He is survived by his wife and two children.

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Moinak Mitra

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