The BAT-ITC Tussle (Page 2)

Abstract

The case examines the tussle between ITC Limited (ITC) and its parent company British American Tobacco (BAT) during the mid-1990s. The case also details the issues over which the two companies disagreed, with a focus on the ITC Chairman K L Chugh's role in the battle.

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BACKGROUND NOTE contd...

By 1919, BAT had transferred its holdings in Peninsular and ILTC to Imperial. Following this, Imperial replaced Peninsular as BAT's main subsidiary in India. Throughout the 1920s, Imperial appointed distributors and agents in various parts of the country. As sales were growing faster in North India than elsewhere in the country, Imperial set up its third factory at Saharanpur in UP in 1924. A year later, Imperial set up a printing factory at Munger. In 1928, Imperial's head-office in Calcutta was inaugurated.

In the early 1930s, Imperial's sales declined sharply. The Independence movement and its aftermath left the company's distribution network severely damaged and many areas became inaccessible overnight due to the partition.

The company however managed to re-establish its distribution network and went on to become very successful in the next few decades. By the late 1960s, the Indian government began putting pressure on multinational companies to reduce their holdings. Imperial divested its equity in 1969 through a public offer, which raised the shareholding of Indian individual and institutional investors from 6.6% to 25%....

        Case Code   BECG012
   Case Length    11 Pages
              Period    1996-2002
 Organization     ITC BAT
        Pub Date     2002
Teaching Note    Available
     Countries    India
      Industry    Food, Beverages & Tobacco

Issues

Tussle between BAT and ITC, Corporate Governance, Role of BAT in the whole issue, FERA Violations by ITC, role of Chugh in the ITC controversy.

ITC Limited, ITC, British American Tobacco, BAT, 1990, disagreed, ITC Chairman, K L Chugh, battle, case Study, and business Case study.

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.