Although one in four of all adult Indians use tobacco, the country¡¯s addiction runs far deeper. The government, too, has a toxic dependence. It¡¯s called ITC Ltd.
Formerly known as Imperial Tobacco of India, later renamed India Tobacco Company, and finally truncated to just ITC, the 110-year-old conglomerate is 29.4% owned by British American Tobacco Plc. About 28.5% is controlled by various Indian state-run insurance companies and a government-controlled bad bank.
And therein lies the problem. The large quasi-state ownership is acting as a value trap. It¡¯s preventing the $25 billion enterprise from being carved up into a pure cigarette company, owned by BAT, and a supply-chain platform like China¡¯s Pinduoduo Inc., which is nearly four times bigger in enterprise value. It¡¯s a missed opportunity, not just for ITC¡¯s minority shareholders, but for India.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.