British American Tobacco intends to reduce its stake in ITC India from 29.02% to 25%

According to Indian media ET, BritishAmericanTobacco (British American Tobacco, as the largest shareholder of ITC India, hereinafter referred to as BAT) owns 29.02% of the company, but recently expressed its intention to reduce its stake to about 25%.

 

The CEO of BAT, TadeuMarroco, stressed due to India’s strict direct investment in the tobacco industry. (FDI) this equity adjustment behavior rule will face a complex test.

 

Maroco further elaborated on the main two-tiered complexity of ITC equity reduction. First, the FDI rules have severely restricted foreign investment in India’s tobacco sector. Second, the Reserve Bank of India (RBI) requires approval, which makes it more difficult to sell shares. During BAT’s recent annual trading update call, Maroco told analysts that he doesn’t need to keep more than a 25% stake if he wants to maintain strategic influence and veto power within ITC.

 

Maroco stressed that the complexities that the ITC needs to point out for divesting investments include the unique permission of the Reserve Bank of India, which undoubtedly adds bureaucratic hurdles. The ITC has a significant presence in India’s tobacco industry, accounting for three-quarters of legal tobacco sales.

 

Apart from the tobacco industry, ITC has recently become the largest company in the fast-moving consumer goods (FMCG) sector in India. At the same time, it is the second-largest hotel chain in India, the largest private company in the agricultural business, and also has a significant position in the paper industry.