NEW DELHI, JAN 12: Tobacco major ITC Limited is open to introducing Rothmans' brands in India following the worldwide $21 billion mega merger between its parent British American Tobacco (BAT) with Rothmans International, a top ITC official said today."We will consider bringing brands from Rothmans stable into India if it is commercially advantageous," chairman and managing director of ITC, Y C Deveshwar said here today. Rothmans has a 1.7 per cent stake in Calcutta based ITC Ltd, a pre-war legacy when both BAT and Rothmans supplied cigarettes to British armed forces.After the merger, the total stake of BAT in ITC would go up to about 33 per cent. But this would not have any effect on controlling the company as domestic financial institutions have a higher equity of close to 40 per cent.Asked about the fate of the pending Rothmans proposal for setting up a wholly-owned subsidiary in India, Deveshwar said, "the government rules are clear as far as establishing fully owned subsidiaries in India when ajoint venture already existed".Deveshwar, however, said the merger would not have any impact on ITC despite BAT plc getting ITC shares held by Rothmans. BAT had been using the proxy rights of Rothmans at the ITC annual general meetings and extraordinary general meetings over the years and the merger would not give BAT any additional shareholding rights, he pointed out.The new tobacco giant, the second largest in the world, after the merger, will be formed by an issue of shares by BAT and is due to take effect in the second quarter of this year, pending regulatory clearance. After the merger, BAT will account for 16 per cent of all cigarettes sold in the world and will be worth $21.32 billion. ITC Ltd is the largest player in the Indian tobacco market and has a 30-year licensing agreement to manufacture and market BAT's prestigious Benson & Hedges and State Express 555 brands in the country.ITC's own brands include popular names like Wills, Goldflake and Scissors and premium names such as Classic andIndia Kings.It was felt that the merged companny may also choose to exercise the licensing route to introduce the international Rothmans' brands in India. Deveshwar's statements make it clear that ITC may not immediately consider introducing the Rothmans brands out of fear of an impact on its market share.
