ITC Honchos Cash in on Scrip Rally

Source from:  Telegraph India 10/10/2011

Four top officials of ITC led by chairman Yogi Deveshwar have sold a pile of stock in recent weeks, choosing to cash out at a time the Rs 21,468-crore tobacco-to-hotels conglomerate has bucked the trend and turned in a stellar performance on the bourses. The other three functional and executive directors are Kurush Grant, Nakul Anand and Pradip Dhobale - all of whom have sold shares in the company between August 29 and September 30. Deveshwar has sold the biggest chunk - 15.27 lakh shares - and raked in a cool Rs 30.70 crore. He continues to hold 34.67 lakh shares in the company as on September 2, 2011. Nakul Anand, who is in charge of ITC's hotels business, is next in the pecking order, having sold around 2.52 lakh shares for Rs 5.03 crore. Grant, who mainly focuses on the FMCG business, including the money-spinning tobacco business, sold around 1 lakh shares for Rs 1.97 crore. Dhobale, who looks after the group's finances and paper operations, sold 10, 000 shares to pick up a nifty Rs 20.21 lakh. The move by the ITC directors to sell the stock goes against the trend in India Inc with several promoters and top honchos increasing their holdings in the companies they own or manage. For instance, Tata Sons, the main promoter of the $80-billion Tata group, has been buying shares in flagship Tata Steel and Tata Motors. Ratan Tata, chairman of Tata Sons, is the chairman of both companies. Analysts say the action by the ITC directors could have been prompted by the fact that the ITC stock has outperformed the market over the past year. ITC, which closed at Rs 199.2 on Friday, has gained 15.85 per cent year to date compared with the market's benchmark index - the BSE Sensex - which has lost 20 per cent during the same period. "The fast-moving consumer goods segment has done well. Many of the stocks in this space are near their life-time highs and are trading at their highest price-earning multiples. While the broad market has had a terrible year, FMCG stocks including ITC have had a dream run. But as and when the overall market picks up, the FMCG basket of stock tends to underperform. Maybe that's why the directors are partly selling off shares and switching to other asset classes," said an analyst on the condition of anonymity. He did not believe that the stake sale by the top directors should be read as a sign of the impending performance of the company. The ITC spokesperson could not be reached for comment. He did not return calls or reply to the text messages sent to his mobile phone. FMCG stocks have ridden out the turbulence on the markets as investors chose to place their bets on the domestic consumption story. "The performance of these companies is in no way linked to the outside world where there has been a lot of volatility. As more and more people come out of poverty, they start to consume more FMCG products. ITC has also shown remarkable ability to improve its profitability despite the heavy burden of taxation it is subjected to by both the states and the Centre," said an industry observer. Rural and farm incomes have been rising sharply this year - stoking demand for products across the board - and has been one of the key factors fuelling inflation, which is running at 9.78 per cent. Enditem