A public interest litigation (PIL) filed in the Bombay High Court has challenged the large investments made by government-owned insurance companies in cigarette maker ITC, which is the country’s largest fast moving consumer goods company in terms of market capitalisation.
The petition wants the government to direct the insurance companies to divest their stake — worth ₹1,02,546 crore — in the Kolkata-based entity, while formulating a policy to desist such investments in future. It says such investments by public sector entities in a cigarette maker contradicts the anti-tobacco stance taken by the government at national and international level as India is one of the signatories of WHO.
Interestingly, the petition has been filed by top officials of Tata Trusts, which include managing trustee R. Venkataramanan and project management group head Lakshman Sethuraman, along with doctors of Tata Memorial Hospital and a few other individuals. Both, Mr. Venkataramanan and Mr. Sethuraman are part of the PIL in their individual capacity. The main petitioner is Dr. Sumitra Pendnekar.
Large insurance majors like Life Insurance Corporation (LIC), General Insurance Corporation (GIC), New India Assurance Company (NIAU), and Oriental Insurance Company (OIU) have been made a party to the case along with Specified Undertaking of the Unit Trust of India (SUUTI), Insurance Regulatory and Development Authority (IRDA), and the Union government (through Ministry of Health and Family Welfare).
“The government can utilise the amount locked up in a socially undesirable investment for carrying out its stated budgetary plans as far as citizen’s health is concerned,” says the PIL. The Hindu has seen a copy of the petition.
According to the PIL, there are 27.5 crore tobacco users in India and about 10 lakh Indians die each year from tobacco-related diseases. As per WHO estimates, India is the second largest consumer of tobacco.
At the current rate, one billion people will be killed in the century because of tobacco, stated a report released by the government and Tata Memorial Centre. Tobacco is responsible for nearly 50% cancers in India and 90% of mouth cancer patients die within 12 months of diagnosis.
The petition highlights that Article 5.3 of the WHO’s Framework Convention on Tobacco Control, 2003, mandates members to create, implement, and protect policies for tobacco control.
Further, Article 7.2 restrains parties from investing in the tobacco industry to avoid promoting the cultivation and production of tobacco.
An adverse ruling in the matter could seriously impact the business of ITC as the insurance companies along with SUUTI hold a cumulative stake of 30.25%, as per the latest shareholding information available on BSE. As per the PIL, cigarettes accounted for 85.31% of ITC’s net profit in the financial year 2015-16. While LIC is the largest shareholder with a stake of 16.29%, the other entities like GIC, NIAC, and OIC hold a stake between 1-2% each. Meanwhile, SUUTI has a stake of 9.10% in the company.
