It is fairly well known that ITC Limited, India’s biggest blue-chip company, earns its bread and butter from selling tobacco products like cigarettes and cigars. Its revenue for 2011-12 is a mammoth Rs 36,000 crore (US $7.2 billion) and net profit, Rs 6,162 crore ($1.23 billion). 

The share of business from cigarettes in total revenue was Rs 22,248 crore ($4.49 billion) or 62 per cent, with remaining being accounted by the food, hotels, agribusiness and paper boards segments. 

The operating profit of cigarettes business was Rs 6,907 crore (US $1.38 billion) or 80 per cent of the total (Rs 8,571 crore) in 2011-12, with marginal losses in other segments such as the food business. This clearly shows that ITC’s cigarettes business is what drives profits in the company.

What is most-interesting is the list of top 10 public shareholders of this tobacco-driven company—the insurance companies and the government of India. As of the quarter ended September 2012, the Life Insurance Corporation (LIC), other insurance companies and government's Unit Trust of India held a staggering 31.52 per cent equity (through owning shares) of the company (see table).

Table 1- Top public shareholders of ITC Limited (as of September 2012)

Source: Moneycontrol.com
http://www.moneycontrol.com/bse/shareholding/shp_public_shares.php?sc_dispid=ITC#ITC

Entities holding stake in a company’s shares expect to profit from its business in the future. So, while the government-owned LIC, which deals with life insurance, held a 11.9 per cent stake in ITC , its private counterpart, ICICI Prudential, owned a 1.09 per cent stake. On the other hand, the Unit Trust of India, a government-owned mutual fund, held a massive 11.41 per cent equity stake. 

The Oxford Dictionary defines ‘insurance’ as “arrange for compensation in the event of damage to or loss of (property), or injury to or the death of (someone), in exchange for regular payments to a company”. If insurance companies and the government are mandated to deal with welfare of their clients and citizens respectively, one wonders why are they investing so heavily in this company.