ITC raises the prices of its two best-selling brands of cigarettes


New Delhi: ITC Ltd, the country’s largest cigarette maker, increased the prices of two of its top-selling cigarette brands, Classic and Gold Flake Kings, by 12.84%. Packs with the new prices arrived in stores on Tuesday evening.

The Union budget had proposed an increase in excise duties on tobacco products, excluding bidis, from 10 to 15%. The company passes the higher duties on to customers with the new prices.

“The prices of a few selected brands have been revised,” said an ITC spokesperson. The company has not yet decided on the amount of the price increase for other brands.

A pack of 10 cigarettes (Gold Flake Kings and Classic) now costs ?? 123, from ?? 109 earlier, while a pack of 20 sticks is now priced at ?? 246 from ?? 218 earlier.

The rise in prices is expected to affect sales volumes. The ITC has already experienced 11 straight quarters of declining cigarette volumes, according to a report by Abneesh Roy, analyst at Edelweiss Securities, released on February 29. Over the past year, ITC has suffered from the sharp increase in cigarette taxes. ITC’s cigarette sales by volume fell 17% in the first quarter of the current fiscal year from a year earlier, 16% in the second quarter and 4% in the third, according to Roy’s report. .

“The increase will have a negative impact on ITC cigarette volumes (expected 6-7% decrease in cigarette volumes in FY17 versus an estimated 10% drop in FY16). the weighted average increase in excise duties was 13%), ”noted Roy in the report.

According to industry lobby group The Tobacco Institute of India (TII), excise duties on cigarettes, at the unit level, have increased 98% since 2012-13. “The 10% increase in tariff rates announced in this year’s Union budget will bring the cumulative impact of tariffs since 2012-2013 to 118%,” said Syed Mahmood Ahmad, director of TII, after the budget announcement.

Cigarette taxes (excise duty and state value added tax) in India, at 6.5% of GDP per capita, are among the highest, TII said, referring to a study by the ‘WHO 2015. “Cigarette taxes in India are 14 times higher than in the United States, nine times in Japan, seven times in China, five times in Australia and three times in Malaysia and Pakistan,” he said. declared TII.

The cigarette market in India saw a compound annual growth rate of 10.5% in value between fiscal 02 and 14, according to a report from UBS Securities India. ITC leads the market with 78.5% volume, followed by Godfrey Philips Ltd (13.5%) and VST Industries Ltd (7%), the report adds.

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