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A global shortfall in tobacco output has boosted demand for the Indian leaf, pushing up prices in the domestic market to new records, hurting Indian cigarette makers and challenging the government's plan to cut acreage.
The average price of Flue Cured Virginia (FCV), a premier grade used for cigarette-making, has risen more than 50 percent to 71.37 rupees per kg, from 47.47 rupees a year ago.
"Internationally, the supply situation is not very comfortable. Especially Brazil, which is competing with India, there is shortage of 70 to 75 million kg," J Suresh Babu, chairman of the Tobacco Board, told Reuters.
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ITC Ltd., India's biggest tobacco company, fell the most in three weeks in Mumbai trading after the government increased cigarette taxes, prompting brokerages to downgrade the stock.
Shares of Kolkata-based ITC fell 4.5 percent to 193 rupees on the Bombay Stock Exchange today, their biggest one-day decline since Feb. 11. . . .
The tax increase is ``steeper than expected,'' Citigroup analysts Princy Singh and Pragati Khadse said in a note to clients dated Feb. 29.
Shares of Kolkata-based ITC fell 4.5 percent to 193 rupees on the Bombay Stock Exchange today, their biggest one-day decline since Feb. 11.
UBS AG cut its forecasts on cigarette volumes in India saying they will probably fall 2.5 percent in the year through March 2009, compared with the earlier estimated gain of 4 percent, after the government at least doubled the excise tax on non- filter cigarettes. The increase in overall weighted duty for ITC is equal to about 16 percent, Citigroup Inc. said.
Research and Markets (http://www.researchandmarkets.com/reports/c81641) has announced the addition of "India: Tobacco" to their offering.
Tobacco occupies a prime place in the Indian economy on account of its considerable contribution to the agricultural, industrial and exports sectors. India is currently the world's 2nd largest producer of tobacco next to China and the fourth largest exporter of unmanufactured tobacco in the world.
"India: Tobacco" covers the global perspective, general economic environment, tobacco/cigarette industry and economic impact of the tobacco industry in India. It also covers the market trends and outlook of production, distribution, exports, imports, environment analysis, export strategy 2002-2007 and organizations dealing in tobacco: Directorate of Tobacco Development, Indian Tobacco Development Council, Indian Council of Agricultural Research, Tobacco Board, Directorate of Marketing and Inspection, Central Board of Excise and Customs, and Departments of Agriculture in various States.
There report also provides a comparative matrix and SWOT for the industry's local leading players: ITC Holdings Corporation (ITC), Godfrey Phillips India Limited, Vazir Sultan Tobacco (VST) and G.T.C.
Indian tobacco giant ITC has had little cause to celebrate the 59th Indian Republic Day with trade unionists backed by the Maoists shutting down its tobacco factory in south Nepal, the second such disruption in three months.
Surya Nepal, ITC's majority-held joint venture that is also one of Nepal's largest revenue earners, has had its tobacco factory in Simra town in frontier district Bara closed since Wednesday with its Maoist-affiliated trade union raising a fresh 15-point demand.
KOLKATA: Tobacco and hotels major ITC on Friday reported a 16% Y-o-Y growth in net profit for the third quarter (Q3) ended December �?~07 to Rs 830 crore. Net sales during the period grew by 13% to 3,595.4 crore, driven by 50% growth in revenues from the newer non-tobacco FMCG businesses such as packaged foods, lifestyle retailing and stationery.
ITC Ltd., India's biggest tobacco company, said third-quarter profit rose 16 percent, more than analysts anticipated, on higher cigarette prices.
Net income rose to 8.31 billion rupees ($212 million) in the three months ended Dec. 31 from 7.17 billion rupees a year earlier, the Kolkata-based company said in a statement today. That compares with the 8.05 billion rupee median estimate of seven analysts surveyed by Bloomberg News.
ITC, 32 percent owned by British American Tobacco Plc, is expanding sales of shampoo, snack food, clothing and other goods as the Indian government increases taxes and restrictions on cigarettes, which account for about half its revenue. The company raised cigarette prices by about 20 percent last year. . . .
``The cause for anxiety, however, stems from the steep increase in indirect taxes on cigarettes in India,'' ITC said in a statement. The additional indirect taxes during the quarter aggregated to 5.13 billion rupees, the company said.
The government plans to ban smoking in public places, except designated areas in restaurants and airports from May 31, the Hindustan Times reported on Jan. 12, citing Health Minister Anbumani Ramadoss.
ITC, 32 percent owned by British American Tobacco Plc, is expanding sales of shampoo, snack food, clothing and other goods as the Indian government increases taxes and restrictions on cigarettes, which account for about half its revenue. The company raised cigarette prices by about 20 percent last year.
India can take advantage of reduced tobacco production in traditional tobacco-growing countries like Brazil and Zimbabwe, ITC CEO S Janardhan Reddy said.
Since the production of tobacco worldwide has gone down, India should increase its production in the country, he said at the Tobacco Board Foundation Day here.
Indian Tobacco Association President M Venkateswara Rao said the production of tobacco in other countries has declined resulting in heavy demand for Indian tobacco.
The FMCG and tobacco major ITC Ltd is planning to make Bingo a Rs 1,000-crore brand in two years down the line. ITC launched Bingo eight months back to get a toe hold in the Rs 2,000-crore snacks mart in the country. Besides, the company will soon launch a low-cholesterol health biscuit under Sunfeast brand.
Diversified major ITC Ltd on Friday reported a 13.4% jump in Q2 net profit to Rs 770.87 crore on the back of improved performances by its non-cigarette businesses.
However, the tobacco-to-hotels conglomerate - which has been trying to reduce its dependence on cigarettes - said underlying growth in post-tax profit was higher at 18.7% after adjusting for the tax refund of Rs 30 crore received in the corresponding quarter last year.
Hike in cigarette prices to offset VAT backfires as a drop in sales volumes hits revenues. The price hike effected by ITC has dented cigarette revenues, which declined 5.5 per cent y-o-y in the September 2007 quarter.
Analysts have estimated a 7-8 per cent deceleration in volume sales this financial year due to the company's 20 per cent price hike in cigarettes to offset value-added tax.
ITC Ltd., India's biggest tobacco maker, which also owns hotels and trades in farm produce, posted a 13 percent rise in profit, matching analyst estimates. Shares fell as earnings from the agriculture business were hurt by a ban on some exports and an appreciating rupee.
Net income rose to 7.71 billion rupees ($195 million) in the three months ended Sept. 30, from 6.8 billion rupees a year earlier, the Kolkata-based company said today in an e-mailed release. That compares with the 7.56 billion rupee median estimate of five analysts surveyed by Bloomberg News.
The decline in profit at ITC's agriculture trading business may be a setback for the company, which is trying to reduce dependence on tobacco
ITC, one of the largest fast-moving consumer goods companies in India, is a market leader in the domestic cigarette industry. It is using the cash flows from the tobacco business to expand aggressively into non-tobacco businesses such as agri-commodity, packaged food, ready-to-eat, paper & paper board, hotels, personal care and garments. Many of these diversifications have now reached a critical mass and are on the verge of yielding returns. . . .
In FY07, its non-cigarette business grew 32% against the 14% growth of its tobacco business. Most importantly, profit before taxes from the non-tobacco business was up 34% against the 17% growth of its tobacco business. This was achieved despite continued losses reported by the non-tobacco FMCG business. In the June quarter, revenues from the non-tobacco business grew 25% while PBIT grew 7%, mainly on account of a decline in the profitability of paper & paper board business.
ITC is using its strength in the rural sourcing network and brand-building to acquire industry leadership in branded staples, ready-to-eat, hospitality and life style apparel segments.
Good news for the cigar aficionado in India. After Luxury cars, branded foreign liquor, chocolates and almost everything else associated with luxury, good cigar brands are now making their way to India.
It’s a style statement; it’s fashionable and the new mantra of the young upwardly mobile with money to spare. These are some of the many reasons that has prompted the $150 million Swiss cigar maker Villiger Sons Ltd to set up shop in India. Godfrey Phillips India (GPI) through its pan shops and departmental stores will exclusively distribute Villiger cigars. “India is an emerging market, a young nation and has thrown open good opportunities for us,†Heinrich Villiger, president and chairman of the board of the 119-year-old family-held cigar company told the Hindustan Times.