Tobacco.org

ITC joint venture Nepal's second highest tax payer 

Despite growing labour trouble, tobacco giant ITC's joint venture in Nepal remains one of the top tax payers in the Himalayan republic, coming second after the state-run Nepal Telecom.

Surya Nepal, ITC's joint venture with British American Tobacco and private Nepali shareholders including members of Nepal's former royal family, was the second-highest tax payer in 2007-08, according to Nepal's apex bank Nepal Rastra Bank (NRB). . . .

Besides being Nepal's biggest manufacture of tobacco products, the nearly 30-year-old ITC joint venture has diversified into garments manufacturing in Nepal.

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ITC’s profit grows 8.7% as cigarette sales rise despite ban  

India’s biggest tobacco company, ITC Ltd, reported an 8.7% rise in third quarter profits on higher cigarette prices.

Net income rose to Rs903 crore in the three months ended December from Rs831 crore a year earlier, Kolkata-based ITC said in a statement to the Bombay Stock Exchange (BSE) on Monday. That’s in line with the Rs904 crore median estimate of nine analysts surveyed by Bloomberg.

ITC’s cigarette sales rose 18% even after the government imposed a ban on smoking in public places, including offices.

Cigarettes had a 52% share in third quarter revenues compared with 49% in the same year-ago period

The company is expanding sales of shampoo, food, clothing and other goods as the government increases taxes and restrictions on cigarettes, which account for about half the company’s revenue.

“Cigarette sales have exceeded expectations,” said Abhijeet Kundu, an analyst at Mumbai-based Antique Stock Broking Ltd. “Increases in cigarette prices and some consumers moving to higher-priced filter cigarettes have contributed to the gains.”

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India's ITC Q3 net up 8.4 pct, shares fall 1 pct 

India's top cigarette maker, ITC Ltd, on Monday matched market expectations with an 8.4 percent rise in quarterly profit, but its revenue growth disappointed and sent its shares down 1 percent.

ITC, 31.7 percent owned by British American Tobacco), said revenues and profits were hit by a slowdown in its hotels business as corporate travel fell in the wake of a slowing economy and militant attacks in Mumbai in November.

The company said net profit rose to 9 billion rupees ($185.2 million) in its fiscal third quarter ended Dec. 31 from 8.3 billion a year earlier, while gross revenue rose 8 percent to 59.2 billion rupees from 54.8 billion. . . .

ITC said higher prices from its filter cigarettes helped drive profits even as a ban on smoking in public places curtailed sales. Cigarettes contributed about 66 percent of gross revenue.

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ITC: FMCG's a drag 

ITC's FMCG business continues to pull down its profits and a break even point for this segment could be quite some time away. The disappointing 11.5 per cent growth in FMCG revenues in the December 2008 quarter -- way below the 30 per cent seen in the first half of the year -- indicates that the cigarette major is finding it hard to take away share from incumbents in the personal care and snack foods spaces.

What's more high marketing and brand-building spends are pushing up losses -- up 95 per cent to Rs 127 crore in the December 2008 quarter.

These losses, together with a worse than expected fall in profits of 34 per cent from the hotels division, left the company with a net profit growth of just 8.6 per cent at Rs 903 crore. That's despite the cigarettes business beating both price increases, and a ban on smoking in public places, to turn in a decent 11 per cent growth in the top line and 18 per cent at the segment profits level. Cigarette volumes however fell slightly.

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CLSA maintains 'buy' on ITC  

CLSA has maintained a �?~buy�?(TM) recommendation on ITC, banking on stable earning growth and attractive valuations with its PE having improved from a low of nearly 10x in 2003 to about 17x.

"ITC's cigarette volumes have remained strong despite two years of heavy tax increases, highlighting its pricing power. With capex peaking in FY09, we expect a 42 percent CAGR in free cashflow (FCF) over FY08-11. The firm's earnings CAGR was 18.4% over the past decade and average variance was only 3ppts. The new smoking ban appears to have had little effect and CLSA does not expect it to have much impact in the medium term. ITC remains net-cash, adding stability to the earnings profile.

CLSA has projected a 15 percent CAGR in the cigarette business EBIT over FY08-11 while the company's overall EBIT will expand faster on the back of a 23 percent EBIT CAGR in other divisions.

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ITC’s Q2 profit rises 4.2% on higher cigarette prices  

India’s biggest tobacco firm ITC Ltd posted a 4.2% increase in second quarter profit after raising prices of cigarettes earlier this year. Net income rose to Rs803 crore in the three months ended 30 September, from Rs771 crore a year ago, Kolkata-based ITC said in a statement on Friday. . . .

ITC is expanding sales of shampoo, food, clothing and other goods as the Union government increases taxes and restrictions on cigarettes for health reasons. Cigarettes account for about half the company’s revenue.

“Cigarette sales have been robust as there has been a distinct customer shift to higher-priced filter cigarettes after the government raised taxes,” said Abhijeet Kundu, an analyst at Mumbai-based Antique Securities Ltd.

ITC, 32% owned by British American Tobacco Plc., raised prices of the Gold Flake and Classic cigarette brands earlier this year.

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Japan Tobacco FDI plan raises govt row 

A proposal by tobacco giant Japan Tobacco Inc (JTI) to raise its equity in its Indian joint venture has kicked off a major controversy with the country's largest tobacco company ITC Ltd and the health ministry opposing the move and the Prime Minister's Office (PMO) being impelled to intervene.

In June this year JTI submitted a proposal to the Foreign Investment Promotion Board (FIPB) to raise its stake in JT International (India) Ltd, which makes the Camel and Winston cigarette brands, from 50 to 74 per cent. The proposal was endorsed by the ministry of commerce and industry, which argued the policy allowed 100 per cent Foreign Direct Investment (FDI) in the sector subject to industrial licensing and the proposal was not for fresh capacity for cigarette manufacturing.

Meanwhile, the PMO, in a series of letters in July and August, has directed the department of commerce and industry to take action on points raised by the Tobacco Growers Welfare Association of Guntur, which has opposed the increase in FDI, and also instructed the Department of Economic Affairs (DEA) to give its comments on a petition by the Tobacco Institute of India (TII), which represents the interests of domestic tobacco companies and also opposed the JTI proposal.

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• Tobacco cos get ready for life after 'no-smoking' ban  

Cigarette-makers including big boys like ITC and Godfrey Phillips India have put up ‘nosmoking’ boards across all their offices, removed ash trays and sent notifications to every employee that the no-smoking ban is here to stay.

“Whatever is required under the new rules... we have done it,” an ITC spokesperson said from Kolkata. In the past five years, a no-smoking ban is already in force at ITC’s headquarters and its offices, except in certain areas like canteens. With the new rules, the ban has been extended to the entire office, the spokesperson said.

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We are a law-abiding company, and will operate as per the law of the land — not just in letter but also in spirit. We are not working or intending to work on any strategy to counter the ban. As notified by the law, all our offices will be made no-smoking from October 2.
Unidentified spokesperson of Godfrey Phillips India.

ITC, hoteliers appeal against smoking ban 

ITC and Indian Hotels Association have moved the Delhi high court challenging the Union government's notification that bans smoking in "public places", including hotels and restaurants, from October 2.

They have argued that the notification makes no distinction between private space and public space.

On Wednesday, ITC fielded senior advocate Soli Sorabjee, who argued that the rule was unjustified as it included private offices like a lawyer's chamber or an artist's studio. "Private office cannot be called a public place as these are not accessible to the general public," Sorabjee told the court.

Sorabjee told the bench headed by Justice Vikramjit Sen that the government had no power to take such a decision as the act under which the notification was issued had already been stayed by the Madras high court.

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• Centre has no power to ban smoking in pvt office, HC told 

ITC Ltd, which has approached the Delhi High Court against the Centre's notification banning smoking in private offices, on Wednesday contended that the Government has no power to take such a decision.

Senior Advocate Soli Sorabjee, appearing for the company contended that the Act under which the notification was issued has already been stayed by the Madras High Court.

"When the Act has already been stayed where is the question of framing rules under the law. The government need to have statutory power to frame rules. After the Madras High Court interim order staying the operation of the law, the government has no power under the law," he contended before a Bench headed by Justice Vikramjit Sen.

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ITC challenges smoking ban  

ITC Ltd on Wednesday approached the Delhi High Court challenging the Central Government's notification that slapped a ban on smoking in all public places and other establishments from October 2.

A Bench comprising of Justice Vikramjit Sen and S L Bhayana deferred the hearing till September 30 after the Central Government contended that a case related to the issue was coming before the Supreme Court September 29.

Besides ITC, two others petitioners, including Indian Hotels Association, have moved separate pleas challenging the May 2008 notification issued by the Health Ministry.

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India's ITC says tech arm acquires U.S. firm  

ITC Ltd, India's top cigarette firm, said on Tuesday its information technology arm has acquired U.S-based technology firm Pyxis Solutions for an undisclosed sum.

Last month, ITC Chairman Y.C. Deveshwar said the company was in talks to acquire a U.S.-based information technology firm and the acquisition would be made through ITC Infotech.

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India's ITC says plans to buy U.S. IT firm  

India's top cigarette firm, ITC Ltd plans to acquire a U.S.-based information technology firm, chairman Y.C. Deveshwar said at the annual shareholders meeting on Wednesday.

"We are in talks with the company and hope it will materialise soon," Deveshwar said. The acquisition would be made through its technology unit, ITC Infotech, he said.

He did not give further details.

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• No drop in tobacco consumption: ITC 

The quantum of Tobacco consumption has not come down despite the Government increasing the tax on cigarettes, Indian Tobacco Company Chairman Y C Deveshwar said on Saturday.

"It is going up in other forms like scented tobacco and Gutkha," he told reporters.

He told newsmen here Tobacco was being sold in so many forms like Gutkha and Paan, which, he claimed, caused oral cancer, and were more dangerous. "Unfortunately all the attention was only towards cigarettes,which were less harmful with filters and all," he claimed

He said government was only losing revenue by increasing the tax on cigarettes, and ITC's share in tobacco business had come down.

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ITC Profit Falls for First Time in Nine Quarters (Update1)  

ITC Ltd.'s profit fell unexpectedly for the first-time in nine quarters as India's biggest tobacco company said losses widened at its new personal-care products and apparel businesses.

Net income declined to 7.49 billion rupees ($177 million) in the three months ended June 30 from 7.83 billion rupees a year earlier, the Kolkata-based company said in a statement today. That lags behind the 8.51 billion rupee median estimate of nine analysts surveyed by Bloomberg News.

ITC, 32 percent owned by British American Tobacco Plc, is expanding its products to include shampoos, snack foods, clothing and other goods as the Indian government increases taxes and restrictions on cigarettes, which account for about half of its revenue. Costs on promotions and advertisements to sell its soaps and shampoos crimped profit. Profit growth from cigarettes also rose less than expected, analysts said.

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