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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 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.
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.
ITC Ltd Chairman Y C Deveshwar on wednesday said that owing to the restrictive regulatory environment it is difficult to make the tobacco business grow and for the same reason company has diversified into other new areas.
Deveshwar said that cigarettes, the traditional product from ITC, were being taxed disproportionately at rates higher than other forms of tobacco consumption.
"The cigarette business is operating in a restrictive regulatory regime," Deveshwar said.
He said that there was need to "create other legs of growth for which ITC has ventured out in new areas like FMCG".
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.
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.
ITC Ltd., India's biggest tobacco maker, said third-quarter profit rose at the fastest pace in seven quarters on higher cigarette sales and rising occupancy rates at its network of hotels, the country's second-largest.
Shares of ITC rose after the Kolkata-based company said net income gained 34 percent in the three months to Dec. 31 to 7.17 billion rupees ($162 million), or 1.9 rupees a share, from 5.37 billion rupees a year earlier. Six analysts surveyed by Bloomberg forecast profit at 6.98 billion rupees. Sales rose 24 percent to 31.66 billion rupees.
The fastest pace of wages growth in Asia is giving smokers more cash to spend on ITC's 30 brands of cigarettes, driving a 14 percent rise in sales of the products. Cigarettes account for only 14 percent of tobacco consumption in India, giving ITC room to attract consumers of hand-rolled bidis or chewing tobacco.
ITC Ltd., India's biggest tobacco maker and second-largest hotel operator, plans to tap ``new areas'' in consumer products to cut dependence on its tobacco business, which faces high taxes and advertisement curbs.
The Kolkata-based company plans to sell ``fast-moving consumer goods,'' Chairman Y.C. Deveshwar told reporters in New Delhi today, without specifying the products or by when it plans to start selling the new products.
ITC, set up in 1910, has in the past six years added businesses such as food, matches, apparel, deodorants, greeting cards and rural retail stores to reduce its reliance on tobacco, which contributes to about half of sales. Analysts such as Abhijeet Kundu expect ITC to start selling soaps and detergents, putting it in direct competition with the local units of Unilever and Procter & Gamble Co.
ITC Ltd., India's biggest tobacco maker and second-largest hotel operator, posted a 19 percent gain in second-quarter profit, matching estimates, because of an increase in cigarette prices and guests at its Sheraton hotels.
Net income climbed to 6.8 billion rupees ($151 million), or 1.8 rupees a share, in the three months ended Sept. 30 from 5.72 billion rupees a year earlier, the Kolkata-based company told the Bombay Stock Exchange today. Sales rose 32 percent to 28.8 billion rupees.
ITC, 32 percent owned by British American Tobacco Plc, raised prices of Gold Flake Kings and Scissors by as much as 20 percent last month to profit from smokers switching from hand- rolled cigarettes. Overseas tourist arrivals in India rose 13 percent in the first nine months, boosting occupancy at properties, including those franchised from Starwood Hotels & Resorts Worldwide Inc.
ITC Ltd., India's biggest tobacco maker and second-largest hotel operator, may say second-quarter profit rose 18 percent because of higher cigarette prices and more guests at its Sheraton-branded hotels.
Net income may have risen to 6.76 billion rupees ($150 million) in the three months ended Sept. 30 from 5.72 billion rupees a year earlier, according to the median estimate of five analysts surveyed by Bloomberg News. Sales may have gained 23 percent to 26.91 billion rupees. Kolkata-based ITC is scheduled to report earnings on Oct. 30.
ITC, 32 percent owned by British American Tobacco Plc, raised prices of Gold Flake Kings and Scissors by as much as 20 percent last month to profit from smokers switching from hand- rolled cigarettes. Overseas tourist arrivals in India rose 13 percent in the first nine months, boosting occupancy at properties including those in franchise with Starwood Hotels & Resorts Worldwide Inc.
Tar and nicotine levels in Indian cigarettes have dropped by about 10 per cent in the last one year, though cigarettes still remain hugely harmful. While the habit of cigarette-smoking is not on the rise in India, more and more Indians are taking to higher nicotine-tar products like bidis and chewing tobacco.
Nicotine and tar are ingrained in the tobacco leaf and their levels have been reduced with better practices of cultivation and use of inorganic fertilisers, Dr V Krishna Murthy, the director of Central Tobacco Research Institute (CTRI), a unit of the Indian Council of Agricultural Research at Rajahmundry in Andhra Pradesh, told DNA. He said the average tar content in a 66-mm long cigarette is down to 16 mg from 17 to 24 mg a year ago and nicotine has been lowered to about 1.5 mg from 2 mg in the same period.
Growing tobacco in lighter soils instead of heavier soils that lead to higher tar content, harvesting the leaves at a ripe stage and removing flower heads of plants have also helped, a senior scientist of the ITC said.
Even though the non-cigarette business of ITC Ltd now contributed more than 50 per cent to its net turnover, the company on Friday ruled any possibility of exiting the tobacco business.
Responding to a demand by shareholders at the company's AGM that the company should exit the tobacco business as it has already built up its non-tobacco business, ITC chairman Y C Deveshwar said that it would not be a responsible act on the part of the company to exit the tobacco area.
"A large number of farmers are dependent on tobacco farming in the country and we cannot suddenly abandon this business," Deveshwar said, adding, "We are a responsible company and we do business abiding by the law of the land."
He said, "If cigarettes manufactured in the country were not available here, the market will be flooded with contraband products from other parts of the country.
Shares of ITC Ltd., which sells seven of every 10 cigarettes in India, fell to their lowest in five weeks as the company's cigarette sales grew at a slower pace than expected.
The stock, which gained 55 percent in the past year, slumped as much as 4.9 percent, the most since June 13. The shares declined 7.75 rupees, or 4.4 percent, to 167.2 rupees at the 3:30 p.m. close on the Bombay Stock Exchange, after ITC's first- quarter profit rose a lower-than-expected 17 percent to 6.52 billion rupees ($139 million).
``Expectations were for higher cigarette sales growth, given that the economy is growing fast and income levels are high,'' said Abhijeet Kundu, an analyst at Prabhudas Lilladher Securities Ltd. in Mumbai. ``That did not happen,'' said Kundu, who has a ``buy'' rating on the stock.
ITC's stationery business is already the No. 2 player in the organised market. Here's how it plans to fill schoolbags with its Classmates notebooks.
Chand Das can’t stop beaming. The chief executive of ITC Greetings’ Gifting and Stationery Business has just stepped out of a presentation ceremony that honoured winners of the Classmate Young Author 2005 awards.
But that’s not the main reason for the smiles. ITC’s stationery business, which sells notebooks under the Classmate brand name, brought in earnings of Rs 40 crore in 2005-06.
Granted, that’s chicken-feed for a conglomerate like the Rs 7,600-crore ITC, which has interests spread across hotels, tobacco and the agri-business. . . .
why is ITC betting big on paper? As a first explanation, Das parrots the official explanation.
“Since 2000, ITC has been looking at growing its non-cigarette FMCG business, which blends with the core capability of the group.” . . .
it created an affordable-yet-aspirational image and also send a hidden message of being a superior product (60 gsm paper, bleached without using chlorine). Then, ITC focused on the design elements of notebooks: each Classmate notebook has a theme on the cover and related information inside.
For instance, if the cover has a photograph of a ship, the inside front cover has information about ships. Then, the last two pages of the notebook have trivia and the back cover highlights the corporate social responsibility initiatives of the company (Re 1 from each notebook sold is set aside for the cause of underprivileged children). . .
it introduced the Young Author competition for students across schools in India, who were in the 9th to 12th grade.
Chewing tobacco has been a tradition in India for centuries. Of the total amount of tobacco produced in the country, around 48 per cent is in the form of chewing tobacco, 38 per cent as bidis, and only 14 per cent as cigarettes.
Thus, bidis, snuff and chewing tobacco (such as gutka, khaini and zarda) form the bulk (86 per cent) of India's total tobacco production. In the rest of the world, production of cigarettes is 90 per cent of total production of tobacco related products.
The per capita consumption of cigarettes in India is merely a tenth of the world average. This unique tobacco consumption pattern is a combination of tradition and more importantly the tax imposed on cigarettes over the last 2 decades. Cigarette smokers pay almost 85 per cent of the total tax revenues generated from tobacco. . . .
Despite being the second largest producer, India is only the ninth largest exporter of tobacco and tobacco products in the world. Out of the total tobacco produced in India, only one-third is flue-cured tobacco suitable for cigarette manufacturing. Most of the tobacco produce is suitable for the manufacture of chewing tobacco, bidis and other cheap tobacco products, which have no demand outside the country.