ITC sees cigarette volumes drop due to higher taxes
Following incidence of higher tax rates due to imposition of 12.5 per cent VAT on cigarettes, ITC Limited feels that sales volume would definitely drop, the extent of which would be ascertained at a later date.
By PTI |
KOLKATA: Following incidence of higher tax rates due to imposition of 12.5 per cent VAT on cigarettes, ITC Limited feels that sales volume would definitely drop, the extent of which would be ascertained at a later date.
An ITC source told media that "33 per cent rise in taxes is bound to affect volumes. We will have to wait and watch for the actual impact."
He, however, said that the extent of price rise may not be enough to compensate for the loss in volumes. ITC is a leading player in the cigarette industry, where consumption of cigarettes constituted only 15 per cent of the tobacco market.
The source said that the growth of the cigarette business, which had been the traditional line of activity for ITC, was more or less stable. As compared to the cigarette business, the growth of the company's hotels, fast moving consumer goods (FMCG) and paperboards divisions had been extremely fast.
The company had also drawn up plans to invest Rs 300 crore in the cigarette business at Kidderpore in the metropolis for which clearance for land, which belongs to Kolkata Port Trust, was still awaited.
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Meanwhile, the company was in the process of identifying land for spearheading its retail initiative in West Bengal. The source said that ITC had identified land near Barasat for purposes of setting up a demonstration farm and a nursery for growing fruits and vegetables.ITC's retail initiative, under the brand 'Choupal Fresh', would have both B2B and B2C segmemts, and the tentative cost for setting up one outlet was in the region of Rs 25 crore. Currently, ITC had three Choupal Fresh stores one each in Chandigarh, Pune and Hyderabad. The company plans to set up one such store in Kolkata.
On the food processing unit and logistics hub in West Bengal, the source said that the company had earmarked an investment of Rs 250 crore, the location of which yet to be finalised. The project would require 60 acres of land, the source said.
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