The Hindu Business Line : ITC stops non-filtered cigarette production

A high-level source at ITC confirmed today that the company has stopped production of the non-filter variety recently. As of now, ITC has also not increased the prices of its filter cigarettes, the source clarified.

The official also confirmed that the industry players have represented to the Government seeking a review of the excise hike. According to him, at the proposed excise rates, production and sale of low-priced non-filter sticks was unviable.

New excise rates

For sticks with a length not exceeding 60 mm, it is proposed to raise excise duty to Rs 819 per 1,000 from Rs 168, and for sticks of over 60 mm, it will be Rs 1,323 per 1,000 from Rs 546.

An appropriate decision would follow after the Government response to the issue, the source added.

Meanwhile, brokerage firm Prabhudas Lilladher, which claimed to have spoken to ITC recently, said in its report that “the company will try to push non-filter smokers to use filtered cigarettes by cutting the availability of non-filter cigarettes. The same would be reviewed in May, and other actions, if required, would be taken”.

According to Prabhudas Lilladher: “ITC’s non-filtered cigarettes account for consumption expenditure of about Rs 1,860 crore. To get the same value from RSFT at Rs 2, the conversion from non-filters needs to be 62 per cent (and if we assume only plains will upgrade to filters, conversion needs to be at 88 per cent).”

The brokerage firm further said: “Given that this is an unprecedented move, we believe that the company would like to assess the market situation before implementing any price hike. With the company stopping production of non-filtered cigarettes, we believe that the average stick price would increase by 9.6 per cent for a new product mix.”

The ITC stock today finished at Rs 195.10, up over 2 per cent, on the BSE.

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