The Hindu Business Line : ITC, Godfrey Phillips in limelight

Two cigarettes stocks, which have substantial foreign direct investments, on Monday moved up. Market sources said the Japan Tobacco International’s proposal to raise its stake in its unlisted Indian outfit would be taken up by the Foreign Investment Promotion Board (FIPB) at its meeting on Tuesday. “If FIPB clears the proposal, then it would surely warm up the possibility for BAT and Phillips Morris to raise stake in investments and take control of ITC and Godf rey Phillips, both of which are listed,” said an analyst with a foreign investment firm. Sources in FIPB confirmed to Business Line that the board is likely to take up the proposal for discussion in Tuesday’s meeting as it was on the agenda (item number 12). BAT holds majority stake of over 32 per cent in VST Industries, while it holds over 32 per cent in ITC, without majority stakeholder status. Phillip Morris holds around 36 per cent Godfrey Phillips, and considered a joint-venture with Modi family.

Opposing move

In the backdrop of the Government policy for over a decade in discouraging FDI in tobacco and a number of rejections of such proposals, the new development is being seen as a first sign of change in the authorities. However, a section of the industry lobby is learnt to be active against such a change.

ITC closed at Rs 177.60, up around 4 per cent and Godfrey Phillips finished at Rs 1,250 with gain of over 3 per cent. VST, however, finished down marginally at Rs 316. According to analysts, in the case of VST, which is a much smaller player compared to ITC, change in FDI policy would not have much impact as BAT is already in the saddle, and does not appear to be aggressive in terms of expansion.

Jayanta Mallick

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