Search the Internet          Tips  Sites: Finance, Investment

Sector Focus : Cigarettes

Cigarettes: Post-Budget

Cigarettes: State of the industry (2000)

Cigarettes: Tariffs

	Tariffs
	Customs1		Excise2
Filter	2000-01	2001-02	2000-01	2001-02
> 85 mm	44.0	40.4	1,545	1,780
75-85 mm	44.0	40.4	1,260	1,450
70-75 mm	44.0	40.4	945	1,090
< 70 mm	44.0	40.4	580	670
Non-filter
60-70 mm	44.0	40.4	390	450
< 60 mm	44.0	40.4	115	135

1 Customs duties are in per cent.
2 Excise duties are in Rs per '000 cigarettes.

Source: CRIS INFAC

• In 2000, cigarettes accounted for around 18 per cent of total tobacco demand. (Remaining tobacco was consumed in the form of bidis, chewing tobacco and other non-smoking tobacco varieties.)
• In 2000, cigarette sales declined by around 4 per cent, as compared with those in 1999. Sales volumes declined largely in the mini/micro cigarette category (70 mm or lower). However, sales increased in value terms, due to the increasing usage of filter cigarettes (largely in the non-premium segment). Sales were also affected due to increased smuggling of the premium foreign brands.
• During the April-December 2000 period, in spite of a decline in sales, profits of the four large players increased, as compared with those during the corresponding period in 1999. Profits increased largely due to an increase in unit price realisations, which could be partly attributed to the increase in the demand for filter category cigarettes.

Cigarettes: Budget impact

Impact factors

Company name	Impact	Impact factors
Godffrey Philips	Neut	A,B
(421.40, 396.10)
ITC	Neut	A,B
(829.65, 778.90)
VST	Neg	A,B
(111.95, 117.50)

Notes:
Figures in brackets indicate the closing share prices, on February 27, 2001 and February 28, 2001, respectively.
pos= positive neg= negative neut= neutral

Source: CRIS INFAC

A: The increase in the excise duty is expected to have a negative impact on the volumes and the operating margins of players, who are concentrated in the price elastic lower segments. However, companies, such as ITC and Godfrey Phillips would be able to pass on a major portion of the increase in the duty, since they operate largely in the price inelastic segments.

B: The reduction of surcharge on corporate tax, from 13 per cent to 2 per cent and the expected decline in interest rates, is expected to have a positive impact on producers.

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

Tell us what you think of this analysis