ITC smokes now 14-18% costlier - Daily News & Analysis

ITC, the country's largest cigarette maker, has raised prices of its cigarettes 14-18%, in line with market expectations. This is on the back of an 18% increase in excise duty on 65mm cigarettes as part of the 2013-14 Budget. Coupled with the hike in value-added tax or VAT across states, the increase in levies works out to around 350 basis points. This made the price hikes inevitable, said analysts. Trade channels and distributors said higher prices of key ITC brands -- Gold Flake, Classic Milds, Wills Navy Cut and India Kings – took effect in the first week of April. But some distributors, overcome by anticipation of price hikes soon after the February 28 Budget, unofficially increased prices from March first week itself. ITC, however, waited for state budgets before formalising the hike. ITC confirmed the price hike but refused to comment on its possible impact. Abneesh Roy of Edelweiss Securities, however, said steep price increases over the past two years will pressure volumes, keeping growth flat to negative. "The 65mm segment may decline 2-3% in the coming quarter, but the volume growth in the sub-64 mm segment may end up neutralising the effect." In the coming months, the sub-64 mm segment will be key, said another analyst with a foreign brokerage. For, after test-marketing the cigarette, ITC has rolled it out nationally. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGU4Ukgp6Htl5rr2fzYIbBNcfBwiQ&url=http://www.dnaindia.com/money/1819185/report-itc-smokes-now-14-18pct-costlier

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