GTL prints bigger pictorial warnings on cigarette packs

ITC, Godfrey-Phillips continue to keep their factories closed

Even as Dalmia Group-owned Golden Tobacco (GTL) has started rolling out cigarette packets adhering to the new pictorial warning norms, Tobacco Institute of India (TII) members such as ITC and Godfrey-Phillips are sticking to their decision to halt production “until clarity emerges in the rules on health warning”.

TII is a representative body of manufacturers, farmers, exporters and ancillaries of the cigarettes segment of the tobacco sector.

GTL is not a member of TII.

When contacted, ITC did not offer any comment on the situation. Earlier, in a regulatory filing with the BSE, it had said that from April 1 the company was forced to shut its tobacco plants due to lack of clarity over the pictorial warning norms.  

TII director Syed Mahmood Ahmad, too, had said that owing to ambiguity on the matter, TII members were unable to continue manufacturing cigarettes, which resulted in the sector facing Rs 4,550 crore losses.

The health ministry had on September 24, 2015 directed cigarette makers to print pictorial warnings on 85 per cent area of the front side of the cigarette packet from April 1 onwards against 40 per cent earlier.

According to industry sources, the new rules could benefit imported cigarettes that hardly carry any pictorial warnings.

“Consumers may be led to believe that imported cigarettes are safer than the Indian made brands,” said an industry source.

According to retailers such as B K Mahapatra of A B Associates, a tobacco distribution company, since GTL brands such as Panama and Chancellor do not command a significant market share, new stocks of the brands will hardly have an impact in the market.

“It is ITC brands that are in demand followed by Godfrey-Phillips. GTL brands are hardly bought by smokers and there are few retailers who keep stocks of GTL brands,” said Mohammed Hussein, a wholesaler in Kolkata.

Echoing similar views, G Paras of Paras Pan House, a tobacco retailer in Vadodara, said: “Stocks of ITC-branded cigarettes with the distributors are depleting fast. And, with most major cigarette makers shutting down production, I don’t know what the future beholds as far as prices and availability are concerned.”

According to industry estimates, ITC commands 80 per cent of the cigarette trade, and Godfrey-Phillips has 10-11 per cent, while GTL has only two or three per cent market share.

Narsee Monjee-founded GTL posted a 18.75 per cent decline in its net income during the April-December 2015 period at Rs 32.49 crore, while its net losses from the tobacco business mounted to Rs 26.75 crore in the same period against Rs 23.52 crore in the corresponding nine months of FY15.