ITC may raise cigarette prices

As a result, many shopkeepers are asking customers to pay more than MRP printed on cigarette packs

ITC is likely to increase the prices of some of its cigarette brands by up to 15 per cent. While the company is yet to raise the prices officially, it appears dealers and retailers have already been informed of the move.

As a result, many shopkeepers are asking customers to pay more than the maximum retail price printed on cigarette packs.

Currently, a 10-stick packet of the Navy Cut brand is priced at Rs 60. But retailers are now selling these packets at Rs 69-70. “We have been told the price has been increased. Stockists are selling the cigarette at a higher price. Hence, we are also asking customers to pay more,” said a retailer.

He added packs with the new prices would be available from next week.

On being asked about the price rise, an ITC spokesperson said, “We do not comment on price revision.”

Earlier this year, the company had increased cigarette prices by up to 20 per cent, after the government had raised the excise duty on cigarettes in Budget 2013-14. A few states, including West Bengal, had raised tobacco taxes in their state budgets.

“This (the price rise) will further add up to the margins and realisations will get a boost. However, volumes will remain under pressure in 2013-14. An uplift in the volume is expected only in the next financial year,” said a senior analyst at Sharekhan.

He added the price rise was unlikely to affect consumption..

ITC closed July-September quarter with a margin of around 32% in its cigarette business. The company's cigarette sales during this period had increased by 10% from year earlier to Rs 3,723.8 crore. However, analysts were disappointed as cigarette volume fell by 5% on a year-on-year basis during the second quarter of 2013-14 as against market expectation of 2% decline.