Cigarette stocks go down in flames; ITC plunges 6%

 

The shares of cigarette and tobacco product makers today fell on the BSE, led by sector leader ITC that declined over 6 per cent, after Finance Minister Pranab Mukherjee announced hike in excise duty on cigarettes, cigars and cigarillos in his Budget Speech.

In bad news for smokers, Mukherjee, while presenting the Budget for 2010-11, announced the upward revision of excise rates up to Rs 2,363 per 1000 (barring cigarettes of less than 60 mm). Also, chewing-tobacco products will attract excise duty of 60 per cent as against the earlier 50 per cent.

Soon after the announcement of Budget, shares of ITC, which had opened firm on the Bombay Stock Exchange, fell sharply to settle 6.17 per cent down at Rs 232.05. ITC was the biggest loser among 30 bluechip stocks on the BSE.

Shares of Godfrey Phillips India Ltd also ended the day's trade with a fall of 0.56 per cent to Rs 1,790.

Golden Tobbaco Ltd, another leading player in the sector, too declined 1.77 per cent to close at Rs 126.50.

Mukherjee, who gave up his smoking pipe years ago, feels that others too deserve encouragement to kick the habit and hence has subjected tobacco products to higher taxation.

"Since I quit smoking many years ago, I would urge others to also follow suit, as smoking is injurious to health. To this end, I am making some structural changes in the excise duty on cigarettes, cigars and cigarillos coupled with some increase in rates," he said.