Gutkha Ban Pulls Down Kothari
Shares of Kothari Products, the makers of Pan Parag, declined today after Maharashtra joined Tamil Nadu, Kerala, Andhra Pradesh, Goa and Gujarat in banning manufacture, sale, stocking and display of gutkha and pan masala in the state with effect from August 1, 2002.
The scrip slipped 8.59 per cent to end the day at Rs 219.40. A total of 9387 shares and 21,886 shares changed hands on the BSE and NSE respectively.
Market analysts said the company's sales will be impacted in those states where gutkha is banned. But in states such as Uttar Pradesh and Bihar where the gutkha culture is rampant there has been no ban and so there should not be a problem. Business on the whole, however, is not expected to be much impacted, analysts said.
With regard to Maharashtra, the state exchequer nets Rs 25 crore annually through taxes levied on gutkha and pan masala. There are 40 manufacturing units of gutkha and pan masala in Maharashtra which would have to wind up in the wake of the notification to be issued by the state government.
Earlier, Kothari was in the news after there were talks that the company would go for a complete buyback, and given that the promoters hold about 75 per cent stake in the company the chances of a complete buyout are high. But the company has denied any such moves.