ITC gains on plan to resume cigarette production amid health warning row

ITC rose 0.44% to Rs 332.40 at 11:01 IST on BSE after the company said it will soon resume production, after two weeks suspension due to government's strict packaging norms requiring heavy health warning.

The announcement was made on Friday, 15 April 2016.

Meanwhile, the BSE Sensex was up 125.76 points, or 0.49%, to 25,752.51 .

On BSE, so far 1.13 lakh shares were traded in the counter, compared with an average volume of 6.34 lakh shares in the past one quarter. The stock hit a high of Rs 338.40 and a low of Rs 331.10 so far during the day. The stock hit a 52-week high of Rs 359.75 on 26 October 2015. The stock hit a 52-week low of Rs 268 on 29 February 2016. The stock had underperformed the market over the past one month till 13 April 2016, rising 3.07% compared with 3.68% rise in the Sensex. The scrip had, however, outperformed the market in past one quarter, rising 4.73% as against Sensex's 3.11% rise.

The large-cap cigarette major has an equity capital of Rs 804.72 crore. Face value per share is Re 1.

The government ordered that from 1 April 2016, 85% of a cigarette pack's surface had to be covered in health warnings, up from 20%, but cigarette firms halted production saying the policy was not clear.

In a statement to the stock exchanges late on Friday, ITC said that consequent upon a high court order passed in favour of the company, the company will soon resume manufacture of cigarettes in its factories. Its statement gave no details of its court appeal or any subsequent orders. The company also did not address whether it would print bigger health warnings on its packs.

ITC said earlier this month it was not ready to print bigger, excessive health warnings. It also said the government was implementing new rules despite a parliamentary panel report that called for the size of the warnings to be reduced.

ITC's net profit rose 0.7% to Rs 2652.82 crore on 3.4% growth in net sales to Rs 9102.66 crore in Q3 December 2015 over Q3 December 2014.

ITC is a diversified company, with presence in cigarettes, hotels, paperboards & specialty papers, packaging, agri-business, packaged foods & confectionery, information technology, branded apparel, personal care, stationery and other FMCG products. ITC is a market leader in cigarettes.

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