ITC Ltd, one of the two BAT subsidiaries in India (the other one is Hyderabad-based VST Ltd), has for a while now been affected by contraband cigarettes finding their way to the stands in India.
The sale of BAT brands sold in India by ITC -- State Express 555 and Benson & Hedges -- is far outstripped by the sale of smuggled cigarettes of the same brand.
According to sources, while seven out of every eight packs of 555 sold in the country are smuggled, four out of every five packs of Benson & Hedges enter the country trough the illegal route.
Despite the recent worldwide re-launch of State Express 555 in new international packaging, the shelves on the retail outlets are crowded with old and dated contraband stock only. Retailers find it attractive to sell these contraband brands because the margins they can earn on these are thrice what they earn on regular duty-paid cigarettes.
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