Shares of Godfrey Phillips India surged 11 per cent to Rs 1,042, hitting a 52-week high of the BSE in intra-day trade on Monday after the company issued a clarification regarding alleged violation of the Foreign Direct Investment (FDI) laws of India. The cigarettes and tobacco products company said the allegations were"completely misconceived and misplaced".
The stock surpassed its previous high of Rs 1,000 recorded on January 15, 2019 in intra-day deal.
“The company has entered into a commercial arrangement with IPM Wholesale Trading Private Limited (an Indian entity and affiliate of Philip Morris International Inc., USA) to manufacture Marlboro cigarettes in India in May 2009 which is a year before May 2010 when the restrictions on FDI in manufacture of cigarettes came into being. The commercial arrangement referred to above is in complete compliance with the extant regulations governing the FDI laws in India. All the business transactions entered and executed between the parties since 2009 are governed by the above referred commercial arrangement. Incidentally, all the business transactions referred above are executed in Indian rupees,” the company said in a regulatory filing.
Godfrey Phillips India made the clarification with reference to the news report put out by Reuters and published by various newspapers in last few days, suggesting alleged violation of the FDI laws in the arrangement to manufacture Marlboro cigarettes by Godfrey Phillips India Limited (the Company) in India.
The counter has seen huge trading activity with combined volume more than doubled today. Till 03:08 pm, total 1.23 million equity shares have changed hands against an average sub 400,000 shares were traded daily in past two weeks on the BSE and NSE.
Meanwhile, in the past seven trading days, Godfrey Phillips India has outperformed the market by 18 per cent, as compared to 3 per cent rise in the S&P BSE Sensex.
The company manufactures some of the most popular cigarette brands in the country like, Four Square, Red and White and Cavanders. Additionally, Godfrey Phillips India also manufactures and distributes iconic brand Marlboro under procurement and product supply agreements with Philip Morris International.
Last week, ITC, the industry major had increased the price of three cigarette brands - Bristol, Flake Excel and Capstan.