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Smokestack valuations likely for the cigarette industry - Views on News from Equitymaster
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  • Dec 20, 1999

    Smokestack valuations likely for the cigarette industry

    The cigarette sales have declined in volume terms by 5.5% in April-November 1999 vis-à-vis the corresponding period last year. This was for three companies Indian Tobacco Company (ITC), Godfrey Philips and Vazir Sultan Tobacco (VST).

    These three companies account for 95% of the total domestic cigarette sales and the sales figures are based on the cigarette clearances from their factories.

    As against 61.568 bn cigarette sticks sold in between April-November 1998 sales have come down to 58.176 bn.

    (Figures in million sticks)

    The decline in cigarette sales is a part of the continuing trend. The reasons are:

    1. a continuous increase in excise duties over the last few year’s which has resulted in an increase in prices
    2. the fall of the mini segment which is the largest segment in terms of volume since the last budget increased the duty on this segment.
    3. Restrictions and bans on smoking on public places
    4. The gathering strength of the anti-smoking lobby.



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