India's second largest cigarette manufacturer, Godfrey Phillips India Ltd, a flagship company of K K Modi group, is planning to invest around Rs 270 crore on distribution, retail and other areas as part of its entry into new markets in the country. The company is also setting up a manufacturing plant with an investment of around Rs 200 crore in Thane, Mumbai.
Speaking to reporters in Chennai today after launching the company’s brand Four Square Kings and Four Square Gold for the Tamil Nadu market, Nita Kapoor, executive vice president – corporate affairs, Godfrey Phillips India said that the company had set a target of Rs 2,200 crore of revenue in 2009-10 as compared to Rs 1,825 crore in 2008-09, an increase of around 20 per cent.
To support the target, the company is looking at entering new markets across the country. Recently, it entered West Bengal.
She added that the company would invest 15 per cent of its turnover in the new markets to increase the distribution channels, retail outlets and in advertisements.
Currently the company has 520 distributors and 800,000 retailers across the country, said Bhisham Wadhera, executive vice president – sales, Godfrey Phillips.
He said one of the potential markets was the south, including Andhra Pradesh, Tamil Nadu, Kerala and Karnataka. He noted that of the total cigarette industry size, which is estimated to be Rs 20,000 crore, Andhra Pradesh has 14 per cent market share and Tamil Nadu has 11 per cent. The company is planning to reach out to smokers in Tamil Nadu through 10,000 plus retail outlets.
Kapoor said, current production capacity for the company is two billion sticks a month and that it is planning to increase it by another one billion over the next 18 months with a new facility in Thane near Mumbai.
She added that with the new entry and increase in production, the company expects to increase its market share to 20 per cent from the current 16 per cent. Current market size in India is 1,100 million sticks a month or Rs 20,000 crore.