ITC hikes Wills, Gold Flake prices

ITC has revised the prices of its best-selling Wills Navy Cut and Gold Flake range of cigarettes following the hike in excise duty in this years Budget.

The price of a 10-stick packet of Wills Navy Cut was raised from Rs 25 to Rs 27 and that of the Gold Flake Filter Kings was hiked from Rs 29.50 to Rs 33; the price of a 20-stick pack of ITC Classic was raised from Rs 65 to Rs 70.

ITC spokespersons refused to comment on the issue, which is in keeping with the company's policy of not commenting on cigarette related issues.

Thought the sources could not confirm on the share of these brands, trade sources said that the Wills Navy Cut and Gold Flake variants represented the bulk of the company's cigarette sales.

In the quarter ending December 2005, cigarette sales of ITC stood at Rs 2,880 crore, while profit before tax (PBT) and exceptional items from cigarettes stood at Rs 692 crore.

Total gross revenue for the quarter was Rs 4,239 crore, while PBT and exceptional items was Rs 842 crore; profit after tax stood at Rs 536 crore.

In this years Budget, the specific excise duty on every thousand non-filter cigarettes not exceeding 60 mm in length was raised from Rs 150 to Rs 160.

The specific excise duty on every thousand non-filter cigarettes exceeding 60 mm, but less than 70 mm in length rose from Rs 495 to Rs 520 while excise duty on every thousand filter cigarettes not exceeding 70 mm in length rose from Rs 740 to Rs 780.

On every thousand filter cigarettes exceeding 70 mm, but less than 75 mm in length, the specific excise duty was hiked from Rs 1,200 to Rs 1,260, while the duty for every thousand filter cigarettes exceeding 75 mm but less than 85 mm in length gained from Rs 1,595 to Rs 1,675.

For all other types of cigarettes, on every thousand the specific excise duty was hiked from Rs 1,960 to Rs 2,060.

The duty blow was the hardest on premium and longer length cigarettes. The prices of top-end cigarettes saw a hike of Rs 100 per 1000, while the prices of the marginally lower ones, in the category of filter cigarettes exceeding 75 mm but not exceeding 85 mm in length were increased by Rs 80 per thousand.

Cigarettes accounted for around 14 per cent of total tobacco consumption in the country at last count.

In the case of ITC, filter cigarettes represented close to 70 per cent of its total cigarette production, with bulk of the sales coming from Gold Flake and Navy Cut brands, which were less than 75 mm in length.

Production of longer, or higher priced cigarettes was smaller in terms of numbers but margins in this category were much higher.