The Kolkata-based company revised prices on three brands including Classic, Gold Flake and Silk Cut. The price of a 20-stick pack of the premium brand Classic was raised by 10 per cent to Rs 88 from Rs 80 earlier, while a pack of the mid-market Gold Flake brand will cost 5 per cent more at Rs 40 against Rs 38 earlier. The price of economy brand Silk Cut has been revised marginally from Rs 20 now, retailers added.
"Prices have been revised in select brands," said ITC, but refused further comments.
The company, releasing its results on May 23, had warned about cost pressure and a sharp increase in taxes in FY08.
The current price revision is apart from the increase the company effected after Finance Minister P Chidambaram increase excise duty on cigarettes in the Union Budget.
The three brands are the company's major cigarette brands and only the Wills brand, priced at Rs 34, has been kept out of the purview of this exercise. The three brands would push up the cigarette division's gross margins by 1 per cent or a little more, they indicated. Retailers said they would continue to sell the old stock at the old printed price.
The company said its cigarette business saw increase of about 30 per cent in incidence of taxation owing to 6 per cent increase in excise duty and imposition of VAT at 2.5 per cent ad-valorem.
The company claimed its cigarette manufacturing facilities achieved record levels of productivity but warned that the discriminatory taxation regime, extremely high rates of excise duty coupled with VAT was driving tobacco consumption to lesser taxed products such as bidis, gutkha, chewing tobacco and zarda and assisting the growth of contraband trade and cigarettes produced by clandestine domestic players.
It claimed that consequent to the 30 per cent equivalent increase in tax rates on cigarettes during the year, the volume of these illegal products has doubled from around 150 million per month to nearly 300 million.
More importantly, it warned that non-filter cigarettes had become unviable and its market was being captured by smuggled and tax-evaded cigarettes, a situation which could be rectified only through moderation of taxes on tobacco, minimisation of discriminatory taxes on different class of tobacco products and a regulatory framework.
ITC brand retailers here said that they expected supplies of non-filter cigarettes to decline if not stop altogether once existing inventories were liquidated because minor brands, some of them smuggled, were undercutting them.
Q4 net up 14%
ITC posted a 16 per cent rise in gross income at Rs 6,009 crore in the fourth quarter of FY08 (Rs 5,279 crore in Q4 of FY07) with post-tax profit up 14 per cent at Rs 736 crore (Rs 650 crore) after adjusting for income tax refunds.
For FY08, ITC gross turnover rose to Rs 21,966 crore (Rs 19,636 crore) while profit before tax rose to Rs 4,571 crore (Rs 3,926 crore). Profit after tax jumped to Rs 3,120 crore (Rs 2,699 crore). Cigarettes, reeling under a higher taxation regime, reported Q4 net sales of Rs 3,583 crore (Rs 3294 crore) with the segment's gross profit at Rs 870 crore (Rs 741 crore).
During FY08, gross sales from cigarettes were Rs 13,825 crore (Rs 12,833 crore) while the segment's gross profit was Rs 3,634 crore (Rs 3,172 crore).
