ITC dropped 1.93% to Rs 329.55 at 10:00 IST on BSE after the company said that it has been compelled to shut its cigarette factories with effect from 1 April 2016 until clarity emerges in the current uncertain state of the rules on health warning.
The announcement was made on Saturday, 2 April 2016.Meanwhile, the S&P BSE Sensex was up 94.71 points or 0.37% at 25,364.35.
On BSE, so far 1.51 lakh shares were traded in the counter as against average daily volume of 6.01 lakh shares in the past one quarter. The stock hit a high of Rs 333 and a low of Rs 325.90 so far during the day. The stock had hit a 52-week low of Rs 268 on 29 February 2016. The stock had hit a 52-week high of Rs 359.75 on 26 October 2015. The stock had underperformed the market over the past one month till 1 April 2016, gaining 3.35% compared with Sensex's 6.27% rise. The scrip had, however, outperformed the market in past one quarter, advancing 2.66% as against Sensex's 3.41% fall.
The large-cap company has equity capital of Rs 804.72 crore. Face value per share is Re 1.
In 2009, the Central Government introduced pictorial health warning on cigarette packages. The implementation of any change in the health warnings on the cigarette packages is an elaborate process for the manufacturers, entailing months of preparation involving substantial cost and effort, ITC said. Since the matter of new health warning was under the Parliamentary Committee's consideration, and the Government had itself held out that it would await the Committee's report, the industry was led to believe that the Government would re-notify new health warnings after considering the Committee's recommendations, the company said. Further, the question of the legality of the new warnings has been and continues to be pending before the Court, it added. In this situation, the company, as any prudent person would, did not commit to wasting substantial resources in creating the large number of cylinders and other tools necessary for a change-over of the warnings. As a result, the company is at present not in readiness to print the health warnings as now once again notified, ITC said.
ITC's net profit rose 0.7% to Rs 2652.82 crore on 3.4% growth in net sales to Rs 9102.66 crore in Q3 December 2015 over Q3 December 2014.
ITC is a diversified company, with presence in cigarettes, hotels, paperboards & specialty papers, packaging, agri-business, packaged foods & confectionery, information technology, branded apparel, personal care, stationery and other FMCG products. ITC is a market leader in cigarettes.
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