In what could come as a blow to Cigarette Major ITC, Uttar Pradesh (UP) government has hiked taxes on tobacco products from 12.5% to 50%. Earlier in UP, the tax summed up to 18.5% along with additional tax and entry tax, however with the recent hike, the tax tallies up to almost 55%.
This action by UP government is in line with the actions taken by Kerala and MP governments, which have banned these products completely. However, some reports also state the likelihood of hike in tax being extended to tobacco products like gutka and pan masala and not cigarettes.
However, the speculations are rife that the country’s largest cigarettes maker to mitigate the impact of UP tax hike would increase the prices of cigarettes by 2% yet again. The company had in April 2012, upped the price of cigarette by 5-16%. FMCG giant, in the month of June, reported that it could increase the prices of some food products after the rupee’s plunge to a record low threatened to eat into company’s margin.
The company’s net profit for the fourth quarter ended March 31, 2012 surged by 25.98% of Rs 1614.36 crore as compared to Rs 1281.48 crore for the quarter ended March 31, 2011. For the Year ended March 31, 2012, the company’s net profit registered 23.55% growth at Rs 6162.37 crore as compared to Rs 4987.61 crore for the previous year. Company’s total income has increased by 17.97% to Rs 25999.16 crore for the year from Rs 22038.80 crore in the previous year.
Segment wise, the company’s revenue from Cigarettes registered 17.4% (Y-O-Y) growth for the quarter ended March 31, 2012, at Rs 3249.9 crore; revenue from FMCG division grew by 23.2% at Rs 1616.5 crore, Agri business grew by 30.7% at Rs 1414.2 crore, while it’s Paper and packaging Business registered 6.9% growth at Rs 979.9 crore.