Comments
This year’s Budget, once again, saw an increase in taxes on cigarettes. But, will a chunk of the potential annual tax revenue be lost, with new products arriving late and old stock being sold at a premium?
At a premiumFor nearly a month, since the Budget, cigarettes are selling at a premium of ₹5-10 for a pack of 10. According to a retailer in the central business district, the three varieties of Silk-Cut contribute nearly 30 per cent of his daily sales of approximately 100 packets of ITC cigarettes. This is followed by Flake (25 per cent); Gold Flake regular (18 per cent); 74 mm Wills Navy Cut (12 per cent), while 84 mm king size cigarettes contribute 15 per cent.
According to submissions by former Union Minister of State for Commerce and Industry D Purandeswari to Parliament, India consumed 1,16,166 million sticks in 2011-12.
This implies approximately 97 crore packets of 10s are sold a month; close to 70 crore are from ITC.
A rough calculation suggests ₹5-10 premium on every ITC cigarette packet may have benefitted the trade with ₹350-700 crore of unaccounted cash in the last one month.
New price tagsWhat is surprising is that the premium charged by retailers matches the new price range released by ITC. While company officials did not reveal the new prices, sources said ITC escalated prices of Classic and Gold Flake (king size) from ₹85 to ₹95 for a pack of 10. Flake Filter prices are up from ₹39 to ₹48.
ITC, sources say, is yet to revise prices of Navy Cut (₹69), Gold Flake Filter (₹59) and Gold Flake Premium Filter (₹58).
According to Abneesh Roy, Associate Director — institutional equities research of Edelweiss Securities, ITC generally does not increase prices across brands at one go.
ITC maintains silence on the reasons behind the delayed arrival of new stocks.
In an emailed response, the company declined to take any responsibility of the alleged incidence of over-charging of customers by retailers as they sell cigarettes only to wholesalers. “Retailers are prohibited by law from charging above the MRP,” it said.
Claiming there are many fair price retailers, an ITC spokesperson said: “We have started shipping out stocks with new MRPs and such stocks started connecting to markets.”
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.