ITC loses ground on move to ban sale of loose cigarettes

By: |
Mumbai | Updated: November 26, 2014 10:24:14 AM

The health ministry has also accepted proposals to raise the minimum age for tobacco consumption and increase fines for violations of laws on cigarette sales

Shares of cigarette manufacturers lost ground on Tuesday after the health ministry said that it has accepted an internal panel’s recommendation to ban the sale of loose cigarettes. ITC posted the biggest single-day fall in 5 months. The scrip ended 5% lower at R355.70  on the BSE.

The Sensex ended 161.49 points lower to 28338.05 points on Tuesday, with ITC accounting for 118 points to the slide.

Among other cigarette companies, Godfrey Phillips posted its biggest single-day fall in 5.5 years. The scrip ended 8.9% lower at R2,965.95. VST Industries which sells its cigarettes under the brand name Charminar Specials, Shah-IDeccan, Charms Virginia Filter Kings, Vazir, Qila and Ambassador, saw its shares fell by 2% to R1,832.50.

Tobacco

For FY14, cigarettes contributed 62% of ITC’s revenues. Meanwhile, cigarette and tobacco sales accounted for 94% of the Godfrey Phillips’ FY14 sales.

According to a Reuters report, Health Minister JP Nadda in a statement to Rajya Sabha said that the health ministry has accepted the recommendation of an internal panel to ban the sale on single cigarettes. Another Reuters report quoted dealers who said that the health ministry’s move could impact ITC’s volumes by 10%.

The health ministry has also accepted proposals from the panel to raise the minimum age for tobacco consumption and increase fines for violations of laws on cigarette sales, health minister JP Nadda informed lawmakers, according to a Bloomberg report.

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