sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« VAT (Value Added Tax) »
 1 step forward, 2 steps back. Is GST going the VAT way?
 1 step forward, 2 steps back. Is GST going the VAT way?
 Pending VAT comes to haunt companies claiming input tax credit
 One-time settlement of VAT, excise disputes in the works
 Haryana government uploads photos of VAT defaulters
 Filing of online return for 4th quarter of 2017-18 extension of period thereof.
 No Cenvat credit admissible on outward transportation services from factory to buyer’s premises
  Filing of reconciliation return in form 9 for the year 2016-17
 Govt may send notice to 162 companies; ask for VAT returns
 Cenvat Credit Is Not Income Liable To Be Taxed
 Cos wanting to claim VAT refund on employees' foreign stay can get professional help

ITC raises cigarette prices after VAT hike
September, 23rd 2011

A month after cigarette major ITC increased the price of its premium brand, Classic, the company has done the same to its mid-sized brands Wills Navy Cut.

The move follows an increase in value-added tax (VAT) on cigarettes in Andhra Pradesh from 14.5 per cent to 20 per cent.

neighbouring Tamil Nadu had also increased the VAT rate on cigarettes from 12.5 per cent to 20 per cent, which had prompted ITC to take up the price of Classic from Rs 50 to Rs 55 for a pack of 10. In between, West Bengal had included cigarettes in Schedule D of VAT brackets, where the effective rate is 30 per cent. "All this had prompted the increase in Navy Cut," said an ITC spokesperson.

Wills Navy Cut now costs Rs 44 for a pack of 10. This is a rise of 10 per cent over Rs 40. The jump in price of the Classic was also in the same range. But, the overall pricing action has helped ITC maintain a sizeable price difference between its various brands and its rivals. This avoids cannibalisation, say market experts.

For instance, with Classic at Rs 55, or Rs 110 for a pack of 20, Gold Flake Kings, another ITC brand, which competes in the same segment, can comfortably sit at Rs 96 for a pack of 20 or Rs 48 for a pack of 10.

While Wills Navy Cut does not have another ITC brand in the same segment, industry sources say the current move is significant. "The company could also increase the price of the Gold Flake portfolio given the way it has taken up the prices of Classic and Navy Cut," said a Mumbai-based fast moving consumer goods analyst.

Gold Flake, which straddles the premium and economy ends of the market, hasn't seen a price rise for some time now. Its portfolio contributes almost 43 per cent to ITC's cigarette revenues, followed by Navy Cut at 11 per cent and Classic at 10 per cent, respectively.

The balance 36 per cent, cumulatively, comes from brands such as Bristol, Capstan, Scissors, Burkley, Bensen & Hedges etc.

Gold Flake Kings, Classic and Marlboro are 84-millimetre-size brand, while Gold Flake Regular is 69 mm in size. Priced at Rs 98 for a pack of 20, Marlboro is marketed by Phillips Morris, which is a partner of Godfrey Phillips in India. Gold Flake Regular, on the other hand, competes with the latter's Four Square in the 69-mm segment.

But the price difference again is substantial. Gold Flake Regular is priced at Rs 38 for a pack of 10 to Four Square's Rs 29 for the same pack size. ITC's Bristol, in fact, is now a rupee less than Four Square at Rs 28 for a pack of 10.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Team

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions