ITC shuts In­dian cig­a­rette fac­to­ries

The Pak Banker - - Company& -

MUM­BAI: ITC Ltd., In­dia's largest cig­a­rette maker, has shut all its five fac­to­ries man­u­fac­tur­ing the to­bacco prod­uct await­ing clar­ity from the govern­ment on the dis­play of pic­to­rial health-warn­ing la­bels, spokesman Nazeeb Arif said.

The Kolkata-based com­pany has closed the plants from Dec. 1, Arif said by tele­phone to­day. "There is no clar­ity about what has to be car­ried" on the prod­uct la­bel, he said.

In­dia's Min­istry of Health and Fam­ily Wel­fare in March or­dered all to­bacco prod­uct mak­ers to carry graphic pic­to­rial warn­ings on their prod­uct pack­ag­ing that cau­tioned buy­ers of the pos­si­ble risk of mouth can­cer, re­plac­ing an ear­lier im­age of lung can­cer. The ex­ist­ing pic­to­rial warn­ings printed on cig­a­rette packs was due for a changeover from Dec. 1, ac­cord­ing to Richard Liu, an an­a­lyst at JM Fi­nan­cial In­sti­tu­tional Se­cu­ri­ties Pvt. in Mum­bai.

"Since the changeover date of Dec. 1 was known well in ad­vance, the com­pany is likely to have pro­vided for ad­e­quate in­ven­tory," Liu, who rates the stock "buy," wrote in a note to in­vestors yes­ter­day. "We do not en­vis­age the tem­po­rary pro­duc­tion halt to have any no­tice­able im­pact on cig­a­rettes vol­ume for the cur­rent quar­ter."ITC de­clined 1.1 per­cent to 169 ru­pees as of 10:45 a.m. in Mum­bai trad­ing, while the bench­mark Bom­bay Stock Ex­change Sen­si­tive In­dex rose 0.2 per­cent. ITC had fallen as much as 3.6 per­cent ear­lier to­day. The print­ing of warn­ings with pic­tures of mouth can­cer fol­lows other steps by the govern­ment, which barred to­bacco ad­ver­tis­ing in May 2004 and pro­posed to re­strict the dis­play and use of to­bacco prod­ucts in movies in an at­tempt to dis­cour­age smok­ing in the world's sec­ond-most pop­u­lous nation. God­frey Phillips In­dia Ltd. has also stopped pro­duc­tion of cig­a­rettes at both its fac­to­ries, the com­pany said in an e-mail state­ment to­day. -Bloomberg

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