ITC Hikes Gold Flake, Classic Brand Prices — Here's What Smokers Will Pay

ITC Ltd. has sharply raised cigarette prices across some categories, negating the impact of excise duty on its operating income, according to on-ground study by analysts at B&K Securities and InCred.

Prices for Gold Flake and Classic (Premium) has been hiked by 41%, Classic Connect (Slims) by 20% and Gold Flake Superstar (Value) by nearly 19%.

• Gold Flake (pack of 10): Now Rs 240 (from Rs 170 earlier) | Rs 24 per stick.
• Classic Regular/Mild/Ultra (pack of 20): Now Rs 480 (from Rs 340) | Rs 24 per stick.
• Classic Connect (Slims) (pack of 20): Now Rs 360 (from Rs 300) | Rs 18 per stick.
• Gold Flake Superstar (Value) (pack of 10): Now Rs 70 (from Rs 59) | Rs 7 per stick.

Distributors are still getting older priced inventory but invoice size is being cut off at Rs 60 lakh per day compared to no limit earlier, InCred said. They have not been given clarity from ITC regarding when the new priced inventory will be available.

ITC is also likely to launch more products at 74 mm category with larger price increases to negate excise impact in king size brands., according to B&K Securities. While such increases are likely to have a sightly higher impact on volumes, overall profitability drop may be mitigated.

While some brands in the mainly 69 mm RSFT (Regular Size Filter-Tipped) are still to be announced, Godfrey Phillips India Ltd.'s price increase in Marlboro Compact to Rs 11.5 per stick from Rs 9.5 can be taken to be a precedent in that segment, they added.

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Excise Changes

The GST on cigarettes in India has been raised to 40% rate from Feb. 1, the highest slab for 'sin goods', replacing the previous 28% GST plus compensation cess structure. An additional excise duty ranging from Rs 2.05-8.50 per stick based on cigarette length is also in force.

Under the new tax structure, short non-filter cigarettes (up to 65 mm) will attract an additional duty of about Rs 2.05 per stick, while short filter cigarettes of the same length will be charged around Rs 2.10 per stick.

Medium-length cigarettes (65-70 mm) will face an additional duty of roughly Rs 3.6-4 per stick, and long, premium cigarettes (70-75 mm) about Rs 5.4 per stick.

The highest duty of Rs 8.50 per stick applies only to unusual or non-standard designs of cigarettes and most popular cigarette brands do not fall under this slab.

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