ITC sending smoke signals

ITC is amongst the top losers on the BSE currently, opening marginally weaker at Rs.359, which was incidentally its intra day high. It soon slipped to Rs.346.10 and it is now at Rs.350, down almost 3%.

This cigarette stock and others like Godfrey Philips and VST are down after the talked about ban on loose cigarettes is back in news. The Health Ministry has proposed this ban on sale of loose or single stick of cigarette once again. Not just that, there is news that the Ministry might raise the fine from Rs.200 to Rs.1000 for smoking in public places and increasing the minimum age of smoking to 21 years from the present 18 years. Over 70% sales of cigarette companies across India come’s from these ‘single’ cigarette and if banned, it is sure to cause a lot of margin pain to cigarette companies.