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Informist, Thursday, Jul. 23, 2026

 

By Avishek Rakshit 

 

KOLKATA – Seeking to allay shareholders' concerns about a sharp fall in ITC Ltd.'s share price after the government sharply raised taxes on cigarettes, Chairman and Managing Director Sanjiv Puri on Thursday said the company is taking substantive measures to create long-term value, which it hopes will be reflected in a fair market valuation. 

 

The steps that ITC is taking include fortifying its core cigarettes portfolio and strengthening its consumer goods, agriculture and paperboards businesses. 

 

"Many of you have highlighted that the drop (in share prices) has been seen consequent to the introduction of the change in taxation on cigarettes, where taxation increased by 70%, which is absolutely correct. That has been the trigger and we have experienced similar instances in the past," Puri told shareholders at the company's 115th Annual General Meeting. "Also, on account of taxation, our share price has sometimes been impacted; but the task of management is always to roll up our sleeves, put our heads down and create value, and once we create value, we do see that the valuations emerge in the market."

 

Several shareholders raised concerns about the fall in ITC's share prices after the government increased taxes on cigarettes. While ITC raised cigarette prices by 41% for the Kings cigarettes variant, its sales volume declined. Sector analysts estimate an 8-10% month-on-month decline in cigarette sales volume, but retailers peg it higher at 20% month-on-month. 

 

Thursday, ITC's shares closed at INR 281.30 on the National Stock Exchange, down 13% from INR 322.15 on Jan. 30, a day before the new tax rates were announced.

 

Puri said that such volatility in the company's share prices has been a historical trend when the government raises taxes sharply, but ITC's share prices bounced back. "This has been an historical trend, and we have, over a period of time, with the steps taken, come back. There is a recent experience from when about (INR) 200, we went to beyond (INR) 400. But it is not really management's role to determine share prices. Management's role is really to create value, and that's what we will remain focused on," he said. 

 

Along with ITC's top leadership, shareholders too raised concerns about illicit cigarette trade gaining momentum, which shareholders feared could dent ITC's growth potential. 

 

Puri said that ITC is taking several steps to mitigate the tax impact on sales and also strengthen its market position. "We have taken a calibrated approach of pricing to minimise the losses to illicit (trade). At the same time, we are re-architecting the portfolio, and you will see a lot of innovations in the market, a lot of new SKUs (stock keeping units) in the market to enable re-architecting of the portfolio; that's how we are addressing it," Puri said.

 

Even as ITC raised cigarette prices to mitigate the tax impact, it also rolled out new variants of its bestselling brands to maintain its hold in the market and not lose market share to the non-duty-paid cigarettes segment, which is basically the illicit cigarettes market in the country. 

 

For instance, in June, ITC launched a new Classic brand of cigarettes by trimming the length, which enabled it to price 41% lower than the existing King-sized Classic cigarettes. 

 

Priced at INR 170 for a pack of 10, the new trimmed variant of ITC's Classic cigarette brand is currently available only in select, highly price-sensitive markets. Since excise duty on cigarettes is based on their length, the company is able to shorten the cigarettes to reduce the applicable excise duty. 

 

ITC has always maintained that a sharp hike in taxes on cigarettes promotes the growth of the illicit trade, where companies not only lose potential market and revenue, but the government also loses taxes. 

 

Apart from re-architecting its cigarettes portfolio, ITC is also strengthening its non-cigarettes consumer goods portfolio, which it hopes will drive top line in coming years and improve the bottom line and profitability of the company as well. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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