Proposal to ban sale of loose Cigarettes pulls down ITC shares 1.3%

On hearing about the proposed anti-smoking legislation suggesting a ban on sale of loose cigarettes, ITC shares fell 1.3 percent Thursday.

The proposal which has been sent to the Cabinet for approval also suggested an increase in the minimum age of smoking to 25 years. Some of the other points included banning designated smoking zones in hotels and airports, banning tobacco advertising on Internet and mobiles.

Another proposal is to set up special courts to try offences related to anti-tobacco law among others and not promoting CSR initiatives by tobacco companies which they use in earning goodwill.

According to Motilal Oswal Financial Services report, in India, about 73 percent of the cigarettes are sold loose. It said that though big companies like ITC can find out new ways, the proposal can affect new consumers as they mostly start with purchasing just one cigarette.

JM Financial in a report said, "It is, in fact, the retailers who currently sell cigarettes in loose form to the end-consumers and, hence, compliance will need to be ensured at retailers' end. This could prove to be a difficult task, given the widespread retail landscape of the country."

The proposals were prepared by a panel appointed by former health minister Harsh Vardhan. They have been accepted by the new health minister JP Nadda, who has sent them to the Cabinet for its green signal.

Source: Medindia