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ITC – Competitive position to strengthen
The Ministry of Commerce is considering 2 changes to the FDI policy on tobacco: 1) exclude
tobacco from 100% FDI policy in wholesale trading 2) put tobacco imports from OGL to restricted
list. If the above is implemented, we believe it will positive for ITC.
Media reports that Foreign Direct Investment on tobacco is likely to change
While, Foreign Direct Investment (FDI) in tobacco manufacturing in India is restricted totally,
some of the global MNCs were accessing the Indian tobacco market through the wholesale
trading route where FDI was allowed. Media reports suggest that Government might consider
removing tobacco from the list of products where FDI is allowed for wholesale trading route.
Besides, there is proposal to shift over tobacco imports from open general licence (OGL) to
restricted list.
Above policy, if implemented, would strengthen ITC's competitive position
Over the last few years, some the MNC's have been accessing the Indian tobacco market by
using the FDI policy for wholesale trading and making investments in India in marketing.
While, ITC competitive strengths in cigarette business is already very strong, this competition
would have impacted its market share in the premium end "King Size" segment. We believe if
the above changes are implemented, ITC's competitive position would strengthen further.
ITC's volume recovery in 3QFY11, we believe would gather momentum
We estimate that ITC recorded a volume growth of 2% in 3QFY11, after recording a marginal
decline in the 1HFY11. We expect the volume recovery to gather further momentum in the
4QFY11. We do not expect a sharp excise hike in the 2011 budget, as Central government
excise rate hikes have been muted in years when volume growths have been under pressure.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
ITC – Competitive position to strengthen
The Ministry of Commerce is considering 2 changes to the FDI policy on tobacco: 1) exclude
tobacco from 100% FDI policy in wholesale trading 2) put tobacco imports from OGL to restricted
list. If the above is implemented, we believe it will positive for ITC.
Media reports that Foreign Direct Investment on tobacco is likely to change
While, Foreign Direct Investment (FDI) in tobacco manufacturing in India is restricted totally,
some of the global MNCs were accessing the Indian tobacco market through the wholesale
trading route where FDI was allowed. Media reports suggest that Government might consider
removing tobacco from the list of products where FDI is allowed for wholesale trading route.
Besides, there is proposal to shift over tobacco imports from open general licence (OGL) to
restricted list.
Over the last few years, some the MNC's have been accessing the Indian tobacco market by
using the FDI policy for wholesale trading and making investments in India in marketing.
While, ITC competitive strengths in cigarette business is already very strong, this competition
would have impacted its market share in the premium end "King Size" segment. We believe if
the above changes are implemented, ITC's competitive position would strengthen further.
ITC's volume recovery in 3QFY11, we believe would gather momentum
We estimate that ITC recorded a volume growth of 2% in 3QFY11, after recording a marginal
decline in the 1HFY11. We expect the volume recovery to gather further momentum in the
4QFY11. We do not expect a sharp excise hike in the 2011 budget, as Central government
excise rate hikes have been muted in years when volume growths have been under pressure.
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