Shares in India's largest cigarettes manufacturer ITC fell after the Economic Times reported that Union health minister Harsh Vardhan has sought an increase in tax on cigarettes of all lengths by Rs 2 to Rs 3.5 per stick as well as removal of tax exemption granted to bidi makers, measures that can deter people from smoking.
Shares in ITC fell 5 per cent after the proposed reports and was last trading at Rs 320 on the National Stock Exchange.
Though ITC is now a well diversified company, a bulk of its revenues still come from the cigarettes business. The tobacco business is also a high margin business for the company.
In the past successive Union Budget's have raised the prices of excise on cigarettes to curb their usage. This is also a good revenue stream for the company.