GPI.
GPI the second largest player in the Indian cigarette industry is a joint venture between Modi group and global cigarette major Phillip Morris. Some of the leading brands in GPI’s portfolio are Jaisalmer, Cavenders, Four Square, Red & White and Originals. The company has a value market share of 11.4% and a volume share of 12.4% in the cigarette industry. In FY2000 while industry volumes declined by 3.5% company's cigarette volumes dropped by 5.3%. The GPI also has a presence in the domestic and export packet tea business.
The cigarette and tobacco players face increasing protests from anti-tobacco and health organizations. Globally as well as in India, the anti-smoking lobbying has been gaining ground. The cigarette industry faces immense pressure with declining volumes and increasing government regulations and taxation.
Profitability of most players has been affected. The industry has received some relief in the form of excise exemption for manufacturing in North Eastern states, and most companies have commenced manufacture in the region to avail of the excise exemption. During the year the company entered into arrangements with small scale manufacturing units in Assam for purchase of cigarettes under company's brands.
During Q2 FY01 company sales dropped by 13%yoy to Rs2.5bn while its net profits increased more than two-folds to Rs123mn.The growth in profits has come from higher operating profits, other income and lower interest costs despite higher tax provisioning and depreciation charged during the quarter. Operating profit margins increased by 3.8% points to 6.6% of sales.
The improvement in margins has come from drop in excise duty and lower staff cost which more than offset the increases in advertisement cost and other expenditure. The drop in excise duty can be attributed to excise duty exemption for cigarette manufacturing in Northeast.
GPI the second largest player in the Indian cigarette industry is a joint venture between Modi group and global cigarette major Phillip Morris. Some of the leading brands in GPI’s portfolio are Jaisalmer, Cavenders, Four Square, Red & White and Originals. The company has a value market share of 11.4% and a volume share of 12.4% in the cigarette industry. In FY2000 while industry volumes declined by 3.5% company's cigarette volumes dropped by 5.3%. The GPI also has a presence in the domestic and export packet tea business.
The cigarette and tobacco players face increasing protests from anti-tobacco and health organizations. Globally as well as in India, the anti-smoking lobbying has been gaining ground. The cigarette industry faces immense pressure with declining volumes and increasing government regulations and taxation.
Profitability of most players has been affected. The industry has received some relief in the form of excise exemption for manufacturing in North Eastern states, and most companies have commenced manufacture in the region to avail of the excise exemption. During the year the company entered into arrangements with small scale manufacturing units in Assam for purchase of cigarettes under company's brands.
During Q2 FY01 company sales dropped by 13%yoy to Rs2.5bn while its net profits increased more than two-folds to Rs123mn.The growth in profits has come from higher operating profits, other income and lower interest costs despite higher tax provisioning and depreciation charged during the quarter. Operating profit margins increased by 3.8% points to 6.6% of sales.
The improvement in margins has come from drop in excise duty and lower staff cost which more than offset the increases in advertisement cost and other expenditure. The drop in excise duty can be attributed to excise duty exemption for cigarette manufacturing in Northeast.