COLOMBO: The domestic market of the leading manufacturer of tobacco products in Sri Lanka, Ceylon Tobacco Company (CTC) has contracted 11% in 2014, the company said in its financial statement here the other day.
Ceylon Tobacco Company contributed Rs. 73.6 billion to the Government during the 12 months ended 31st December 2014, a reduction of 4% vs. 2013 shrunk due to the declining domestic market.
Sri Lanka Customs statistics indicate that Beedi volumes have grown by almost 200% since 2008 and now contribute to 42% of the total tobacco consumption in Sri Lanka. The growth of the non-regulated segments had a direct impact on the decline of the legitimate cigarette consumption.
The law enforcement agencies continue to effectively curtail the spread of unauthorized and illicit tobacco products. In the first nine months of 2014, a total of 1,020 raids have yielded 30 million illegal cigarettes at a market value of Rs. 900 million.
Despite the challenges faced above, the Company’s Profit after Tax stood at Rs. 8.6 billion for the year, impacted mainly by volume decline and lower interest income, partially offset by stronger pricing and operational excellence.
“CTC remains committed to invest into our key brands and predominantly to infuse value in our mainstream brand JPGL,” it said.
Export sales revenue increased by Rs. 213 million and the Company said it will continue its endeavor to improve export performance into the future.
CTC’s flagship CSR initiative, the Sustainable Agricultural Development Programme (SADP) continued to focus on alleviating poverty and empowering the livelihoods of families in rural Sri Lanka. The total number of active families as at 2014 stood at 17,464, comprising of 67,199 beneficiaries in 16 districts in Sri Lanka to date.
All cigarette packs that are manufactured and issued to the market by the Company from 1 January 2015 are fully compliant with the Regulations requiring pictorial health warning covering 60% of the front and back surfaces of cigarette packs.
The Company said it is aware of the Bill to amend the National Authority on Tobacco and Alcohol Act to increase size of the health warnings to 80% which has been tabled in Parliament. The Company will ensure that any requirement under the new law will be complied with as will be provided by the new law.
CTC said it is awaiting further clarification on the base and application of the one-off Super Gain Tax announced as a part of the Governments interim budget proposals on the 29th of January 2015, to determine its impact on cash flow and ability to distribute a final dividend for 2014.
