Financial Times

CTC concern over ‘smoking areas’
The Ceylon Tobacco Co (CTC) has raised concerns over some sections of the proposed anti-tobacco legislation now before the Cabinet. A company spokesperson said the proposed National Authority on Tobacco and Alcohol Bill contains clauses and conditions, particularly section 40 which deals with smoking areas vis-à-vis the public, that will be detrimental to the legitimate tobacco industry,

“We recognise and accept that we are in a controversial industry. We believe that products which pose risks to health, such as tobacco, require regulation. We seek to engage with governments and other regulatory bodies on tobacco regulation that can tackle real issues in workable ways. CTC has acted responsibly and has encouraged and supported balanced and enforceable legislation.

“Demonstrating its sincerity of purpose, the company introduced a voluntary code of conduct for its marketing activities in the year 2000 and has adhered to it since. Under this code, the company has withdrawn from all forms of product advertising in all media, including all trade name boards and outdoor product advertising,” Dinesh Dharmadasa, Corporate and Regulatory Affairs Director said in a statement.

He added “in our view, sensible regulatory approaches consider the guiding principles of better regulatory practice – they look to see if regulation is the most effective approach, they are transparent in seeking all views on ways forward, they analyse the costs and benefits of the regulation on the basis of sound science, they are proportionate and take into account the wishes of adults who want to smoke, and they are consistent with other regulatory approaches.

“Therefore in this light CTC is confident that the government will seek company representation to ensure that proposed regulations are both sensible and enforceable”.

The company said it contributed Rs 8.9 billion to the government during the first quarter 2006, an increase of 15.8 percent over the corresponding period last year. The increase of Rs 1.2 billion is attributed to the 221 raids carried out by law enforcement authorities during the first quarter of the year.

Operating profit grew by 8 percent to Rs 373 million. Sandeep de Alwis, CTC Finance Director, said, “The growth in government revenue (15.8 percent) is mainly due to the effect of excise-led price increases and the commitment demonstrated by the law enforcement authorities in curbing the smuggling of cigarettes, which threatens government revenue and the legal industry. 221 raids have been carried out so far, with fines amounting to over Rs 1.3 million rupees.

“The authorities have always been vigilant and keep netting the illegal players. The high incidence of taxes on cigarettes continues to make this market attractive.”

Operating profits have grown by 8 percent mainly due to the impact of higher revenues and lower other expenses. Staff and operating costs have increased in comparison to the same period last year due to the impact of inflation, organisational restructuring activities, costs of new product launches and other exceptional expenditure.

The company’s gross revenue grew by 18 percent despite a 3 percent drop in volumes mainly as a result of pricing and a better brand mix due to higher sales of the mainstream brand Gold Leaf. The decline in volumes is attributable to government-led excise price increases in the final quarter of 2005 which has had a negative effect on CTC’s low-end and value-for-money brands.
A 1st Interim Dividend of 14 percent has been declared and was due to be paid on April 28.

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