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India's Godfrey Phillips posts slump in quarterly profit as cigarette tax hike bites

By Reuters News

Nov 5 (Reuters) - Godfrey Phillips India GDFR.NS on Thursday reported a 37.7% decline in quarterly profit, as steep cigarette tax hikes imposed earlier this year continued to hurt the tobacco maker.

The company reported a net profit of 1.9 billion rupees ($20.10 million) for the July-September quarter, compared with 3.05 billion rupees in the year-ago period.

Here are some more details:

  • The cigarette tax hike announced in January continues to weigh on India's tobacco industry, with Godfrey Phillips saying the higher levy has hurt profitability despite subsequent price increases and has fuelled illicit trade

  • The company's expenses nearly tripled to 40.3 billion rupees in the quarter, driven by higher excise duty and rising raw material costs

  • However, the company, which makes and sells Marlboro cigarettes in India under a license with Philip Morris International PM.N, reported a rise in total revenue from operations to 42 billion rupees from 16.23 billion rupees, helped by its price increases

  • Godfrey Phillips' results come after rival and market leader ITC ITC.NS reported a 20% decline in quarterly profit earlier this week, hurt by rising raw material costs and higher cigarette prices denting demand

($1 = 94.5075 Indian rupees)

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