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IndianTobaccoIndustry,TobaccoIndustryinIndia,TobaccoIndustry,TobaccoIndustries

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INDIANTOBACCOINDUSTRY
Geographical
AndhraPradesh,GujaratandKarnataka
distribution
Outputperannum
IndianTobaccoandtobaccoproductsearnawhoppingannualsumofaboutRs.10271crores
Percentageinworld Indiatodayholdsameager0.7%shareoftheUS$30bnglobaltradeintobacco,withcigarettescontributingfor85%
market
ofthecountry'stotaltobaccoexports.
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Market
Capitalization

IndianTobaccoIndustry,TobaccoIndustryinIndia,TobaccoIndustry,TobaccoIndustries

IndianTobaccoIndustry'sexportsarelikelytotouchRs.16,050milliontowardstheendofcurrentfiscal

History
InIndiathetraditionofchewingtobaccohasbeenfromageoldcenturies.Around48%isintheformofchewingtobaccooutofthetotal
tobaccoproducedinthecountry,were38%asbidis,andonly14%ascigarettes.Thesebidissnuffandchewingtobacco(suchasgutka,
khainiandzarda)formthebulk(86%)ofIndia'stotaltobaccoproduction.Productionofcigarettesis90%oftotalproductionoftobacco
relatedproductsintherestoftheworld.InIndiaTobaccoisanimportantcommercialcropgrown.
Tobaccoproductionoccupiesthethirdpositionintheworldwithanannualproductionofabout725
MillionKgs.Theproductionhasdifferenttypesgrownlike,fluecuredtobacco,countrytobacco,
burley,bidiandrustica.Asanexporteroftobacco,IndiarankssixthintheworldnexttoBrazil,
China,USA,MalawiandItaly.
IndianTobaccoandtobaccoproductsearnawhoppingannualsumofaboutRs.10271crorestothe
nationalexchequerbythewayofexciserevenue,andRs.2022Crores(200607)bywayofforeign
exchange.InIndiathepercapitaconsumptionofcigarettesismerelyatenthoftheworldaverage.
Theuniquetobaccoconsumptionpatternisthecombinationoftraditionandmoreessentiallythetax
imposedoncigarettes.Cigarettesmokerspayalmost85%ofthetotaltaxrevenuesgeneratedfrom
tobacco.
Briefintroduction
AfterChina,Indiaisthesecondlargestproduceroftobaccointheworld.Indiahasproduced572mkgsoftobaccoin2003.However,India
todayholdsameager0.7%shareoftheUS$30bnglobaltradeintobacco,withcigarettescontributingfor85%ofthecountry'stotal
tobaccoexports.Ofthetotaltobaccoproducedinthecountry,around48%isconsumedintheformofchewingtobacco,38%asbidis,and
14%ascigarettes.TodayIndia'spercapitaconsumptionofcigarettesinIndiaisatenthoftheworldaverage.
Indiahaswitnessedanunexpectedincreaseinitstobaccoexports,whichhasescalatedby55%toreach
at$169millioninfirstquarterof2008/09.Manybigcompaniesallaroundtheworldareshowingtheir
interestinpurchasingtobaccoathigherquantitiesfromIndiaandthankstowhichthecountry's2008
09exportstoucedthemarkof$600million,whichis19%morethanfrom$503millionofprevious
year.Indianexportshaveshowntremendousrecordat$169million,whichwas$109millioninthe
sameperiodayearago.ThebiggestplayerinIndiaTobaccoindustryisITCwithamarketshareof
72%.Althoughithasbeensaidthatcigarettesmokingisinjurioustohealthbutstill,thereisan
increasingintheprofitmarginoftheIndianTobaccoCompany.Withitswiderangeofinvaluable
brands,itleadsfromthefrontineverysegmentofthemarket.It'shighlypopularandhighlyconsumed
listofbrandsincludeInsignia,IndiaKings,Classic,GoldFlake,SilkCut,NavyCut,Scissors,Capstan,
Berkeley,BristolandFlake.
ITChasbeenabletoreachthetoppositionbecauseofitssinglemindedfocusonvaluecreationfortheconsumersviait'ssignificant
investmentsinproductdesign,innovation,manufacturingtechnology,quality,marketinganddistribution.ITC'scigarettesareproducedin
thestateoffactorieswhicharesituatedatBangalore,Munger,SaharanpurandKolkata.Thesefactoriesareknownfortheirextremelyhigh
levelsofquality,contemporarytechnologyandworkenvironment.
MarketCapitalization
TheIndiantobaccomarketgeneratedtotalrevenuesof$9.9billionin2007,itrepresentsacompoundannualgrowthrate(CAGR)of6.6%
forthefiveyearperiodspanning20032007.
ITCistheleadingcompaniesintheIndiantobaccomarket,holdinga72%shareofthemarket'svolume.GodfreyPhilipsaccountsfora
further12%ofthemarket'svolume.
Sizeoftheindustry
Indiaisexportingtobaccotodayto80nationswhichisoverallthecontinentsintheworld.AtpresenttheIndianTobaccoIndustryis
providinglivelihoodtomorethat25millionpeopleinthecountry.FromthetotaltobaccoitemsexportedfromIndia,theunmanufactured
tobaccosharesaround80%to85%ofthetotalexportswhilethemanufacturedtobaccoproductsholdaroundnearly20%to25%.Inthe
unmanufacturedtobaccoexports,FlueCuredVirginiatobaccoaccountsnearly75%to80%export.TheothervarietiesareBurley,
HDBRG,Natu,DWFC,TopleafandJuttyarealsoexportedwhichareusedinmakingcigarettes.Noncigarettetobaccoexportedworldwide
isLalchopadia,Judi,andRusticaareusedforchewingandmakingbidis.Around8%to10%noncigarettetobaccoisexportedin
throughouttheworld.Accordingtotheinternationaltrends,noncigarettetobaccosarethedominatingiteminthenationalexport.
AccordingtothecurrentsituationintheinternationaltobaccomarketIndiaisprovedtoemergeoutasthefavorablemarketfortheIndian
tobaccoexport.ThepricesofBrazilianexporthavealmostequalizedthemostexpensiveAmericantobaccocost.Zimbabweanfarmprices
havealsoseenanupwardtrend.ThereareseveraladvantageswhichcanbeputforthforfavoringtheIndiantobacco.Likelowunit
productioncost,averageexportpricesoftobaccoinIndia,whicharefoundmorecompetitivethanthatofthepricesofBrazil,USA,
Zimbabwe.
Indiaisoneofthemajorproducersoftobaccointheworldrankingthirdwithaproductionofabout600,000tonnes,afterChina
(3,000,000tonnes)andUSA(700,000tonnes).Indiaisthefourthlargestconsumeroftobaccointheworld.Manytypesoftobaccosare
growninIndia(notallareusedforcigarettes).
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IndianTobaccoIndustry,TobaccoIndustryinIndia,TobaccoIndustry,TobaccoIndustries

DomesticandExportShare
IndianTobaccoIndustry'sexportsarelikelytotouchRs.16,050milliontowardstheendof
currentfiscalfromRs.aboutRs.15060.20millioninlastfiscalasitsgrowersaresettoexport
morethan60%oftheirproduceinviewofdomestictobacco'srisingdemandincountrieslike
Russia,Vietnam,U.K.,GermanyandBelgium.

TheestimatesmadebytheAssociatedChambersofCommerceandIndustryofIndia
(ASSOCHAM)onProspectsofTobaccotoExportsforCurrentFiscal,emphasizingthat
domestictobaccosectorinthepastfewyearshascomeoutofrecession,theimpactofwhich
wouldbefavorableandamounttohighertobaccoexports.
TopleadingCompanies
KanhayyaTobaccoCompany
M.RTobacco
SapnaEnterprises
SudarshanTobacco
ITCCompany
Employmentopportunities
IntheIndianTobaccoCompanyscenariothereareafewmoretobaccocompanies.ThesearetheotherIndiantobaccoCompanieswhich
havemadeanameinthemarket,butarenowayclosetoITC.Indiaisthethirdlargestproducerandeighthlargestexporteroftobaccoand
tobaccoproductsintheworldwhichgoestoshowthetremendoussuccessthattheIndianTobaccoCompanyhasachieved.WhileIndia's
shareintheworld'sareaundertobaccocrophasrisenfrom9%to11%inthelast3decades,itsshareinproductionhasinchedupfrom8%
to9%inthetobaccoindustry.Themajorportion(80%)ofrawtobaccoproductionintheIndianTobaccoCompanyscenariocomesfrom
AndhraPradesh,GujaratandKarnataka.
Latestdevelopments
IndiaisthesecondlargestproduceroftobaccoafterChinaintheWorld.However,itholdsameagre0.7%shareofthe$30billion
globaltradeintobacco.
Cigarettesaccountfor85%ofthecountry'stotaltobaccoexports.
Ofthetotaltobaccoproducedinthecountry,around48.5%isconsumedintheformofchewingtobacco,38%asbidis,and14%as
cigarettes.
ThepercapitaconsumptionofcigarettesinIndiaisatenthoftheworldaverage.
Intherecentpast,theconsumptionoftobaccohasbeenreducedbyantitobaccodrivesandthebanofconsumptioninpublicareas.
ThebiggestplayerinthisindustryisITCwithamarketshareof72%.

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