"Prices have been increased in the Classic brand of cigarettes," an ITC representative told PTI today. The firm, however, refused to offer the reason for doing so. The company has increased by 10% the prices of 20-sticks packs of the Milds, the Regular and the Menthol in the Classic range from Rs 100 to Rs 110.

Interestingly, the firm distributed two prints in Mumbai in July. One at the old price and the second one with the new MRP. Though the newly-priced packs hit some pockets of the Mumbai market only late last week, distributors and retailers, sensing a price hike, were hoarding the old prints and said to be selectively selling them loose, charging 50-100 paise more.

This is significant as the company was in the past was penalised by the Supreme Court for the same offence. According to the sources, the Kolkata-based tobacco-to- hospitality major raised the cigarette prices on higher cost as some states have increased VAT on tobaccos in their last budgets.

Assam, Kerala, Gujarat, Maharashtra, Tamil Nadu, Bihar, Himachal Pradesh, Jammu & Kashmir, Rajasthan and Delhi have increased VAT on tobacco products in their FY'11 budgets. Tamil Nadu, which contributes 15% to ITC turnover, hiked cigarette VAT to 20% from 12.5%.

ITC's immediate rival Godfrey Phillips India, which sells brands like Marlboro, Four Square, Stellar, Cavanders and Red & White, however, said it has no immediate plans to increase the rates of any of its brands.

Source: Moneycontrol.com, India,  dated 09/08/2011