Ceylon Tobacco Company PLC which last year contributed over seven percent of the state’s total tax revenue and is the country’s second most valuable company listed on the Colombo Stock Exchange has welcomed government moves to regulate what CTC calls the long "under-regulated" beedi industry now commanding approximately 43% of the country’s tobacco market.
CTC Chairman Susantha Ratnayake has said in the company’s annual report that "we are please to see the extension of the pictorial health warning to all tobacco products including beedi which accounts for a significant portion of the total tobacco market."
He added: "Proposals to levy higher levies on beedis are also welcome as it will reduce disparities among market players."
The CTC report revealed that the company which had lost almost 25% of their volumes from 2011 to 2014 has seen increasing demand for their premium brands and the migration of beedi smokers to cigarettes during the year under review.
The company’s MD/CEO Felicio Ferraz said that excessive increase in excise duty always leads to a volume decline as demonstrated for four years from 2011 to 2014 and that could lead to lower tax revenue for government when smokers shift to beedi and smuggled products.
He made the point that the 80% pictorial health warning on cigarette packs can favour illegal products such as smuggled or counterfeit cigarettes "mainly because smugglers do not respect any regulation on top of which they pay no excise or taxes."
Further, unreasonable restrictions on tobacco cultivation would result in the need to import leaf from elsewhere. This would be a loss for Sri Lanka’s national economy, loss of hard currency, loss of value infused into rural areas and loss of jobs.
Ratnayake reported that during the latter part of last year tobacco farmers faced difficulties owing to proposed restrictions on growing tobacco on paddy land. But tobacco farmers and barn owners had mobilized themselves "to meet this challenge headlong" by entering into a dialogue with the relevant stake holders – something the CTC chairman saw as "encouraging."
"…we are confident that the government will not ignore the significance of tobacco cultivation which in 2015 infused over Rs. 790 million into the rural economy and strengthened over 20,000 farmer livelihoods," he said.
During the year ended Dec. 31, 2015, CTC increase turnover to Rs. 106.5 billion from Rs. 87.9 billion a year earlier partly on account of government levies which went up from Rs. 66.2 billion to Rs. 80.4 billion. The company’s after tax profit was up to Rs. 10.6 billion from Rs. 8.6 billion.
Earnings per share grew to Rs. 56.77 from Rs. 46.01 and dividends per share to Rs. 45.15 from Rs. 39.50.
BAT is the dominant shareholder of CTC with 84.13% of the company with a number of foreign funds holding the lion’s share of the balance. The Lankan shareholders in the top 20 include the Bank of Ceylon (0.12%), Channa Nalin Rajamoney (0.08%) and AIA Insurance ( (0.08%).
The directors of CTC are Messrs. Susantha Ratnayake (Chairman), Felicio Farraz (MD/CEO), Dinesh Weerakkody, Premila Perera, Shigeki Endo (Finance Director), Syed Javed Iqbal and Kenneth George Allen.
