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With larger health warnings, ITC resumes cigarette production; stocks surge 2.4 pc

India’s biggest cigarette manufacturer, the ITC Ltd. today said it had resumed production at its plants with larger pictoral health warnings as mandated by the new rules of the government.

India TV Business Desk India TV Business Desk
Published on: May 09, 2016 18:58 IST
ITC had shut production at its plants to comply with new
Image Source : PTI ITC had shut production at its plants to comply with new rules on health warning

Mumbai: India’s biggest cigarette manufacturer ITC Ltd. today said it had resumed production at its plants with larger pictoral health warnings as mandated by the new rules of the government. The news resulted in a surge in the stock prices of the company as well others in the tobacco sector.

"ITC cigarette factories have resumed production in a phased manner, with the specified 85 percent graphical warning pending hearing by the Karnataka High Court,‎" an agency report quoted an ITC spokesperson as saying.

The government’s order required health warnings to cover 85 per cent of a cigarette pack’s surface, which was earlier only 20 per cent.

ITC had halted production its plants from May 4 as it worked to get the larger health warnings on cigarette packs, even as the Karnataka court hears objections to the new rules.

“The company has had to shut its cigarette factories from May 04, 2016, until the company is in a position to comply with the interim requirements pending hearing in the Karnataka High Court," a statement issued by the company said on May 4.

Also read: ITC shuts down cigarette factories, seeks time to comply with govt’s requirements

The move comes a day after the Supreme Court told cigarette manufacturers to immediately comply with the new federal rules requiring bigger health warnings on cigarette packs.

Last month, various Indian cigarette manufacturing companies, including ITC Ltd and Godfrey Philips, stood against the new directives issued by the government on April 1 and briefly shut down production.

They refused to abide by the new rules and said that the government’s stringent policy will boost cigarette smuggling.

Meanwhile, cigarette stocks are closed higher on the BSE. Godfrey Phillips India surged 6.7 per cent to Rs.862, after opening at Rs. 829.95 and touching a high and low of Rs. 876.9 and Rs. 819 respectively.

Shares of ITC also gained 2.4 per cent to close at Rs.325.50, down marginally from its intraday high of Rs 326 per share.