ITC Shuts Cigarette Factories Over Pictorial Warning on Risks of Cancer

ITC Ltd., India’s largest cigarette maker, has shut all its five factories manufacturing the tobacco product awaiting clarity from the government on the display of pictorial health-warning labels, spokesman Nazeeb Arif said.

The Kolkata-based company has closed the plants from Dec. 1, Arif said by telephone today. “There is no clarity about what has to be carried” on the product label, he said.

India’s Ministry of Health and Family Welfare in March ordered all tobacco product makers to carry graphic pictorial warnings on their product packaging that cautioned buyers of the possible risk of mouth cancer, replacing an earlier image of lung cancer. The existing pictorial warnings printed on cigarette packs was due for a changeover from Dec. 1, according to Richard Liu, an analyst at JM Financial Institutional Securities Pvt. in Mumbai.

“Since the changeover date of Dec. 1 was known well in advance, the company is likely to have provided for adequate inventory,” Liu, who rates the stock “buy,” wrote in a note to investors yesterday. “We do not envisage the temporary production halt to have any noticeable impact on cigarettes volume for the current quarter.”

ITC declined 1.1 percent to 169 rupees as of 10:45 a.m. in Mumbai trading, while the benchmark Bombay Stock Exchange Sensitive Index rose 0.2 percent. ITC had fallen as much as 3.6 percent earlier today.

Discourage Smoking

The printing of warnings with pictures of mouth cancer follows other steps by the government, which barred tobacco advertising in May 2004 and proposed to restrict the display and use of tobacco products in movies in an attempt to discourage smoking in the world’s second-most populous nation.

India had almost 70,000 estimated cases of cancers of the mouth in 2008, the highest in the world ahead of the U.S. at 23,000 cases, according to statistics compiled by the World Health Organization’s International Agency for Research on Cancer.

Godfrey Phillips India Ltd. has also stopped production of cigarettes at both its factories, the company said in an e-mail statement today.

Shares of India’s second-biggest cigarette maker fell 2.1 percent to 1,980 rupees.

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editor responsible for this story: Arijit Ghosh at aghosh@bloomberg.net

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