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ITC Said to Raise Prices of Some Cigarettes by 10%

Sept. 2 (Bloomberg) -- ITC Ltd., India’s largest tobacco company, has raised prices of its Gold Flake and Classic Milds brands by about 10 percent, according to four distributors. The stock gained the most in two months.

The price of a 10-cigarette pack of Gold Flake Kings will rise to 75 rupees ($1.13) from 68 rupees and a 20-unit pack of Classic Milds will increase to 150 rupees from 136 rupees, according to the distributors, who asked not to be named because they aren’t authorized to talk to the media. Nazeeb Arif, ITC spokesman, didn’t immediately respond to two calls to his mobile phone.

ITC’s decision to raise retail prices comes after the Kolkata, India-based company reported that quarterly profit expanded at the slowest pace in four years due to weaker economic growth. The company, which is partly owned by British American Tobacco Plc, may be raising prices to offset increases in cigarette taxes in some states, Nitin Mathur, an analyst at Espirito Santo Investment Bank, said via phone today.

“ITC typically raises cigarette prices twice a year to offset some excise tax increases,” Mumbai-based Mathur said. The company gets all of its tobacco from within the country, so the rupee’s record plunge is unlikely to have had a significant impact, he said.

Shares of ITC rose 3.8 percent, the most since July 4, to 320.40 rupees at the close in Mumbai.

The company will invest 260 billion rupees to expand businesses from cigarettes to hotels , Chairman Yogesh Chander Deveshwar said in July. ITC will use its profits to make the investment, he said.

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

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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