Financial Times

CTC says amnesty for illicit fags could hit Govt. revenue
Ceylon Tobacco Company has warned that the amnesty granted to manufacturers of illicit ‘white’ cigarettes could hit its own sales resulting in lower revenue to the government from excise taxes.

The company announced a third interim dividend of 16 percent to be paid on October 31, 2005. This is in addition to the first interim dividend of 10 percent paid in April 2005 and the second interim dividend of 12 percent paid in July 2005.

“CTC has continuously brought to the notice of the government of the possible decline in volumes leading to significant declines in government revenues from the legal industry,” a company statement said. The law enforcement authorities are working closely with CTC to ensure that the sale of illegal cigarettes are minimised, it said.

“However, the company continues to place emphasis on a level playing field within the industry in the light of the amnesty granted to the manufacturers of illicit ‘white’ cigarettes.”

CTC said the government recorded a Rs 2,927 million (13.8 percent) increase in excise revenue for the nine months ended September 30, 2005. The company attributed this mainly to the declining volumes of illegal and counterfeit products in the local market.

It said government revenue has grown to Rs. 24 billion during the third quarter of 2005 from Rs 21 billion during the same 2004 period. “The growth of 13.8 percent in government revenue comes in the wake of massive raids and detections carried out by customs officials and police to minimise the availability of counterfeit and illegal cigarettes,” the CTC statement said.
The estimated volumes of these illegal products have seen a decline during the period under review.

During the nine months ended September 30, Customs, Excise and Police have conducted over 500 raids and confiscated over 36 million cigarettes. The total value of these counterfeit and illegal cigarettes amount to over Rs 350 million, CTC said.

Meanwhile, 32 million of the confiscated sticks were destroyed under close supervision. The CTC statement also highlighted the firm’s CSR initiatives.
The Dendro (bio-mass) power plant established at Walapane is now operational and connected to the national grid.

The company said it has been successful in organising the supplies of bio-mass contributing annually Rs 40 million to the rural economy. “This venture has been undertaken to demonstrate the practicality of generating electricity using renewable local resources for greater national benefit,” CTC said.
“The government in September 2005 approved incentives to encourage this form of power generation, and its implementation is awaited.”

CTC also said the tsunami housing project at Hikkaduwa (80 units) and Tirukkovil (95 units) is well under way with the Hikkaduwa project due for completion by end-November 2005. This project is funded from contributions received from the company, its employees, BAT Group and employees worldwide.

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