Illicit cigarette ban adds to Govt revenue

The law enforcement authorities' efforts to minimize the presence of illicit cigarettes in the local market have assisted in delivering a higher revenue base for the Government with 1,190 raids conducted to date and 69 million cigarettes being confiscated to the value of Rs. 1 billion. Government revenue from Ceylon Tobacco Company (comprising all Levies, Duties and Taxes) for the nine months increased by Rs. 2.6 billion to Rs. 36.3 billion due to excise-led price increases and an improved brand mix. The Provincial Council Tax also grew by Rs. 130 million to Rs. 2.3 billion.

Law enforcement authorities including Customs, Excise and Police officials' efforts to crack down on smugglers ensured of protecting the Government's strong revenue base with over 69 million cigarettes confiscated during the nine months to September 2009. 'Gold Seal' remains the main illegally smuggled brand, while smugglers rake in additional profits through counterfeit cigarettes. CTC volumes continued to decline due to the higher excise-led price increases and lower consumer affordability.

However, aggressive cost management initiatives within all areas of the organization led to a significant reduction in operating expenses and contributed to the profit after tax growth of Rs. 597 million for the period, offsetting the impact of higher tobacco leaf prices and declining volumes.