Tobacco Case Analysis

EconomicsAssignment

Submitted By:-

Prudhvi Dharma Teja K.V (13A1HP049)

Venkata Goutham Abbineni (13A1HP026)

Sarat Chandra Vallabhaneni (13A1HP051)

Prakhar Gupta (13A1HP034)

Cheeti Ramakrishna (13A2HP056)

Pranav Kumar (13A1HP002)

Nikita Pani (13A1HP054)

Satjot Singh (13A1HP031)

1) Cigarettes contribute more than 90% of the total tax revenue from the tobacco sector despite constituting only 14 % of the tobacco consumption in the country. Cigarettes are taxed the highest among all tobacco products at 132% of the value of the product.

Following Interpretations were made from the two Tables:-

* ITC has been the leading producer as well as having the leading market share of 75% in the tobacco products.

* There has been increase in the taxation of unfiltered cigarettes, being equalised to filtered ones. This lead to the increase in consumption of filtered cigarettes.

* Taxation of tobacco products directly influences the economic growth.

ITC Rural Market Potential:-

* ITC should focus on the production of leaf tobacco as its demand has increased in international market and it should focus on better utilisation in local markets rather than exporting for getting high revenues.

* Navy cut, Wills, Gold flakes small are extensively used in the rural market. There should be more focus on the sales of these products.

* Education in the Rural Areas would curtail down the Consumption of Bidis and increase the consumption of filtered Cigarettes of ITC’s Product List.

* ITC should come up with ad-valorem products with improved quality to compete with the local ad-valorem products.

* ITC should come up with CSR activities in rural areas about the general awareness and the health features concerning people.

* It should also focus on better marketing & improvisation of better Distribution network service as its serving to around 2 million outlets a day.

2) The own price elasticity being the...