Sharp Edge of Competition

Sharp Edge of Competition Hansavivek VAZIR SULTAN TOBACCO has experienced sharp deterioration of margins due to escalation in the cost of raw materials and industrial products and increase in the total duties against which the increase in prices of its brands of cigarettes could be only of modest proportion in view of the competition in the market. Although net sales at Rs 32.60 crores were only marginally lower than the previous year's Rs 32.91 crores, gross profit tumbled to Rs 3.49 crores from Rs 5.43 crores. With the tax liability more than halved, the gap at the 'net' level narrowed leaving a profit after tax of Rs 1.50 crores (Rs 1.80 crores). Total dividend, maintained at 17 per cent, was covered 1.46 times against 1.77 times previously. The management is taking steps to correct this position by improving the company's market share. Exports of traditional and new types of leaf tobacco developed by the company have been satisfactory. Orders booked by overseas buyers are promising and the company expects to increase tobacco exports in the coming years. Bhadrachalam Paper- boards, in which the company has invested Rs 1.50 crores,has been in commercial production since October 1 last.