Rothmans sticks to proposal

“We are keen to start operation here. India is the third largest tobacco market in the world and we are optimistic that the application will be approved sooner or later,” he told newsmen here.

Asked whether the company wanted to concentrate on India as there was stiff resistance for tobacco use in developed markets, Wood wondered how the existing players ITC and Godfrey Philips India (GPI) were allowed to triple theirmanufacturing capacity in some of its factories recently if health was the concern.

Wood also made it clear that the company would come in only if a 100 per cent subsidiary was allowed. However, he said it was ready to divest 26 per cent after it stabilised in the market.

While commerce ministry is reported to have set an export obligation condition of 75 per cent of its production in value added form, the revenue department had been analysing foreign exchange aspect of the application.

Wood, however, said the company would have to “reassess” their proposal if the commerce ministry insisted on exporting finished cigarettes. “As per our proposal we do not plan to import any tobacco for making cigarettes. It will be difficult to export cigarettes as the tobacco grown domestically is not fit for manufacturing certain popular brands in demand abroad,” he said.

Already, Rothmans had committed to export processed tobacco in value added form worth 70 million dollars in seven years, Wood added. Cigarettetypes like American blended and those with low tar, low nicotine content are the fastest growing segments in the international market today.

Though Rothmans has been using Indian tobacco as a “blend” in various products for years, it is not possible to make American blended brands in its stable like Golden American, Dallas and Winfield without imports, he said.

In order to improve the quality of Indian tobacco, the company planned to work with farmers in Andhra Pradesh and Karnataka and help them in various ways including supply of seedlings and better husbandry. “If the farmers are willing to listen to us, we will be able to double their yield and improve quality to suit our needs,” he said adding the company was successful when it undertook a similar effort in China.

Wood said the company would manufacture cigarettes in the country either by acquiring an existing facility or establishing a greenfield project. Already, a number of local manufacturers have queued up before the company and Rothmanswould take a decision when the need arose.

Asked whether the Rothmans would divest the two per cent stake it held in the largest tobacco company in India, ITC, if the company was granted permission to enter the market, he said “we do not feel any necessity to sell.”

Wood said the two per cent stake was giving good return on their investments, adding the company enjoyed good relations with ITC to the extent that Rothmans does not even exercise its right to vote in AGM and EGM’s leaving the option to the Calcutta-based firm.