Economy, Domestic Economy

Tobacco Industry in Crisis

Tobacco Industry in CrisisTobacco Industry in Crisis

The tobacco industry is struggling with a sharp decline in production and profitability level after majority shares of the state-owned Iran Tobacco Company were transferred to the Steel Industries Pension Fund as part of the government’s debt to the organization.

Cigarette production in the first quarter of the current Iranian year (started March 21) reached less than half the level during similar period last year, while foreign and smuggled cigarettes are quickly replacing domestic brands, Eghtesad News reported.

Available data indicate that a total of 2.8 million cigarettes were produced during the period, of which 1.3 million were produced under Iranian brands while the remaining 1.5 million were produced by joint ventures. The figure is 51% less than production during the first quarter of last year.

This is while manufacturing units in the country have the capacity to produce up to 3 million cigarettes per month.

Experts believe the slow production is linked to financial difficulties faced by ITC which has also hampered the company’s import of raw material for cigarette production including filter, rolling paper and protective cellophane.

The state-owned ITC was sold to the Steel Industries Pension Fund in 2010 and became part of the Ministry of Labor and Social Welfare’s assets. Accordingly, 60% shares of the company currently belong to the fund.

The workers of ITC are concerned that they could lose part of their benefits as the pension fund has its priorities set on its own priorities rather than improving the workers’ welfare.

In the absence of proper management, the domestic tobacco industry is faced with the biggest existential threat ever.