Ceylon Tobacco Company Plc. (CTC) announced that it will be closing its leaf depots in Anuradhapura and Sigiriya due to the impact of tax hikes, despite an increase in profits reported last year.
CTC managing director and chief executive officer Michael Koest said, “It is no secret that the excise and VAT hikes in October and November last year, which led to a 43 percent price increase in legally manufactured cigarettes, had an impact on our business and manufacturing operations in Sri Lanka.”
The company announced in December 2016 that it was considering the closure of four leaf depots, due to the drop in demand for tobacco leaf as a result of declining volumes. The closure of the two depots in Anuradhapura and Sigiriya mark the start of CTC winding down operations in these areas.
Shutting down the two depots is estimated to impact the livelihoods of approximately 2,000 people depending on tobacco farming, and who stand to lose close to 200 million rupees in annual income.
CTC also underwent a 20% head count reduction at the start of 2017 as a result of reducing one shift at its Colombo factory.CTC currently directly and indirectly employs over 46,000 people and supports around 300,000 livelihoods at various stages of operations from farming tobacco to the distribution and sale of its products, the company said.