BAT affiliate faces pounds 192m fine threat

TOM STEVENSON

City Editor

An Indian associate of British American Tobacco faces the elimination of its entire net worth if the Delhi government enforces a 7.99bn rupee (pounds 192m) fine on the company for alleged tax evasion.

ITC, which is 32 per cent owned by BAT, is accused of failing to pay more than pounds 150m of tax. If the penalty is enforced the company may be forced to borrow the funds to pay it, possibly from BAT itself. Shares in the UK holding company shrugged off the threat yesterday, closing just 1p lower at 564p; analysts doubted whether ITC would be forced to pay the whole fine. The company, which denies wrongdoing, said it would appeal.

The tax evasion charge is the latest hitch in the relationship between ITC and BAT, which last year failed to have an outsider appointed to the Indian company's chair. Its views were overruled by a group of institutions backing the deputy chairman, Yogi Deveshwar.

One source close to the company said, however, that the appointment of Mr Deveshwar to the top job might have been a blessing: "Given his connections in Delhi, we will not be surprised if ITC manages to come out of the whole affair with little lost, if at all."

The ITC affair is the second time in as many days that BAT's Asian operations have caused controversy. Yesterday the company denied that it had gathered a group of senior executives to target China and other emerging markets. The company said that executives meeting in Hong Kong would be discussing BAT's new regional structure.

Attention has focused on BAT's interests in China and other developing markets because of the gap between the slowly declining tobacco markets of the West and the enormous growth potential in other markets that have only recently opened to foreign companies.

China is understood to have 450 million smokers, smoking 1,700 billion cigarettes a year of which foreign companies have a 4 per cent share. Sales in China are thought to have contributed between pounds 200m and pounds 300m to BAT's profits last year.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Business Development Executive - Affiliates & Partnerships

£20000 - £35000 per annum: Recruitment Genius: This multi-award winning foreig...

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor