While Sri Lanka is awaiting a crucial verdict on pictorial warnings on cigarette packets, Ceylon Tobacco Company, the country’s major distributor of cigarettes said its profits surged 38.4 percent in the March 2014 quarter despite a 3.6 percent volume drop, helped by cost cutting.

However, the firm reported a 14 percent domestic sales drop in the March 2013 quarter attributing it to rise in inflation and dropped demand in the wake of a balance of payments crisis triggered by credit financed fuel subsidies.

Gross revenues with state taxes rose 7.3 percent in the March quarter from a year earlier to 21,200 million rupees, with net revenues after excise and valued added taxes rising at a faster 12 percent to 5,243 million rupees, despite the volume drop.

The government  raised taxes on tobacco in the wake of the crisis and there was also an industry price increase allowing net revenues to also go up. The firm said export revenues rose by 48 million rupees and volumes by 31 million. ( With inputs from Lanka Business Online )