INSUBCONTINENT EXCLUSIVE:
said it was in compliance with the country's foreign direct investment (FDI) rules, following a Reuters article that alleged it
circumvented the laws.Philip Morris has for years paid manufacturing costs to Godfrey Phillips to make its Marlboro cigarettes,
circumventing a nine-year-old government ban on foreign direct investment in the industry, Reuters reported last week based on a review of
at country's main financial crime-fighting agency said Philip Morris and Godfrey were being probed for alleged violation of the country's
The scope of the investigation, the source added, was much broader than the alleged law violations highlighted in the Reuters story.On
Monday, Godfrey told National Stock Exchange "the suggestion of alleged violation of the FDI laws of the country is completely misconceived
and misplaced".Godfrey's stock rose as much as 10 per cent from Friday's close.India in 2010 prohibited FDI in cigarette manufacturing,
saying this would enhance efforts to curb smoking.Ahead of the ban, Philip Morris formed a new wholesale trading company with Godfrey
Since then, Godfrey has acted as a contract manufacturer of Marlboro cigarettes in India, while Philip Morris's local unit acts as a
wholesale trading company and promotes the brand.Godfrey told the stock exchange on Monday it had entered into a commercial arrangement with
Philip Morris' local unit to manufacture Marlboro cigarettes in May 2009, a year before the May 2010 FDI ban."The commercial arrangement
referred to above is in complete compliance with the extant regulations governing the FDI laws in India," the company said.Dozens of
internal company documents reviewed by Reuters showed Philip Morris has been indirectly paying costs related to Marlboro cigarette
Philip Morris documents for Reuters and said the dealings should be investigated for circumventing country's foreign investment rules.
