Godfrey Phillips Secures 9-Year Tobacco Manufacturing Pact with Polisetty Somasundaram

Synopsis: Godfrey Phillips India Limited has entered into a Contract Manufacturing Agreement with Polisetty Somasundaram Tobacco Products (India) Pvt. Ltd. to manufacture and supply cigarettes and other tobacco products. The agreement is expected to enhance production capacity, ensure uninterrupted product availability, and support the company’s long-term growth strategy through a dedicated manufacturing arrangement. 

Godfrey Phillips India Limited, one of India’s leading tobacco and FMCG companies, has announced the signing of a Contract Manufacturing Agreement with Polisetty Somasundaram Tobacco Products (India) Pvt. Ltd. The agreement aims to strengthen the company’s manufacturing ecosystem by securing additional production capabilities to meet future demand while maintaining quality and operational efficiency. 

Agreement Details 

Under the agreement, Polisetty Somasundaram Tobacco Products (India) Pvt. Ltd. will manufacture cigarettes and other tobacco products exclusively for Godfrey Phillips India at its manufacturing facility. The products will be produced according to the specifications and quality standards prescribed by Godfrey Phillips and will utilize production materials supplied by the company. 

The arrangement follows a contract manufacturing model, wherein Godfrey Phillips will pay a manufacturing fee comprising fixed and variable components. This structure is expected to provide operational flexibility while ensuring consistent product supply across markets. 

As part of the agreement, Polisetty will undertake necessary efforts to establish manufacturing facilities and obtain all required licenses, approvals, and regulatory clearances to commence operations within the next 12 months. Godfrey Phillips may also provide machinery and equipment on a bailment basis to support production activities. The initial tenure of the agreement is nine years, providing long-term visibility and stability for both parties. 

The agreement is expected to significantly strengthen Godfrey Phillips’ manufacturing capabilities and supply chain resilience. By securing dedicated contract manufacturing capacity, the company can better manage production requirements, improve operational scalability, and address future market demand efficiently. 

Polisetty Somasundaram Tobacco Products (India) Pvt. Ltd. is a domestic entity engaged in tobacco product manufacturing. Based on its latest audited financial statements for FY25, the company reported revenue from operations of approximately Rs. 1.86 crore and profit before tax of around Rs. 1.64 crore. The transaction is not classified as a related-party transaction, and neither the promoter group nor related entities of Godfrey Phillips have any interest in the manufacturing partner. 

Industry Outlook 

India’s FMCG and food processing sector continues to witness strong growth, supported by rising rural consumption, premiumization trends, and the rapid expansion of quick-commerce channels. The Indian food processing market, valued at US$354.5 billion in FY24, is expected to reach US$535 billion by FY26, while the healthy snacks market is projected to grow from US$3.13 billion in 2025 to US$4.77 billion by 2034. 

Government initiatives are also providing a strong growth tailwind for the sector. The Ministry of Food Processing Industries (MoFPI) has approved over 1.44 lakh food processing projects, while Indian dairy companies are expected to grow 11–13% in FY26 with improving margins and higher value-added product sales. At the same time, quick commerce in India represents a US$45 billion addressable market, supported by rising internet penetration, urbanization, and changing consumer purchasing habits. 

The manufacturing agreement with Polisetty Somasundaram Tobacco Products marks an important strategic step for Godfrey Phillips India. By securing dedicated manufacturing capacity through a long-term arrangement, the company aims to strengthen operational efficiency, enhance supply reliability, and support future business growth while maintaining product availability across its markets. 

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