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1.1 Background

of the study :

The BBA program of Dhaka City College is designed to focus on theoretical and

professional development of students who are open to take up business as a profession as

well as service as a career. An internship program is a requirement for the completion of

the BBA program. This internship program is of three months duration. This internship

provides the students to link up their theoretical knowledge with the practical fields. After

completing eleven semesters at Dhaka City College, under the Bachelors of Business

Administration Curriculum, to complete my internship, I had been placed in British

American Tobacco Bangladesh Company Limited which is one of the leading

multinational companies in Bangladesh.

The internship program exercises a significant importance as it enables a student to

familiar with the practical business activities as well as the corporate environment. The

students get the chance to work closely with the people of an organization and learn

about the functions of that organization. This program enables a student to develop his

analytical skill and scholastic aptitude which help him in building a potential career.

Students are required to prepare an internship report under the guidance of supervising

teachers on a selected subject matter to highlighting his experience and to conduct an in

depth analysis on the subject matter. I have tried my level best to present my experience

of the practical orientation in this report.

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1.2 Origin

of the report :

To realize some thing in depth, the clear understanding of the context is utmost essential.

Like all other activities, there is also an origin of the report too. My assigned topic was

“Corporate Culture of British American Tobacco from Secretarial point of view”. From

the term Corporate Culture; we generally understand how an organization performs it

corporate activities and behave in a particular point of time and situation. Now question

is what should be the perfect corporate culture in a company from a secretarial point of

view. But unfortunately there is no such way that a person can realize and articulate the

corporate culture of an entity due to the absence of clear picture in the laws, regulations

and other relevant matters. In this connection I have tried my level best to work on this

issue to get a fair practical exposure and this is the origin of the report.

1.3 Purpose of

the Report:

Students of BBA program of Dhaka City College are required to undergo an internship

program at the end of the final semester. As part of the program, I was placed in British

American Tobacco Bangladesh Company Limited for a period of 3 months. This

internship is an orientation to the working activities of British American Tobacco

Bangladesh Company Limited and a study on a particular area. During my time of

working there, I had to select an area of study on which I can make this report. From this

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perspective, after completion of my internship program, I have prepared this report. I

have high hopes that this assignment will play a great role in building by future career.

1.4 Objectives of

the report:

All well planned activities have some ultimate targets or objectives. It is the guiding light

of all predetermined activities. The prime objective of preparing this report is to sketch

out the corporate scenery. This objective can be divided into two basic parts:

1. How well the company is complying with the corporate laws and regulations?

This part concerns with the corporate laws and regulations. Such as:

The companies Act, 1994;

The SR Ordinance, 1969;

The SE Rules, 1987;

DSE & CSE Listing regulations;

International Accounting Standards (IAS);

Other laws and Negotiations;

With the analysis of Secretarial matters, Finance and Accounts and General

Administrative department so as to get the fair idea about Corporate Culture of

British American Tobacco whether complying with the corporate Laws and

regulations or not.

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2. What is the trend and pattern in Corporate Culture of British American

Tobacco from Secretarial point of view?

This part refers the trend and pattern of Corporate Culture during 2006-2010.

This trend analysis will help us to make a fair prediction precisely and to formulate a

review of corporate policy for British American Tobacco and also amendment and to

introduce corporate laws and negotiations in Bangladesh.

1.5

Methodology:

Methodology refers how the study is to be conducted, data are to be collected, and

information is to be prepared and interpreted. Without and adequate research

methodology a meaningful study cannot be conducted and completed.

Data Collection and Analysis: Data Collection and Analysis:

To conduct a study properly designing of the procedures is essential. Because the

reliability and validity of the outcomes and of a study depends on the reliable data,

information and the methodology that has been adopted in preparing the report. In this

manner I have carried out some activities to collect data and information, they are

mentioned below:

a. Study design: In order to conduct this study smoothly I have designed the study

procedures into three stages –

Searching of data

Discussion with knowledgeable persons

Analysis an Recommendation

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b. Data Collection Method: Using interviews, discussions and close observations

during the study period I have collected relevant information.

c. Data Type: I have collected primary data as well as secondary data. But in

preparing this report basically secondary data have been used.

d. Sources: The annual reports of British American Tobacco and business journals

and websites are the secondary data sources. But for the theoretical discussions I

have taken help from the some business journals, corporate laws and negotiations

and handbook of Company Secretary of Muqtadir.

1.6. Limitations of

the study:

All methodology regarding the research and study is not absolutely free from errors.

There are some limitations in this procedure too. While considering this report these

limitations are to be remembered in order to get a more meaningful and valid

information, these are—

1. The sources of data are not such absolutely reliable and smooth. Due to the lack

of proper management information system, data and information are not always

readily available. Thus a huge amount of time was wasted in collecting data and

getting those data usable.

2. As the annual reports and business bulletins are the main sources of data these

sources do not clearly reflect the real situation regarding the corporate culture.

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3. The data are used in this analysis is historical in nature thus those reflect the past

context rather than the present or future aspects. The reader should be careful

while making decisions based on this report.

4. Conducting this sort of research takes a substantial period of time. A period of

three months time is not enough sometimes. Therefore an equal care could have

hardly been taken in all areas of this report.

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AnAn

Overview ofOverview of

BritishBritish

AmericanAmerican

TobaccoTobacco

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British American Tobacco

2.12.1

Company ProfileCompany Profile :

The history of BAT cannot be told without the mention of James Buchanan Duke who

can be credited as the founder of BAT. His family owned a tobacco company with

factories in New York and North Carolina. As development occurred in the tobacco

business and as smoking in the form of cigarettes becoming popular, James Buchanan

Duke decided to expand his family business. By 1890 he had joined with four of the

largest American cigarette manufacturers to form the American Tobacco Company with

himself as the president. After having strengthened his position in America, he then

decided to enter into the British market. On September 27 1902, American Tobacco and

Imperial signed an agreement to merge together as British American Tobacco Company.

On 29th September 1902, this new company was formed with one third owned by

Imperial and two thirds by American Tobacco. BAT’s first Chairman was James Duke.

Thus, British American Tobacco has been in business for more than 100 years, trading

through the turbulence of wars, revolutions and nationalizations as well as all the

controversy surrounding smoking. Despites its name, derived from the home bases of its

two founding companies, British American Tobacco was established to trade outside both

the UK and the USA, and grew from its roots in dozens of countries across Africa, Asia,

Latin America and continental Europe. British American Tobacco was ‘born

international’, and has developed over a century’s expertise in operating locally in

diverse cultures around the world.

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British American Tobacco is the world’s second largest quoted tobacco group occupying

approximately 17.1% of world’s tobacco market with Phillip Morris having 18.7%

market share in the first position. China having the largest market has state owned

companies that produce cigarettes.

Leading Players in the World Tobacco Industry

Altadis, 2.10%

Other (China), 48.00%

Philip Morris, 18.70%

British American Tobacco , 17.10%

Gallaher, 3.10%

Imperial Tobacco, 3.50%

Japan Tobacco, 7.70%

Figure: Leading players in the world Tobacco Industry

With more than 300 brands in the company portfolio, British American Tobacco holds

robust market position in each of the regions and has leadership in more than 50 of the

180 markets where it does business. The Group has 85 cigarette factories in 67 countries.

The Group companies, including associated companies, employ more than 97,000 people

and more than 300,000 farmers providing leaf worldwide.

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2.2. he World of British American

Tobacco

America-Pacific Latin America Europe Africa Middle East

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2.3 . The Tobacco Industry:

2.3.1. Nature of the Industry:The tobacco industry of Bangladesh is an age old industry. There a distinct monopoly in

this industry where British American Tobacco Bangladesh (BATB) leads the market with

more than 50% market share. The other major players are-

Dhaka Tobacco Industries (DTI)

Alpha Tobacco Manufacturing Company (ATMC)

Abul Khair Tobacco

Azizuddin Tobacco

The industry is very price sensitive in nature. It is also a stick selling market, which

means that most of the tobacco consumers normally buy tobacco in sticks, not in packs.

These two features-price sensitive and stick selling-influences the business philosophies

of the companies.

2.3.2. Industry Segmentation:The tobacco industry can be divided into two markets-Biri market and Cigarette market.

Biri Market

Biri market is comprised of 72% of the tobacco market. It is basically the non-filter

cigarette market with a very two pricing. So biri is by far the dominating segment in the

tobacco industry. Recent trend has shown that biri market is experiencing decline which

is a favorable sign for the cigarette market. BATB does not operate in this market.

The major brand in this market is ‘Akiz Biri’, product of Dhaka Tobacco Industries. This

is by far the most popular Biri in the country.

Cigarette Market

Cigarette market is where BATB has all its focus. The market covers the rest 28% of the

industry. But the value of this market is lot higher than the biri market. The market can be

divided into four segments on the basis of price-

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Segment Price Range

Premium Tk.3.00-4.00

Medium Tk.2.00

Low Tk.1.00

Very Low <Tk.1.00

Table I: Price Segmentation of Cigarette Industry

BATB operates in the top three segments of the industry. It does not operate in the very

low segment. Along with BATB, DTI and Alpha Tobacco is also a major player in the

low segment.

2.3.3. Competitive Scenario in the Cigarette MarketThe competition in the cigarette market is based on the price segment. There are

individual competitive brands in each price segment. There is no competition in the

premium and medium segment where the top International Brands of BATB dominate the

market. Only in the low segment there is a competition where mainly three companies

have their individual stakes and trying to take the segment leadership. In the very low

segment, there is also competition among brands like Sun Moon, Five Star, Wilson, Gold

Hill etc.

Segment Price Range Brands Company

Premium Tk.3.00-4.00

Benson & Hedges

State Express 555

Rothmans

BATB

Medium Tk.1.5-2.00John Player Gold Leaf

Capstan

BATB

Low Tk.1.00

Star Filer

Navy

Senor Gold

Marine

BATB

DTI

Alpha Tobacco

Abul Khair Tobacco

Very Low <Tk.1.00

Sunmoon

Five Star

Wilson

Gold Hill

DTI

Azzizuddin Tobacco

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Table II: Competition in Different Price Segment

2.3.4. Industry Facts

83 billion sticks contribute to Biri Market. Recent trend shows that Biri market is

experiencing a declining trend.

35.5 billion sticks contribute to the cigarette market.

6.4 million adult male smokers comprises the industry.

There 21 companies contributing to the industry with around 112 brands.

Top 10 companies share 91% of the volume and 93% of the value.

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2.4. Corporate Profile and

Background:

3.4.1 Historical Background

British American Tobacco Bangladesh (BATB) is a subsidiary of British American

Tobacco Group. It has been incorporated in 1972 as Bangladesh Tobacco Company

(BTC). Since 1972 BATB has been operating in Bangladesh as one of the leading

multinational organization. Since 1972 BATB is operating as the market leader in the

tobacco industry by providing some of the most powerful global and local brands. At

present BATB is the highest tax paying company, contributing around 7% of the total

revenue of the Government of Bangladesh. BATB is renowned as one of the most

prominent socially responsible and ethical company in the minds of the citizen.

Based in England, British American Tobacco was formed at the turn of the 20th century

with the objective of establishing a worldwide business. British American Tobacco is

World's most global tobacco company. Today British American Tobacco sells the leading

brands in over 30 markets covering 102 countries, has more than 200 brands worldwide,

employs more than 55,000 people and produces some 2 billion cigarettes every day.

More than a billion people across the globe enjoy smoking tobacco. One in every eight

chooses a British American Tobacco brand.

In order to support the company's business goals the merger of British American Tobacco

with Rothmans International had been announced on 11 January 1999. This global

merger was completed on 7th June 1999. This brings together the number 2 and 4 players

which together will boast a combined volume exceeding 900 billion cigarettes around the

world with some 120,000 employees and a world-wide market share of 16 percent

(Phillip Morris has a 17 percent share). The merger is a major step forward in British

American Tobacco’s vision of becoming the world’s leading International Tobacco

Company.

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2.4.2 BAT & BATB: The Relation

The parent company of BATB is called BATCO or British American Tobacco Company.

They are the major shareholders of BATB. The operations of BATB are regulated

according to BATCO regulations and BATCO looks after the management aspects of

BATB. BATB management is trained by BATCO and in many occasions BATCO sends

their management to work in BATB. BAT industries are widely known as BATCO has

two major divisions:

1. Tobacco Division

2. Financial Division

With the help of the following diagram we can easily see the relationship between

BATCO and BATB very clearly:

Figure 1: Relation between BAT and BATB

Currently British American Tobacco Bangladesh is retaining 63% of the cigarette market

in Bangladesh. British American Tobacco Bangladesh is a sister concern of British

TOBACCO DIVISION FINACIAL DIVISION

AMESCA

BATB

BATCO

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American Tobacco Company (BATCO). The cigarette division is known as “British

American Tobacco Holdings (BAT Holdings)", which operates in more than 78

countries. "BAT Holdings" is a sister concern of BAT industries - a London based world

famous business house. BAT industries operate in financial services, paper

manufacturing, and tobacco sector. BATCO divided its cigarette operation in five

regions. They are:

North and Central America

Europe

South America

Asia Pacific

AMESCA

BATB actually maintains a relationship with BATCO through AMESCA. It is actually a

region of BATCO to which BATB reports. AMESCA is made up of: A = Africa, ME =

Middle East, S= Subcontinent, CA = Central Asia.

2.4.3 Structure of BATB

BATB is a public limited company. Management Director is the operational head and

appointed by the British American Tobacco. Head of every department carries out their

functions with the help of line managers. Different departments have different structure

according to their function and responsibility.

The “Board of Directors” and Executive Committee (EXCO) govern the overall activities

of the company. The "Board of Directors" is composed of 10 members who are called

Directors. The Chairman heads the “Board of Directors”. Chief Executive of British

American Tobacco Bangladesh is called the "Managing Director" who is normally

appointed by "BAT Holdings". Managing Director of the company is the chairman of the

Executive Committee. This committee includes the head of all the functional

departments.

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2.4.4 Ownership Status of the Company

British American Tobacco Bangladesh is listed in the "Dhaka Stock Exchange (DSE)". It

has an authorized capital of Tk. 400,000,000 of 40,000,000 ordinary shares of Tk. 10

each. British American Tobacco Bangladesh, which encompasses 62% of the shares of

the British American Tobacco, London. The Government held 32% of its shares.

Subsequently the government has gradually sold its holdings to different organizations of

the country.

Raleigh Investment Co. Ltd. UK 65.91%

Investment Corporation of

Bangladesh

26.99%

Sadharan Bima Corporation 2.86%

Bangladesh Silpa Rin Sangstha 0.84%

Government of Bangladesh 0.65%

Sena Kalyan Sangstha 0.52%

Others 2.23%

Table III: Ownership status of BATB

2.4.5 BATB: At a Glance

Name of the Company British American Tobacco Bangladesh

Name of the Parent Company British American Tobacco Group

FormationFormation of Pakistan Tobacco Company (PTC)

in March 1949

FactoryIn 1954 PTC opened its first factory in

Fouzdarhat, Chittagong

Branch in Dhaka PTC opened a branch in Moulavibazar, Dhaka in

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1962

New Factory In 1965 factory was built in Mohakhali, Dhaka

IncorporationIncorporated in 1972 as Bangladesh Tobacco

Company (BTC)

Change of NameIn March 22 1998, BTC was renamed as British

American Tobacco Bangladesh

Nature of BusinessGrowing and Processing Tobacco;

Manufacturing and Marketing Cigarettes

Corporate Slogan Success and Responsibility go together

Corporate VisionExtend our leadership through world class

performance

Corporate Mission

Double our net revenue by 2005 while growing

our share of the total tobacco market and

dominating key identified segments

Table IV: BATB at a Glance

2.4.6 Physical Infrastructure

The infrastructure of the company has a broader field where the company plays its

important role. BATB has 6 Regional Trade Marketing Offices (RTMOs), 12 Regional

Sales Depots, 1 Factory, 1 Green Leaf Threshing Plant, 7 Leaf Depots and a Head office

consisting of Corporate Head office and Production Head office. The Company’s Head

office and Cigarette factory are located in Dhaka. A Green Leaf Threshing (GLT) Plant

has been set up in Kushtia and it has started operation from April 1995.

The company’s products are manufactured in the factory at Mohakhali, Dhaka. The Plant

Manager who reports to the Production Director at the Head Office heads Dhaka factory.

The company’ procures tobacco leaf maintaining the international standard and it imports

processed tobacco leaf for its international brands. It procures green tobacco from the

registered farmers of the leaf area mainly for it’s local brands.

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The company’s authorized leaf areas are located in Kushtia, Chittagong and Manikgonj.

But bulk of tobacco leafs comes from Kushtia region. The Chittagong area is under

development process and it now covers Rangunia and Lama. The company operates 7

leaf depots in he leaf area. 4 of them are located in Kushtia region, 2 of them are located

in CDA and other 1 is in Manikgonj, The Company provides all sorts of supports to the

registered growers through its depot personnel. This includes technical know how,

agricultural inputs and financial assistance.

The company performs its sales and distribution operation all over the country through its

five regional sales offices. They are located in Dhaka, Khulna, Chittagong, Sylhet and

Rajshahi. Each of the regions is again divided into operational areas, each of which in

turn is divided into territories. To perform its sales and distribution smoothly, the

company operates 10 sales depots in different locations of the country and it has 63

authorized distributors.

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2.5. V ision and Strategies of

BATBC:

British American Tobacco Bangladesh is very optimistic about their future in Bangladesh

as well as the world as a whole. The company has always been sitting challenging targets

and achieving them at regular basis. Their vision for the future is clearly defined. The

vision is “to achieve Leadership of the Global Tobacco Industry”- in order to create

long term shareholder value. To make this vision into reality people at BATB are

working on four strategies, growth, productivity, responsibility and winning organization.

The vision of BATB can be both quantitatively and qualitatively described.

Quantitatively, the company seeks volume leadership among the international

competitors and in the longer term, value leadership. BAT recognizes that it is adult

customers who will determine this and that, therefore, BAT must be consumer driven.

Qualitatively, BAT seeks to be recognized as industry leaders and to be the partner of

first choice for government, NGO’s, investors and potential employee recruits. The

company will also do this by being a responsible tobacco group, with sustainable

business, outstanding people and superior products.

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2.6. Organization’s

Values:

2.6.1 BATB’s Core Values :

BATC are committed to building value for their shareholders, and they believe there is

real value embedded not only in how they run their business but in how a company is put

together; in its ability to see the world as it really is; in it's ability to pick and retain talent;

to build relationships of trust with consumers, suppliers, distributors and partners, and to

manage high quality brands. Perhaps above all in today’s economy, there is particular

strength in the ability to root local businesses in a vast range of different cultures around

the globe. Their guiding principles describe key characteristics of their organization,

which they aim to nurture.

2.6.2 BATC’s Guiding Principles:

Here at British American Tobacco we have identified their Guiding Principles which

describe the core beliefs and values of their organization. They define who they are and

what differentiates them - their "corporate DNA", and capture the spirit and ethos of what

is a truly global company with many different forms in the 180 countries in which they

operate. These principles apply to every employee in British American Tobacco, across

all levels, functions and geographies, and act as a point of reference for every aspect of

our working life, from communication to decision making. Their core Guiding Principles

are:

Strength from Diversity: Everyone can flourish and succeed in an environment

which values and cherishes differences. The diversity of their people and their

ideas creates opportunities and a competitive edge.

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Open Minded: They are open-minded and encourage everyone to contribute, by actively

listening; by being genuinely receptive to new ideas and the ideas of

Others by being open to different perspectives and by questioning and challenging

the conventional.

Enterprising Spirit: They strive to do different things in different ways.

Freedom through Responsibility: People have the freedom to take decisions and

act by accepting personal responsibility, within the parameters of the

organizations strategic goals.

2.6.3. A Clear Female Voice:

Their Employment Principles clearly state that British American Tobacco is dedicated to

providing equal opportunity to each employee and that their employment beliefs and

standards mean in practice that they will not discriminate when making decisions on

hiring, promotion or retirement on the grounds of the employees’ or candidates’ race,

color, gender, age, social class, religion, smoking habits, sexual orientation, politics or

disability – subject to the inherent requirements of the role to be performed. In line with

this principle, at British American Tobacco, individuals are nominated to fulfill speaking

engagements, liaise with a wide range of external audiences (including the media) and are

put forward for company awards based on their suitability for the respective event and

criteria such as gender will neither positively nor negatively impact on the choice of

candidate chosen for the event.

At British American Tobacco, many of their most senior and prominent external-facing

managers are women and as such, naturally, they are seen fulfilling a number of public

speaking engagements and are seen quoted in the press on a regular basis. At their

London Press Office at Globe House which fulfils a number of roles including

orchestrating the Company’s contact with all UK national and London-based

international media, overseeing media communications on trans-national issues such as

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the WHO’s Framework Convention on Tobacco Control and crisis communications, two

of the three press officers/Company spokespeople are women.

Since 2002, British American Tobacco has been running The Golden Leaf Award, an

annual program that celebrates examples of excellence within and across Group operating

companies, regions and functions. The Awards not only recognize the outstanding

achievements of markets or teams but furthermore demonstrate the business impact of

these achievements or behaviors and ultimately, share both success and knowledge across

the Group. The award celebrates the achievement of groups of employees rather than

individuals, however, many women were essential and valued members of the eventual

three winning teams in 2002. In 2004 two women won the Golden Leaf Award. These

women had to ensure continued delivery in the US marketplace even in the thick of the

merger process.

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2.7. Organizational

Policies:

Based on their values and principles they developed an ‘Equal Opportunity Policy’ and

various employment policies to assure diversity within the company. The policies are

documented and can be accessed via the intranet. In support of women's advancement

they also have in place a maternity policy. Their disciplinary policy and sexual

harassment policy, for example, applies to all employees regardless of gender.

2.7.1. BATB’s Employment Principles:

Based on these Guiding Principles, BATC have developed a set of Employment

Principles and workplace related human rights. British American Tobacco is a

decentralized group of companies and each company has wide freedom of action.

However, within that framework it is their aim to apply these principles (Principles) in

the key areas of employment practice:

Their Four Guiding Principles

Strength from Diversity: Actively utilizing diversity - of people, cultures, viewpoints,

brands, markets and ideas - to create opportunities and strengthen

performance.

Open Minded: Being an active listener, genuinely considering others' viewpoints

and not pre-judging.

Freedom through

Responsibility:

The freedom to take decisions and act on them obliges them to

accept personal responsibility for the way they affect their

stakeholders.

Enterprising Spirit: The confidence to seek out opportunities for success, to strive for

innovation, and to accept the considered risk-taking that comes

with it.

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I. STRENGTH FROM DIVERSITY:

“Actively utilizing diversity – of people, cultures, viewpoints, brands, markets and ideas

– to create opportunities and strengthen performance”

BAT is dedicated to providing equal opportunity to each employee. Their employment

beliefs and standards mean that they will not discriminate when making decisions on

hiring, promotion or retirement on the grounds of the employees’ or candidates’ race,

color, gender, age, social class, religion, smoking habits, sexual orientation, politics, or

disability – subject to the inherent requirements of the role to be performed. A

fundamental aim is to ensure a diverse and representative workforce profile through the

promotion of employment equality. They shall observe national legislation relative to

positive discrimination.

II. OPEN-MINDED

“Being an active listener, genuinely considering others’ viewpoints and not pre-judging”

Openness and Responsiveness

Internal Communications: Employees’ sense of belonging to, and trust in, BAT is

enhanced by their focus on internal communications, a sense of pride in their

brands and being part of a socially respected group of companies. They aim to be

open and transparent and to provide regular, reliable and relevant business and

industry- related information, through a wide range of internal communication

channels to allow access for all employees. Disclosure/communication policies

take into account their obligations to business confidentiality and other

competitive concerns. However, subject to this, they actively encourage and

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promote the free flow of ideas and information between their operating companies

and their workforce.

Relationships and Partnerships: Worker Representation and Freedom of

Association- they respect both freedom of association and freedom of non-

association. They acknowledge the right of employees to be represented by local

company-recognized Trades Unions, or other bona fide representatives, and for

these, where appropriate, to consult with the relevant company – within the

framework of applicable law, regulations, the prevailing labor relations and

practices, and company procedures. They acknowledge the activities of

recognized worker representative bodies such as Trades Unions (where such

activities are practiced in accordance with national law) and they ensure that

workers are able to carry out their representative activities within agreed

procedures.

III. FREEDOM THROUGH RESPONSIBILITY

“We believe decisions should be pushed down the organization to the appropriate level,

as close to the consumer as possible and that decision takers should accept responsibility

for their decisions”.

Company Responsibilities

Fairness at Work: They seek to encourage a climate of confidence to ensure that

employees can air questions and problems arising during the course of their

(workers) work and aim for quick resolution to the satisfaction of all concerned.

To this end, they seek to ensure that their employees know about grievance and

disciplinary procedures and how to use them. Temporary labor is an important

element of the overall employment mix and essential to meet the local business

requirement and cycles. Where this form of labor is used they will act at all times

to conform to local labor laws and practices. BAT companies do not have a policy

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of engaging in the use of casual labor to avoid an employee receiving company

and government benefits.

Dignity at Work: BATC finds all aspects of harassment and bullying unacceptable

and they are committed to removing any such actions or attitudes in the

workplace.

Restructuring: BAT undertakes restructuring in a responsible manner. Any of

their global operating companies involved in restructuring will explain the

initiatives that make change necessary to its employees and all appropriate groups

and bodies, in accordance with local laws and regulations. They cannot offer a job

guarantee for life but compulsory termination of employment is only actioned

after a comprehensive review of all the alternatives. Where such situations do

occur, they will adopt responsible local approaches and procedures to address

each instance, including severance pay and any other such measures as may be

appropriate to the situation and location.

Against Exploitation:

Child labor: BAT does not condone or employ child labor. They seek to

ensure that:-

• The welfare, health and safety of children are paramount at all times.

• Practices undertaken by children for the development of vocational skills

(e.g. in agricultural employment) do not conflict with or impede their

educational development, including school attendance.

• The development of children, their communities and countries is best

served through education.

Forced labor: Bonded or involuntary labor is completely unacceptable, as

is the requirement to surrender identity papers or pay deposits as a

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condition of employment. Where national legislation or employment

procedures require the use of identity documents, these will be used

strictly in accordance with the local legislation and procedures. We do not

condone exploitation or the unlawful use of immigrant labor.

Employee’s Responsibilities

Standards of Business Conduct: These are an integral part of their corporate

governance and are designed to provide a decision-making framework for all

employees. Employees are the key upholders of such standards and are expected

to comply with them.

Proper use of Company Systems: BAT companies deploy many systems to help in

the achievement of business goals. In doing so, they entrust the use of these

systems and facilities to their employees. It is the responsibility of employees to

familiarize themselves with these systems and to adhere to all operational and

confidentiality procedures including those concerning personal use of the systems.

BAT companies will provide training in the use of their systems and policy

adherence and employees should seek further training if required. The use of

these systems will be monitored from time to time to ensure lawful use and

purposes in

Accordance with BAT policy and local legislation. Employees will be encouraged

to make suggestions to improve either the training or the systems themselves.

Performance Responsibility: They expect their employees to make a meaningful

and confident contribution to the success of BAT and their (workers) own place

within it. As such, employees will be held accountable for their performance.

They therefore provide employees with clarity on their expectations of them

(workers) and feedback on their (workers) performance. The mechanisms for this

will be determined as appropriate at the local level. Where poor performance

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continues, despite the prior provision of opportunities for improvement, BAT

companies will terminate the employment, applying the framework of applicable

law and company labor relations procedures.

Mutual Responsibilities

Environmental Responsibilities: BAT has in place Environmental, Health and

Safety management and monitoring systems and strives to achieve annual targets

and performance indicators in each of the key areas of environmental

management. Both their companies and their employees have an integral part to

play in the achievement and maintenance of these standards.

Constructive Place in the Community:

Community contribution: BAT thinks globally but it is a local

citizen. As such, they encourage their employees to play an active

role both in their (workers) local and business communities. The

level and type of support the local company and their employees

give is at the discretion of the local company.

Economic contribution: BAT seeks to create opportunities for

skills development for employees and communities in markets

where they operate. They also aim to work in harmony with the

development objectives and initiatives of host governments.

Business Information Security: Business information security is a multifaceted

challenge requiring effective co-operation between all parts of the business, their

business partners, employees and employee representatives. Their policy

embraces all elements of business information security including physical records,

electronic data, e-mail, personal data held by the company, information processes

and data management, legal and audit considerations and communications

systems (telephones, fax, internet etc.). Their policy is to maximize the business

leverage of their information, ensuring that it is reliable and available to those

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who need it. It is of paramount importance to ensure that all their employees are

fully aware of their personal responsibilities in this regard. They will honor the

privacy of workforce data according to the requirements of national legislation

and the security and interests of the business.

Personal Development and Learning: They develop and deliver high quality

learning and development initiatives appropriate to the needs of the individual

operating companies and their employees. They aim to foster a sense of pride in

working for BAT and to be the employer of choice wherever they operate. Whilst

they put great emphasis and resources in training and opportunities for

development, employees are encouraged to take responsibility for their (workers)

own development.

Valued Business Partners

Whilst they are not responsible for standards of employment practice throughout their

supply chain, they seek to influence our business partners to avoid:

• The employment of children particularly in any industrial process, or agricultural

process which uses chemicals (other than in genuine apprenticeships);

• The selling of cigarettes to minors;

• The use of forced or illegal immigrant labor;

• Working conditions which do not meet BAT standards on health, safety or hygiene;

• The denial of access to, or unfair application of, a transparent grievance procedure;

• Any form of unlawful discrimination, harassment, abuse or bullying.

Whilst each partner organization has the responsibility to manage its employment

practice in accordance with its own business standards, values and local legislative

framework, they will work with them to embrace these Principles.

BAT Minority Shareholding Interests: They (BATC) will draw to the attention of the

Directors of companies, in which they (BATC) have a minority interest, the contents of

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these Principles and, where they do not exist already, encourage them to be adopted.

IV. ENTERPRISING SPIRIT

“The confidence to seek out opportunities for success, to strive for innovation and to

accept the considered risk – taking that comes with it”.

Physical and Material well-being

Elements of this are:-

Reasonable Working Hours: It is almost inevitable that in most roles, and at certain times

of the year, business needs will dictate more concentrated periods of work than at other

times. However, BATC acknowledge and support the need of employees to balance work

and personal interests and will encourage flexibility where possible.

Family Friendly Policies: BATC encourage their markets to explore and adopt

family friendly policies as relevant according to local practice.

Occupational Health and Safety: BAT companies will all have, and comply with,

internal health and safety policies and procedures and national regulations to

ensure a safe working environment. BATC are committed to working with their

employees to ensure that health and safety standards are maintained and

improved. This process involves the effective application of an environmental,

health and safety management and monitoring system. BATC work continuously

to maximize the physical security of their employees wherever they (workers) are

employed. BATC will ensure that their standards and policies are understood and

training will

Be provided so that all employees understand the health, safety and security

issues and requirements concerning their (workers) job/position.

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Fair, Clear and Competitive Remuneration and Benefits

BAT recognizes the need for their remuneration policies to be competitive and they have

been designed to ensure a real differentiation amongst individuals and teams within

companies, using criteria such as: qualifications, skills, performance, contribution and

responsibility. BAT uses objective instruments in determining the level and seniority of

roles within the business by means of a well-defined method of job evaluation, which

defines roles, scope and subsequent salary positions and ranges. These are then compared

against the local labor market to ensure their competitiveness. Prevailing market

conditions are a key point of reference for establishing remuneration in each operating

company. BAT will comply with legislation imposing a national minimum wage;

however, their strategy will be to ensure that their reward levels are highly competitive

within the local area. BATC use remuneration and reward as an active tool to build and

maintain a high performance, highly motivated culture. Their approach is based on a mix

of financial and non-financial, long and short-term incentives. Each operating company

has the opportunity to structure their reward and benefits packages according to local

circumstances. All employees are provided with clear information for each pay period,

including any and all deductions from their pay.

Talent, Performance and Equal Opportunity

Where possible BATC fills vacancies internally, although they will seek out external

talent as this provides the opportunity for fresh thinking, new ideas and experiences.

Their recruitment strategy is based on retaining and attracting the most suitable people at

all levels of the business and this is reflected in their objective approach to recruitment

and selection. The approach is based on the inherent requirements of the job (both now

and in the foreseeable future), matching the ability and potential of the individual.

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2.8. P roduct

& S ervice:

2.8.1 International Brand:

As a major international Fast Moving Consumer Goods (FMCG) company, BAT are

proud of their reputation for producing high-quality brands that are chosen by one in

eight of the world’s adult smokers.

Their four Global Drive Brands - Dunhill, Kent, Lucky Strike and Pall Mall - account for

26 per cent of our global volumes and grew by 16 per cent in 2008.

Kent was introduced in America in 1952 and is now sold in more than 75 countries.  It is

our largest premium brand. Annual sales exceeded 63 billion in 2008, up 18 per cent on

2007 and its sixth consecutive year of double digit growth. Key markets include Russia,

Japan, Eastern Europe and Chile.  Kent Nanotek, a superslim king size variant, is sold at

a premium to the main range and accounts for around 10 per cent of Kent’s global sales

volume.

Dunhill, which celebrated its centenary in 2007, sells in more than 120 countries. 

Dunhill offers a range of premium and super premium cigars and cigarettes. 37 billion

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cigarettes were sold in 2008, up 7 per cent on 2007.  Key markets include Australia,

Malaysia, South Korea, South Africa and Taiwan.

Lucky Strike, launched in 1871, is one of the oldest and most iconic trademarks in the

world.  It’s a premium brand sold in more than 65 countries.  Volumes rose 9 per cent in

2008 to 25 billion cigarettes. Key markets include Germany, Spain, Japan, France and

Argentina.

Pall Mall was introduced in 1899 and is now sold in more than 85 countries.  It is our

leading global value-for-money brand.  Pall Mall volumes grew 22 per cent in 2008 to 62

billion cigarettes.  Key markets include Germany, Italy, Russia, Uzbekistan and Pakistan.

While the Global Drive Brands remain central to our strategy, we are also increasing the

profile of Vogue and Viceroy.

 

Vogue is a super premium brand selling in more than 55 countries. Key markets include

Russia, South Korea, France, Poland and Japan.

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Viceroy is sold in more than 40 countries.  Introduced in 1936, key markets today

include Romania, Russia, Poland, Uzbekistan, Turkey and Argentina.

Other famous international brands, familiar to smokers around the world, include:

Rothmans was launched in 1890 and is now sold in some 60 countries.  Key markets

include France, Italy, South Africa, Saudi Arabia, Yemen and Egypt.

Kool was introduced in 1933 and is among the world's biggest selling menthol

cigarettes.  Kool is sold in some 20 countries and is very popular in Japan, the United

States and Latin America.

Benson & Hedges cigarettes were created for the Prince of Wales in 1873.  British

American Tobacco acquired the rights to the brand in a large number of overseas markets

in 1956.  Today, our companies sell Benson & Hedges in more than 50 countries outside

the European Union, including Nigeria, Australia, New Zealand, Bangladesh and

Malaysia.

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State Express 555 was launched in 1895 and is now sold in more than 20 countries.  The

brand is particularly popular with smokers in China, Taiwan, Cambodia and Vietnam.

Peter Stuyvesant was first launched in South Africa in 1954 and then internationally in

1957.  Now sold in around 30 countries, Peter Stuyvesant is popular in South Africa,

France, The Netherlands, Greece, and Malaysia.  Snus is currently being test-marketed

under the Peter Stuyvesant brand by our company in South Africa.

John Player Gold Leaf is sold in 12 countries and is particularly popular in Pakistan,

Bangladesh, Sri Lanka and Saudi Arabia.  The brand dates back to the 1890s.  We do not

own the brand in the UK, Europe or the United States.

2.6.2 Brands in Bangladesh

British American Tobacco Bangladesh operates in key segments of the cigarette market

of Bangladesh with drive brands like Benson & Hedges, John Player Gold Leaf, Pall

Mall, Star and Viceroy.

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Benson & Hedges cigarettes were initially made for the Prince of

Wales back in 1873. British American Tobacco acquired the rights

of the brand in a large number of overseas markets in 1956. Today,

British American Tobacco Group companies sell Benson & Hedges

in more than 80 countries in the world. In Bangladesh Benson and

Hedges was launched in 1997 and it is dominating the premium

segment of cigarettes in Bangladesh. B&H has a value of TK 4/

stick and can be found in two different flavors, Special Filters and

Lights.

John Player Gold Leaf is one of the oldest brands of BATB in

Bangladesh that was launched in 1980 and one of the highest selling

brands in the Medium Segment in the market. JPGL is mostly found in the

Saudi Arabia, Pakistan and Sri Lanka. JPGL has a value of TK 2.5/ stick.

Pall Mall is an International Brand operating in more than 60 countries

in the world. Pall Mall is the First Global Drive Brand launched in

Bangladesh in March 2006. Even though Pall Mall is a premium brand

worldwide but it is under Medium Segment in Bangladesh. Pall Mall has

a price of TK 2/ stick, and can be found in three flavors, Full Flavor,

Lights, and Menthol. Pall Mall made record sales in terms of volume in

2007 that was initially maintained by Star brand of BATB.

Star, a local Brand launched 40 years ago still generates leading sales

in terms of volume. Star operates in the Low Segment and has a price

of TK 1.5/ stick. Star occupies the leadership in the low segment

outside Dhaka, where it has tremendous popularity among smokers.

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BATB launches colorful new packets for star during the Spring Season in Bangladesh to

represent the true colors of Bangladesh.

Viceroy a newly introduced cigarette in the Bangladeshi market was

launched in 2007. Viceroy operates in the Very Low Segment with a

price of TK 1/ stick. Viceroy was introduced to Bangladeshi market

considering the demand for a low price cigarette by the lower income

group smokers who represent a majority of market share and to provide

the consumers with the smooth taste of premium cigarettes.

And British American Tobacco’s latest cigarette in the Bangladesh market is Gold Flake

which is launched in July 2009. With a view to operate in the lower segment Gold Flake

is priced at TK 1.00/ stick.

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2.9. Organizational Structure in

BATB:

2.9.1 The Departments

BATB has very organized departmentalization with in the organization. There are six

departments that perform all the activities different activities regarding the whole

business process of BATB. The department structure is as follows:

Figure 2: Departments of BATB

OPERATIONS

LEAF

MARKETING

HUMAN RESOURCE

FINANCE

INFORMATION TECHNOLGY

CORPORATE AND REGULATORY AFFAIRS (CORA)

LEGAL

BATBCorporate Headquarter

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2.9.2. The Organogram

The organizational hierarchy of BATB starts with the Managing Director and Deputy

Managing Director. There is an executive committee in BATB which comprises of MD,

DMD and the Head of Departments. The organizational hierarchy is as follows:

Figure 3: Organizational Hierarchy of BATB

2.9.3 C orporate & Regulatory Affairs (CORA)

In a world where society’s expectations of multinational companies have become

increasingly high, many companies recognize that they must earn trust and reputation and

cannot take it for granted.

In particular, CORA works with the business to:

Ensure the principles of Corporate Social Responsibility are embedded in every

function and driven with integrity; 

Managing Director

Deputy Managing Director

Headof

Marketing

HeadofFinance

HeadofHR

HeadofOperation

HeadofLeaf

HeadofCORA

HeadofIT

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Develop a comprehensive best practice approach to Social Reporting – put

simply, a process for listening and responding to our stakeholders; 

Communicate widely, clearly and openly to ensure we are becoming known as a

responsible tobacco company;

Understand the complex political and regulatory framework in which we operate

and to engage with governments and key bodies in support of our desire for a

regulatory environment in which the business can compete and prosper; and  

Build and manage relationships with British American Tobacco Bangladesh’s key

stakeholders, including governments, the media, scientists, consumers, business

partners, investors, employees, Non-Government Organizations, local communities

and many other groups. Our approach is to build effective networks through open,

constructive dialogue. 

Structure of CORA

The Corporate and Regulatory Affairs Department programs are lead by the Head of

Corporate Affairs who is assisted by the Company Secretary and the CORA Managers.

The company’s Legal and secretarial function also reports in to the Head of CORA.The

Company Secretary looks after the legal sides of the company such as trademark

Protection, Infringement of Company Rights, Distributor Agreement, and Trust Fund etc.

He also looks after the share market activities of BAT shares.

The organogram is given below-

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Figure 15: CORA Organogram

2.9.4 F inance:

In a competitive business environment, a commercially astute finance function is critical

for making good business decisions - for example - about which brands or countries to

invest in, in evaluating and improving returns and of course, in managing the delivery of

consistent profit growth to the shareholder.

Head of CORA

CORA Manager, Economic

Issues

Company Secretary

CORA Manager, Social

Responsibility

CORA Manager

CORA Manager, Shareholder

Communication

Asst. Co. Secretary

Executive, Legal and Regulatory

Affairs

Executive, Share and

Agreement

Confidential Assistant

CORA Executive, Internal

Communication

CORA Manager, External

Communication

Public Relations Officer

Executive, Media

Relations

Coordinating Officer

CORA Marketing Manager

CORA IT Manager

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Functions of Finance Department

Finance company assets, personnel and operational facilities of the cigarette

factory, leaf factory and head office.

Prepare and verify consolidated financial statement of all units of the company.

Monitor and control all financial activities of the.

Monitor sales collections.

Process Management information.

Structure capital policy.

Carry out by auditing internal and external auditors.

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The Structure of Finance Department

Figure 7: Finance Organogram

The Supporting Finance managers, Audit Manager and Treasury Manager assist the Head

of Finance. The Finance Department comprises of six areas. They are:

Treasury: Corporate (L/C opening, fund management, banking relationship etc.)

Core Finance and Management Accounts: Corporate

Marketing Finance: Supporting

Excise Management: Supporting

Taxation: Corporate

Audit: Separate

Insurance: Corporate

Supp

ort F

inan

ce

Head of Finance

Senior Corporate Finance

Internal Audit Manager

Deputy Corporate

Finance Manager

Treasury Manager

Deputy Treasury Manager

CORA Finance

Brand Marketing Finance

Trade Finance Manager

Leaf Finance

Production Finance

Deputy Corporate

Finance Manager

Billings

&

Taxation Manager

Product Costing Manager

Budget Manage

r

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The Core Finance and Management Accounts activities includes monitoring and

controlling all the Accounting and Financing activities of the company such as product

costing, invoice pricing, taxation etc. Audit Manager manages all the internal and

external auditing of the company.

2.9.5. Human Resource Department

BATB believes in the strength of human resource and uses the modern concept of

resource utilization. Every job description is carefully designed and modified under

dynamic environment. The company believes in the concept of best fit and trains and

develops company personnel as the key ‘human capital’ of the company.

The Human Resource Department thus concentrates all its activities for the development

of human resource for the benefit of the company. The department also believes in

maintaining harmonious relationship between the management and workers all the times.

The department ensures that managerial development contributes to organizational

development.

The departments’ various activities cover setting criteria for the selection procedures.

Interview techniques, training standards etc. According to the BAT policy guideline, the

department maintains the personnel through formulation policies on wages, fringe

benefits, annual leave, training calendar, provident fund, performance appraisal etc.

Remuneration is managed centrally and there is never any negotiation but settlement. It

also settles with the trade union for Long Term Agreement (LTA) between management

and workers and the ‘collective burgeoning agents’. The concept behind the industrial

relations is always ‘win-win’ situation.

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The Structure of Human Resource Department

Figure 8: Human Resource Organogram

Head of Human

Resource

Human Resource

Development Manager

Human Resource Manager:

Production

Resource and Remuneration

Manager

Human Resource Manager:

Leaf

Coordinating Officer

Training

Manager

Industrial Relations and

Welfare Manager

Employee Relations Officer

Payroll & Funds

Manager

Human Resource Services Manager

Production

Training

and

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2.9.6. Marketing

The Structure of the Marketing Department

Marketing is “The Department” of BATB. The marketing department has recently been

rebuilt by merging brand marketing and trade marketing. Earlier these two were

individual departments. But now with the “Power of One” theme the brand and trade

department has formed a very efficient marketing department.

Marketing Mission

We will grow to 60% volume share by 2010 while

Owning IB (i.e.100%)

Dominating ASU 30 (i.e. more than 60%)

Leading DVFM (i.e. more than 50%)

The marketing department can be divided into three sub departments-

Figure 9: Marketing Department Structure

Marketing

Brand Marketing

Trade Marketing & Distribution

Trade Development

Team

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Brand Marketing

The Brand Marketing department concentrates on satisfying consumers’ needs from

within the brand portfolio. Once consumers’ needs are understood and evaluated, brands

can be made available, accessible and desirable through strong, consistent

communication. The brand marketing elements covers the adopting of products, logistics

and brand marketing policies that best meet the needs of particular trade channels and

strategic customers. The Brand Managers and Brand Executives are responsible for the

allocated brand(s). They are responsible for all type of brand management activities.

Brand Marketing Organogram

Figure 10: Brand Marketing Organogram

Head of Brand

Marketing

Coordinating

Officer

CORA Marketin

g

Senior Brand

Manager VFM

Group Brand

Manager

Senior Brand

Manager DVFM

Marketing Intelligence

Manager

Product Development

Manager

Brand Marketing Finance Manager

Brand Manager

JPGL

Brand Executive JPGL

Brand ManagerB & H

Assistant Marketing Intelligence Manager

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Trade Development Team (TDT)

This department works in between the brand and trade department in a view to facilitate

and coordinate the activities from the two ends. TDT performs different functions like

channel management, cycle planning, merchandising etc.

Channel Development: There are three types of channel outlets where cigarette is sold.

This is classified on the basis of quality, authority, environment etc.

Convenience

Grocery

Horeca

Volume Class Outlets: The cigarette selling outlets are classified on the basis of their

daily sales of cigarette.

Volume Class Stick Sales/Day

1 54795+

2 27397-54794

3 13699-27396

4 5479-13698

5 2740-5478

6 1370-2739

7 548-1369

8 274-547

9 Below 274

Table VII: Volume Class Outlets

Cycle Planning: Cycle planning is a process by which a particular brand’s message is

designed and communicated to the trade and consumers. Usually, a particular brand cycle

continues for at least a month. It can also be for 2/3 months. Cycle communication is

implemented through the TM&D level.

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Merchandising: Merchandising can of different type. It can be permanent or temporary.

BATB uses a combination of these two categories of merchandising.

Permanent Merchandising

In store merchandising: e.g. Street Cabinet

On store merchandising: e.g. Fascia

Out of Home (OOH): e.g. Billboard

Temporary Merchandising

Point of Purchase (POP): Bunting, Dangler, PVC

Trade Marketing and Distribution (TM&D)

TM&D carries out the activities like ensuring proper distribution and reach of the brands

in the market, implementing promotional campaigns and brand communication programs.

Trade Marketing Operational Hierarchy

Figure 12: Trade Marketing Operational Hierarchy

Two area managers under each regional manager

Head of Trade Marketing

Regional Manager

Area Manager

Territory Officer

Six regional managers

One for each territory

National Sales Manager

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Channel of Distribution

Figure 13: Channel of Distribution

Regional Go-down: There are five regional go-down through out the country

to fill every regional demand just at the time of need, and to overcome various

uncertainties related to physical distribution of products, every regional go-

down is directly controlled by separate Regional Manager to face the regional

physical distribution challenge.

Carrying Contractor: They are the party engaged in the physical movement

of cigarettes from head office godown to regional office godown. Normally

they are the truck owners who take all the risk and responsibilities of physical

movement of goods between two warehouses.

Distribution Warehouse: All distributors have their own warehouse, where

cigarette can be kept safely while not degrading its product quality.

Factory

Sales Depots

Distributors

Retailer

Consumer

Cash & Carry

Internal Carrying Agent

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Distributors buy the cigarette from BATB and from that point ownership and

all responsibilities of the products go under the distributors.

Internal Carrying Agent: They are like carrying agent but carry small

volume of products. Normally they are local truck owners. They carry

products from, regional godowns to distributor warehouses. They also take al

the responsibilities and risk engaged in physical movement of products.

Opening Stock at Distributors’ Office: Apart from the warehouse, every

distributor also maintains another stock at their office. This stock is for

maintaining any change in market demand instantly. Dealers sometimes sell

cigarette through their counters to face special situation.

Delivery Van: All the delivery vans are owned by the dealers to assure the

supply of cigarette on the door of wholesalers, cash & carries and retailers just

according to their demand. There are two types of delivery vans. One is

Scooter van and another is Rickshaw van.

Cash & Carry: They are businessmen who sell cigarette directly to

consumers and at the same time they sell cigarette to the retailers.

Retailers: Retailers are at the end of the physical distribution system of

cigarette selling products directly to the consumer.

2.9.7.Information TechnologyInformation Technology department was mainly acting as a supporting service for all the

other functions of BAT. As the emergence of super information highway and other

technological advancement made the business world more competitive, BAT also made

necessary adjustments towards the changes and in continuation with that process IT was

made a separate department in February 2000. The head of IT is also a member of the

executive committee and he is supported by the function support IT managers.

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IT Organogram

Figure 14: IT Organogram

Three Local Area Networks (LANs) have been set up in the Head Office to channel

necessary information among the Head Office, main Factory and Kushtia leaf factory.

Three LANs are connected via a Wide Area Network (WAN). BAT has a private E-mail

network through which management personnel can deal with each other even with the

foreign suppliers.

Head of IT

Technology IT Manager

Services IT Manager

Marketing IT Manager

Operations IT Manager

Corporate IT Manager

Leaf IT Manager

Logistics IT Manager

Systems Administration Manager

Communication & Group Working Manager

Assistant Manager, IT Services

Assistant Manager, IT Services

Quantum System Manager

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2.9.8.Production DepartmentThe Head of Production looks after the production and takes necessary steps to smooth

out the production process. The entire production process is performed at the Dhaka

Factory. The motto of Production Department is to ensure the high quality and

productivity steadily for the last few years. The production department has been very

successful in meeting the challenges and the company now produces a wide range of

filter cigarettes to meet the market demands. All the local brands are now available with

its international brands.

Existing Production Facilities

Capacity Output: The country’s biggest manufacturing plant is owned by BATB with a

capacity of 80 million (rounded) sticks of cigarettes per day in 3 shifts.

Actual Output: Presently the factory is producing 60 million sticks per day hence they

need 70.000 kg of tobacco leaf.

Reasons for the difference: The market is the main reason for the difference between

actual and capacity output. Wastage is approximately 4% - 5% of the tobacco leaf used

and it occurs in three from namely - rejection, yield loss and accountable loss.

Raw Material Used: The following table summarizes the raw materials used for

producing cigarettes. The procurement sources are shown in the same table.

Raw Materials Source

Bulk Tobacco Locally produced in leaf

areas

Blending Tobacco Imported

Cigarette Paper Imported

Filter Material Imported

Packing Material Local

Table V: Raw Material Procurement Sources

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Annual Cigarette Production

2007 2008 2009

Cigarette (in million Stick) 9,604 12,723 15,070

Pipe tobacco (in Kg) 35,000 - -

Table VI: Annual Cigarette Production

Production Process

The Primary Manufacturing Department: The primary manufacturing department

(PMD) is responsible for further conditioning the domestic and important tobacco to

make it ready for production. The tobacco passes through a set of integrated and

regulated machinery whose purpose is to blend the different 'packing grades' in specified

proportions, convert the bales into 'rag' suitable for use in cigarettes, and bring tobacco to

a uniform temperature and moisture.

The Secondary Manufacturing Department: The secondary manufacturing department

(SMD) uses the tobacco that is blended and conditioned by the PMD along with

wrapping materials to manufacture cigarettes. The PMD delivers its final processed

tobacco to the Cut Tobacco Store (CTS). The CTS has a 50-ton storage capacity and the

tobacco is stored there typically for one and a half days before it is used. The SMD brings

in the processed tobacco from the CTS as needed for production along with wrapping

material.

Currently there are 16 cigarette-making machines at Dhaka factory, which are operated in

three daily shifts. Shift engineers and officer's monitor shift activities to ensure quality

production. The flow of tobacco and cigarette paper to the cigarette making machines are

regulated by six (programmable Logic Controlled) PLC controlled feeders. These feeders

send in the required quantities at the right time to ensure smooth production. Each brand

of cigarette is monitored by a separate feeder. In addition to the tobacco and cigarette

wrapping material, filter rods are fed into the machines for cigarette production. The

machines combine these three inputs to generate cigarettes as output. Defective cigarettes

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are either identified manually or by built in sensors and removed from the production

flow. The tobacco from these wastes is removed and reused for cigarette production. The

manufactured cigarettes are deposited in trolleys and carted to the packing machines.

There are currently 18 packing machines at Dhaka factory. These machines are equipped

with the wrapping material used to pack the cigarettes. Almost all of the wrapping

materials used are imported. Local companies, however, conduct the printing work that is

required. The manufactured cigarettes are fed from trolleys into the packing machines,

which generate the packed cigarette as output. The flow is monitored closely to identify

and eliminate defective products.

In addition to the cigarette manufacturing and packing machines, Dhaka factory has two

Secondary Production Units (SPU). These are used exclusively to produce the State

Express 555 and John Player Gold Leaf brands. These modern production lines are

different from the other machinery in that both cigarette manufacturing and cigarette

packing can be conducted in one process flow. This reduces the time needed to manually

put the cigarettes into trolleys and cart them to the packing machinery. The SPU makes

approximately 8000 cigarettes per minute. Defective cigarettes are detected by sensors in

the machines and are removed automatically. In addition manual checking is conducted

for quality control purpose.

2.9 .9 L egal and S ecretarial

Legal and Secretarial functions are considered as the first line of defense and an essential

business process of the company. The major activities of Legal and Secretarial includes

litigation management, combat-illicit trade, trade marks & agreement management, in-

house legal counsel, share management which is listed with two stock exchanges and

operating under central depository system, company secretarial function, records

management, shaping regulatory environment, trust fund management, policy compliance

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etc. Legal and Secretarial function also drives to ensure Corporate Governance in the

company.

2.9.10. S upply Chain

Operations function is at the heart of BATB business, so BATB invest substantially in

people and technology to ensure that the processes are state-of-the-art, highly flexible and

responsive to the needs of customers and consumers alike.

Working in operations means constantly having to balance the demands of availability,

quality and cost. BATB people operate in a high speed environment and under

tremendous pressure, so they need the strength of mind to make quick decisions, often

basing them on limited information. They also need to be open to innovative solutions

that can improve the processes.

Manufacturing within British American Tobacco Bangladesh includes:

Product knowledge

Process and control

Knowledge of technologies

Quality

Supply chain management

Regulatory framework

Employee relations

Excise

Environmental, health & safety

Project management

Commercial awareness

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2.9.11. L eaf

The Leaf Department is responsible for purchasing, processing, packing, shipping, and

storing leaf tobacco for BAT Bangladesh.

Essentially, it is the Leaf Department's job to ensure a secure, continuous and consistent

supply of tobacco at the best cost and right quality (as required by BATB Blenders) to

maintain the correct taste of final products for the consumer. Therefore, the Leaf Team's

skills make a significant contribution to the ongoing success and reputation of BATB

brands, as well as the Company's position as market leader.

The Leaf arena within British American Tobacco Bangladesh includes:

Managing a tobacco growing programme

Processing tobacco in a Green Leaf Threshing plant

Blending tobacco for the cigarette business

Purchasing tobacco from all over the world

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3. Secretarial

Matters: 1.1. IntroductionIntroduction

2.2. Company SecretaryCompany Secretary

3.3. Secretarial works Relating to Board MeetingSecretarial works Relating to Board Meeting

4.4. Secretarial works relating to AGMSecretarial works relating to AGM

5.5. Master file for AGMMaster file for AGM

6.6. Directors’ folder for AGMDirectors’ folder for AGM

7.7. List of documents and stationery for AGMList of documents and stationery for AGM

8.8. Share Management System and MISShare Management System and MIS

9.9. Corporate Annual ReportCorporate Annual Report

10.10. Chairman’s StatementChairman’s Statement

11.11. Directors’ reportDirectors’ report

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3.1. Introduction: :

Secretarial department is a very important department in a limited company. Generally

this department plays various roles through Company Secretary, such as legal,

mandatory, ministerial, and administrative. British American Tobacco has one Secretarial

department and it has two sections. One is called LEGAL and other one is called

SERETARIAL. The organogram of the secretarial department of British American

Tobacco is given below:

LEGAL SECRETARIAL

.

Head of Legal & Co. SecretaryBATB

Coordination Officer BATB

Litigation Counsel BATB

Trademark & Agreement Manager BATB

Shares Executive BATB

Deputy Co. Sec & Records Manager BATB

Corporate & Commercial Counsel BATB

Shares and Records Management Executive BATB

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3.2. Company Secretary:

Company secretary can be defined as a person who is a member of Institute of Chartered

and Secretary and Managers of Bangladesh (ICSMB), appointed to perform the duties

which may be performed by a secretary under the Company Act 1994 and any other

ministerial and administrative duties.

Sir Edwin said, “A good secretary endeavors to hide his employer’s defects by allowing

his virtues to appear in the full light of the day/ he shields him aside from ubiquitous

interviewer and the garrulous inventory who boats a remedy for every works that keeps

him from the things he need not know, and acquaints him only with such thing he ought

to know. In short, he is a man of discernment, discretion and tact.

Appointment of a Company Secretary: Appointment of a Company Secretary:

Usually there is a specific section in the current company low of most commonwealth

countries providing that ‘Every Company must have a Secretary’. In those countries the

Articles of association normally gives directions of the appointment and removal of the

secretary and to fix remuneration. In Bangladesh Secretaries are appointed in the same

manner as other staffs are appointed.

Generally the ‘promoters’ appoint the first secretary if the company at the pre

incorporation stage. After the registration of the Company this appointment should be

ratified at the first meeting of the Board of Directors by a resolution. The said resolution

may be worded as follows:

“RESOLVED that Mr. X, AICS, be, and is hereby appointed secretary of the company at

a monthly salary of Tk. ….………exclusive of other allowances applicable as per

company rules.”

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Part time Secretary:

A part time secretary is one who accepts appointment as a secretary in mote that one

company.

Director as Secretary:

A director of the company may be appointed as secretary provided consent of the

Company has been obtained by passing a resolution to this effect in General Meeting as

per section 104 of Companies Act, 1994.

General Legal Position:

In accordance with Companies Act, 1994; the legal position if a company secretary be as

follows:

A servant of the company

An agent of the company

An officer of the company

Finally, I would like to say, some organ grams of the company and activities of the

company Secretary give the position to the Company Secretary as next to MD or CEO

because a company secretary represent the Board of a company.

Responsibilities of a Company Secretary: Responsibilities of a Company Secretary:

The Company Secretary is responsible for:

Any lapses, frauds, or wrong doings in the course of his employment.

Maintenance of strict secretary affairs, of the Board and, of the Company.

Circulation of notice of meetings.

Filing various statutory returns in due time.

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Maintenance of various statutory registers.

Duty of a Company Secretary: Duty of a Company Secretary:

The duties of a Company Secretary are given below:

1. Protect and safeguard such interests of the company at all levels: legal statutory,

administrative, arbitration and in other policy matters.

2. If allowed he can ----

Convene meeting in time

Sign notice of such meeting

Watch that the notice are dispatched properly and timely

Send the accounts to the members

Make sure about the quorum

Prepare minutes timely and correctly

3. See various deeds, contracts, and agreements, where the company is a party, are

properly framed, worded and terminologically in order and sign of such

agreements, if he authorized, or at least a knowledgeable witness.

4. Prepare allotment list, process the share transfer instruments and print or make out

the definitive share certificates for approval of the Board.

Liabilities of a Company SecretaryLiabilities of a Company Secretary

The company Secretary has got same specific liabilities within the framework of the

companies Act, 1994 (though not explicitly assigned), which may be called the statutory

liabilities. These liabilities are:

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To submit the statutory report as and when required

To hold the Annual General Meeting

To file the annual list of members and summary of share capital

together with the authenticated Balance Sheets and the Profit and

Loss accounts.

To issue dividend warrants, bonus share certificates and make

arrangement of for disposal of fractional shares, if any;

To record proceedings of meetings and to maintain the minute

books.

To make arrangements for inspection of minutes and provide

copies thereof, if so requested by members.

To comply with the requirements to paint and affix the company

name and address outside office and make out rubber stamp and

embossed Common seal of the Company

To affix the requisite stamp duty on various documents of the

company as per the Stamp Act

To arrange audit of accounts and prepare accounts as per stature.

To arrange to file income tax returns every year and also to the

same assessed by the authorities.

The Company Secretary is, however, not liable for any wrong, misdeed, or fraud.

What the Secretary can not do: What the Secretary can not do:

The secretary is regarded, on the other hand, as a servant, while on the other, as an agent

of the company. However, measuring from the orthodox angle, he has got the some

working limitations.

The Secretary can not—

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Assume any executive or managerial powers without express authority from the

Board.

Represent the Company without knowledge about the Directors.

Bind the company by a contract on his own.

Propagate for sale of company’s shares.

Strike out or register a transfer unless approved by the Board.

File a suit on behalf of the Company.

But times has changed quite a lot and now a days in a modern Company the Secretary has

got a far wider range of duties an responsibilities.

3.3. Secretarial Works related to Board

Meeting:

Generally the Company Secretary of British American Tobacco performs various works

related to Board Meeting. These are as follows:

Preparatory work relating to Board Meeting.

Notice for Board Meeting.

Preparation of agenda.

Notes to the agenda.

Drafting of Minutes and its maintenance.

Post meeting week.

Drafting of Directors’ report.

Recent trends in Board’s Report.

Preparatory notes for the preparation of Chairman’s Speech.

Recent trends in Chairman’s Speech.

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3.4. Secretarial Works related to Annual

General Meeting (AGM):

Generally, the company secretary of British American Tobacco, through secretarial

department, performs the following duties:

Duties before AGM: Duties before AGM:

Open a master file for AGM.

Prepare annual draft accounts with the Finance Department.

Prepare a draft of Directors’ Report consultation with the Chairman.

Arrange a Board Meeting for passing the following businesses:

1. To receipt and approve the draft accounts as per sec. 189 (3) of C.A. 1994.

2. To recommend payment of dividend.

3. To recommend appointment of Directors under rotations.

4. To recommend appointment of auditors and fix their remuneration.

5. To approve the Directors’ Report.

6. To fix the date, time and place of Annual General Meeting (AGM).

7. Other ordinary business.

Inform Security Exchange Commission (SEC) and Dhaka Stock Exchange (DSE)

about Board decision related to AGM.

Authenticate the financial statements as per section 189(1) of C.A. 1994.

See the Auditors’ Report.

Make arrangements for printing of Annual Report.

Send notice to members.

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Prepare the list of proxy form.

Prepare the speech of the Chairman.

Prepare dividend list.

Close the member register.

Notice publish in newspaper.

Collect offer letter from the auditors.

Collect the consent of directors.

Prepare folders of Directors.

Prepare Name Plate, Banners etc.

Prepare the list of documents and stationery for holding of AGM.

Make seating arrangements for AGM.

Arrangement for refreshments.

Duties at the AGM: Duties at the AGM:

Check the documents and stationery for holding AGM as per list.

Record the presence.

Ascertain the quorum.

Read notice.

Read Auditors’ Report.

Assist the Chairman.

Prepare the notes of AGM.

Duties after the AGM: Duties after the AGM:

Draft the minutes.

Make arrangement for the issue of dividend warrants.

File copies of annual accounts with register.

Prepare annual return.

Implement the resolutions.

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3.5. AGM Master File

AGM Master File means a file, for the AGM, in which every document in relation to

AGM is kept. This file is so important for the secretarial department. Generally the

following documents exist in the AGM Master File:

Minutes of Board in relation to AGM.

Letter to SEC, DSE to inform them of the following matters:

1. Date of AGM

2. Time of AGM

3. Place of AGM

4. Dividend percent

Annual Report.

Auditors’ Report.

Offer letters.

1. Auditors’

2. Directors’

Share Summary statements.

Schedule of AGM program.

Schedule of committees to conduct AGM.

Folders of Directors for AGM.

Other papers relevant to AGM.

3.6. Directors’ Folder for AGM:

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Directors’ folder is a folder, which is prepared by the secretarial department for the

chairman and directors to exercise control of AGM program systematically. Despite

being a very old practice in the corporate culture, the secretarial department of British

American Tobacco prepares this Directors’ folder artistically with full of necessary

information to conduct the Annual General Meeting (AGM) as per program. Generally

the following documents are included in the Directors’ Folder:

Program of the AGM.

Proceedings of last AGM, with item -1 being on the agenda.

Annual Report for the AGM with item -2 being on the agenda.

Offer letters to the directors for election, with item – 3 being on the

agenda.

The recommendation of the Board to declare dividend, with item – 4

being on the agenda.

Offer letters from the proposed Auditors with item – 5 being on the

agenda.

Working papers.

3.7. List of Documents and Stationery for the

AGM:

A number of necessary documents and stationery are used to carry out smooth operation

of AGM. Without those it is impossible to conduct the meeting. The secretarial

department of British American Tobacco generally prepares a detail list of relevant

documents, papers, and stationery before the AGM to make them available at the meeting

with due care. These are as follows:

1. Memorandum and Articles of Association.

2. Finance Act.

3. Companies Act, 1994.

4. Previous Annual Report.

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5. Half yearly Report.

6. Offer letters to the directors.

7. Offer letter to the auditors.

8. Original copy of Auditors’ Report.

9. Prospectus.

10. SEC rules, ordinance, and Notification.

11. DSE and CSE rules.

12. Bangladesh Gazette.

13. Folders of Directors for AGM.

14. Board Minutes in relation to AGM.

15. Master file for AGM.

16. Name plates.

17. Banners.

18. Attendance Slips.

19. Working papers.

20. Staplers.

21. Glues.

22. Signature pens.

23. Wood pencils.

24. Gems Clips.

25. Calculators.

26. Slip pads.

27. Sharpeners.

28. Proxy Form.

29. Maulana’s Remuneration.

30. Drinking glass and boiled water.

3.8. Share Management System and MIS

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The Secretarial Department of British American Tobacco is marching with the present

development of Information Technology (IT). At present the share department uses Share

Management System (SMS) and Management Information System (MIS) to perform the

following functions:

In regard to public issue of securities.

Recording of application.

Scrutinizing and sorting applications.

Printing of allotment advice and preparing mailing list for dispatching.

Creation of ledger folio numbers.

Printing of covering letters for dispatching of share certificates.

Recording day to day transfers.

Calculations of dividend and interest.

Printing of mailing list for various communications.

Recording of change of members’ addresses and printing of lists for

communication.

Recording of minutes.

Recording of splitting of share certificates.

Preparation of shareholding patterns and various Management information data.

Processing of proxy.

Preparation of annual return and various information relating thereto.

Preparation of unpaid dividend list.

Preparation o distribution schedule.

Data relating to Debenture holders.

Documentation and filling of secretarial works.

Preparation of returns and papers to file to Registrar, DSE, CSE and SEC.

Preparation of important papers for the internal management.

3.9. Corporate Annual Report:

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All the public limited companies are obliged to prepare a report, at the end of every

financial year, of accounts for their shareholders, which is called the Corporate Annual

Report. British American Tobacco prepares this report in every year which is generally

comprised of following things:

Corporate Directories.

The Company Profile

Notice of Annual General Meeting

Major achievements during the year

Chairman’s statements

Last Annual General Meeting

Report to the Directors

Fiver year Statistics

Value added statements

Growth during the year

Auditors’ Reports to the Shareholders

Balance Sheet

Profit and Loss account

Cash Flow Statement

Notes to the financial statements

Proxy Form

It is obligatory for the British American Tobacco to publish the corporate annual report in

a printed booklet form and it has to be circulated to:

Every shareholder of the company

Every director of the company

The Securities and Exchange Commission

The DSE and CSE

The Investment Corporation of Bangladesh (ICB)

The Bangladesh Bank (For joint venture)

The Registrar of Companies

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3.10. Chairman’s statement

There is nothing mentioned in the Companies Act., 1994; about the chairman’s statement

but as per regulation 37(5) of DSE listing rule chairman’s statement refers to the

statement by the Chairman of the company, which shall include events occurring after the

balance date as required by the Bangladesh Accounting Standards on “Contingencies and

Events occurring after the Balance Sheet Date.” Apart from this British American

Tobacco ornaments this report by including other matters such as operation, growth,

future plans, acknowledgements and specially those matters of the company which are

not discussed in the Directors Report.

3.11. Directors’ Report:

In accordance with the section 184 of Companies Act, 1994; and regulation 37(4) of the

DSE Listing regulations, British American Tobacco attach a report by its Board of

Directors to every balance sheet and it is placed before the General Meeting which is

known as Directors’ Report fir the consideration of shareholders with respect to—

The state of the Company affairs

The amount, if any, which the Board proposes to carry to any reserve in such

balance sheet.

The amount, if any, which the Board recommends should be paid by way if

dividend.

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Material changes and commitments, if any, affecting the financial position of

the company which have occurred between the end and of the financial year of

the company to which the balance sheet related and the date of the report.

Contribution to the national exchequer.

Any big deal in the form of lease, loan or debenture.

About election, re-election or retirement of Directors.

About appointment, re-appointment, and remuneration of auditors.

Employment policy, labor relations and the total number of employees at year

end.

Other sundry information such as, number of branches and subsidiaries, any

foreign establishments, number of employees and shareholders, prevailing

share price index

Acknowledgment of assistance, co-operation etc.

4. Corporate Social Responsibility

The company has established a Corporate Social Responsibility (CSR) Steering Group

chaired by the Managing Director and consisting of the Deputy Managing Director and

all function heads. It is responsible for the review of Stakeholder feedback, the

development of responses, the integration of CSR principles into its business activities

and overseeing the preparation of the Social Report.

Identification of stakeholders-

Government-Finance, Environment & Forest, Commerce, Industries, Health,

Law, Agriculture, Police/BDR/Coast Guard, Local Administration, Others etc.

Academicians-Teachers, Researchers.

Legal Community

Medical Community

NGOs

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Think Tanks

Anti Tobacco Groups

Media-Print, Electronic

Political Group

Business Group

BATB’s business partners-Distributors/Retailers/Cash & Carry, Suppliers,

Tobacco growers

International Organizations

Students(Adults)

Human Rights Organization

Neighbor/DOHS

As their slogan is “Success and Responsibility go together” they are the first company to

prepare a social report that complies with the rigorous global benchmarks of the AA 1000

standards and the United Nations Foundation sponsored global reporting initiative

guidelines. They have formulated the expectations (approximately 122) of stakeholders

under ten main headings through a discussion with the stakeholders.

These are as followed along with their solutions-

1. Consumer information (12%) :

Stakeholders expressed that current warning clause printed on cigarette packets and all

tobacco advertisements were inadequate.

BATB position and response-In response to stakeholders’ expectations they have

decided to provide additional information on smoking and health risks. They will help by

providing additional relevant information to the government to assist them in this area if

they are asked to do so.

BATB Commitment-will support reasonable and enforceable laws by the government, in

respect of improved health warnings on packets and brand communications and also will

provide additional information on smoking and health through distribution of the

‘smoking and health risks-our views’ booklets amongst stakeholders also distribute

consumer leaflets.

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2. Public Smoking (7%) :

Stakeholders expressed their view that laws should be enacted to restrict public smoking.

Opinions were also expressed regarding protection of smokers’ rights.

BATB position and response-They want to support initiatives of the government to

restrict smoking in public places and will work the government to have clear definitions

of public places with the objective of protecting nonsmokers’ and smokers’ rights.

BATB Commitment-will support initiatives of the government to restrict smoking in

public places.

3. Lower Risk Products(2%) :

Stakeholders expressed that they would like to see BATB undertake long term research

programme for developing products which would be less harmful to consumers.

BATB position and response-British American Tobacco’s central research and

development (R&D) based in London, UK are coordinating their efforts in this respect.

But they have suggested that the only way to avoid the risks of smoking is not to smoke,

and the best way for smokers to reduce the risks is to give up smoking.

4. Youth smoking prevention(13%) :

Stakeholders expressed that cigarette advertisements which attract the youth should be

stopped. They urge to make advertisements showing harmful effects of cigarettes on

children. They want to restrict availability of cigarettes to underage.

BATB position and response - They will support any government initiative which

suggests practical solutions to underage smoking and to enforce the law on juvenile

smoking which prohibits sale and purchase of tobacco products by the underage. They

have clear company policy which they communicate to their distributors, not to engage or

sell cigarettes to underage vendors. They have stopped all the brand advertisements on

TV.

BATB Commitment - will continue to work with other third parties, including the

government, in order to make improvements to our Youth Smoking Prevention (YSP)

campaign.

5. Responsible marketing(10%) :

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Stakeholders expressed that tobacco advertisements are too aggressive, often taking

almost the entire attraction of a viewer. They have said that indirect advertisements

through sports sponsorships like cricket should be avoided just like direct advertisements.

BATB position and response - They have voluntarily stopped advertising in the electronic

media and print media. They have also recommended to the print and electronic media

that they introduce their own code of conduct to restrict aggressive and unethical tobacco

advertisements.

BATB Commitment-will follow all the guidelines provided by the regulatory agencies in

case of promoting their products.

6. Tobacco regulation(4%) :

Stakeholders were concerned about the poor enforcement of laws relevant to the industry

which they felt was contributing to the rapid increase in the numbers of smokers in the

country. They want support enforcement of laws to restrict tobacco related products.

BATB position and response - BATB advocates and supports practical and enforceable

tobacco regulation. They will support the government on regulations providing realistic

solutions to relevant tobacco issues.

BATB Commitment-will record proactive engagements with the government on a

quarterly basis.

7. Tobacco Taxation and Cigarette pricing(2%):

Stakeholders expressed that tax on tobacco products should be increased to a prohibitive

level to discourage consumers from purchasing the product.

BATB position and response-Cigarettes are already heavily taxed with as much as 70%

of the retail selling price going to the government. They have already engaged with the

government and National Board of Revenue(NBR) to ensure reasonable, sustainable

growth in government revenues.

BATB Commitment-will keep relevant evidence of dialogue with the NBR and BCMA

for reasonable excise rates that supports revenue generation without encouraging

counterfeits and smuggling.

Issues relating to environmental management, corporate citizenship and

corporate governance

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8. Environmental management(16%):

Stakeholders expressed their concern regarding the impact that tobacco cultivation has on

the environment. They also expressed their concern regarding soil fertility issue due to

tobacco cultivation. Stakeholders mentioned that BATB should make more meaningful

contributions to environmental management. During this session five main themes

emerged-

1. Afforestation

2. Alternatives to wood fuel

3. Fertilizers

4. Soil conservation

5. Product waste and factory emmisions

BATB position and response-BATB is in a position to influence directly some of the

environmental impacts occuring the product life cycle. Their aim is to eliminate or

minimize these impacts to reduce the burden on the environment. In line with this

approach BATB is already focusing reducing wastes, promoting recycling, reducing

water comsumption,using raw materials efficiently, improving soil’s nutrient

composition, introducing alternatives to agricultural chemicals and wood fuels in tobacco

growing, reducing depending on fossil fuels and atmospheric emmisions.They manage

the country’s largest private afforestation programme and distribute more than 3.5million

saplings annually. In the last two decades, they have distributed and planted more than

42.5 million saplings. They have received the first prize of Prime Minster’s tree

plantation award in 1999.They meet 70% of their wood fuel requirements through

alternatives like paddy straw, jute stick, dhoncha stick etc.They use potassium sulphate

which is recommended by Bangladesh Agriculture Research Council(BARC) .They also

recommended balanced use of fertilizers on the cultivation process. They buy the best

valuable non-adulterated fertilizers from the government in bulk and supply at cost price

to the farmers. Soil fertility actually improved by tobacco cultivation but they still

conduct soil quality test in tobacco growing areas from time to time to determine the

fertility status. Their farmers have already taken up soil fertility programme.Every year

they obtain a clearance certificate from the department of environment (DOE) which

testifies that they are abiding by all environmental laws and regulations relevant to their

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operations. Any smoke residue from the e wood-fuel burning is emitted high in the air at

about 12-14 feet. The residual ashes are used as fertilizers.

BATB Commitment-will conduct the ongoing biodiversity assessment of their

operating areas based on which specific improvements in their afforestation programmes

will be designed and implemented.

Corporate citizenship (31%):

Stakeholders suggested that BATB should take up such economic activities which would

help the company to diversify and create more employment opportunities.Stakehlders

listed a number of expectations regarding the role of BATB in CSR:

Six main themes emerged in this list-

1. Role as a development partner

2. Corporate sponsorship and poverty allegiance

3. Support to tobacco farmers

4. Support to health programmes

5. Support to education programmes

6. Eliminating child labor

BATB position and response-BATB has always conducted business in Bagladesh

responsibly. Their corporate citizenship has a much wider reach. They are involved in

various projects and initiatives, in improving the environment, supporting philanthropic

organizations, promoting art and culture and assisting with disaster relief. They play a

significant role in human resources development in the country. They run management

development programmes which are attended by managers of other business houses.

They offer internship programme for graduates and they also provise marketing skills

development programme for BRAC.They promote indigenous culture by including

Rabindra sangeet and Baul sangeet in their Star search programme.They also sponsor

annual Lalon festival in Kushtia.They employ many women managers in order to con

duct their business butr they do not have any women worker directly employed in their

facory.Tobacco cultivation has a direct and indirect impact on the local economy and

poverty alleviation. It also genrates employment for 100,000 people over the four month

growing season. They run many programmes such as advising in the area of poultry

rearing, vegetable and fruit cultivation to make life easier for farmers. They also try to

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facilitate bank loans to support farmers. They have initiated medical check up

programmes for farmers but they do not compensate smokers affected by smoking. They

are also involved with eye donation and blood donation programme and they also provide

support health programmes such as Center for Rehabilitation for paralysed (CRP).They

have a basic IT education center in Kushtia.They will promote higher education to

farmers’ children as well as adult literacy programmes for farmers. They do not

encourage child labour in their business area.

BATB Commitment-will keep contributing in the tobacco export business of the country

and also keep continuing current various types of programmes related to culture.

Corporate Governance(3%):

Stakeholders stated that BATB is a good company and they would want to see the

company continue with its operations. Company’s vision statement should include social

responsibility and the company should not take all the profit out of the country. They

should actively participate with the customs intelligence to control smuggling.

BATB position and response-In 2002 they have introduced a new corporate slogan

“success and responsibility go together” which supports their vision and emphasizes their

commitment to be a responsible company.BATB is a public limited company in this

country and there are some shareholders of this company. They get dividend from the

company against their share. They provide any relevant appropriate in formations for

supporting to control smuggling, counterfeiting and will continue to do so.

SOCIAL AND ECONOMIC CONTRIBUTION

One of the largest revenue generator in private sector.

Has planted and distributed 42.5 million trees with a sapling survival rate

exceeding 90%.

Has successful biodiversity program specifically emphasizing on water, air and

energy.

Has partnership with the Students’ Anti Smoking Committee(SASC).

Has been providing Basic IT Education and Basic English at free of cost in rural

areas.

Has signed an agreement with Agro-based Industries & Technology

Development project to produce quality vegetables for export.

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Established a call center which provides business consultancy and technical IT

supports to different BAT companies in Sri Lanka and Middle East.

Installed a bio-filter at a cost of 6 crores for environmental health and safety

practices.

Provides support to programmes like Shandhani’s Posthumous eye donation, the

government’s Polio vaccination programme and blood donation programme etc.

Gives support to the people of that regions which are affected by natural disasters.

ACHIEVEMENTS

Has won the Food and Agricultural organization award for pioneering the

development of vegetable seed industry in Bangladesh

1st prize of Prime Minister’s National Award on Tree Plantation in 1999 and 2002.

The Prime Minister’s Afforestation Award in 1993.

The President’s Award in Agriculture in 1976.

The FAO Award in 1999

The National Export Trophy Award in 2000.

Measurement of CSR to Stakeholders:

As BATB has identified stakeholders, it has some responsibilities for its stakeholders.

From the discussion held between BATB and its stakeholders, we have got some ideas

where the stakeholders have some expectations from BATB. They expect some non-

profitable activities from BATB in order to control tobacco business in the country. A

total of 122 expectations have come up through the discussion and all of them fall in ten

main categories.

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Figure: Percentage of expectations

Most of them have strong logical base to conduct and BATB is trying to meet these

expectations for many years. Majority of these are being conducted successfully

throughout the country under supervision of BATB. Few of these expectations are

coming to consideration of BATB and they have already started working on these. BATB

has some strong responses and positions over each and every expectation and they also

have commitments regarding the demands from stakeholders. BATB has achieved many

awards from many organizations including government for contributing a lot in the social

and economic context of Bangladesh. It implies that BATB is doing well and putting best

effort in conducting social responsibility in their chosen areas.

‘YOUR VOICE SURVEY’ result-

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0102030405060708090

100

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Open

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Pay&Ben

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Enter

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BATB

Global high performancenorm

From the survey stated above it is clearly seen that BATB is performing extremely in

order to satisfy their stakeholders. In comparison to global high performance, BATB is

clearly serving well in terms of culture, freedom through responsibility, open minded,

pay & benefits, enterprising spirit, leadership, CSR etc.As the stakeholders have been

selected by BATB itself, we think the stakeholders are being reasonably served by

BATB.

In the context of conducting corporate social responsibility they are doing comparably

well than others. Their stakeholders getting proper feedbacks against their expectations.

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5. Financial

Statistics:

5.1. Introduction:

Every Company secretary should have sound knowledge about finance and accounts to

comply with the requirements of the laws and also for the support of Board of Directors.

The Companies Act requires every company to ensure that adequate accounting records

are kept, sufficient to show and explain its transactions. Moreover, as per International

Accounting Standard (IAS), the financial statements to be prepared so as to give a true

and fair view of the company’s financial position as well as the profit and loss.

According to the section 181 of Companies Act, 1994; the books of accounts must

in particular contain:

All sums of money received and expended by the company and matters in

respect of which the receipts and expenditures take place.

All sales and purchase of goods by the Company.

The assets and liabilities of the Company

In the case of a Company engaged in production, distribution, marketing,

transportation, processing, milling, manufacturing, extraction, and mining

activities such as complete particulars relating to utilization of material,

labor and those items of overhead cost as may be necessary to identify their

nature.

A complete ser of financial statements include the following components:

1. Balance Sheet

2. Income Statement

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3. A statement showing either—

i. all changes in equity, or

ii. changes in equity other than those arising from capital transactions

with owners and distributions to owners

4. Cash Flow Statement

5. Accounting policies and explanatory notes.

The financial period the Companies is January to December and the financial statements

are prepared under the historical cost convention in accordance with applicable,

International Accounting Standards (IAS) in Bangladesh, which does not vary from the

requirements of the companies Act, 1994; the listing Regulations of the Stock Exchanges,

The Securities and Exchange Rule 1987 and rules applicable in Bangladesh.

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6. Company

Analysis:

6.1. Market composition

Chittagong is the biggest region in terms of industry size. The region contributes 29% of

the cigarette industry which is almost one third of the total industry. This makes

Chittagong very important for BAT since 3% growth of market share in the region will

result into 1% growth of market share nationally.

Figure 17: Market Composition

Market composition in Chittagong is different from other regions. The resonsons are

stated below:

Firstly, unlike other regions Very Low is the largest segment in Chittagong. At the same

time the size of the biri market is smaller than other regions. This is due to higher per

capita income in Chittagong which has probably led to faster cigarettization than the

other regions.

125

Secondly, nobody truly dominates the market in Chittagong. The market is fragmented

among four companies. Other than BAT and DTI, Abul Khair and Aziz Tobacco have

strong presence in Chittagong. BAT leads the region with 38% share, followed by DTI

with 28%.

Figure 19: Competition in Different Region

Figure 18: Price Segment in Different Regions

125

6.2 Industry Growth

Chittagong is the fastest growing region

Over the last three years Chittagong has always been the highest contributor behind

national industry growth. Since 2000, cigarette market is growing strongly and has

become the fastest growing region.

Figure 20: Growth Trend of Chittagong Market

Not only in terms of absolute volume but also at a percentage growth level, Chittagong

has provided highest growth than any other region over the last two years.

Company 2005 2006 2007 2008

National 11% 27% 5% 12%

DN 22% 12% -17% 7%

DS 14% 21% -3% 7%

Ctg 7% 29% 14% 16%

Bog 10% 51% 12% 12%

Khl 9% 32% 14% 10%

Syl 5% 26% 7% 14%

Table XI: Growth Percentage of Different Market

125

Growth in Chittagong is driven by Low and Very Low Segment

Growth of low and Very low segment is the driving force behind the overall industry

growth in Chittagong. In 2002 Very Low growth rate contracted and Low became the

fastest growing segment. The same trend has been observed in 2003 where Very low

growth rate has declined further and Low has grown more strongly.

Medium segment in Chittagong remained flat in 2003 after strong growth in 2002. Unlike

other regions mid has not declined in Chittagong.

Premium is growing strongly over the last two years from a very small base. Growth rate

over 20% for consecutive two years indicates the segment will pick up much faster in

2004.

Segment Volume Growth Rate

2007 2008 2009 2010 2007 2008 2009 2010

Premium 22 21 26 32 29% -1% 24% 21%

Medium 92 104 132 133 11% 14% 27% 1%

Low 153 181 256 289 2% 18% 41% 13%

V Low 241 288 335 349 15% 19% 16% 4%

Industry 508 595 749 803 10% 17% 26% 7%

Table XII: Segment Growth and Volume in Chittagong

Figure 21: Growth of Different Segment in Chittagong

125

6.3. Market and BATB’s Relative Share

BAT business performance in Chittagong region is very diverse from market to market.

Based on BAT share performance, these markets can be classified into three broad

groups: Green, Yellow and Red.

Green Markets: Markets where BAT has clear leadership i.e. BAT Market share is more

than 50%. Comilla, Daudkandi and Sitakunda markets are green which together

contributes 20% of Region’s total Industry.

Yellow Markets: Markets where BAT has some base but not leadership. i.e. BAT share

is between 30-49%. Chittagong, Feni, Rangamati, Khagrachari and Laksam are yellow

and together they contribute 50% of Region’s total industry volume.

Red Markets: Markets where BAT lack leadership and competition has dominance i.e.

BAT share is below 30%. Choumuhoni, Chandpur and Cox’s Bazaar markets are red.

Turnaround in these markets will require long term investment.

Market Growth Potential for BATB

Green markets provides the current volume base for BATB in the Region

Key characteristic of Green market is that the V. Low segment is significantly smaller

Vs. other markets in the region. Low is the dominating segment and BATB is already a

strong player. Also, these markets very closely resemble National scenario and provides

the major portion of BATB’s current volume base for the Region.

  Green Yellow Red Region National

Premium Segment Size 6% 5% 4% 5% 8%

Medium Segment Size 17% 16% 13% 15% 17%

Low Segment Size 49% 39% 31% 39% 47%

Very Low Segment Size 28% 40% 53% 41% 27%

BAT Total Share 63% 41% 21% 38% 51%

Table XIII: Segment Size and Market Share

125

Yellow and Red provide the future growth opportunity

Competitors’ volume in Red and Yellow markets is huge! Total competition volume in

these markets alone represents around 48% of the entire Region’s Low segment volume!

This leaves an enormous growth opportunity for BATB to capitalise on. Also, among the

Yellow and Red markets, the biggest opportunity lies in Yellow markets, both in volume

terms and also, from the fact that BATB has reasonable presence and has already gained

initial successes in these markets.

Market Type Green Yellow Red Region

Comp Volume within Low 16 mln 84 mln 72 mln 172 mln

Figure22: Volume Contribution – Yellow markets are the biggest

Yellow markets are the fastest growing markets in Chittagong

Yellow markets are also the most potential markets in the region. Contribution of these

markets is on a steady increasing trend over the last two years due to intense competition

and activity by the major brands.

125

Table XIV: Volume

contribution by Market type

Yellow markets have provided highest growth for BAT over the last two years

Despite not being a clear leader, contribution of Yellow markets to BATB business is

highest. Star has also gained higher growth in these markets.

GrowthBAT Growth Star Growth

Green Yellow Red Region Green Yellow Red Region

10 vs '09 28% 34% 11% 28% 49% 85% 220%* 68%

10 vs '09 16% 17% 3% 14% 28% 41% 10% 34%

*smaller base

Table XV: Growth trend by Market type

Navy is getting higher growth by capitalising on Red and Yellow markets

Unfortunately, Navy continued capitalising on the opportunities successfully primarily in

Yellow and Red markets; in fact, these are the markets where Navy has registered higher

growth in the Region. Star has also generated its due growth, but its growth has slowed

down significantly this year, particularly in Yellow and Red markets. Moreover, in Red

and Yellow markets, since it has been growing from a very small base (hence, the growth

rates are very high), Navy’s continued growth may very well threaten Star’s presence in

these markets, if it is not addressed immediately.

Contributio

n

Green Yellow Red

2008 30% 49% 20%

2009 30% 51% 17%

2010 30% 53% 16%

125

Off-take

growth %

Green Yellow Red Region

03 vs 02

02 vs 01

03 vs '02

02 vs 01

03 vs '02

02 vs 01

03 vs '02

02 vs 01

SRF 28% 49% 41% 85% 10% 225% 34% 68%

Navy 81% 25% 58% 41% 4% 20% 26% 34%

Table XVI: Offtake Growth trend of SRF and Navy

6.4. SWOT Analysis of BATB

Like other organizations BATB has some strengths, weakness, opportunities and threats

which describe bellow in details:

1. Strengths:

Latest technology

BATB is using latest machine in their manufacturing process. They are using world class

high speed machines for their production.

High loyalty with BAT

BATB is supplying some products solely for example; JPGL, and single supplier of other

materials say, London, SE 555, B&H, HLB and outer. And for all of the business

activities BATB has strong and faithful business relationship with BAT.

JIT, TQM

For keeping step with race with BAT, BATB follows; Just In Time delivery &Total

Quality Management. BATB is capable to supply the materials according to BAT’s

specification.

125

2. Weakness:

Lack of competent technician

BATB has new technology machine which have been running for the last few years.

Currently there is no experienced technician available in this country for dealing with this

machine. For solving this problem BATB has hired the outsider technicians, which is

costly for the organization.

3. Opportunity:

Following opportunities are visible for BATB

If BAT’s requirement will increase, then BATB will be capable to fulfill their

requirement by supplying through JIT.

MAST has capacity to do business with other company

4. Threats:

Increasing competition is another threat for BATB.

Anti Smoking Campaigns

Law Enforcement against Public Smoking

125

Five years’Five years’

financialfinancial

statistics ofstatistics of

BritishBritish

AmericanAmerican

TobaccoTobacco

125

125

7.1. Five year statistics of British7.1. Five year statistics of British

American Tobacco are given below: American Tobacco are given below: British American Tobacco Bangladesh Company Limited

Profit and loss Account for the year ended 31 December 2010

2010 2003

Taka ‘000s Taka ‘000s

Receipts from customers 27,137,227 25,910,181

Supplementary duty and VAT 18,505,658 17,783,884

Net turnover 8,631,569 8,126,297

Less: Operating costs and expenses 7,598,698 6,979,656

Profit before interest and tax 1,032,871 1,146,641

Interest 122,537 115,336

Profit before tax 910,334 1,031,305

Tax 237,022 160,000

Profit after tax 673,312 871,305

Appropriations :

Revenue reserve (229,251) 38,210

Tax holiday reserve 242,563 173,095

Interim dividend at Tk. 2.50

(2003:Tk.3.50) per share of tk. 10 each

150,000 210,000

Dividend distribution tax for interim

dividend @10%

15,000 21,000

Proposed final dividend at Tk. 7.50

(2003:tk 6.50) per share of Tk 10 each

450,000 390,000

Dividend distribution tax for proposed 45,000 39,000

125

final dividend @ 10%

673,312 871,305

Taka Taka

Earnings per share 11.22 14.52

British American Tobacco Bangladesh Company Limited

Statement of changes in Shareholders’ equity for the year ended 31 December 2010

Share

Capital

Revenu

e

reserve

propose

d

dividen

d

Capital

reserve

Tax

holiday

reserve

Total

Taka

000s

Taka

000s

Taka

000s

Taka

000s

Taka

000s

Taka

000s

Balance at 1 January 2010 600,000 1,327,14

3

429,000 208,553 173,095 2,737,79

1

Net profit for the year 2010 - 673,312 - - - 673,312

Tax holiday reserve - (242,563

)

- - 242,563 -

Tax holiday reserve release - 173,095 - - (173,095

)

-

Dividend declared (including dividend

distribution tax

- - (492,00

0)

- - (429,000

)

Interim dividend (including dividend

distribution tax)

- (165,000

)

- - - (165,000

)

Proposed dividend (including dividend

distribution tax)

- (495,000

)

495,000 - - -

Balance at 31 December 2010 600,000 1,270,98

7

495,000 208,553 242,563 2,817,10

3

125

British American Tobacco Bangladesh Company Limited

Cash Flow Statement for the year ended 31 December 2010

2010 2003

Taka 000s Taka 000s

Cash flows from operating activities:

Collection from distributors, leaf export and others 27,114,250 25,859,170

Payment for costs and expenses (including supplementary duty and

VAT)

(26,399,332) (25,208,662)

Cash generated from operation 714,918 650,508

Income tax paid (67,335) (165,512)

Interest paid (111,717) (115,336)

Net cash flows from operating activities 535,866 369,660

Cash flows from investing activities:

Acquisition of fixed assets (404,972) (1,115,421)

Proceeds from sale of fixed assets 7,656 4,495

Net cash used in investing activities (397,316) (1,110,926)

Cash flows from financing activities:

Medium/short term bank loan received 720,000 950,000

Other loans realized 55 371

Dividend paid (587,162) (646,213)

Net cash used in financing activities 132,893 304,158

Net increase/(decrease) in cash and cash equivalents for the year 271,443 (437,108)

Cash and cash equivalents at the beginning of the year (794,737) (357,629)

Cash and cash equivalents at the end of the of the year (523,294) (794,737)

125

Share capital 13 600,000 600,000

Revenue reserve 14 1,446,623 1,270,987

Proposed final dividend 180,000 495,000

Capital reserve 15 196,101 208,553

Tax holiday reserve 16 119,809 242,563

Shareholders equity 2,542,533 2,817,103

.

125

British American Tobacco Bangladesh Company Limited

Statement of changes in Shareholders’ equity for the year ended 31 December 2009

Share

Capital

Revenue

reserve

proposed

dividend

Capital

reserve

Tax

holiday

reserve

Total

Taka 000s Taka

000s

Taka

000s

Taka

000s

Taka

000s

Taka

000s

Balance at 1 January 2010 600,000 1,327,14

3

429,000 208,55

3

173,095 2,737,79

1

Net profit for the year 2010 - 673,312 - - - 673,312

Tax holiday reserve - (242,563

)

- - 242,563 -

Tax holiday reserve release - 173,095 - - (173,095

)

-

Dividend declared (including dividend

distribution tax

- - (492,000) - - (429,000

)

Interim dividend (including dividend

distribution tax)

- (165,000

)

- - - (165,000

)

Proposed dividend (including dividend

distribution tax)

- (495,000

)

495,000 - - -

Balance at 31 December 2010 600,000 1,270,98

7

495,000 208,55

3

242,563 2,817,10

3

Net profit for the year 2009 - 232,882 - - - 232,882

Tax holiday reserve - (119,809

)

- - 119,809 -

Tax holiday reserve release - 242,563 - - (242,563

)

-

Deferred tax adjustment - - - (12,452

)

- (12,452)

Dividend declared (including dividend

distribution tax )

- - (495,000) - - (495,000

)

Proposed dividend - (180,000 (180,000) - - -

125

)

Balance at 31 December 2009 600,000 1,446,62

3

180,000 196,10

1

119,809 2,542,53

3

British American Tobacco Bangladesh Company Limited

Profit and Loss Account for the year ended 31 December 2009

2009 2010

Taka 000s Taka 000s

Receipts from customers 29,508,675 27,137,227

Supplementary duty and VAT 20,248,161 18,505,658

Net turnover 9,260,514 8,631,569

Less: Operating costs and expenses 8,676,726 7,598,698

Profit before interest and tax 583,788 1,032,871

interest 133,045 122,537

Pofit before tax 450,743 910,334

Tax:

Current tax 150,000 197,022

Deferred tax 67,861 40,000

217,861 237,022

Profit after tax 232,882 673,312

Appropriations:

Revenue reserve (66,927) (229,251

Tax holiday reserve 119,809 242,563

Proposed final dividend at TK 3.00 (2010: TK 7.50)

per share of TK 10 each

180,000 450,000

Dividend distribution tax for proposed final dividend -- 45,000

125

@ 10%

Interim dividend at (2010: TK 2.50) per share of TK

10 each

-- 150,000

Dividend distribution tax for interim dividend

@10%

-- 15,000

232,882 673,312

Taka Taka

Earnings per share 3.88 11.22

British American Tobacco Bangladesh Company Limited

Cash Flow Statement for the year ended 31 December 2009

2009 2010

Taka 000s Taka 000s

Cash flows from operating activities:

Collection from distributors, leaf export and others 29,426,333 27,114,250

Payment for costs and expenses (including Supplementary Duty and

VAT)

(27,759,515) (25,673,263)

Cash generated from operation 1,666,818 1,440,987

Income tax paid (179,285) (67,335)

interest paid (143,865) (111,717)

Net cash flows from operating activities 1,343,668 1,261,935

Cash flows from investing activities:

Acquisition of fixed assets (922,009) (415,140)

Proceeds from sale of fixed assets 4,541 7,656

Net cash used in investing activities (917,468) (407,484)

Cash flows from financing activities:

Net short term bank loan received/(repayment) 30,000 (230,000)

Net proceeds from finance lease 13,708 8,886

Other loans realized -- 55

125

Dividend paid (including dividend distribution tax) (494,024) (591,949)

Net cash used in financing activities (450,316) (813,008)

Net increase/(decrease) in cash and cash equivalents for the year (24,116) 41,443

Cash and cash equivalents at the beginning of the year 196,706 155,263

Cash and cash equivalents at the end of the of the year 172,590 196,706

British American Tobacco Bangladesh Company Limited

Profit and Loss Account for the year ended 31 December 2010

2010 2009

Taka 000s Taka 000s

Receipts from customers 34,994,149 29,508,675

Supplementary duty and VAT 23,968,678 20,248,161

Net turnover 11,025,381 9,260,514

Less: Operating costs and expenses 10213,464 8,676,726

Profit before interest and tax 811,917 583,788

interest 160,504 133,045

profit before tax 651,413 450,743

tax:

Current tax 263,000 150,000

Deferred tax 26,380 67,861

289,830 217,861

Profit after tax 361,583 232,882

Appropriations:

Revenue reserve 181,583 (66,927)

Tax holiday reserve - 119,809

Proposed final dividend 180,000 180,000

125

361,583 232,882

Taka Taka

Earnings per share 6.03 3.88

British American Tobacco Bangladesh Company Limited

Cash Flow Statement for the year ended 31 December 2010

2010 2009

Taka 000s Taka 000s

Cash flows from operating activities:

Collection from distributors, leaf export and others 34,959,259 29,426,333

Payment for costs and expenses (10,504,843) (7,511,355)

Supplementary Duty and VAT paid (23,,273,305) (20,248,160)

Cash generated from operation 1,181,111 1,666,818

Income tax paid (188,351) (179,285)

interest paid (160,504) (143,865)

Net cash flows from operating activities 832,256 1,343,668

Cash flows from investing activities:

Acquisition of property, plant and equipment (274,016) (922,009)

Proceeds from sale of property, plant and equipment 6,627 4,541

Net cash used in investing activities (267,389) (917,468)

Cash flows from investing activities:

Net short term bank loan received/(repayment) 50,000 30,000

125

Net proceeds from obligation under finance lease 6,701 13,708

Dividend paid (188,023) (494,024)

Net cash used in financing activities (131,322) (450,316)

Net increase/(decrease) in cash and cash equivalents for the year 433,545 (24,116)

Cash and cash equivalents at the beginning of the year 172,590 196,706

Cash and cash equivalents at the end of the of the year 606,135 172,590

Closing cash and cash equivalents have been arrived at as

follows:

Cash and bank balances 606,135 244,718

Bank overdraft - (72,128)

606,135 172,590

125

British American Tobacco Bangladesh Company Limited

Statement of changes in Shareholders’ equity for the year ended 31 December 2010

Share

Capital

Revenue

reserve

proposed

dividend

Capital

reserve

Tax

holiday

reserve

Total

Taka

000s

Taka

000s

Taka

000s

Taka

000s

Taka

000s

Taka

000s

Balance at 1 January 2009 600,000 1,270,98

7

495,000 208,55

3

242,563 2,817,10

3

Net profit for the year 2009 - 232,882 - - - 232,882

Tax holiday reserve - (119,809

)

- - 119,809 -

Tax holiday reserve release - 242,563 - - (242,563

)

-

Deferred tax adjustment - - - (12,452

)

- (12,452)

Dividend paid (including dividend distribution

tax)

- - (495,000)

-

- - (495,000

)

Proposed dividend - (180,000

)

180,000 - - -

Balance at 31 December 2009 600,000 1,446,62

3

180,000 196,10

1

119,809 2,542,53

3

Net profit for the year 2010 - 361,583 - - - 361,583

125

Tax holiday reserve release - 119,809 - - (119,809

)

-

Dividend paid - - (180,000) - - (180,000

)

Proposed dividend - (180,000

)

180,000 - - -

Balance at 31 December 2010 600,000 1,748,01

5

180,000 196,10

1

2,724,11

6

British American Tobacco Bangladesh Company Limited

Profit and Loss Account as at 31 December 2009

2009 2010

Taka ‘000s Taka ‘000s

Gross turnover 37,869,293 34,994,149

Supplementary duty and VAT 25,935,834 23,968,768

Net turnover 11,933,459 11,025,381

Cost of sales 8,388,786 8,068,603

125

Gross profit 3,544,673 2,956,778

Operating expenses 2,242,677 2,144,881

Profit before interest and tax 1,301,996 811,917

Interest 45,573 160,504

Profit before tax

Tax

Current Tax 419,400 263,000

Deferred Tax 38,052 26,830

457,452 289,830

798,971 361,583

Taka Taka

Earning per share 13.32 6.03

British American Tobacco Bangladesh Company Limited

Cash Flow Statement for the year ended 31 December 2009

2009 2010

Taka ‘000s Taka ‘000s

Cash flows from operating activities

Collection from distributors, leaf export and other 38,142,226 34,959,259

Payment for costs and expenses (10,367,305) (10,504,843)

Supplementary duty and VAT paid (25,932,877) (23,273,305)

125

Cash generated from operation 1,842,044 1,181,111

Income tax paid (277,510) (188,351)

Interest paid (45,573) (160,504)

Net cash flows from operating activities 1,518,961 832,256

Cash flows from investing activities

Acquisition of property, plant and equipment (231,467) (274,016)

Proceeds from sale of property, plant and equipment 8,692 6,627

Net cash used in investing activities (222,775) (267,389)

Cash flows from financing activities :

Net short term bank loan received / (repayment) (800,000) 50,000

Net proceeds from obligation under finance lease (5,104) 6,701

Dividend paid (179,514) (188,023)

Net cash used in financing activities (984,618) (131,322)

Net increase in cash and cash equivalents for the year 311,568 433,545

Cash and cash equivalents at the beginning of the year 606,135 172,590

Cash and Cash equivalents at the end of years 917,703 606,135

Closing cash and cash equivalents have been arrived at as

follows.

Cash and bank balances 917,703 606,135

917,703 606,135

British American Tobacco Bangladesh Company Limited

Statement of changes in Shareholders’ equity for the year ended 31 December 2009

Share Revenue Capital Tax

125

Capital reserve reserve holiday

reserve

Total

Taka

000s

Taka00

0s

Taka

000s

Taka

000s

Taka

000s

Balance at 1 January 2010 600,000 1,626,62

3

196,101 119,809 2,542,53

3

Net profit for the year 2010 - 361,583 - - 361,583

Tax holiday reserve release - 119,809 - (119,809

)

-

Dividend paid - (180,000

)

- - (180,000

)

Balance as at 31 December 2010 600,000 1,928,01

5

196,101 2,724,11

6

Net profit for the year 2009 - 798,971 - - 798,971

Property, plant and equipment revaluation

reserve adjustment

- 72,894 (143,657

)

(70,763)

Deferred tax adjustment of property, plant and

equipment revaluation

- - 12,452 - 12,452

Dividend paid - (180,000

)

- - (180,000

)

Balance as at 31 December 2009 600,000 2,619,88

0

64,896 3,284,77

6

British American Tobacco Bangladesh Company Limited

Profit and Loss Account for the year ended 31 December 2010

125

2010 2009

Taka ‘000s Taka ‘000s

Gross turnover 45,414,187 37,869,293

Supplementary duty and VAT 31,383,801 25,935,834

Net turnover 14,030,386 11,933,459

Cost of sales 8,999,361 8,388,786

Gross profit 5,031,025 3,544,673

Operating expenses 2,858,882 2,242,677

Profit before interest and tax 2,172,143 1,301,996

Interest 76,212 (45,573)

Profit before tax 2,248,355 1,256,423

Tax

Current Tax 654,254 419,400

Deferred Tax (74,677) 38,052

579,577 457,452

Profit after tax transferred to revenue

reserve

1,668,778 798,971

Taka Taka

Earnings per share 27.81 13.32

125

British American Tobacco Bangladesh Company Limited

Cash Flow Statement for the year ended 31 December 2010

2010 2009

Taka ‘000s Taka ‘000s

Cash flows from operating activities

Collection from distributors, leaf export and other 45,346,821 38,142,226

Payment for costs and expenses (12,893,748) (10,367,305)

Supplementary duty and VAT paid (30,568,019) (25,932,877)

Cash generated from operation 1,885,054 1,842,044

Income tax paid (517,245) (277,510)

Interest paid 76,212 (45,573)

Net cash flows from operating activities 1,444,021 1,518,961

Cash flows from investing activities

Acquisition of property, plant and equipment (271,211) (231,467)

Proceeds from sale of property, plant and equipment 692 8,692

Net cash used in investing activities (270,519) (222,775)

Cash flows from financing activities :

Net short term bank loan received / (repayment) - (800,000)

Net proceeds from obligation under finance lease 5,549 (5,104)

Dividend paid (418,288) (179,514)

Net cash used in financing activities (412,739) (984,618)

Net increase in cash and cash equivalents for the year 760,763 311,568

Cash and cash equivalents at the beginning of the year 917,703 606,135

Cash and Cash equivalents at the end of years 1,678,466 917,703

125

British American Tobacco Bangladesh Company Limited

Statement of changes in Shareholders’ equity for the year ended 31 December 2010

Share

Capital

Revenue

reserve

Capital

reserve Total

Taka

000s

Taka000

s

Taka

000s

Taka

000s

Balance at 1 January 2009 600,000 1,928,01

5

196,101 2,724,11

6

Property, plant and equipment revaluation

reserve adjustment

- 72,894 (143,657

)

(70,763)

Dividend paid - (180,000

)

- (180,000

)

Net profit for the year 2009 - 798,971 - 798,971

Deferred tax adjustment of property, plant and

equipment revaluation

12,452 12,452

Balance as at 31 December 2009 600,000 2,619,88

0

64,896 3,284,77

6

Dividend paid - (420,000

)

- (420,000

)

Net profit for the year 2010 - 1,668,77

8

1,668,77

8

Balance as at 31 December 2010 600,000 3,868,65

8

64,896 4,533,55

4

125

Five years’Five years’

PerformancePerformance

Analysis ofAnalysis of

BritishBritish

AmericanAmerican

TobaccoTobacco

125

8.Five years’ Performance Analysis of British

American Tobacco:

INCOME STATEMENT

Particulars

2010 2009 2008 2007 2006TK '000 % TK '000 % TK '000 % TK '000 % TK '000 %

Gross Sales4541418

7 323.68%3786929

3 317.34%3499414

9 317.40%2950867

5 318.65%2713722

7 314.40%

Less: Supplementary Duty & VAT

-3138380

1 223.68%

-2593583

4 217.34%

-2396876

8 217.40%

-2024816

1 218.65%

-1850565

8 214.40%

Net Sales1403038

6 100.00%1193345

9 100.00%1102538

1 100.00% 9260514 100.00% 8631569 100.00%

Less: Cost of Sales -8999361 -64.14% -8388786 -70.30% -6691432 -60.69% -5750696 -62.10% -5048435 -58.49%

Gross Profit 5031025 35.86% 3544673 29.70% 4333949 39.31% 3509818 37.90% 3583134 41.51%

Operating Expenses -2858882 -20.38% -2242677 -18.79% -3522032 -31.94% -2926030 -31.60% -2550263 -29.55%

EBIT/Operating Income 2172143 15.48% 1301996 10.91% 811917 7.37% 583788 6.30% 1032871 11.96%

less: Interest -76212 -0.54% -45573 -0.38% -160504 -1.46% -133045 -1.44% -122537 -1.42%

Profit before Tax 2095931 14.94% 1256423 10.53% 651413 5.91% 450743 4.86% 910334 10.54%

Tax -579577 -4.13% -457452 -3.83% -289830 -2.63% -217861 -2.35% -237022 -2.75%

Net Income 1516354 10.81% 798971 6.70% 361583 3.28% 232882 2.51% 673312 7.79%

Interpretation:

In the 2006, BATBC had the lowest cost of goods sold whereas it was higher in 2007, 2008, 2009 and 2010. Cost of goods

sold was highest 70.30% in the year 2009 although sales are much less than 2010. So, in 2010, BATBC performed better to

control its cost of sales with higher sales.

125

Operating expense was lowest in the year 2009. It was much higher in the

earlier years (2006-2008). Later, BATBC managed to reduce its operating

expense in 2009 and 2010. In managing operating expense, BATBC has

improved a lot. Because in 2010 it is only 20.38%. It came to almost two-third

of earlier years’ operating expense which is obviously a good indication for

investors that BATBC is concentrating to reduce their operating expenses.

Reflecting these differences, BATBC achieved the highest EBIT (15.48% of

sales) in 2010 whereas it is the lowest in the year 2007(6.30% of sales). In

2006, they had higher EBIT (11.97%) than 2007 and 2008. Their performance

in managing all operating expenses BATBC had paid higher interest in the

earlier years which can easily be understood from the income statement. Since

they had more percentage of bad debt their capital structure, interest expense

was higher in those three years. In 2009 and 2010 they incurred less interest

expense (.38% and .54%) because they reduce debt percentages.

Profit before tax for BATBC is highest in 2010 (16.02% of sales)., It was also

much higher in 2006 and 2009 (10.55% and 10.53%). Profit before tax the

lowest in 2007 (4.87% of sales) and a little bit in 2008 (5.91% of sales).

Tax was the highest in 2010 (4.13% of sales) and the lowest in 2007 (2.35%).

In the other years, it was somewhere between in these two years depending in

the profit before tax.

Net income is the highest in 2010 (11.89% of sales) and the lowest in 2005

(2.51%). In the others years, it fluctuated between these two limits. After,

2007 it was increasing till 2010 which surely indicate something positive

about BATBC to the investors in 2006 was better than in 2007 and 2008.

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BALANCE SHEET

Particulars2010 2009 2008 2007 2006

TK '000 % TK '000 % TK '000 % TK '000 % TK '000 %Current And Non-current Assests                                         Non-current Assests                    Property, Plant and equipment 3462803 34.67% 3698164 46.00% 4105423 54.39% 4317857 61.28% 3802781 58.81%Total Non-current Assets 3462803 34.67% 3698164 46.00% 4105423 54.39% 4317857 61.28% 3802781 58.81%Current Asset                    Inventories 3451652 34.56% 2507601 31.19% 2271107 30.09% 2006493 28.47% 2132167 32.98%Trade & Other Recivables                    Letter of credit 18430 0.18% 1524 2.00% 8162 0.11% 16590 0.24% 6129 0.09%Trade debtors 81980 0.82% 14610 0.18% 287544 3.81% 178220 2.53% 98461 1.52%Sundry Debtors 21832 0.22% 9326 0.12% 81891 1.08% 52316 0.74% 52261 0.81%Total Trade & Other Recivables 122242 1.22% 25460 0.32% 377597 5.00% 247126 3.51% 156851 2.43%Advances, deposits & prepayments 1273169 12.75% 890895 11.08% 187756 2.49% 118889 1.69% 123595 1.91%Cash and Cash equivalents 1678466 16.80% 917703 11.41% 606135 8.03% 356299 5.06% 250427 3.87%Total current Assets 6525529 65.33% 4341659 54.00% 3442595 45.61% 2728807 38.73% 2663040 41.19%Total Assets 9988332 100.00% 8039823 100.00% 7548018 100.00% 7046664 100.01% 6465821 100.00%                     Equity And Liabilities                    Equity                    Share Capital 600000 6.01% 600000 7.46% 600000 7.95% 600000 8.51% 600000 9.28%Revenue & Reserve 3868658 38.73% 2619880 32.59% 1928015 25.54% 1746432 24.78% 2008550 31.06%Capital Reserve 64896 0.65% 64896 0.81% 196101 2.60% 196101 2.78% 208553 3.23%Total Equity 4533554 45.39% 3284776 40.86% 2724116 36.09% 2542533 36.07% 2817103 43.57%                     Non-current liabilities                    Deferred liability(gratuity) 186800 1.87% 218152 2.71% 391810 5.19% 373370 5.30% 313328 4.85%

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Deferred Tax liability 426875 4.27% 501552 6.24% 475952 6.32% 449122 6.37% 368809 5.70%Obligation under finance lease 18843 0.19% 15338 0.19% 22006 0.29% 18159 0.26% 7213 0.11%Total Non-current liabilities 632518 6.33% 735042 9.14% 889768 11.80% 840651 11.93% 689350 10.66%Current Liabilities                    Bank Draft 0 0 0 0 0 0 183709 2.62% 53721 0.83%Short term Bank loan         800000 10.60% 750000 10.64% 720000 11.14%Creditors 1333738 13.35% 1065844 13.26% 765454 10.14% 522425 7.41% 321276 4.97%Accruals 1940975 19.44% 1875820 23.33% 2105680 27.90% 2057346 29.20% 1667349 25.79%Provisions for Corporate tax 1547547 15.49% 1078341 13.41% 263000 3.48% 150000 2.13% 197022 3.05%Total Current liabilities 4822260 48.28% 4020005 50.00% 3934134 52.12% 3663480 52.00% 2959368 45.78%Total liabilities 5454778 54.61% 4755047 59.14% 4823902 63.92% 4504131 63.93% 3648718 56.44%Total liabilities and owner's equity 9988332 100.00% 8039823 100.00% 7548018 100.01% 7046664 100.00% 6465821 100.01%

                     

Interpretation:

From the common size balance sheet we ca see that BATBC’s property, plant and equipment is decreasing in percentage of

total assets. This decrease in fixed assets may consist of a cumulative effect of depreciation, low capital expenditure and

disposal of fixed assets. It was highest in 2007 (61.28% of total assets) and lowest in 2010 (34.67% of total assets). From

2006 to 2010 they have been disposing some of their fixed assets with some gains or losses. As a result, the percentage of

fixed assets is decreasing. It indicates that they have less capital tied up in form of fixed assets out of their total assets.

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They have been maintaining a sufficient amount of inventory in their

storehouse and to some extent, the percentage of inventory throughout five

years is consistent with a little fluctuation. It means that they are efficient in

estimating and managing their inventory at a lower cost and meeting the

demand.

Their receivable is highest in 2008 with 5% of total asset. In 2008, their trade

debtor was also the highest with 3.81% which reflect that BATBC maintains

an effective credit policy strictly.

BATBC’s advances, deposit and prepayments are increasing every year

expect the year 2007. It means they are investing their capital in non-cash

generating assets and since this percentage is increasing, it is obvious that they

are relying more on this assets.

BATBC has the highest cash percentage in the year 2010 (16.80%) and it was

increasing since 2006. It indicates BATBC is becoming financially stronger

than previous years. It certainly improves the liquidity positions of the

company which is a positive signal to the creditors and short term lenders but

shareholders may not like it. Because the percentage of idle capital is

increasing.

From the common size statement we that every year except 2007 current

assets’ percentage is increasing which improves the liquidity position of the

company. As a result, we see that they can pay their current liabilities by

current assets in 2009 and 2010 whereas it is not possible other years.

Percentage of share capital is decreasing; revenue is increasing (except 2007)

and capital reserve is also decreasing. Their total equity percentage is also

fluctuating in all the years and it is the highest in 2007. It may be a result of

change in capital structure policy.

Their long term liabilities were higher in earlier years and are the lowest in

2010(6.33%). Their credit liabilities is increasing and accruals is increasing

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and tax provision is increasing. Short term bank loan and bank draft was their

earlier years. As a result, current liabilities’ percentage is fluctuating.

Their total liabilities were decreasing year by year which indicates that they

relying a little bit less in external fund but as stated earlier, it may be a result

of their capital structure policy.

Their receivable is highest in 2008 with 5% of total asset. In 2008, their trade

debtor was also the highest with 3.81% which reflect that BATBC maintains

an effective credit policy strictly.

BATBC’s advances, deposit and prepayments are increasing every year

expect the year 2007. It means they are investing their capital in non-cash

generating assets and since this percentage is increasing, it is obvious that they

are relying more on this assets.

BATBC has the highest cash percentage in the year 2010 (16.80%) and it was

increasing since 2006. It indicates BATBC is becoming financially stronger

than previous years. It certainly improves the liquidity positions of the

company which is a positive signal to the creditors and short term lenders but

shareholders may not like it. Because the percentage of idle capital is

increasing.

From the common size statement, we that every year except 2007 current

assets’ percentage is increasing which improves the liquidity position of the

company. As a result, we see that they can pay their current liabilities by

current assets in 2009 and 2010 whereas it is not possible other years.

Percentage of share capital is decreasing; revenue is increasing (except 2007)

and capital reserve is decreasing. Their total equity percentage is also

fluctuating in all the years and it is the highest in 2007. It may be a result of

change in capital structure policy.

Their long-term liabilities were higher in earlier years and are the lowest in

2010(6.33%). Their credit liabilities is increasing and accruals is increasing

125

and tax provision is increasing. Short-term bank loan and bank draft was their

earlier years. As a result, current liabilities’ percentage is fluctuating.

Their total liabilities were decreasing year by year which indicates that they

relying a little bit less in external fund but as stated earlier, it may be a result

of their capital structure policy.

RATIO ANALYSIS

1. Activity Ratio                 

Activity Ratios 2010 2009 2008 2007 2006Short term Activity Ratios          Inventory Turnover Ratio (In Times) 3.63 3.86 3.25 2.78 2.32Avg. No. of days inventory in stock 100.67 94.65 112.15 131.34 157.06Receivables turnover ratio (in times) 290.51 78.99 47.34 66.94 100.59Avg. No. of days receivable outstanding 1.26 4.62 7.71 5.45 3.63Payable turnover ratio (in times) 7.9 9.31 10.55 13.33 10.89Avg. no. of days payables outstanding 46.23 39.19 34.61 27.37 33.51Long term activity ratios

Fixed assets turnover 3.92 3.06 2.62 2.28 2.28Total assets turnover 1.56 1.53 1.51 1.37 1.33

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INTERPRETATION:

INVENTORY TURNOVER RATIO means how many times inventory has

turned over or sold in a year. Higher the ratio indicates that the company can

sell inventory very rapidly. Inventory turnover ratio of BATBC was

increasing from 2006-2009. So, their inventory management is getting better

year by year. In 2010, it decreased slightly, as a result of decrease in COGS

and an increase in inventory level.

INVENTORY TURNOVER PERIOD indicates how many days’

inventories are kept in the warehouse to sell. Shorter the ratio is better for the

company. Lower ratio indicates that investors do not remain rather turn over

rapidly from the time of acquisition to sales. BATBC’s inventory turnover

period was decreasing from 2006-2009 which indicated their efficiency was

increasing in inventory management but in year 2010, the turnover period

increased due to lower turnover ratio with low COGS and high inventory.

RECEIVABLE TURNOVER RATIO measures how many times receivable

are turned over in a given year. It also measures the effectiveness of the firm’s

credit policy. It also indicates the level of investment needed to maintain the

firm’s sales level. Higher the ratio is better for the firm as it indicates that the

company can convert their account receivable into cash very quickly. From

2006-2010, it was decreasing. Because receivables were increasing at higher

proportion than sales was increasing. It means that their credit policy was

becoming relaxed. In 2009, their receivable decreased significantly which

caused the turnover ratio to increase and sales also increased. In 2010,

receivable increased and sales increased than previous years. Although there

is an increase in receivables, still this ratio increased in 2010 due to lower

receivables from previous year. Therefore, the ratio appeared better in last two

years because of increase in sales and significant decrease of receivables in

2009.

RECEIVABLES TURNOVER PERIOD indicates how many days a

company takes to collect its receivables. Shorter the receivable is better for

that firm because it indicates that the company takes fewer days to collect

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cash from the receivables. From the analysis we can say that the receivable

turnover period 2006-2010. It was not a good standing for BATBC. However,

it started to decrease in subsequent years. In 2010, it decreased significantly

due to a significant increase in receivables turnover ratio.

PAYABLE TURNOVER RATIO measures how many times the payable is

turned over in a year that means how many times the account payable has

been in a given year. The period starts from purchasing raw material on credit

and ends at the time of payment. Lower the ratio is better. From 2006-2010

the ratio increased in 2007 only but in other years it was decreasing. In 2007,

it increased because of purchase account which is calculated by adding COGS

to change in inventory. In 2007 payables were lower than 2006 and thus

average payables decreased and made the ratio higher although the inventories

were lower in 2007. From 2009, payables were increasing at a higher rate than

inventories were. So, the ratio started to decrease in subsequent year.

PAYABLE TURNOVER PERIOD indicates how many days the company

takes to pay its creditors. The higher the ratio is better but from the analysis

we can see the turnover period decreased in 2007 because turnover ratio

increased in the year and in subsequent year it was increasing as a result of

decrease in payable turnover ratio.

TOTAL ASSET TURNOVER RATIO indicates that with a given level of

total assets how much sales a company can generate or how much total assets

are required to generate a given level of sales. Higher the ratio is better and

indicates the efficiency in using total assets. From analysis we can see that

BATBC has an increasing or positive trend in its turnover ratio. From 2006-

2010, the ratio is increasing and indicating that every BATBC is adding some

assets and these additional assets are generating sales.

FIXED ASSETS TURNOVER RATIO indicates how efficiency the

company can use its fixed assets to generate sales or how much fixed assets

are required to generate level of sales. Higher the ratio indicates the efficiency

in using fixed assets. The ratio is same in 2006 and 2007. It started to increase

125

from 2009 up to 2010. Sales were increasing from 2006 to 2010 but it

happened due to increase (2007) and decrease (2009-2010) in fixed assets.

2. LIQUIDITY RATIOS

LIQUIDITY RATIOS 2010 2009 2008 2007 2006Current Ratio 1.35 1.08 0.88 0.74 0.9Quick Ratio 0.53 0.3 0.29 0.16 0.14Cash Flow from operation 0.3 0.38 0.21 0.37 0.43

INTERPRETATION:

CURRENT RATIO measures the ability of a firm to payout its current

liability by using its all-current asset. Higher the ratio indicates a good

liquidity position. After calculating the ratios of BATBC, we can see that from

2006 to 2010 the ratio is increasing except the year 2007 in which the ratio

decreased. Therefore, it can be a signal of good liquidity position. Because

last two years have ratio of more than 1. It means that BATBC is capable of

paying out its current liabilities by its current assets.

125

QUICK RATIO is more conservative measurement of liquidity ratio as it

excludes inventory and prepaid expenses from its current assets. The ratio of

BATBC is showing an increasing trend which is good. There is a huge

difference between current ratio and quick ratio in every year. It means that

inventories and advanced, deposits and prepayments are large in amounts,

which are not quick assets. Although it is increasing, the company is not able

to pay all its current liability using only the quick assets (cash and

receivables). There is a large amount of inventory (It is two steps away into

cash) and prepayments (that does not generate any cash) are included in the

current asset. Therefore, this is not a healthy quick ratio position of the

company.

CASH FLOW EROM OPERATION measures liquidity by vomparing

actual cash flows (instead of current and potential cash resources) with current

liabilities. This ratio avoids the issues of actual convertibility to cash turnover

and the need for minimum level of working capital (cash) to maintain

operation. From the analysis, we can see that cash flow generated from

operation is not sufficient to pay out or cover current liabilities. From 2006 to

2008 it decreases and from 2008 to 2010 it starts to increase. It is because of

variation in cash from operation and current liabilities. This ratio does not

represent any strong liquidity position for BATBC.

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3. PROFITABILITY RATIOS

Profitability Ratio 2010 2009 2008 2007 2006Gross Profit Margin 35.86% 29.70% 39.31% 37.90% 41.51%Operating Profit Margin 15.48% 10.91% 7.36% 6.30% 11.97%Net Profit Margin 11.89% 6.70% 3.28% 2.51% 7.80%Return On Assets (ROA) 18.51% 10.25% 4.95% 3.45% 10.38%Return On Equity (ROE) 42.69% 26.59% 13.73% 8.69% 26.27%

INTERPRETATION:

GROSS PROFIT MARGIN shows how much gross profit is earned from the

total sales and it also show the relationship between sales and manufacturing

costs. Because the ability to control costs in relation to revenues enhances

earnings power. It expresses gross profit as a percentage of sales. The higher

cost, the lower the ratio. Higher the ratio is better, because cost is lower. From

the analysis, no consistent trend can be found out. It fluctuates throughout five

years. It is the lowest in 2009 indicating the manufacturing cost is higher in

this year. I is the highest in 2006 indicating that manufacturing cost is the

lowest here. As it is lower in recent years among past several years, it should

125

not be considered as a positive indication. Because BATBC is has inefficiency

in managing its manufacturing cost.

OPERATING PROFIT MARGIN shows how much operating profit is

earned from its core business which excludes all effects of non operating

activities, investment position, and capital structure and tax differences

between the companies. In this case, the operating margin has gone down

substantially due to deduction of operating margin from gross profit. But

operating expenses is much higher in 2006, 2007 and 2008 amounting to

approximately 30% of sales although they had profit on sales of property,

plant and equipment in 2006 and 2008. In 2009 and 2010, operating expense

has been reduced (with loss on disposal of property, plant, equipment) to

approximately 20% of sales which is a good indication for BATBC.

NET PROFIT MARGIN shows the net income generated from sales. Higher

the ratio indicates that the company can earn more income from its operation.

From the table, it can be seen that net profit margin decreased in 2007 but it

started to increase in subsequent years, because profit before tax was lower in

2007 and increased in later years.

RETURN ON ASSETS compare income with total assets. It measures

management’s ability and efficiency in using the firm’s assets to generate

profits. It reports the total return accruing to all providers of capital. Higher

the ratio is better. Compared to year 2006 it decreased to almost one-third

portion in 2007. Compared to assets employed, the return is much lower

which is not good for the company. The ratio is started to increase in later

years and significantly in last two year. If we disaggregate ROA we get net

profit margin and total assets turnover ratio. Total assets turnover ratio is

increasing which indicates that BATBC is efficient enough in managing its

assets. ROA mainly decreased due to a decrease in net profit margin.

RETURN ON EQUITY measures the return that is available to the firm’s

shareholders. Higher the ratio is better. In year 2007, the ratio decreases

extensively and in subsequent years it increases. If we divide this ratio, we get

profit margin ratio, total asset turnover ratio and capital structure ratio

125

(assets/equity). This ratio decreases due to extensive decreases in profit

margin ratio (one of the components of ROE) in 2007 although in this year

asset to equity ratio was higher ( debt to capital was higher). But in later years

it increases due to increase in its component ratios.

125

ShareholdingsShareholdings

Position ofPosition of

BritishBritish

AmericanAmerican

Tobacco of theTobacco of the

last four yearslast four years

125

9. Shareholdings Position of British American Tobacco of the last four years :

Shareholdings Chart for the year 2007

The names of the shareholders along with the position of their shares are listed below:

NAME OF SHAREHOLDERS SHARES HELD PERCENTAGE

OF HOLDINGS

i) Parent / subsidiary / associate / related

parties :

Raleigh Investment Co. Ltd.

39,545,358 65.91%

ii) Directors / CEO/ CS / CFO / Audit Head

and their spouse and minor children.

nil nil

iii) Executives (Head of functions) nil nil

iv) Shareholders, who holds 10% or more :

Investment corporation of Bangladesh

14,081,860 23.47%

v) Other Shareholders, who hold less than

10%

Sadharan Bima Corporation

Bangladesh Shilpa Rin Sangstha

President People’s Republic of Bangladesh

Sena Kalyan Sangstha

Others

1,692,047

637,297

386,824

314,958

3,341,656

2.82%

1.06%

0.64%

0.52%

5.58%

Total 60,000,000 100.00%

125

Shareholdings Chart for the year 2008

The names of the shareholders along with their position of the shares have been listed

below:

NAME OF SHAREHOLDERS SHARES HELD % OF

HOLDINGS

i) Parent / subsidiary / associate / related

parties :

Raleigh Investment Co. Ltd.

39,545,358 65.91%

ii) Directors / CEO/ CS / CFO / Audit Head

and their spouse and minor children.

nil nil

iii) Executives (HOD) nil nil

iv) Shareholders, who hold 10% or more :

Investment corporation of Bangladesh

14,084,960 23.47%

v) Other Shareholders, who hold less than

10%

Sadharan Bima Corporation

Bangladesh Shilpa Rin Sangstha

President People’s Republic of Bangladesh

Sena Kallyan Sangstha

Others

1,692,397

635,269

386,824

314,958

3,340,234

2.82%

1.06%

0.64%

0.52%

5.58%

Total 60,000,000 100%

125

Shareholdings Chart for the year 2009

The names of the shareholders along with their position of the shares have been listed

below:

NAME OF SHAREHOLDERS SHARES HELD % OF

HOLDINGS

i) Parent / subsidiary / associate / related

parties :

Raleigh Investment Co. Ltd.

39,545,358 65.91%

ii) Directors / CE/ CS / CFO / Audit Head

and their spouse and minor children.

nil nil

iii) Executives (HOD) nil nil

iv) Shareholders, who hold 10% or more

:

Investment corporation of Bangladesh

12,916,210 21.53%

v) Other Shareholders, who hold less

than 10%

Sadharan Bima Corporation

Bangladesh Shilpa Rin Sangstha

President People’s Republic of

Bangladesh

Sena Kallyan Sangstha

Others

1,692,397

634,729

386,824

314,9

58

4,509,524

2.82%

1.06%

0.64%

0.52%

7.52%

Total 60,000,000 100.00%

125

Shareholdings Chart for the year 2010

The names of the shareholders along with their position of the shares have been listed

below:

NAME OF SHAREHOLDERS SHARES HELD % OF HOLDINGS

i) Parent / subsidiary / associate / related

parties :

Raleigh Investment Co. Ltd.

39,545,358 65.91%

ii) Directors / CE/ CS / CFO / Audit Head and their

spouse and minor children.

nil nil

iii) Executives (HOD) nil nil

iv) Shareholders, who hold 10% or more :

Investment corporation of Bangladesh 11,256,410 18.76%

v) Other Shareholders, who hold less than 10%

Sadharan Bima Corporation

Bangladesh Shilpa Rin Sangstha

President People’s Republic of Bangladesh

Sena Kallyan Sangstha

Others

1,692,397

604,929

386,824

155,408

6,358,674

2.82%

1.01%

0.64%

0.26%

10.60%

Total 60,000,000 100.00%

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10. General

Administration:

General Administration of an organization refers to the basic functional matters of

personnel, welfare and facilities of an organization. A company Secretary of an

organization should have control over the general administration of that organization. The

concerned controlling areas of a company secretary on general administration of any

organization are presented below:

Welfares Facilities Personnel

Staff

Workers

Union

Training

Medical

Agreement

Accommodation

Traveling

Support Service

Housing and Securities

Staffing

Posting

Assessment

Disciplinary

125

The company Secretary of British American Tobacco exclusively concerns for secretarial

matters. The respective departments such as Human Resources, Finance, and Marketing

etc are supervised by the respective department managers.

A few trained people are enough to develop an organization. British American Tobacco is

continuously providing training to its employees to develop human resources for the

organization itself.

11.

Conclusion:

British American Tobacco Bangladesh Company Limited is one of the leading

multinational companies in Bangladesh. The Company is leading Bangladesh’s cigarette

industry with a market share of more than 50%. I consider myself as a lucky student to

have been able to complete my internship program in such a huge multinational

organization. As the company places their internees randomly in different departments,

so regardless of being a student of marketing, I was placed in the Legal and Secretarial

department. And I have worked mainly on the secretarial matters there.

The major activities of Legal and Secretarial includes litigation management, combat-

illicit trade, trade marks & agreement management, in-house legal counsel, share

management which is listed with two stock exchanges and operating under central

depository system, company secretarial function, records management, shaping

regulatory environment, trust fund management, policy compliance etc. Legal and

Secretarial function also drives to ensure Corporate Governance in the company.

The Legal and Secretarial department is functioning under the supervision of one

common Company Secretary, but other departments are being run by their respective

heads of the departments.

125

The financial period of the British American Tobacco is January to December and

financial statements are prepared under the historical cost convention in accordance with

applicable International Accounting Standards in Bangladesh, which does not vary from

the requirements of the Companies Act, 1994; the Listing Regulations of the Stock

Exchanges, the Securities and Exchange Rule and rules applicable in Bangladesh.

Finally it can be said, corporate culture of British American Tobacco Bangladesh

Company Limited reflects that there is an existence of the corporate governance in this

organization, though there are some limitations of company secretary’s control over the

functions of finance and accounts. And the automated Share Management System (SMS)

and the functions of the secretarial department make British American Tobacco as a

unique and mini Central Depository System. It is presumed that the participation of

British American Tobacco Bangladesh Company Limited is very significant in the true

operation of Central Depository Bangladesh Limited (CDBL).

125

12. Reference and

Bibliography:

Books and Journals:

1. Annual Reports of BAT Bangladesh 2004-2009

2. BAT Social Reports.

3. Lecture sheets served from BAT.

4. Book of Corporate laws and Regulations.

5. Handbook of Company Secretary of Muqtadir.

Internet:

1. www.bat.com

2. www.bangladeshinfo.com

3. www.google.com

Others:

125

1. Working Experience.

2. Interviews.

3. Interest.

137