You are on page 1of 199

The internship report is on British American Tobacco Bangladesh, the market leader in

cigarette manufacturing companies in Bangladesh. It is thought to be an ideal


organization for the application of the knowledge that a graduate gains during his/her
four years study period. In addition, as BATB is a company with multifarious challenges
of tobacco manufacturing industry, a graduate can also apply various theories and can be
innovative. This report has been organized into two major separate sections. First the
organization part which is divided into four parts. In Part I, the mission, vision, history of
the company is discussed along with the functions of different departments. Based on
Porters five forces model Part II is prepared. SWOT analysis is done in Part III to identify
strengths, weakness, opportunity and threats. One of the major findings was the existing
law of Bangladesh regarding smoking. And in Part IV, Brand performance analysis was
done based on Boston Matrix along with sales trend for a few years.

The second part is the project part, which is divided into eight parts.
In Part I, the tasks those were assigned by company supervisor is discussed in short and
the experience that has been gathered is also discussed. Part two is the main project part,
which is the Financial Analysis. First of all, analysis of Common size income statement
and balance sheet is done and then ratio analysis and bankruptcy prediction is done. The
balance sheet and income statement of 1994-99, Common size Income Statement,
Balance Sheet, ratios and forecasted Income Statement and Balance Sheet are in
presented in Appendix I. The financial analysis explains BATB’s current and historical
performance in finance area. Some suggestions are also given to BATB so that BATB
can retain its leadership in the market. In the third part, ‘The Impact of CDS in the Share
Management of BATB’ is discussed but here the qualitative analysis is done because of
lack of information. In fourth part ‘Comparison of Standards of Business Conduct
between BAT and BATB’ is done and recommendation are made. Fifth part includes
‘Advertising and
Promotion Policy’. This is the updated version of Advertising and Promotion Policy
1988. In this Policy, a few standards of Business Conduct and Marketing Code of
Conduct of BATB and Section 294(B), Bangladesh Penal Code was incorporated. Sixth
part is about ‘Records Management’. This is a training module for the managers for
implementing Records Management thorough out BATB. Two projects were submitted
to Social Responsibility Managers as per his instruction- ‘Railway Station Waiting Room
Beautification’ and ‘Returning the Light of the Eyes of the Cataract Patients’. In the
Eighth part Checklist on Statutory requirements of DSE, CSE and SEC and checklist on
Companies ACT 1994 are presented which were prepared to ensure compliance with
those requirements and laws.

Company Overview
British American Tobacco Bangladesh (BATB) is one of the pioneer cigarette
manufacturers in the world. The company was formed at the turn of the 20th century
with the objective of establishing a worldwide business. 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.

British American Tobacco Bangladesh Company Limited is one of the


largest
private sector enterprises in Bangladesh, incorporated under the
Company’s
Act 1913 on 2nd February 1972. BAT has over the decades consistently
invested in Bangladesh market through Bangladesh Tobacco Company (BTC).
Thus
BTC has always been on the business of manufacturing and marketing
different
brands that meet the standards found everywhere in the world.

BAT has a plan to build their business in three ways:


? Organic growth in their existing markets
? Quick and effective entry into new markets and
? Potentially attractive acquisition, joint ventures or other
strategic alliances.

The merger of British American Tobacco with Rothmans International had


been
announced on 11th January 1999. This global merger was completed on 7th
June
1999. This brings together the number 2 and 4 players which will boast
a
combined volume exceeding 900 billion cigarettes around the world with
some
120,000 employees and a worldwide market share of 16 percent (Phillip
Morris
has a 17 percent share). The merger will help to attain in British
American
Tobacco’s vision of becoming the world’s leading International Tobacco
Company.

The British American Tobacco Group is one of the world’s leading


international manufacturers of cigarettes, marketing its products in
almost
every country worldwide. It is the clear leader in a
competitive and fast moving business. The group consists of four
tobacco
subsidiaries, which are given below:

? British American Tobacco Company Limited, which produces cigarettes


in over 45 countries for domestic and foreign markets in Europe,
Australasia, Latin America, Asia and Africa.
? Brown & Williamson Tobacco Corporation is the third largest tobacco
company in the US.
? British American Tobacco (Germany) GMBH is a leading cigarette
company in Germany.
? Souza Cruz S.A. is the market leader in Brazil and a world leader
in tobacco leaf export.

BAT subsidiaries operate in more than 90 countries employing around


173,000
people. Its aim is to grow its share in the world market and its
profitability within the share- by offering more brands against
competitors,
and by running its business efficiently and well. With its current
position
and plans, BAT is heading towards obtaining its objective, which is to
be
the world’s number one in tobacco industry.

British American Tobacco Co. Ltd.

British American Tobacco is the second largest Tobacco Company in the


world.
Based in London, UK, it operates in more than 50 countries with the
strength
of 100,000 employees and sells more than 250 brands in more than 180
markets
worldwide. Tracing its heritage back to a joint venture formed by the
Imperial Tobacco Company of the United Kingdom and The American Tobacco
Company of the United States in 1902, today's British American Tobacco
Company was born. Extent of operation of British American Tobacco
Company is
given below:

? America-Pacific (USA, Japan, South Korea)


? Asia-Pacific (China, Indo-China, Taiwan, South-East Asia,
Australasia)
? Europe (50 countries including Russia)
? Latin America (Central & South America, Mexico, Caribbean)
? Africa (More than 50 countries)
? MESCA (Middle East, South & Central Asia)
History of British American Tobacco : Where have we come from?

1902 : Imperial Tobacco Company of the United Kingdom and The


American
Tobacco Company of the United States formed a joint venture - the
‘British-American Tobacco Company Ltd’.
1910 : Operations extended to West Indies, India, Ceylon (Sri Lanka,
East
Africa, Java, Malaya
(Malaysia) and Nigeria.
1911: British American Tobacco listed on the London Stock Exchange.
1914 : Acquired Brazilian tobacco company -Souza Cruz.
1927 : Entered the US market through purchase of Brown & Williamson.
1929 : Rothmans listed on the London Stock Exchange.
1930s :Period of growth for both Rothmans International and British
American Tobacco.
1960s/70s/80s : Period of diversification for British American
Tobacco.
1976 : Group re-organised under new holding company - B.A.T.
Industries &
BATUKE
1990s: B.A.T. Industries focus on tobacco & financial services .
1993 : Rothmans emerges as pure tobacco company after reorganisation.
1994 : Reorganisation of 4 tobacco companies within B.A.T Industries.
1995 : Rothmans 100% owned by Richemont.
1998 : British American Tobacco plc listed as a FTSE 100 company on the
London Stock Exchange.
British American Tobacco Bangladesh

British American Tobacco Bangladesh Company Limited is one of the


largest
private sector enterprises in Bangladesh, incorporated under the
Company’s
Act 1913 on 2nd February 1972 and since than it has been the market
leader
in the country. Based in Dhaka the company has one packaging factory in
Dhaka and one leaf-processing factory in Kushtia. The company currently
employees more than 200 managers and 1300 employees. In its effort to
create
an international market for Bangladeshi leaf tobacco the Company has
been
exporting tobacco to markets in developed countries like UK, Germany,
Poland, Russia and New Zealand.

Vision:
To extend our leadership through world-class performance.

Mission:
? Double the net revenue by 2005
? Growing our share of the total tobacco market
? Dominating key identified segments

In its brand portfolio British American Tobacco Bangladesh has a wide


range
of cigarettes for different consumer segments. Starting from Benson &
Hedges
(Lights & Regular), which are currently imported from Europe to locally
produced International Brands such as State Express 555 and John Player
Gold
Leaf (Lights and Regular) and also National Brands like Capstan, Star
family
and Scissors family are members of the portfolio.

BATB strictly practices the industrial safety measures and is committed


to
conform to internationally accepted environmental standards. All of the
BATB
areas are equipped with sufficent equipment, gears and water supply.
BAT
group head quarters recognized BATB’s level of safety practices with
awards.
It has also received the prestigious Environmental, Health and Safety
Silver
Award in 1998 and 1999 in a row for no lost time accident in any part
of the
company.
British American Tobacco Bangladesh is involved in various types of
social
activities. It is proactively involved in afforestation program in the
rural
areas of the country since 1980’s. Every year it distributes amongst
the
farmer and other agencies over two million plants free of charge. Till
now
the company, has planted 32 million trees across the country. The
company
has been awarded Prime Minister Afforestation Award in 1993, Presidents
Award in Agriculture in 1975, Sports Journalist Award and FAO Award in
1998.
Besides this, the company is also involved in vegetable seed
multiplication
project, supports philanthropic organizations like Sandhani and other
Social
and Cultural groups.

At the end of 1993 the company adopted a change management program


called
MRP II, the acronym for Manufacturing Resource Planning, with the
objective
of becoming a world-class company with world-class systems, processes,
products, and people. The strategy for “Partnership Excellence Program”
is
based on a clear understanding on meeting world-class performance and
to
achieve MRP II Class A. BATB conducted series of training for the
vendors
and the result was very positive in terms of quality and delivery
improvements. Back in 1997, the organization was a Class C company. In
1999
it had achieved the status of Class B and in this year, 2000 the
company was
awarded Class A status which has made BATB the only member in BAT group
to
achieve A in four categories in one go. The categories are Strategic
Planning, People and Team, Planning and Controlling, New product
development, reducing lead-time. This year, the company is working on
getting class A in Continuous improvement

The parent company of BATB is called BAT Co or British American


Tobacco.
They are the major shareholder of BATB. The operations of BATB are done
according to BAT Co regulations and BAT Co looks after the management
of
BATB. BATB management is trained by BAT Co and on many occasions BAT Co
sends their own managers to work in BATB.

Different departments have different structure according to their


function
and responsibility. BAT maintains a modern organizational structure
headed
by Managing Director. Managing Director is the operational head and
national
sales manager. Head of every department carries out their functions
with the
help of line managers. Other positions of the organogram are directors,
regional manager, secretary, assistant manager, area manager, territory
officer, supervisor and other staffs. It has seven departments with two
supporting departments.

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


overall
activities of the company. The Board of Directors is responsible for
protecting the rights and interests of all shareholders and are held
accountable for the overall management of the entity.

The British American Tobacco Bangladesh Board consists of eight


Directors,
comprising the Non-Executive Chairman, five other Non-Executive
Directors
and three executive Director which includes the Managing Director. The
key
functions of the Managing Director are clearly defined.

The Board meets at least 6 times a year and makes decisions on key
matters.
The Board is responsible for the overall system of internal control for
the
company and for reviewing the effectiveness of these controls. The
system is
designed to manage risks that may impede the achievement of the
company’s
business objectives rather than to eliminate these risks.

Responsibilities for implementing the company’s strategy and day to day


operations are delegated to the Executive Committee, which meets
monthly.
The Executive Committee is chaired by the Managing Director. The other
members include the Deputy Managing Director and the functional heads
of
Human Resources, Corporate and Regulatory Affairs, Operations, Leaf,
Brand
Marketing, Trade Marketing & Distribution, Finance and Information
Technology of whom three are Executive Directors.

The Board Committees are namely – Audit Committee & Board Compensation
Committee, each of its own terms of reference play an important role in
executing the responsibility of the Board.
Appendix-II Figure 1: Board of Directors
Appendix-II Figure 2: Executive Committee
History of British American Tobacco Bangladesh
British American Tobacco Bangladesh Company Limited is a subsidiary of
British American Tobacco and is one of the 68 countries in which BAT
has
manufacturing plants. It is one of the oldest and largest multinational
companies operating in Bangladesh.

BATB started its journey as Imperial Tobacco Company Limited in the


then
undivided India in 1910. Its head office was at Calcutta and in 1926 a
branch office was made in the Sales Depot of Moulovi Bazar and
cigarettes
were made in Carreras Ltd., Mungair, Calcutta. Imperial and Carreras
merged
into a single company in 1943. At that time it used to produce Scissors
105,
Passing Show, State Express 999 and Gold Leaf, locally. It also used to
import State Express 555 from UK. Later on Imperial Tobacco Company
Limited
took up the name of British American Tobacco.

After the partition of India, Pakistan Tobacco Company was established


in
1949 to meet the demand for cigarettes of whole of Pakistan. The
monthly
volume of sales in the former East Pakistan soon reached 40 million.
The
population of Dhaka was at that time a mere 0.25 million.. All the
local
cigarettes i.e. Capstan, Wills, Scissors, Passing show, Berkeley and
Tiger
were manufactured in Mouripur Factory, Karachi, West Pakistan. And
Tiger
were manufactured in Mouripur Factory, Karachi, West Pakistan. And sent
to
Bangladesh and sold there. Ardath F.T., The Three Churchman No. 1,
Player’s
No. 2, Senior Service, Craven ‘A’ F.T., The Three Castles”, Gold Flake,
Player’s Navy Cut, State were soon added to the list of top brands of
cigarettes available along side the Express F.T. 999,State Express
555.These
cigarettes used to come directly from London. the competition brands
which
were available then, were Abdullah ,Imperial preference, Cavander’s
STD,
Virginia No. 10, Du-Maurrior F.T., De-Luxe Tenor, Orient, Montes,
Gold
Link & Jeep.

The sales Depot was separated from the cigarettes godown and shifted in
1954
to Omar Sons Building, Motijheel-now known as Red Cross Chamber. About
that
time there were about 2 or 3 buildings in whole of Motijheel Commercial
Area. In1965, the Sales Depot was upgraded to the status of the Branch
Office and was shifted to ALICO Building, 18-20 Motijheel Commercial
Area,
Dhaka. The building (after the emergence of Bangladesh became the Head
Office Of Bangladesh Tobacco Company Limited) was occupied by BATB till
1992.

26.18 acres of private land was requisitioned and acquisition between


1952-54 in Vhatiary, Fouzdarhat Area, Chittagong for PTC by the
Government
of the then East Pakistan . The first cigarette factory set up on the
location, produced its first cigarettes which were King Stork in 10ss,
in
March 1954.

The second factory was set up in 1965, 30th June in Dhaka on a16 acres
of
land on a 90 years lease that was purchased from the Cantonment Board.
Following the 1965 war with India, the import of `Tendu, leaves which
were
used as wrappers for hand made biris, was banned. This gave rise to
huge
demand for paper wrapped machine-made-cigarettes and a large number of
cigarette Factories-in all about 19- were set up. Initially Capstan,
Bristol, Scissors, Star were manufactured in Dhaka Factory and the
Chittagong Factory produced Star and Scissors. The monthly sale of
cigarettes in East Pakistan in the 1970’s reached 1200 million while
the
combined production capacity of the two Factories at Dhaka &
Chittagong,
was only 900 million.

The East Pakistan became embroiled in the struggle for achieving full
Provincial Autonomy in 1970 and this eventually lead to the civil war
and
emergence of independent Bangladesh on 16th in December, 1971. After
Bangladesh came into being , all properties of Pakistan Tobacco Company
Limited (PTC) were declared as “ abandoned property” because the owners
were
citizens of a state which was engaged in war with Bangladesh after 25th
March, 1971 and the ownership of the Company vested in the Government
under
the Bangladesh Abandoned Property (Control Management and Disposal)
Order,
1972 (know as P. O. 16).

The new infant Government allowed the local and the expatriate British
Management of the former PTC to continue to operate the Company and the
reconstitution process was set in motion in 1972 by BAT.

The Marketing Department afterwards became no more than an allotment


centre.
Its role became limited to the allotment of whatever cigarettes that
could
be produced in the two Cigarettes Factories, to the Distributors. There
was
an acute shortage of skilled man power (the skilled employees had left
for
Pakistan), tobacco, Wrapping materials, spare parts and foreign
currency.

All these except the foreign currency used to come from West Pakistan.
BTC
after exhaustion of the pre-independence stocks of tobacco and the
Wrapping
materials, ran hand to mouth for a few years.

After independence of Bangladesh, import of hand-made biris and ‘Tendu`


leaves as wrapppers for locally made biris, were allowed from India and
low-priced paper wrapped cigarettes rapidly lost both grounds and the
volume
to biris due largely to economic hardship, scarcity of cigarettes-for
want
of tobacco, wrapping materials and spare parts for the running of the
Mollins Mark V makers and the M 2 and the Duplex packers. The sales
volume
came down to 550 million per month in 1972-73 from its early peak of
1,200
million of an year ago. As the Company fell into great crisis of
foreign
exchange along with management and technical support, the Company was
compelled to develop its own resources particularly the raw inputs.

The proposed name of the company to be incorporated in Bangladesh to


succeed
PTC, was Tobacco Company Limited (TC) and the Company operated under
this
name till 2.2.1972. TC sought permission from the Ministry of Finance
on 28
December, 1971 and the Ministry of Industries (the Ministry) on 30
December,
1971 for permission to operate the bank accounts which were in the name
of
Pakistan Tobacco Company Limited (PTC).

The majority shareholders of British American Tobacco Company Limited


of
former PTC proposed to the Government, on 24 January 1972, that BAT be
allowed to reconstitute Bangladesh Tobacco Company Limited as a joint
venture company. The UK shareholders will have 2/3rd interest and the
Government a 1/3rd interest in the Company. The business, assets,
liabilities of the former PCT will be vested in BTC by authority of the
Government. On 25.1.72 the proposal was granted.
The Bangladesh Tobacco Company Limited (BTC) was incorporated on
2.2.1972 as
a private limited company with only three shareholders of Tk. 10.00
each-2
from BAT and 1 from the Govt.

On receipt of the Ministry of Industries ’letter dated 11th October,


1973
vesting the right of the assets of the former Pakistan Tobacco Company
Limited located in Bangladesh into Bangladesh Tobacco Company Limited
and
the Directors capitalized those assets to the extent of Tk. 4,49,99,970
which added to Tk 30 capital already subscribed, amounted to Tk.
4,50,00,000. The first AGM was held on 27th August, 1974 in Motijheel.

As BTC has always been a part of BAT and over the years BTC has proved
to be
the perfect representative of BAT by manufacturing and marketing
quality
brands of cigarettes which met the standards of BAT. In recognition to
its
commitment towards BAT and the important role it played on BAT group,
BTC
was later named as British American Tobacco Bangladesh Company Limited
(BATB).

The composition of shareholders of BATB as at 31st December, 1999 were


as
follows:
Shareholders Total No. of Shares Holding %
1. Raleigh Investment Co., UK 26,364,000 shares 65.91
2. Investment Corporation of Bangladesh (ICB) 10,864,000 shares
27.16
3. Sadharan Bima Corporation (SBC) 1,136,000 shares 2.84
4. Bangladesh Shilpa Rin Shangstha (BSRS) 332,000 shares 0.83
5. Sena Kalyan Shangstha (SKS) 208,000 shares 0.65
6. Government of Bangladesh 260,000 shares 0.52
7. Other Bangladeshi Shareholders 836,000 shares 2.09
40,000,000 shares 100.00
Table 1: The Composition of Shareholders in 1999

Structure of BATB

BATB is a process-based organization, instead of having isolated


departments
the company has some support functions and some core functions.
Typically
the structure of the organization can be explained through the supply
chain.
In BATB it is called seed to smoke as the supply chain process.
Mission of supply cahin is - To be the most cometitive supply chain in
terms of cost qulaity
and EH&S practices.
The core functions are:
? Leaf
? Production
? Brand Marketing
? Trade Marketing
? CORA.
Along with the core functions there are some support functions such as
? HR
? IT
? Finance
CORE Functions

Leaf Operations
Mission:
To exceed costomet expectations by providing quaity tobacco at
competiotive
price.

The leaf department of BATB is responsible for Tobacco Growing,


Production &
Procuremnt, Green Leaf threshing and pacaking, leaf bending, leaf
export
and import . BTAB procures almost 80% of their leaf from their own
cultivation. The Leaf department is involved in cultivating and
purchasing
flue-cured tobacco. BAT does not own farmland nor does it employ
farmers
directly to produce the tobacco it uses for cigarette production.
Instead,
each year the company registers thousands of farmers along with their
land,
to grow and cultivate tobacco crop. The company provides seed,
fertilizer,
and other loans to the farmers throughout the crop season to ensure
quality
growth. At the end of the season BAT buys fixed quantities of tobacco
from
the farmers, paying rates based on the grade of the crop. Tobacco
growing
and buying activities is conducted throughout the country. The two main
areas are Kushtia Leaf Division and Chittagong Development Area.

Green Leaf Threshing Plant (GLT)


The tobacco crop is processed at the Green Leaf Threshing (GLT) plant
in
Kushtia. The purpose of the GLT is to convert the tobacco into a form
suitable for cigarette production. The tobacco is brought to a uniform
moisture level and temperature. Initial blending of the different
grades of
tobacco takes place at the GLT. The processed tobacco is sized and
packed
before delivery to Dhaka factory.

The Leaf department makes an estimate of the quantity of tobacco that


BAT
will need to purchase for the based on the input of the Sales &
Operation
Planning (SOP) committee. Based on these estimates the number of
farmers and
the amount of land, which will have to be registered, are fixed.

The leaf season begins in the month of July. At this time tobacco
seedbeds
are prepared to generate the seed that will be distributed to the
farmers
for cultivation. Plantation in the registered lands occurs during
October
and November. BAT provides the necessary fertilizer, pesticides, and
other
loans to ensure proper growth for the crop. Farmers use their own
irrigation
and plowing methodology to prepare the land. Harvesting and curing
begins at
the end of January and continues till March. Almost 100% of raw tobacco
is
'flue' cured.

The buying process begins in mid-February and continues till the end of
May.
The farmers bring in their cured tobacco in the form of bales to the
buying
courts in the depots. The tobacco is graded according to set criteria
and
purchased at these sites. All relevant information is marked on the
bales
and stored at the depots till shipment to the GLT.

At the beginning of the season the various depots distribute


registration
forms to the farmers in its region. BAT strives to maintain an ongoing
relationship with its registered farmers. Information on each farmer is
maintained at the depots through in-house database software called
Integrated Leaf System (ILS). On the basis of these records a decision
is
made on whether to register the farmer for the following crop season.

Buying courts are located at the depots. The farmers bring their
tobacco to
these sites in the form of bales on a specific day and time. At the
buying
courts the bales are graded, priced and weighed. After the tobacco is
bought
and graded it is stored in the depot godowns; each bale identified with
its
grade, weight, and price. These bales are stored in the depots and
moved to
the GLT when needed for processing.

Tobacco processing
The Green Leaf Threshing Plant in Kushtia is used to treat the raw
tobacco
and convert it to a form suitable for use in cigarette production. It
is a
seasonal factory operating for six months of the year, on two shifts
per
day. The remainder of the year is used to clean the machinery and make
modifications as necessary.

Each tobacco leaf that is processed at the GLT is separated into four
components- tip, lamina, stem, and by product. At the beginning of the
process flow, tips of the tobacco leaves are cut off by a calibrated
cutter.
The leaves are then passed through the sand reel where foreign
materials and
dirt are separated. The tobacco leaves are then proceeds to the
threshing
line to separate the lamina from the stem by hitting the leaves. The
separated lamina are then dried and the re-dried lamina is then packed
at a
temperature of about 43 Degrees Centigrade with approximately 12%
moisture
content for storage. The separated stem, meanwhile, moves to the stem
dryer
where it is re-dried for storage purposes and then sent to the stem
packer.
The moisture content level of the stem is brought to around 12% at the
time
of storage. By-products are sold to the outside contractors.

The GLT's main objectives are as follows:


? Separate Lamina from Stem
? Retain physical and chemical properties of the leaf.
? Removal of foreign materials.
? Conversion of bale to packed dry product capable of long storage.

After the tobacco is stored in the depots, it is brought to the godown


at
the GLT for processing. The GLT godown has a capacity of around 500
tons.
The different 'buying' grades of tobacco are combined in fixed
proportions
to create 'packing' grades. The packing grades are further blended at
Dhaka
factory. This final blend goes into the different brands of cigarettes.

Appendix II- Figure 3: Leaf Organogram


Figure: 3 GLT Process Flow Line

Fig 4: Tobacco Procurement and Processing flow


`
Exports
Although the primary objective of leaf department is to ensure
continuous
supply of tobacco, leaves to export in a highly competitive world
market as
well. Exports of tobacco during 1997 generated more than two million
dollars, with sales being made to UK, Hungary, New Zealand, Egypt, and
the
USA. In the year 2000 BATB made a profit of $ 309,506 from leaf
exports.

The various Advantages of leaf export are:


? Exports earn foreign exchange
? Exports help in attain favorable attitudes of Govt. and Public
? Helps to improve overall domestic quality
? Preferential corporate tax on export profit
? Inter group trading
? Handling of BAT and international Leaf dealers enriches Knowledge
and
awareness.

Future challenges:
The cigarette market is growing and in order to sustain the current
pricing
of the products, more and more imported tobacco grades are being
substituted
by locally grown tobacco grades. This means that Leaf Department has to
manage the future challenges to sustain competitive advantage and in
order
to do that following program have been identified:
• Improvement of barn capacity. This means that barn efficiency &
utilization has to be increased through technological innovation but
without
increasing the cost of manufacturing Barn.
• Green Leaf threshing plant is currently over manned. Employee
productivity
has to be improved so that tobacco-processing cost becomes competitive.
• Striving for continuous quality improvement is essential in order to
substitute the imported grade by local grades for the premium brands.
• Leaf department has to ensure that the buying cost of the tobacco
should
not increase compare to the current buying pricing policy. But this
does not
mean that the farmer will lose any money in the overall process. In
order to
achieve that Leaf has to ensure that the overall growing yield has to
increase significantly.

Manufacturing

Mission
We delight our customers with superior quality product through
flexible
operations

In order to support the mission, Production department is performing


the
following activities successfully:
? Support brand portfolio / new product launch.
? Availability/product harmonization.
? Quality/ meet international standards.
? System/ ISO 9002.
? Low cost producer.
? Competitive position of EH&S in the group (Achieved 3.4 on scale
4.0).

Backward vertical integration:


BATB requires most of its suppliers to deliver raw materials just in
time
for using on its production line. KANBAN system for inventory control
for
domestically produced or converted raw material is a benchmark within
British American Tobacco’s Operating companies. Only one-day stocks of
raw
materials are available in the factory premises. This reduction of
inventory
happened only for the long term contract with the suppliers for a
period of
3 years, where price are settled for that period and suppliers are well
aware of sales forecast and manufacturing plan for next 18 months
through
direct link with BATB’s computer terminals. Technical helps are always
extended to the suppliers in case they ask for it.
Appendix II- Figure: 4: Production Department

The prized tobacco from the GLT comes to the DF for further processing
according to need. The first stage of production is known as PMD. 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 PMD(Primary Manufacturing Division ) process


The Primary Manufacturing Department (PMD) is responsible for further
conditioning of the domestic and imported tobacco to make it ready for
cigarette 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 bales into "Rag" suitable for use in
cigarettes, and bring tobacco to an uniform temperature and moisture.

Threshed lamina and stem are not of the size suitable for cigarette
preparation. To make them suitable for cigarette making the following
operation have to be performed.

? The bales of lamina which comes in a compressed form. Have to be


'opened'.
? Lamina has to be cut to a size suitable for cigarette making.
? Before cutting, the moisture content has to be raised to be a
level, which is required so that excessive dust is not produced.
? After cutting, the moisture content has to be raised to a level,
which is required for cigarette making.
? After the dryer stage, the temperature of the tobacco is bit
higher. It has to be cooled down.
? The moisture content of the stem has to be increased to a level,
which is required for cutter stage.
? Stems are to be cut to a very thin size.
? The 'fill value' of the cut stem has to be increased by applying
sudden High Velocity Steam (in the HVST. Stage)
? After the HVST. Cut stem has to be dried to a level required for
cigarette making.
? Apart from the above 'normal' functions, casing has to be added to
some Air Cured Tobacco to increase the sugar content.

From the final product bin it goes to the SMD( Secondary Manufacturing
Division) for further manufacturing.

Figure 5 : PMD Process


SMD (Secondary Manufacturing Division)
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.

There are three technologies that are linked with cigarette


manufacturing.

SPU ( Secondary production Unit):


This most advanced in terms of cigarette making technology .It
producess
8000 thousaunds cigarette sticks per minute. This technology is smainly
used
for hindge lid packing. This is absolutely a hardlinked machine which
means
there is no use of mannual labour.
Nested Cell:
Nested Cell is the second best in terms of technology. It producess
5000
thousaunds cigarette sticks per minute. This technology is smainly used
for
Soft cup pacaking
Conventional cell:
Conventional cell can ake use of both hindge lid and soft cup. It
produces
about 250 cigarettes per minute.

Shipping
The finished cigarette stock is brought in from the holding room at the
Secondary Manufacturing Department and kept at the shipping prior to
delivery. The godown has a capacity of 260 million cigarettes. Trucks
belong
to outside contractors arrive daily to deliver the stock to the various
Regional Trade Marketing Offices (RTMOs) around the country. The
marketing
department issues a daily shipping program specifying the stock that
needs
to be allocated. This information is processed by software to generate
a
truck allocation scheme. Trucks going to Dhaka carry 2 million
cigarettes
per trip and those going outside Dhaka carry 3 million cigarettes per
trip.
Vat documents are sent along with the trucks.

Trade Marketing & Distribution Department

TM&D Mission:
To reach our target consumers in the most efficient and effective way
by
becoming the benchmark supplier to the trade within strategic channels
in
every market place where we do business.

The Trade Marketing and Distribution department identifies the areas in


which best practice must be achieved to enable markets to meet the
Trade
Marketing and Distribution objectives, which are:

? Create an efficient entry barrier against international


competition.
? Improve our benchmark supplier status to the trade pioneer among
all FMCG companies.

Trade Marketing & Distribution Department has the responsibility to


reach
the ultimate consumers through trade, e.g. Retailer. The emphasis is
not
only on what volume is being sold to the retailers (Sell-In), but also
on
the volume sold out to consumers (Sell-Out). The mission of TM&D is to
reach the target consumers in the most efficient and effective manner
by
becoming the “Benchmark Supplier” to the trade within strategic
channels in
every market where they do business.”

The Marketing Department and the Production Department activities are


highly
correlated. According to the needs of the Marketing Department,
Production
Department carries out the cigarette manufacturing. The marketing
Department
forecasts the sales volume of the different brand cigarettes for the
coming
business year and based on this, prepare a marketing plan known as the
Sales
Operational Plan (SOP). According to the Plan, Marketing Department
communicates the brand wise sales target for each month to the
Production
Department. Based on the SOP, Production Department sets its production
schedule. The inventories of cigarettes are also evaluated at this
stage to
find out the actual output to be produced.

The British American Tobacco Bangladesh has a well-defined mission for


the
marketing and distribution of products, which is to reach the target
consumer in the most efficient manner by becoming the benchmark
supplier to
the trade within the strategic channels in every market where the
company
operates. A well-organized trade marketing team is working continuously
to
make this mission successful; furthermore the whole country has been
divided
into six regions to perform the marketing activities efficiently.
Moreover
the regions are further spitted into 11 areas. Right now there are 6
regional managers, 12 area managers and 42 territory officers working
under
the Head of Trade Marketing. At present, there are 62 distributors
involved
with BATB who are responsible to make the products of the company
available
throughout the country.

TRADE MARKETING ORGANOGRAM (REGIONS)


Figure 6 : Trade Marketing Organogram
Appendix II- Figure 5: Trade Marketing Organogram
Distribution Channel

The Company sells their product to the distributors; in turn the


distributors sell to the retailers and cash & carry as well. Cash &
carry
are nothing but wholesalers. Cash & Carry are needed because at times
the
retailers may not have adequate funds to buy the required quantity.
Figure 7: Distribution Process

Regional Go-down: There are five regional go-downs 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.
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.

Distributors: The financial standing of the distributors, their


reputation
in the local region, and prior related business experience are some of
the
key criteria examined when a distributor is selected. The regional
manager,
supply chain manager and head of trade marketing prior to making a
decision
check the evaluation forms and field recommendations. After a
distributor
is selected, they issue a ‘letter of intent’ that specifies certain
requirements of the company. After these requirements are
satisfactorily
fulfilled, a formal ‘letter of appointment’ is issued.

Distributors buy fixed volumes of cigarettes from BATB at a set price


and
resell to the retailers. The company closely monitors their activities
and
performance and ensures them to operate in the market at the highest
standard. Distributors follow a work routine set by the company,
generating
paper work, and reports as required. Distributors are assigned a
certain
geographic region within which they sell their cigarettes. Different
routes
are assigned within the region that helps to sell their stock.
Vehicles
owned and operated by the distributors are responsible for carrying
stock
along these routes and selling it to the retailers.

Retail Outlet Classification

The British American Tobacco Bangladesh has classified all the retail
outlets into three categories, these are - Convenience, Grocery and
HoReCa

Convenience Outlet: All shops where consumers generally go without any


purchasing intention fall in this category. The consumers like to buy
product on impulse from this sort of outlets. These outlets generally
maintain a limited product range and do not offer flexibility in
prices.

Grocery: These are the outlets where consumers visit on a regular basis
with
a purchasing intention. They generally make a list of items before they
will
visit these sorts of outlets. These outlets typically offer variety in
terms
of product range and also flexibility in prices.

HoReCa: Shops like hotels, restaurants, and cafes are considered in


this
category. The prime characteristic of a HoReCa is that the shops must
have a
seating arrangement. It is assumed that consumers visit those shops
with the
intention to spend some time. These outlets range from small roadside
cafes
with seating arrangements to luxurious restaurants of fast food
outlets.

CORA- Corporate Regulatory Affairs

CORA is the department which is responsible for upholding the corporate


image of the company. Since BAT is in a controversial industry it is
very
much important for it to manage all its stakeholders as well as to
manage
the media. All these are done by CORA. It also looks after the legal
aspects and taxation of BATB. CORA carries out different activites
such as
:

? Managing taxation and excise


? Looking after stakeholders interest
? Correspondence with media
? Maintaining government lobby
? Working towards development in the field of mal nourishment,
poverty and cultural adoption
? Discouraging under aged i.e. under 18 smoking
? Managing external and internal communication
? Publicity management
? Selling the idea of socially responsible corporate business
practices inside the organization
? Looking after the legal issues of BATB

Through projects and initiatives around the world BAT is committed to


help
to protect and improve the enviorment, support local employemnt and
tertiarry education, promote artistic and cultural activities and
assist
with disaster aid.

The Corporate & Regulatory Affairs Department (CORA) of the company is


dedicated towards achieving the company’s fifth strategic imperative,
which
is: To be a responsible company in an industry seen as controversial
Appendix II-Figure 6: CORA Organogram
Globalization and increased scrutiny of businesses by consumers and the
general public mean that companies are today judged not only by the
quality
of products that they produce but also the manner in which they carry
out
their business activities. It is therefore, an imperative that
corporate
bodies are responsible not just in their businesses but also in the
social
domain that they operate in. British American Tobacco’s philosophy has
been
to be conscious corporate citizens wherever they operate, respectful of
local cultures

The company recognizes that it manufactures a product, which carries


significant risks. In this light, the company believes that only
informed
adults should use its products and that under-age persons should not
smoke.
It also believes that the company must act, behave and carry out its
business activities in a manner accepted by society at large as
responsible.
This includes dissemination of the company’s positions on issues.

The Corporate & Regulatory Affairs function is charged with driving


reputation management to the heart of the business and ensuring the
company’s involvement as a leading development partner of the country.

The CORA Mission:


To proactively build strengthen relationships based on mutual benefit
and
trust with all our stakeholders and enhance our corporate reputation
through
visible responsible activities

Reputation management involves identifying and prioritizing the


company’s
stakeholders and preparing and implementing plans to engage and
communicate
with these stakeholders.

In a competitive market, BAT wants adult smokers to choose its brands


over
those of its competitors. Advertising has two purposes – to maintain
brand
loyalty and to encourage smokers to switch brands. Advertising provides
consumers with information to make choices. BAT believes that the use
of
tobacco products should be an adult choice. Advertising programs,
including
promotional activities for tobacco products should be carried out in a
responsible manner.

BATB has carried out significant activities for society such as Blood
Donation Programs, Immunization programs . The afforestaion program of
BATB
in khustia chittagong and some other areas of Dhaka have made
tremendous
contribution to the enviornement.

Different Activities Carried Out by CORA :

Environment, Health and Safety:


Environmental issues, health and safety are high priorities for
responsible
companies, and British American Tobacco is no exception. BAT accepts
their
business operation impact on the environment, and they are committed to
following the best international standards of environmental protection
and
to the principles of sustainable development. Their environmental
management
systems conform to international standards such as ISO 14001; in safety
management, they have a zero target for accidents across our
operations; and
they are developing occupational health management from a sound basis
already in place. In 1999, group expenditure on Environment, Health and
Safety (EHS) was over £20 million.

Afforestation Programs (Globally)


In some countries, wood is burned as a fuel for tobacco curing or used
for
building curing barns, in the same way as it is used for other crops
and
building purposes. Since the 1970s, BAT have run ambitious
afforestation
programs, sponsoring and promoting the planting of 267,000 hectares of
managed, renewable woodlands worldwide to date. The scale of these
woodlands
effectively makes British American Tobacco one of the world's largest
tree-planters outside the timber and paper industries. The aim is to
provide
a sustainable source of wood fuel for contracted tobacco growers who
require
wood, and to contribute to conservation and bio-diversity in developing
countries.

Afforestation in Bangladesh
British American Tobacco Bangladesh began its afforestation program in
1980,
to compensate for wood being burned as a fuel in tobacco curing. Due to
the
pressure on land for farming, farmers are at first reluctant to
allocate
land to trees, especially as they might not be able to harvest them for
some
years. British American Tobacco's solution was to plant fast-growing
trees
on canal banks, roadsides and railway embankments. To date, 710
kilometers
of canal banks, 115 kilometers of roadsides, and 52 kilometers of
railway
embankments have been planted. Through commitment by dedicated company
managers in the field, farmers' demand for saplings has increased to
the
point where over 3.5 million trees are planted annually. In 1993,
British
American Tobacco Bangladesh received the Prime Minister's Award for
Afforestation. As a result of the company's afforestation activities,
Bangladesh now has a wood fuel surplus of 80,000 metric tones.

Support Functions

Humana Resources

HR Mission:
Embedding winning culture where people always strive to excel.

To develop the most vital element of the organization which is the


human
resource BATB has put in a lot of efforts in responding to various
changes
and problems through effective formulation and implementation of human
resource strategies through the HR department.
? Bridging the gap between top level and lower level management:
? Improved performance through attractive reward system
? Strive for excellent management practice

From recruitment to selection and also from employee welfare to


industrial
relations, this department has to play an important role.

Recruitment and Selection


Recruiting the right parson for the right job.

Training and Development


? Fighting employees obsolescence
? Prepare them for the future.

Personal Department's role


? Assist operating managers to identify employee's training need.
? Assist the Training managers to design and implement training
programs.
? To carry out general skill development program.
? Management training on Industrial Relations.
? Monitor on the job training and training offered by the training
programs.

Communication
? They try to create and maintain a communication channel between the
management and the employees independent of union influence.
? Employee briefing session.
? Quality circle meeting.
? Direct written Communiqué.
? Discussion with the union.
? Open forum.
? Housing magazine.
? Annual report booklet for the employees.
? Training and motivation session

Compensation Management
? Employee services
? Workers' canteen
? Dispensary and medical treatment.
? Scholarship for employees children.
? Uniform.
? Benevolent fund.
? PF loan.
? Retirement benefits.
? Long service awards.
? Personal Records and Statistics

Appendix II: Figure 7: Human Resource Department Organogram


Safety:
? Formation of department fire fighting team.
? Compliance to statutory requirements.
? Fire vigilance exercise and training.
? To liaison with government fire department.
? Organize mock fire drills.

Security:
? Employment of security staffs.
? Checking of all outgoing vehicles.
? Spot-check of goods truck.
? Physical checking of workers while leaving.
New HR Practices & Programs:
BATB now values its people as Human Capital. As a measure to that, BAT
has
taken extensive training programs, which include educational programs
like
English training, Computer literacy etc. In order to improve individual
performance, different skill development programs are also in place.
Teams
are being formed to implement flexible work practice.

Removal of barriers:

Barriers, both physical and mental, were hindering the progress of the
company. Company started removing barriers from early 1999. All offices
were
brought into a single location and all offices were made open. Managers
and
employees started using the same dinning facility and the same uniform.
Managing Director initiated Skip Level meeting with all levels of
employees
where issues are discussed openly. A Family Day was arranged where all
members of the organisation participated along with their family
members and
enjoyed throughout the day.

Reward system
BATB has introduced new Reward and Recognition system throughout the
company
to motivate the employees. Any employee, doing something extraordinary,
is
being selected as Champion for a specific month. As a result, people
are
opening up and trying to grab the title. This has generated a positive
competition among the employees.

Winning in Our World


BATB has very good corporate reputation for excellent management
practices
base on Trust, Commitment and Achievement, which is the main driver to
develop WOW (Winning in Our World) culture throughout the organisation.
The
WOW values are clearly defined and employees, management & Union all
are
continuously striving to achieve these values.

Achievement:
a) Vision: We understand what each of us has to do.
b) Map: We believe in our plan.
c) Consumer focus: We live for our customers.

Commitment:
a) Confidence: We expect to win.
b) Standards: We keep raising our standards.
c) Drive: We take personal responsibly.

Trust:
a) Teamwork: We have trust in each other.
b) Support: We learn from Each other.
c) Belonging: We are proud of who we are.
There are certain guiding principles that center around the corporate
principles of the company. The core asset of the company is a result of
the
four philosophies that the company adheres to in every management
aspect of
the organization:

Open Minded
It encourages within the organization to be able to maintain an
environment
where the managers can have open-minded approach to various strategic
decision-makings.

Enterprising Spirit
The core asset of the organization will come from the enterprising
spirit
embedded in the minds of the managers, resulting from effective
strategies.

Freedom through Responsibility


Managers at all levels work with freedom of responsibility in their
areas of
functioning.

Strength from Diversity


The company derives its drive for effective attainment of goals from
the
strength of Diversity
Figure 1: Guiding principles

Figure 8 : Guiding Principles


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 bargaining agents’. The concept behind the
industrial relations is always ‘win-win’ situation.

Information Technology

Mission:
‘The mission BATB IT is to enhance BATB's competitive position by
increasing operational efficiency and timely decision making through
measurably better and more compatible information system, and by
harnessing
the most appropriate technology and implementing new business practices
to
enhance BATB's business effectiveness.’

Information 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.

British American Tobacco Bangladesh IT department drives the demands of


its
business and processes. IT delivers comprehensive, timely, and relevant
business information to decision makers wherever they are located. This
will
allow the organization the maximum ability and flexibility to identify
new
opportunities and quickly respond to competitive challenges.
Appendix II- Figure 8: IT Organogram
Key Functions of IT
? Establishing and maintaining information and infrastructure
architecture to support knowledgeable business users who incorporates
IT
into their decision making and of doing business, supported by
specialist
team who manages and seeks continuous improvement, outsourcing where
possible.
? Resilient communication infrastructures that are flexible and are
able to take new technical innovation to keep the cost down.
? To adopt global application convergence strategy that meets the
local business requirements, and develop local applications where
appropriate, outsourcing data processing where possible.
? To support the changing organizational structure and requirements,
IT continues to make available innovative services and training.
? To develop application and promote the use of the group working
tools as first choice of communications and to become center of
excellence
for group working.
? To develop and retain IT professionals.

Finance Department

Finance department is responsible to evaluate the economic performance


of
the Organization. BAT strictly uses the budget as part of the strategic
plan
to go for operational activities. The company budget helps to measure
its
performance acting as a tool for feed forward and also for feed back.
The
company at the beginning of the year starts its operation with the
budgeted
sales, target, cost, investment and other financial activities. The
company
for control purpose evaluates its performance at the end of each month.
It
helps to give the actual information of cost, sales and other data and
compares with the budget allocation or target. In this way it finds the
variances, then find out the reasons and take necessary corrective
action or
review the budget. The overall responsibility of doing this goes to the
Cost
Accountant and Finance Director of BAT. The Finance department has its
established strategic plan, normally the person involved are Finance
director, company executive, Material Resource Planning Manager (MRP),
Information Technology Manager (IT), Management Accountant and
Financial
accountant. Under Financial Accountant there are three accountant
officers,
Head Office accountant, Production accountant and Leaf Accountant.
These
three-accounts managers individually have Deputy Head Office
accountant,
Deputy Production Accountant and Deputy Leaf Accountant. Under these
three
Deputy Accountants three Assistant account officers works.

Finance Department audits the expenditure at a regular interval to


ensure
that rules and regulation are properly adheres the operation. External
auditor also checks all the BAT Financial system and also prepares the
annual financial report. If they find any deviation they report to the
Chief executive for taking corrective action. The Auditors Inform the
BAT
Head Office and makes them visit the operating company to ensure the
Management Control are directly administrated. Any new proposal is
analyzed
from the viewpoint of future prospects of the plan, Profitability,
Capital
Investment and Shareholders wealth. Here the Finance department gives
special consideration on the Return on Investment of the proposal.
Detailed
month wise cost analysis is done in detailed to access the variances.
At
each financial point's corrective action are taken to remain with in
the
budgeted plan.

Budget
The Budget process is done at BAT in two steps. First the former year
annual
report is taken as the base of the budget. And in the second step, top
management with the help of financial department tries to integrate
proposal
of the next year, which have been already established. The proposals
have
been considered from the viewpoint of inflation of the currency, cost
of
living, and exchange rate prevailing in the country. By integrating the
proposals the concerned authority figure out the costs involved. After
that
they add these costs with the former year Annual Balance sheet and thus
formulate coming years budget.

There are various parties involved in making and executing the budget.
Some
of the parties are organization, Budget Committee, Negotiation,
Issuance of
guidelines, Initial Budget Proposal. As all the costing comes from
various
departments and units so the role of the organization as a whole is
vital
preparing Budget.

BAT always keeps a budget committee for each year and this committee is
consisted of MD, National Sales Manager, Finance Director and Chief
Accountant. This committee reviews the budget then either approves or
adjust
the same. BAT is not allowed to do any budgetary activities other than
directed by the main Head Office.

Transfer Pricing Method


There is no special rule on transfer pricing at BAT. They use a mixed
transfer pricing system in the company, there are two ways BAT do their
transfer pricing. In production department they do cost based transfer
pricing and in finished goods they do market based transfer pricing,
Between
two production units they set the pricing and for market based they set
the
pricing while distributing product to the wholesalers and retailers.
The
managers from each unit get the transfer pricing by negotiation and set
the
pricing after that the top management sets the transfer pricing and
contribution margin. When the top management decides and especially
after
the negotiation they send the pricing to the senior managers after that
the
final report is structured on the base of final decision from the
Finance
Department.

Measuring and Controlling Assets Employed


In this part measuring and controlling is done under strict supervision
of
the finance department. Finance department takes necessary measures as
per
top management decisions. Major areas of assets employed are Cash,
Accounts
Receivables, inventories, Working Capital, Equipment Replacement,
Disposition of Assets, Leased Assets, Idle Assets, Non current
liabilities
and finally Capital charges.

About account receivable, the company does not make any credit sales,
the
amounts depicted are from other sources. Leased holdings, land and
building
are depreciated over the life of the lease term.

Foreign Exchange Policy


Some tobacco is being exported to BATBs sister companies in overseas
countries and there by it earns very limited amount of foreign
exchange. For
manufacturing its product BATB needs lot of Raw Material i.e. tobacco
and
packaging materials which are not available in the country and so the
company have to import those items by purchasing Foreign Exchange from
the
secondary exchange market. To keep the cost down of the secondary rate,
the
company makes the forward booking of the required amount for the
individual
letter of credit. And the Treasury Manager of the company finds the
best
solution to Hedge the currency market and accordingly the company
negotiates
with the foreign exchange rate with the Financial Banks. As a policy,
BAT
Bangladesh will engage in foreign exchange transactions through usual
banking channels only: to meet the requirements of its (a) Normal
commercial
trading activity, and to manage and provide for (b) currency cash flows
relating to this activity on up to a rolling 12- month basis. It will
include specifically the following means:
? Imports through letters of credit (L/C) for working capital
requirements and capital expenditure project.
? Remittances for payment of dividends, royalty and technical fees,
expatriate staff allowances, constancy fees etc.
? Travel expenses.
? Training expenses
? Payment for institutional memberships and for publications.
? Payment of advertising, travel and other expenses which are
permitted from the Export Retention Quota.
? Payments of principal, interest and financial charges in connection
with any off-shore borrowing which may be in place from time to time.
? Exports.
? Forward cover for imports, remittance and exports are part of the
policy guidelines.

Appendix II- Figure 9: Finance Department


This policy is issued by the EXCO. The Managing Director and Finance
Director are authorized to jointly take decisions on matters arising in
the
course of business not covered in this policy and report such decisions
in
the immediate next EXCO meeting.

Foreign Exchange Exposure


BAT exposure to foreign exchange is mainly imports and to lesser degree
on
scheduled remittances, i.e. for T&A fee, consultancy services, overseas
training etc. BAT 's exposure to foreign exchange can arise at a
variety of
points. Normally exposure will arise on the opening of a LC for the
import
of Leaf, Wrapping Material, Capital Equipment, Spare parts etc.
However,
there is also commitment and exposure to foreign exchange risk in the
following circumstances:

? A foreign supplier is contracted either by British American Tobacco


Bangladesh or by Technical Services, BATCo to supply capital equipment.
? The fast moving spare procurement yearly schedule is agreed with
Molins, Singapore.
? Scheduled payments for T&A fees.
? A purchase commitment is made by BAT Bangladesh for leaf, wrapping
or spares to any overseas supplier.
? On contracting or placing an order overseas for consultancy
services for machinery installation, computer software etc.
? When a promotional campaign is contracted or launched from outside
the country.
? If an off-shore loan is negotiated.
? To a lesser degree, when overseas training plans are made out.

BAT Bangladesh will seek to take forward cover for all known
commitments
within the constraints imposed from time to time by the Bangladesh Bank
or
the government. For offshore commitments denominated in Taka, for
instance
dividends and royalty, BAT Bangladesh will hedge the exchange rate only
if
requested to do so by the beneficiary.

In no circumstances will the company undertake a foreign exchange


transaction that may violate the exchange control regulations of the
country
or attempt transaction that may be otherwise improper. Further, it is
the
company's policy not to take any speculative position or enter into any
transaction with the intention of securing a gain in foreign exchange
trading.

For the present, the company deals with any of the following banks for
its
foreign exchange transaction:

Foreign Banks Exposure Limit


Taka Mn.
American Express Bank Ltd. 300
ANZ Grindlays Bank plc 300
Standard Chartered Bank 330
Banque Indosuez
Society General 350
100

Accounting Department

Functions of the Accounting Department


The Accounting department of Dhaka Factory is headed by the production
accountant. Under him are six Assistant Production Accountants working.
The
department has been divided into seven sections according to the job
each of
them performs.

Time Office Section


? Time keeping of the workers.
? Processing of the time cards
? Reporting to the HR Department for absenteeism.
? Reporting the overtime, shift allowance information to the wages
section.
? Dealing with all leave information.
? Maintenance of the master pay roll
? Keeping records about promotions, new appointments, and dismissals
for accounting purpose.
? Keeping records of the crew developments sheets from production.

Wages Section
? Payments of wages to the workers.
? Dealing with the allowances like smoking allowances, festival
bonus, and annual bonus.
? Payment of the areas after the LTA.
? To inform the Head Office about the employees group insurance.
? Payment to the Badli and casual workers.
? Reporting monthly reports to the Head office and HOD of different
departments.

Bills and Ledger Section


? All types of bill processing.
? Preparing trial balance and sending it to the Head Office.
? Keeping records of all fixed assets.
? Ledger posting of all records.

Cash Section
Deals with all sorts of cash receipts and payments e.g. PF loan and
refund.
Scrap selling, Waste paper selling, Selling of tobacco waste, Misc.
payments.
R&RS Section
The section deals with the imported parts locally fabricated parts and
the
items those are bought against works order. The following are the
functions:
? Costing of spare parts
? Budgeting for spare parts.
? Record keeping about the value and quantity of the spare parts.
? Processing the bills for these items.

Factory Office Section


? Productive reports
? Absenteeism reports.
? Machine downtime reports.
? Record keeping in connection with the excise.
? Preparing the excise reports.
? Dealing with the vats.
? Selling of wastage
? Maintaining the sales register.

Costing Section
? Leaf costing.
? Wrapping material costing
? Standard costing of product.
? Marginal costing.

Industry Analysis

For this part, five competitive forces model developed by Professor


Michael
Porter has been used.

Threat of Rivalry
Rivalry depends on mostly in terms of price and quality. International
brand
image, major competitors consists of domestic manufacturers are
accounted
for the rivalry. The industry is still growing opening the door of
opportunity for augmented business as consumers are up coming from Biri
to
cigarette. Rivalry in this particular segment is very intensive in
terms of
price rather than quality

Market share of BATB and its competitors

Different brands of BATB and market share of its competitors are shown
on
the basis of price segment in table –2:
Beside BATB, a number of the companies are engaged in manufacturing and
marking cigarettes. They are:
? Dhaka Tobacco Company
? Alpha Tobacco Company
? Nasir Tobacco Company
? Abul khair Tobacco Company
? Sonali Tobacco Company

Moreover, there are also some foreign brands, which are either smuggled
or
imported illegally. which have been termed as transit brands. The most
important brands in this category are Dunhill, Benson & Hedges,
Marlboro,
London etc. It is notable that recently Marlboro has started operating
seriously in Bangladesh.

The market share of BATB is around 51% in the Dhaka Metro. The share of
all
other companies in Dhaka Metro is shown in table-3 and pie chart.

Name of the Company Percentage of the Share


BATB 51%
Dhaka Tobacco 11%
Alpha Tobacco 3%
Sonali Tobacco 2%
Transit 13%
Others 20%
Source: BATB Monthly Audit Report: October 1999.

Figure:9 : Market Share of BATB in Dhaka Metro

In the whole Country, the share of BATB is 41%, Followed by Dhaka


Tobacco,
which has a market share of 22%. The market share of BATB on a national
basis is shown in the graph (Table 1: Appendix-I):
Figure 10: Percentage of Share on National Basis

The above chart shows that BATB is holding the major portion of the
market
share in the whole country amounting to 41% and the nearest rival is
Dhaka
Tobacco with market share of 22% followed by Alpha Tobacco with 8%
market
share.

Though BATB is holding the major market share in the Dhaka City as well
as
whole country, there are also other companies that are operating in the
market.

The main brands of the competitors are as follows:

Name of the Company Name of the Brands


Dhaka Tobacco Five Star, Legend, Navy
Alpha Tobacco Senor Gold
Sonali Tobacco Five Five
Azizuddin Industry Wilso Classic
Abul Khair Tobacco Sun- Moon
Nasir Tobacco Nasir Gold, Top-10
Table 4: Main Brands of Competitors

Although none of these companies have become a major threat to BATB,


except
perhaps Dhaka Tobacco, yet the presence of these companies signals that
other companies can also join in this market.
The market leader is Gold Leaf of BATB (15%), followed by Star of the
same
company, which accounts for 11% of the market share. Then comes Navy of
Dhaka Tobacco, which accounts for 7% of the market share. The market
shares
of all main brands shown in the following graph: (Appendix II-
Table-2).
Figure 11: Market Share of Main Brands

Therats of Substitute

Price, quality, performance, perceived value of the product and brand


image
are the key factors for brand substitution. In the low price segment
readily
available and attractive priced substitute creates competitive
pressure.

But in the mid-price segment the key for the substitution is the cost
as
well as price. Product with more and new attributes can create product
substitution in this segment.
In the premium price segment quality and product image is key for the
substitution. Customers in this segment are brand loyal.

BATB has no threat for the substitute products as there is no


substitutes in
terms of cigarette with other product in the industry.

Threats of Potential New Entrants

Industry is safeguarded from the potential entrants due to government


lawful
barrier for setting up new tobacco industry, high capital investment,
economies of scale, brand Image, and specialized know-how, existence of
learning and experience curve effect, brand preference and customer
loyalty.
But the introduction of the operation of an international tobacco
company
like Marlboro in Bangladesh is really a big threat for BATB. This is an
external threat over which BATB has no control. However, the company
should
take steps to increase its market share to combat Marlboro.

Bargaining Power of Suppliers


As the products are classified as Fast Moving Consumable Goods and
produced
in all over the world, all the firms have the leverage to choose the
wrapping materials from any where in world. These materials are
cigarette
paper, aluminium foils, boards, filter papers, cellophane paper etc.
Tobacco
for medium and low price segment cigarette is grown in Bangladesh and
is
capable of fulfilling the entire industry demand. Tobacco for premium
priced
cigarette are also grown in Bangladesh and around 18 – 20% high quality
tobacco is imported from different tobacco growing countries, where
tobacco
is surplus compared to its consumption. Therefore, suppliers tend to
have
less leverage to bargain over price and quality.

Bargaining Power of Buyers


Low substitutes and a very close pricing of the competitors in the
industry
leave very low bargaining power for the buyers, specially in the low
priced
segment. But in the medium priced segment, quality and price are
factors key
for substitution and therefore, different brand preferences are
available in
the market and the market share of each competing rivals tend to shift
in
very significant margin. But it is not very relevant scenario for
the
premium segment
where most of the customers are loyal to their brands.
SWOT Analysis

Strengths

1. Wide recognition – BATB is widely recognized as good corporate


company
for its corporate value and ethics. The good deeds are in terms of
highest
tax payment, community services, afforestation programs and helping
some
social organizations like shandahni

2. International brand Image – BATB’s manufactured premium and medium


segment brands Benson & Hedges, State Express 555 and John Player Gold
Leaf
are internationally recognized & valued by its loyal customers. This is
because these brands are manufactured in different BAT operating
companies
and dominating in the world market. Quality of these brands is
legendary and
consistent, when it is compared. In order to ensure the quality product
BATB
use global sourcing of all the raw material, which is common for all
the
operating companies in BAT.

3. Strong brand portfolio: BATB offers product in all price segments in


the
market. All their products are the market leaders, having the majority
of
market share in term of value and volume.

4.Cigarette share in Bangladesh market

Price segment BATB Other Companies


Premium (Tk. 3 and above) 48% 52%
Medium (Tk. 2 and above) 84% 16%
Low (Tk. 1 and above) 54% 46%
Very low (Tk. .25 and above) 0% 100%
(Source: BATB’s portfolio, 2000)
Table-5: Share of Cigarette in Bangladesh Market

5. Talented workforce - People are BATB’s fundamental advantage-the


sources
of all their strength. This include management, workforces and all
other
business partners, who are directly involved in the value chain
process.
People are highly trained and motivated, productive and team-oriented.

Some important aspects are listed below:


Planning
? Long term orientation
? Many people involved in preparing and making decision
? Decision making takes long time but implementation is fast
? Employees share power and responsibility

Organizing
? Common organization culture
? Organizational change by changing goals

Staffing
? Rapid advancement highly desired and demanded
? Reward for individual achievements
? Training and development undertaken

Leading
? Directive style, strong, firm and determined
? Leaders are decision maker is heading the group

Controlling
? Control by supervisor
? Control focus on individual performance

6. Superior technology – Technology used in BATB is superior from the


competition in Bangladesh. Their state of art manufacturing plant in
Dhaka
is not only sophisticated but also benchmark facility within the
operating
companies of BAT in their AMESCA (Africa, Middle East, Sub-Continent &
Asia)
region. In this industry technology is the key for superior quality
product.

Technology revolutionizes the product and production process and BATB


always
uses latest technology which smoothing out the production process.

? Process Technology: It is used for tobacco processing and its


conversion to cigarettes. It encompasses extrusion technology, aspects
of
packing and painting, cutting and dying technology, application of
instrumentation, control system and process automation and separation
of
tobacco and non tobacco materials.
? Material Technology: The company has been using latest material
technology to the design and develops the cigarettes and packing.
These
area covers paper technology, combustible smoking material etc.
? Information technology: BATB’s computer section is very much
updated and well oriented. All the external and internal information
is
being controlled through a network.
? MRP II: BATB is the only company in Bangladesh who uses MRP II
(Manufacturing Resource Planning II) in their production and operation.
This is the latest technology and only a few companies in the world
have the
capability to implement MRP II. This is a very distinctive competitive
advantage of BATB over other companies.

7. Better product quality relative to the rivals: As mentioned earlier


BAT
maintains its consistent quality with good blend of tobacco through
superior
technology, thus BATB is always in an advantages position compare to
its
competitor.
BAT grows tobacco for their own consumption in Bangladesh and they have
completely separate function responsible for tobacco growing and
processing,
which their competitors do not have.
8. High financial strength: BATB has a huge financial back up. The
company
can devote a large fund to R&D, advertisements, quality control, and
training and also in other areas, which it’s competitor can’t match.

9. Absorbing economies of scale in producing BAT products: BAT product


has a
higher demand in Bangladesh. As the company produces in a large scale,
it
possesses economies of scale and hence per unit of cost is
comparatively
lower in Bangladesh. On the other hand production sources – land,
labor and
raw materials are also low in this country.

10. BATB is the largest tax payer in Bangladesh: BAT is the largest
tax
payer in our country. It paid more than Tk. 267 million tax in the
year
1998 (source: Annual Report 1998). As a result of this huge amount
BATB
enjoys a cordial relationship with the govt. of Bangladesh.

11. Low manufacturing cost: There are many reasons for low
manufacturing
costs of BATB. First, it can hire labor at a cheaper rate, which is
not
possible in developed countries. Secondly. The company has been using
the
latest technology in production by which it is able to minimize its
production cost by producing bulk of cigarettes. Thirdly,
transportation
cost is also comparatively lower in our country.

Weakness

1. Strong Trade Union: Trade union is one of the weakness for BATB.
They are
resistant to any changes. It takes lot of management effort and time to
make
the union leaders to motivate for any minor changes in the entire
process.
Management in BATB is working hard to change the culture and practice
through different projects and program.

2. Missing a large number of consumers due to high price: BATB is


loosing a
large number of consumers in Bangladesh due to high price of its
products.
It does not have a product for very low income consumers and Biri
consumers.
Evidence shows that 74.5% of the total volume of market share of
smokers
(Cigarette and Biri combined) belongs to local company where BATB has
no
access. Hence we may suggest that BATB may capture a large portion of
the
local smokers market, if it produces a low priced product for the low
income
consumers.
Wholesalers and retailers are not getting enough attention:
Distributors of
BATB do not provide adequate attention to wholesalers and retailers.
Enough
merchandizing materials are also not provided to them.

On the basis of the above in depth external analysis the following


opportunities and threats have been identified for BATB that need to be
considered with due care.

Opportunities
1. Recent Global Merger with Rothmans: Recent global merger of BAT
with
Rothmans Industries and closer of all Rothmans facilities in South Asia
gave
BATB opportunity to become regional source of John Player Gold Leaf &
Benson
& Hedges for Middle-East market. BATB already sent samples of these two
brands for physical & sensory test in R&D Center in the head quarter.

2. The increased number of smokers in Bangladesh: The number of


professional
smokers is gradually declining in the western countries where as the
same is
increasing in Bangladesh. BATB can grab this opportunity and can make
a
consumer forecast for the future. At present, the cigarette market in
Bangladesh is growing at a rate of 10%. It is indeed a very good
opportunity for BATB to grow.

3. Augmenting GDP: GDP of Bangladesh is increasing due to economic


expansion, open market policy, industrialization and educational
development. It’s a great opportunity for BATB to expand its market
and
product line.

Year 1994-95 1995-96 1996-97 1997-98


GDP 4.4 5.3 5.9 5.7
Table 6: GDP Growth rate
(Source: Statistical Year Book of 1998)

4. Increasing number of population: The number of population is


increasing
at a higher rate in Bangladesh. And at the same time the number of
smokers
are increasing. So it is an opportunity for the company.

5. 80% people smoke Biri: In our country a large section of urban and
rural
people smoke Biri. This means that the market potential of BATB is
very
high. If the Biri consumers can be persuaded to smoke cigarettes
instead,
the company will have a very big market for its products in this
country.

Threats:
1. Anti smoking lobbies activities: Anti-Smoking lobbies are now
getting
very strong in Bangladesh. Recent demonstration against Voyages of
Discovery
(VOD), a global campaign of John Player Gold Leaf and government
legislation
against ban in cigarette advertisement in all media reflects clear
threat
for cigarette industries.

2. High Excise rate : Excise is another threat for BATB. In the recent
past
there was several increases in tax structure specific to BATB to get
more
revenue for the government. If this continue BATB’s strategy for price
leadership will be at stake.

3. Smuggled/ Transit cigarettes: Smuggled cigarettes are available in


Bangladesh. These are companies same brand or other international
brands.
These transit cigarettes are decreasing locally produced international
brands. This is one of the greatest threats for BATB. BATB can not
lower
the price of its products, as the company has to pay a huge tax for
those.
But the same brands of smuggled cigarettes are sold in Bangladesh at a
lower
price. As a result consumer are purchasing the transit one.

4. Violation of patent: It is very common in Bangladesh, even though


the
government is taking legal action against it. Many companies are
copying
the brand names of BATB products. For example: there is a cigarette
called
“Five Five” which resembles to the BATB’s popular international brand
SE
555.

5. Social pressure on the company is increasing: At present people are


becoming more and more health conscious and a strong social pressure is
being created on the cigarette companies worldwide. BATB is not free
from
this pressure.

6. International competitors are coming to Bangladesh: Phillip Morris


Incorporation has already started its operation in Bangladesh. This is
a
significant threat for BAT Bangladesh.

7. Political instability and violation: Political instability, hartal,


public demonstration, anti social activities are the most common
phenomenon
in Bangladesh. These external forces hamper sound business
environment. So
these factors are big threats for the company.

8. Natural disasters: Natural disasters like flood, cyclone, and


tornadoes
are very common in Bangladesh. These natural disasters cause a huge
loss of
crops, production and property, which directly reduces the purchasing
power
of the consumers. This in turn reduces demand for cigarettes including
BATB
products. As BAT cultivates a considerable amount of tobacco in the
country
to use them as raw materials in cigarette production, sometimes natural
disaster greatly hampers leaf cultivation.

9. Implementation of Existing Laws:


If the following laws are implemented in will be great threat to
tobacco
industry.
1. Railway Act, 1890, section 110 prohibits smoking without the consent
of
the fellow passengers.
2. Juvenile Smoking Act, 1919 prohibits smoking by a person under 16
years
of age. Also, no tobacco products can be sold to such a person.
3. Prohibition of Smoking in Show Houses Act, 1952 prohibits smoking in
cinemas, theaters etc. during demonstration or show. Offenders are
liable
to be arrested without any warrant.
4. Tobacco Board Ordinance of 1968 had set up the Tobacco Board to
promote
tobacco cultivation, manufacture and export of tobacco & tobacco
products.
5. Tobacco Cess Rules, 1968 allowed collection of cess on tobacco
under the
Tobacco Board Ordinance of 1968.
6. Bidi manufacture (Prohibition) Ordinance of 1975. The law prohibits
manufacture of hand made biris using ‘Kumbi’ or ‘Tendu’ leaf or any
other
plant.
7. Tobacco Originated Goods Marketing (Control) Act, 1988. This Act
introduced the statutory health warning on the packet of tobacco
products.
Performance of Different Brands of BATB in Bangladesh

The performance of each brand was seen from the time of its inception
and
the trend was then discussed. For a better understanding Boston matrix
is
also applied on different brands of BAT such as B&H, SE 555, Gold Leaf,
Capstan, star and Scissors and described briefly their position in the
market.

Star
**
(STAR Brand)Question Marks
??
(CAPSTAN Brand)
Cash Cow
(GOLD LEAF, SCISSORS) Dogs
(B&H, SE 555 Brands)

The BCG growth share matrix on BAT brands


? Vertical line indicates relative market growth rate
? Horizontal line indicates relative market share

BATB is in the Cash Cow segment of Boston Matrix. Cash Cow implies low
growth, high share business and products. In this segment the company
produces a lot of cash to support its different business units.
According
to the strategy when a market’s annual growth rate falls below 10%, the
Star
becomes Cash Cow. Evidences shows that the company’s growth is
decreasing
since last three years. Cash Cow also enjoys the economies of scale
and
higher profit margin. BAT is also enjoying the economies of scale,
that is,
it has been producing at a lower cost due to huge value of productions.
Production materials are also relatively cheaper in Bangladesh compare
to
that in the developed countries. At the same time BAT has been
achieving
the highest profit among the competitors. A very few number of local
companies are its competitors. No other MNC cigarette companies had so
far
been operating in Bangladesh even a few months back. However, recently
only
one MNC – Phillip Morris Inc. – has started its operation in
Bangladesh. So
it would be quite some time before BAT faces severe competition and
hence,
BATB is expected to retain stable position in Cash Cow even in the
coming
days.

Benson & Hedges:

It is the most popular and traditional brand across the globe and even
in
Bangladesh. The Benson & Hedges Lights is a new member of B&H family.
It was
first introduced in 1998 in Dhaka and Chittagong. The objective was to
give
the smokers more options within the same brand and to keep pace with
the
modern trend of smoking light cigarettes throughout the world.

National sales showed that the position of B&H is conversant with the
Dog’s
cell, which indicates low growth, low share of business and products.
Even
though B&H is recognized as a prestigious brand of BATB, it is loosing
its
number of consumers due to high price. As a result, its sales volume is
very
low compare to other brands and it also registers low growth rate in
sales
in Bangladesh.

SE 555

SE 555 is the international brand of Bangladesh symbolizing


internationalism
and smoothness. But it can be seen from the trend above that though it
had
done fairly well during 1997-98 but then again had a downward turn.

SE 555 is the largest and fastest growing brand of BATB; its position
is not
up to the mark in Bangladesh. National sales shows that the position
of SE
555 lies in the Dogs cell which indicates low growth and low share.
The
price of SE 555 is also very high (Tk. 3 per stick) compare to other
local
brands and Bat’s own brands. Its sales volume is very low and having a
very
low growth rate. The sales trend is shown below:

Figure 12: The sales Trend of SE 555

Gold Leaf

JPGL is the number one brand of BATB and is the leader in the cigarette
industry of the whole country in terms of market share and total
turnover.
It draws about 50% of the total revenue of BATB. Bangladesh is the
largest
of the 33 JPGL selling countries.

Due to reasonable price (Tk. 2 per stick) people of medium and low
medium
income group can easily afford it. It was launched in 1980 for the
first
time in Bangladesh. After reviewing national sales it can be inferred
that
from the commencement period of the brand, it realizes the highest
share and
highest growth. But at present the brand growth is not increasing as
the
previous trend due to mild competitive pressure. The above attributes
of
Gold Leaf are conversant with the Cash Cow, which means low growth and
high
share of business.

Figure 13: The sales Trend of Gold Leaf

Jhon Player Gold Leaf Lights

To keep pace with the global trend of lights and to support British
American
Tobacco Bangladesh’s corporate objectives of establishing leadership in
lights segment in Bangladesh, the management of BAT launched JPGL
Lights in
1997 in some selected outlets in Sylhet as a part of test marketing.
JPGL’s
association with the worldwide F-I powerboat racing was also
successfully
exploited in 1997 through a consumer promotional event under the banner
of
‘JPGL Carnival’, which took place in five key cities. The company
launched
the brand in 1998, with the unique product feature of ‘white tipping
paper’.
It is also in the cash cow cell.

Scissors

Scissors is the second leading brand of BATB as well as of Bangladesh.


Its
price is comparatively lower than the price of BAT’s other brands. Its
sales volume is high and it has achieved a high share in business.
National
sales indicate that growth of the brand is decreasing compare to the
previous years but there is nothing to worry about. The above noted
characteristics of the Scissors places it in the Cash Cow cell. The
company
is making huge profit from this brand.

Star

BATB uses completely local materials in producing Star brand. This


brand
gained popularity for its low price (Tk..1 per stick). From national
sales
figure it can be said that the brand realize the high growth and high
share
and still in this position. The present position of the brand
positioned it
in the Star cell of Boston Matrix.

The different brands of Star are discussed below:

Star Classic
Introduced into the market in February 2001, this brand targets the
medium
segment customers. Up until now, the brand has got moderate responses
from
smokers. However, it is very early to comment on the future of this
brand.

There are three filtered Star brands in the low segment. These brands
are
discussed below:

Star Filter Kings (KSF 20HL)

Star Filter Kings (KSF 20HL) has a very unstable position in the
market. The
sole reason is the accessibility of other brands at the same price. Not
only
local manufacturers are manufacturing cigarettes of this quality and
price
but also coming from other countries through illegal means.
The same cigarettes are available in a soft packet (Star Filter Kings
(KSF
20SC)), which is priced 30 paisa less. The sale trend is as shown
below:

Figure 14: Performance of KSF 20HL

Star Filter Kings (KSF 20SC)


In recent years the brand has got bumper increase in turnover, mainly
because of its low price and effective marketing. Moreover, the
retailers
get more profit on selling this for which the retailers place extra
effort
to sell Star Filter Kings (KSF 20SC). The sales trend of this brand
follows:

Figure 15: The sales Trend of Star Filter Kings (KSF 20SC)

Star Plain
Star Plain has been losing its market very fast and in 2000 the total
sales
stood at only 53 million sticks! BATB needs to rethink its strategy to
increase the sales of this brand. The sales trend of this brand
follows:

Figure 16: The sales Trend of Star Filter Kings (KSF 20SC)
Capstan

At present Capstan is enjoying an increasing trend. But its market


share is
very low. The price is comparatively very low in comparison to BATB’s
other
brands except Star and Scissors. National sales indicates the present
position of the brand lies in the Question Mark cell. BATB needs to
formulate an appropriate strategy for expanding the market share of
this
brand. The sales trend is shown in below:

Figure 17: The sales Trend of Capstan


Experience in BATB

As a prerequisite of the BBA degree, each and every student has to do


Internship in an organization for a minimum period of three months. I
got
the opportunity to do Internship in British American Tobacco Bangladesh
Company Limited for that purpose. I started internship on 2nd February
2001
as an intern in Finance department and after a week I was asked to join
in
Corporate and regulatory Affairs (CORA).

CORA is a department in BATB which looks after the Company’s legal,


Board,
Corporate and Public Relations matters. It was previously known as
Consumer
and regulatory Affairs. Head of CORA leads the department.

Though I was an Intern of CORA I did not work in the core CORA but the
legal
department which was under CORA. The legal department had to handle a
lot of
cases for BATB. The cases were mostly of trade mark related cases,
distributorship cancellation cases, counterfeit cases which are handled
by
different legal farms of the country. I was taken to perform various
jobs.
My supervisor was the Company Secretary who headed the Company
Secretarial
and Legal Department within CORA. He reports to the Head of CORA as
administrative line manager and to Board of Directors for Board and
statutory affairs. Company secretarial and legal department handles the
corporate and legal issues of the Company. It has to perform cross
functional activities by the advice of the Board and line management
within
the laid down rules and regulations.

Goals of the Legal and Secretarial Department are:

? To equip share department to enter into the millenium


? To become the benchmark service provider in Bangladesh to share
holders
? To offer value added legal assistance to the business

Legal & Secretarial Functions are :


• Legal
? Civil cases
? Excise issues
? Smoking & Health legal issues
• Regulatory Compliance
? Stock Exchange
? Security and Exchange Commission
? Registrar of Trade Marks
• Secretarial
? Board
? AGM/EGM
? Shareholders
? Annual Report
? Trust Fund
• Other..
? All legal compliance for all functions
? Contracts and agreements
? Custodian of property deeds

• Future Action Plan of Legal and Secretarial Department:


? Legal Retainership
? Access to legal expertise on S&H litigation
? Closer Co-operations with legal firms
? Closer cross-functional working relation
? Improve legal issue communication within company
? Building of legal database for easy access

At the beginning, I was asked to go through various legal agreement and


was
asked to develop a checklist so that anyone could get the basic idea of
the
contract such as the parties of the contract, the originating
department of
the contract, advance payment, termination notice and expiry of the
contract. While reading the agreements I learnt various legal terms and
various clauses that helps the company to avoid trouble. I made a list
of
all the files of legal and secretarial department and arranged the
agreement
files in a cabinet so that those could be found easily. I developed a
legal
library.

As I was not taken for any specific purpose I always had to run like a
chicken without head. In the second month I was told to collect
sensible
tobacco regulation by browsing internet and publish a wall magazine
“Infotopics” on weekly basis. At the end of the each month I had
prepare a
power point presentation for the Company secretary to update him those
issues.

As the days passed, I was assigned more important tasks. I made a


comparison
on the standards of business conduct of BAT and BATB and then updated
the
advertising and promotion policy. To do that I had to read Section
294(b)
Bangladesh Penal Code and added a few clauses from there.

As BAT is involved in various social activities I was asked to prepare


a
project on “ Railway waiting room beautification’ and “ Returning the
lights
of the eyes of the cataract patients’. While doing these projects, how
long
term advertising can be done through social activities.

I also had to go through Companies Act 94 and Listing requirement of


SEC and
prepared a checklist for the company.

My supervisor sent me SCE to attend ‘ Investors Training program’ so


that I
could get an idea about the primary and secondary market and about
Central
Depository System. Later I was assigned to prepare a report on ‘Impact
of
CDS in the Share Management of BATB’.

My supervisor also involved me in the Records Management Program which


is
considered very important in BATB in recent days. The managing director
of
BATB has to present three letters of compliance to the head office in
London, one of which is the Record Management Compliance letter. I was
involved in conducting a training program on ‘Records Management’ and
in
preparing retention schedules of various records.

My internship period was for three months and at the end of the period
my
internship was further extended for one and half month by BATB to help
in
the Annual General Meeting. The AGM exposure is totally different and
quiet
fascinating. I was involved in he book closure, dispatching of notice
to the
shareholders, selecting volunteers and distributing their duties and
responsibilities, proof reading and scrutinize printing of the annual
reports and ensuring support for a smooth event. I was involved in
preparing
different questions and answers that can be raised by shareholders
during
the AGM.
Analysis of Common Size Income Statement
One look at the common size income statement shows that there is not
much
change in any of the elements except the interest and tax. Interest has
increased because of increased short term loans and the tax has
increased
because of the increased tax the Government has imposed on the
cigarette
manufacturing companies.
Figure 17 : A graph showing value adding elements
in
1999 is given below:
Analysis of Common Size Balance Sheet

By looking at the common size balance sheet it can be seen that BATB
has
succeeded to lower its inventory overtime. The proportion of inventory
dropped to 42.31% in 1999. It can also be seen that in 1998 the
inventory
went as low as 40.55% but again rising for the last two years.

The proportion of debtors has somewhat remained stable but again the
sudden
drop in cash and bank balance in 1999 does not look good. Every
organization
should have cash reserve. The proportion of fixed asset has risen which
answers the question of where the cash has gone. The short-term bank
loan
seems to have increased over time. This is quite a big portion of the
total
liabilities. But the long-term liabilities has dropped immensely. The
share
capital has dropped substantially. The rise in retained profit shows
the
foresight of the company to expand more in future.
Appendix 1- Common Size Income Statement
Appendix 1-Common Size Balance Sheet
Ratio Analysis

Ratio analysis is the analysis of the relationship among financial


statement
accounts. They are designed to show relationship among financial
statement
accounts. A single ratio is relatively useless in making relevant
evaluations of a firm’s health. For effective interpretation, a ratio
must
be systematically applied in one of the following ways”
? Comparing with several ratios in a net work such as the Du Pont
system analysis.
? Comparing with the trends of the firm’s own ratios.
? Comparing with management’s goals for key ratios.
Analyst who use financial ratios extensively can be characterized into
three
main groups:
? Managers, who use ratios to help analyze, control and thus improve
the firms operations.
? Credit analysts, such as bank loans officers or credit managers for
industrial companies who analyze, control and thus improve the firms
operations;
? Securities analysts, including both stock analysts, who are
interested in a company’s efficiency and growth prospects and bond
analysts,
who are interested in companies efficiency and growth prospects and who
are
concerned with a company’s ability to pay interest on its bonds and
with the
assets that would be available to bondholders if the company were to go
bankrupt.

Thus each group of analysts has specific areas of interest which it


wishes
to investigate. Therefore ratios may be categorized into specific, task
groupings. We have categorized ratios into five groups:
i. Liquidity ratio
ii. Asset management ratios
iii. Debt management ratios
iv. Profitability ratios and
v. Market value ratios
Liquidity Management
One of the first concerns of most financial analysts is liquidity,
which
shows whether the firm is able to meet its maturing obligations. A full
liquidity analysis requires the use of cash budgets; but by relating
the
amount of cash and other current assets to the current obligations,
ratio
analysis provides a quick and easy to use measure of liquidity. Two
commonly
used liquidity ratios are – Current Ratio and Quick Ratio or Acid
Test.

By analyzing the data of last six years it has been seen that BATB has
enough asset to meet its obligations. But from the balance sheet it is
seen
that the current liabilities is rising faster than the current assets
which
led to poorer current ratio that is visible in the graph. The rise in
current liabilities resulted from the short term bank loans taken by
the
company. On the other hand the cash and bank balances has also
decreased
because of the sudden drop in the foreign currency accounts. If this
trend
goes on, the company will face difficult time in near future for paying
debts.

Figure 18: Liquidity Ratios

BATB has a quick ratio less than the current ratio showing that most of
BATB’s current assets comprises of inventory which we know to have
least
amount of liquidity. The trend analysis shows that the quick ratio is
falling meaning the company is building up its stock and failing to
sell
them off. So the company may face hardship if it faces the pressure of
paying of its current debts immediately. Again the net working capital
was
most of the time negative indicating that the firm has a permanent
shortage
of short term financing.
Asset Management Ratio

The Asset Management ratios measure how effectively the firm is


managing its
assets and generates cash flows from the overall operations. A firm’s
performance depends on the management techniques, which are the
intangible
assets of the firm. First of all, the fixed asset turnover ratio on
average
was about 8.17 times. The total assets t. ratio of the firm was 4.19
times
on average. This ratio has fallen during 1998 and 1999 . This decline
did
not create mentionable negative affect on ROA. It is evident that that
net
profit margin of BATB is slowly decreasing and combining this with
fluctuating asset turnover reflects stable ROA.

Again the inventory turnover ratio on average was 9.27 times. This was
quite
well compare to the other turnover ratios. But it can be considered a
reasonable one for decreased asset turnover in 1999. So the turnover
ratios
of the firm should be improved in order to obtain a high ROA.

Figure 19 : Asset Management Ratios


The structure of the capital investment of the firm was all along
consistent. On an average, the firms capital intensity or the fixed
investment ratio was about 52% meaning that almost half of its total
assets
are in the form of fixed investment and half is in the form of current
assets.
94 95 96 97 98 99
Capital Intensity Ratio 0.44 0.47 0.53 0.56 0.55 0.55
Table 7: Capital Intensity Ratio

Debt Management Ratios


The extent to which a firm uses debt financing, or financial leverage,
has
three important implications:
? By rising funds through debt, the owners can maintain control of
firm with a limited investment.
? Creditors look at the equity or owner supplied funds, to provide a
margin of safety, if the owners have provided only a small proportion
of the
total financing, the risks are borne mainly by its creditors.
? If the firm earns more on investments financed with borrowed funds
than it pays in interest, the return of the owners capital is
magnified,
resulting in ‘favorable leverage’.

Financial leverage has the potential to raise the rate of return to


stockholders for two reasons:
? Because interest is deductible, the use of debt financing lowers
the tax bill and leaves more of the firm’s operating income available
to its
investors.
? If the firm’s basic earning power ratio exceeds the interest rate
on debt, as it generally does, then a company can use debt to finance
assets, pay the interest on the debt, and have something left over as a
‘bonus’ for its stockholders.
Three types of debt management ratios are Debt ratio, Times Interest
Earned
and Fixed Charge Coverage Ratio. For BATB debt ratio and Times Interest
Earned are calculated and analyzed.

Debt ratio measures the proportion of capital supplied by creditors.


From
the figure, it is clearly evident that BATB is not in a good position
as
most of its capital is supplied by their creditors. The situation was
further deteriorated form 1998. More care should be taken in future.

A major shift was seen in the capital structure of the company. During
the
early periods the firm’s capital structure consisted of approx. 46%
debt and
54% equity. but the scenario changed over the years and in 1999 it was
about
61% debt and 39% equity. This is not a good sign as the firm was
increasing
debt though the proportion was not unusual. Provided below the debt and
equity ratio of the firm over the years:

1994 1995 1996 1997 1998 1999


Debt Ratio 46% 54% 51% 56% 61% 61%
Equity Ratio 54% 46% 49% 44% 39% 39%
Table 8: Debt Equity Ratio

Another important side of the firm is it’s composition of the total


debt.
The firm was always a heavy short- term borrower. Its long-term debt
has
fallen over the years. The firms short-term debt was 41% in 1994 and
56% in
1999 of the total assets which is very high.

Time interest earned measures the ability to make interest payment.


From the
trend analysis it is evident that this ratio is decreasing over time.
The
gap between interest and taxes narrowed, leaving the company with less
earning after paying off the interest. This is due to increased amount
of
short term bank loans that the company has acquired and the huge amount
of
interest it has to pay. As the loan is short term, the company will
recover
soon.

Figure 20 : Debt Management Ratios

Profitability Ratios

Profitability is the net result of the large number of polices and


decisions. Although the ratios examined provides some information about
the
way the firm is operating, the profitability ratios show the combined
effects of liquidity, asset management and debt management on operating
income and net income. PM, ROA, ROE and Gross Profit margin are being
calculated and analyzed.

The average Profit Margin on sales is 2.85. PM suddenly declines to


1.66 in
1999 from 3.52 of 1998. This was due to increased supplementary tax and
surcharge and smuggled cigarettes.

The average ROE is 26.68 and it showed an upward trend form 1994 but in
1999
it dropped down because of low profit. This was disappointing for
investment
concerns. Same trend is seen for ROA.

Figure 21 : Profitability Ratios

Figure 21: Profitability Ratios


Gross Profit Margin: It measures product costing in comparison with
its
basic cost. The basic cost of tobacco manufacturing industries is
supplementary duty, VAT and surcharge. The fact that BATB has a
reputation
about giving tax is again proved here. BATB’s average gross profit
margin is
low as it gives a very high value added tax to the government.

Figure 22: Gross Profit Margin

Market Value Ratios

Market value ratios relate to the firm’s stock price to its earnings
and
book value per share. These ratios give management an indication of
what
investors think of the company’s past performance and future prospects.
This
ratio includes earning per share, book value per share and dividend per
share. Earning per share and dividend per share is being calculated for
better understanding.

Earning per share expresses profit on a per share basis. BATB has
always
high significant amount of earning to give to each shareholder. Though
the
amount decreased in 1999 due to lower profit, the company has the
capacity
of recovering it. So BATB is profitable place to invest for the
shareholders.

Dividend per share measures amount paid as dividend to each share of


stock.
From the graph it can be seen that BATB always declares dividend.
Though
DPS was low in 1999 but it can’t be considered the worst if other
companies
in the industry are considered.

Dividend and Reinvestment

On an average, the firms plowback ratio was 55% and the payout ratio
was
45%. The firms had retained most of it’s earnings when the firm’s ROE
was
satisfactory and high. It’s plowback ratio was increasing over the
years
but suddenly declined in 1999 as the ROE had declined. Earlier, the
company
reinvested approx. 55% of it’s earnings but now the plowback has
declined to
32.42% . The dividend policy was quite efficient and the firm had paid
dividend consistently

Figure 23 : Dividend & Reinvestment

Cash Conversion Cycle

Cash conversion cycle depicts the length of time between payment of


materials and collection of sales. The cycle of the firm was about
31.52
days in 1995 which is very high. Later it improved . In 1998, BATBs
cash
conversion cycle was only 17.32 days! This is a very remarkable
achievement. However, in 1999, their cash conversion cycle went up to
more
than 30 days. This is mainly because the days’ sales in inventories
were
very high.
The cash conversion cycle for the past five years for BATB has been
shown in
the following graph.

Growth Rates

In this section, analysis will be made with a view to evaluate the


company’s
financial activities more thoroughly. Among various ratios only some
selected ones will be analyzed.

Growth of Sales:
As can be seen that the trend of sales in the last two years is
downward
which is not a good sign for the company and thus will effect the
coming
years. The management must devise ways to improve the sale figure.

Growth of Assets:
As the trend line is upward, the Company’s assets has been growing
consistently but the effect will be offset if sales doesn’t keep up the
pace.

Growth of Expenses:
This is also a bad sign for the company as the trend of expenses is
upward.
Management should therefore control operating expenses.

Figure 25: Growth Rates

Bankruptcy Prediction

Prof. Altman’s Z-Score is used to indicate the financial health of


BATB. The
following formula is used for Bankruptcy Prediction:

Z = 3.3 +1 + .6 + 1.4

+ 1.2
A cut-off point for the ‘Z-Score’ for the US firms were determined as
follows:
? Z- Score of 1.81 and less indicate bankrupt.
? Z- Score of 2.99 and above indicate solvent.
? Z- Score of 1.82 and above but less than 2.99 indicate zone of
ignorance.
A subsequent study for the UK by Altman and other established somewhat
lower
values in the above categories of Z-Scores.
• Z- Score of 1.50 and less indicate bankrupt.
• Z- Score of 2.00 and above indicate solvent.
• Z- Score of 1.5 and above but less than 2.00 indicate zone of
ignorance.
The Z –Score of BATB for the last six years are as follows:

Year 1994 1995 1996 1997 1998 1999


Z –Score 7.97 7.42 7.23 6.98 6.33 5.7
Table 9 : Z-Score

Either of the cut off points verifies BATB as a solvent company. So


there’s
no chance of BATB to go to bankrupt at any point in near future.

Major Findings and Recommendation

? The Company borrows heavily on short-term basis or loan.


? The Company was successful to bring down long term loan to
substantially low level.
? The profit margin was fairly consistent throughout the years.
? The Company pays dividend consistently.
? The Company was successful to achieve a less Cash Conversion Cycle.
? The Company has no chance of being bankrupt.
? The Company’s liquidity is low. Liquidity Ratios show that BATB is
in a difficult position to meet its current obligation . From the
commons
size balance sheet it was understood that the inventory is not so high
at
this moment compare to Company’s historical data. But the company
should
always be careful so that inventory does not pile up.
? Rise of operating cost, supplementary duties and surcharge on both
raw materials and finished products, stiff competition from smuggled
cigarettes and lack of protection from the law of the land led the
turnover
of the company to fall. It resulted that the profitability of the
company
slipped downwards sharply. The Company’s profit for the year 1999 was
less
than half of the year 1998. BATB should create pressure on Government
on
smuggled cigarette issue as.
? From the trend analysis it is seen that the value ratios are better
in case of BATB. BATB gives good dividend and earning per share is
also
good. The company always keeps its shareholders happy but the company
should remember that their main job is to increase shareholder’s wealth
not
only offering high dividend.
Impact of Central Depository System in the Share Management of BATB

Introduction:
Depository system is in vogue in the developed nations and it ensures
to
safeguard the interests of the investors. Having felt the absence of
the
system in Bangladesh capital market the foreign institutional investors
insisted upon the government to adopt the system on the pattern of
developed nations to assure safeguarding of their interests.
Accordingly,
the Government has enacted the Depository Act on April 13, 1999.

Objective of the Study:


? To analyze the Impact of Central Depository System in the Share
Management of BATB
? To come up with some recommendations so that BATB can take
pro-active measures to implement CDS.

Limitations:
? As the Company who is responsible for implementing CDS is still not
in a position to give a clear picture about the procedure of CDS and
cost of
implementation by the companies and the cost of investors for taking
service, it is not possible to make quantitative analysis.
? For having a clear idea I had to depend on Websites and materials
of ‘ Investors Training Program’ organised by Securities and Exchange
Commission.

What is Central Depository System:


Central Depository System(CDS) is an -an infrastructure for the
development
of Capital Market in Bangladesh . It is a system of scriptless trading
where
all records relating to the sale, purchase and transfer of shares are
maintained electronically, doing away, with need for share
certificates. In
a Depository the investors lodge securities with the depository company
and
the records of transfer between the buyers and sellers are made by book
entry not by an extensive paper trial

In a nut shell, Central Depository System is an Electronic Book Entry


System
to record and maintain securities and to register their transfer. In
Central
Depository System, ownership will be changed without physical movements
of
securities or execution of transfer deeds. The ownership will be
transferred
as soon as securities move from one account to another. CDS is purely a
settlement vehicle and will not affect the trading in any manner
whatsoever.

Depository Participants:
? Brokers & Dealers
? Banks &Non-Banking Financial Institutions
? Others, under discretion of the Regulatory Body

Job of a Depository Participant:


? Depository Participants will act as agent of the Depository
? Depository Participants reach the investors the services of the
Depository through their Branch Network.

Corporate Features of the CDS:


? A Company under an Act/Ordinance
? Monitored by a Regulatory Body
? Owned by Financial Institutions & other Capital Market Players
? Highly Technology based
CDS - Operations
Deposit of existing and new securities in to the Central Depository
System.
Once a security is declared eligible by CDC, the physical certificates
of
that security will be deposited in the CDS for conversion after which
they
will be available for further transfers within the system. Following
is the
procedure to deposit securities in the CDS:
? The Account Holder will initiate the Deposit Request by entering
the details of share certificates into the system, and Securities
Deposit
Form: CDS will generate computer printouts of the transaction. Transfer
Deed
will be executed in favor of 'Bangladesh National Securities
Depository
Limited'. Account Holder will then send the relevant share
certificates,
transfer deeds, Securities Deposit Form and the computer printouts to
the
relevant registrar. The registrar after verification will either
approve or
reject the transaction within five days from the receipt of the
documents.
Registrar will update CDC nominee share holding in the Member's
Register,
cancel share certificates and transfer deeds, and return the relevant
documents ( other then canceled share certificates and transfer deeds )
to
applicant account holder.
? Withdrawal of securities in the form of certificates from the
depository to cater for investors who prefer to have physical
possession of
certificates. Following is the procedure to withdraw securities from
the
CDS:
? The Account Holder will initiate the Withdrawal Request by entering
the relevant details into the system, and Securities Withdrawal Form.
? CDS will generate computer printouts of the transaction.
? Account Holder will then send the Securities Withdrawal Form and
the computer printouts to the relevant registrar.
? The registrar after verification of the balance will either approve
or reject the transaction within five days from the receipt of the
documents.
? Update CDS nominee share holding in the Member's Register.
? Prepare share certificate.
? Return the relevant documents and share certificates to the
applicant.

Benefits of Depository System:

For the capital market


? It eliminated bad delivery of securities,
? It helps to eliminate voluminous paperwork,
? It helps in quick settlement and reduces settlement time,
? It helps to eliminate the problems of odd lots, it facilitates
stock lending.

For the Investor

? It reduces risks associated with loss, theft and forgery of


physical shares,
? It ensures liquidity by speedier settlements of trades,
? It makes the investors free from physical holding of shares,
? It reduces the transaction costs,
? The need to sign transfer instrument widely known as Form-117,
disappears as trades are settled by book entry transfer. Settlement is
not
delayed for signature verification.
? It helps the investors to get preference in getting loan against
securities.
? The investors will get periodic status report on their holding and
transactions, thereby leading to better control.

For the issuers


? It provides up-to-date knowledge of shareholder’s names and
addresses,
? It enhances image of the company,
? It reduces the cost of secretarial department,
? It increases efficiency of registrars and transfer agents,
? It provides better facilities of communication with the
shareholders.
? Printing of Share Certificates
? Cost of Stamp Duties
? Mailing Operation to Shareholders
? Hassle of undelivered mails
? Voluminous work during book closure

Share Department of BATB:

Goals of the Share Department of BATB:

• To equip share department to enter into the millenium


• To become the benchmark service provider in Bangladesh to share
holders

Function of Share Department of BATB:


? Transfer of shares
? Split share certificates
? Signature verification
? Payment of dividends per year
? To deal with shareholders, provide them information and services
? Comply with Companies Act., Company Articles and stock exchanges
regulations

Automated Share System of BATB:


? Two dimensional bar code to check forged certificate
? Data entry through bar code
? Locking facility for stolen certificate
? Network support
? Automated signature verification and share register
? Flexibility to generate report

Impact of CDS on BATB:


Because of lack of information it is very difficult to discuss the
impact of
CDS on BATB. As BATB is using automated share system it is free forged
certificate and it also has locking facility for stolen shares.
? It is known to all, the investors do not transfer the shares into
their name after buying it in the secondary market. Generally, transfer
requests come before the book closure. So the automated system of BATB
expedites the process of transfer and then can provide up to date name
and
address of Shareholders. CDS will provides up-to-date knowledge of
shareholder’s names and addresses which will provide better facilities
of
communication with the shareholders.
? The hassle of Form-117 will disappear.
? BATB allocates around Tk.2,50,000 per year for printing of Share
Certificates. CDS will help to reduce this expense.
? Cost of Stamp Duties will not be applicable after the
implementation of CDS.
? Will get rid off mailing operation to Shareholders
? There will be no hassle of undelivered mails.

Comparison of Standard of Business Conduct Between BAT and BATB

Prelude:

British American Tobacco Bangladesh limited is a subsidiary of British


American Tobacco and is one of the 68 countries in which BAT has
manufacturing plants. It is one of the oldest and largest multinational
companies operating in Bangladesh. Like the parent company, BATB is
also
committed to ethical conduct and compliance with the law in all of its
activities.

Objective of the Report:

The main objective is to find out the difference of the standards of


Business conducts of Parent company and the subsidiary company namely
BATB.

Why BATB is concerned about the standards:

• The standards will meet the general expectation that everyone wants
to see
from a leading public company.
• The standards will set a tone and culture for the organisation, which
will
enable it to be regarded as a good corporate citizen.
• The standards will help the employees to make judgement in the course
of
their actions.
• These will give a clear picture about the code of business conduct to
the
stakeholders.

Comparison of BAT and BATB Standard of Business Conduct :

Compliance with laws and regulations


According to BAT all employees shall observe the laws and regulations
of
each country in which they operate. But in case of BATB this is implied
but
does not appear as standard

Ethical Standards
BAT wants all the employees to act with high standards of business
integrity
and does not want them to compromise those standards for the sake of
results. This standard is covered through trade etiquette standard of
BATB.
Conflicts of Interest
According to BAT and BATB standard, each employees should avoid
situation/discussion where his/her personal interest could conflict
with the
interest of the companies

Besides the standard of the parent company, BATB’s standard does not
allow
the employees to take part in relevant discussion or in the decision
making
process if such involvement create advantageous position for
himself/herself
or a close family member or friend.

A personal or financial interest in a business which has significant


transactions or dealing with British American Tobacco group companies
where
the employee is in a position to influence the decisions by a group
company
with respect to the business relationship with any such company may be
considered as a conflict of interest according to BAT standard. But
such
standard is not clearly evident in BATB’s standard. BATB’s employees
might
have personal interest with such companies which have significant
transactions with BAT group. Therefore, clearly stated standard should
be
added.

Besides the business dealings, the employees are not allowed to involve
with
the commission or omission of any act, without prior disclosure , which
gives undue advantage to an outside party. BATB’s standard does not
focus
on such an important issue.

Interest in Competing Business

BAT standard prohibits the employees to own shares, stocks of the


competitive companies.
BATB demands the personnel to convey information about their interest
about
the competitive companies or which act against the companies best
interest
but such prohibition is not there.

As employees of BAT are significantly empowered, they should be given


the
opportunity to make their own judgement about investing in the
competitive
companies share. Such prohibition can be questioned

Entertainment

According to BAT and BATB standards, the frequency and amount of


business
entertainment with people doing or desiring to do business should be
modest
and not exceed reasonable business practices.

Gift
BAT discourages the employees to give or receive business gifts but
modest
gift is exception in both the ways. Giving or receiving lavish gifts
must be
approved by the employee’s manager.

BATB neither discourages nor encourages as it allows the employees to


receive gifts in the form of diary or calendar and in case of giving
gifts
up to Tk.2000 in value is accepted. BATB standards demand the
employees who
receive gifts because of position, to report to MD otherwise
disciplinary
action will be taken against the employee for not disclosing such
information. Such provision in not there in BAT standard

Payments to politicians, Government Officials or Employees

BATB standard does not allow to donate to any political party or


candidate
and to involve the employees to involve in politics.
BAT Standard is not clear about the employees’ involvement in politics
but
allows to contribute fund to the political party for influence the
debatable
issue which is affecting the group or an operating company as long as
the
operating company is assured that they will be used only for such
purpose.
Full documentation will have to be kept.
Like BAT, BATB should adopt such flexible standard

Insider Dealing

According to BAT and BATB standard , employees who are aware of price
sensitive, non-public information which could affect the share price of
the
company , shall not use such information for profit or to avoid loss.

Confidentiality of Commercial Information

Both BAT& BATB standard do not allow the employees to disclose any
confidential commercial information relating to the group but allow to
disclose with the explicit permission of the appropriate Departmental
Head.

According to BAT standard Special legislative provision can be made


governing the retention of personal data but such provision is not
there in
BATB standard.

Dealing with Public Officials


In dealing with public officials BATB has clearly demanded the standard
behaviour from the personnel. Such clear standard is not there in case
of
BAT but it can be considered as an implicit standard.

Press Interview

BATB standards does not allow the Members to make statement to the
press or
media which concern Company policy, sales, production cost, Trade Union
relation with without the prior permission of the appropriate
Department
Head/CORA. BAT Standard is very straightforward in this case. In
handling
media, BAT standards advise to obtain guidance from CORA.

Exports

According to BAT standard, the integrity of the group’s transfer


pricing
policy must be maintained and the documentation supporting all
transactions
must be managed to support this accordingly. All export transactions
should
be done in accordance with the laws of the exporter country.

As BATB is also involved in exporting the standard regarding export


should
be incorporated immediately. Clear guideline is present in BAT standard

Close Personal Relationship

It is against BAT group policy and good business practice for


individuals
who have a close personal relationship to be in the position of manager
or
sub-ordinate. During adoption of these standard or if new relationship
is
built up among the existing employees, there must be no direct or
indirect
reporting relationship between them.
This important standard is absent in BATB which needs to be
incorporated.

Trade Etiquette

BATB does not allow the members to criticize or compare competitive


goods
with its products in a derogatory manner. Such standard is not evident
in
BAT standard.

Standards Violation
Both BAT and BATB standards want the employee to report any breaches
of the
aforesaid standards of business conducts to the Head of Department or
if
necessary to the MD.

But unlike BAT Standards, BATB standards ignores the fact if a director
or
manager asks the employees to involve in illegal activity or violation
of
standards. The direction should be given clearly.

Recommendations:
Recommendations are given while the comparison is done.
British American Tobacco Bangladesh
Policy on Advertising and Promotion

1. Preamble:
1.1 British American Tobacco Bangladesh is proud of its reputation for
manufacturing high quality cigarettes and other tobacco products which
are
enjoyed by million of adult smokers around the country. In a
competitive
market, we want adult smokers to choose our brands over those of our
competitors.

1.2 It is our considered position that advertising does not cause


people to
take up smoking. Advertising has two purposes-to maintain brand loyalty
and
to encourage smokers to switch brands. Advertising provides consumers
with
information to make choices. We believe that the use of tobacco
products
should be an adult choice. British American Tobacco Bangladesh will
carry
out its advertising programmes, including promotional activities for
tobacco
products (“Advertising”) in a reasonable manner.

1.3 These principles provide the standard by which we ensure that our
Advertising efforts are consistent with this position. They will be
applied
to a rigorous standard, and with regard to the cultural environment and
the
local law and / or industry code. For the purpose of these Principles,
an
adult is defined as anyone who is 18 years of age over as the law of
Bangladesh.

1.4 British American Tobacco Bangladesh has, therefore, required that


these
standards should be supported by a policy statement on such matters and
should also incorporate implementation procedures to ensure that
compliance
is certain and is monitored.

2. Policy
2.1 It is the policy of British American Tobacco Bangladesh to strictly
abide by all laws and regulations affecting our product advertisement
and
promotional activities and to maintain the highest industry ethical
standards in this respect.

2.2 It must, therefore, be clearly understood by all concerned managers


that
the company’s product advertisement and promotional activities under
all
circumstances,
- comply with all applicable laws and legal codes of practice, where
existing
- comply with all applicable advertising codes, where existing
- is intended for and will be directed at Adult smokers.
- will not be false or misleading
- Will not make health claims about tobacco products or smoking. Will
not
depict the use of tobacco products as being as essential to sexual
success.
- Will not allow any younger person to appear in advertising, nor
appear
younger, than 25 years of age.
- promotional items and premiums bearing tobacco trade marks will be
directed only to Adults and smokers.
- Does not allow the employees to criticise or compare competitive
goods
with our products in a derogatory manner.
- Should not contain any elements of lottery or a game of chance.
- Will not include any benefit, prize, and reward at point of sale or
purchase of any product.
- Will allow only those participants who can display some skills/talent
in
order to participate.
- Should not offer such thing which is linked to sale.(No proof of
purchase).
- Will not use coupon, tickets, number or figure or any other device.
- are in accordance with industry agreements, if any
- adhere to established ethical standards, i.e., statements as to
quality or
performance, competition reference, health warning, conflicting
statements,
social acceptability, religious sentiments, etc.
- are not liable to or provoke legal actions
- are not damaging to the Company’s reputation or its standing in the
community.
The Company will take serious actions against any individual or
individuals
failing to comply with this Policy.

2.3 Ignorance of applicable laws, regulations and codes will not be


acceptable in principle and managers committing breaches of the Policy
will
have to fully convince the Company that such actions were in good faith
and
in absence of any knowledge of contravention.
2.4 There will be two Health Warning Clauses for any tobacco
advertising in
television and radio. Both the warnings will be accompanied by voice
over
in Bangla.

2.5 The size of the Health Warning Clause on all tobacco communication
will
be 10% of the total communication area.

2.6 Proof of age (minimum 18) for participation in and attendance to


all
sponsored social, cultural, musical and sporting events shall be
mandatory
and publicised.

2.7 No advertising will be displayed through any media primarily meant


for
schools ( both primary and secondary), hospitals, places of worship or
on
the compound walls of the above mentioned institution.

2.8 No billboard or hoarding advertising tobacco products will be


placed
adjacent to or opposite the compound walls of schools (primary and
secondary), hospitals, places of worship.

2.9 To ensure compliance and that lapses do not occur, all product
advertisement and promotional plans company-wide must be submitted to
the
Secretarial Department for confirmation of legal compliance prior to
the
issue or implementation. However, re-run or reuse of advertisement and
promotional plans which have been earlier confirmed by the Secretarial
Department need not be resubmitted unless the concerned manager is in
doubt
of its full compliance with this Policy at the time of reissue.
Advertising
agencies dealing with Company’s business must be thoroughly appraised
of
this Policy and warned of the consequences.

2.10 No payment shall be made for the placement of Advertising or


tobacco
product in any film produced for viewing by the general public.

2.11 Any breaches of this policy should be brought to the immediate


attention of Head of Brand, Head of Trade and Distribution, Head of
CORA and
Company Secretary.

Non-Adults

2.12 The Company’s policy on advertisement and promotional activities


as
regards non-adults is based on our opinion that smoking is an adult
choice.
The Company is totally opposed to smoking by non-adults and it is
strictly
against our policy to encourage non-adults to smoke. The Company will
support any efforts of authorities to prevent the exposure and sale of
cigarettes to non-adults.

2.13 Therefore, Company’s advertisement and promotional campaigns must


not
be such which could be interpreted as encouraging non-adults to smoke.
Likewise, the advertisements and promotional activities must not be
placed
or timed where the majority of targeted people are non-adults.
Advertisements and promotions must not involve or feature non-adults.

2.14 Where television and radio advertising is permitted, it will only


be
broadcast in those hours when programming is primarily directed to
adults.

2.15 It is our intent that Advertising will not be displayed on


billboards
directed at or in close physical proximity to schools or other
facilities
mainly used by persons under Adult age.

2.16 Print advertising will not be placed in publications primarily


directed
to person under Adult age. Cinema adverting will not be shown during
films
directed primarily at persons under Adult age or at times when the
audience
is likely primarily to comprise persons under adult age.

2.17 Direct marketing, market research and sampling of tobacco products


will
only be carried out with, or in relation to, Adult and smokers.

2.18 Any material received from any agency or third party which does
not
comply with this Policy will be rejected and a written reply to this
effect
will be sent to the party concerned.
3. Policy Implementation

3.1 To ensure that this Policy has been clearly understood by all
concerned,
that administrative procedures are adequate and effective to ensure
compliance, and that breaches of the Policy are brought to the
immediate
attention of the Company, following measures have been brought into
effect.
The Marketing Manager will fully explain these procedures to the
concerned
managers.
- issue of the Policy to all advertising agencies engaged by the
Company.
- Issue of the Policy to Head of Brand, Head of Trade and
Distribution,
Head of CORA and Company Secretary.
- Holding of discussion meeting at the time of issue of the Policy
- Yearly appraisal of individual managers will record any
non-compliance of
the Policy
- Monthly meetings both at Unit and Head office level will also record
any
non-compliance
- Monthly reports on breaches of the Policy
- Periodical review of compliance and administrative measures by
internal
audit.
- Yearly confirmation in a Board meeting.
The Policy comes into effect immediately on issue

[ Note: This is the updated version of Advertising and Promotion Policy


1988. In this Policy, A few standards of Business Conduct and Marketing
Code
of Conduct of BATB and Section 294(B), Bangladesh Penal Code was
incorporated.]

[ This is a Power Point Presentation on Records Management prepared for


“Records Management Knowledge Seminar”. Earlier a longer presentation
was
used for such seminar or training programs. This time it was shortened.
]

Record- Definition
A record is any paper, micro film, electronic or other information
medium
created or received by a company and its employees in the course of
business.
Records include, but are not limited to, all papers, books,
photographs,
microfilm, maps, drawings, charts, discs, audio and video tapes.

Records Management
An administrative system by which an organization seeks to control the
creation, distribution, filing, retrieval, storage and disposal of the
records which are created or received by that organization in the
course of
its business.
Records Management Aspects
Records Management is about managing records from the time they are
created
or received until they are disposed of or sent to permanent storage.
We concentrate on two aspects.
? Creation
? Retention and disposal

Records creation
Any way in which a record can be produced, whether by writing, typing,
drawing, copying, recording or by electronic or other means.

Records Retention
The whole process by which a company:
• Decides how long it needs to keep its records;
• Formally records its decisions as Approved Retention Schedules;
• Ensure compliance with those Schedules, including prompt disposal of
records which are no longer required.

Retention Schedules
Comprehensive listings of records held by an organization, giving a
variety
of
information about each category (series) of records, such as:
? Title, brief description, and media code;
? Whether the record is in the department responsible for keeping
it;
? Approved retention periods;
? Details of it and when records are to be sent to the storage;
? Disposal instructions;
There are two types of Retention schedule:
? General schedule for all workgroups
This lists all the common records which are found in most offices. It
is
used by
everyone who handles records.
? Workgroup schedule
This lists all those records specified to a particular work area

Records Series
A group of records arranged in a common file structure and/or set of
sequences (usually
in numerical, alphabetical or date order or in a computer directory or
sub-directory).
All the records in a series relate to a similar type of activity, are
in the
same physical
form and have the same retention period.( E.g. Bank is a series and
SCB,CAI,Pubali,
Sonali is file)

A series can consist of one file or many hundreds, depending on the


type of
records
involved.

Workgroup
A Workgroup consists of one or more people sharing a common body of
work,
information and therefore records. (e.g.Trade Development )
It may or may not be the same as a department, or section within a
Department, as shown on an organization chart.

Department of Record
The Department or Workgroup responsible for keeping the original or
"official" copy of a
record.
Department of Record is abbreviated to "DR" on the forms. (E.g.
Corporate
Reporting is DR for Budget, HR is DR for Salary) )

Program objective
? Retention for proper time periods
To ensure that Company records are maintained for as long as they are
needed
and no longer, taking into account business, legal, tax, audit and
archival
requirements

? Prompt disposition of unneeded records


To ensure that records are disposed of promptly when the needs of
the
Company have been met.

? Improved records creation and filing practice


To ensure records are only created if there is an identifiable
business
reason for them and are only filed if they are of lasting value to the
Company.
? Volume reduction and cost savings
To reduce the quantity of records maintained, together with the
associated storage costs.

? Business efficiency
To improve and update management of records to maximise their use
as a
business resource.

Policies
Records include all paper, microfilm, electronic or other information
media
created or received by an organisation and its employees, regardless of
location.

? Ownership of records
All records created or received by employees in the course of business
are
the property of the company concerned and do not belong to individuals
or
departments.
? Records Retention Decisions
The Company decides how long to retain its records

? Creation of Records
Records should be created only if there is an identifiable business
&
Regulatory
need for them. Personal or telephone communication is often more
effective
than
writing.

? Default Retention Period


Records are to be destroyed within three years (two years plus
current)
unless a specific reason is identified for longer retention

? Temporary Records
Records of a temporary nature (drafts, messages, personal reminder
notes, etc.) are to be destroyed as soon as possible and not filed.

? Routine Records
Other records of a routine nature (general correspondence and
administration, covering memos, travel details, etc.) should be
destroyed as
soon as they have met immediate needs.

? Copies
The number of copies of any record should be kept to a minimum.
Individuals
receiving copies from others inside the Company should destroy them
when
they have met immediate needs.

? Employee Changes
Any records left by employees who leave the Company or are transferred
within the Company are to be reviewed and either disposed of or
integrated
into existing files as soon as possible.
? Hold Orders
Normal destruction procedures must be suspended if a specific
instruction
("Hold
Order")is given in response to legal, tax or audit advice.

? Storage of Records
Records identified on an approved Retention Schedule as having long
(generally over three years) or permanent retention periods and high
volumes
should be stored in the most appropriate and cost-effective way.

? Updating Instructions
Retention Schedules and procedures must be updated as necessary to
reflect
any changes in operational or legal requirements.

? Yearly Review
A review of all records must be made at least once a year to ensure
retention or destruction in accordance with the Retention Schedules.

? Destruction methods
Methods of destruction should be appropriate to the type of record
to
ensure security where required.

? Yearly Audits
An audit should be conducted at least once a year to ensure
compliance
with the approved Retention Schedules.
? Improved Records Management
While reviewing records retention requirements, opportunities
should be
taken to identify areas for further improvement in records management
procedures.

What is Records Creation?

Any way in which a record can be produced, including:


? writing
? typing
? drawing
? copying
? recording
? electronic means (HDD, Tape Backup, etc.)
Records Creation Guidelines

Think before you write


The key point to remember about records creation:
? What is the purpose of the record?
? What is the most effective way to communicate the information?
» Phone
» e-mail
» time and cost

Never create records “Just in case”


Have a real business reason for everything you produce, don't create
records
just in case they may be needed later
Does it really need to be in writing to do the job?
? Who needs to know and when?
? Talk on the phone
? Remember that using Lotus Notes creates records
? Memos and notes take time and cost money
How sensitive is the information?

? Use the "mental copy rule"


» Imagine your record will be seen by the person that you would least
like
to read it.
» Assume that it will be.

? Would you still write it?


If so - would you still write it the same way?

If it really needs to be written down:


? Be precise
? Avoid inflammatory or personal remarks
? Indicate speculation, personal views or the views of third parties.
? Don’t give “expert” advice in those areas in which you are not an
expert
? Ensure accuracy and quality
Keep copies to a minimum
How many copies are really required?
• Only copy to people who need the information
• Have a sound business reason for each copy you send
• Remember Each copy costs time and money

Ensure records are dated and mark drafts clearly


? Date marking is essential for retention/disposal
? Drafts can be disposed of when the next version is produced

Records Creation-Summary
? Think before you write
? Never create records ”just in case”
? Does it really need to be in writing
? How sensitive is the information?
? If you must write: Be precise, Avoid personal or inflammatory
remarks, Don’t give expert advice, ensure accuracy
? Keep copies to a minimum
? Date all records and mark drafts

Records Creation Benefits

IF WE ALL WRITE LESS AND TALK MORE WE GET:


? Improved communication
? Reduced costs
? Improved productivity
? Better teamwork
? Reduced potential for legal and PR problems

Records filing guidelines


1. Think before you make a filing decision
Just because a record was created or received does not mean it has to
be
filed
2. Do not file “Temporary” records
– Most hand-written documents are intended to be temporary.
– Dispose of messages and personal reminder notes as soon as possible
3. Do not file “Drafts”
– Date all drafts
– Keep only until the next version is produced and in any case no
longer
than six months
– Don’t put draft documents into long-term files
– Don’t forget drafts in electronic form
4. Dispose of routine records as soon as they have met immediate needs
Do not:
– file routine records relating to dated events which are of little or
no
value after a short time
– keep “housekeeping” records
5. If you must file something, only file one copy
– Do not file several copies in different places
– Don’t forget your computer records and copies
– In relation to internal communications:
– Only keep a copy if you need it for your work
– Many records will be kept by the department which produced them

Summary - Records filing guidelines


? Think before you make a filing decision
? Do not file “Temporary” records
? Do not file “Drafts”
? Dispose of routine records as soon as they have met immediate needs
? If you must file something, only file one copy

Program Responsibilities
Individual Manager
Ultimate responsibility of records management
Records Coordinators
Co-ordinate with in the Department
Workgroup Managers
Workgroup managers determine business retention periods and supervise
disposals
Facility Managers
Ensures records management within the facility
Department Managers.
Ensures that annual disposals take place and Certify to General Manager
that
disposals have been done correctly
General Manager
Overall responsibility and preparation of annual compliance statement
for
BAT Board.

Annual Compliance Statements


A compliance statement certifies that the Retention Schedule are being
complied with, and says:
? Those records still required are being maintained
? Those records which are no longer required have disposed of.
Railway Station Waiting Room Beautification
Project of Corporate Social Responsibility of BATBD.

Prelude:
As we are involved with a controversial Industry, it is very important
for
us to build our corporate reputation by maintaining a healthy
relationship
with various stakeholders like Government, employees, stockholders,
consumers and society. As we all are aware about the poor condition of
the
railway stations of Bangladesh specially the waiting room, we want to
provide our sincere effort to improve the condition of waiting rooms of
very
important railway stations of two routes- Rajshahi to Shantahar and
Dhaka to
Sylhet and based on the experience new action plan will be prepared.
Objective:
• To enhance the image and reputation of the company.
• To make the people understand that we share social responsibility.
• To show a new path to the Railway about customer care.
• To become one of the top F.M.C.G Company in Bangladesh.
Strategy:
• The stations to be identified through comprehensive data collection
to
assess the traffic.
? The market research agency can involve the local college students
(above 18 Years of Age) for the aforesaid purpose which will promote
company
name.
• Based on the survey, 15 heavy traffic railway station of
Rajshahi-Shatahar
Route of North Bengal and another 15 of Dhaka-Sylhet Route of East
Bengal
will be taken for modernizing the waiting room. Initially 3 heavy
traffic
stations from each route will be taken in the pilot project as a trial
and
error basis for better understanding.
• Local TMD and Distributor to be involved to participate in the
project
along with HO support.
• The cleaners should be provided dress with Company name and logo.
This
will promote the company name to the general people.
• A separate smoking corner should be there as many passengers will
definitely smoke in the waiting room which is risky for children and
non-adults. In the waiting room, campaign against non-adults smoking
can be
carried out which will prove how much caring we are about the future
generation and general people.

Activities:
• Identified stations to be marked with joint survey.
• A formal meeting to be organized with Railway Authority to assess
their
views.
• A meeting to be organized with Communication Ministry to obtain their
agreement support to undertake the task.
• A meeting to be organized with local TM&D and Distributors for their
support.
Especial Facilities:
• Marked area for saying prayers.
Execution:
If above points are cleared, we have to assess the fixed cost and
running
cost.

Cost Assumption for 30 stations


Fixed Cost
1. Sanitary Latrine for male and female to be built if not available.
It
will cost
Tk.100,000.00 per station * 30 =
Tk.3,000,000.00

2. Tube well to be sunked to provide water supply.


Tk. 10,000 per station * 30 =Tk. 300000.00
3. Sitting chairs to be placed in each station.
Tk.500 per Chair * 20*30 = Tk.300000.00
4. Painting of the existing rooms
Tk. 5000 per station * 30 = Tk.150,000.00
5. A separate corner for smoking by hard-board.
Tk. 2000 Per station* 30 = Tk. 60,000.00
6. New doors and windows if not in good shape
Tk. 3000 per station* 30 = Tk. 90000.00
7. One ceiling fan if not available.
Tk.2000 per station * 30 = Tk. 60,000.00
8. One standard Mirror (Wall).
Tk.1000 per station * 30 = Tk. 30,000.00
Total Fixed Cost : Tk. 39,90,000
Running Cost:
1. One cleaner for 3 station to clean the room and latrine once in a
day.
Tk.40001* 10 = Tk.40,000
2. One supervisor in each route to ensure that the cleaners are working
properly and all the activities provided are functioning properly.
Tk. 6000 * 2 = Tk.12000.00
3. Cleaning materials like broom, harpic will cost
Tk.100*30 = Tk. 3000 .
4. Others cost (like lights, Badna, maintenance of waiting room and
tube
well)
Tk 500*30=Tk. 15000.00
Total Running Cost : Tk. 70,000

Total Cost for the 1st Year : Tk.40,60,000


Cost assumption for 6 stations
Fixed Cost
1. Sanitary Latrine for male and female to be built if not available.
It
will cost
Tk.100,000.00 per station * 6 =
Tk.600,000.00
2. Tube well to be sunked to provide water supply.
Tk. 10,000 per station * 6 =Tk. 60000.00
3. Sitting chairs to be placed in each station.
Tk.500 per Chair * 20*6 = Tk.60000.00
4. Painting of the existing rooms
Tk. 5000 per station * 6 = Tk.30,000.00
5. A separate corner for smoking by hard-board.
Tk. 2000 Per station* 6 = Tk. 12,000.00
6. New doors and windows if not in good shape
Tk. 3000 per station* 6 = Tk. 18000.00
7. One ceiling fan if not available.
Tk.2000 per station * 6 = Tk. 12,000.00
8. One standard Mirror (Wall).
Tk.1000 per station * 6 = Tk. 6,000.00
Total Fixed Cost : Tk. 7,98,000.00

Running Cost
1. One cleaner for 3 station to clean the room and latrine once in a
day.
Tk.40001* 2 = Tk.8,000
2. One supervisor in each route to ensure that the cleaners are working
properly and all the activities provided are functioning properly.
Tk. 6000 * 2 = Tk.12000.00
3. Cleaning materials like broom, harpic will cost
Tk.100*6 = Tk. 600 .
4. Others cost (like lights, Badna, maintenance of waiting room and
tube
well)
Tk 500*6=Tk. 3000.00
Total Running Cost : Tk. 8,21,600.00

Where to report :
The reporting or contact point will be nearest distributors for
disbursement
of salary and supervisors will take any administrative action with the
consent of the T.O. or Regional Office.
How the Co-ordination will take place:
From the Head Office Department of CORA will maintain liaison with the
regional office of TM & D and will observe how the project is going on.
Conclusion:
The project will be carried out for two years and then it will be
handed
over to Railway authority. By this time, if per day 1000 people move
through
these 30 stations total 30,000 people will get our message. If 15% of
them
or adult smokers, at least 5% of those will prefer our products.

Prelude:
As we are involved with a controversial Industry, it is very important
for
us to build our corporate reputation by maintaining a healthy
relationship
with various stakeholders like Government, employees, stockholders,
consumers and society. This time to meet social responsibility, our
sincere
effort will be delivered to the poor cataract patients.

Although no reliable statistics on blindness is available for


Bangladesh, in
line with WHO estimation the cataract blindness is expected to
represent
approximately 0.6% of total population. The project area, having a
population of 5.0 million should therefore have 30,000 number of
cataract
patients. Adding 50% for bilateral blindness, number of cataract eyes
available for immediate restoration of sight is 45,000.

This number of patients is expected to grow at the rate of 20% each


year as
new incidence i.e., yearly 6,000 and 24,000 by the year 2004 if not
addressed immediately. Thus the figure appears 54,000 by the year 2004,
excluding the bilateral blindness.

A blind person with disability is expected to live for 15 years. So


annual
loss of per capita income due to loss of productivity for cataract
blindness
alone is US $ 300 x 54,000 =
$ 1,62,00,000 US Dollar per annum in the proposed project area i.e. in
only
two districts of northern Bangladesh.

This accounts for Taka 80 crores approximately. Therefore, restoration


of
sight over 6/18 level has the potentiality to bring back the productive
life
in the disabled persons, which can be financially expressed as Taka 80
crores annually in only two small northern districts of Bangladesh.
Objective:
• To enhance the image and reputation of the company.
• To make the people understand that we share social responsibility.
• To create impact in the GDP of Bangladesh.
• To make the unproductive blind people productive.

Why Rangpur and Gaibandha District:


The people of northern districts are mostly poor and thus leading a
life
with poverty, mal-nutrition, communicable diseases, natural disasters
like
flood, cyclones add to this situation every year.

The growing dimensions of poverty presents a major challenge for the


government as it enters the next century. The national population
growth
rate is 1.8 per cent per anum placing serious pressures on land,
utilities,
services and shelter

The scenario is almost same for all over the Bangladesh but we must not
forget these are the two districts which are famous for tobacco
cultivation
and now we can see a declining trend of tobacco cultivation over there.

Strategy:

• Local TMD and Distributor to be involved to participate in the


project
along with HO support.
• Initially the field officer will select the patient and his financial
condition will be verified by local chairman or member and if local
TM&D is
satisfied with the documents, operation will be done. After the
operation
CERCE will send necessary papers to local TM&D and thus monitoring and
execution can be done.
• Only the people who do not have the ability to carry out the
operating
cost will be supported and the people will be identified with the help
of
the field organizer of the aforesaid hospital.
• There are 17 Thana in Rangpur and Gaibandha district and 100
patients
from each thana will get the support. And the rest budget for 300
patients
will be allocated based on population and for the neighboring districts
as
patients of CERCE are scattered in various districts.
• The company logo and name and the role of the company to meet the
social
responsibility will be highlighted by CERCE and for this, support will
be
provided by local TM&D .
• Local and national dailies will cover the news.
• With the prescription, the company’s say about non-adult smoking can
be
added.
• One T-Shirt can be given to the operated person (male) containing BAT
logo
and name in one side and the monogram of CERCE on the other side. This
will
be presented in a way that will show that CERCE is thanking BAT for
their
support.
• A banner containing “Thanks to British American Tobacco for
supporting
Cataract patients” can be hung on the front of the hospital.
• Now BAT will support the people of two aforesaid districts and based
on
result and experience, the long term planning can be done for the whole
country.
• The program can be expanded to other districts after observing the
result.

Cost Allocation:

For Operation (2000 Person) = 2000*Tk.500= Tk. 10,000,00


T-Shirt = 2000 * Tk. 40= Tk. 80,000
Total= = Tk.10,80,000

Activities:
• A formal meeting to be organized with CERCE to assess their views.
• A meeting to be organized with local TM&D and Distributors for their
support.
Benefits:

• By spending Tk.500 for each patient, BATB will help to generate


Tk.500*54=
Tk.27000 to the national economy.
• If 100 patients from each Thana can be covered, almost all the people
of
this two districts will know the name of BATB and definitely the people
will
likely to prefer BATB’s brand as BATB’s name will be in their heart.
• As the hospital is on the main road (Dhaka-Rangpur) , the banner will
be
viewed by at least 2000 people each day.
• A feeling that BATB is always beside the poor people of these two
districts which are famous for tobacco cultivation. In the crisis
period,
hopefully the people will be with BATB.
• As in the screening and selection process of patients local leaders
are
included they will also be in difficulty to talk against BATB or its
products instead they will have to praise BATB’s activities as their
potential voters are taking the service.

How the Co-ordination will take place:


From the Head Office Department of CORA will maintain liaison with the
regional office of TM & D and will observe how the project is going on.

Conclusion:

The discussion above had provided clarity transparency of goal,


purpose,
expected results and required activities to produce the results.

Looking very ambitious though, the proposal has been made on necessity
for
the proposed area . The target is not ambitious and very much possible
to be
accomplished if BATB extends its support to these poor people.

Attachment: Patient Screening Program Carried out By CERCE, Rangpur.

Data Collected from P.S.P Carried out by Community Eye Care and
Research
Center:

Sl.No Date Name of the Area Total Number of Patients Operation ECCE
DCR
1 14/9/00 Shukurer Hat College
Thana:- Mithapukur
Dist: Rangpur 150 36 36 -
2 17/9/00 Tepa Modhupur College
Thana:- Kawnia
Dist: Rangpur 109 13 11 2
3 19/9/00 Taraganj Ecorchali Union
Thana:- Taraganj
Dist: Rangpur 158 29 29 -
4 26/9/00 Chowdhurani College
Thana:-Pirgachha
Dist: Rangpur 191 38 34 4
5 28/9/00 Paglapir College
Thana: Gangachara
Dist: Rangpur 119 24 18 6
6 11/10/00 Zaigir Edulpur Madrasha
Thana: Mithapukur
Dist: Rangpur 113 29 27 2
7 16/10/00 Shatibari Islam Alem Madrasha
Thana: Mithapukur
Dist: Rangpur 140 26 22 4
8 18/10/00 Pirganj College
Thana: Pirganj
Dist: Rangpur 100 26 25 1
9 21/100/00 Pirgachha Thana Complex
Thana: Pirgachha
Dist: Rangpur 148 22 20 2
10 23/10/00 Kawnia Girls’ School
Thana: Kawnia
Dist: Rangpur 159 38 31 7
11 3/11/00 Badarganj High School
Dist: Badarganj
Dist: Rangpur 135 29 28 1
12 8/11/00 Kishha Dimukhi High School
Thana: Kawnia
Dist; Rangpur 127 37 32 5
13 30/01/01 Shadullapur Hospital
Thana & Dist: Gaibandha 111 30 25 5
14 3/2/01 Saidpur Golger Boarding
Thana: Saidpur
Dist: Nilphamari 104 29 35 1
15 16/3/01 Gaibandha
Thana & Dsit: Gaibandha 200 29 27 2
16 20/3/01 Sundarganj High School
Thana: Pirgachha
Dist: Rangpur 168 27 25 2
17 24/03/01 Tulshi Ghat High School
Thana & Dist: Gaibandha 150 50 46 4
18 28/03/01 Saidpur Gilger Boarding
Thana: Saidpur
Dist: Nilphamari 103 22 20 2
19 20/4/01 Gaibandha Hospital
Thana & Dist: Gaibandha 117 29 28 1
[These two Checklists were prepared to ensure compliance with the
statutory
requirements of DSE , CSE and Companies Act 94.]

Statutory Listing Requirements of DSE and CSE

Sl. No. Regl. No. Action Target date/ Compliance


1. 11(2) Consolidation or splitting of share certificates into
marketable
lots. Within 45 days of application.
2. 12(1) Signature verification (need not be accompanied by share
certificates) Within 72 hours of such request.
3. 12(2) Share transfer registration and delivery of certificates
Within 45
days of application.
4. 13(1) Notice of Book Closure to the Exchange. Min.14 days prior to
the
closure.
5. 15(1,2)Intimation of Dividend/other entitlements to DSE. As
recommended by directors and not later than 14 days prior to book
closure.
6. 16 Send to DSE half-yearly/annual accounts. As soon as approved by
the
directors.
7. 17(1) Send to DSE 50 copies of reports and audited accounts. At
least 14
days before AGM.
8. 17(3) Send to DSE 50 copies of half-yearly accounts. As soon as
printed.
9. 17(2) Send to DSE copies of all notices/resolution.As & when
despatched
to shareholders.
10. 18(1 i) Dispatch of Interim Dividend warrants to shareholders by
regd.
post/courier. Within 60 days from the dt of declaration at BM.
11. 18(1 ii)Dispatch of Final Dividend warrants to shareholders by
regd.
post/courier. Within 60 days from the dt. of AGM apprvg. Div.
12. 18(1 iii) Despatch of bonus share certificates. Within 60 days from
the
dt. of AGM apprv. Bonus
13. 18(1 iv) Inform DSE on completion of despatch of div.
warrants/bonus
share certificates As soon as all posted.
14. 19(1) Hold AGM and place BS, P/L A/C & , Cash Flow Statement.
Within 9
months from the close of financial year.
15. 20(1) Send to DSE/SEC copies of minutes of AGM/EGM. Within 60
days
of
such meeting.
16. 20(2) Send to DSE/SEC a summarised list of shareholders as at 30/6
and
31/12. Within 30 days thereof.
17. 21 Advise DSE/SEC re any changes in authorised/issued capital,
bonus/right issue. ASAs decisions taken by the Board.
18. 22 (1) Issue entitlement letters/right offers to shareholders.
Within 45
days from re-opening of shr.tr. register.
19 23 (1) Issue & dispatch bonus share certificates to the shareholders
by
regd post/courier Within 60 days from re-opening of shr.tr. register.
20. 25. Notify DSE/SEC re. changes in Board of Directors by
addition/removal
etc. Immediately
21. 26. Notify DSE/SEC re. any proposed amendment in the
Memorandum/Articles. Before placed for approval of the shareholders.

Sl. No. Regl. No. Action Target date/ Compliance

22. 27 Notify the DSE/SEC in respect of any material change in the


nature of
its business including acquisition or sale or purchase of major
operating
assets, franchise, brand name, goodwill, royalty andall relevant
information
such as consideration, terms of payment, period of use of such
facilities
and projected gains and also risk or uncertain factors to accrue to the
company. Immediate
23. 29 Intimate to the DSE/SEC the date and time of holding of its
annual
general meeting or extraordinary general meetings 14 days before the
event
24 30 Notify the DSE/SEC the date and time of its Council meeting
specially
called for consideration of its accounts and for declaration of any
entitlement for the shareholders In advance
25 36(A)(1) Supply the SEC any information concerning the Company or
any of
its subsidiaries necessary to avoid the establishment of a false marked
in
the company’s securities or which would be likely to materially affect
the
price of its securities. Immediately
26 36(A)(4) Intention to fix a book closing date and the reason
thereof,
stating the book closure date At least 14 market days after the date of
notification to the SEC
28 36(A)(6)
(a)(i) Announcement of a payment of an interim dividend, the rate and
amount
per share and date of such payment. Before the expiry of 60 market days
from
the date of announcement (Should be communicated to SEC by telephone)
29 36(A)(6)
(a)(ii) Recommendation of a final dividend, the rate and amount per
share
and date of payment Before the expiry of 60 market days from the date
of
declaration (Should be communicated to SEC by telephone)
30 36(A)(6)
(b) Decision to change the Capital Structure of the Company by way of a
Rights or a Bonus Issue. (Should be communicated to SEC by telephone)
31 36(A)(9)
(a) Make available to SEC and shareholders, a half yearly Financial
Statement signed by the Chairman or chief executive and the Finance
Director
or in his absence, the Chief Accountant. Before 1 month of half yearly
period
32 36(A)(9)
(b) Make the Financial Statements available to the SEC even if the
figures
are provisional and subject to audit Before the expiry of 3 months from
the
end of each financial year
33 36(A)
(10)Notify any intention to pass a resolution at any members’
meeting
to SEC at the same time convey to the shareholders. Send duly stamped
proxy
forms to shareholders. Notify within 3 market days after the date of
the
meeting
34 36(11) Notify any change of address of the registered office. Notify
SEC
immediately
35 36(12) Notify any change in the Directors, Company Secretary,
Registers
or Auditors of the Company Notify SEC immediately
36 36(13) Notify any change of substantial share holding in the Company
and
details thereof Notify SEC immediately
37 40 Inform SEC as and when a report is lodged with the Company on any
loss
certificates or when the Company discovers a forgery in a certificate
of the
Company. Immediately

Annual published accounts and report shall contain among other


information

1) A full list of Investment (quoted and unquoted) held outside the


group as
investments by the Company.

2) Holdings in Associate and Subsidiaries with the relative percentage.

3) A distribution schedule of each class of equity security setting out


the
number of holders and percentage in the following categories:

No. of Holders Holdings Total Holdings %


Less than 500 shares
500 to 5000 shares
5,001 to 10,000 shares
10,001 to 20,000 shares
20,001 to 30,000 shares
30,001 to 40,000 shares
40,001 to 50,000 shares
50,001 to 100,000 share
100,001 to 1,000,000 shares
Over 1,000,000 shares
4) A Director Report, in addition to the requirements of the Companies
Act,
1994 shall contain:
(i) Names of the persons who were at any time during the Financial
Year,
Directors of the Company.
(ii) The principal activities of the Company and its subsidiaries
during the
year and any changes therein.
(iii) Significant changes in the Company’s or its subsidiaries fixed
assets
and the market value of land, if the value differs substantially from
the
book value.
(iv) If any shares or debentures have been issued, the number, class
and
consideration received and the reason for the issue.
(v) Details of any arrangement whereby the Company enables Directors to
acquire benefits by means of acquisitions of shares or debentures of
the
Company or any body corporate, explaining the effect of the
arrangements and
giving names of the directors who, at any time during this year, were
Directors and held, or whose nominees held, shares or debentures
acquired as
a result of the arrangements.
(vi) A statement for each director whether or not he had an interest in
any
other body corporate within the group, specifying the number and amount
of
shares and debentures held at the beginning and end of each Financial
Year
(or it was not a Director at the beginning of the year, the details
when he
became a Director)
(vii) If turnover is attributable to two or more substantially
differing
classes of business, the proportions in which the turnover is divided
among
these classes, also operating profit and asset allocation.
(viii) The sum total of contributions made to Government approved
charities
and other charities by the Company, if in respect of each category, if
exceeds Tk. 50,000.
(ix) Where items are shown in the Directors’ Report instead of in the
accounts of the Company, the corresponding amounts for the immediately
preceding year must also be shown.

5) A Chairman’s Report which shall include events occurring after the


Balance Sheet Date as required by the Bangladesh Accounting Standards
on
“Contingencies and Event occurring after the Balance Sheet Date”.

Violation Amount of fine to be paid to SEC


Delays in submission of half-yearly reports Tk. 500 per day
Delays in submission of Annual Provisional accounts Tk. 500 per day
Delays in dispatching audited accounts Tk. 500 per day
Delays in payment of Annual Listing Fees Tk. 500 per day
Delays in the registration of share transfers Tk. 100 per day
Companies Act 1994

Balance Sheet, Statements, Books etc.

Sl. No. Clause Description Action


01 181(5) The books of accounts relating to a period of not less than
12
years immediately preceding the current year together with vouchers
shall be
preserved in good order. In case of violation six months prison or
fine.
02 183(1) The board of directors shall at every AGM held in pursuance
of
section 81 lay before the company a balance sheet together with a
profit and
loss account.
03 183(4) Financial Year may be more or less than a calendar year but
not
exceeding 15 moths but with permission 18 months.
04 184 Boards report should be attached to balance sheet stating the
company
affairs, the amount, if any which the board proposes to carry to any
reserve
in such balance sheet, material changes and commitment affecting the
financial position.
05 184(4) Board report Should be signed by Chairman or directors
according
to 189(1) & (2)
06 185(1) The balance sheet shall contain a summary of the property and
assets, and of the capital and liabilities giving a true and fair view.
There should be ‘Notes’ at the end. In case of violation 6 months
imprisonment 0r five thousand taka fine.
07 189 Every balance sheet , profit and loss account or income and
expenditure shall be signed on behalf of the Board of Directors by its
secretary and by not less than two directors of the company one of whom
shall be the managing director where there is one.
08 190 Three copies of balance sheet, profit and loss account or the
income
and expenditure account shall be filed with the Registrar after the
AGM.
Within 30 days from the last day of AGM.
09 191 A copy of balance sheet, profit and loss account, auditors
report or
income and expenditure account and other documents should be sent free
of
charge to every shareholders. Not less than 14 days before the date of
the
meeting.

Meeting and Proceeding


Sl. No. Clause Description Action
01 81 AGM should be held in each year but with permission not exceeding
15
months. In each year
02 88 A copy of every special and extraordinary resolution shall be
printed
and duly certified and filed with the Registrar. Within 15 days of
the
meeting.
03 89 A member can request for minutes proceedings after fourteen days
from
the meeting at a charge. Should be executed within seven days.
04 96 Meeting of board of directors At least three or four times in a
year.

Certificate of shares
Sl. No. Clause Description Action
01 158 The allotment of any shares and the registration of transfer of
any
shares should be delivered to the holders Within 90 days.

Inspection and Audit


Sl. No. Clause Description Action
01 210 AT Each AGM, Every company shall appoint an auditor after
receiving
auditors written consent. Auditor should inform the Register within 30
days
of the appointment.
02 212 An auditor must be a ‘Chartered accountant within the meaning of
the
Bangladesh Chartered Accountants Order 1973.

Share Capital, Registration Of Unlimited Company As Limited Company And


Unlimited Liability Of Directors
Sl. No. Clause Description Action
01 34 Every company shall keep in one or more books of register of its
members .
02 35 Every company shall keep an index of the names of the members of
the
company and shall within fourteen days after the date on which any
alternation is made in the registrar members make any necessary
alteration
in the index.
03 36 Every company shall make an annual list of members who have
ceased to
be members since the date of the last return or incase of the first
return
of the incorporation of the company. This should be completed within
21
days after the day of the first or only ordinary general meeting of the
year
and the company shall within that period file with the Registrar.
04 38 Receiving an application for the registration of the transfer of
shares, the company shall enter in its registrar unless objection is
made by
the transferee. Within two weeks.
05 38(4) If the company refuses to registrar the transfer of shares,
notice
of refusal must be sent to transferee and the transferor. Within one
month
06

42 A company may close the registrar of members for any time or times
not
exceeding in the whole 45 days in each year but not exceeding 30 days
at a
time. Seven day’s notice by Advertisement in some newspapers.

AGM, EGM and Dividend

Sl. No. Clause Description Action


01 81 AGM should be held in each year but with permission not exceeding
15
months. In each year
02 190 Three copies of balance sheet, profit and loss account or the
income
and expenditure account shall be filed with the Registrar after the
AGM.
Within 30 days from the last day of AGM.
03 191 A copy of balance sheet, profit and loss account, auditors
report or
income and expenditure account and other documents should be sent free
of
charge to every shareholders. Not less than 14 days before the date of
the
meeting.
03 88 A copy of every special and extraordinary resolution shall be
printed
and duly certified and filed with the Registrar. Within 15 days of the
meeting.
04 36 Every company shall make an annual list of members who have
ceased to
be members since the date of the last return or incase of the first
return
of the incorporation of the company. This should be completed within
21
days after the day of the first or only ordinary general meeting of the
year
and the company shall within that period file with the Registrar.
05 42 A company may close the registrar of members for any time or
times not
exceeding in the whole 45 days in each year but not exceeding 30 days
at a
time. Seven day’s notice by Advertisement in some newspapers.
Conclusion

It is important to remember that though BAT is enjoying monopoly in the


medium and high brand segment of cigarette and turn over is also high,
it
will face difficulty as people are gradually becoming health conscious.
The
negative correlation between health consciousness and smoking signals
difficult time in near future. Anti smoking campaign is a big threat
for
BAT to run thee business. They should look for different other areas to
invest to hedge against possible loss that are likely to occur in near
future. It will also help to minimize the risk through diversification
of
business.

BAT has recently achieved the certification of MRP II Class A, which


recognizes that BATB is a World Class Company which is able to ensure
world-class performance through the development of world class people.
This
particular certification will bring a remarkable change in the market
standing of BATB. Moreover, BATB’s latest business mission is to double
its
revenue in next five years, which is quite possible. But as mentioned
earlier the implementation of existing laws and proposed ‘Tobacco
Control
Act 2000’ may create the barrier of achieving such target.

References

1. Ross Stephen A.: Westerfield, Randolph W.; Jordan, Bradford D. “


Essentials of Corporate Finance”
2. Hickman, Kent A: Hunter Hugo O. & Byrd John W. “ Foundations of
Corporate
Finance”
3. Richardson, Bill, Business Planning: An Approach to Strategic
Management
London: Pitman 1989
4. Block Stanley B: “Foundations of Financial Management”
5. Islam, D.M.A. Former Company Secretary, British American Tobacco
Bangladesh Company Limited.
6. Annual Report (1994-19999) of British American Tobacco Bangladesh
Company
Limited.
7. Nur, Abu Hasan, North South University, Internship Report.
8. Zarreen, Amina, North South University, Internship Report.
9. www. bat.com
10. Companies Act 1994
11. Listing requirements of DSE.
12. BATB Audit Report’99
13. Statistical Year Book 1998
14. Depositories Act, 1999.
Appendix-I
Table 1: The market share of BATB on a national basis
Name of the Company Percentage of the Share
BATB 41%
Dhaka Tobacco 22%
Alpha Tobacco 8%
Sonali Tobacco 3%
Transit 6%
Others 20%
Source: BATB Monthly Audit Report: October 1999.

Table-2: The market shares of all main brands

Name of the Brand


Percentage of Share
Gold Leaf 15%
Navy 7%
London 3%
B & H (Transit & Own) 3%
SE 5553%
Scissors 10%
Star 11%
Others 48%

Source: BATB Monthly Audit Report: October 1999.


Balance Sheet (1994-1999)

British American Tobacco Bangladesh Company Limited

1994 1995 1996 1997 1998 1999


Taka 000s Taka 000s Taka 000s Taka 000s Taka 000s Taka
000s
Current Assets
Stocks 1101585 1251727 1159115 1327179 1661288
1784958
Debtors 31518 111965 25773 57010 101537 108544
Cash & Bank Balances 8014 2303 6314 37735 27800 7564
Total Current Assets 1141117 1365995 1191202 1421924
1790625 1901066

Fixed Assets

Long Term Loans and Advances 1036 1289 1494 2058 1428 1294
Fixed Assets 909501 1189173 1365923 1849022 2180470
2316063

Total Assets 2051654 2556457 2558619 3273004 3972523


4218423

Current Liabilities

Short Term Bank Loans 300000 250000 700000


550000 900000
Creditors & Accruals 396285 531666 611466 606283
769183 1032450
Bank Overdrafts 263128 288323 187584 175074
246230 56796
Provision for Corporate Tax 71735 6984 2792 49664 159983 74887
Proposed Final Dividend 120000 160000 120000 160000
200000 160000
Installments of Medium Term Loans 150000
150000
Total Current Liabilities 851148 1286973 1171842 1691021
2075396
2374133

Long Term Liabilities

Deferred Liabilities 100671 105673 127002 156977


178462 209513
Medium Term Loans 150000
Total Long Term Liabilities 100671 105673 127002 156977
328462 209513

Total Liabilities 951819 1392646 1298844 1847998


2403858 2583646

Equity

Share Capital 400000 400000 400000 400000 400000


400000
Capital Reserve 344160 338630 337603 336376
336374 325764
Revenue Reserve 355675 425181 522172 688630
832291 909013
Total Equity 1099835 1163811 1259775 1425006 1568665
1634777

Total Liabilities & S/E 2051654 2556457 2558619 3273004


3972523 4218423

Income Statement (1994-1999)

British American Tobacco Bangladesh Company Limited

1994 1995 1996 1997 1998 1999


Taka 000s Taka 000s Taka 000s Taka 000s Taka 000s Taka
000s

Gross Turnover 9070235 10729078 12652852 15019602


14322307 14232679
Supplementary Duty, Vat &
Surcharge 6588272 7882805 9179639 10480249 9801620
10029375
Net Turnover 2481963 2846273 3473213 4539353 4520687
4203304

Operating Expenses 2050392 2462031 2988119 3836227


3617745 3729677

EBIT 431571 384242 485094 703126 902942


473627

Interest 26127 53736 73102 81468 131531 131905

EBT 405444 330506 411992 621658 771411


341722

Taxation 119273 21000 75000 135200 267750 105000

Profit After Tax 286171 309506 336992 486458


503661 236722
Common Size Balance Sheet (1994-99)
British American Tobacco Bangladesh Company Limited

1994 1995 1996 1997 1998 1999


Taka 000s Taka 000s Taka 000s Taka 000s Taka 000s Taka
000s
Current Assets

Stocks 53.69 48.96 45.30 40.55 41.82 42.31


Debtors 1.54 4.38 1.01 1.74 2.56 2.57
Cash & Bank Balances 0.39 0.09 0.25 1.15 0.70 0.18
Total Current Assets 55.62 53.43 46.56 43.44 45.08 45.07

Fixed Assets

Long Term Loans and Advances 0.05 0.05 0.06 0.06 0.04 0.03
Fixed Assets 44.33 46.52 53.39 56.49 54.89 54.90

Total Assets 100.00 100.00 100.00 100.00 100.00 100.00


Current Liabilities

Short Term Bank Loans 0.00 11.73 9.77 21.39 13.85 21.33
Creditors & Accruals 19.32 20.80 23.90 18.52 19.36 24.47
Bank Overdrafts 12.83 11.28 7.33 5.35 6.20 1.35
Provision for Corporate Tax 3.50 0.27 0.11 1.52 4.03 1.78
Proposed Final Dividend 5.85 6.26 4.69 4.89 5.03 3.79
Installments of Medium Term Loans 0.00 0.00 0.00 0.00 3.78 3.56
Total Current Liabilities 41.49 50.34 45.80 51.67 52.24 56.28

Long Term Liabilities

Deferred Liabilities 4.91 4.13 4.96 4.80 4.49 4.97


Medium Term Loans 0.00 0.00 0.00 0.00 3.78 0.00
Total Long Term Liabilities 4.91 4.13 4.96 4.80 8.27 4.97

Total Liabilities 46.39 54.48 50.76 56.46 60.51 61.25

Equity

Share Capital 19.50 15.65 15.63 12.22 10.07 9.48


Capital Reserve 16.77 13.25 13.19 10.28 8.47 7.72
Revenue Reserve 17.34 16.63 20.41 21.04 20.95 21.55
Total Equity 53.61 45.52 49.24 43.54 39.49 38.75

Total Liabilities & S/E 100.00 100.00 100.00 100.00 100.00 100.00
Common Size Income Statement(1994-99)

British American Tobacco Bangladesh Company Limited

1994 1995 1996 1997 1998 1999


Taka 000s Taka 000s Taka 000s Taka 000s Taka 000s Taka
000s

Gross Turnover 100.00 100.00 100.00 100.00 100.00 100.00


Supplementary Duty, Vat & Surcharge 72.64 73.47 72.55 69.78 68.44 70.47

Net Turnover 27.36 26.53 27.45 30.22 31.56 29.53

Operating Expenses 22.61 22.95 23.62 25.54 25.26 26.21

EBIT 4.76 3.58 3.83 4.68 6.30 3.33

Interest 0.29 0.50 0.58 0.54 0.92 0.93

EBT 4.47 3.08 3.26 4.14 5.39 2.40

Taxation 1.31 0.20 0.59 0.90 1.87 0.74

Profit After Tax 3.16 2.88 2.66 3.24 3.52 1.66


Forecasted Balance Sheet (2000-2004)

British American Tobacco Bangladesh Company Limited

2000 2001 2002 2003 2004


Taka 000s Taka 000s Taka 000s Taka 000s Taka 000s
Current Assets

Stocks 1862336.5 1999868.3 2137400.1 2274931.8 2412463.6


Debtors 111232.8 122235.17 133237.54 144239.91 155242.29
Cash & Bank Balances 25521.2 28540.114 31559.029 34577.943
37596.857
Total Current Assets 1999090.5 2150643.6 2302196.6 2453749.7
2605302.8

Fixed Assets

Long Term Loans and


Advances 1660.2667 1725.1524 1790.0381 1854.9238 1919.8095
Fixed Assets 2684005.3 2983713.9 3283422.5 3583131 3882839.6

Total Assets 4684756.1 5136082.6 5587409.2 6038735.7 6490062.2


100 110 119 129 139
Current Liabilities

Short Term Bank Loans 990000 1140000 1290000


1440000
Creditors & Accruals 1046708.1 1157799.4 1268890.6 1379981.8
1491073
Bank Overdrafts 85810.933 52369.533 18928.133 -14513.267 -
47954.667
Provision for Corporate Tax 113170.4 128074.09 142977.77 157881.46
172785.14
Proposed Final Dividend 189333.33 199619.05 209904.76 220190.48
230476.19
Installments of Medium Term Loans 150000
Total Current Liabilities 1435022.8 2527862 2780701.3 3033540.5
3436379.7
31%
Long Term Liabilities
Deferred Liabilities 225638.2 248282.54 270926.89 293571.23
316215.57
Medium Term Loans 150000
Total Long Term Liabilities 225638.2 248282.54 270926.89 293571.23
466215.57

Total Liabilities 1660661 2776144.6 3051628.1 3327111.7


3902595.3

Equity

Share Capital 400000 400000 400000 400000 400000


Capital Reserve 326487 323630.57 320774.14 317917.71
315061.29
Revenue Reserve 1037608.1 1156307.5 1275006.9 1393706.2
1512405.6
Total Equity 1764095.1 1879938.1 1995781 2111624 2227466.9

Total Liabilities & S/E 3424756.1 4656082.6 5047409.2 5438735.7


6130062.2

Forecasted Income Statement (2000-2004)

British American Tobacco Bangladesh Company Limited

2000 2001 2002 2003 2004


Taka 000s Taka 000s Taka 000s Taka 000s Taka 000s

Gross Turnover 16566991 17680096 18793200 19906305


21019409
Supplementary Duty, Vat &
Surcharge 11419917 12113133 12806350 13499566 14192782

Net Turnover 5147074.2 5566962.4 5986850.6 6406738.8 6826627

Operating Expenses 4385199.3 4748390 5111580.8 5474771.5


5837962.2

EBIT 761874.87 818572.35 875269.84 931967.32 988664.81

Interest 160042.27 182060.58 204078.9 226097.21 248115.52

EBT 601832.6 636511.77 671190.94 705870.11 740549.29

Taxation 193445.67 214276.67 235107.67 255938.67 276769.67

Profit After Tax 408386.93 422235.1 436083.28 449931.45


463779.62
Ratios

1994 1995 1996 1997 1998 1999


Profitability Average
PM 3.16 2.88 2.66 3.24 3.52 1.66 2.85
ROA 13.95 12.11 13.17 14.86 12.68 5.61 12.06
ROE 26.02 26.59 26.75 34.14 32.11 14.48 26.68
Gross Profit Margin 0.27 0.27 0.27 0.30 0.32 0.30
Payout Ratio 41.93 51.70 35.61 32.89 39.71 67.59 44.90
Plowback ratio 58.07 48.30 64.39 67.11 60.29 32.41 55.10
Growth in Equity 15.11 12.85 17.22 22.91 19.36 4.69 15.36
BEP 0.21 0.15 0.19 0.21 0.23 0.11 0.18

Liquidity Ratio
Current Ratio 1.34 1.06 1.02 0.84 0.86 0.80
Quick Ratio 0.05 0.09 0.03 0.06 0.06 0.05
Assets Management Ratio
1994 1995 1996 1997 1998 1999
Inventory Turnover 8.23 8.57 10.92 11.32 8.62 7.97 9.27
Fixed Asset Turnover 9.96 9.01 9.25 8.11 6.56 6.14 8.17
Total Assets Turnover Ratio 4.42 4.20 4.95 4.59 3.61 3.37 4.19
Capital Intensity Ratio 0.44 0.47 0.53 0.57 0.55 0.55
Current Assets Intensity Ratio 0.56 0.53 0.47 0.43 0.45 0.45
Fixed Assets Turnover Period36.14 39.94 38.91 44.37 54.84 58.62
Total Assets Turnover Period 81.43 85.78 72.80 78.45 99.85 106.70
Inventory Turnover Period 43.72 42.00 32.98 31.81 41.76 45.15
Daily Sales (000s) 25195.10 29802.99 35146.81 41721.12
39784.19
39535.22
Daily Sales Outstanding
Debt Management

Debt Ratio 0.46 0.54 0.51 0.56 0.61 0.61


Debt-Equity Ratio 0.87 1.20 1.03 1.30 1.53 1.58
TIE Ratio 16.52 7.15 6.64 8.63 6.86 3.59

Market Value Ratios

EPS 7.15 7.74 8.42 12.16 12.59 5.92


Dividend Per share 3 4 3 4 5 4

Working Capital

GRVC = CA ( Gross Working Capital) 1,141


1,366
1,191 1,422 1,791
1,901
Net Working Capital 289.969 79.022
19.360
(269.097) (284.771) (473.067)
Payables Deferred Period 4.00 3.55
3.61 3.76 8.26
5.30

Glossary

Balance Sheet : Snapshot of a company’s financial position at a moment


in
time. The left-hand side lists assists and the right hand side lists
liabilities and owners' equity.

Barriers to Entry : Factors that make it difficult and costly for an


organization to enter a particular task.

COGS: It is the cost of goods that is being sold.

Cross-Functional Team: A group of managers from different managers


brought
together to perform organizational tasks.

Current ratio :It measures the short coming debt paying capacity of a
company. It is calculated by dividing current assets by current
liability.

Debt ratio: It measures the proportion of capital supplied by


creditors. It
is calculated by dividing long term debt by total long-term capital.

Depreciation : An accounting expense deigned to reflect the wear and


tear of
use of as long- lived asset.

Dividends: Payments made to stock-holders by the corporation. Cash


dividends
are payments of money. Regular cash dividends are often made quarterly.
Stock dividends are additional shares of stock issued to existing
shareholders.

Dividend Per Share: It measures amount paid as dividend to each share


of
stock. It is calculated by dividing net income by total number of
shares.

Earning per share : It expresses profit on a per share basis. It is


calculated by dividing net income by total number of shares.

EBIT: It is the earning before interest and taxes.

EBT: It is the earning before taxes.

Gross Profit Margin:: It measures product costing in comparison with


its
basic costs. It is measured by deducting cost of goods sold from
revenue and
then dividing the result by revenue.
Income Statement : A record for a period of a company’s operational
activities. Sometimes referred to as a P/L or Profit/Loss statement
because
the bottom line of the report provides profit or loss income
information.

Information: Data that is organized in a meaningful fashion.

Interest Group: An informal group composed of employees seeking to


achieve
a common goal related to their membership in an organization.

Leader : An individual who is able to exert influence over other people


to
achieve group or organizational goals.

Liquidity: The ability of a company to meet its cash needs either from
cash
balances or timely access to cash. Also refers to the cash with which
an
asset or security can be turned into cash.

Merger: The friendly combination of two companies.

Multinational companies: A corporation with investments in at least two


and
often a large number of countries.

Planning: Identifying and selecting appropriate goals and courses of


actions; one of the four principles function of management.
Profit Margin On Sales : It measures earning generated per taka of
sales. It
is measured by dividing net profit by revenue.

Quality: The totality of features and characteristics of a product or


services that bears on its ability to satisfy stated or implied needs.

Quick ratio or acid test : It measures immediate short term liquidity.


It is
calculated by deducting inventory from current assets and then dividing
the
result by current liabilities.

Restructuring : Downsizing an organization by eliminating the jobs of


large
numbers of top, middle and first line managers and non management
employees.

Retained Earning : Profits retained within the firm to help fund


expansion
or repay debt.

Return On Common Equity : It measures the profit accruing to


shareholders
per taka of contributed equity. It is calculated by net income by total
equity.

SEC: Securities and exchange commission.

Times Interest Earned : It measures the ability to make interest


payment. It
is calculated by dividing earnings before interest and taxes by total
amount
of interest (in Tk.) paid every year.

You might also like