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Tobacco business is a centuries old business. It has a very high growth rate and has seen many ups and downs. It has also been controversial over the period of time and has been subject to many types of criticisms. But apart from all these things people do smoke and people want to keep on smoking. I start my discussion with the history of tobacco.

1,000 BC Ancient temple carvings depict Mayan priests in Central America smoking tobacco through a pipe. Tobacco leaves become widespread in medicine for use on wounds as a means of reducing pain. Later the Aztecs incorporate smoke inhalation into religious rituals. Two castes of smokers emerge: the pipe smokers at the court of Montezuma and lesser Aztecs who roll the leaves into crude cigars. 470 - 630AD Mayan tribes begin to scatter - and tobacco travels with them. The leaf moves southwards to South America where it is wrapped in maize and palm leaves and smoked - and north where it is introduced to the native Americans in the Mississippi area. In North America pipes are made from clay, marble or lobster claws. Some pipes, with two stems, are used for inhaling through the nostrils. Tobacco chewing is common, especially in South America where the leaf is mixed with lime. 1492 Arawak people in the Bahamas, on an island Christopher Columbus christens San Salvador, offer the explorer-dried leaves. Not understanding their significance, Columbus discards them. A month later Rodrigo de Jerez and Luis Torres returning from a trip into the interior of Cuba - stumble on villagers inhaling the smoke from burning dried tobacco leaves through a hollow Y-shaped piece of cane called a tobago or tobaca. Jerez is thought to be the first smoker outside the Americas. When Jerez

returns to his home town of Ayamonte, during the Spanish Inquisition, the holy inquisitors accuse him of "consorting with the devil" when they see smoke coming from his mouth. He is imprisoned for seven years. By the time he is released, smoking is a custom in Spain. Jerez perhaps sets a precedent for the plant's controversial future. 1492: Arawak people in the Bahamans North America give Christopher Columbus burning leaves, pipes are made from clay, marble or lobster claws. USE OF TOBACCO IN 20th CENTURY 1900 The Anti Cigarette League publishes a pamphlet claiming links between cigarette smoking and brain disease. 1902 The Imperial Tobacco Company of the United Kingdom and The American Tobacco Company of the United States agree to end a trade war by forming a joint venture, the 'British-American Tobacco Company LTD'. James B. Duke, becomes the venture's first chairman. 1908 The New York City authority bans women from smoking in public. Two weeks later Katie Mulcahey is arrested for violating the rule. As she is led away she declares, "No man shall dictate to me". Cigarette smoking was often seen as a symbol of women's emancipation. 1914Outbreak of World War I. General John J. Pershing, commander-in-chief of the American forces in France in 1917 calls tobacco "indispensable to the daily ration". In Europe troops use cigarettes to pass time and to try to calm their nerves. The popularity of cigarettes in the armed forces associates tobacco with patriotism. 1925 Despite the bans, cigarette sales continue to increase. The American Mercury reports, "The more violently it has been banned, the more popular it has become." 1941 Roosevelt makes tobacco a protected crop as part of the World War II war effort. His wife Eleanor was dubbed "the first lady to smoke in public". 1945 During World War II, smoking increases. By the middle of the next decade, more than a quarter of American women and more than half of American men smoked cigarettes. 1952 Two British researchers, Richard Doll and A. Bradford Hill report the results of a four-year study comparing 1,465 lung cancer patients to an equal number of patients with other diseases, matched for age, sex and region. They conclude that lung cancer

patients are considerably more likely to be smokers and much more likely to be heavy smokers. 1960s Public health warnings emerge. 1964The American Surgeon General publishes a 387-page report stating, "Cigarette smoking is a health hazard of sufficient importance in the United States to warrant appropriate remedial action." For the first time smoking is banned in the State Department auditorium 1980s The tobacco industry sees substantial annual duty increases which result in cigarette taxation increasing by 85 per cent or more in several countries including the UK.


The tobacco plant is a member of the same botanical family as tomatoes, potatoes, peppers or eggplants. An adaptive species, it can be grown economically from 50 Northern to 40 Southern latitude. More than 100 countries grow tobacco. China is the largest producer, followed by the United States, Brazil, India, Zimbabwe and Turkey.Tobacco thrives in poorer soils, providing farmers with a welcome alternative crop. In many cases, it provides a higher income than any other smallholder crop. As a crop, it integrates well into environmentally friendly rotations, and its inclusion benefits subsequent crops like maize. A typical farmer in rural Uganda, for example, with two to three hectares of land can earn a good income from only a small part of that land being planted with tobacco. British American Tobacco can help the farmer by providing seeds and fertilizer and by giving advice on planting, growing, harvesting and curing tobacco and other crops. There are some 13,000 seeds in a gram -looking rather like powdery instant coffee. The seeds are so small that they must be nurtured in specially prepared and protected seedbeds for 60 days before transplanting to the field. After a couple of weeks, soil is banked up around the seedlings to protect them and to allow them to develop a good root system. Two months later, the plants' flowers and some of the upper leaves are

'topped' in order to concentrate growth in the remaining leaves (in the same way that tomatoes are 'pinched out'). All the time, the farmer needs to provide the appropriate nutrition for the plant and watch out for pests as the crop grows towards the harvesting stage.

With the exception of some countries such as the United States (where the crop is mechanically harvested), the farmer will typically harvest by hand, sequentially taking off 2-4 leaves per plant as the leaves ripen from bottom to top, which stretches the harvesting period from over 2 to 4 months. The typical Ugandan farmer will harvest about 15,000 plants, each with 22 leaves.

Virginia is named after the US state where it was first cultivated. It is also called "bright tobacco" because of its yellow to orange color, achieved during the flue-cure. This type grows particularly well in subtropical regions with light rainfall, such as Georgia (USA), Southern Brazil and Zimbabwe. Classic English brands like Benson & Hedges or Dunhill use exclusively Virginia tobacco. Burley is slightly lighter green than Virginia is. After being air-cured, the tobacco turns brown with virtually no sugar, giving it an almost cigar-like taste. It requires heavier soils and more fertilizer than Virginia does. The best Burley is grown in the USA, Central America, Malawi and Uganda. Together with Virginia and Oriental tobacco, it makes up an American Blend, as used in brands like Lucky Strike or Pall Mall. Oriental is the smallest and hardiest of all tobacco types, grown into the hot summer of the Balkans, Turkey and the Middle East. These conditions and a high planting density create an aromatic flavor, enhanced by sun curing, as in a traditional Turkish cigarette.

Curing is a carefully controlled process to achieve the texture, color and overall quality of a specific tobacco type. During the cure, leaf starch is converted into sugar, the

green color vanishes and the tobacco goes through color changes from lemon to yellow to orange to brown like tree leaves in autumn. There are four main curing methods.

Air cured tobacco, for example Burley, is hung in unheated, ventilated barns to dry naturally until the leaf reaches a light to medium brown color. At this point, there are virtually no sugars left in the leaf.

Heat is introduced into a barn via pipes from an exterior furnace like radiators connected to the central heating system. This controlled heat allows the leaves to turn yellow/orange at which point they are fixed. These leaves now contain a high amount of sugar. Virginia tobacco is flue-cured.

Leaves are strung out on racks and exposed to the sun. The whole process takes from 12 to 30 days. The sun's direct heat fix the leaves at a yellow to orange color with a high sugar content. Oriental is the most prominent among the sun-cured tobaccos.

Fire curing follows the same principle as producing smoked ham. Brushwood is burnt under the tobacco leaves, which dries the tobacco and produces a Smokey fragrance. This type is principally used in some pipe tobaccos such as Dunhill Morning Mixture, or roll-your-own brands like Samson or Javanese Jongens. After curing, the farmer grades the leaves into different leaf positions, qualities and colors and packs his grades into what is known as a farmer bale of 30-50kg. He then takes his bales to a buying center or auction for sale.

The cured leaf is then processed through a Green Leaf Threshing Plant. The main purpose of the processing is to remove sand, dust, scraps and foreign matter. Separate the

lamina from the stem (threshing). Drive down the tobacco to a safe 'keeping moisture' content. Processed tobacco is packed into 200kg cardboard boxes, for shipping to manufacturing sites.

At the factory, the matured tobacco is checked for quality and then carefully blended with other ingredients which the brand recipe may call for, such as flavorings or pre-processed tobacco. Keeping track of the various types of tobacco and blend components is key and computers are increasingly used to track production runs. Moisture content is crucial. Too dry and the tobacco leaf will crumble; too moist and it may spoil during storage. The blended tobacco is treated with just the right amount of steam and water to make it supple, and then cut into the form in which it appears in the cigarette. Excess moisture is then removed so that the cut tobacco can be given a final blending and quality check. Cigarette making, once done entirely by hand, is today almost fully automated with the cut tobacco, cigarette paper and filters continuously fed into the cigarettemaking machines. The technology has advanced dramatically over the years, but quality is not forgotten; each cigarette is automatically quality controlled to ensure that it meets every aspect of its specification. As packing machines put them into the familiar brand packs, wrap the packs in protective film, and group them into cartons and cases, further testing takes place at each stage to make sure the cigarettes are properly protected. The completed cases, time-dated to ensure the freshest product possible, are then ready for distribution.


Finished products are distributed to more than 15 million retail outlets throughout the world. As a leading consumer goods company, Company aims to get our products to the retail outlets in the most efficient and cost-effective manner, and in the best possible condition. Company constantly monitors and evaluates global supply chain network to guarantee that brands are delivered by the best distribution methods.

"As a leading consumer goods company, company aims to get our products to the retail outlets in the most efficient and cost-effective manner, and in the best possible condition." The retail outlets include supermarkets, convenience stores, hotels, restaurants, cafes, tobacconists and duty free shops. It's the job of trade marketing to work with retailers, to enable adult consumers to buy brands where they want, when they want and in sufficient quantity. Companys big goal is customer satisfaction. Its trade marketing and distribution has earned Lakson Tobacco Company recognition in the retail trade in several of its major markets, as a leading cigarette manufacturing company in terms of professionalism, service levels and speed of response.

Tobacco production in Pakistan is forecast to increase to 98,500 metric tons (MT) due to an expected increase in area and yield. Area is forecast to increase in response to stronger demand and better prices from cigarette manufacturers. Vegetables and sugarcane compete with tobacco and farmers have started inter-cropping tobacco to increase returns. Tobacco is grown mainly in the North West Frontier Province (NWFP) and Punjab. Fluecured and burley tobaccos are used primarily in higher-quality cigarettes. Oriental varieties (known locally as White Patta) are used in low-quality cigarettes and for chewing tobacco. Dark air-cured varieties are largely used for filler,while light air-cured varieties are used primarily for traditional Pakistani tobacco products. Yields in Pakistan are about twice those for neighboring countries largely due to the extension services provided by the industry. Quality, however, is improving only slowly due to problems related to climate and soil. In 2000 tobacco consumption is forecast to increase to 81,200 MT as a result of increased demand for tobacco products. An estimated two-thirds of the tobacco produced in Pakistan is utilized for cigarettes and the remainder for other tobacco products.

About 24 companies manufacture cigarettes in Pakistan. Two of the largest--Lakson Tobacco Company and Pakistan Tobacco Company--account for 52 and 41 percent of total cigarette production respectively.


Lakson group of companies is a national base group of companies. It comprises of different companies. There are 29 companies in the Lakson group of companies. Lakson group deals in garments, leather, cloth, paper, packaging, textile, tobacco industry and many other areas of business in all over the country. The board of directors consists on Mr. Sultan Ali Lakhani Iqbal Ali Lakhani Amin Lakhani Zulfiqar Ali Lakhani. The chairman of the group is Mr. Sultan Ali Lakhani.


Lakson Tobacco Company is one of the largest tobacco companies in the tobacco industry of Pakistan. In 1952, Mr., Abdul Samad, formed a cigarette company, named premier tobacco industries. Miss Fatima Jinnah inaugurated it. Mr. Abdul Samad was its first chairman. The premier launched its first product in 1953. In 1957, the famous brand K-2 was launched which dominated the industry for many years.

In 1958, Mr. Sadar-Ud-Din Hashwani purchased the PTI industries but could not handle it due to lack of experience. Lakson Tobacco Company was established in 1971 by Mr. Hassan Ali kara Bhai. In September 1971, they launched their first brand Lakson King. In 1983, with collaboration of Ruthman International, they launched Ruthman NT. In 1983, Lakhani brothers purchased the main controlling shares of PTI. It was a big merger indeed. In this way Lakson Premier group was established. In January 1997, by the decision of Sindh High court, they changed the name as Lakson Tobacco Company. Now Muhammad Iqbal Ali Lakhani is the chairman of the Lakson tobacco company.


To provide best quality products to our valued customers and consumers, and to strengthen national economy by contributing with new business units which will help to decrease unemployment to some extent and to generate more revenue for the government for the sake of prosperous Pakistan.


Lakson Tobacco Company got no. 1 position in cigarettes industry since 1996; now the main objective of the company is to maintain its no.1 position and to capture more market shares with planning, organizing and implementation of sales and marketing activities.


The companys head office is in Karachi. The head office controls all the activities of the company.

THE production of all the products of the lakson tobacco company takes place in the five factories located in the districts of karachi Sahiwal

Dadu Rawalpindi Swabi

There are sixteen godowns, which are providing the company with the facility of efficient distribution. Karachi Hyderabad Rohri Bahawalpur Multan D.G.Khan Sahiwal Bahawal Nagar Faisal abad Sargodha Lahore Jehlum Islamabad Rahim Yar khan Bhakkar Mardan

The company has efficient distribution network. There are fifteen district offices situated in the following cities.

Karachi Hyderabad Bahawalpur Multan Sahiwal Faisalabad Lahore Islamabad Sukkur Gujranwala Peshawar Lar kana Quita Sargodha Jehlum


Lakson Tobacco Company is the market leader with 51% share of the total market. The market share of Pakistan Tobacco Company is 33%. Remaining part of market is capture by the other tobacco companies of Mardan.


There are more than 2500 employees are working. In this strength of the employees, approximately 1700 employees are working in marketing and selling department.

In tobacco industry, there are too many brands including international ones operating in Pakistani market but the company recognizes the following companies as the close competitors of LTC.

Pakistan Tobacco Co. Mardan Based Companies. International Companies.

These are the competitors which the company feels are closely competing in the market. The recognition of competitors is generally made on the following basis. The statistical data, which shows that the sale of Lakson Tobacco and that of its competitors is highly competitive. Feedback from field force and personal judgment of the brand manager. For the identification of competitors, all the information regarding competitors is collected by the brand manager and then analyzed by the planning department to have an overall view of the competitors.




BRAND Premier Classic, Red & White, Diplomat, Royals Etc. PACKING HL

Lord, K-2, Hylite, Princeton Etc. Embassy Filter, Capstan Filter (Of Ptc) Dunhill (Imported) * HL --- Hinge Lid * SS ----- Shell & Slide * SC ----- Soft Cup * EP ----- Emperor Pack


Some brands are classified according to length and sizes. Brands of LTC classified according to size and length are as follows; KSFT King size filter RSFT Regular Size Filter LSFT Long size filter The Packing is also given different names according to their classification and their variety. HL Hinge Lid SS Shell & Slide SC Soft Cup EP Emperor Pack


1) Length 2) Circumferences 3) Moisture 4) Cigarette paper 5) Pressure drop 6) Tip leakage 7) End loss

8) Firmness 9) Blend chemistry


Delivering taste Delivering psychological satisfaction

Fuel cured tobacco Air cured tobacco Burley tobacco Stem Top flavors

To contain tobacco blend To control air dilution To control burning rate

Largely cellulose Contain fiber such as calcium carbonate

Cigarette filter reduce tar/nicotine Act as a mouth pipe keeping tobacco away from smokers mouth.

Mostly cellulose acetate

Porous and non porous

5 Tipping Paper
Ventilated and non ventilated.

District Sales Manager Sr.Area Sales Manager



Area Sales Manager

Sr.District Sales Manager

Brand Executive

Brand Manager

General Manager Marketing Director Marketing And Sales

Executive Director


National Sales Manager

Regional Sales Manager


Marketing is the delivery of right product to the right costumer at the right place at the right time at the right place through the communication and promotion. Sales and marketing department is go into the marketing and selling for the companys products that are cigarettes. Huge sales force is working in the field. There are many district, area sales managers in the regions of the sales department. The achievement of the targets is very necessary for this department. Sales force of the company is very much skilled and motivated towards its tasks. In Lakson tobacco company the marketing is defined as Marketing is the backbone of the company, which plays a vital role in company sales, building brands and company image. Introduction of marketing department In Lakson Tobacco Company, marketing department consists of the following heads. General manager marketing Marketing managers Brand manager

Brand executives ROLE OF MARKETING DEPARTMENT IN THE COMPANY All functions of marketing department are very much important to the Lakson tobacco company. TO CREATE THE FAVORABLE IMAGE OF THE BRANDS AND COMPANY IN THE MINDS OF THE CUSTOMERS WHICH RESULTS IN SALES ON WHICH COMPANY EXISTS. The marketing department of the Lakson Tobacco Company does the marketing, sales, and research. LTC has divided the whole country into five regions to facilitate sales and marketing activities. Following are the Regional Offices of the LTC.

Karachi Lahore Faisalabad Islamabad Hyderabad

In the head of Lahore region four districts are working these are Lahore Gujranwala Sahiwal Bahawalpur

Faisalabad region consist of the following districts

Faisalabad Multan Sargodha Jehlum

Islamabad region contains the district of Islamabad, Peshawar and quita.

In the head of Hyderabad Region the district of Sukhar, Larkana & Hyderabad are working.

Each district is further divided into four to five areas under the head of Area Managers. Faisalabad region is divided into following district and areas Faisalabad (Regional Office) Multan (D. Faisalabad (D.O) Jehlum (D.O Sargodha (D.O) Muzafar garh T.T. Singh Chakwal Bhakar D.G.Khan Jaranwala Gujrat Mianwali Khanewall Faisalabad(a) Jehlum Sargodha Multan Faisalabad(b) Shekhu pura


Each district office has a team of area managers that is supervised by a senior district manager. Their responsibilities include following.

1- Go to the filed practically and keep a liaison with the distributors and with the retailers on the behalf of the company. 2- To keep and eye on the working of distributor and to keep on checking the distributors records. 3- To be present in the wholesale market and keep working of the whole sale market smother and trouble free.

To achieve area sales forecast, by planning organizing and implementation of selling, merchandising distribution and field promotion activities in line with action plan.


Sales Forecast
To prepare with guideline/assumption by the divisional sales manager. Monthly planning conference To actively participate in monthly planning conference of the DSM for implementation of area action plan or other related activities.

Area demo graphs.

To regularly conduct training briefs to all field force. Employees including D.D. salesmen with on the job training and also to educate/motivate the distributors on line with company policies.

To prepare annual tour plan To carry out a minimum of 150/175 days tour in each year as per policy.

Field activities
To ensure that the action plan is being implemented by random check of the staff. To keep abreast of brands trends and market opportunities.

Selling arrangement
To prepare the distributor history card. To prepare and monitor distributors monthly target. To carry out regular and random visit to whole-sellers/retailers/local/outstation. To check D.D service and brand availability. To review distributors financial investment periodically.

To maintain divisional leave record of his staff members. To verify all expense statements/ distributors claims or any other claims.

From the factory, when the cigarette manufacturing process finished and then after stocking period, then there is a stage when it is to be shipped and delivered to the customers. In this whole system following parties are involved: Area sales managers District sales managers Head office Factory manager Godown incharges Transporters Distributors Whole sellers Retailers

First of all it is the responsibility of the area sales managers to evaluate the demand of the market of his own area and sets the targets of the distributors. He sends this target report to the district manager who moves it next to the head office Karachi. Then after the complete documentation the head office send requisition to the factories. From the factories the stock is transferred to the company godowns in all the district head quarters. Then godown in charge on the order of the distributor make him delivery by the companies own transportation. Then finally distributor delivers the stock to the wholesalers, retailers and direct to the customers.


The next major function performed by the marketing department is the sales promotions. For this purpose, a team of sales promoters goes practically to the field and performs the sales promotion functions. The sales promoters help in placing posters and other temporary merchandising materials. They have to go to the every retailer of the area and have to decorate the shop not only with posters but also buntings and other sales promotion stuff that is given to him, according to the currently going on promotion activities. LTC is very well aware of importance of promotion and for this purpose different campaigns are run periodically. SDS/MDS has to participate / sponsor various promotion events in order to implement the agreed sales promotion plan by exploiting various promotional opportunities in the territory. Following steps are taken by SDS/MDS. Participate in all major Melas/Fairs in the territory. Identify plan and organize special events like sports, tournaments, exhibitions, sponsorship and musical concerts. Maintain contacts with local authorities for organizing sales promotion activities. Devise/invent new methods and concepts for promotion. Sales promotion is based on the marketing activities, other than personal selling, advertising and publicity. This stimulates consumers to buy. The examples are the

displays, shows, exhibitions, demonstrations and various non-current selling efforts not in the ordinary routine. Lakson Tobacco Company in also involved in sales promotion activities. It offers different schemes not only for retailers but for consumers as well. In these schemes, the company offers different type of incentives to both retailers and consumers.


Identify the brand to be promoted keeping in view the market and consumer profile. Operate joint consumer promotion with melas, circus and magic shows. Consumer promotion like lucky draws and other gimmicks to be organized melas through stalls. Discount coupons scheme pertaining to different brands is introduced. Scheme awareness is done through banners, posters, and through sales promoters. Head Office approves the budget for the merchandising and promotional activities. The MSPO sends the proposal to Head Office. In the proposal all the activities are listed related to the merchandising and promotion aids. After seeing the proposals the Head Office sends a final budget then MSPO works out his activities accordingly.


Lakson Tobacco Company gives incentives to consumers as well. The purpose is to make the consumer more familiar with the Companys brands with the objective of increasing the sale. Here the sales force selects different spots to establish a direct contact with consumers. The sales persons meet different consumers and have a talk with them and then offer different gifts to make a strong relationship with the company and the consumers.

Publicity is any form of non-paid commercially significant news or editorial comment about ideas, products or institutions. According to the Company, the following things are used for publicity purpose. Posters

Shop banners Road banners Buntings Mobiles

As we now that by marketing a product can flow from producers to consumers. All cigarette manufacturing organizations spending lot of money for advertising and other promotional activities. Now a days in Pakistan cigarette advertisement in TV is banned during prime time. So there are lot of difficulties are being faced by tobacco companies for the promotion of their brands. For this purpose they are heavily spending on merchandising and on other promotional activities so that people should know about their brands. For these purposes LTC spend money for Cricket events, arranges Meals in villages etc. This all is being done to create good will among the people about the LTC and its brands.

Target market for different products is different. Identification of target market in tobacco industry is likely to be very difficult. People have misconception about market segmentation on the basis of income. To segment the market just on the basis of peoples income is not correct in all situations. Theoretically, people with higher income are supposed to smoke high-priced cigarettes, yet it is not the case in all contexts. For instance, many students who tend to smoke Gold Leaf have little money. Actually, the isolation of target market is dependent upon the blend of tobacco. Different people want different blends of tobacco in cigarettes. Each brand of cigarette has its own distinct blend and each brand has its own target market. For example, some people dislike K-2 or Royals due to their strong blend of tobacco. Lakson Tobacco Company has launched a new brand of Diplomat for a segment of people who like light blend of tobacco.

During the internship, I found out that people had the same liking for blend of tobacco in one particular geographic area. For example, Royals Kings gives higher sales in Muzafar Garh and Multan area than in any other area of Pakistan.

Lakson Tobacco Company. Of course, is using personal selling as a promotional tool in its promotional mix. The company understands its need and considers it as an important element in promotional mix. In personal selling, the Companys Merchandising Department plays an important role. Here the term merchandising does not mean as it is used in Accounting, but this department that is concerned with personal selling is called the merchandising department. The sales person meets different retailers during their visit to make their relationship more strong with them and in this way they make their salesmen convenient. During their visit, salesmen give some gifts to retailers. These gifts are specially prepared for the purpose of personal selling. These gifts include liters, key rings, telephone directories, pens, and many other things. On these gifts, the different brand names of the Lakson Tobacco Company. are written to get more popularity not only among the customers but also among retailers themselves. The sales persons are consistently doing the personal selling to retain their customers. Area Sales Manager also helps his sales force by himself visiting retailers and customers. District Sales Manager is also involved in personal selling. He himself visits the spots along with Area Sales Managers.

As we know promotional activities play an important role in the failure or success of any product. If these are designed in a perfect manner then it will not be wrong to say that the product for which these activities have been designed, will get good position in the mind of people and vice versa. LTC is aware of this fact and for this purpose management designs periodical promotional campaigns in which Tele advertisements

print advertisements and merchandising, etc. are included. Also LTC conduct certain shows, concerts and competitions. In every district there is an MSPO which is responsible for all merchandising and promotional activities. He also has to develop sales promotion plans. The execution should be carried out in effective and efficient manner so as to exploit the sales potential and image of brands of LTC consequently leading to the overall profitability and longterm growth of company.

Designs and implement merchandising and sales promotions plan. Ensures the display of brands at every outlet with the help of its staff. Checks the maintenance of merchandising material of outlets. Prepares decentralized communication budget for the merchandising and promotion activities. Planning Managing People Merchandising Promotion Trade Offers Public Relations

The merchandising installation is based on segmentation of brands volume, e.g. if a specific markets highest selling brand is Morven Gold, then outlet in that market will not be merchandised with K-2 or any other brand of LTC. Following are the types of merchandising.

It includes posters, wobbles, stickers, mobiles etc.

It includes Fascia, Counter, and Wall Clock etc.

The material placed at streets, roads are outdoors merchandising. It includes Hoarding Wall Painting, billboards etc.

The merchandising material placed in side of a shop is called in store merchandising. It includes, modular tube, counters etc.

The material, which is placed out of the outlet. It includes Fascia, nameplate, Neo signs etc.


It is also ensured that all the merchandising material and fixtures are properly maintained in top-notch condition. For this purpose retailers are encouraged to clean their modular, tube shades, etc. regularly. In addition, MDSs also take part in cleaning exercises. If repair work is needed such as, changing of modular sheet, or replacement of tube lights, MDS ensure that things are fixed up in no time. MSPO periodically visits such retail shop and assess the merchandising and the maintenance work. If need be, quick action is taken pertaining to maintenance work.

Lakson tobacco company has a wide distribution network to cover the whole country. LTC has divided the whole country into five regions and there are about more than 1000 distributors. A person heaving the rights given by company for making the goods of company available at wholesalers outlet and retailers outlet.

The distributor is the cigarette agency called in general. The functions of distributor includes following. 1- To purchase the stock from the company and to sell it to the whole sale and retail market. There are following kinds of sales. 1. DD Trivans (tricycle) or Vans 2. S/S Shop Sale 3. VDD Village Sale 4. W/S Wholesale sale 2- To keep all the sales record and maintain all the documents that are required and asked by the company. These records include following main categories. 1- Daily sales summary 2- Monthly record of sales in the register 3- Cash Memos First week I was deputed at distribution to get knowledge about the basic terms of the sale point of the company. I spent the second week of my internship program with the salesmen. There are four distributors in the Faisalabad town. My first attachment was with the distributor for Faisalabad (a). The distributor shop and godown is located at Allama Iqbal Road near Ghanta Ghar, Faisalabad. The main functions of the distributors are Visits to outlets periodically. Making sure the availability of all the products. Helps LTC in promotion campaign. Introduce the retailers and wholesalers with schemes. In the first week I was attached with the distributor of LTC here in Faisalabad named Haji Muhammad Amin And Co. The office staff at distribution office is Md Haji Muhammad Naeem

Manager Mr. Umair Casher Mr.Muhammad Raza Sales Supervisors Mr Abdul Sattar Mr Intakhab Alam Godown Incharge Muhammad Riaz I also had a chance to observe the working in the distributors office. I was shown different documents such as OCF, stock register form, retailer/wholesaler cash memo, ledger and salesmen voucher. OCF is the order control form; it gives information about when to place orders. Usually the distributors keep the safety stock of three days then place the order. Stock register form, is the document in which daily stock statements were fed into details. Retailer/wholesaler cash memo is the document in which stock sold to the retailers and wholesalers is kept and bill is charged. Sales men voucher, is a document, which provide information about how much stock was issued to sales men and how much stock was returned. Also documents such as weekly sales report and monthly sales reports were shown to me. There were two sales supervisors in the distributors office. Their main job was to make sure that salesmen supply stock at each shop properly on the specified day. They also manage and control the sales men. The job of the cashier was to deal with cash i.e. receive cash from salesmen, deposit it in the bank, and note down the detail of cash in the financial book. Manager was responsible to control all the activities and working of the staff.

A distributor has number of salespersons that supply the product from distributors shop to the outlets. My next attachment was with the salesmen. There are 10 salesmen to supply stock in the Faisalabad (A) market. Salesmen use van, motorcycle carriage and tricycle vans to distribute the product of LTC. Seven salesmen

use tricycle vans; two use motorcycles, and one use delivery van, each sale man visits the shop twice in a week. Routes for salesmen are well defined and planned. Every salesman visit his own territory. Every salesman is issued stock in the morning and it is noted in the salesmans voucher. When salesman return godown keeper receives the unsold stock and he again notes it in the salesman voucher. If salesman can sell all the stock and he needs more stock, then it could be delivered on desired location on demand. Salesman makes contact to the distributor on phone line and asks for the desired stock. I visit seven local areas with the salesmen during my attachment. These include all the bazaars around Ghanta Ghar, GTS, bus stand, vegetable and grain market, and timber market and Lal Mill Bazaar,Ghang road and Rehmania Chock. I got the opportunity to visit these areas along with the experienced salesmen. I observed the working off salesmen very keenly. Salesmen were very efficient in taking orders, delivering stock and receiving cash. Salesmen spent 4 to 5 minutes in each shop and then moved to the next shop.

My next attachment was with Mr. Muhammad Anees, who is warehouse in-charge. Distributors fax or hand over the cash voucher or draft to warehouse along with the order. LTC has account in all the branches of UBL in all over the country. Distributors transfer cash to the LTC account and then send this receipt to the warehouse in-charge. The company management for the company transport vehicles that makes the supplies very systematic defines specific routes.

The distribution manager of the godown told me that they are using the perpetual inventory system; it means that they record the transactions as they occurred.


Mr. Muhammad Anees told me that all the depots of the company are using FIFO method for the sake of inventory management.


He told me following reasons for using this method for the record of inventory the inventory that are cigarettes is perishable products. With the passage of time inventory can loose its taste and quality so FIFO method is most favorable for the company because in this method the production that first comes go out first. The second reason of using the FIFO method is that cigarettes are the products that are easily convertible into cash, we can say that these are cash products and prices of the cigarettes always go for rising not falling so it is highly advisable for such products to use FIFO methods to avail the opportunities which increase the company's profits. The third reason for using the FIFO is that in case of FIFO method for Tobacco products, this method is helpful for reduction of taxes and excise duties.

All of the godowns of the company are using computerized most advanced systems for inventory management. The company itself develops all the software that are using in the company. The separate department of the company is working for serving this purpose that is computer division. The software that is especially used for inventory management is SMASH that is developed by the Lakson Group Of Companies itself. The whole procedures for the handling and managing the inventory were fully computerized in 1995, 1st July. The distribution manager is fully empowered for placing order at any time to any factory of the company that is working in any part of the country of his desired quantity. He is also responsible for maintaining and minimizing for carrying, ordering and storage costs of the inventory. The company set a fixed budget for distribution expenses. the distribution manager has achieved his targets with in the limits of his budget that is allocated by the head office. The evaluation process of the godowns is continuously takes place by the head office.

Transportation mode
There are three modes that are commonly used by the Lakson Tobacco Company

These are: Twenty two wheeler container Ten wheeler container Four wheeler mazda Some years back, the trucks were used for delivering and handling the stock. But by using this transportation mode there were high chances of losses because of rain and other mishaps and it was due to the nature of the products. In case of rain, the whole truck was damaged and company has to face huge losses in this regard. But now, the company is using covered container for delivering the inventory. This has decreased the chances of damages and decreases the transportation and carrying cost.


My next attachment with SDS Intakhab Alam. During attachment with SDS I had to spent a week in Jhang because of Mela. During Mela the job of SDS is to supply stock to the temporary shops and also promote the LTC by offering promotional schemes. We were also having a mobile film unit (MFU) with us. Two movies were shown each night during the mela to the public. Also during the mela I did posting of posters, bunting at the shops along with the SDS and MDS. During posting I was told that the life of a poster is of few hours. Poster and buntings were posted to create awareness about the promotional schemes offered by Morven gold and Diplomat. The basic responsibility of a SDS is to survey the market, including both the consumer and retailer survey, and coordinate the relationship between the company and distributor. If there is any consumer promotion plan then distributor sends all the flappers to the company office. Then SDS counts them and makes their claims. SDS visits to distributor, wholesaler, and retailer periodically. He monitors the performance of distributor and salesman. Sales supervisor also checks that distributor and supplies regularly. They report to AM about the trend of their concerning market. Distribution officer also informed about that types of sales- which are DD Direct delivery

S|S Shop sale VDD Village sale W\S Wholesale The sales promoters help in placing posters and other temporary merchandising materials.


My next attachment was with merchandising officer Khawaja Muhammad Kamran. The role profile of MSPO is that he is action man, he is mobile personality. He is to be outgoing as he spends a lot of time in the market. He should have one eye over market. He is to develop rapport with retailers. MSPO is to identify outlets and get merchandised till due date. The selection of an outlet for merchandising depends on factors such as traffic flow, key location i.e. it is visible to smokers. MDS is under the MSPO. He is responsible for checking that which shop should have modules, wall clock etc. also in case of any breakage of merchandising material, he ensures the maintenance, and where necessary recommend replacement. MSPO places purchase orders and gives deadline for supplies after consulting with merchandising coordinator. During my attachment I visited one of the suppliers of LTC named Chishty Advertisers who supplied merchandising material. The design was painted on hoarding by following the instructions in the design manual provided by LTC. I was attached to the MSPO when he was making preparation for Rahim Shah Music Night. Most critical task of MSPO is to plan and execute and then evaluate merchandising activities in his region. Merchandising activity has a tremendous effect on the final point of sale bottle. MSPO always strives to improve the existing merchandising material.


There are many departments that are working in the Lakson tobacco company. Some of them are as under.

Operation and administration department Production department Finance department Product, research and development department Sales and Marketing department Leaf department Data processing department. (Computer division) Engineering department Safety and environment department Employees Relation department.


Safety and Environment Department
LTC management is very much concerned with safe operation and environment that is why, there is a separate section named as Safe. Operation & Environment department (SO&E) responsible for the safe operation and maintenance activities and providing the timely help at a time of emergencies like accidents, explosion and fire.

Safe Operation & Environment section is responsible for the safety of: Equipment Material Persons Environment

Operation and Administration Department

This department is responsible to carry the operations of the company successfully. The integration of all the departments of the company is the important task of this department.

Production Department
Production department is very important for the company. Because it is directly related to the production of the companys products. This department is responsible to fulfill the needs of the distribution department. This department is comprised on the five manufacturing units of the company that are working in all over the country. The production department is divided into three sections. Primary department Making department Packaging department

Primary Department
From the godown of the factory, the tobacco in the form of bails brings in the primary department for starting production process.

Bail Slighter
This is a part of the primary department in which the workmen for the purpose of the heat up of the tobacco bails put the bails of the tobacco.

After the bail slighter, the heated bails of tobacco come into the casing through pipeline that linked the bail slighter to the casing. The main function that is performed by the casing is that it at once crushes the bails that are already heated into the desired form of the tobacco.

Reordering Vessels
After cutting the bails into small-required pieces, the tobacco come in the reordering vessels. Reordering vessels are the very big containers that are used for the further process of heating and provide required wet that is necessary for the further production process.

In this part, the tobacco is taking the ultimate shape of cigarettes that we find after finishing the process.

Making Department
This department is used for the storage purposes of the inventory that the making department gets from the primary department that is very small pieces of tobacco. It is called cut tobacco store. In this store tobacco is stored for some days. It contains very big pots that have big caps for the covering of the tobacco. There are eight pots for the production of different brand of cigarettes. After the process of pots the inventory go into the big vessels of glass. In these glass vessels ordering the cigarettes in the form that is helpful for further processing.

Packaging Department
Because the tobacco takes the form of cigarettes in the making department, so after the completion of this process, the cigarettes come in the packaging department for the packaging. It consists of a computerized packaging machine. The making ordering vessels are directly attached with the packaging machine. The production come in this machine and take the for of packets of cigarettes that consist twenty cigarettes each. The packet consists of three layers. First consist on seven cigarettes the second layer consist on six cigarettes and the third and last one also consist on the line of seven cigarettes. One part of this machine has the empty packet of the cigarettes. After getting the shape of packets, the packets go to another machine in which they are covered by a transparent paper and a s3al is also take place on the packets in the machine.

It contains the ten packets of cigarettes that 200 cigarettes.

It contains 50 outers that are 10000 cigarettes.


It consists of 20 cigarettes.

Product, Research & Development Department

Research and development provide improvement and innovative ideas emerge which help in surviving in the competitive market. LTCs research and development help in coping with the new consumer taste and requirements. The basic aim of the research and development is to produce highest quality cigarettes that are not made for the sake of profit but to meet the requirements of the smokers. R&D includes farmers suppliers of tobacco and how better grades of tobacco can be produced and properly used for the right taste. This department is responsible to manage the products and brands of the company and it is also working for preparing new products for the company. Research and development is the main task of this department. There are two-research labs in the Lakson tobacco company for research and development purposes. Research and development is the continuous process in the Lakson tobacco company for competing in the tobacco industry in Pakistan.

Data Processing Department. (Computer Division)

This department is responsible for the operations of the business that are computer technology- oriented. Development of new software, maintenance of existing devises, communication within the offices and go downs and Communication within the companies of the Lakson group is carrying on with the help of this data processing department. All the soft wares that area using by the company is its own and developed by this department. Copyrights of these soft wares are a also reserved for Lakson groups of companies.

Engineering Department
This department is responsible for maintenance of equipments and plants of the companies. Purchasing of new equipments and plant is also take place with the consultation and assistance of the department.


To keep the plant in running condition by providing efficient and timely maintenance and repair. Do the preventive maintenance for avoiding any damage. To repair the faults if is occurred. To assess and arrange the requirements of materials, equipment, resources and manpower for executing its maintenance activities. To have close liaison with inventory management and commercial department to maintain the necessary level of spares required. QUALITY CONTROL DEPARTMENT The objective of LTC quality control department is summarized asunder: To produce high quality product, conforming to the standard specification. Quality check of the purchased material helps in achieving the required specification. Inspection of the various maintenance jobs help in gaining huge saving by reducing the maintenance error cost Weight and packing check before dispatching help in building the good image in customer mind.


The heart of LTC is quality. It is the first company in the tobacco industry of Pakistan to have achieved the highest Quality Award. The ISO registration, which gives LTC. The international recognition as the producer of Red & White and Premier Classic. Besides it, LTC was conferred the management excellence award by the Management Association of Pakistan for demonstrating the best Corporate Performance on quality in the Engineering Sector of Pakistan for the year 1993 and 1994. In LTC quality is a dynamic state associated with the products, services, people, processes and environment that meets or exceeds the expectations of their customers and it is a strong edge on the basis of quality against the competitors. There is wellestablished Quality Control department in the company that assures quality by incorporating other departments.


Total Quality Management is an approach to doing business that attempts to maximize the competitiveness of organization through the continual improvement of the quality of its products, services, people, processes and environment. In LTC management has been taking the following steps for Total Quality Management.


The management has established a training center in the premises of the company for training to the managers and workers to increase the performance at every level. This improvement in performance is directed towards satisfying such cross-functional goals as quality, schedule, and others activities. Before audit of ISO implementation in the company all the employees who are concerned with quality were given training so that all the employees could understand all the documented procedures, authorities and responsibilities of each other in the company. Some managers were sent to different seminars and workshops to learn about ISO.

In LTC there is strong existence of teamwork. These are the managed group of the employees doing their best competitive efforts to cope with the barriers, rivalries and distrust among different departments to improve the quality of the their products.


For obsession with quality the employees are trained from time to time to learn the philosophy how can we do better the suggestion given by the employees about quality are appreciated in the company.


The management of LTC has taken many steps to improve their system in order to continually improve the quality of products and services. Employees are trained from time to time and new technologies are adopted.

Personnel Department/Corporate Affairs

This department deals with the affairs of the employees of the company. Selection of the employees, firing of the workers is also the duty of this Department. Other inter industry and intra industry affairs are also bring into the account by this department.

Sales and Marketing Department

Sales and marketing department is go into the marketing and selling for the companys products that are cigarettes. Huge sales force is working in the field. There are many district, area sales managers in the regions of the sales department. The achievement of the targets is very necessary for this department. Sales force of the company is very much skilled and motivated towards its tasks. In Lakson tobacco company the marketing is defined as Marketing is the backbone of the company, which plays a vital role in company sales, building brands and company image. Introduction of marketing department In Lakson Tobacco Company, marketing department consists of the following heads. General manager marketing Marketing managers Brand manager Brand executives ROLE OF MARKETING DEPARTMENT IN THE COMPANY All functions of marketing department are very much important to the Lakson tobacco company.
To Create the favorable image of the brands and company in the minds of the customers which results in sales on which company exists.

Leaf is a natural product and the main ingredient of the cigarette. Because the production of the natural product can vary due to climate and seasonal variation, which can as a result affect the leaf requirement for manufacturing. LTC does not own land for the cultivation of the leaf but fulfills its requirements by contracting with the independent farmers. LTC provides the farmers with free extension advice in agriculture skills and environmental support on the range of crops and guarantee the purchase at the pre defined prices of all tobacco they produce. For the sensitive smoker right leaf blending is very important to create good taste. Leaf department makes sure that blends for each brand have a consistent desirable taste, year on year.

All firms raise money and control the financial aspects of their business. In the finance department three cost accountants perform their jobs with the clerical staff, then present the report to the director finance. The cost accountants deal with the following sections Wages and payroll system Production expense system Ledger section Variable cost section Cash and excise section The following are the main functions of the finance department To link all departments with each other financially Arrange monitory resources at proper time Allocate resources through out organization Deal with banks investment firms, govt agencies and tax department. Carry out final auditing and financial records prepared Details of calculations of salaries, income tax and funds for loans Calculate different expenses of the company


In LTC employees are considered a resource in the organization. For the proper management of employees related issues employee relation department functions under the departmental head Mr.Ikram-ul-Hq.


1. Approve training agencies, which give the training to the personnel of LTC. 2. Ensure hygiene and housekeeping of the factories. 3. Approve job contract contractors. 4. Conducts and arranges training programs. 5. Implement measures that are helpful to motivate the personnel of the company.


The logistics functions have been made very easy with the help of computerized Godown management information system. It is a computerized database that is centrally connected to head office and all the warehouses are linked with each other. It is programmed in the FOX PRO. It performs following functions. Keeps a detailed record of stock receipts Keeps and detailed account of the stock that has been shipped to the distributors or have left the warehouse under any conditions Have a complete record of all the orders that have been placed during a year and have a complete record with their complete details. Have a complete record of all the damages and claims that have been raised through out the year. It also generates the system reports and system queries that are required by head office for the purpose of analysis. It includes following Daily sales report Zone wise Sales

Freight expenses Payable Transit Duration Analysis Monthly Stock reconciliation Distributor wise sales Godown Wise transfers


The main product of the company is Morven Gold, which comes in competition with Gold Flake. The other products of the company are also very popular in the market. They have the competitive edge over their competitors on the following grounds. The companys market coverage is better than its competitors. Availability of the brands is made at each and every spot. The companys sales force is more efficient then its competitors. The penetration of the companys products in villages or remote areas, where the 70% of the population lives, is very high.


Laksons close competitor is Pakistan Tobacco Company with its popular brand Gold Leaf -one of the most successful A category brand in urban areas. The secondary competitors are International brands, which are available at cheaper prices in Pakistani markets.

Positioning is to fit a product one or more segments of broad market to set it apart from its competitors. Lakson Tobacco Company has adopted two positioning strategies to position their different brands of cigarettes. These two positioning strategies are: Positioning by price Positioning by competitors

Positioning by price means to communicate the product image by price. There are four cigarettes of different brands of cigarettes with respect to price. CATEGORY A B C D E LAKSONS BRAND NO BRAND PREMIER CLASSIC RED & WHITE MORVEN GOLD ROYALS FILTER, LORDS, DIPLOMAT, K-2 PTCS BRAND GOLD LEAF CAPSTON WILLS KING GOLD FLAKE EMBASSY

Positioning by competitors means to communicate the product image with respect to competitor. It is to create the image of the brand where competitors brand exists.

Any paid form of non-personal persuasive communication by an identified sponsor with predominant use of the media of mass communication. Each brand is controlled by its Brands Manager who is fully responsible for the decision of the advertisement of the brand. Following are the different responsibilities of a Brand Manager regarding advertisement of a particular brand.

For the development of new advertisement of different brands, the Brand Manager uses different messages. Here are the examples of different messages for different brands.


Brand Manager has the authority to make a final decision on the selection of model for the particular advertisement.

Different locations are selected for the advertisement purposes. For example: Brand name Location RED & WHITE INDIA MORVEN GOLD AUSTRALIA ROYALS FILTER SCOTLAND

Media selection
Lakson Tobacco Company has a large target market. Therefore, the following electronic and print media are used to cover the target market.

Electronic Media
Television Television has become the most popular media particularly in urban areas. Games are sponsored through television.

Radio Although television has become the most popular media yet we can not ignore the role of radio in advertisement particularly in rural areas. Rural areas are a big market for cheaper brands. Usually, the population of rural areas is not ready to buy expensive brands of cigarettes. Radio is the best way to advertise cheaper brands in rural areas. Some other media channels are as follow

Cinema advertisement Print media Magazines

The frequency of advertisements of cigarettes on television is five to seven times a day except national events. EVENTS The company also sponsors different events. It as recently sponsored a football world cup 2002 held in Japan. Different games are sponsored by different brands. The detail is as follows. Brand Name Games RED & WHITE POLO RED & WHITE SNOOKER K-2 HOCKEY ROYALS FILTER WOLLY BALL DIPLOMAT FOOTBALL MORVEN GOLD CRICKET K-2 KARATTE

Besides sponsoring different events, the Company also advertises its products on television before or after the Khabarnama or Dramas.

The company evaluates the advertisement result by the sales volume and the feedback from retailers and consumers. Other sources of evaluation of advertisement are as follows. Change in sale Sales force information Retailers and wholesalers Customers response

Different advertisements have their own objectives, which provide performance standards of measurement of effective advertisement. Some objectives of ads are: 1. To increase awareness in public. 2. To increase sale. 3. To increase public relations. If the particular objectives are not achieved by the ad then the ad campaign is considered to be unsuccessful and it is the responsibility of the Brand Manger to revise the whole campaign to make an effective ad.


Selection of advertising agency is based on many factors such as, how much creativity is done by that agency. What is the previous reputation of agency? What are the equipment and which agency using them? Which technology is used? What is the reputation regarding timely delivery? All these factors are of great importance to organization The advertising agency, Lakson Tobacco Company is using is Star Sports. They are using latest equipment for the development of promotional material.


Role of advertising agency can be seen as it is the service that is providing the development of literature while the initial point is only the raw information available regarding the product. It takes usually fifteen days to develop a literature and another fifteen days to finalizing and printing the literature. Advertising agency also suggest the type and the quality of the gifts for the product whose material is developed by them. The process of developing literature is quite difficult but systematic. Firstly, the organization just gives raw information about the product. Advertiser gathers them and arranges them. Designing is also much important during arrangement. Advertiser then makes dummy literature for the Company, which afterwards is used for final changes and then finally is made available for printing

No tobacco product is traced more heavily then cigarettes. LTC is one of the major tax paying organization of Pakistan, according to representative of LTC the Morven Gold Pack price 12/= and from these 7/= RS is paid to government in the form of different taxes, only 5/= RS are kept by the LTC.


During the year ended June of 2001, sales at Lakson Tobacco Company Limited were 15.46 billion Pakistan Rupees (US$257.06 million). This is an increase of 4.9% versus 2000, when the company's sales were 14.73 billion Pakistan Rupees. This was the fifth consecutive year of sales increases at Lakson Tobacco Company Limited (and since 1996, sales have increased a total of 1,445%).

Recent Sales at Lakson Tobacco Company Limited

14.7 15.5 5.4 1.0 2.4 4.5 1996 1997 1998 1999 2000 2001 (Figures in Billions of Pakistan Rupees)

Price / Earnings Ratio


Dividend Yield 18.36%


Price / Sales Ratio


Payout Ratio 90.17%

Price / Book Ratio

% Held by 14.82 N/A Comp Yea Sales Sales Large Insiders any r ed Lakso n Tobac co any Limite d VST Mar 66.30 3.2% India Indust 2001 5 (100.0 Jun 257.0 Comp 2001 55 4.9% N/A (US$ Gro st wth Regio n End m)

ries Limite d Godfr ey Phillip Mar 112.0 s India 2001 00 Limite d Pakist an Tobac co any Limite d Dec 330.6 Comp 2001 01 N/A N/A India 7.3% (100.0 %) %)

During the 12 months ending 12/31/01, Lakson Tobacco Company Limited paid dividends totaling 10.83 Pakistan Rupees per share. Since the stock is currently trading at 59.00 Pakistan Rupees, this implies a dividend yield of 18.4%. This company's dividend yield is higher than the three comparable companies (which are currently paying dividends between 0.0% and 4.2% of the stock price). The company has paid a dividend for 6 straight years. During the same 12 month period ended 12/31/01, the Company reported earnings of 12.01 Pakistan Rupees per share. Thus, the company paid 90.2% of its profits as dividends.

In 2001, earnings before extraordinary items at Lakson Tobacco Company Limited were 394.71 million Pakistan Rupees, or 2.6% of sales. This profit margin is lower than the level the company achieved in 2000, when the profit margin was 3.2% of sales. The company's return on equity in 2001 was 43.7%. This was significantly worse than the already high 66.2% return the company achieved in 2000. (Extraordinary items have been excluded).

As of June 2001, the company's long term debt was 185.59 million Pakistan Rupees and total liabilities (i.e., all monies owed) were 1.82 billion Pakistan Rupees. The long term debt to equity ratio of the company is 0.16. As of June 2001, the accounts receivable for the company were 168.00 million Pakistan Rupees, which is equivalent to 4 days of sales. This is an improvement over the end of 2000, when Lakson Tobacco Company Limited had 4 days of sales in accounts receivable. LT Debt/ Equity 0.16 1.20 0.04 0.14



Lakson Tobacco Company Limited 2001 VST Industries Limited Godfrey Phillips India Limited 2001 2001

Pakistan Tobacco Company Limited 2001


Lakson Tobacco Company has greater contribution in the social welfare program. The northwest frontier province for the social program has given a special award. For the welfare of the community in general along with this social program, LTC gives the mobile dispensaries in the remote areas.


The foundation stone of Lakson Medical Trust Hospital (LMTH) was layed by Mrs.Gul Bano Hasanali Chief Patron of the Lakson Medical Trust on March 13,1998,. The Hospital started its function on May 11, 2001. Equipped with 14 beds, it is the first specialized hospital for eye diseases in N.W.F.P. It is currently deemed among the most developed hospitals in the region in terms of high medical technology with its diagnostic and surgical equipments, which covers all requirements for examination diagnosis and treatment of different eye diseases.


Lakson Medical Trust has embarked upon an ambitious program to increase its cataract surgeries. For permanent solution and to provide better treatment with latest technology, the Trust decided to have a modern Hospital, having all facilities, equipped with the following units: The project has been completed with the cost of Rs.32.00 million. The Hospital including an operation theatre, equipped with latest instruments, has started operation from 11th May 2001 under the supervision of Trustees and qualified Surgeons/Doctors with welltrained staff.


LMT arranged 9 Free Eye Camps at various locations from November,1994 to May,2001. During this period 65,035 OPD patients were treated and provided medical aid, 3,973 persons were operated and 27,308 glasses were distributed to the needed persons.

Lakson Tobacco Company has strong portfolio of brands on its credit. The brands of LTC are well established in the country. Most of the people are quite familiar with these brands and these brands are in market for a number of years. LTC has well-known brands in its portfolio such as Red & White. Morven Gold. K-2. Diplomat. Royals Flt.


The customers of LTC are very much brand loyal and they do not switch over to other brands for any reason like sales promotional campaign, price or any other factor. For example if a person smokes and buys Morven Gold then it is unlikely that he is going to switch over to any other brand.


Lakson Tobacco Company has wide distribution network to cover the whole country. LTC has divided the whole country into five regions and there are more than 1000 distributors in the country.

Lakson Tobacco Company maintains strong communication with its employees, distributors and customers. Due to the fact that working environment is very friendly and cooperative, any employee can give suggestion regarding improvements. Also due to strong communication employees have clear understanding of their responsibilities and what is expected from them. Similarly distributors and management of LTC work closely to solve the problems being faced by any partner. The promotional campaigns launch by LTC gain popularity among the consumers and these campaigns are very much effective in creating awareness among the customers.

The manufacturing factories are equipped with latest technology and equipment available. The top management continuously seeks for new innovative technology and plant equipment to remain cost effective and competitive in market.

Lakson Tobacco Company has been in business since 35 years. And due To this reason LTC has in depth knowledge of every market that they are serving. Also LTC uses

new marketing techniques to promote its Products. LTC has set many benchmarks in the field of marketing.


Lakson Tobacco Company has ready access to financial resources due to better credit rating and repute in the industry.


Lakson Tobacco Company has a well competent and motivated workforce. LTC gives salary and fringe benefits to its employees, which are lucrative in industry. Due to this fact LTC is able to attract competent people in its workforce Lakson Tobacco Company also conducts training workshops to motivate and teach new skills to its employees.


Lakson Tobacco Company is putting more efforts on merchandising as compared to its main competitor Pakistan Tobacco. Lakson Tobacco Company has been able to control the retailers due to the demand of its brands. Lakson Tobacco is investing heavily on merchandising the retailer shops and is in position to control the retailers.

Lakson Tobacco Company has been unable to launch new brands successfully in recent past in the competition of Gold Leaf. LTC is generating its significant proportion of revenues and profits from brands that are already established and successfully in the market. LTC should launch new brands of a class successfully to further diversify its portfolio of brands.


Lakson Tobacco Company relies heavily on few strong brands for its revenues and contribution margin. Especially LTC is relying heavily on Morven gold.

Lakson Tobacco Company can diversify its products by offering cigars, menthol cigarettes and pipe tobacco in Pakistani market for upper middle and upper class.

Lakson Tobacco Company can opt for unrelated diversification to reduce risk associated with tobacco business due to social resistance and health hazards.

Lakson Tobacco Company is trying its utmost to control forged products but could not do so because of the state authorities and poor implementation of laws and regulation. Forged products are threat for LTC because they destroy product image and company repute. Forged brands also cause irritation & dissatisfaction to customers and this can result in lost customers and sales.

Generally smoking is not liked in our society, it is considered as a bad habit because of the link between tobacco and drugs. Since smoking causes health problems people have a negative view about cigarette manufacturers, as they believe that they are selling devices for death. Recently cigarette- manufacturing companied in USA had to suffer heavy losses due to lawsuits filed by different people who suffered from smoking.

Government regulations also pose a big threat to cigarette manufacturers as these regulations encourage people not to smoke. These regulations include ban on smoking at public places, ban on cigarette advertisements etc.

Strong competition is also of concern to cigarette manufacturers as it initiates the battle for survival. Due to strong competition, prices decrease and profits are foregone. Only that cigarette manufacturer will survive who will be efficient and effective.