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.

2

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. A c t i o n 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. A c t i o n 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.