British American Tobacco, the second largest Tobacco Company in the world

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British American Tobacco, the second largest Tobacco Company in the world

Executive Summary

A new corporate guideline has been implemented recently by the British American Tobacco p.l.c. and BATB needs to implement the global guideline as well.

The corporate brand definition of British American Tobacco defines the attributes as winning, enterprising, honest, and open minded and responsible. It also summarises them in a corporate brand essence: winning with integrity.

Defining the corporate brand means identifying the specific values that different stakeholders would be attributing to BAT if they think about the company in a specific way. These should be attributes which are significant and relevant to stakeholders, which differentiate BAT from competitors and thus drive preference for the company, which are mainly intangible values and which are authentic to its business and its culture.

People are very unlikely to regard BAT as winning, enterprising, honest, open minded or responsible just because the company say so. These are not virtues that BAT should loudly proclaim for itself; they are attributes that the company would like stakeholders to associate with it. Stakeholders need reasons to believe for themselves and BAT’s communications and engagement should encourage them to judge for themselves.

CORA is the custodian of the corporate brand. It is the responsibility of CORA in all Group companies to ensure that all corporate communications are aligned effectively with the corporate brand definition.

Moreover, BAT’s visual identity provides a fresh, contemporary look and feel for its communications and aims to enhance the heritage and equity of its corporate signature, the yellow 3-leaf symbol and blue logotype, by maintaining the integrity of the way it is displayed.

In order to effectively communicate the corporate guidelines the internal communication tools can be used. The aim is to build awareness among the employees about the new corporate guidelines. At BATB, project deals with the first two stages of Awareness and Creating Understanding among Employees

Internal Communications is a part of the corporate communications team of CORA. It is the function which engages with the internal stakeholders of the company. The recipients of internal communications are all the 1300-plus employees, belonging to both management and non-management.

The responsibilities of Internal Communications include planning and developing appropriate communications tools, methods and messages as well as advising other functions in developing cross-functional communications tools or activities.

All the internal communication tools are to be used for this communication. Thus the following tools that is to be used:

Focus: An internal magazine of BATB which takes a people-centered approach to events and issues in business. It is released in every quarter.

BATB News: A monthly news edition which focuses on internal activities.

Baithak: A cyber tool allowing managers to share the latest information in news, within functions and eventually with other Operating Companies.

LN: Lotus Notes is the intranet which connects all managers.

Briefings: These are sessions are conducted by members of the Executive Committee. This is one open forum where all the employees of BATB are assembled in groups.

Apart from these formal channels, all communication channels that are NOT being controlled by Corporate Communications are also to be used, e.g. communication through the line, team meetings, grapevine, etc.

We need to develop the Key Questions first:

– What messages do we need to communicate to help our target audiences to do (think/feel) what we want them to?

We need to communicate that corporate guidelines are very important in the way we do business.

– Which messages are most important for which audiences?

The audience has been divided into two parts – Management and Non-Management.

Management – we need to communicate that each of them needs to take ownership of the ‘areas of responsibility’ outlined to them. They need to be apprised by the Executive Committee.

Non-Management – The employees need to have a brief overview of the B.P and they have to know that these are being followed in BATB and are ethically aligned to their business.

A survey was carried out, with a sample size of 95 (33 – managements; 62 non-managements) to find out which is the most effective tool for each target audience and the following result was found:

Roadshow (sharing of company plan) has been the most successful tool especially for the factory workers while BATB News (video news) received the lowest score.

Skip Level is probably more popular among the factory workers as they like the dinner that comes with the meeting. The management have demonstrated a preference for electronic media as they have given the highest rating to ‘Lotus Notes’ and ‘Bulletin Board’ where as the factory workers have shown the strongest preference for ‘face-to-face briefing’. Baithak (intranet site) is a central point for all managers to connect and share information and managers gave it the highest rating among all tools. However, not all features of Baithak are used or preferred to the same extent. ‘Room Reservation’ is the most popular and useful feature followed by the ‘Bulletin Board’.

For the purpose of communicating the corporate guidelines, the developed a plan for communication such as providing company-wide, consistent messages to create employee awareness. It might be through a consistent presentation template. Employees can be engaged so they have ownership and are actively involved in putting the CB Model into practice.

For Implementation of the Communication process, the following steps have been set up as guidelines for the “Internal Communications Executive”: Using common tools like brochures slides etc. across the company, utilising existing meeting forums as much as possible, training & provide communication kit to managers that communicate the CB model to teams.

This is how the CB model can be communicated successfully across the organization and feedback about the implementation can be received by using some of the measurement tools like forming focus group employee panels, interviews, survey questionnaires etc.

Chapter One

Company Overview

1.1 British American Tobacco Group

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 clear leader in a competitive and fast moving business. The group consists of four tobacco subsidiaries and they are:

· British American Tobacco Company Limited, which produces cigarettes in over 45 countries for domestic and export 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. Multi-national, multi-cultural and multi-disciplined, British American Tobacco Group, a world-class group of tobacco companies. BAT offers a brand for every taste and preference.

1.2 British American Tobacco Co. Ltd.

British American Tobacco, the second largest Tobacco Company in the world is also the world’s most global tobacco company. 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 on the world stage. 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)

Today British American Tobacco sells the leading brands in over 30 markets covering 102 countries, has more than 200 brands worldwide, employs more than 55,000 people and produces some 2 billion cigarettes every day. More than a billion people across the globe enjoy smoking tobacco. One in every eight chooses a British American Tobacco brand. In order to support the company’s business goals the merger of British American Tobacco with Rothmans International had been announced on 11 January 1999. This global merger was completed on 7th June 1999. This brings together the number 2 and 4 players which together will boost 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 is a major step forward in British American Tobacco’s vision of becoming the world’s leading International Tobacco Company.

1.3 British American Tobacco Bangladesh

British American Tobacco Bangladesh a subsidiary of British American Tobacco was established in 1971 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 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.

British American Tobacco Bangladesh is involved in various community services in the country. Afforestation is the pet project of the company, which was started in 1980 and till now the company, has planted 32 million trees across the country. In this regard, British American Tobacco Bangladesh has won many awards during last 28 years but the most prestigious of all are 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.

The Company has its Head Office and the cigarette factory in Dhaka, a Green Leaf Threshing Plant in Kushtia and a number of Leafs and Sales Offices throughout the country.

1.4 Relation with the parent company

The following figure shows the flow from the parent company to BATB:

1.5 Company Vision

“To extend our leadership through World Class performance”

BATB is already a leader in the Bangladesh cigarette market. In the future the company wishes to extend the present leadership through world class performance. The company believes that the management already possess world class product and people. Right now they need to concentrate on improving their process capability. This company proved itself to be a world class company by achieving the prestigious MRPII recognition. Now the whole process is going to accelerate more and altogether it will reach the level of world class performance and gradually it will extend its leadership in all aspects in a very competitive environment.

1.6 Company Mission

Double the net revenue by 2005

The company is planning to double its net revenue by the year 2005. That means in the span of 5 years time the revenue must rise at a tremendous rate. This requires a continuous and consistent growth in revenue in the coming years. One thing must be noted here that the target is to increase the revenue rather than the profit. This is because BATB is a responsible company and wants to generate profit for all its stakeholders and create and maintain a win-win situation for all.

Growing our share of the total tobacco market

The biri segment has captured the major share of the total tobacco market. BATB plans to uptrade the smokers in the country and wishes to transfer their smoking habit from biri to cigarette. This is also coherent with the first objective of the mission as more people will start smoking BAT brands instead of biri, more the revenue will increase.

Dominating key identified segments

The total brand portfolio of the company is divided into 3 major segments- high, medium and low. BATB is already dominating the high and medium segment in the market. But it is facing tremendous competition in the low segment. BATB wishes to dominate all the key identified segments and they are planning accordingly. The company doesn’t have any brand competing in the very low segment.

1.7 Historical Background of BATB

British American Tobacco Bangladesh (BATB) Company Limited is the recognized leader in Bangladesh cigarette market, with a long established reputation for providing its consumers with consistently high quality brands. The journey of this company started long back. BATB was established back in 1910 as Imperial Tobacco Company Ltd. with head office in Calcutta. In the very beginning Imperial Tobacco Company (ITC)launched abranch office at Moulivibazar Dhaka in 1926. Cigarettes were made in Carreras Ltd., Calcutta. Imperial and Carreras merged into a single company in 1943. After the partition in 1947, cigarettes were coming freely from Calcutta, but introduction of customs barriers in 1948 between India and Pakistan interrupted the smooth flow of cigarettes from Calcutta to East Pakistan. In March 01, 1949 Pakistan Tobacco Company (PTC) came into existence with head office in Karachi; with the assets and liabilities of ITC Limited held in Pakistan. The then East Pakistan Office was situated in Alico Building, Motijheel. In order to meet the increasing demand, the first factory in the then East Pakistan was established in Chittagong in 1952. From this time onwards requirements for cigarettes for East Pakistan markets were met from products manufactured in Karachi. In 1954PTC established it’s first cigarette factory although high-grade cigarettes still came from West Pakistan. The Dhaka factory of PTC went into production in 1965.After the War between India and Pakistan in 1965;the import of tender leaf from India for the production of Biri was stopped. This gave a big boost to cigarette business. It was at that time the East Pakistani entrepreneurs set up 16 cigarette factories in this region.

After independence, Bangladesh Tobacco Company (Pvt.) Limited was formed on 02 February 1972 under the Companies Act 1913, with the assets and liabilities of PTC. Shareholding position for GOB and BAT was 1:2. BTC (Pvt.) was converted into a public limited company on 03 September 1973. British American Tobacco played a pivotal role in BTC’s creation in 1972 and since then has been involved in BTC’s development every step of the way. To pronounce the successful relationship with British American Tobacco, BTC has changed its name and identity to British American Tobacco (BAT) Bangladesh Company Limited on March 1998.

March 1949 Formation of Pakistan Tobacco Company (PTC)
1954 PTC opened its first factory in Fouzdarhat, Chittagong
1962 Opened a branch in Moulavibazar, Dhaka
1965 Building of a factory in Mohakhali, Dhaka
February 1972 Incorporation of Bangladesh Tobacco Company with a paid up capital of Tk. 400 million
March 22, 1998 Changed its identity from Bangladesh Tobacco Company (BTC) to British American Tobacco Bangladesh Company Limited (BATB)

Source: BATB

1.8 Structure of BATB

BATB is a public limited company. Management Director is the operational head and appointed by the British American Tobacco. Head of every department carries out their functions with the help of line managers. Different departments have different structure according to their function and responsibility.

Source: BATB

The “Board of Directors” and Executive Committee (EXCO) govern the overall activities of the company. The “Board of Directors” is composed of 10 members who are called Directors. The Chairman heads the “Board of Directors”. Chief Executive of British American Tobacco Bangladesh is called the “Managing Director” who is normally appointed by “BAT Holdings”. Managing Director of the company is the chairman of the Executive Committee. This committee includes the head of all the functional departments.


Emil Moskofian

Managing Director

Source: BATB


1.9 Functional Areas

BATB has been operating its business under the following major functional areas:




Human Resource

Brand Marketing

Trade Marketing and Distribution

Information Technology

Corporate and Regulatory Affairs

Business Development

1.10 Ownership Status of the Company

British American Tobacco Bangladesh is listed in the “Dhaka Stock Exchange (DSE)”. It has an authorized capital of Tk. 400,000,000 of 40,000,000 ordinary shares of Tk. 10 each. British American Tobacco Bangladesh, which encompasses 62% of the shares of the British American Tobacco, London. The Government held 32% of its shares. Subsequently the government has gradually sold its holdings to different organizations of the country. The composition of shareholders on December 31,1999 were:

Raleigh Investment Co. Ltd. UK 65.91%
Investment Corporation of Bangladesh 26.99%
Sadharan Bima Corporation 2.86%
Bangladesh Silpa Rin Sangstha 0.84%
Government of Bangladesh 0.65%
Sena Kalyan Sangstha 0.52%
Others 2.23%

Source: BATB

1.11 Physical Infrastructure of the Company

The infrastructure of the company has a broader field where the company plays its important role. BATB has 6 Regional Trade Marketing Offices (RTMOs), 12 Regional Sales Depots, 1 Factory, 1 Green Leaf Threshing Plant, 7 Leaf Depots and a Head office consisting of Corporate Head office and Production Head office. The Company’s Head office and Cigarette factory are located in Dhaka. A Green Leaf Threshing (GLT) Plant has been set up in Kushtia and it has started operation from April 1995.

The company’s products are manufactured in the factory at Mohakhali, Dhaka. The Plant Manager who reports to the Production Director at the Head Office heads Dhaka factory. The company’ procures tobacco leaf maintaining the international standard and it imports processed tobacco leaf for its international brands. It procures green tobacco from the registered farmers of the leaf area mainly for it’s local brands.

The company’s authorized leaf areas are located in Kushtia, Chittagong and Manikgonj. Butbulk of tobacco leafs comes from Kushtia region. The Chittagong area is under development process and it now covers Rangunia and Lama. The companyoperates 7 leaf depots in he leaf area. 4 of them are located in Kushtia region, 2 of them are located in CDA and other 1 is in Manikgonj, The company provides all sorts of supports to the registered growers through its depot personnel. This includes technical know how, agricultural inputs and financial assistance.

The company performs its sales and distribution operation all over the country through its five regional sales offices. They are located in Dhaka, Khulna, Chittagong, Sylhet and Rajshahi. Each of the regions is again divided into operational areas, each of which in turn is divided into territories. To perform its sales and distribution smoothly, the company operates 10 sales depots in different locations of the country and it has 63 authorized distributors.

1.12 Tobacco Cultivation in Kushtia

Tobacco cultivation in Kushtia Leaf area was first introduced in 1967 with an area of 10 acres. It was expected to expand to 650 acres by 1971 Flue-cured and air-cured tobacco were cultivated in Kushtia and the Leaf Department achieved self-sufficiency in cigarette tobacco by 1975. Tobacco cultivation though registered growers and procurement of the product tobacco is done through four leaf depots In Kushtia. Those depots are Meherpur, Jhenidah, Chechua and Allardarga Leaf Depot. Kushtia Leaf Factory stands on 4.31 acres of land and is located at about three kilometers away from main town. The Green Leaf Threshing (GLT’) plant could complete the entire leaf purchase in 1995. A team of management including the Plant Engineer, Processing Manager, Shift Manager, Quality Control Manager, Leaf Account and the Leaf personal Manager is managing the GLT plant. The Plant Manager is the team leader of GLT management team.

1.13 EHS Policy & different CSR activities:

All the activities in the manufacturing unit and Green Leaf Threshing Plant ensure that work is conducted in a manner to minimize environmental pollution. Kushtia a GLT has won British American Tobacco’s EHS (Environment, Health and Safety) Merit award for the year 1995 and 1996 for achieving consecutive two years of operation with zero accident. The company also received the prestigious EHS Silver Award for 1999 without any lost time accident in any part of the company, which was the second year in a row.


Afforestation Vision:

1. Introduction

No one can deny how important the forest diversity is for mankind. Almost everyone to meet their needs uses different kinds of plants, either wood or non-wood. Several of wood from forest has been used for raw materials for housing, furniture, and other tools for human needs. As their main source of vegetable nutrients to sustain their lives, people consume non-wood substances from the forests, such as fruits. Roots of the trees are used as raw materials for different kinds of medicines. In addition, forest is home for many different kinds of fauna with countless value. Another importance of the forest is to prevent flood disaster through its function in reducing surface flow and increasing water infiltration into the ground. Furthermore, the existence of the forest would protect the soil from erosion due to the continuous rainfall. To provide all these natural services, it is generally estimated that 20-25 percent of the total land area of a country should have forest cover.

While the loss of individual species catches our attention, it is the fragmentation, degradation, and loss of forests and other ecosystems that poses the gravest threat to biological diversity. Forests are home to much of the known terrestrial biodiversity, but about 45% of the Earth’s original forests are already gone, cleared mostly during the past century.

In Bangladesh, it is widely suspected that the amount of land left with any forest cover is no more than 6% of the total land area of the country. Since more that 80% of the total population in Bangladesh live in the villages, they have to heavily depend on fuel-wood for both domestic and external consumptions. It is estimated that about 85% of the total fuel/energy requirement of these rural households is met through various natural sources including the village forests. Note that the population density of Bangladesh is 868 inh/km2. Its population is projected to grow to over 200 million by 2050. Coupled with commercial extraction, this puts enormous pressure on the existing forest resources.

2. Importance of Forest Resources in Tobacco Industry

Wood in all its guises in central to processing: from drying tobacco before getting to the plants, through to cardboards and wrappers, cigarette bodies and filters. The flue-cured tobacco used for manufacturing cigarettes mostly depends on fuel-wood for curing. Interestingly enough, even bidi consumers are now showing preference towards flue-cured tobacco. On the other hand, the filter process is predicated on a reliable source of quality pulp for cellulose, and for the correct length of fiber for starting the basic process. The reliance of imported wood products, some of which may be derived from non-sustainable hemlock, entails a number of problems. It is not known yet to what extent the paper and pulp used by the tobacco industry comes from sustainable forests.

Likewise, through its operations, the tobacco industry explicitly or implicitly influence the status of forest diversity. For example:

· As a land-owner, the tobacco industry has an impact on forest diversity through building, development or sudden changes in land-use which destroy biodiversity-rich habitats or reduce the variety of local species.

· Tobacco industry has an impact on forest diversity through its supply chain and use of raw materials, for instance, sourcing fuel-wood from Ipil-Ipil plantations which replace native forests, or using products from species which are over-harvested.

3. Backdrops of BATB Afforestation Initiative

Presently BATB enjoys a market share (volume) of about 50% in the cigarette industry. All BATB cigarettes are heavily depended on flue-cured tobacco. It is generally estimated that for one kilogram of tobacco to be flue-cured, five kilograms of fuel-wood is required. Hence, for a long time, BATB had been widely accused of deforestation, especially in its growing areas. Interestingly enough, though there are a number of companies involved in the tobacco industry (none of which has any significant presence with respect to afforestation), BATB has singularly and frequently enough been pointed at for the loss of forest cover.

The sustained flow of access to fuel-wood enables to keep the total production cost of tobacco in check. In other words, to meet the operational requirements of fuel-wood, it had been recognized that BATB has to put back to the nature at least what it extracts. Subsequently, BATB had initiated its afforestation drive in 1980. Setting a 5-year cycle of harvesting, BATB decided to promote planting of Ipil-Ipil due to its fast-growing characteristic.

Since the forest resource base of the country was alarmingly denuding due to various natural (biological attrition) and anthropogenic reasons (e.g. population pressure), BATB felt that, as a responsible company and as a development partner of the country, it must assist and contribute in rehabilitating the forest ecosystems. Hence, while setting the targets for its afforestation initiative, BATB decided to plant 1.5 saplings for 1 tree harvested by the tobacco industry. Moreover, to ensure spreading the benefits of its afforestation efforts across the country, BATB decided to go well beyond its growing areas. So far, BATB has either planted or distributed some 43 million saplings countrywide with a survival rate of 90%.

4. Emergent Issues

Based on a trend analysis, over the period of 1995-2002, crop volume of British American Tobacco Bangladesh has increased by 350% whereas fuel-wood requirement increased by 250%. This is largely due to the fact that about 70% of our fuel-wood requirement has now been met through alternative sources. Dependence on alternative sources has to be carefully monitored since it, in reality, diminishes the opportunity for the households to use them for domestic purposes. And this then, in turn, forces increased use of fuel-wood for domestic purposes and hence contributing towards setting a vicious cycle.

On the other hand, all over the world, stakeholders are more and more becoming vocal on environmental issues putting special importance on responsible environmental-friendly behavior by the businesses. Responding to this stakeholders’ expectation, for instance, globally many MNCs have already registered themselves in the Business in the Environment (BiE) Index. British American Tobacco is one such company. Interestingly enough, though BAT had had world class standards of environmental performance (brown or pollution issues) in place, after the launching of BAT Biodiversity Partnership in 2001, BAT’s ranking jumped from 32nd to 18th.

Similarly, in the Dialogue 1 of the Social Reporting process of British American Tobacco Bangladesh, after screening and clustering the expectations put forward by the stakeholders, environmental performance (including biodiversity-friendly afforestation) was one of key issues identified.

5. Objective/Key Platform

? Meet the wood fuel requirement of the tobacco industry in Bangladesh.

? Encourage use of alternative wood fuel for tobacco curing.

? Contribute in increasing the forest cover of native species.

? Utilize afforestation initiative to demonstrate corporate social responsiveness.

6. Projections/Scenario

¨ Tobacco Growing – industry requirement

o 47.22 mln kg for 2004

o 76.4 mln kg in 2012

¨ Woodfuel Requirement – 30% of the total tobacco

o 78.68 mln kg for 2004

o 124.9 mln kg for 2012

¨ Saplings Requirement – 40 Kg woodfuel/plant on average

o 1.97 mln saplings for 2004

o 3.12 mln saplings for 2012

¨ Factoring-in 90% Survival Rate

o Additional 0.197 mln saplings required for 2004 – total 2.17 mln

o Additional 0.312 mln saplings required for 2012 – total 3.43 mln

With respect to 1:1.5 ratio as well as exotic and native species perspectives:

¨ Sapling requirement

o 3.25 mln saplings for 2004

o Similarly, 5.15 mln saplings for 2012

¨ Projected costing

o Tk 3.58 mln (Tk 1.1/sapling) in 2004

o Tk 6.7 mln (Tk 1.3/sapling) in 2012

¨ Reserve (non-harvesting) forest of native species – 0.7 mln each year

o @Tk2.5 per sapling in 2004 – Total Cost Tk 1.75 mln

o @Tk3.5 per sapling in 2012 – Total Cost Tk 2.45 mln

7. Key Performance Indicators

§ Plant and distribute saplings (preference on fast-growing varieties) of the amount of 1.5 times the tobacco industry requirement every year

§ Plant and distribute annually 700,000 saplings of native varieties

¨ 50% of the native variety saplings will be distributed and planted in the growing areas.

¨ 50% of the native variety saplings will be planted in strategic locations through strategic partnerships


British American Tobacco Bangladesh is the first company in the country to embrace biodiversity into in our way of work. British American Tobacco Bangladesh drafted its Biodiversity Conservation strategy in the year 2002 which is also a first of its kind by any corporate in Bangladesh. The primary objectives of the Strategy is raise awareness among company’s internal and external stakeholders, promote biodiversity and sustainable use principles in the operations of British American Tobacco Bangladesh, showcase ‘best practice’ examples and influence others to participate in biodiversity conservation.

Our tobacco production demands uses from goods from the natural environment, such as tobacco, paper and board.

The use of these natural resources in our operations requires us to contribute in the environmental sector of the country. British American Tobacco has committed itself to attaining world class standards of environmental performance. In line with this approach, British American Tobacco focuses on reducing waste, promoting recycling, cutting water consumption, using raw materials efficiently, improving soil quality, introducing alternatives to agricultural chemicals and wood fuels in tobacco growing, reducing fossil fuels dependence, and limiting atmospheric emissions.

In addition to that British American Tobacco believes that, as a conscious and responsible corporate citizen and as a user of biological resources for its operations, it must contribute towards ensuring sustainable utilization of natural resources and conservation of biodiversity. Hence British American Tobacco has entered into a biodiversity partnership with four independent international NGOs which specialise in the conservation of biological diversity. They are: Fauna and Flora International, Earthwatch Institute (Europe), Tropical Biology Association, and Royal Botanic Gardens Kew. The objective of the Partnership is to work towards the conservation and management of biodiversity in ways relevant to sustainable development. Fundamental to the achievement of this objective in the longer term, is the development of a process of governance and leadership through which companies operating in controversial sectors can engage effectively with non-governmental organizations (NGOs) in order to help promote biodiversity conservation and management.

DISHARI- A Basic IT Education Centre


Project “IT Education” is one of the BATB’s social initiatives to respond to SMC. To respond to the country’s thrust sector, BATB shall endeavor to leverage IT opportunities in Bangladesh by providing basic IT Education in the rural areas.

Project Objectives:

British American Tobacco Bangladesh established Dishari, a basic IT education centre in support of its commitment to be a development partner of Bangladesh and to support the government’s emphasis on IT. The objective of Dishari is to provide computer education, free of cost, to those who can less afford it. It works with a philosophy of providing a platform to the students which will help them in their endeavor to grow in future.

Backdrops of Dishari initiatives:

Dishari a basic IT education centre was born in July 2002 to spread IT education among the youth of the country who can less afford it. British American Tobacco Bangladesh has taken this initiative in support of its commitment to be a development partner of Bangladesh and to support the government’s emphasis on IT.

The education centre is aimed at providing basic computer education to those who can less afford it. Dishari works with a philosophy of providing a platform for students which will help them grow in future.

Dishari started its journey with a few students in Chechua, Kushtia. Since then 3 more centres of Dishari have been established, one at Moulvibazar in Sylhet in May 2003, the 3rd one at Manikganj in April 2004 and the 4th and the last one at Chokria in Cox’s Bazar. Till date 342 students passed out from the 3 centres of Dishari who have a basic understanding of IT. So far, 101 female students have passed out from Dishari.

Dishari Chokoria kicked off on 10th April 2005. The class environment in this centre is the same as that of the other 3 centres.

Dishari has produced students who accomplished very positive results. Some of the students have got jobs in the areas of data entry, computer composition, VDO editing, CD writing and as computer teachers in schools. Last but not the least; three students of Dishari have endeavored into a small business providing various computer services in Kushtia.

Dishari seeks to provide quality education to the students through its unique facilities. The centre provides the following facilities which are:

Future of Dishari

British American Tobacco Bangladesh remains committed to bring continuous improvement to Dishari. As part of that commitment 3 students from the 3 centres of Dishari have been provided with financial support to pursue an advanced level of IT education outside Dishari based on their merit and skills. This is a commitment that the company will pursue in the future.

1.14 Commitment to Develop the Future

British American Tobacco has over the decades consistently invested in the Bangladesh market through BATB. Thus BATB has always been in the business of manufacturing and marketing brands that meet standards found anywhere in the world.

The company believes in attracting the best talent available by offering a challenging working environment with international career development opportunities. Individuals here are entrusted with significant responsibility and autonomy, and investment in people through regular training and career development has helped to establish a culture, which encourages people to think creatively, generate new ideas and approach problems from a number of different perspectives. In the quest of becoming a World Class Company by achieving the visions, strategic imperatives and the values, the company has launched a change management program called – Winning In Our World in 1999. The objective is to bring about a cultural change by embedding the WOW Values and removal of barriers. To this effect the company has organized different workshops, employee care and development activities throughout the year with direct participation of its people.

With state-of-the-art machinery, world-class people, and a portfolio of world-beating brands, British American Tobacco Bangladesh couldn’t be anything but instinctively international.

People’s attitudes have changed much over the time. Without this changed attitude of excelling in their performance it would not have been possible to make so much progress. This spirit of people will help in achieving the company’s Vision and Mission and ultimately to be a world lass company.

Lotus notes is a highly evolved advanced communication system of BAT through which all the employees of BAT worldwide communicate among themselves. This is a hi-tech device that helps to provide quick and uninterrupted communication and factual information. Quantum is a marketing information tool with the objective of effective utilization of marketing spends through better targeting and evaluation of BATB’s marketing activities. This is a strategic investment that helps BAT to achieve competitive edge in case of facing any competition. The company has implemented Tetra CS/3, a totally integrated software package that links Manufacturing, Finance, and Distribution providing one set of clearly understood information that can be used throughout the company. Apart from this software, the company uses several other software packages for some specific purposes that can also be shared throughout the company.

Another important development with regard to accessibility of information is the implementation of the Global Enterprise Network (GEN) standard. GEN provides a standardized IT infrastructure throughout the British American Tobacco group that allows users to access their work areas from any location within the group.

Also the company has developed a system to have better control of its supply chain process. This has made a major impact in terms of automating the entire supply chain process from shipping godown to retailer, providing on-line information at every stage of the secondary supply chain.

As a company that aspires to be the world class, the company also looks at the interests of its suppliers and trading partners. A team is currently looking at how the company can support them as they strive to improve their performance.


Chapter 2

Core Functional Areas

2.1 Leaf Department

At the time of the liberation war in 1971, only 600 acres of land were used for the production of cigarette type’ of tobacco. Major portion of the total local requirement of cigarettes were imported from West Pakistan. Immediately after the independence, owingto the shortage of foreign exchange, import had to be reduced. There was an urgent need for increasing local production of tobacco. The sustaining efforts of the company and the response of the farmers were so effective that the country became self sufficient in cigarette tobacco by 1975. In recognition to that outstanding performance, the company was awarded the President’s Medal in 1976. In 1996, the company purchased about 5500 tons of tobacco leaf from its registered farmers.

The Leaf department is involved in cultivating and purchasing flue-cured tobacco. BAT does not do 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. Byproducts are sold to the outside contractors.

The GLT’s main objectives are as follows:

1. Separate Lamina from Stem

2. Retain physical and chemical properties of the leaf.

3. Removal of foreign materials.

4. 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.

Although the primary objective of leaf department is to ensure continuous supply of tobacco, leaves were exported in a highly competitive world market as well. Exports of tobacco during 1997 earned BATB in excess of two million dollars, with sales being made to UK, Hungary, New Zealand, Egypt, and the USA.

Leaf Tobacco Export Volume

Year Quantity

(Metric Ton)Value

(US Dollar)Price/Kg

(US Dollar)1993329.1877,0002.661994259.2677,4002.611995279.2672,7002.411996182.4516,4002.8319979872,201,5002.2319981130.22,250,4001.99

Source: BATB

Important functions that Leaf Department carries out

Provides technical know how, financial assistm1ce and agricultural inputs to the Registered farmers.

Purchases tobacco leaf from the growers.

Processes tobacco leaf ready for insertion in the Production Department.

Provides storage and transportation facilities in carrying tobacco to and from the factory.

Strengthens social relationship through different community development projects in the leaf areas, like encouraging and helping to build a vegetable garden at the premises of the growers.

Exports tobacco leaf.


2.2 Production Department

The Head of Production looks after the production and takes necessary steps to smooth out the production process. The entire production process is performed at the Dhaka Factory. The motto of Production Department is to ensure the high quality and productivity, steadily for the last few years. The production department has been very successful in meeting the challenges and the company now produces a wide range of filter cigarettes to meet the market demands. All the local brands are now available with its international brands.

Existing Production Facilities

Capacity Output: The country’s biggest manufacturing plant is owned by BATB with a capacity of 80 million (rounded) sticks of cigarettes per day in 3 shifts.

Actual Output: Presently the factory is producing 60 million sticks per day hence they need 70.000 kg of tobacco leaf.

Reasons for the difference: The market is the mainreason for the difference between actual and capacity output. Wastage is approximately 4% – 5% of the tobacco leaf used and it occurs in three from namely – rejection, yield loss and accountable loss.

Raw Material Used: The following table summarizes the raw materials used for producing cigarettes. The procurement sources are shown in the same table.

Raw Materials Source
Bulk Tobacco Locally produced in leaf areas
Blending Tobacco Imported
Cigarette Paper Imported
Filter Material Imported
Packing Material Local

Source: BATB

Initial Storage in Dhaka

Processed tobacco from the Green Leaf Threshing Plant (GLT) in Kushtia and imported tobacco are brought and stored in the Bangladesh Machine Tools Factory (BMTF) godown. BATB has rented 5 godowns at the location with a total area of around 130,000 square feet. The tobacco is transferred to Dhaka factory for cigarette production as needed. The godowns are maintained and guarded by the outside contractors.

Tobacco is brought in from the BMTF to Dhaka factory as is required for production. Dhaka factory has one bonded godown, which is used to store, imported wrapping materials and two non-bonded godowns to store tobacco. The tobacco is released from the godowns to the production floor as specified by the production schedule. Issues from the bonded godown are in control of custom officials and transferred in small quantities as needed. Relevant taxes and tariffs are paid at issue. Issues of tobacco to the production floor from the non0bonded godowns conducted daily in large quantities as specified in the production schedule.

Production Process

The Primary Manufacturing Department: The primary manufacturing department (PMD) is responsible for further conditioning the domestic and important tobacco to make it ready for production. The tobacco passes through a set of integrated and regulated machinery whose purpose is to blend the different ‘packing grades’ in specified proportions, convert the bales into ‘rag’ suitable for use in cigarettes, and bring tobacco to a uniform temperature and moisture.

The Secondary Manufacturing Department: The secondary manufacturing department (SMD) uses the tobacco that is blended and conditioned by the PMD along with wrapping materials to manufacture cigarettes. The PMD delivers its final processed tobacco to the Cut Tobacco Store (CTS). The CTS has a 50-ton storage capacity and the tobacco is stored there typically for one and a half days before it is used. The SMD brings in the processed tobacco from the CTS as needed for production along with wrapping material.

Currently there are 16 cigarette-making machines at Dhaka factory, which are operated in three daily shifts. Shift engineers and officer’s monitor shift activities to ensure quality production. The flow of tobacco and cigarette paper to the cigarette making machines are regulated by six (programmable Logic Controlled) PLC controlled feeders. These feeders send in the required quantities at the right time to ensure smooth production. Each brand of cigarette is monitored by a separate feeder. In addition to the tobacco and cigarette wrapping material, filter rods are fed into the machines for cigarette production. The machines combine these three inputs to generate cigarettes as output. Defective cigarettes are either identified manually or by built in sensors and removed from the production flow. The tobacco from these wastes is removed and reused for cigarette production. The manufactured cigarettes are deposited in trolleys and carted to the packing machines.


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