BAT BANGLADESH ITSELF

An introduction to BATB

History

Product Profile

Mission and Objective of BATB

INTRODUCTION

British American Tobacco Bangladesh is one of the oldest and largest blue chip multinational
companies operating in Bangladesh. The British American Group holds 65.91% share in the
company. The Government owns 26.57% through several of its agencies, while 7.52% is owned
by other stakeholders. Every day more than 1,300 employees directly and a further 40,000
indirectly as farmers, distributors and suppliers are contributing to the success of British American
Tobacco Bangladesh (BABT).

HISTORY

BATB was established back in 1910 as Imperial Tobacco Company Ltd. with head office in
Calcutta. In March 01, 1949 Pakistan Tobacco Company (PTC) came into existence with the
assets and liabilities of ITC Limited held in Pakistan and a head office in Karachi. In order to meet
the increasing demand, the first factory was established in Chittagong in 1952, in the then East
Pakistan. After the Liberation War, Bangladesh Tobacco Company, more widely recognized as
BTC, was formed on 02 February 1972 under the Companies Act 1913. Shareholding position for
GOB and BAT was 1:2. BTC (Pvt.) was converted into a public limited company on 03 September
1973. . It is a policy of BAT that when a daughter company, as BTC was, achieves a certain
standard of performance and exhibits at certain level of profitability, its nomenclature is upgraded
to represent the original company, BAT. When BTC was successful in producing high quality
cigarettes that achieved international standards in mid 1998, it came to be known as British
American Tobacco Bangladesh, more commonly BATB.

PRODUCT PROFILE

The main product of the company is cigarette. Brands that are dominating the cigarette are:

* Benson & Hedges

* Gold Leaf
* Pall Mall
* Star

Benson & Hedges: Originally launched in 1873, Benson & Hedges is now available in more than
80 countries. This brand is popular in Australia, South Africa, Malaysia and New Zealand.

Gold Leaf: Launched in 1892, John Player Gold Leaf is now sold in more than 20 countries. It is
particularly successful in Pakistan, Bangladesh, Sri Lanka and Saudi Arabia.

Pall Mall: Pall Mall brand cigarettes were introduced in 1899 by the Butler & Butler Company. In
1907, Pall Mall was acquired by British American Tobacco with the sale of Butler & Butler. This
brand has a rapid growth in 60 countries of the world. Like other countries as well in Bangladesh
it is doing good business.

Star: More than 55 countries and is popular with smokers in China, Taiwan and Vietnam.

MISSION STATEMENT

Our goal is to create long term value of our shareholders by the consistent achievement of
superior return from the manufacture and marketing of tobacco products and to remain the worlds
leading Tobacco Company outside the United States, as measured by market share, by
commitment to quality, and by our ability to meet the needs and interest of our customers, our
employees and communities in which we operate.

OBJECTIVES

BATCo’s primary objectives are:

* To increase world cigarette market share and sales volume, with particular emphasis on
international brands thus enhancing the value of their goodwill.
* To increase sterling earnings per share consistently in ‘real terms.’
* To maximize the generation of Group cash flow
* To provide an environment in which employee can achieve their full potential and in which
excellence is rewarded
* To apply the highest international standards of workplace safety and of environment concern
* To maintain the respect and trust of the public, of international, and local authorities, and of
customers worldwide.

ABOUT THE REPORT

1 CSR at glance

2 Objective of the report

3 Methodology

4 Limitations

1 CSR at a glance

Corporate social responsibility is nothing more than this the duty of help and care of to the
society. Many people are uneasy about the profit motive, suspecting that profits emerge only from
exploitation. They fear that free enterprise encourages greed and selfishness. They are
convinced enough to accept the logic of Adam Smith's famous theory of the invisible hand, which
holds that business people promote the general interest more effectively by pursuing their own
interests. That why we hear little about the social responsibilities of other organization then the
business farm. Business, in contrast, is assumed to have a problem about its social
responsibilities because it is driven by profit motives.

Once there was a time when managers of corporations think that they are socially responsible to
maximize their profit. The money they are spending for social good is nothing but increasing their
cost. Because on that time their only motive is to maximize the profit of their stockholders. This
managerial view the corporate social responsibility is known as “Classical View”.

Today’s scenario is different. Now the corporate social responsibility is something beyond the
profit maximization. Today corporations are not independent entities responsible only to the
stockholders. Most interestingly corporations get encouragements to involve to the social,
political and legal issues. This contemporary view is named as “Socioeconomic View”.

The journey to the Classical View to the Socioeconomic View includes four steps:

* Step1: Managers follow the classical view to maximize the organization’s profit by following
the laws and regulations.
* Step2: managers improve the facilities for their employees. Such as improve working
condition, expend employee right, increase job security and ensure the human rights.
* Step3: In this step organizations focus to the stakeholders. The entities that create the
environment for an organization. Such as the customer, suppliers. Organizations ensure the
quality product for the customer, good suppliers’ relation in this step.
* Step4: In this stage manager shows their responsibility as a whole. They feel their business
as a public entity. As a result they actively participate to the welfare activities of the organization.

The major points that we can add to the dimension of CSR is that, corporate social responsibility
is a major ethical consideration of the managers, managers focus on the ends, they take it as an
obligation, and it is long term framework to carry on.

2 Objective of the report

The primary objective of the report is to identify how corporate social responsibilities are
performed. Especially how an organization performs its corporate social responsibility. Moreover
in this report we tried to gain some practical knowledge about how business community is
responding to its social responsibilities in different stages.

3 Methodology

Mostly in this report our findings are to analyze the process how BATB is becoming responsible.
To do so we at first-

* Describe the four different stage of stages of responsibility (shareholder to the broader
society) performing which an organization responsible to society.
* Describe BATB’s some corporate social responsibilities.
* Analyze the described activities , how those are fulfilling the responsibility in stage to different
people
* In the final stage we analyze some core factors like focus, emphasis, decision framework to
become a sustainable corporate in the world of CSR

We mostly use the data from different websites, annual and social repot of BATB. Along with the
secondary data we also interviewed some personals from the company to better our
understanding about BATB’s CSR. In terms of analysis we rely on relevant discussion of our text
book.

3 Limitations

In seeking information to write this report we faced some limitations of the information's which
were kept confidential in a cycle. The most important problems are as follows:

# Lack of the sufficient information:

Bangladesh Tobacco Limited is a private Organization in Bangladesh and due to organization
limitation they usually do not provide sufficient information on their overall plans and strategies
regarding social responsibilities etc.

# Research Limitation:
As we have to prepare the report on social responsibilities of the organization we have to
evaluate their strategies and reports. In this situation we did not get sufficient information
regarding social responsibilities of this organization. During our interview the personal could not
give us accurate figured data of their Social Responsibilities.

BATB’S PORTFOLIEO OF CSR

1 Environment

2 Biodiversity and Environment

3 Community Services
a) Compost Pits
b) Green Manuring
c) Neem Decoction machines
d) Sanitation Support
e) Monthly Health Check
f) Vegetable Growing
g) Malarial Prevention

4 Education
a) Educational Assistance
b) Dishari

5 Others

6 Awards

British American Tobacco Bangladesh mostly classifies all of its CSR initiatives over years in the
following four sectors.
 * Environment
* Community Services
* Education
* Others

1 Environment

British American Tobacco Bangladesh organized this well recognized program to create mass
awareness of the need for afforestation with the free sapling distribution program in 1980. Today,
after more than two decades, BATB have contributed more than 5 crore 50 lakh saplings to the
country’s afforestation initiative. The survival rate of these saplings stands at 90%. Most of these
plants are located in Kushtia, Rangpur, Manikganj and Chittagong regions including the hill tracts.
The trees have mostly been planted along roadsides, canal banks and farmers’ landholdings.

2 Biodiversity & Environment

BATB had a significant amount of investment behind its biodiversity and environmental project in
2004.

3 Community Services
a) Compost Pits:

Compost pits are a source of natural fertilizers for the farmers. As a part of bio-friendly agricultural
practices, they are providing the costs to put up compost pits in the homesteads of the targeted
farmers. This assistance is also supported by an ongoing awareness campaign. This contributes
in significantly reducing dependence on the use of chemical fertilizers for agricultural productions
while enabling to decrease the cost of production.

b) Green Manuring:

BATB provides the free seeds for ploughing and green manuring by the targeted farmers. These
seeds are sowed in the fields and after these plants known as Sun Hemp (Dhoincha) reaches a
certain height, they are ploughed and mixed with the soil. The cultivation of sun hemp increases
soil‘s organic composition and is a eco- friendly sustainable method of soil enrichment. In the
year of 2007 they have distributed 25,000 KG of Sun Hemp .It has been reported through a study
funded by BATB and undertaken by Bangladesh Agricultural University that the organic matter
content of the soil is less than 1%.

c) Neem Decoction machines:

Promoting the concepts of integrated pest management, BATB also provides training and set-up
the neem decoction tool in strategic locations for use by the target population. Their goal is to use
environment friendly pesticide in the operations and that is why use natural, antiseptic properties
of the neem plant through neem decoction. BATB’s field experience suggests that 1 unit can
support at least 50 farmers. This initiative will make positive biodiversity contribution from eco-
system rehabilitation and sustainable use perspectives.

d) Sanitation Support:

To support the target for universal sanitation coverage, BATB provides costs to put up latrines for
farmers and these are available for sharing within the village. This assistance is also supported
by an ongoing awareness campaign. BATB has already distributed 12436 latrines among
registered farmers.

e) Monthly Health Check:

BATB’s registered farmers are provided health care support from company depots every month.
A doctor sits in the depot in a particular day each month so that the registered farmers can come
and receive free prescriptions for their health problems.

f) Malarial Prevention

Malaria is a recurring problem, especially in the Chittagong hilly area. Each year in Chittagong
region a number of affected farmers are given mosquito nets assisted by an ongoing awareness
campaign. Till date BATB has distributed mosquito nets among 49 villages of Chittagong region.

g) Vegetable Growing:

Seeds of different vegetables types are distributed free while training are provided to the
interested farmers. This initiative is meeting the nutritional requirement while creating income
opportunities. Not only that this initiative will make positive biodiversity contribution from eco-
system rehabilitation and sustainable use perspectives.

4 Education
a) Educational Assistance

Education has remained a national high-priority issue while the major thrust by the development
sector has been on universal primary education. Understanding the issue of Governments effort
to increase the literacy rate, BATB also contributing in it. The aim here is to address the gap in
terms of patronage in higher-level education. A number of meritorious children from BATB farmer
base are selected each year to receive 500 taka per month for a period of 2 years to enable them
to complete their higher secondary education. On the other hand, these recipients will act as the
‘biodiversity ambassadors’ who will assist in creating awareness in their respective localities.

b) Dishari

The Government is aimed at providing basic computer education .Dishari – a basic IT education
center was stablished in Chechua, Kushtia in 2002 to spread IT education among the youth of the
country. In May 2003, the second center of Dishari was started in Moulvibazar. BATB has taken
this initiative to contribute to the promising IT sector of the country, which is a thrust sector of the
Government.

5 Others

* A one of a kind bio-filter installed in BATB’s factory to reduce odor emissions is now used as
an example for emulation by other industries.
* Support for programs like Shandhani's posthumus eye donation, polio vaccination and blood
donations.
* Provide prompt relief and generous support to affected communities in cases of natural
disaster. In the year of 2007 they distributed 75 tons of relief materials to the 5000 SIDR effected
family.
* Commitment to the principles of sustainable development through high international
standards of environmental, health and safety practice.
* BATB participated in the Beautification of Dhaka Program. BATB has forestations in several
places across Dhaka City including afforestation at Kemal Ataturk Avenue, Banani.

6 AWARDS

British American Tobacco Bangladesh has won many awards during the last 30 years,

Including the National Export Trophy (2000), the Prime Minister's 1st Prize for Tree Plantation in
1999 and 2002; the Food & Agriculture Organization (FAO); award for pioneering the
development of the vegetable seed industry.Your browser may not support display of this image.
The company received the Prime Minister’s 3rd prize in 1993 and 1st prize in 1999 and 2003 for
Your browser may not support display of this image. its afforestation initiatives.

ANALYSIS OF BATB’S CSR ACTIVITIES

1 How BATB is becoming a Responsible Corporation:

a) Shareholders exaction of better financial performance

b) Responsible to the employees

c) A Reliable Partner to the Stakeholders in the Environment

d) BATB as a responsible corporate to the broader society

2 Conclusion

1 How BATB is becoming a Responsible Corporation:

British American Tobacco makes them socially responsible step by step. They are emphasising
their activities with same importance in the way of being a socially responsible corporate.

* Continuously meeting the shareholders exaction of better financial performance

* Becoming responsible to the employees
* Creating an impressive image of reliable partner to the stakeholders
* Feel and perform the responsibilities of society

a) Shareholders exaction of better financial performance

At first they have established themselves as a reliable investor to its share holders. Not only in
Bangladesh but also in other 179 countries they are recognized as “Blue Chip” share providers. In
a highly controversial business of tobacco they are handling the challenges very well and
upgrading their financial performance day by day. In the year of 2007 they have achieved:

* The company grew its turnover by 8% which is Tk. 3,786 crores from the previous year.
* The profit after tax was Tk. 79.8 crores which is Tk. 36.1 crores more than the previous year.
 * The earning per share was Tk. 7 for 2007 which is Tk. 42 crores.
* The cash flow increase by 33.95% In the year of 2007.

On the other hand internationally the British American Tobacco Company improved their
performance like this:

* Growth in revenue of 5 per cent and profit from operations

* Total dividends per share for 2007 up 18 per cent on the prior year

* Strong cash flow, with free cash flow up 11 per cent at £1,711 million and free cash flow per
share up 13 per cent.

* The 2002 five year cost saving program reached over £1 billion in annual savings, with a new
target set for annual savings of £800 million by 2012.

b) Responsible to the employees:

Over the world British American Tobacco has more or less 53,000 employees. In Bangladesh
they have 1,052 permanent employees.

BATB is ensured the employee right by encouraged them through individual discussions, team
briefings, publications, internal blogs and local surveys. At the same time they focus that decision
and the judgment made by the employee are lawful and comply with the ethical standards. Most
remarkably the organization extended its hand for the employee who faces difficulty in terms of
making relevant decisions.

It is not just a handsome salary, job security or good working environment; they are continuously
encouraging employees about ownership through the provision of employee share plans,
including the Partnership Share Scheme and the Share Reward Scheme. Moreover all
permanent employees receive total Tk. 36, 000 per annum.

c) A Reliable Partner to the Stakeholders in the Environment:

British American Tobacco Bangladesh is the leading tobacco business organization. Day by day
the organization is enlarging itself. At the same time area of their stakeholders are also getting
bigger. BATB identifies their stakeholders as such:

* Consumers
* Government:
o Finance
o Environment & forest
o Health
o Law
o Agriculture
o Police/ BDR/Cost Guard
o Local Administration
* Academicians: Teacher and Researchers
* Legal Community
* Medical Community
* NGOs
* Think Tanks
* Anti Tobacco Group
* Media: Print and Electronic
 * Political group
* Business Group
* BATB’s business partners: Distributors, Retailers, Suppliers, Tobacco Growers
* International Organization
* Students
* Human Recourse Organizations
* Neighbours

BATB arranges a dialogue sessions in where they invite some member of any stakeholder
community and discuss the matters of their interest based on which they sectaries the
stakeholders’ expectation like this:

CUSTOMER INFORMATION: They have distributed 50,000 leaflets to the retail seller about
the information of tobacco products. Not only that they are also providing health warnings on
packets of cigarettes comprise 10% of both the front and back panel.

PUBLIC SMOKING: In response to stakeholders expectation of reducing public smoking

BATB has given commitment that they will work with the government to reduce public smoking. In
fact already they are providing awareness information among the smokers.

LOWER RISK PRODUCTS: In response to stakeholders demand of lower risk product BAT
has already built up a research center for producing low risk product. To date, globally, the BAT
group of companies aspires to be the first to launch new generation tobacco products with critical
mass appeal that will, over time, be recognized by scientific and regulatory authorities as posing
substantially reduced risks to health.

YOUTH SMOKING PREVENTION: To prevent the youth smoking prevention BATB is

taking many necessary steps. Such as they are providing a awareness creating guidebook
against smoking in the schools and colleges. Not only that they are also doing awareness
creating posturing.

RESPONSIBLE MARKETING: In terms of doing responsible marketing BATB is always

following the rules and regulation provided by the Government. They set their code of conduct for
marketing tobacco product by following International Tobacco Products Marketing Standards
(ITPMS) in 2003.

TOBACCO REGULATION: For regulating the tobacco product BATB has expressed its full
cooperation with the Government and legal community.

TOBACCO TAXATION AND CIGARETTE PRICING: Cigarettes are already heavily taxed
with as much as 70% of the retail selling price going to the government. They paid Tk.
419,400,000 tax in 2007 over selling price which is 37.29% more than the previous year.

ENVIRONMENTAL MANAGEMENT: In terms of environmental management BATB is

playing very much active role. Actually they are in the ACTIVIEST APPROACH for handling the
environmental issues. Some of their activities are:

* Use alternatives to wood fuel like jute stick and dhoncha stick.
* Use urea instead of Ammonium Sulphate and Potassium Sulphate as fertilisers
* Conduct research for overcoming soil imbalance problem and also identify crop pattern,
which will recover the soil quality.
 CORPORATE CITIZENSHIP: In terms of performing as a good corporate citizen BATB is
consider themselves as a developing partner of Bangladesh. As a result in this part they are
mostly concentrating on:

* Role as a development partner

* Corporate sponsorships and poverty alleviation
* Support to tobacco farmers
* Supporting health program
* Support to education programs
* Eliminating child labor

d) BATB as a responsible corporate to the broader society:

BATB is the first organization which is publishing Social Report and every time in their report they
convey their present position and commitment to the society in the long run. For example in the
social report of 2006-2007 they said they will provide research program for Safe Drinking Water
Preservation in the rural arrears of Bangladesh. Moreover it is also stated that BATB will create
10 more herbal gardens and distribute 4.2 million neem plats. We see that in every social report
they state their plan for the next year, in this way they are performing social obligations year after
year in a long term basis.

Overall the analysis shows that BATB has the potentials like major consideration, focus,
emphasis, decision framework to become a responsible corporate. At the same time they are
performing all the stages of CSR successfully by taking care of the interest of the share holder to
the people of broader society.

2 Conclusion:

As we know that CSR means a positive approach from the corporate towards the society for
mutual benefit. In a country like Bangladesh it is not possible all the time to take care of the social
benefits by the government. As the report shows after analysis its is seen that BATB is a
responsive company , not responsible there fore they should try to use more innovative methods
and activities to better their Responsiveness to the environment. So it is necessary to come out
for the organization like BATB and do something for the betterment of the country. Like BATB we
think other local and foreign companies should come forward and take initiatives for the
betterment of our country.

References:

* http://207.56.111.185/batb
* http://www.bat.com/group/sites/uk3mnfen.nsf/vwPagesWebLive/DO52APZ6?
opendocument&SKN=1
* http://www.library.ucsf.edu/tobacco/batco/html/7300/7303/
* Annual Report of BATB for the year of 2007
* Social Report of BATB For the year of 2006-2007
* Robbins. P.S & Coulter m. (2005), Management 8th Edition.