‘Rolling up “to serve: Pakistan tobacco goes for expansion through localization

For any multinational, the key to success is the inclusion of local people in order to achieve the best results. Pakistan Tobacco Company (PTC) - the largest manufacturer of cigarettes in the country - decided to promote tobacco in Pakistan and Punjab farmers take on board in an attempt to enhance its image as a promoter of localization.

imagesPakistan Tobacco Company is part of British American Tobacco, “most international tobacco group in the world,” according to its Web site, with its brands sold in 180 markets around the world. Their work began in Pakistan in 1947, making the company one of the first foreign investment in Pakistan.

Pakistan Tobacco already working with local farmers to grow tobacco and purchased 10% of the total number of products of Punjab.

Agricultural center of the country is about 23,424 tons, accounting for 20% of total tobacco production in Pakistan is worth Rs1.7 billion last year. Tobacco out of Punjab, Pakistan Tobacco bought 2750 tons and contributed nearly RS300 million in regional economy in the transaction.

As tobacco through cigarettes is on the rise, the company decided to increase the production of tobacco by creating a nursery near Mianwali, where seedlings were grown. The tobacco giant has also created a nursery in Islamabad.

Pakistan Tobacco investment in Punjab has touched half a billion rupees for a pilot project in the house cured tobacco leaf. The project aims at improving the quality in achieving economies of scale.

“We believe that the land of Punjab is fertile for any crop, so we decided to get our agriculture in Punjab. We built a nursery in outreaching areas and will involve local farmers opt for this cash crop,” said Uzma Osman, communications Pakistan Tobacco Company manager, while talking to The Express Tribune.

Pakistan Tobacco still created 1810 jobs for farmers in Punjab, while the number of jobs for support personnel for agriculture is 5792. Compared with other segments, it is the smallest number of jobs that PTC has created.

In the industrial segment, the company has created 7,064 positions and 22,605 support positions. In addition, the tobacco giant has caused 68,208 jobs and 218,265 jobs in the distribution and retail segment in Punjab.

The company believes that the more farmers prefer to grow tobacco, the number of jobs will increase significantly in the other segments.

The composition of the contribution of Pakistan tobacco in the retail paints an interesting picture. It is estimated that there are 250,000 retail outlets selling cigarettes in the Punjab. Pakistan Tobacco brands supplied by 96% of the total volume of retail outlets and contribute 14% of the average of the total turnover of retail trade. About 60% of retail outlets are scattered in urban areas, while the remaining 40% coverage of rural Punjab. Of the total of 250 000 points, 47% of general and departmental stores, 40% of corner shops, hawkers and 7% of the rest belong to different categories.

Pakistan Tobacco Company contributes Rs11 billion to the economy of Punjab annually, of which Rs0.3 billion generated by agriculture, Rs2.8 billion and Rs7.9 billion manufacturing through distribution and sales.

The company also had a production unit in the Jhelum since 1956. However, the company is looking to increase the tobacco cultivation in Punjab, they do not plan to install a second unit in the province.

“There is a new plant in the state of Punjab is under consideration, but we can upgrade our existing factory depending on production load in the future,” said Osman.

Pakistan’s contribution to the income of tobacco is ahead of other companies. Company paid RS45 billion in taxes in 2011 and paid the tax Rs37.6 billion in the first nine months of 2012 to 10.6% as compared to the first three quarters of 2011. Pakistan is one of the largest tobacco tax unit in Pakistan. The company pays more taxes than all hired person in the country put together.

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