ENGINEERING MANAGEMENT

PAKISTAN TOBACCO COMPANY

SEMESTER PROJECT

Group Members

 Asad Ali

 M. Ahtsham Cheema

 Sajeel Aqdas

 Asim Fida

 Tanveer Hasan
Engineering Management Pakistan Tobacco Company

Table of Contents

ACKNOWLEDGEMENT ....................................................................................... 4

1 Introduction: ......................................................................................................... 5
1.1 Why we select the Pakistan Tobacco Company? .............................................................................. 6

1.2 Principal line of business: ................................................................................................................. 6

1.3 Mission statement.............................................................................................................................. 6

1.4 Vision................................................................................................................................................ 6

1.5 Strategic Objectives........................................................................................................................... 6

2 ORGANIZATIONAL STRUCTURE .................................................................. 7

2.1 Departmentalization ......................................................................................................................... 7

2.2 Work Specialization ......................................................................................................................... 8

2.3 Delegation and Accountability.......................................................................................................... 8

2.4 BOARD OF DIRECTORS............................................................................................................. 9

2.5 Management Hierarchy –FlowChart......................................................................................... 10

3 Organization Culture &

Environment................................................................... 11

3.1 Dimensions of Organizational Culture ........................................................................................... 11

3.2 Strong or Weak Culture prevails in a company? How employees learn Culture in organization?.. 12

3.3 Internal & External Environment Factors........................................................................................ 12

3.4 Stakeholders .................................................................................................................................... 14

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Engineering Management Pakistan Tobacco Company

4 Decision Making ................................................................................................ 15

5 Human Resource Management .......................................................................... 16

5.1 Importance of Human Resource: ................................................................................................. 16

5.2 Activities At The Human Resource Department At Pakistan Tobacco .......................................... 17

6 Leadership........................................................................................................... 23
6.1 Motivation......................................................................................................................................... 23

6.2 Communication ................................................................................................................................. 23

6.3 Corporate Culture .............................................................................................................................. 24

7 Change Management ........................................................................................... 24

7.1 Technological .................................................................................................................................... 24

8 Knowledge Management ..................................................................................... 25

9 Conclusion: ....................................................................................................... 26
ACKNOWLEDGEMENT

We want to thank our families and friends for supporting and encouraging us at the time when we lose
our stamina during semester. We want to convey our thanks and gratitude to our tutor Ma'am Hina
Riaz who supported us whenever we need any help and due to her kind guidance and suggestions she
made it possible to complete our project.

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Engineering Management Pakistan Tobacco Company

1 Introduction:
Pakistan Tobacco Company Limited was incorporated in 1947 immediately after partition, when
it took over the business of the Imperial Tobacco Company of India which had been operational
in the subcontinent since 1905.

The company prides itself in being the first multi-national company to begin its operations in
Pakistan. The parent company, British American Tobacco has been in business for over 100 years
now with a presence in over 180 countries. The Group has built an international reputation for
making and marketing high quality brands for the millions of informed adults who choose to
consume tobacco.

From being just a single factory operation to a company which is involved in every aspect of
cigarette production, from crop to consumer, Pakistan Tobacco Company evolved into one of the
leading corporations in Pakistan. The company operates two state of the art factories and employ
more than 1,700 people while indirectly providing livelihoods to more than a million people who
are involved in various aspects of the business. The Company is market leader and contribute more
than Rs. 30 billion in excise duties and taxes to the Government. Company strategy reflects the
vision, being the champions of growth, productivity, responsibility and a winning organization. It

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Engineering Management Pakistan Tobacco Company

had three branches – Karachi, Jhelum, Akora Khattak, but Karachi factory has been closed since
1992 due to heavy loss and some other reasons.

Pakistan Tobacco Company Limited is part of the following trade and industrial associations:

 Cigarette Manufacturers Association Of Pakistan (CMA)

 Management Association Of Pakistan (MAP)

 Overseas Investors Chamber Of Commerce & Industry (OICCI)

 Anti-Counterfeit and Infringement Forum (ACIF)

1.1 Why we select the Pakistan Tobacco Company?

Pakistan Tobacco Company is one of the profitable company in the Pakistan and it is easy to access.
Pakistan is an agricultural country and PTC is depending on the agricultural. PTC is the largest
excise tax generator in the private sector in the country. PTC is committed to providing consumers
with pleasure through excellent products, and to demonstrating that we are meeting our
commercial goals in ways that are consistent with reasonable societal expectations of a responsible
tobacco group in the 21st century.

1.2 Principal line of business:

The company produces high quality tobacco products to meet the diverse preferences of millions
of consumers, and it works in all areas of the business - from seed to smoke. The company provides
a number of reputed brands of cigarettes to consumers in Pakistan, including
 Dunhill

 Benson & Hedges

 John Player Gold Leaf

 Capstan by Pall Mall

 Gold Flake Embassy

1.3 Mission statement

Transform PTC to perform with the speed, flexibility and enterprising spirit of an innovation,
consumer-focused company.

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Engineering Management Pakistan Tobacco Company

1.4 Vision
First choice for everyone.

1.5 Strategic Objectives

Our strategy reflects our vision of being the champions of Growth, Productivity, Responsibility
and Winning Organization.

2 ORGANIZATIONAL STRUCTURE
The term organization structure describes the organizations formal framework or system of
communication and authority. Pakistan Tobacco Company Limited (PTC) is the oldest
multinational in Pakistan that has been contributing towards the economic, social and human
resource development of the country in various forms for the past 65 years, Thus the organization
structure is centralized and decision making is highly centralized in upper levels of Management.
PTC is lead by the Chairman/Chief Executive, and then there are departmental heads who are
responsible for their departments. The human resource was also kept in minimum level
comparatively now a days. Each Regions had some field divisions scattered in far flung Areas .
The Divisional Managers were performing their duties as Divisional Incharge with some Sub.
Divisional Officers and Supervisory staff. The unity of command was very simple and it was
highly cleared where is the types and amount of authority and responsibility that organizational
members hold. Now the complexity interred in the organization structure resultantly more division
of labor the more vertical levels and more geographically dispersed the organizations units, the
more hierarchy, the more difficult it is to coordinate people and their activities. However since last
two decades PTC is playing an increasingly significant role as the most important infrastructure of
modern economic and societies.

The following steps are taken by the Pakistan Tobacco Company in organizing their goals and
objectives:

 Departmentalization 

Work Specialization

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Engineering Management Pakistan Tobacco Company

 Delegation and
Accountability

All the steps are discussed below in detail:

2.1 Departmentalization
On the basis of functional approach the Pakistan Tobacco Company is divided into different
departments. Grouping of employees is done on the basis of their common skills and work
activities. Such kind of approach helps the company in solving their problems and it also make the
less the need of training the employees specially. There are six major departments in the company
which are as follow:

 Production Department

 Legal Affairs Department

 Sales and Marketing Department

 Human Resource Department

 Finance Department

 Leaf Department

2.1.1 Production Department: This department looks around all the production of the
company. All plants in the country are in under its control.

2.1.2 Sales and Marketing department: This department makes sure that the product is
easily available in the market for the customers to buy and deals with the issues of advertisement,
promotion, and distribution of the product.

2.1.3 Human Resource Department: This department takes care of the efficient workers of
the company, they select some efficient workers of in the company recommend their names for
promotion in job so that the workers remain happy and don’t leave the company. Management
level employees are dealt by the department.

2.1.4 Finance Department: The department is concerned with cost and price of the products
produced by the company. It also tackles with import related issues of the company. Finance
department is assisted by the sales and marketing department in making invoices and payroll
entries.

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Engineering Management Pakistan Tobacco Company

2.1.5 Leaf Department: The department is concerned with the growth related activities of
leaves.

2.1.6 Legal Affairs Department: This department takes care of the different legal affairs of the
company and employees.

2.2 Work Specialization

There is a high percentage of work specialization in the the Pakistan Tobacco Company because
every manager is appointed in the function in which he is expert so there is no boredom or
monotony. All the promotions of the employees are based on their performances. No favoritism is
allowed in the company.

2.3 Delegation and Accountability

There is a high percentage of delegation in the company. The work is done with proper authority
and responsibility. Every manager is made accountable for the actions of his subordinates. All the
subordinates are guided very keenly by their respective managers at the time of accomplishing
some goal. Keeping the delegation process on the other side the managers also motivate their
subordinates to boost up their energy and make them more effective by using different methods.
They make their subordinated think that they have to give their best to their managers which
increases their performance, quality of work and satisfaction of the customers.
2.4 BOARD OF DIRECTORS
Since establishing, the PTC has formed a Board of Directors consisting upon twelve members
including a Chairman and Chief Executive Officer.

The Name of members of the Board of Directors as on 30th June 2004 are given below.

S.NO. NAME EXISTING POSITION

1 Mr.Graeme Amey Managing Director and CEO

2 Mr. Mueen Afzal Chairman and Non-Executive Director

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Engineering Management Pakistan Tobacco Company

4 Mr. Mustanser Mohammad Supply Chain Director

Ali Khan

5 Mr. Shehzad Munim Marketing Director

6 Mr. Tajamal Shah Legal Director

7 Lt. Gen. (Retd.) Ali Kuli Non-Executive Director

Khan Khattak

8 Mr. Syed Asif Shah Non-Executive Director

9 Mr. Sayed Imtiaz Farooq Human Resource Director

10 10 Mr. Kunwar Idris Non-Executive Director

11 Mr. Abid Niaz Hasan Non-Executive Director

2.5 Management Hierarchy – Flow Chart

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Engineering Management Pakistan Tobacco Company

The larger role in the organization’s success is played by the mutual adjustments. The turnover
has been reduced because the employees feel more engaged in the work. The organization’s growth
rates increased and the return of equity for stockholders went from a negative return to a 20 percent
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return. The changes brought by CEO in proved to be good for the organization and the employees
were also happy with the change which is reflected by the end results of the company. Such
balances are indispensible because due to them the employees feel some flexibility and it also gives
some time to the organization to forecast their future plans about the organization. The structure
of the Pakistan Tobacco Company is made up of both “Mechanistic & Organic” models. The
Pakistan Tobacco Company mainly focuses on the responsiveness.

All the complex integrating mechanism which are discussed before are the characteristics of the
organic structure. The company uses survey and interviews for the flow of information from
bottom to up, latterly the information is exchanged by the intranet. The surveys have made the
Pakistan Tobacco Company to believe of simplification and standardization. Centralization and
standardization are associated with mechanistic structure.

The mix of the two structures looks to be ideal for the organization. When organization wants to
appeal to such a huge kind of independent market it requires to be flexible, on the other hand to be
more efficient in production. Coordination is easy for the company when it uses complex
integrating mechanisms. Due to centralization the organization goals and organizational choices
are kept align. Now that the information in the company is flowing very easily, the top level of
management will receive the information more fast due to tre organization’s flexibility and
responsiveness. Recently there was a shift in the organization to make it more decentralized and
organic which corresponded with quite uncertainty with organization.

3 Organization Culture & Environment

3.1 Dimensions of Organizational Culture

• Attention to detail: High (degree to which employees are expected to exhibit
precision analysis and attention to detail detail)
• Outcome orientation: Medium (more focus on results rather than how they are
achieved)
• Innovation and risk taking: Medium(degree to which employees are encourged
to be innovative and risk taking)
• Aggressiveness: Medium(degree to which employees are aggressive and
competitive)
• Stability: High(degree to which organizational decisions and actions emphasize
maintain the status quo)
• Team orientation: Medium (degree to which work is organized around teams
rather than individuals)
• People orientation: Medium (degree to management decisions take into
account the effects on the people the organization)
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Engineering Management Pakistan Tobacco Company

• Company oriented culture: Achieve success by control and competence.

• Control: Stability , Order, Hierarchy, Process,
• Competence: Efficiency, Effectiveness, Expertise, Craftsmanship

3.2 Strong or Weak Culture prevails in a company? How employees learn

Culture in organization?

“While the right to talk may be the beginning of freedom, the necessity of listening is what makes
the right important.”

Employer should maintain good and friendly relations with its employee. Employees should try to
meet the expectations of the employer so that both the organization and the employee prosper
together. They strongly believe that the interests of the PTC and employee are inseparable. The
PTC promotes the “we culture” where there is mutual trust and respect for each other. The skills
and capabilities of employees are developed and enhanced through extensive in-house and external
training programs and job rotations. Company is determined to provide employees with a healthy
and safe place to work, wherever they are in the world. Although local legislation varies between
countries, PTC is increasingly applying their efforts to ensuring consistently high principles of
Health and Safety across our operations. Company aim is to provide the PTC community with the
structures, systems and support to ensure the Health and Safety of all employees, customers,
visitors and contractors. To achieve this, Company aim is to facilitate, guide and encourage
management and employees to create a work environment where hazards are kept to a minimum
and safety is seen as a core value. The different local Health and Safety legislation in the many
countries make this a challenging task. Health and Safety for company is not just about legislative
compliance, it is about creating the right culture.

3.3 Internal & External Environment Factors

3.3.1 Economic trends

The rate of inflation is high in Pakistan and the prices increase day by day. The devaluation occurs
in the Pakistani rupees. The taxes are rising on tobacco, due to which the prices of cigarette are
rising. There is also the energy problem in Pakistan and the oil and gas prices increases. The
electricity load shading is also a big problem. These factors increase the cost of Pakistan Tobacco
Company.

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Engineering Management Pakistan Tobacco Company

3.3.2 Technological

PTC is the pioneer of using latest technology in Pakistan. The machine they use to manufacture
cigarettes “Loga Max” can produce 8000 sticks per minute. Although now Lakson is also using
the same technology but it was PTC which introduced it in the country

3.3.3 Political and Legal:

Ministry of Health has made all possible efforts in informing the masses that smoking is injurious
to health and PTC maintains that “smoking is an adult choice”. Cigarettes are being manufactured
and each packet must contain a warning “Tobacco seriously damages health” or

“smoking is injurious to health. The law “no smoking in public places” might effect sales volume
because the people who use to smoke for style or fashion may give it up.

3.3.4 Socio cultural of PTC:

According to the Central intelligence Agency (CIA) World Factbook the population of Pakistan is
176,242,949 (July 2009 est.), the growth rate is 1.947% (2009 est.), the age distribution is 0-14
years: 37.2% (male 33,739,547/female 31,868,065) 15-64 years: 58.6% (male 52,849,607/female
50,378,198) 65 years and over: 4.2% (male 3,475,927/female 3,931,605) (2009 est.). The birth rate
in Pakistan is 27.62 births/1,000 population (2009 est.).As we see in the age distribution that the
number of people who have 15-64 year old are more as compare to other and this is the age in
which more people smoking. Mostly young people start smoking as a fashion. Some people think
that smoking of good brand cigarette like Dunhill, Benson show their personality and identity.
Mostly people say that I started smoking in tension and usually people smoking in tension.

3.3.5 Threat of new entrance

While the anti-tobacco movement in the USA helped lower cigarette sales, Big Tobacco, the largest
US companies: Philip Morris, R.J. Reynolds and Brown and Williamson have continue to expand
overseas.. They have flooded the markets in Asia and Eastern Europe with advertisements,
promotional products and cut-price brands designed to encourage new smokers.

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Engineering Management Pakistan Tobacco Company

3.3.6 Rivalry among existing firms

In Pakistan only two major companies compete with each other. These are Pakistan tobacco
company and Lakson tobacco company. So rivalry among firms is normal.

3.3.7 Threat of substitute product

Substitutes are easily available in Pakistan so people have the option to switch to brands of other
firms.

3.4 Stakeholders

3.4.1 Bargaining power of buyers:

Cigarette consumption in Pakistan is five times higher than in India with 620 cigarettes per adult
per annum against 119 for India. This shows that the market for tobacco industry is very immense
locally. According to Pakistan Pediatric Association, 1,000 to 1,200 children between the ages of
6 and 16 years take up smoking every day. Therefore bargaining power of buyers is relatively low.

3.4.2 Bargaining power of suppliers:

Most of the tobacco used by the firms is produced in Pakistan, but still a considerable amount of
tobacco is imported every year so suppliers have some bargaining power regarding the prices
especially.

3.4.3 Competiters

PTC faces rivalry from Lakson Tobacco Pakistan in major, after it there is no other big market
player and cannot affect the sales of PTC that much. As there have been the anti tobacco campaigns
internationally, there is a threat that the other international industries might direct themselves for
the developed countries to ensure their sustainability. Pakistani market may also be in the threat
for the international companies to enter, as government policies for the entry are much relaxed but
afterwards the company has to abide by the strict rules and regulation for operating in the region.

3.4.4 Image

The industry has a negative image among its consumers and the general public. This is due to the
various health hazards associated with tobacco consumption. People are also blaming the

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government for its support for the industry. Smoking is the cause of lung cancer in 90% of the
cases. Its users get addicted to it.

Although the companies can not change the nature of their product, they are trying to build a
socially responsible image in the eyes of the consumers. PTC is currently engaged in various
programs such as afforestation, Mobile doctors program, Youth smoking prevention, learning
resource centers. The laskson group has set up Lakson medical center (Sahiwal hospital) and a
Medical complex in Sawabi NWFP.

3.4.5 Entry conditions and government regulations:

There are no entry conditions as such but when a company enters the industry, it has to abide by
all the rules and regulations of government. This is very costly especially in terms of advertising.
The firms have to inform the consumers about the potential health hazards related to tobacco
products. This implies that in order to enter as a manufacturer, heavy investment is required. The
government is providing incentives to the tobacco growers in order to promote the industry. This
is being done through the Pakistan tobacco board. The board tries to find out their problems and
to educate them about the cultural operations, plant protection measures, picking and curing
operations. Other responsibilities of the board are to regulate, control and promote the export of
tobacco and tobacco products, and to fix grading standards

4 Decision Making
Decision making process is centralized in the company. The classical model is used, the top level
managers take their time in making the decisions, all the possible alternatives are kept in mind
before going for the rationally economic solution. The top level managers don’t consult with any
employee in case of programmed decision making. The ordinary routine decisions are made by the
line managers of the middle level management after getting the permission from the general
manager.

The following are the decisions which are taken by the top level of management in the Pakistan
Tobacco Company:

 The package positioning

 Trade discounts

 Advertisements  Price reductions  Distribution.

In recruitment of new employees the top level management approves the vacancies and the Human
Capital Department is asked to conduct a written test such kind of tests are conducted for the
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employees of lower level. The prospective applicants are shot listed through the interview process.
After taking the interview of the applicant the operation manager and the general manager make
the final decision of selection of the employee.

5 Human Resource Management

5.1 Importance of Human Resource:

To lead the organization in enhancing its human capital and creating a winning environment where
everyone enjoys contributing to the best of one’s ability.PTC is developing its people to strive for
higher standards by inspiring and motivating its people. Driving an open minded and enterprising
corporate culture where people through leadership at all levels dare to dream, dare to try, dare to
fail and dare to succeed. PTC always attract and recruit the best talent of the country.

Human resource department will continue its effort towards nurturing a winning corporate culture
and building organizational capabilities by ensuring that its people at all levels are both able and
willing to perform at consistently exceptional levels. At PTC the people have been empowered to
a large degree by minimizing out dated rules /regulations and plan to further eliminate the
bureaucratic barriers to capitalize on their ingenuity and talent .The top team continue to play its
role in providing the guidance and support to people at all levels. The HR (people’s) function
ensures that it leads the transformational change by nurturing a climate, which would help in
converting the huge potential at disposal of the company into world-class performance.

5.1.1 Objectives of the Human Resources Department

 To reduce the turnover.

 Career development.

 Thorough training program.

 Job evaluation for right head count.
 Right placement.

 Implementation of policies and procedures

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5.2 Activities At The Human Resource Department At Pakistan Tobacco 

Recruitment.

 Selection.
 Orientation, Placement and Separation.

 Development and Evaluation  Performance Appraisal.

 Compensation.

 Employee’s benefits and motivation

 Exit Procedure

5.2.1 Recruitment

Recruitment is a searching for and obtains potential job candidates in sufficient number and quality,
to enable the organization to select the most appropriate people to fill its job needs. First of all
there is a requisition from a department for a post which if approved by the HRD, it is advertised
with full job description and specification in the leading newspapers (it is also checked if the post
can be filled from within or alternate solutions are figured out in order to save hiring, training and
other expenses). Thereafter, when a pool of applicants comes up by the due date, the recruitment
process comes to an end.

5.2.2 Selection

Selection of candidates follow after the recruitment procedure is completed. Thus the selection
under take to consider those candidates who applied for respective job and decides which one
should be given the appointment. Selection process typically consists of the following steps.

 Advertising
 Compiling the application forms
 Initial screening interview
 Employment test
 Assessment test
 Comprehensive interview  Background investigation  Conditional offers.
 Medical and physical test.  Final interview.
 The permanent job offers.

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5.2.3 Orientation

Orientation is always only gives to new employees which is selected by external recruitment
process. In this we give the information of all departments, such as head office, regions, areas,
factories and from where raw material comes.

5.2.4 Development and Evaluation

There are two steps in development, training and evaluation process

i. Training and development ii.

Types of training programs

5.2.4.1 Training & Development

An employee is trained in accordance with the needs of the concerned department. The HRD
specifies needs of training and arranges courses, which can be carried out in the country or abroad
also. The annual report of the employee includes the courses he/she has received. The courses
include office management, communications, etc.

Other thing is the employee development. The difference between the employee training and
development is that, that training is present oriented activity while development is future oriented.
Employee development helps the employees and enables them to cope the future challenges and
perform the activities in the coming future.

5.2.4.2 Types of Training Programs

There are different types of training programs, which are developed for different employees.

5.2.4.2.1 Technical Skills Training

Technical skills means that the technique and other information which needs a workers to work
with a machine, what difficulties may comes in this process and how he work efficiently.

5.2.4.2.2 Management Development Training

In management training you conduct a training program to managers to enhance their skills such
as communication, coordination and aware them the new working experiences.

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5.2.4.2.3 Overall Training

Training is a planned effort by a company to facilitate employees learning of job-related

competencies. These competencies include knowledge, skills or behaviors that are critical for the
successful job performance.
5.2.5 Performance Appraisal

Performance appraisal at PTC is used to evaluate the job performance of employees. HR

department use the information gathered through performance appraisal to evaluate the success of
recruitment, selection, orientation, placement, training and other activates. Formal appraisals are
needed to help managers with placement, pay and other decisions. This kind of formal appraisal in
PTC for Business Support Officer is called Steps or Success Through Performance Evaluation the
method used for managers is called PACE or the Performance Appraisal for Career Enhancement.

5.2.6 Compensation

PTC considers its employees not just as a cost but as a resource in which the company has invested
from which it expects valuable returns. Pay policies and programs are one of the most important
human resource tools for encouraging desired employee behaviors. The advantage of paying above
the market average is the ability to attract and retain the top talent available, which can translate
into highly effective and productive work force.

5.2.6.1 Extra Pay for Overtime

If a worker works for more than nine hours in any day or for more than 48 hours in any week in a
non-seasonal or seasonal factory he shall be entitled in respect of overtime worked to pay at the
rate of twice of his ordinary pay.

5.2.7 Promotions

In order to retain employees and keep them motivated, the employees having good performance
can be promoted to the next higher post. There are two bases for promotion in PTC - the suitability
and Seniority. Suitability means the suitability of the person in terms of his performance on the job
and seniority means the time he has passed in PTC.There are certain jobs to which eligible persons
are directly promoted and do not require any further training. But certain jobs require special
training for a particular period. So, when a person is to be promoted to these jobs they are provided
with specified training. There is an annual assessment form, which is used to grade employees. It
depends upon the work performance, quality of work, cooperation, versatility, general knowledge,
and punctuality and attendance of a worker.

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5.2.8 Employee’s benefits and motivation

5.2.8.1 Employee's Benefits

People join organizations for better living better and prosperous life. They expect some monetary
and non monetary benefits in return for the services they give to the organization.

Monetary benefits available to these workers may be classified as

• Wages and Salary;
• Incentives; Fringe
Benefits; and
Bonus.

5.2.8.1.1 Wages and Salary

The wages of workers in PTC are determined through salary reviews, job surveys and through
collective bargaining. In PTC, the minimum wage for a general grade A–1 worker is at least Rs.7,
000 per month. This also makes PTC as a preferred employer.

5.2.8.1.2 Incentives

In PTC, a Group Incentive Scheme called Special Incentive Allowance (SIA) is in operation.
Special incentives are given to all permanent workers in order to keep them motivated and to
achieve the targets and organizational objectives.

5.2.8.1.3 Fringe Benefits

PTC being a progressive multinational provides many fringe benefits to its employees. The fringe
benefits available to workers of PTC are explained as under:

5.2.8.1.3.1 Pension

In PTC on attainment of 58 years of age for men and 55 years for women or of completing fifteen
years insurable service, one gets eligible for retirement. But he is given another option as well. If
he wants to continue his job, he is awarded 3 extensions (Each extension each year) for 3 years
more.

5.2.8.1.3.2 Old Age Grant

Old Age Grant is payable in lump-sum at the rate of 50% of the average wages of an insurable
worker for his completed years of service.

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5.2.8.1.3.3 Group Insurance

Under this scheme all the employees are insured with ALICO Insurance Company and also with
EFU Insurance Company. Under the former scheme the whole premium is paid by the company
on behalf of the workers.

5.2.8.1.3.4 Long Term Service Awards

Workers who have continued to maintain their commitment to the organization for long period of
time are given long service awards. Eligibility for this award is completion of 25 years of service.
The employees eligible for this reward are given Rs.12000/- each as their reward for their loyalty
with PTC. A special party is arranged for this purpose.

5.2.8.1.3.5 Hajj Scheme

Each year PTC sends seven workers to Mecca for pilgrimage (Hajj). Six of these members are
from Akora Khattak Factory and one is from Leaf Area. Financial Assistance of Rs.110, 000 is
given to each employee who proceeds on Hajj.

5.2.8.1.3.6 Scholarships

Each year Workers’ Welfare Board grants scholarships to academically talented children of
workers. These scholarships are provided to 24 students on merit basis. Maximum of Rs.400 are
granted to post matriculate students and Rs.500 to post intermediate students.

5.2.8.1.3.7 Bonus

PTC gives two types of bonuses to its permanent employees every year.

• Contractual Bonus

• Profit Bonus

These bonuses are declared in the month of January each year but are paid to workers in March
when the audited accounts of the company are declared along with three months interest.

5.2.8.2 Employee’s motivation

PTC provides the following benefits to its employees to keep them motivated, confident, up-todate
and to make them better citizens of the community:

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 Free Computer Courses

 Dastakari Center
 Farewell
 Housing Schemes
 Factory Mosque
 Sports Activities
 Traveling Facilities
 Uniform and Smoking Allowance
 Burial Expenses
 Retirement Party
 Blood Donation Camp
 Social Security
5.2.9 Exit Procedure

5.2.9.1 Retirement

There is a limit for an individual to do a job. No individual can work throughout his life. In PTC
the age of compulsory retirement is 58 years for workers and managers, first extension is given at
the age of fifty-five years, second at 56, third at 57, subjected to his performance and medical
fitness. The retirement can also be on medical board examination/ recommendation basis.

5.2.9.2 Retirement on medical grounds

Any employee, if becomes medially unfit to perform his job satisfactorily, is referred to the
Medical Board. If the Medical Board finds him medically unfit for the job, he is given retirement
on medical grounds.

5.2.9.3 Discipline

It is the company policy to ensure that the required standards of performance and conduct are
maintained. PTC respects and abides by the rules given under any Labor Law. For a minor mistake,
a worker may be cautioned or summoned by his supervisors not to repeat the same mistakes or a
written warning is given to him or a fine is imposed on him, which is in conformity with the law.
For a mistake of severe nature, a worker may be Charge Sheeted under the law. The disciplinary
procedure is intended only as a statement of company policy and management guidelines. It does
not form part of the contract of employment or otherwise have contractual effect. There are four
stages to the procedure for permanent. The company reserves the right to initiate the procedure at
any stage or to jump depending on the seriousness of the conduct/performance.

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5.2.9.4 Methods of separation

5.2.9.4.1 Resignation

If an employee finds a good job offer elsewhere, better working environment, attractive salary
packages, fringe and other benefits or due to any other reason, and if he/she opts for separation
from the organization, it is termed as resignation. It is a right of a worker but he/she has to inform
his employer one month prior to his resignation from the organization or one month wages/salary
is deducted from him if he does not inform.

5.2.9.4.2 Voluntary Separation or Golden Handshake

PTC is one of those organizations that keep pace with the changing technological environment. It
has recently replaced its old cigarette making machines with modern machines, which require less
manpower to produce more cigarettes per man hour. In order to reduce the surplus employees,
PTC in year 2001 launched schemes to reduce the surplus employees, called Voluntary Separation
Scheme VSS and Special Separation Scheme SSS. It may be viewed as Golden Handshake or
restructuring of PTC.

6 Leadership
The following major steps are taken by the Pakistan Tobacco Company in the leading function:

 Motivation

 Communication

 Corporate Culture

6.1 Motivation
Pakistan Tobacco Company gives high attention to the motivation of the employees. Promotions
of hardworking employees are a part of the company’s policy. Promotions of employees are done
on the performance basis which is a great motivation for the employee that higher his
performance there is more chance of his promotion.

Beside from promotion strategy the Pakistan Tobacco Company also uses the compensation
strategy to motivate the employee; Pakistan Tobacco Company is paying industrial average in
compensation. Not only this different campaigns and competitions between the employees itself
are also used to motivate the employees.

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Managers play a very important role in the motivation of the employees in Pakistan Tobacco
Company . They help them in all their problems either they are personnel or professional. They
give them feedback on their performance which makes the employee feel good. Working
environment and a challenging milestone are a major factor in employee motivation in the
company.

6.2 Communication
There is an open environment in the which allows the employees to communicate with each
other and it allows the information to flow inside the company and discourages the barriers
between members to share information. Before making the decisions the top level managers
discuss it with the middle level managers and before decision making it is shared till the end of
the hierarchy. The Pakistan Tobacco Company allows the employees that anyone of them can
meet the general manager if he/she is facing any kind of difficulty.

Interdepartmental communication is done in the form of formal and informal manners.

6.3 Corporate Culture
The top management of the Pakistan Tobacco Company tries to follow the prescribed culture of
the organization. Pakistan Tobacco Company has formal and documented values that are
communicated to all the employees. The top level manager acts as role models to make sure that
the rules and regulations are been applied in the company and closely administrator review their
employee’s behavior.

7 Change Management
Developing National Talent Pool by hiring and training over the years thousands of managers who
not only contribute to Company’s business results, but also apply their skills, learning's, and
experiences wherever they chose to work thus playing a vital role in the national economic
development. Pakistan Tobacco Company Limited (PTC) has significantly contributed to the
economic development of Pakistan by continuous investments in the industrial sector. There has
been a ceaseless effort to modernize Company’s operations by introducing new and innovative
concepts, optimal processes and state of the art technology thereby increasing investment in the
country.

7.1 Technological
IT is the backbone of every business without it concept of successful business is becoming
impossible in modern business environment.

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7.1.1.1 SAP (SYSTEM APPLICATION PROGRAM)

The company undertook the mammoth task in 2004 to replace the existing enterprise resource
planning (ERP) system with SAP, world leading ERP system. A smooth implementation across
the organization, in short period it was possible through excellent cross functional efforts by the
projecting the Sap will greatly facilitate the achievement of further efficiencies in all key
business process.

7.1.1.2 MARK 9 MACHINES

MARK 9 plants are used for the production. The manufacturing machine manufacture 8500
cigarettes per minute - a packing machine makes between 300 &400 packets per minute.
Employees were given special training on the SAP software and it was successfully implemented
same was with the MARK 9 planting machines these machines have new technology a special
team gave the training for month on this machine until they were expert on these machines hence
employees responded to this technological change cheerfully.

2008 has also been a year of change for PTC with a number of Business Process Re-engineering
initiatives successfully implemented across the Company as the organization embarked on a
challenging and ambitious journey classifying our must do objectives to succeed in the market as
the “Big Mountains” and focusing our resources behind the same. The Enterprise Program Office
played a vital role in supporting the Company strategy by setting-up the governance structures and
process framework for effective program and project management. Projects implemented during
the year focused on the key areas of Talent, Growth, Illicit Trade reduction, Productivity
improvement and proactive approach to Regulations. PTC is on the forefront of adopting best
practices on Corporate Governance and Reporting standards, as our Annual Report for 2007 was
recognized as the best in its category by ICAP. In addition to the above, PTC won the 25th
Corporate Excellence Award in Business and Industry Category from the Management Association
of Pakistan which is recognition of the excellent management processes in our Company.

8 Knowledge Management
The Company has worked hand-in-hand with local business partners to improve standards and
processes, transferring technology and knowledge, and sharing best practices from across the
globe. Business Enabler Survey Tool (BEST) of PTC assesses the sustainability performance of
materials suppliers, providing a framework for continuous improvement. Suppliers must obtain
Approved, Qualified or Certified status in order to be enlisted and retained. This not only helps
valued business partners become more efficient and responsible but allows them to expand and
grow in new spheres. Numerous businesses in Pakistan that used to be dependant solely on PTC
have now grown to become well established industry leaders. PTC has over the years developed
exemplary trade distribution networks.

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The systems and processes developed by it are considered by other industries as a model of
efficiency and speed. Over the past 65 years hundreds of distribution houses all over the country
have entered into long term association. These valued business partners benefit from the need to
learn and adhere to global standards, and the continuous push for innovation and up gradation
which PTC endeavours to inculcate. This has been a journey which has taken them on the path of
distribution excellence, thereby improving standards of service delivery in the country. The
Company pioneered to set up one of the best extension program for farmers that has also
contributed to the modernization, development and growth of the agricultural sector in the country.
Farmers are constantly helped through field workshops where they learn about integrated pest
management, appropriate use of agrochemicals, etc. PTC has also been providing them agronomy
support which includes guidance on crop management, soil health, water management and
environmental friendly practices. This also includes advice on how to maximize yields, optimize
crop quality, achieve reliable returns and improve the long-term sustainability of a farm. These
initiatives are not limited to tobacco farming; these relate to overall agriculture and helps farmers
improve the quality and yields of other crops, making them more self-sufficient. This has made
tobacco crop yield in Pakistan one of the highest in the world and also made Pakistan a net exporter
of tobacco thereby bringing in the much needed foreign exchange. PTC’s extension services have
helped farmers utilize the acquired skills, technology and cultivation practices for improvement of
other crops. Consequently, this has improved income for farmers and increased the overall
agricultural productivity in the country.

9 Conclusion:
Fiscal revenues are a key source of funding for public sector development projects, including
infrastructure (motorways, dams, etc.) and services (social sector programs). Over the last 65 years
PTC has consistently contributed billions of rupees in the form of taxes which helped our country
in meeting its developmental objectives. In the last 3 years alone, PTC contributed more than Rs.
120 billion in the form of federal excise and sales tax to the Government of Pakistan. In the last
financial year, PTC contributed more than Rs. 45 billion as tax to the Government of Pakistan,
making the Company one of the leading tax payers and revenue generators in the private sector in
the country.

References:

 www.thenetwork.org.pk/pressrelease04-01-08.htm

 The News

 Reuters

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 Pakistan Tobacco Board (www.ptc.com.pk)

 Report(65 Years Of Excellence) PTC

 BMA Capital Management

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