PTC

At PTC, we have been delivering shareholder value and
creating valued employment for over 70 years. Today, we find

ourselves in one of the most dynamic periods of change our
industry has ever encountered. Our environmental, social and
governance agenda is at the heart of our way forward. Rapid
product innovation, along with advances in societal attitudes
and public health awareness, have given us the opportunity
to make a substantial leap forward in our long-held ambition
to positively impact the lives of millions of our consumers by
providing them reduced risk products*. Through this strategy,
we will build A Better TomorrowTM for consumers, society,
employees and shareholders.
*Based on the weight of evidence and assuming a complete switch from cigarette smoking.
These products are not risk free and are addictive.
CONTINUING
OUR WINNING
LEGACY
Asia Money Award Top Employer 2020 GDIB Award 35th MAP Award
TABLE OF CONTENTS
04 04 04 05 06 08
Our Our Our Our British American BAT’s Geographical
Vision Mission Purpose Ethos Tobacco (BAT) Spread
10 12 14 15 16 18
Our Evolved Our Evolved ESG Pakistan Tobacco Our Footprint Corporate Our Logo
Business Model Agenda Company Limited Information Evolution
20 22 24 28 30 32
Our Response to Awards and Risk & Opportunity Organisational Position of Board of
COVID-19 Accolades Report Structure Reporting Directors
Organisation Within
Value Chain
36 40 43 48 50 52
Committees of Report of Audit Standards of Chairman's MD/CEO's Director's
Board Committee Business Conduct Review Message Report
and Ethical
Principles
63 64 65 66 68 69
Product Illicit DIGIMARC Operational Our ESG Calendar of Notable
Portfolio Trade Excellence Achievements Events 2020
70 72 74 75 76 77
Leaf Sustainability Marketing Becoming the VELO Sound Security that Means Simplify
Initiatives Performance Exports Hub For Station Business
Review Modern Oral
78 80 82 86 88 90
2020 Performance Critical Performance Quarterly Analysis Horizontal & Analysis of Summary of
Indicators 2020 Vertical Analysis Statement of Profit Statement of Profit
or Loss & Statement or Loss, Financial
of Financial Position Position & Cash
Flows
91 92 94 95 96 97
Dupont Analysis Liquidity, Cash Performance Analysis of Significant Plans Business Rationale
2020 Flows and Capital Indicators Ratios for Performance and Decisions of Projects
Structure 6 Years Indicators Undertaken During
the Year
98 100 101 102 104 105
Strategy and Statement of Value Share Price Forward Looking Financial Calendar Statement of
Resource Allocation Generated and its Sensitivity Analysis Statement Adherence
Distribution with Integrated
Reporting
Framework
106 110 112

Notice of the Statement of Independent
Annual General Compliance Auditors' Review
Meeting Report
Financial Statements
114 118 119 120 121 122

Independent Statement of Statement of Statement of Statement of Statement of
Auditors' Report Profit or Loss Comprehensive Financial Position Changes in Equity Cash Flows
Income
123
Notes to the
Financial
Statements
Consolidated Financial Statements
168 169 180 184 185 186

Chairman’s Review Director’s Report Independent Consolidated Consolidated Consolidated
(Consolidated (Consolidated Auditors Report Statement of Profit Statement of Statement of
Accounts) Accounts) (Consolidated or Loss Comprehensive Financial Position
Accounts) Income
187 188 189 232 241 244

Consolidated Consolidated Notes to the Pattern of Director’s Report Notice of Annual
Statement of Statement of Cash Consolidated Shareholding (Urdu) General Meeting
Changes in Equity Flows Financial (Urdu)
Statements
245 247 248

Glossary and Form of Proxy Form of Proxy
Definitions (Urdu)
OUR VISION
Reducing the health impact through offering a greater
choice of enjoyable and less risky products for our
consumers
The BAT Group set out an inspiring purpose for the whole Company when it introduced its evolved strategy in March
2020. The Group’s renewed purpose is to build A Better TomorrowTM by reducing the health impact of its business
through offering a greater choice of enjoyable and reduced risk products* for our consumers. It will evolve its growth
model through the development of a portfolio in tobacco, nicotine and beyond, meeting consumers’ evolving needs
for enjoyment and satisfaction. The Group now aims to generate an increasingly greater proportion of revenue from
products other than cigarettes and so, reduce the health impact of its business. This will deliver A Better TomorrowTM
for consumers who will have a range of enjoyable and reduced risk choices for every mood and moment; for society
through reducing the overall health and environmental impacts of our business; for employees by creating a dynamic
and purposeful place to work; and for shareholders by delivering sustainable superior returns.
OUR MISSION
Stimulating the senses of new adult generations
Today, BAT sees opportunities to capture consumer moments which have, over time, become limited by societal and
regulatory shifts, and to satisfy evolving consumer needs and preferences. Our mission is to anticipate and satisfy this
ever-evolving consumer: provide pleasure, reduce risk, increase choice and stimulate the senses of adult consumers
worldwide.
OUR PURPOSE
To create A Better TomorrowTM for all our stakeholders
CONSUMERS SOCIETY EMPLOYEES SHAREHOLDERS

By responsibly offering By reducing the health By creating a dynamic, By delivering sustainable and
enjoyable and stimulating impact of our business inspiring and purposeful superior returns.
choices for every mood and by offering a range of place to work.
every moment, today and alternative products, as
tomorrow. well as by reducing our
environmental and social
impacts.
04 These products are not risk free and are addictive.
OUR ETHOS
BOLD FAST EMPOWERED

Dream big – with innovative ideas. Speed Matters. Set clear direction Set the context for our teams and
and move fast. trust their expertise.
Make tough decisions quickly and
proudly stand accountable for Keep it simple. Focus on outcomes. Challenge each other. Once in
them. agreement, we commit collectively.
Learn quickly and share learnings.
Resilient & fearless to beat the Collaborate and hold each other
competition. accountable to deliver.
DIVERSE RESPONSIBLE
Value different perspectives. Take action to reduce the health
impact of our business.
Build on each others' ideas,
knowledge and experiences. Ensure the best quality products
for our consumers, the best place
Challenge ourselves to be
to work for our people and the best
open-minded and recognising
results for our shareholders.
unconscious bias.
Act with integrity, never
compromising our standards and
ethics.
Annual Report 2020 05

BRITISH AMERICAN
TOBACCO (BAT)
BAT by Region
America and Sub-Saharan Africa Asia Pacific and Middle East
Employees Manufacturing Sites Employees Manufacturing Sites
15,000+ 27 10,000+ 24
Europe and North Africa United States of America

Employees Manufacturing Sites Employees Manufacturing Sites
22,000+ 21 4,900+ 7
For the fourth year running, we received the prestigious Global Top
Employer accreditation in January 2021, acknowledging our commitment
to creating an inclusive and innovative working environment. We’ve also
been certified as a Top Employer in more than 40 markets
06
BAT is a leading, multi-category consumer goods business.
Founded in 1902, today the Group is a truly global company
–it employs more than 55,000 people worldwide, operates
in over 180 markets and has factories in more than 40
countries.
The Group’s global business is divided into four regions sustainability journey, as reflected by its presence in the
and covers over 150 million consumers and 11 million Dow Jones Sustainability Indices for many years and the
retail points of sale, with a balanced presence in both other notable independent recognitions it has received.
high-growth emerging markets and developed markets.
BAT’s portfolio comprises combustible tobacco products, BAT’s strategy has evolved with the purpose of delivering
such as cigarettes, alongside a range of non-combustible A Better TomorrowTM for all our stakeholders. At its heart,
products. These include New Categories of reduced risk the strategy is about anticipating and satisfying the ever-
products* – vapour and tobacco heating products and evolving consumer: providing pleasure, reducing risk and
modern oral products, including tobacco-free nicotine offering increasing choice.
pouches – as well as traditional oral products, such as
snus and moist snuff. Central to the strategy is the Group’s updated
sustainability agenda which reflects our changing external
The Group’s headquarters are in London and the environment. Specifically, we are clear that reducing the
company is listed on the London Stock Exchange. In health impact of our businesses is our principal focus
2020, the Group generated revenue of £26.7 billion and area, as well as placing a greater emphasis on the
profit from operations of more than £9 billion. importance of addressing climate change and excellence
in environmental management. At the same time, we
Today BAT is transitioning from being a business where remain committed to delivering a positive social impact
sustainability has always been important to one where it is and ensuring robust corporate governance across the
front and centre in everything that it does. Group.
The Group has made significant progress on its
>180
markets in which we operate
Our wide range of capabilities make us
exceptionally well-placed for future growth:
• our unique global marketing and distribution
>150m
reach;
• our track record of R&D strength and
daily consumer interaction innovation;
• our decades’ worth of consumer insights, and
>11m
brand building expertise; and
• our New Categories business aims to generate
points of sale across £5bn in revenue in 2025
over 180 markets
These products are not risk free and are addictive. Annual Report 2020 07
BAT’S
GEOGRAPHICAL
SPREAD
United States Americas and Sub-

of America Saharan Africa
Argentina, Brazil, Canada, Caribbean, Central America,
Chile, Colombia, Kenya, Mexico, Nigeria, Paraguay, Peru,
South Africa, Venezuela
08
Europe and Asia-Pacific and Middle
North Africa East
Austria, Bulgaria, Czech Republic, Denmark, Finland, Australia, Bangladesh, Cambodia, China, Hong Kong,
France, Germany, Greece, Hungary, Italy, Norway, Poland, Indonesia, Japan, Korea, Malaysia, New Zealand,
Russia, Spain, Sweden, Switzerland, Turkey, Ukraine, Pakistan, Sri Lanka, Taiwan, Vietnam, UAE, Qatar, Oman,
Morocco, Algeria, Tunisia, Libya, Egypt & Sudan Lebanon, Iraq, Jordan, Syria, Palestine, Yemen, KSA,
Bahrain, Kuwait, Iran, Myanmar & Afghanistan

OUR EVOLVED
BUSINESS MODEL
10
OUR EVOLVED
ESG AGENDA
At BAT, we are transitioning from being a
business where sustainability has always
been important to one where it is front
and centre in all that we do.
Consequently, we refreshed our Sustainability Agenda (as an integral part of our
evolved Group Strategy) to place a greater emphasis on the importance of addressing
climate change and environmental management. This is underpinned in excellence in
all other environmental, social and governance (ESG) measures.
12
Our Sustainable Agenda
S
Reducing the HEALTH impact
of our Business
Consumer World-Class Standards
Choice Science and regulation
E S G
Excellence in Delivering a positive Robust corporate
ENVIRONMENTAL SOCIAL impact GOVERNANCE
management
Climate change Human rights Business ethics

Water and waste Farmer livelihoods Responsible marketing
Sustainable agriculture Health and safety Regulation
Circular economy People and culture Policy engagement
Creating shared value for
CONSUMERS SOCIETY EMPLOYEES SHAREHOLDERS

PAKISTAN TOBACCO
COMPANY LIMITED
Pakistan Tobacco Company Limited stakeholders. Furthermore, this year is poised to be the
(PTC) was the first multinational to be year of Sustainability. Exciting new initiatives such as
incorporated in Pakistan, right after the expanding our plant nurseries footprint, increasing our
water-filtration plants network and many new projects are
partition of the Subcontinent in 1947. We underway. A year like no other, we are proud to not only
are a subsidiary of the British American have weathered the storm but come out of this stronger.
Tobacco Group (BAT) and we take pride
in the fact that we started off with a Aligned with the Government’s ambition of reducing the
balance of payments deficit, we exported Raw Tobacco
single warehouse near Karachi port and
and Finished goods to GCC and other Middle Eastern
over the course of time, became one countries with an approximate worth of around $31 million.
of the biggest FMCG companies in the Overall, we exported over 2.3+ Billion Cigarettes and 4+
country. We currently hold more than Million Kilograms of Raw Tobacco. These numbers have
75% of the total legitimate cigarette the potential to grow manifold in the years to come.
market share in the country and nearly
We are extremely positive about the strategic interventions
50% of total cigarette sales nationwide. that our team undertook during 2020. Our globally sought-
after talent, prized product portfolio, our partnerships
We are making a step-change in the development of
throughout our crop to consumer operations and world
standards to protect and support our New Categories
class manufacturing facilities is what sets us apart locally
ambition. We have created new benchmarks and set new
and globally.
records across the value chain - establishing Pakistan as
an export hub for VELO in the APME region - thus building
A Better TomorrowTM for BAT, our consumers and all our
14
OUR
FOOTPRINT

CORPORATE INFORMATION
Registered Office Company Secretary Auditors

Pakistan Tobacco Company Limited Sami Zaman KPMG Taseer Hadi & Co.
Serena Business Complex T: +92 (51) 2083200 6th Floor, State Life Building No. 5, Jinnah
Khayaban-e-Suhrwardy Avenue, Blue Area, Islamabad 44000
P.O. Box 2549 T: +92 (51) 2823558
Islamabad – 44000 F: +92 (51) 2822671
T: +92 (51) 2083200, 2083201
F: +92 (51) 2604516
www.ptc.com.pk
Bankers
Conventional Banks
Share Registrar
MCB Bank Limited
Habib Bank Limited Famco Associates (PVT) LTD
Factories National Bank of Pakistan 8-F, Near Hotel Faran
Citibank N.A Nursery, Block 6, P.E.C.H.S.
Akora Khattak Factory
Standard Chartered Bank (Pakistan) Shahrah-e-Faisal, Karachi
P.O Akora Khattak Limited T: +92 (21) 34380101-5
Tehsil and District Nowshera Deutsche Bank AG
Khyber Pakhtunkhwa
T: +92 (923) 561561-72
Islamic Banks
F: +92 (923) 561502
MCB Islamic Bank Limited
Jhelum Factory
G.T Road, Kala Gujran, Jhelum
T: +92 (544) 646500-7
F: +92 (544) 646524
16
Regional and Area Offices
Central Punjab North Sindh & Balochistan
200-FF Block, Central Commercial Area, 1st Floor, Faran-101, Civic Centre, Office No. 903, 9th Floor,
Phase 4, DHA, Lahore Cantt Phase IV, Bahria Town, Islamabad Emerald Tower (Plot No. G - 19),
T: +92 (42) 35899351-55 T: +92 (51) 5734207-10 Main Clifton Road, Clifton Block 5,
Karachi 75600
11 KM Jaranwala Road, Cigarette Factory, G.T Road, Jhelum T: +92 (21) 35147690-94
Near Shafi Oil Mills, Faisalabad T: +92 (544) 646500-11
F: +92 (541) 646529 Banglow No. 05, Block B, Unit No. 05,
T: +92 (41) 8740892-94
Near Bhittai Hospital Latifabad,
MM Plaza, Plot # 110-111,Soni Pura Chak Hyderabad
G.T Road, Rahwali, Gujranwala Cantt
47 Road, Shaheen Park, Sargodha T: +92 (22) 3813636
T: +92 (55) 3864297 T: +92 (48) 3769921
Bunglow No. A-17, Housing Society,
Southern Punjab 2nd Floor Marina Mall Opposite Chief Nawabshah, (Near SSGE Regional Office).
Burger Near Abdara Chowk Main Nawabshah
Office No. 601/602, 6th Floor,
University Road Peshawar T: +92 (244) 364463-364458
The United Mall, Main Abdali Road, Multan
T: +92 (91) 5702649-50
T: +92 (61) 4512553, 4585992 Bungalow No. A/31 Akhuwat Nagar,
Shikarpur Road, Sukkur
House No. 42/3, Tipu Shaheed Road, T: +92 (71) 5807225 - 5807224
Model Town A, Bahawalpur
T: +92 (62) 2877576 B-604, 2nd Floor, (Serena Bazar), Serena
Hotel Quetta, Quetta
House No. 313, Street No. 3 Hameed Ullah
T: +92 (81) 2832012 - 13
Mocal Colony, Sahiwal
T: +92 (40) 4503107

OUR LOGO
EVOLUTION
New BAT Identity
The logo, along with a new brand identity, reflects changes in the
world around us and our business. For decades, our previous leaf
logo has served us well as a strong symbol of a world-leading
tobacco company. Today, however, our purpose has evolved as we
aim to reduce the health impact of our business through offering
a greater choice of enjoyable and reduced risk products* for our Our Colours
consumers. Our dynamic new logo reflects our company today The blues represent the water and air that
and our journey ahead. Our heritage – and the foundation of our sustain us, yellow/orange are the sun that
success – is in cigarettes, however, we recognize the world is nurtures us, greens are the land on which
changing. We have a clear purpose to build A Better TomorrowTM by we depend and pink/purple represents
reducing the health impact of our business. our innovation and diversity.
18 These products are not risk free and are addictive.
OUR RESPONSE TO
COVID-19
Since the COVID-19 outbreak, we have moved quickly

to protect the health of our staff and customers, while
activating
26 February our business contingency 1 April plan to avoid 20 May
disruption
Regular Crisis to our services.MoreOur digitalization efforts
than 2,000 ina complete
Almost
recent
meetings were years,
Management Team
held to to move our recorded
customers to digital channels
cases in Pakistan were
and remote wayand
transformation to digital
of
enable our employees to work remotely, have helped

take updates and take
necessary decisions us
working was implemented
across business
adapt
employees fast. Here is our response to COVID-19.
regarding safety of our operations in the country
23-29 March 15 May

Disinfection of our We distributed Personal
offices, factories and Protective Equipments,
distribution locations were N-95 masks and
conducted. Disinfection sanitizers to doctors
chambers were installed, and health workers who
strict temperature & were treating COVID-19
symptom monitoring was patients. Furthermore
deployed across all areas surgical masks and
sanitizers were distributed
amongst communities in
Jhelum and Akora
20
1 August 10 December
Decline of first wave
Covid awareness
was witnessed in the
campaigns launched to
government data.
reaffirm the severity of the
Business flourished along
pandemic. We continued
with new normal. Akora
to operate with our Work
Khattak Factory and
from Home protocol
Jhelum Factory continued
ensuring the continued
to push industry leading
safety of its employees
numbers across the BAT
Group
28 June 1 November 31 December

HO and A&TMD offices Pakistan experienced We continued to distribute
started to reopen with a second surge in Personal Protective
limited capacity adhering the pandemic. Zero Equipment’s amongst
to Covid protocols. tolerance policy for any front line health workers
Zero-Tolerance Policy non compliance to SOPs and the communities in
for any non-compliances continued to stay in effect Jhelum and Akora
to the SOPs were put
in place. We pioneered
in implementing Covid
protocol and helped to
cascade best practices to
other end markets

AWARDS AND
ACCOLADES
GDIB Award Asia-Money Award
Global Diversity and Inclusion Benchmark (GDIB) Awards Asia-Money Awards are considered as one of the
are conducted by Diversity Hub Pakistan on an annual most prestigious awards globally and are designed to
basis. GDIB awards is a mechanism to recognize and acknowledge listed companies that have excelled in
encourage progressive organizations who use GDIB areas such as financial performance, management team
standards to align D&I with organizational policies and excellence, IR activities and CSR initiatives.
process for sustainable financial and social performance.
Pakistan Tobacco Company Limited (PTC) was awarded
GDIB has awarded Pakistan Tobacco Company Limited as the “Most Outstanding Company in Pakistan” in
(PTC) 6 awards in the following categories: Tobacco Sector by the Euro-Money – Asia-Money Asia’s
Outstanding Companies Poll 2020.
• Vision
•
•
Leadership
Structure
Management Association of
• Recruitment & Development Pakistan
• Learning and Education
Founded in 1964, MAP is a professional and non-
• Communication
political association with a not-for-profit agenda, and it
pursues the vision to lead change processes towards
We ranked 5th place out of 30 companies by the GDIB panel
best Management Practices. Management Association
of Pakistan is committed to excellence in management
Top Employer 2020 through human capital development, creating awareness
and recognizing best management practices to enhancing
Established more than 25 years ago, Top Employer
competitiveness. In 2020, Pakistan Tobacco Company
Institute is a global certification Company recognizing
Limited (PTC) was awarded the 35th corporate excellence
excellence in people practices. Top Employers Institute
award in the Tobacco Sector category.
has certified over 1500 organisations in 118 countries/
regions. Pakistan Tobacco Company Limited (PTC) has
been awarded the Top Employer certification 2020 by the
Top Employers Institute. We have achieved this award two
years in a row.
22
RISK & OPPORTUNITY REPORT
As challenges in our operating landscape continue to Risk Governance

intensify, the proactive identification and management
of risks became vital in ensuring that the Company The Board of Directors are responsible for determining
is able to deliver sustainable stakeholder value. The the nature and extent of the significant risks the Company
Company’s risk management framework is characterized is willing to take to achieve its strategic objectives. The
by defined mandates, comprehensive policy frameworks Board is supported by the Board Audit Committee in
and robust governance structures. Effective risk discharging its risk management related responsibilities
identification, monitoring and mitigation processes are and the Board Audit Committee regularly reviews the
embedded in the Company’s daily operations through effectiveness of the Company’s risk management
a comprehensive framework comprising monitoring processes and internal control systems. A dedicated
processes, internal controls and relevant stakeholder Governance Committee (GC), comprising the Finance
engagement mechanisms. As a subsidiary of BAT Group, Director, as its chairman and Senior Managers
we also benefit from globally followed highly effective representing key functions, reports to the Executive
best practices in risk management and thus, have Committee on the risk performance of each function
been successful in nurturing a risk culture, which aptly on a regular basis. The Company’s risk profile is also
balances risk and growth considerations. monitored through the internal reporting mechanisms of
the Group.
Statement from Board of

Risk Identification
Directors During the year, a robust assessment of the principal
The Board is responsible for determining the risk appetite risks faced by the Company were carried out, including
that the Company is willing to take to achieve its strategic those that would impact its business model, performance,
objectives and for maintaining sound risk management brands, assets, solvency and its employees. Financial
and internal control systems. The Company's risk and non-financial risks are identified at a functional level,
management and internal control frameworks are aimed with inputs from relevant employees. This is carried out
at safeguarding shareholders’ investment, our assets as through team discussions and brainstorming sessions,
well evaluating and managing risks that may impede our which facilitate participation and value addition by
objectives. employees across the Company. The identified risks are
then reviewed for completeness by the GC on a regular
As part of the risk governance and overall good corporate basis.
governance stipulated in the Code of Corporate
Governance 2019, several Directors of the Company have
been appropriately certified under the Directors’ Training
Program from SECP approved institutions in accordance
with the time frame set out in the Code. The following 9
Directors have obtained the requisite certification. Three
are pending - their training is scheduled during the
current year to ensure certification of the entire Board.
Names of Directors who have obtained certification from

SECP approved institutions are provided below:
1. Syed Javed Iqbal

2. Asif Jooma
3. Tajamal Hussain Shah
4. Zafar Mahmood
5. Lt. Gen. M. Masood Aslam (R)
6. Usman Zahur
7. Syed Asad Ali Shah
8. Syed Ali Akbar
9. Mohammad Riaz
24
Risk
Management
Management
Risk Approach Assessment &
Identification Evaluation
Monitoring

Assessment and Evaluation Materiality Approach Adopted
Elaborate Risk registers are used to assess and evaluate by the Management
the risks in detail. Each identified risk is assessed and
Materiality levels, other than those provided under
then categorized at one of the three levels (high/medium
regulations, are judgemental and may vary substantially
/low) in terms of the likelihood of its occurrence and
from company to company. For us, matters are
the severity of its potential impact. Tolerance levels and
considered to be material if, individually or in aggregate,
trigger points are also defined for each identified risk.
they are expected to significantly affect the performance,
The risk registers are first validated by the GC, then
profitability, brands or assets of the Company.
the Executive Committee and finally by the Board Audit
Committee.
Powers of the Board of Directors and the management
have been defined with special reference to, and in
Risk Management compliance with the applicable regulatory framework.
Authorizations for transactions have been clearly
Following the identification of key risks faced by the
defined and documented in the Statement of Delegated
Company, the respective functions develop elaborate
Authorities (SoDA). These authorities have been defined
strategies and plans to mitigate the impacts of these
keeping in view materiality levels appropriate to a certain
risks. The Responsibility for managing each identified
position or level of an employee. These are reviewed and
risk rests with the head of each function (risk owners),
approved by BoD each year.
who reports regularly to the GC on the progress and
effectiveness of the risk mitigation plans. Additionally,
the potential impact of global trends and risks are also Key Sources of Uncertainty
captured through input by the GC, which can recommend
improvements in internal controls and risk mitigation plans and Risks & Mitigating
in line with global best practices and experiences. Strategies
Key sources of uncertainty emanate from challenging
Monitoring environments, the company operates in. Changes in
political, social, technological, economic or legal factors
Risks are monitored at multiple levels in the organization
also lead to risks, which the company might be exposed
including at functional level, by GC, Executive Committee,
to. The Company actively monitors its risk universe to pro-
Board Audit Committee and Board level. Identified risks,
actively manage and mitigate various risk exposures.
the risk registers, mitigation plans, and performance of
each risk mitigation plan are evaluated at these levels
throughout the year. Furthermore, the Company is also The following section details key risks that the Board
fully compliant to all the requirements of Sarbanes Oxley believes could have the most significant impact on
Act (SOx) which has further strengthened the internal the Company’s ability to create value. Some of these
controls of the Company. major risks are outside our control and other factors
besides those listed below may affect the Company’s
performance. Some risks may be unknown at present;
others which are currently immaterial, could emerge as
material risks in the future.
26
Risk
Level Impact Mitigating Strategy
Description
Strategic Risks
Illicit and High • Volume loss and profitability • Active engagement with Government/ law
Counterfeit • Erosion of brand value enforcement agencies to highlight the issue
Trade • Investment in trade marketing is and its impact on the legal industry
undermined
Aggressive High • Direct impact on consumer affordability • Active engagement with Government/ law
Excise • Down trading to illicit brands enforcement agencies to explain impact on
Increases • Reduced legal industry volumes the legal industry
• Sustainability issues for the legal
industry
Economic Moderate • Direct impact on consumer buying • Brands across various consumer segments
Conditions power
• Down trading to illicit brands
• Reduced legal industry volumes
Financial Risks
Currency Moderate • Increased cost base • Hedging to minimize exposure
Devaluation • Lower operating margins • Operational synergies across value chain
• Pressure on profit growth • Cost savings initiatives
• Physical hedging options
Material Price Moderate • Increased cost base • Productivity initiatives
Sensitivity • Lower operating margins • Substitutes
• Pressure on profit growth • Alternative suppliers
Operational Risks
Pandemics Moderate • Injury to employees or contractor • Strict compliance with EHS regulations,
workforce standards and protocols
• Damage to company reputation • EH&S Trainings
• Employee dissatisfaction • EH&S Audits
• Business Interruption • Safety equipment
• Incident reporting
Accidents at Low • Employee absenteeism • Strict compliance with EHS regulations,
Workplace • Business interruption standards and protocols
• Damaging employee morale • EH&S Trainings
• Reduced operational effectiveness • EH&S Audits
• Safety equipment
• Incident reporting
Employee Low • Loss of key talent • Market competitive remuneration
Turnover • Low employee morale • International career opportunities
• Employee dissatisfaction • Development and Growth opportunities
• Reduced operational effectiveness • Conducive and safe work environment
• Favourable employee policies
Natural Low • Business interruption • Business interruption plans.
Disasters • Property loss • Evacuation Plans and drills.
• Employee safety • Safety Equipment
• Financial loss

ORGANISATIONAL
STRUCTURE
Chairman and
Board of Directors
Audit Human Resource MD/CEO Share Transfer

Committee & Remuneration Committee
Committee
Finance & Head of Country Security

IT Director Human Resources Manager
Head of Corporate Sr. HR Business Security Manager -

Internal Audit Finance Controller Partner Ops - AKF Operations
Area Commercial Security Manager -

Sr. HR Business
Finance Controller - Marketing & Secondary
Partner Ops - JF
Operations Supply Chain
Sr. Commercial Finance HR Business Partner - Risk & Resilience

Manager - Marketing Corporate Manager
Executive HR Services
Assistant Manager
Executive
Assistant
28
Executive Area Director
Committee Ops MESA
(ExCo)
Legal & External Head of

Affairs Director Marketing
Head of Activation
Head of External Affairs Factory
and Trade Marketing
& Company Secretary Manager - JF
Distribution
Business Development
Commercial Factory
Manager GTR &
Counsel Manager - AKF
Afghanistan
Executive Supply Chain Planning As at 31st December 2020

Assistant Manager SAA Manager - PK
Area Quality Group Brand

Manager Manager JPGL
Area EHS Executive

Manager Assistant

POSITION OF REPORTING
ORGANISATION WITHIN
VALUE CHAIN
Tobacco Tobacco Cigarette
Harvesting Buying Manufacturing Selling
Tobacco Tobacco Cigarette

Leaf Curing Processing Distribution
Pakistan Tobacco Company

Sourcing
1. Tobacco Buying
While the Company does not own tobacco farms or factory. Our production facilities are located in Akora
directly employ farmers, it buys the majority of its Khattak and Jhelum, which provide employment
tobacco from local farmers that grow tobacco crop opportunities to the indigenous people of these areas.
in areas of KPK and Punjab province. The Company
provides on-ground support and advice to these
farmers, enabling them to increase yields, improve Warehousing and Distribution
tobacco leaf quality and achieve consistency in crop
attributes. In this way, the livelihood of many tobacco Following production, the finished products are then
farmers remains connected with the Company. transported from the factories to warehouses located in
various parts of the country. Export goods are stored
2. Other Raw materials only at Jhelum Factory and shipped to other regions from
there. The other finished goods are sold to our appointed
The Company procures other raw materials used distributors operating across the country. These
in the manufacturing and packaging of cigarettes
from local as well as international suppliers. In
distributors sell the product to wholesalers and retailers
turn, the local industries supplying raw materials operating in their respective market areas. In carrying out
to the Company are able to generate income and its warehousing and distribution operations, the Company
employment by transacting commercially with leases several warehouses across the country whereas
the Company. Venturing into new categories, the it utilizes the services of Logistics Service Providers for
Company currently imports finished goods but will
soon produce it locally.
the transportation of goods. These operations in-turn
enable other companies, businesses and people not only
in generating income for themselves but also in creating
Manufacturing employment opportunities for others. The benefits of the
economic activity generated by our business trickles
1. Tobacco Processing
down to various segments and benefits the society at
Prior to being used in the manufacturing of cigarettes, large.
tobacco undergoes processing first in the GLT (Green
Leaf Threshing) Plant and then in the PMD (Primary
Manufacturing Department). These operations,
being in Akora Khattak and Jhelum, benefit the local
Selling and Marketing
community by not only providing direct employment Every year the Company carries out various marketing
opportunities but also business opportunities created and selling activities to support its business partners and
as a result of ancillary services, required by the to promote its brands. These also include activities that
Company to run its operations.
help in providing insights into consumer preferences and
perceptions, especially those related to the Company’s
2. Cigarette Production brands. In executing these activities, the Company utilizes
In the production phase, processed tobacco and the services of many local suppliers, which in turn generates
raw materials are first used to make cigarette sticks, not only commercial activity for other local businesses but
then formed into cigarette packs and finally packed also creates many employment opportunities.
in corrugated boxes, ready to be shipped out of the
30
Following is the Graphical Representation of PTC’s
Operations and New Categories Product Distribution:
Sourcing Manufacturing Warehousing Distribution
Leaf Local
Overseas Sindh & Balochistan Sale to Distributor
GLT + Leaf Warehouses Southern Punjab Sale to Distributor

WMS Overseas
Local Akora Khattak Central Punjab Sale to Distributor
Jhelum North Sale to Distributor
Exports Local
Overseas
Jhelum Jhelum Factory Exported to MESA Region
VELO Overseas
Finished Goods
All Distribution Sale to Distributor

Warehouses

BOARD OF
DIRECTORS
Zafar Mahmood Usman Zahur William Pegel

(Chairman and Non- Executive Director) (Managing Director/CEO) (Finance & IT Director)
Mr. Zafar Mahmood holds an MA Mr. Usman Zahur joined PTC 23 years ago Mr. William Pegel joined PTC as Area Head
in Economics and an LL.B, as well and since then, he has held various senior of Finance for South Asia Cluster in 2019.
as a Post Graduate Diploma in Marketing positions in Brands, Trade and He has over 24 years of experience in
Development Administration from SP&I across different geographies. In 2012, various BAT companies and successfully
Manchester University, UK. He served he was assigned as the Head of Marketing performed the role of Finance Director
the Government of Pakistan for 38 years – Bangladesh, where he led the marketing in various end markets including New
in multiple important roles, including team in achieving unprecedented growth Zealand, Papua New Guinea, Ghana and
Secretary Textiles, Secretary Industries, in a very complex and competitive Bangladesh. He has also held various
Secretary Water & Power, Secretary environment. He returned to Pakistan senior finance roles at BAT Australia and
Petroleum & Natural Resources, in 2017 as Area Marketing Director for BAT South Africa since 1996. Prior to
Secretary Commerce and Secretary South Asia Cluster including Sri Lanka joining PTC, he was an integral member
Cabinet. During his distinguished career, and Myanmar. He was appointed as the of the BAT Bangladesh Leadership Team,
he also held the positions of Consul Managing Director / CEO of the Company displaying strong leadership and business
General in Istanbul, Vice Chairman in November 2019. acumen. He is a Certified Chartered
Export Promotion Bureau and Chairman Accountant from the South African Institute
Punjab Public Service Commission. He of Chartered Accountancy. He joined the
retired from public service while holding Board in September 2019.
the critical role of Chairman WAPDA. He
joined the PTC Board in 2016.
32
Syed Asad Ali Shah Syed Ali Akbar Syed Javed Iqbal
(Legal & External Affairs Director) (Marketing Director) (Non-Executive Director)
Syed Asad Ali Shah has more than 18 Syed Ali Akbar became a part of PTC Syed Javed Iqbal has been with the BAT
years of experience with the Company. He in May 2019 as the Marketing Director, Group for the last 23 years. He joined
has worked in several managerial roles in holding a strong legacy with over two as a Management Trainee and has held
Marketing, Supply Chain and Corporate & decades of experience of working various key positions in the Finance function
Regulatory Affairs Functions in Pakistan, with various MNC’s and Fortune 500 within PTC as well as with British American
United Kingdom and North America. He companies in senior leadership roles of Tobacco Group. He has served in BAT
has previously served as the Head of General Management, M&A and Business South Korea as the Finance Controller and
Government Affairs and in August 2018, he Development. He has served as a director later in Global Headquarters in London as
was appointed as the Area Head of Legal in different organisations, both in public the Finance Manager for Global Marketing.
and External Affairs for South Asia Cluster. and commercial sectors; not just in In 2011, he was appointed as the Finance
He holds a master’s degree from Cranfield Pakistan but also the Middle East, North Director for Swiss Business Unit. He
University School of Management, UK. He Africa and North America. He embarked returned to Pakistan in 2014 as Director
joined the Board in April 2019. on this outstanding career journey as a Finance & IT. In July 2016, he became
Management Trainee at Unilever Bestfoods the Managing Director /CEO of PTC and
and very quickly grew, taking up senior Area Director of South Asia Cluster. He is
leadership roles in Engro Corporation, currently the Area Director for Middle East
BAT and Coca-Cola. Whilst leading large & South Asia business in BAT with effect
diverse teams across countries in notable from November 2019.
positions, he has received various local &
global honours for his strategic vision; one
of the most coveted accolades being in
recognition of his ground-breaking strategy
of driving innovation at Coca-Cola where he
was awarded the Global Award 2018 – the
Zenith of recognition by the Chairman & the
Board. He joined the Board in November
2019.

BOARD OF
DIRECTORS
Tajamal Hussain Shah Belinda Joy Ross Lt. Gen. M.

(Non-Executive Director) (Non-Executive Director)
Masood Aslam (R)
(Independent Director)
Mr. Tajamal Hussain Shah is a legal Ms. Belinda Joy Ross completed her Lt. General M. Masood Aslam (R) has
professional with extensive experience LL.B. and B. Com at the University of special expertise in countering militancy,
in the public and private sector. Before Otago, New Zealand and is registered as violent extremism and undertaking
joining BAT in 2000, he worked for a Barrister and Solicitor of the High Court rehabilitative measures to ensure lasting
various organisations based in England of New Zealand. Before joining BAT, she peace. He was commissioned in an
including as a regulator of the financial has worked as a private practitioner at one infantry regiment of the Pakistan Army
services industry with UK’s department of Auckland’s leading firms and has also in November 1971. During his illustrious
of trade and industry and in the banking provided advisory services to various New career, he has held various command and
department of the international law firm Zealand and South Pacific Businesses. staff appointments, including commanding
DLA Piper. In this period of his life, he Belinda has over 21 years of experience a brigade and a division. At a crucial time
specialised in general banking, asset within British American Tobacco (BAT) in the country’s history, he commanded
and aircraft financing. He spent over 18 and her current role encompasses Legal the Peshawar Corps and oversaw military
years with BAT, occupying various senior Affairs, Corporate Affairs and Security operations in FATA and KPK. Post his
legal and management roles. He retired matters across Asia Pacific and Middle East retirement, he remains actively involved
in July 2018 from the role of Area Head regions. She is a member of the leadership with numerous think tanks in Pakistan and
of Legal and External Affairs for South teams of Asia Pacific and Middle East abroad. He has also served the country
Area Cluster to become a non-executive regions as well as the Global Legal and overseas as Pakistan’s Ambassador to
director on the board of PTC. Currently, External Affairs team. She joined the Board Mexico. He joined the Board in April 2019.
he is heading the legal and business in April 2019.
consultancy firm THS & Co., which
specialises in telecommunication and
technology law, constitution and tax as
well as compliance. He is a UK qualified
Barrister and a Solicitor for England and
Wales.
34
Mohammad Riaz Asif Jooma Zafar Aslam
(Independent Director) (Independent Director)
(Non-Executive Director)
Mr. Mohammad Riaz started his Mr. Asif Jooma started his career in the Mr. Zafar Aslam is a Mechanical Engineer,
distinguished 37 year career of Government corporate sector with ICI Pakistan Limited having completed management programs
Service as the Secretary / Chief Budget of in 1983 and has over 35 years of extensive at University of Cranfield, Stanford
FBR in 1981. He later served overseas as experience in senior commercial and University and IMD Lausanne. He’s worked
Commercial and Economic Counsellor in leadership roles. Following his early years on multiple programs with McKinsey,
Paris and Counsel General, Istanbul. Due with ICI Pakistan Limited and subsequently Accenture and Gartner. He joined BAT
to his active involvement in Public Affairs, Pakistan PTA Limited, he was appointed 24 years ago, as a Management Trainee
he was posted as DG Social Sector at the Managing Director of Abbott Laboratories in Operations. After several roles in PTC,
Prime Minister’s Secretariat. Later he also Pakistan Limited in 2007. After serving he moved to Malaysia as the Asia Pacific
served as the Member Customs of FBR and there for nearly six years, he returned to (AsPac) Regional Supply Chain Program
DG Customs Intelligence for 4 years. He ICI Pakistan Limited as Chief Executive in Manager before returning to Pakistan
retired after serving as Federal Secretary February 2013. He has previously served as the Factory Manager. In 2010, he
National Assembly/Parliament for 2.5 as President of the American Business was appointed as Operations Director,
years. After retirement, he was appointed Council, President of the Overseas BAT Bangladesh. He then served as the
as a member of the Board of Governors Investors Chamber of Commerce and Regional Head of Plan & Service based
of the State Bank of Pakistan (SBP) in Industry (OICCI) and Chairman of the in the UK and later as the Group Head
2016. He has also served as a Member, Pharma Bureau. He has also served as of Plan, Service & Logistics in the Global
Monetary Policy Committee of the Ministry a Director on NIB Bank Limited, Engro Head Office, London before returning to
of Finance/SBP. He joined the Board in April Fertilisers Limited and Director and Member Asia as the Regional Operations Director
2019. Executive Committee of the Board of for AsPac Region in 2016. He was also
Investment (BOI) – Government of Pakistan. appointed Director on the Boards of
He currently serves on the Board of British-American Tobacco (Singapore) Pte
Systems Limited and is the Chief Executive Ltd & British-American Tobacco Marketing
of NutriCo Morinaga (Private) Limited. (Singapore) Pte Ltd. Since January 2018,
he has taken over the added responsibilities
Mr. Jooma is on the Board of Governors of the Middle East Area as Regional
of the Lahore University of Management Operations Director. He joined the Board in
Sciences (LUMS) and a Trustee of the Duke April 2019.
of Edinburgh’s Awards Programme whilst
previously also serving on the Board of
Indus Valley School of Art and Architecture
(IVSAA). He graduated Cum Laude from
Boston University with a Bachelor of Arts in
Development Economics. He has attended
Executive Development Programmes at
INSEAD and Harvard Business School. He
joined the Board in April 2019.

COMMITTEES OF BOARD
The Board has a number of committees, which assist
the Board in the performance of its functions.
Executive Committee
The Executive Committee of the Board (ExCo) comprises of Executive Directors of the Company and heads of
departments. The ExCo drives to achieve the strategic targets set by the Board of Directors.
Usman Zahur Syed Asad Ali Shah William Pegel

Managing Director & CEO Legal & External Affairs Director Finance & IT Director
Syed Ali Akbar Waqas Ahmad Khan Husain Iqbal Jaffery

Marketing Director Head of Human Resources Head of Operations
Matters delegated to the Management

It is the responsibility of management to conduct the routine business operations
of the Company in an effective and ethical manner in accordance with the
strategies and goals as approved by the Board and to identify and administer
the key risks and opportunities which could impact the Company in the ordinary
course of execution of its business. Management is also concerned in keeping
the Board members updated regarding any changes in the operating environment.
It is also the responsibility of management, with the oversight of the Board and its
Sami Zaman Audit Committee, to prepare financial statements that fairly present the financial
Company Secretary
position of the Company in accordance with applicable accounting standards and
requirements of the Companies Act, 2017.
36
Board Meetings Audit Committee
During the year 2020, five meetings were held on In 2020, 4 meetings were held on 24th February, 7th May,
24th February, 7th May, 24th July, 23rd October and 10th 24th July and 23rd October. Attendance of its members is
December. Attendance of its members is as follows: as follows:
Mohammad Riaz
Members Attendance Chairman
4/4
Mr. Zafar Mahmood
5/5
Lt. Gen. M. Masood Aslam (R) 4/4
Chairman
Usman Zahur
Asif Jooma 4/4
5/5
3/4
Managing Director and CEO
Tajamal Shah
William Francis Pegel
Director Finance & IT 5/5 Belinda Joy Ross 3/4
Syed Asad Ali Shah
5/5
Executive Committee (ExCo)
Director Legal and External Affairs
Syed Ali Akbar

Director Marketing 4/5 In 2020, one meeting was held on 18th June*. Attendance
Syed Javed Iqbal of its members is as follows:
Non-Executive Director 1/5
Belinda Joy Ross Usman Zahur 1/1
Zafar Aslam Khan
William Francis Pegel 1/1
3/5
Non-Executive Director Syed Asad Ali Shah 1/1
Lt. Gen. M. Masood Aslam (R)
Independent Director 5/5 Syed Ali Akbar 0/1
Mohammad Riaz Hussain Iqbal Jaffery
Independent Director 5/5 Director, Supply Chain 1/1
Asif Jooma Waqas Ahmad Khan
Independent Director 5/5 Head of HR 1/1
Mr. Tajamal Shah
Non-Executive Director 4/5 * ExCo meetings reduced due to creation of new empowered forums for
decisions on operational matters. See page 38 for more details

Human Resources & Governance Committee
In 2020, eleven meetings were held. Attendance of Board
Remuneration Committee members is as follows:
Meetings
In 2020, one meeting was held. Attendance of its
William Pegel 11/11
members is as follows: Syed Asad Shah 10/11
Lt. Gen. M. Masood Aslam (R) 1/1

Commercial Committee
Asif Jooma 1/1 In 2020, eleven meetings were held. Attendance of Board
members is as follows:
Usman Zahur 1/1
Usman Zahur 9/12
Shares Transfer Committee
In 2020, twelve meetings were held. Attendance of its
William Francis Pegel 12/12
members is as follows: Syed Asad Ali Shah 12/12
Usman Zahur 9/12 Syed Ali Akbar 9/12
Hussain Iqbal Jaffery
William Pegel 12/12 Moved to new role in August 2020
6/7
Syed Asad Ali Shah 12/12 Waqas Ahmad Khan 12/12
TORs / Functions of Board Committees

Committees Committees
Audit Committee Human Resources and Remuneration (HR&R)
Functions Functions
The Audit Committee functions within the scope of the terms of The Committee is responsible for:
reference approved by the Board, which sets out the roles and
• Recommending human resources management policies to
responsibilities of the Committee and as well as the requirements
the Board;
of the Listed Companies (Code of Corporate Governance)
Regulations, 2019. The role and responsibilities of the Audit • Recommending to the Board the selection, evaluation,
Committee include: compensation (including retirement benefits) and
succession planning of the MD/CEO;
• Seeking assurance on the measures taken by the • Recommending to the Board, the selection, evaluation,
management in identification, evaluation and mitigation of compensation (including retirement benefits) of COO, CFO,
relevant business risks. Company Secretary and Head of Internal Audit; and
• Reviewing quarterly, half-yearly and annual financial • Consideration and approval on recommendations of MD/
statements of the Company and preliminary announcements CEO on such matters for key management positions who
of results before approval by the Board and publication. report directly to MD/CEO or COO.
38
• Reviewing the Company’s statement on internal control
systems, prior to their approval by the Board.
• Ascertaining that the internal control systems including
financial and operational controls, accounting system and
reporting structure, are adequate and effective.
• Monitoring compliance with the best practices of
corporate governance and instituting special projects
and investigations on matters deemed appropriate by the
Committee or desired by the Board.
• Review and approve the scope and extent of internal audit,
including the annual Internal Audit Plan, and regularly
monitors the progress of the internal audit engagements.
Share Transfer Committee Executive Committee of the Board (ExCo)
Functions Functions
The Committee is responsible for dealing with the day to day The Executive Committee of the Board (ExCo) is the central
matters relating to the shares of the Company. working nucleus of the organisation. Comprising of Executive
Directors and Heads of Departments of the Company, the
ExCo drives to achieve the strategic targets set by the Board of
Directors.
Governance Committee Commercial Committee
Functions Functions
The Governance Committee (the Committee) is a sub-committee The committee is also sub-committee of ExCo. The objective
of the Executive Committee (ExCo). is to assist the ExCo in reviewing key business metrics on a
monthly basis which include market overview, current business
The objective of the Committee is to assist the PTC ExCo to
performance, proposed plans, financial performance, latest
discharge their corporate governance responsibilities to exercise
estimates, operational performance and supply plans.
due care, diligence and skill in relation to:
The commercial forum is responsible for the following:
• Achievement of PTC goals within an appropriate framework
of internal control and risk management; 1. Seamlessly drive the commercial agenda for PTC
• Process simplification with empowered teams leading to 2. Monitor progress and facilitate delivery for ongoing projects
smarter and faster decision making; and work streams (Star Charts)
• Internal control system; 3. Provide organizational support to and approval for ongoing
projects
• Risk management and analysis;
4. Operational decision making and business cases for key
• Business policies and practices;
projects and budgetary approvals
• Compliance with the SoBC standards and policies;
5. Detailed PIRs of completed projects
• Compliance with applicable laws and regulations; and
6. Necessary escalations and approvals if required for ASOP
• Monitoring and controlling of business and other risks and ALT Commercial
While recognising that the primary responsibility for corporate This is an approving forum for all budgets for business plans as
governance resides with the Board, it has been delegated to the per the SoDA governance.
Committee, which has a representation of the ExCo and their
direct reports
The Committee does not replace or replicate established

management responsibilities and delegations or the reporting
lines and responsibilities of internal audit or external audit
functions and nor does the delegation to the Committee fragment
or diminish the responsibilities of the Board as a whole.

REPORT OF
AUDIT COMMITTEE
The Audit Committee comprises of five directors. All members of the Audit Committee are non-executive directors
including the Chairman. The Head of Internal Audit is the Secretary of the Audit Committee and reports directly to the
Chairman. In line with corporate best practices laid out in the Code of Corporate Governance 2019, there is more than
one independent director present in the Audit Committee.
Four meetings of the Audit Committee were held during 2020. The composition of the Audit Committee as on December
31, 2020 is as follows:
Directors Status 24th Feb 7th May 24th Jul 23rd Oct Total
Mr. Mohammad Riaz
Chairman
Independent
4
Member
Independent
4
Mr. Asif Jooma
Member
Independent
4
Ms. Belinda Joy Ross
Member
Non-Executive
X 3
Mr. Tajamal Shah
Member
Non-Executive
X 3
*Participants joining via Video conference call.
The Audit Committee is a standing committee of the For 2020 the Audit
Committee Reports
Board. The Audit Committee assists the Board in
carrying out its responsibilities relating to the Company’s
accounting policies, management of business risks,
internal controls, financial reporting practices and 1. The Company has complied, without any material
the conduct of business in accordance with Code of departure, with the requirements of Listing
Corporate Governance. Regulations, Code of Corporate Governance,
Company’s Standards of Business Conduct and
Meetings of the Audit Committee are held once every other relevant statutory & regulatory requirements;
quarter. The Secretary prepares and circulates minutes 2. The Company has issued a Statement of Compliance
to all members and attendees of the meeting. The with the Code of Corporate Governance which has
external auditors attend the meetings to assist the Audit also been reviewed and certified by the external
Committee on matters relating to financial accounts and auditors of the Company;
reporting. The Audit Committee also meets the external
3. The Audit Committee reviewed and approved
auditors without the CFO and Head of Internal Audit
quarterly, half-yearly and annual financial statements
being present. The Managing Director and the Finance
of the Company and recommended them for
Director attend meetings of the Audit Committee on
approval of the Board of Directors. Further, the
standing invitation.
financial statements comply with the requirements
of the Fourth Schedule to the Companies Act, 2017,
The Audit Committee functions within the scope of the
and applicable International Accounting Standards
terms of reference approved by the Board, which sets
and International Financial Reporting Standards
out the roles and responsibilities of the Audit Committee
as well as the requirements of the Code of Corporate
Governance.
40
notified by SECP. No significant issues were identified Based on the internal audit reports, the Audit Committee
by the external auditors with respect to the financial reviewed the adequacy of controls and recommended
statements; improvements in the audit reviews. Report findings
highlighted the adequacy of controls as well as
4. The Audit Committee approves that the Annual
the compliance shortcomings in the areas audited.
Report is fair, balanced and understandable and it
Corrective actions were discussed with management
provides the necessary information for shareholders
and remediation plans were put into place. Regular
to assess the Company’s position and performance,
follow ups were done with management on the execution
business model and strategy;
of remediation plans ensuring management of risks,
5. The Audit Committee reviewed all preliminary effective operation of controls and improved compliance.
announcements of the Company’s results prior to
publication; Head of Internal Audit has direct access to the Audit
6. The Audit Committee reviewed the Company’s Committee. Internal Audit has carried out its duties under
statement on internal control systems prior to its the plan approved by the Audit Committee.
endorsement by the Board;
7. The Audit Committee reviewed the Risk & Controls External Audit
Matrix for identified risks, implemented controls
and countermeasures to mitigate these risks. The external auditors M/s. KPMG Taseer Hadi & Co.
Furthermore, the Audit Committee reviewed were allowed direct access to the Audit Committee.
recommendations from risk-based reviews for the Major findings arising from audits and any matters that
mitigation of risks and improvement of processes; the external auditors wished to highlight were freely
8. The Audit Committee reviewed the procedures discussed with the Audit Committee.
established for receipt, retention and treatment of
concerns relating to the Company’s accounting, Without interfering with the independence of the external
internal accounting controls or auditing matters, on a and internal auditors, the Audit Committee encouraged
confidential and anonymous basis; and coordination between them in the discharge of their
respective duties.
9. The Audit Committee evaluated its performance and
shared the results with the external auditors. The Audit Committee has reviewed and discussed with
the external auditors and management, all the Key Audit
Internal Audit and Risk Matters and other issues identified during the external
Management
audit along with the methods used to address the same.
For continuous improvement of internal controls, the Audit
Committee also discussed the internal controls and the
The Company has an appropriately staffed Internal Audit management letter with the external auditors.
department for the appraisal of internal controls and
monitoring of compliance. The Audit Committee reviewed Being eligible for reappointment as auditors of the
the resources and performance of the Internal Audit Company, the Audit Committee has recommended the
department to ensure adequacy for the planned scope of appointment of M/s KPMG Taseer Hadi & Co., Chartered
the Internal Audit reviews. Accountants as external auditors of the Company for the
year ending 31 December 2021. M/s KPMG Taseer Hadi
Risk Assessments submitted to the Audit Committee & Co. has been the Company’s external auditors since
drive the formulation of the annual Audit Plan to mitigate 2016 and has a thorough knowledge of the Company’s
identified risks in the Company’s operations. Audits are business and industry.
undertaken based on this plan and findings from these
audits are reported to the Audit Committee.

42
STANDARDS OF BUSINESS
CONDUCT AND ETHICAL
PRINCIPLES
We, the Executive Committee mandated by the Board of Pakistan Tobacco Company
Limited, believe in delivering with integrity and being absolutely transparent in
our operations. Leading by example, we have embedded the Standard of Business
Conduct in the DNA of this organisation and we stand by it.
These Standards of Business Conduct set out the standards that everyone working
for PTC must follow, while also providing support and guidance to assist our people
to ensure that their conduct meets the high standards of integrity expected of them.
In our Ethos we express commitment to be "diverse" and to reinforce our purpose, ambitions, values and mindset that we
"responsible". Behaving responsibly will help us protect the require to succeed. They do this by making clear the rules that
quality of our business relationships amongst ourselves, our govern our business conduct and by providing guidance to help
stakeholders and markets. Harnessing the diversity of our us make appropriate judgments and decisions in the course of
people, helps define our organisation, our culture and makes our work. Everyone in the Company is responsible for upholding
working together enjoyable. these requirements. Failure to observe the Standards is a cause
for disciplinary action, which may lead to dismissal.
To ensure that these principles are applied every day in our jobs,
we need to express them in detailed terms. We needed to explain The Standards encourage employees to feel secure in seeking
the challenges and set standards so that people could identify advice or raising concerns. If any employee is unsure of what to
situations that might cross the line and provide guidance on how do in any situation or has concerns about wrongdoing at work,
to address such situations. To understand how these and other there are colleagues who can help, managers who will listen,
principles should be reflected in our daily business lives and in and policies that are there to support the employee. Above all,
our own behaviours at work, we need to set ourselves standards. channels are available for employees to raise their concerns
This is why we have the Standards of Business Conduct. regarding any violation of the Standards. The Company does not
tolerate any retaliation against anyone who raises a concern.
These Standards are designed to help us make the right
decisions when conducting day to day business and to assist We all have a personal responsibility to uphold the Standards
us in upholding the integrity upon which our reputation is that we set for ourselves and to act in ways that maintain and
founded. They are based on our beliefs and values and underpin improve the reputation of Pakistan Tobacco Company Limited.
our commitment to honesty, integrity and transparency. Our The Company encourages everyone to be familiar with these
Standards have been in place for many years and are kept under Standards, not just as a set of rules but as a way of working. By
review to ensure that they remain updated with the best business living up to the letter and the spirit of the Standards in our actions
practices. The latest version has been updated and revised and judgment, we ensure that Pakistan Tobacco Company
in alignment with the United States best practice, following Limited continues to be an organisation which not only delivers
the acquisition of Reynolds American Inc. by British American excellent financial returns, but is also the one which we are proud
Tobacco PLC. Though these Standards cannot cover every to work for.
situation that we may encounter at work, but they can help guide
our conduct. Above all, we must always choose what we truly
believe to be the right course of action. Governance Exceeding
These Standards also provide an extensive outline of the legal
Regulatory Requirements
obligations that all employees of Pakistan Tobacco Company The Company's commitment towards adherence to the highest
Limited need to comply with at all times. However, these levels of ethical values is demonstrated by its voluntary adoption
Standards are further intended to support all of us in ensuring, of the best business practices in addition to the stipulated
not only that our conduct remains lawful, but also that it is in line regulatory requirements.
with the high standards that we expect of ourselves. They help

Some governance practices exceeding legal Procedures for raising concerns are provided below:
requirements that have been adopted by the Company
Informal reporting: Voice concern with line manager or
include:
any other senior manager.
• Implementation of robust EH&S equipment, systems, Formal reporting: Report the matter formally for
processes and standards to ensure a high level of investigation with line manager or any of the designated
safety of all its employees and contractors. officer either verbally or in writing.
• Detailed disclosure of financial analysis including Designated Officer: Referred to by the individual
quarterly analysis, ratios analysis, horizontal and directly or by the line manager for investigation but matter
vertical analysis, risks and opportunities etc. is kept confidential.
• Implementation of “Standards of Business Conduct” Anonymous reports: Individuals may wish to raise
to reinforce that the Company strongly believes in concerns anonymously.
operating with integrity and that there is no room for Reporting a wrongdoing: If you have a concern you
corrupt practices. wish to raise, you may write to any of the Designated
Officers or contact them via telephone or fax.
Whistle Blowing The designated officers are:
At the Company any employee who suspects a Managing Director and CEO
wrongdoing at work, is strongly encouraged to report
such wrongdoing through the whistle blowing procedure. Legal and External Affairs Director
Head of Internal Audit
Policy and Procedures Company Secretary
The Company's whistle blowing policy (Policy) gives All employees of the Company are made aware of this
employees (and people working with the Company) trust Policy and the safeguards it provides to the whistle-
and confidence in how their concerns will be treated. The blower.
whistle blowing policy allows employees to report their
concerns on any breach of the SoBC. The actions that Number of incidences reported in 2020
can be reported include:
11 whistle blowing incidences were reported in the said
• Criminal Acts year.
• Putting Health or Safety at Risk

• Environmental Damage
Conflicts of Interest
A conflict of interest will arise in any situation where an
• Bullying or Harassment
employee’s position or responsibilities within the Company
• Accounting Malpractices present an opportunity for him/her or any close relative to
• Failing to Comply with Legal Obligations obtain a personal gain or benefit (apart from the normal
rewards of employment), or where there is a scope for
• Concealing any of the above activities
them to prefer their personal interests, or those of any
close relative, above their duties and responsibilities to
The Policy through the procedures set out therein, the Company.
ensures highest level of confidentiality for the whistle
blower and the investigation process. Additionally, in
order to encourage people to speak up, the Policy also
Bribery and Corruption
mandates no reprisal against the whistle-blower, who may Corruption causes distortion in markets and harms
also report the concern anonymously. economic, social and political development, particularly
in developing countries. It is wholly unacceptable for the
Company and its employees to be involved or implicated
44
in any way in corrupt practices. The Company expects Protection of Corporate
similar standards from the third parties it works with and
to ensure the same has in place policies like Suppliers Assets
Code of Conduct and Anti-Bribery & Corruption Employees are responsible for safeguarding and making
Procedure appropriate use of the Company assets which they are
entrusted with in order to do their jobs and meet the
Entertainment and Gifts Company’s business objectives.
The exchange of entertainment and gifts with business

partners can build goodwill in business relationships and, Confidentiality and
within limits, is perfectly acceptable. However, some gifts Information Security
and entertainment can create improper influence (or the
The Company and employees must protect and
appearance of improper influence) and might even be
maintain the confidentiality of all commercially sensitive
seen as bribes. The Company's Entertainment and Gift
information, trade secrets and other confidential
Policy prohibits giving and receiving of such gifts that
information relating to the Company and its business.
may create any improper influence.
Political Contributions Insider Dealing and Market

The Company or its employees in official capacity shall Abuse
not make any donations or contributions to any political The Company is committed to supporting fair and open
party or make any donations or contribution to any entity securities markets. Accordingly, employees are prohibited
or individual for a political purpose. from dealing on the basis of insider information or
engaging in other forms of market abuse.
Charitable Contributions
Pakistan Tobacco Company Limited recognizes the role Competition and Anti-Trust
of business as a corporate citizen and the Company is Laws
encouraged to support local community and charitable
The Company believes in free competition. The Company
projects.
must seek to compete fairly and ethically and within the
framework of applicable ‘competition’ laws (or ‘anti-trust’
Accurate Accounting and laws, as they are known in certain countries).
Record Keeping
Honest, accurate and objective recording and reporting Money Laundering and Anti-
of information, both financial and non-financial, is Terrorism
essential to:
Money laundering involves the possession of, or any
dealing with, the proceeds of criminal activity. It includes
• the Company’s credibility and reputation;
the process of concealing the identity of illegally obtained
• its ability to meet its legal, tax, audit and regulatory money so that it appears to have come from a lawful
obligations; and source. The Company does not condone, facilitate or
• informing and supporting business decisions and support money laundering.
actions by the Company.

Trade in the Company’s controls which are in place. To ensure required standards
and quality, all IT projects and initiatives are approved
Products from IT steering committee and built as part of the
The Company engages only in lawful trade in its products. Company's IT plan.
Illicit trade, involving smuggled or counterfeit products,
harms our business and we would like to see our market All of the above is governed through policies and
free of it. standards such as IT Security Policy, Approved Product
List (APL), and Technical Security Standards (TSS) etc.
Sanctions Robust ERP System

Various sanction regimes exist throughout the world,
We have enabled the business team, on the latest and
ranging from comprehensive economic and trade
the most reliable ERP system, to ensure that all financial
sanctions to more specific measures such as arms
activities are recorded, and reporting facility is available
embargoes, travel bans and financial or diplomatic
to management for the latest update on business results
restrictions. Economic and trade sanctions impact upon
and quick decision-making.
the business of our Company by restricting the extent to
which they can operate within certain jurisdictions.
Scaled Sales Automation System
Respect in the Workplace A full sales automation system used by salesmen to sell
our product to retailers has been put in place. It enables
All Company employees must treat all of their colleagues the availability of key information and speeds up the
and business partners inclusively, with dignity and with selling process.
respect.
Cloud Based Infrastructure
Human Rights and the We have transformed all the local data centres to globally
Company’s Operations hosted GEO redundant facility to ensure its availability to
business is 24/7 from everywhere. All applications and
The Company is committed to ensuring that its operations storage facilities are in cloud with six levels of backups
are always conducted in a way that respects the human and GEO redundant backup / failover servers.
rights of its employees, the people it works with and the
communities in which the Company operates. Business Continuity Planning
A Company-wide business continuity plan exists which
IT Governance Policy is reviewed on a quarterly basis and tested twice a year.
It is done to ensure that it is as per latest challenges and
The Company has a robust IT governance based on a
situations to ensure sustainable business operations
number of policies and IT standards, where strategy and
during any disaster or climate situation.
respective plans are defined based on the Company’s
automation and technology needs, processes and
procedures. IT Systems are defined and implemented Human Resource Talent
as per the industry standard process and related
requirements. All the controlling processes are governed
Management
using industry best practices, from leaf buying process to The Company's focus on creating diverse talent pools
cigarette manufacturing to sales automation. begins with attracting the best candidates in the market
from all backgrounds and experiences. All the hiring
Being the custodian of the Company’s most important managers are fully trained through ‘Interviewing &
asset, the data, the Company's IT, supported by global Assessing Skills’ training, which ensures effectiveness
support groups, is ensuring that right people have at hiring top & high potential talent without any biases or
access to the Company's infrastructure through Global IT preconceived notions. The rigorous assessment criteria
standards, IT Infrastructure Library (ITIL) processes and consists of multiple stages of shortlisting which primarily
evaluate a candidate’s agility & adaptability to be a part
of a diverse community both locally and internationally.
46
The Company offers a plethora of learning opportunities Actual and Perceived Conflicts
for the talent to perform in a multi-cultural environment,
including short and long term international assignments of Interest
based in other end markets of the BAT Group. The Company is determined to provide the best working
environment to all its employees. It is a part of SoBC that
Records Management Policy all employees must avoid situations where their personal
interests might, or might appear to, be in conflict with
The Company has its formal Records Management and the interests of the Company. In this regard the guiding
Information Security Policies. Records Management Policy principle is that an employee must disclose to the higher
defines Company’s Critical Records and their mandated management of any personal or business conflict of
retention periods considering their legal audit and tax interest he/she may have.
obligations in addition to business needs. Both policies
not only ensure that critical records are properly saved In the case of any Board member of the Company,
and archived but their security is also uncompromised. disclosure should be made to, and approval sought from,
For electronic records, backups are maintained and for the Board of the Company at its next meeting, and the
hard records, the Company has its own offsite “Records decision should be recorded in the minutes.
Storage” where critical records with longer retention
period are kept safely. All employees must disclose any conflicts of interest in
accordance with the procedure set out in the SoBC at the
Investors Grievance Policy end of each year.
If any Investor has any grievance, he can contact the The Company maintains a ‘conflicts log’ which records the
designated person for handling Investor Claims. On the details of all conflicts of interest disclosed by employees
official website of the Company under the head “Investor and the action taken in respect of them.
Relations” a name has been provided along with contact
details of the person designated to handle investor The Company Secretary is responsible for maintaining the
grievances as per the SECP’s guidelines. ‘conflicts log’.
Business Ethics & Anti- Related Parties

Corruption Measures All transactions with related parties arising in the normal
course of business are carried out on an unbiased, arm’s
The Company is committed to operate the business fairly length basis at normal commercial terms and conditions.
and ethically in line with applicable laws, right across the
world. Conducting business ethically and with integrity As required under the fourth schedule of the Companies
amongst other things entails avoiding all forms of corrupt Act, 2017, detailed disclosures regarding related party
practices. As an organisation we have a “zero tolerance” transactions have been presented in Note 38 to the
approach to corrupt practices and in no circumstances, financial statements. Such disclosures are in line with the
will such conduct be tolerated. requirements of the 4th Schedule of the Companies Act,
2017, and applicable International Financial Reporting
The Integrity Guide (“Guide”) designed by LEX Standards.
department reflects our commitment to encouraging
the application of the Company's Standard of Business In compliance with the Code of Corporate Governance
Conduct. This Guide is designed to help everyone and applicable laws, a comprehensive list of all
working for or with the Company to understand the related party transactions was placed before the
Business Integrity Principles. It aims to define and Audit Committee for review at the end of each quarter.
determine behaviours in certain situations which are After review by the Committee, the transactions were
prone to risk and will serve as a basis for discussing considered and approved by the Board keeping in view
ethical business issues with others. the recommendations made by the Committee.
In order to improve corporate sustainability the Company

further stresses and pushes its contractors, agents or
consultants, to act consistently with the SoBC by applying
similar standards within their own organisations.

CHAIRMAN’S
REVIEW
“ “
I am pleased to share the
Annual Report for the year
2020.
2020 Performance
The legitimate tobacco industry remained under pressure due to The Company also requires its employees to operate and deliver
the widening price differential between duty not paid (DNP) brands with integrity and strongly discourages malpractice. This message is
and legitimate brands following the 93% increase in excise rates in cascaded and internalized across the Company through face to face
2018 and 2019 that fuelled illicit market share growth in 2020. The and online trainings conducted throughout the year as part of SoBC
Government’s decision not to change excise rates was a positive refreshers. Furthermore, channels have been established and made
outcome from FY 2020-21 budget that provided consumer price available for anyone working in or with the Company to raise their
stability, but this was short-lived as key brands in the illicit sector concerns in confidence and without fear of reprisal.
reduced their selling prices by 25% post budget to Rs 30/pack.
Business Sustainability
Enhanced enforcement support by the Government is key to ensure
fair competition within the tobacco industry and would prevent loss of
further tax revenues towards the national exchequer.
PTC’s strategic objectives are aimed at building a business which can
be sustained over a long-term period. 2020 was a landmark year for
Growing Illicit market share was the primary driver behind PTC’s
PTC as it ventured into new categories by launching nicotine pouches
volume decline in 2020, however, the Company’s overall financial
called ‘VELO’ with the aim of driving ‘tobacco harm reduction’
position has remained healthy. The Company delivered EPS growth of
agenda. This was delivered on the back of bold and agile initiatives
28% which was achieved by keeping a strong focus on effective cost
including national expansion of VELO, launch of VELO sound station
management, lean operations and investment in brands portfolio to
and setup of an exclusive local factory for VELO. On the cigarettes
offer products which reflect evolving consumer preferences.
and cut-tobacco exports front, $31 Million in foreign direct inflows
were generated to further augment the Company’s ambition of
Corporate Social becoming the primary export hub for the region. Pakistan has also
emerged as a front runner for setting up a shared services hub.
Responsibility This may serve as a talent incubator enabling Pakistan to become
a Services Exports market unlocking enormous potential for future
This year is poised to be the year of Sustainability. PTC has a long foreign direct investment.
standing tradition of giving back to society; since 1981, the company
has been running one of the largest private sector afforestation The presence of a large illicit sector remains an area of concern,
programs across the country. Under this initiative, the Company as it continues to create major sustainability issues for the legitimate
plants and distributes tree saplings free of cost. During 2020, the industry while causing revenue losses of close to Rs 70 Billion for the
Company planted and distributed more than 9 Million saplings. A new Government. Thus, it is in the best interest of all stakeholders that
fully solar powered nursery is also under construction in Lahore. stringent action is taken by the relevant law enforcing authorities to
curb the illicit sector.
Amongst our other CSR initiatives, the Company continued to provide
free medical advice and medicines under its Mobile Doctor Unit In addition, it is necessary to note the regulations issued in early
program. In 2020, more than 50,000 patients took medical advice March 2020 by the Ministry of National Health Services, Regulations
and medicines under this program. To ensure local community is and Coordination to prohibit tobacco and tobacco products’
protected from water borne diseases, the Company is providing advertising, promotion and sponsorship have the potential to
clean drinking to the less privileged sectors of the society through adversely affect the Company’s business. Local DNP brands continue
5 water filtration plants filtering 64,000 litres of water per day. Our to violate the previous laws and the new regulation which not only
lift irrigation system provided water to more than 1,000 hectares of disrupted the creation of a level playing field within the tobacco
agricultural land of Buner district benefitting more than 450 farmers. industry but also negatively impacted Government tax revenues.
To mitigate water scarcity in the Country, PTC installed drip irrigation
systems in Buner and Mansehra that enabled water conservation of PTC also believes in recruiting the best talent in Pakistan which will
927 Million litres. provide us the human capabilities to excel in a challenging business
environment. The senior management of the Company and I have full
confidence in the long-term sustainability of our business and in the
Corporate Governance efficacy of its leadership.
PTC takes pride in its compliance with good corporate governance Our business rests on strong and durable foundations, which have
practices. A comprehensive system of controls, governance and risk stood the test of time, and it has the necessary dynamism and
management is in place to ensure that the Company’s assets and enterprising spirit to ensure the delivery of sustainable growth for the
the interests of the shareholders are protected. With the acquisition long-term. I have faith that the Company will continue to provide an
of Reynolds American Inc. by the BAT Group and subsequent attractive value for its shareholders in the future.
adherence to all of the Sarbanes-Oxley Regulations (SOx), the
Company’s controls and governance environment has improved
significantly. The compliance to all the SOx controls is monitored by
external auditors and the Group’s internal compliance teams.
Zafar Mehmood Chairman

MD/CEO’S
MESSAGE
“
It gives me immense
“
pleasure to present the
performance of the
Company for the year 2020.
Business Performance Our Processes
During the year consumer affordability remained a challenge PTC has continued its journey towards manufacturing excellence
for the duty paid tobacco sector due to the widening price with the aim of enhancing productivity throughout the value
differential between legitimate and duty not paid (DNP) brands. chain by investing in modernization of machinery and optimal
The excessive excise-led price increase in June 2019 and processes. This led to effective cost management, enabling
price reduction of key DNP brands post FY 2020-21 budget the Company to generate more value for its shareholders.
accelerated consumer downtrading to DNP brands attributing to Furthermore, to ensure safe and smooth operations, strong
the 7% decline in sales volume for 2020. The year in review also focus was given during the year to developing robust operating
witnessed the outbreak of a global pandemic COVID-19 with procedures to mitigate the risk of COVID-19 pandemic impact.
impact on business and social activities. However, PTC results
remained buoyant which is testament to its people’s resilience
and drive for results. Our Future
PTC continued to instil a cost-conscious culture across the Looking forward PTC aims to drive BAT’s vision for A Better
organization with the aim for sustainable profit growth. Despite TomorrowTM by delivering on the tobacco harm reduction agenda
domestic sales reduction, the Company recorded 11.6% growth through its newly launched VELO brand. This coupled with an
in gross revenues from same period last year. EPS growth exclusive factory setup and VELO Sound Station will reinforce the
was 28% resulting in the highest ever dividend payout to PTC Company’s commitment for A Better TomorrowTM by providing its
shareholders at Rs 63/share for the full year subject to approval consumers with reduced risk* alternatives to tobacco products.
of shareholders in their meeting scheduled for April 22nd. This
was driven by a clear and aligned strategy that was underpinned The challenges of 2020 are expected to continue in 2021. The
by passionate commitment of our people and excellence in uncertainty in the country’s economy alongside COVID-19
execution and delivery. pandemic will continue to impact PTC’s operating environment.
The continuous presence of Illicit brands and its sizeable market
share creates a non-level playing field for legitimate brands
Our Brands placing them at a serious disadvantage. PTC continues to work
with the Government on enforcement against the illicit sector and
The Company continued with its strategy to build a differentiated counterfeit producers to ensure fiscal and regulatory discipline
brand portfolio with strong brand equity in every consumer across the industry in the future. This will not only ensure the
segment. Our flagship brand John Player Gold Leaf continues to sustainability of the legitimate sector but also result in significant
lead the premium segment as the preferred choice of consumers revenue inflows for the Government.
in the segment while Capstan by Pall Mall retains its standing as
the best performing brand in the Value for Money (VFM) segment During the year, regulations were issued by the Ministry of
with an increase of 1.8% in its market share for 2020. National Health Services, Regulations and Coordination to
prohibit tobacco and tobacco products’ advertising, promotion,
In line with BAT Group’s vision for A Better TomorrowTM, PTC and sponsorship. These regulations were formulated without any
launched modern oral nicotine pouches VELO with the aim of consultation with the legitimate tobacco industry and we believe
tobacco harm reduction and within a short span of 12 months, that illicit players will continue to violate the previous laws and
became the 6th biggest modern oral company within the BAT the new regulation further fuelling unfair competition within the
Group. The company closed the year with 73 million pouches tobacco industry.
delivered to consumers.
I strongly believe that the Company is well-equipped to manage
these challenges and will continue to deliver on the expectations
Our People of its shareholders.
PTC remains committed to investing in hiring, retaining,
and developing high performing employees that will lead
to successful delivery of business objectives and drive the
corporate strategy. The company takes immense pride in the
fact that local talent not only excels in Pakistan but is preferred
across the BAT world with many Pakistanis placed in leadership
roles internationally in BAT Group companies. Like last year, PTC
retained Top Employer status for 2020 by Top Employer Institute Usman Zahur MD/CEO
which demonstrates its strong and consistent focus on building
the company brand.
These products are not risk free and are addictive. Annual Report 2020 51
DIRECTOR’S REPORT
The Directors Present the Annual Report of Pakistan Tobacco Company Limited
(PTC) Along with the Audited Financial Statements of the Company for the year
Ended December 31, 2020.
Macroeconomic Environment
Graph 1
In 2020, the global economy faced high degree of Illicit Market Share (%)
uncertainty owing to the challenges posed by COVID-19
pandemic, with Pakistan being no different. The first half of
6.2% growth since 2019
the year was particularly stressed due to frequent lockdowns 37.6
across the country impacting business and social activities. 36.9

36.7
Due to manufacturing and supply chain disruptions caused

by the pandemic as a consequence of the national lockdown
to control the spread of the virus, Pakistan’s exports of $22.9
Billion faced a decline of -6.8% compared to same period 31.9
last year (SPLY) 31.4
To curtail the negative impacts of COVID-19, the Government

Jan’19 Jun’19 Dec’19 Jun’20 Dec’20
made a number of targeted interventions to enhance
economic activity in the country by introducing schemes with
Graph 2
low markup such as Temporary Economic Refinance Facility
PTC’s Profit & Loss Snaphot
for investment in plant and machinery to enhance domestic
production capacities, Export Refinance Facility to enhance 100%
export operations and Salary Refinancing for providing Rs 112.5 bn (68% of PTC’s Gross Revenue)
working capital relief to businesses. This was further Total payment to Govt vs Rs 16.5 bn PAT
augmented by a reduction in policy rates announced by

State Bank’s Monetary Policy Committee during 2020 which
helped reduce inflation from the previous level of 12.6% for 68%
10%
SPLY by 4.6%. 17%
5%
Contrary to expectation, foreign worker remittances to Gross Revenue GST. Excise,

Income Tax &
Cost of Sales Operating
Expenses
PAT
Regulatory
Pakistan grew by 6.4% reaching $23.1 Billion in FY 2019-20. Duties
This provided much needed stability to the current account 68% of Gross earnings given as Govt Revenue
with the PKR depreciating only ~3% year-on-year from Rs

Legit Brands Graph 3
154.9/USD in Dec’19. Illicit Brands Price Index
Key illicit Brands
Industry Overview 80
80.0 80.0 80.0 80.0
Fiscal Environment
210+
64
During the FY 2018-19 and FY 2019-20, excise duty on Value
for Money (VFM) brands increased by 93% which resulted in
250+
48
widening the price gap between duty paid and duty not paid
(DNP) brands. The sell-out price for duty paid VFM brands 32
stood at Rs 80/pack compared to Rs 37.7/pack for Illicit
brands in 2020 which resulted in an increase in Illicit share as 16
depicted in Graph-1:
0
Q1 - 20 Q2 - 20 Q3 - 20 Q4 - 20
Source: Access Retail & Neilsen - Retail Audit 2020
52
In FY 2020-21 budget, the Government did not change the Regulatory Environment
excise rates to reduce price differential between DNP and
Towards end of Q1’20, the Ministry of National Health
legitimate VFM brands. This had a positive outcome that
Services, Regulations and Coordination issued a Statutory
provided consumer price stability in the tobacco sector.
Regulatory Order further prohibiting the advertisement,
Contrary to expectation, the price gap between duty paid
promotion and sponsorship of tobacco and tobacco
and DNP products increased to +250% as key brands in the
products. This has further negatively impacted the
illicit sector reduced their selling prices by 25% (down to Rs
legitimate players within the tobacco sector as the local
30.5/pack).
DNP brands continue to violate the previous laws and the
new legislation with impunity.
The disparity between Duty paid and DNP brands
continues to pose a serious challenge to the legitimate
PTC has challenged this in Sindh High Court due to
tobacco sector where selling prices of DNP brands are
certain provisions in the S.R.O that go beyond the scope
not just lower than the Government mandated minimum
of “The Prohibition of Smoking and Protection of Non-
price of Rs 62.75/pack, but even lower than the minimum
Smokers Health Ordinance 2002” (NSO 2002).
excise and sales tax payable on a pack of 20 cigarettes
i.e. Rs 42.12/pack. This consistent tax avoidance not only
impacts the sustainability of the tax-paying legitimate Company Performance
industry but also results in Government revenue loss of
The Company witnessed a decline in sales volume
approximately Rs 70 Billion per annum.
of 7% during the year under review. This is primarily
attributable to consumers downtrading to duty not paid
Enforcement remains a key pillar to curtail growth of the
cigarettes following the 93% increase in excise rates
DNP segment. Enforcement efforts by the Government
announced in FY 2018-19 and FY 2019-20 budgets and
need to be significantly scaled up with dedicated human
~Rs 10/pack price reduction of key DNP brands post FY
and financial resources to ensure a level playing field
2020-21 budget. The Company continued to maintain
in the legitimate tobacco industry which will positively
its market share leadership in the legitimate segment
impact revenue collection for the Government.
growing market share by 1.3% in 2020, reaching 76.2%.
In 2020, PTC contributed Rs 112.5 Billion to the National
During 2020, there was rapid growth in counterfeit
Exchequer in the form of excise duties, sales tax, income
incidence of the PTC brands. According to one
tax and regulatory duties.
independent research, counterfeit incidence of PTC
brands amounted to an annualized volume loss of 2.8
The Company continues to focus on enhancing
Billion sticks with a potential revenue loss of Rs 6 Billion
productivity across its value chain by ensuring effective
for the Government. As a countermeasure, the company
cost management, lean operations, and modernization
introduced a technology enabled solution to arrest
of machinery infrastructure. In 2019, the Company
volume decline to 1.2 Billion sticks. This solution not only
embarked on its very first “Made in Pakistan” exports
enables consumers to identify a genuine product at the
journey by becoming a new export hub for the BAT Group
point of sale but also serves as an effective tool for Law
and in 2020 – its first year of full-scale operation, provided
Enforcement Agencies (LEAs) for on-spot detection of
the Country with $31.1 Million in Foreign Direct Inflows.
counterfeit products. This initiative has been instrumental
PTC’s export operation has huge potential to grow in the
in curbing counterfeit incidence and has helped PTC
coming years which will generate additional valuable
retain sales and as a consequence increase payment to
foreign currency inflows into the Country.
the national exchequer.

Director’s Report
The Company’s cost base remained under pressure

Rs. (million)
throughout 2020 in the wake of the decline in volumes,
currency devaluation, inflation and COVID-19 associated FY 2020 FY 2019
costs. Despite these challenges, the Company continued Domestic Turnover 161,275 147,292
to focus on effective cost management and delivered Exports Turnover 4,983 1,733
multiple efficiency improvement projects, thereby allowing
FED & Sales Tax 105,368 97,050
it to keep costs in check.
Net Turnover 60,891 51,975
BAT Group is driving the agenda for A Better Tomorrow TM Cost of Sales 29,329 25,765
by reducing health impact of its business and offering Gross Profit 31,562 26,210
reduced risk products* to its adult consumers. The Operating Profit 21,846 17,675
group has invested approximately $5 Billion in research
Profit Before Tax – PBT 22,388 18,285
and development for new categories which comprise of
reduced risk products*. In 2020, PTC in line with Group’s Profit After Tax – PAT 16,492 12,889
agenda for tobacco harm reduction, ventured into new Earnings Per Share – EPS
64.55 50.45
categories by launching oral nicotine products, VELO. (Rs)
Currently, the VELO distribution network has expanded to
17 key cities across Pakistan and significant efforts are Profit & Loss Analysis
underway to leverage its potential in keeping with PTC’s During 2020, PTC continued its commitment with the
aim for A Better TomorrowTM. Government as one of the largest tax paying companies
in Pakistan. It contributed Rs 112.5 Billion in revenues
With people at the core of its delivery, the Company has to the Government, which translated to 68% of gross
a strong focus on people by attracting and retaining earnings, and retained 10% of revenues for distribution
the best talent in the country. PTC was awarded the Top amongst shareholders and re-investment in the business
Employer for 2020 by Top Employer Institute. Moreover, for as depicted by Graph-3
its drive and consistent focus on Diversity and Inclusion,
the Company was also awarded the “Global Diversity & Domestic turnover increased by 10% vs Same Period Last
Inclusion, Progressive Award 2020” by Global Diversity Year (SPLY) despite 7% volume decline due to the first
and Inclusion Benchmarks. half (Jan-Jun’ 20) impact of the Jun’ 19 excise-led price
increase. Exports Turnover was driven by a significant
PTC runs one of the largest private sector afforestation increase in export volumes as compared to SPLY, which
programs and a Mobile Doctor Unit (MDU) program. is a testament of the Company’s commitment to the
Under its flagship afforestation program running since Governments’ agenda of driving export growth. The
1981, the Company planted and distributed more than Company exported 2.3 Billion cigarette sticks and 4.1 Mn
9 million saplings free of cost in 2020. A new fully solar kgs of raw tobacco in 2020 with turnover amounting to
powered nursery is also under construction in Lahore. $31.1mn
Under the MDU program, the Company dispensed
medical advice and medicines free of cost to more than Cost of Sales also increased primarily due to devaluation
50,000 patients in 2020. To ensure local community is of local currency, increase in exports and inflationary
protected from water borne diseases, the Company is pressures. These were mitigated through multiple
providing clean drinking to the less privileged sectors of productivity savings initiatives and focused cost
the society through 5 water filtration plants filtering 64,000 management to reduce overall cost base.
litres of water per day.
Selling & distribution expenses declined by 3% which is
linked to reduction in sales volume. However, significant
investments have been made in trade activities, Covid
compliance initiatives and national expansion of new
categories.
* Based on the weight of evidence and assuming a complete

switch from cigarette smoking. These products are not risk
free and are addictive.
54
Other Operating Expenses increased by 12% during Liquidity Management
2020. The major portion of this increase is attributable
PTC’s Treasury function is responsible for raising
to one-off disposal of obsolete plant and machinery
finances for the Company as required, managing its
equipment across PTC’s manufacturing sites with the aim
cash resources and mitigating the financial risks that
of footprint optimization.
arise during its business operations. Clear parameters
have been established, including levels of authority as
Net Finance Income decreased by 11% in 2020,
well as the type and use of financial instruments. All
attributable to the decline in average interest rates.
treasury related activities are executed as per defined
policies, procedures and limits. These are reviewed and
Statement of Financial Position Analysis approved by the Board or the delegated authority to the
Property, plant & equipment increase in 2020 was Finance Director/Treasury Committee. Detailed review
primarily driven by upgrades to existing manufacturing of Company’s liquidity management and financing
capacities and infrastructure to support better product arrangements is provided in this Annual Report on page
quality, innovation and higher operating efficiencies. PTC 92.
has also initiated VELO localization whereby construction
of a standalone manufacturing facility has been initiated. Contribution to National Exchequer
Despite the challenges faced from the DNP sector, PTC
Stock in trade decrease was attributable to lower raw
continues to remain one of the largest contributors to the
material stock.
national exchequer. Despite volume reduction in 2020, the
Company’s contribution to the National Exchequer was Rs
Loans and advances include advances paid to media
112.5 Billion in excise duties, sales tax, income tax and
agencies for on-going VELO marketing campaigns.
regulatory duties.
Other receivables mainly includes balances related to
In order to maintain growth in revenues from the Tobacco
cash margins withheld by banks to comply with State
industry, the Government needs to have a sharper focus
Bank import regulation to deposit 100% cash margin
on enforcement and curtailing the growth of the DNP
against arrangements/contracts for import of raw
sector. Increase in market share of the illicit sector, is
material. Balance under this head decreased in 2020 due
indicative of the huge revenue loss of approximately
to settlement of margins with banks.
Rs 70 Billion per annum. Thus, it is imperative that the
illicit sector is curtailed through use of both fiscal and
Short term investments are done in Government treasury
administrative measures.
bills which recorded an increase from previous year due
to higher availability of surplus funds from sales cash
inflows at year end. Profit Distribution & Reserve Analysis
The Company started the year with reserves of Rs
Current liabilities increased due to higher payables 15.8 Billion. During the year, final dividend of Rs 23
outstanding at year end to internal and external vendors. per share related to year ended 2019, was approved
by shareholders and was subsequently paid. In 2020,
the Company earned net profit of Rs 16.5 Billion and
declared two interim dividends of Rs 15 per share in
Q2’20 and Rs 20 per share in Q3’20. The net reserves
position of the Company at year end stands at Rs 16.9
Billion. The details of appropriations are also elaborated
in the table below:

Director’s Report
Rs. (million) Rs. Per Share Operations Review

Opening Reserves 15,736 PTC has a full seed to smoke business encapsulating
Final Dividend 2019 (5,876) 23.00 two factories and one of the largest leaf operations in
Net Profit 2020 16,492 64.55
the BAT Group. With the aim of enhancing productivity
throughout the value chain, the Company has a strong
Other Comprehensive Loss (452)
focus on effective cost management, lean operations, and
Available for appropriation 25,900 continuous modernization of the machinery infrastructure.
Appropriation: In 2019, the Company, in line with Government’s vision,

launched its export initiative titled “Made in Pakistan” and
Interim Dividends 2020 (8,942) 35.00
earned the position of being an export hub for the BAT
Closing Reserves 16,958 Group. Under this initiative in 2020 – its first full year of
operation, PTC exported over 2.3 Billion Cigarettes and
Final Dividend around 4.1 million KGs of tobacco worth $31.1 Mn.
The Board of Directors of PTC in its meeting held on
February 23, 2021 is pleased to recommend a final As part of the tobacco harm reduction agenda, PTC has
cash dividend of Rs. 28.0 per share for the year ended invested more than £10 Million in Modern Oral plant and
December 31, 2020 (2019: Rs. 23.0 per share), for the machinery for an independent factory at Jhelum site. It is
shareholders’ approval. This recommendation will be expected that the factory will start producing modern oral
subject to approval of the shareholders in the Annual nicotine pouches in the first half of 2021 to enable PTC
General Meeting, scheduled on April 22, 2021. further its agenda towards tobacco harm reduction and
cement its position as an export hub for BAT Group.
Consolidated Financial Statements and
Segmental Review EH&S – Environment, Health & Safety
COVID-19 pandemic and its challenge to the health and
Consolidated financial statements, as included in this
safety of PTC’s employees was handled in an organized
Annual Report, combine performance of Pakistan
and responsible manner in 2020. A dedicated ‘Crisis
Tobacco Company Limited and its wholly owned
Management Team’ comprising of PTC’s leadership was
subsidiary, Phoenix (Private) Limited. The subsidiary
formulated with the aim of brainstorming risk mitigation
company is dormant and has not commenced
strategies for crisis scenarios. Further, comprehensive
commercial operations.
standard operating procedures and ‘Zero Tolerance
Policies’ were enforced, and company-wide awareness
Subsequent Events Review sessions were conducted to avoid COVID-19 contraction
The Management has assessed events arising amongst PTC’s employees.
subsequent to the end of the financial year of the
Company till the date of the report and hereby, confirms Significant awareness and infrastructural improvements
that no material changes and commitments affecting the have been made in relation to Environment, Health &
financial position of the Company have occurred during Safety processes and procedures at the manufacturing
this period. plants. Keeping in view the energy crisis, multiple energy
conservation initiatives were undertaken in 2020 including
Jhelum Factory doubling its solar generation capacity
to 200kW, making it the highest renewable energy
generating site for PTC while Akora Factory has achieved
2nd highest status in water recycling ratio in BAT world,
thereby, reducing its CO2 emissions footprint by 850 tons.
PTC’s manufacturing has been globally recognized in BAT
Group for the efforts and outstanding results delivered
through this drive for excellence.
56
Marketing Review Risk Management & Internal
Consumer affordability continued to come under stress Controls
in 2020 due to global pandemic-led economic tightening
The Board is responsible for managing the risks
and the widening price differential between legitimate
and challenges faced by the Company in its course
and DNP brands. However, despite the challenges faced,
of operations, while maintaining a strong control
focused investments were made for a future-fit brands
environment. The Company’s risk management and
portfolio.
internal controls framework is aimed at safeguarding the
shareholders’ investment and the Company’s assets,
Capstan by Pall Mall retains its standing as the best
while minimizing the impact of the risks that may impede
performing brand in the VFM segment with a 1.8%
the delivery of the Company’s objectives. Details of this
increase in market share in 2020. Additionally, the
are captured in the section on Risk & Opportunity of the
segment witnessed reinforcement campaigns during
Annual Report.
the year to further enhance Gold Flake’s equity and mix.
This was a strategic intervention which has helped the
Comprehensive policies and procedures, structured
brand significantly capture lost volume and market share.
governance mechanisms and a conducive organizational
Embassy’s franchise base was also successfully retained
culture have facilitated a strong compliance and control
through its pack format change campaign allowing it to
environment across the Company. All heads of functions
sustain and maintain its distribution and consumer base
are required to carry out a comprehensive assessment
respectively.
of globally defined key controls that are expected to be
in place and operating effectively. Any non-compliances
Despite increase in the incidence of counterfeit, PTC’s
and material weakness are reported along with action
anti-counterfeit drive via a unique technology enabled
plans to address them. Additionally, all employees are
scanning solution in Q3’20 enabled the Company to gain
required to sign off an annual Statement of Compliance
back volume from Counterfeit brands which also resulted
to the Company’s Standards of Business Conduct.
in positive feedback from consumers, retailers and LEAs.
Furthermore, the Company is also fully compliant to all
the requirements of Sarbanes Oxley Act (SOx) which has
In the Aspirational Premium segment, post successful
further strengthened the internal controls of the Company.
pilot launch of John Player, expansion campaign
was carried out in Q3’20 which was further aided by
successful interventions of limited-edition packs resulting Corporate Governance
in improved sales traction for the brand in Q4’20.
Good Corporate Governance
In the Premium segment, based on consumer trends and The Directors confirm compliance with the Corporate
positive sales results, handlers of Dunhill were increased and Financial Reporting Framework of the Securities and
at a national level resulting in positive sales growth and a Exchange Commission of Pakistan’s Listed Companies
larger handler base in 2020. These initiatives have further (Code of Corporate Governance) Regulations, 2019 (“the
propelled the Dunhill brand to new heights in Pakistan. Code of Corporate Governance”) for the following:
a) The financial statements, prepared by the management

of the Company, present fairly its state of affairs, the
result of its operations, cash flows and changes in
equity.

Director’s Report
b) Proper books of accounts of the Company have been Composition of the Board
maintained.
The Board comprises a total of 12 directors: 8 non-
c) Appropriate accounting policies have been consistently executive directors, of whom 4 are independent directors,
applied in preparation of financial statements and the and 4 executive directors.
accounting estimates are based on reasonable and
prudent judgement. The current composition of the Board is as below.
d) International Financial Reporting Standards, as No. of

Name of Director
applicable in Pakistan, have been followed in Directors
preparation of the financial statements and any • Male Directors 11
departures therefrom have been adequately disclosed • Female Director 1
and explained.
a. Independent Directors 4
e) The system of internal controls is sound in design and (i) Mr. Zafar Mahmood (Chairman)
has been effectively implemented and monitored.
(ii) Lt. Gen. M. Masood Aslam (R)
f) There are no significant doubts about the Company’s (iii) Mr. Mohammad Riaz
ability to continue as a going concern.
(iv) Mr. Asif Jooma
g) There has been no material departure from the best b. Non- Executive Directors 4
practices of corporate governance, as detailed in the (i) Mr. Tajamal Shah
Code of Corporate Governance and listing regulations.
(ii) Ms. Belinda Joy Ross
h) All major Government levies in the normal course of (iii) Mr. Zafar Aslam Khan
business, payable as at December 31, 2020 have been
disclosed in the notes to the financial statements. (iv) Syed Javed Iqbal
c. Executive Directors 4
i) Key operating and financial data for last six years in
(i) Mr. Usman Zahur (Managing Director and
summarized form is provided separately in this Annual
CEO)
Report.
(ii) Mr. William Francis Pegel
j) Values of investments in employee’s retirement funds (iii) Mr. Syed Asad Ali Shah
for the year ended December 31, 2020 are as follows.
Further details are provided in Note 33 to the separate (iv) Mr. Syed Ali Akbar
financial statements.
Fund Name Rs. (million)

Staff Pension Fund 5,492
Employees Gratuity Fund 1,173
Management Provident Fund 735
Pakistan Tobacco Company Limited
382
Provident Fund
Staff Defined Contribution Pension Fund 659
58
There is female representation on the Board in
Name of Director Attendance
compliance with the regulatory requirement.
Zafar Mahmood
Chairman 5/5
The overall effectiveness of the Board is enhanced by
Usman Zahur
the diversity and breadth of perspective of its members,
Managing Director and CEO 5/5
who combine professional and academic skills and
experience, local and international, and collectively William Francis Pegel
the Board also has sufficient financial acumen and Director Finance & IT 5/5
knowledge. PTC conforms to the regulatory requirements Syed Asad Ali Shah
on the composition and qualification of the Board of Director Legal & External Affairs 5/5
Directors. Syed Ali Akbar
Director Marketing 4/5
Directors’ detailed profiles including their names, status Syed Javed Iqbal
(independent, executive, non-executive), in addition to Non-Executive Director 1/5
industry experience and directorship of other companies, Belinda Joy Ross
have been provided separately in the Annual Report. Non-Executive Director 4/5
The status of directorship (independent, executive, non- Zafar Aslam Khan
executive) is indicated in the Statement of Compliance Non-Executive Director 3/5
with the Code of Corporate Governance. Lt. Gen. M. Masood Aslam (R)
Independent Director 5/5
Changes in the Board Mohammad Riaz
No changes in Board were announced in 2020. Independent Director 5/5
Asif Jooma
Meetings of the Board Independent Director 5/5
Tajamal Shah
Under the applicable regulatory framework, the Board is
legally required to meet at least once in every quarter to
ensure transparency, accountability, and monitoring of
the Company’s performance. Special meetings are also Board Meetings Held Outside Pakistan
held during the year to discuss important matters, as and In 2020, PTC conducted all its Board meetings in
when required. In 2020, 5 Board meetings were held, out Pakistan.
of which the 1st meeting was held on 24th February 2020.
Committees of the Board
The notices / agendas of the meetings were circulated
in advance, in a timely manner and in compliance with The Board has four committees, which assist the Board
applicable laws. All meetings of the Board held during in the performance of its functions. Details of all Board
the year surpassed the minimum quorum requirements of Committees, including attendance and their functions, are
attendance, as prescribed by the applicable regulations. provided separately in the Annual Report.
The Company Secretary acts as the Secretary to the

Board. All decisions made by the Board during the
meetings were clearly documented in the minutes of the
meetings maintained by the Company Secretary and were
duly circulated to all the Directors for endorsement and
were approved in the subsequent Board meetings.

Director’s Report
Directors’ Remuneration Offices of the Chairman & CEO

As per the requirements of the Code of Corporate To promote transparency and good governance, the
Governance, there is a formal and transparent procedure offices of the Chairman of the Board of Directors and the
in place for fixing the remuneration packages of individual Chief Executive Officer are held by separate individuals
Directors. No Director is involved in deciding his/her own with clear segregation of roles and responsibilities.
remuneration.
Brief Roles & Responsibilities of the
These remuneration packages are approved as per
Chairman & CEO
requirements of the regulatory framework and internal
procedures, while ensuring that they are not at a level that Roles and responsibilities of the Chairman and the CEO
could be perceived to compromise the independence of have been clearly and distinctly defined by the Board.
non-executive directors.
The Chairman is basically a leader and mediator to head
The remuneration of executive directors including the the meeting of the Board of Directors effectively and
CEO, key management personnel and other executives is take decisions after a free and open sharing of views
given in note 37 to the financial statements. within a limited time quickly and efficiently. The Chairman
is responsible for the overall discharge of the Board’s
duties.
Evaluation of Board’s Performance
The Company has designed an “Evaluation Tool” to assist The CEO is the executive head of the Company, who
the Board to: heads all facets of the Company through respective
heads of functions and manages the day to day
• understand and recognise what is working well; operations of the Company and provides leadership
• identify areas for improvement; towards the achievement of the Corporate Plan. The CEO
is responsible for leading, developing and executing the
• discuss and agree on priorities for change, which
Company’s short- and long-term strategies with a view
can be addressed in the short-and long-term;
to enhance shareholders’ value. The CEO liaises with the
• agree on an action plan. Board and communicates on behalf of the Management.
The Evaluation Tool comprises an evaluation

questionnaire, which is circulated to all the Directors in
which each Director must evaluate himself/herself as
well as the Board. In order to encourage open and frank
evaluations, as well as to ensure anonymity, the evaluation
process is directed by the Company Secretary, who mails
the questionnaire to each Director and then collates the
results into a report including a summary of the results,
and recommendations to the Board. The Report is then
discussed in the next Board Meeting to address the areas
of concern and improve the Board’s performance.
60
CEO’s Performance Evaluation by the Last AGM
Board The Company’s 73rd AGM (Annual General Meeting) was
The Board appoints the CEO for a term of 3 years, in held on May 8, 2020. All shareholders, including minority
compliance with applicable laws. His performance shareholders, were proactively sent out invites informing
is reviewed annually, based on the yearly corporate them about the time and place of the meeting, well in
plan, besides his responsibilities under the regulatory advance. High quality and comfortable arrangements,
framework. aimed at facilitating the shareholders of the Company,
were made to conduct the AGM.
Performance for the year 2020 is demonstrated by
achievement of the corporate plan and compliance with During the meeting, general clarifications on the
the applicable regulatory requirements. published financial statements and the impact of illicit
trade were sought by the shareholders and investors. No
issues were reported in that meeting.
Formal Orientation At Induction
Newly inducted Board members are taken through an
Auditors
Induction Plan for their orientation and familiarization
towards the Company’s vision, organizational structure, Statutory Audit for the Company for the financial year
roles and responsibilities of senior executives, major ended December 31, 2020 has been concluded and the
pending or threatened litigation, policies relating to Auditors have issued their Audit Reports on the Company
dividends, whistleblowing, summary of Company’s major Financial Statements, Consolidated Financial Statements
assets, liabilities and noteworthy contracts etc. and the Statement of Compliance with the Code of
Corporate Governance. The Auditors, Messers KPMG
As part of the Induction Plan, senior executives of the Taseer Hadi & Co., shall retire at the conclusion of the
Company present the performance of their respective Annual General Meeting, and they have indicated their
department to the newly inducted Directors. willingness to continue as Auditors for PTC. They have
confirmed to have achieved satisfactory rating by the
Institute of Chartered Accountants of Pakistan (ICAP) and
Directors’ Training Program
compliance with the Guidelines on the Code of Ethics
PTC has ensured compliance with the applicable of the International Federation of Accountants (IFAC) as
regulatory requirements regarding Directors training. adopted by ICAP. The Board proposes their appointment
More than half of the Directors have obtained certification as Auditors for the financial year ending December 31,
under Directors’ Training Program (DTP) approved by 2020 on the recommendation of the Audit Committee.
SECP. This shall be subject to the approval of the shareholders
in their meeting scheduled for April 22, 2021.

Director’s Report
Pattern of Shareholding The Board reviews compliance with the BCM Manual
on an annual basis. Responsibility and accountability
Our holding company, British American Tobacco
for ensuring compliance with the Standards and for the
(Investments) Limited (BAT-IL), incorporated in United
implementation of the BCM process has been delegated
Kingdom holds 94.34% shares of the Company at the
to the Managing Director. Operational management of
year end. The pattern of shareholding as at December
BCM is delegated to the Head of Security who is the lead
31, 2020 alongside the disclosure as required under
for BCM in the Company. Heads of Functions are the risk
Code of Corporate Governance is provided separately in
owners and are responsible for enabling and maintaining
this Annual Report.
an effective BCM capability within their respective
functions. The Business Continuity Manager facilitates
Trading In Shares by Directors and and coordinates the BCM process in the Company.
Executives
The Directors, Chief Executive Officer, Chief Financial By implementing a BCM process, the Company ensures
Officer, Company Secretary and their spouses and minors that:
have reportedly not performed any trading in the shares
of the Company. • Its people, assets and information are protected,
and employees receive adequate support and
communications in the event of a disruption;
Review of BCP
PTC recognizes the importance of Business Continuity • The relationships with other organizations, relevant
Management (BCM) as the means to ensure that the regulators or government departments, local
business can continue to succeed in times of crisis and authorities and the emergency services are properly
during the recovery process. To this end, the Company developed and documented, and stakeholder
has established a BCM Manual as per International requirements are understood and can be delivered;
Standards which enables the Company to: and
• Proactively plan and prepare in the case of an • The Company has an enhanced capacity to protect
incident; its reputation and remains compliant with its legal
and regulatory obligations.
• Understand how to respond should an incident
occur;
• Know how to manage the situation effectively; and
• Return to Business as Usual (BAU) as quickly as

possible to minimize the negative impact on the
business.
Zafar Mehmood Usman Zahur
Chairman MD/CEO
62
PRODUCT
PORTFOLIO
PREMIUM
DUNHILL GOLD LEAF BENSON & HEDGES
• Dunhill • John Player Gold Leaf • Benson & Hedges (Red)
• Dunhill Switch • John Player Gold Leaf Special • Benson & Hedges (Blue)
Dunhill, our global drive brand and a true The story of John Player Gold Leaf starts In 1873, Richard Benson & William
international premium offer, has been from the story of its founder John Player, Hedges started a partnership in London.
leading innovations in the market since its who started a small tobacco selling Benson & Hedges was launched in
launch since 2008 business in 1877 and turned it into a Pakistan in 2003
Company: John Player & Sons. John Player
Gold Leaf is the leading premium offer in
the country
ASPIRATIONAL PREMIUM
JOHN PLAYER CAPSTAN FILTER
• John Player • Capstan Filter
Launched in 2018, John Player is the most Capstan Filter is the biggest Aspirational
contemporary Aspirational Premium brand Premium brand for us and the offer is now
for the down-trading Premium consumer available in King Size Filter
VALUE FOR MONEY

GOLD FLAKE BY
CAPSTAN BY PALL MALL EMBASSY ROTHMANS OF LONDON
• Capstan by Pall Mall • Embassy Filter • Gold Flake
• Gold Flake Soft Cup
Capstan By Pall Mall is our global drive Embassy has built its heritage over a
brand and currently the leading & most number of years & thrives on its brand Gold Flake enjoys a rich history and legacy
popular Value for Money offering in market loyalty in the market and is still among the most
popular offerings in Pakistan
NEW CATEGORY
VELO
• Polar Mint
• Berry Frost
Our Tobacco free alternatives come in 2
flavours varying in nicotine content i.e.
4mg, 6mg, 10mg

Syed Asad Ali Shah
LEGAL & EXTERNAL AFFAIRS DIRECTOR
ILLICIT TRADE
2020 came with its own set of challenges and the challenges for the legitimate
tobacco industry were no different. Amidst the pandemic, all efforts of Law
Enforcement Agencies (LEAs) were diverted to focus on ensuring compliance of
national lockdowns and border closures across the country. The seriousness of LEAs
to enforce the lockdowns resulted in a temporarily reduced incidence of smuggled
cigarettes due to border closures and also a temporarily reduced incidence of
local Duty Not Paid (DNP) cigarettes due to supply chain disruption, however, they
resorted to other means to ensure consistent supply of illicit cigarettes to the
retailers and eventually the customers.
The current situation serves as a harbinger of the times we embarked on a journey to roll out the solution on our
to come and if no action is taken by the Government, the product offering. The application can be downloaded by
prevalence of illicit cigarettes in Pakistan is likely to grow distributors, wholesalers, retailers, consumers and LEA
further. Unprecedented levels of counterfeit incidence officials to authenticate the product to be sure that the
were witnessed in early 2020. The Duty Not Paid (DNP) product being purchased or sold is genuine and the liable
sector continues to sell at far lower than the mandated taxes and duties have been paid to the Government of
minimum price of PKR 63. Pakistan.
Furthermore, keeping in view the sharp increase in The Federal Board of Revenue (FBR) published a tender
availability of counterfeit cigarettes, we decided to launch for the provision of a Track and Trace solution for the
a technology enabled solution for its brands to protect tobacco, cement, fertilizer, and sugar industries. It is
its intellectual property and safeguard its business from believed that a solution tailored to address the local
the threats posed by the counterfeiters. In collaboration challenges of the Pakistani market will be beneficial to
with DIGIMARC, a globally renowned solution provider, address the issue of illicit trade.
64
Counterfeit brands posed a significant challenge to the legitimate tobacco sector. To counter this, a technology-enabled solution -
DIGIMARC - was introduced by us whereby consumers and retailers are equipped to identify a genuine product at point of sale. This
also serves as an effective tool for on-spot detection of counterfeit products by Law Enforcement Agencies.
Action taken by
+2 Million Decrease Law Enforcement
Scans in Counterfeit Sale Agencies
Step 1 Step 2 Step 3

DIGIMARC App will automatically If the Pack is genuine then our By pressing our logo it will direct
open the camera and user will scan logo will appear. PTC logo is the you to our official website
the pack (front/back side) authentication of Original Pack

OPERATIONAL EXCELLENCE
Our Operations Team did not shy away from clinching to finished goods sales. The formidable team also
higher accolades in distinguishing itself from the ordinary. managed to secure renewal on export licenses for both
This journey towards excellence entailed passion, grit, finished goods and cut rag amidst limited Government
resilience and the synergy for A Better TomorrowTM. With operations and remained on track to deliver our "Made in
the ‘One Ops’ team whose mantra is being Bold, Fast, Pakistan" journey. Moreover, with the devaluation of the
Responsible, Empowered and Diverse, the year 2020 saw rupee, the team took the initiative to go for stock hedging
to fruition unprecedented results. to ensure 2021 supplies are procured in advance to
deliver potential savings. As the situation was normalizing,
While COVID-19 could be termed as a black swan event the global supply chain was disrupted yet again by a
that forced many companies and entire industries to container shortage and port congestions worldwide
rethink and transform their operational model, our Ops resulting in raw material delays; this was effectively
took the entire BAT world with a complete surprise. managed without additional cost. With New Category
Jhelum and Akora factories were busy registering Products gaining traction in the national market, the
themselves as global benchmark setters in Overall team not only ensured product delivery from imported
Equipment Efficiency (OEE) and Mean Time Between supplier but also established readiness for local product
Failure (MTBF). supply chain. To its credit, 2020 was closed delivering
100% Cycle Plan-OTIF with innovative breakthroughs like
DIGIMARC to curtail counterfeit sales and reclaiming 70%
of lost volume.
Our Ops ensured 100% OTIF in delivery of
Export and Local orders to our valued customers. Our procurement meanwhile delivered the highest-ever
savings in 2020 minimizing the impact of currency
devaluation by means of proactively distributing volumes
locally.
Our Leaf team delivered the best leaf season
with the highest crop input, CQI and lowest
crop cost globally.
Our Ops delivered renewable expansion by

100% and optimized costs via initiatives to
attain the rank of lowest cost manufacturer of
the world.
11 2.76 1.7
SKUs of Million GBP Million GBP P&L
imported WMs Highest ever savings were delivered
were localized WMs savings by in-directs through
All this and more, while delivering premium quality to the
effective negotiations
customers securing the seal of global quality excellence
and ingenious
award.
strategies
This Journey does not stop. Another feather in the cap

goes to the resilient supply chain team who faced all
odds and converted misses into opportunities. The team
ensured that despite the pandemic, the On Time In Full
(OTIF) remains a perfect hit from raw materials availability
66
Akora Khattak Factory was
the 2nd most efficient factory
38.3 Billion in the BAT Group
Production Volume
AKF has manifested itself

as the 2nd highest water
2.3 Billion recycling ratio in BAT world
Cigarette sticks Exported whilst also impeding its CO2
to Middle East
emissions footprint by 850
tons.

OUR ESG
ACHIEVEMENTS
In 2020, we set forth in transforming our flagship Afforestation programme. Since 1981 we have planted and
distributed over 90 million trees for a sustainable future. Of this large number, in 2020 alone, we were able to
hit a new high of 9 million trees planted through our ‘Seed Ball Project’; three times of what was achieved by
the company last year (a record was set last year). This initiative has helped us truly transform the landscape
and counter the ever-growing problem of desertification in Pakistan. We operate and maintain 5 nurseries
across the country, 2 in Islamabad, one in Faisalabad, one in Jhelum and one in Swabi. We plan to add more
Afforestation nurseries to help counter the negative impacts of global warming faced by the country.
To combat water borne diseases we have built and continue to maintain 5 water filtration plants; 4 in the
suburbs of Lahore and one in Jhelum. We are providing clean drinking water to the less privileged sectors of
society everyday.
Water
Filtration
Since 1985, to provide free first aid and medical services to far flung and rural areas, we own and operate
7 MDU’s in 6 different Leaf Areas. These MDU’s are stationed in Yar Hussian, Mianwali, Akora Khattak, Sher
Gharh, Mansehra and Jhelum. Due to Covid operations were ceased in March, however upon reopening in
Mobile Doctor August more than 50,000 patients have been attended too.
Units (MDUs)
We embarked upon the journey of Drip Irrigation in 2019 under the umbrella of ESG & till date 165 hectares
of drip irrigation units has been installed successfully. All these initiative enabled us to save overall 927M litres
of water in 2020, which is now available for other food crops. These technologies being the most efficient are
delivering water savings and conserving water and ensuring sustainable water usage and agriculture.
Drip
Irrigation
By successful installation of 150 kW Solar PV (Photo Voltaic) plants in our 5 leaf buying centres & GLT plants,
we aim to reduce our carbon footprint. This has resulted in reduction of 90 tons of CO2 footprints. By 2021,
the aim is to conduct 100% leaf buying through solar powered buying centres. Furthermore, we are saving
435,500 Kwh power annually at our 2 factories. Our new VELO factory will be the first ever fully solar operated
plant in the BAT world.
Solar Power
68
CALENDAR OF
NOTABLE EVENTS 2020
January February March April

VELO Launch First Crisis Management VELO Plant Akora Khattak Factory
Ceremony Team Meeting to Combat Groundbreaking Team achieves Global
COVID-19 Benchmark in Production
May June July August

Jhelum Factory Team HO and A&TMD COVID Relief Launch of
achieves Global Offices reopen Program DIGIMARC
Benchmarks in Production
September October November December

BOM 2020 PTC Celebrates VELO Sound Station New Logo
kick-off PINKtober Launch Launch

LEAF SUSTAINABILITY
INITIATIVES
This year our Leaf Team took remarkable
steps in improving its social uplift agenda
Star Farmer Program

We promote a competitive environment among farmers
leading to adoption of new agricultural technologies
and best practices. The aim is to have better
productivity and quality to improve farmer livelihood.
For 2020 crop, we conducted events across all leaf
producing areas to reward its progressive farmers
under the flagship initiative of Star Farmer Program.
In the journey of transformation and excellence in
agriculture, we strive to transfer modern skills, new
technologies, best agricultural practices to improve
farmers livelihood with a vision to strive for A Better
TomorrowTM.
Technology Deployment
To equip our valuable business partners – our
farmers, with modern techniques in agriculture
sector, new technologies are introduced aiming
at fast-tracked deployment at farm level to bring
ease in operations, reduce cost of production and
better farmer returns. Specific equipment were
introduced to mitigate the identified challenges at
various crop stages including hybrid seed varieties,
float seedling production, drip irrigation, tobacco
leaf stitching machine and Loose-leaf barn.
We strive to have agronomy excellence as a key
game changer. It is a continuous journey that will
remain under prime focus to produce premium
quality tobacco at a competitive cost, where farmer
livelihood can be improved.
70
Turbo Barns
Crop sustainability is the key to our business. To
ensure the same, we work closely work with our
farming community to increase their net returns.
We have taken the route of arresting farmer’s cost
of production & improving their curing quality for
increasing their margins. In this connection one of
the most significant cost & quality element is curing
impacting both farmers spend & tobacco quality.
Keeping in view the aforementioned challenges &

their impact on business, we have introduced new
technology in the form of 'Turbo Barns' and took it
to the farmers doorstep. This journey kick-started
in 2017 with the aim to modify our traditional barns
to turbo barns & ensured incremental increase
in the same. This initiative not only improved the
cured tobacco quality but also helped us in meeting
increased farmer’s net returns & reducing pressure
on natural wood reservoirs. This resulted in 13%-
15% savings in wood consumption.
Human Rights
Human rights is one of the key areas where we took
multiple major initiatives such as:
• Women Empowerment; Trainings were conducted
through female trainers across leaf growing areas.
900 farming families were trained on health & safety,
child education & kitchen gardening.
• Mobile Doctor Unit; We are providing MDU facility
to under privileged rural communities since 1985. In
2020 alone, over 50,000 people benefited from this
much needed facility.
• Grievance Mechanism; To ensure respect for all
and having safe work environment at our farmer’s
premises, boxes were installed across leaf areas for
labours and farmers to raise their voice related to any
human rights issues.
Our efforts have been globally recognized by the Group &
highlighted in its Human Rights report. These efforts will
pave way to achieve our vision of A Better TomorrowTM.

MARKETING
PERFORMANCE
REVIEW
2020 has been a challenging year for us. Not only were there industry specific
challenges such as price disparity and growing illicit & counterfeit incidence post-
2019 Federal Budget, but also a turbulent 1st Half due to the onset of COVID-19,
which led to severe operational challenges for the business, accompanied by the
introduction of the TAPS (Tobacco Advertising, Promotions and Sponsorship) ban.
Given the situation at hand, however, the marketing department which gained further traction when it got picked up by notable
rose to the challenge to keep delivering on yearly goals and publishers and influencers alike. 2020 was a landmark year of
ensuring business continuity. Key wins such as the inculcation VELO in terms of learning and achievements.
of digitization-driven initiatives such as DIGIMARC have been
instrumental in curbing the incidence nationally. Additionally,
ensuring continued strategic investment behind our core brands,
we delivered on our full year volume targets with 38.5Bn cigarette +73 Mn +100,000
sales; the Premium segment played a key role in delivering pouches Sold Consumers
both volume and value for us. In addition to this, 2020 paved
the road for the business bringing to life the group’s vision of A
Better TomorrowTM by launching Pakistan’s first ever Modern Oral Premium Growth in 2020
Category product, VELO.
Our premium portfolio has had a tremendous year in 2020
despite the route to market challenges that came with COVID-19
Establishing Modern Oral in and the consumer communication limitations that came with the
Pakistan
TAPS (Tobacco Advertising, Promotions and Sponsorship) ban.
Each brand within the portfolio has stood out through its strategic
Pakistan successfully embarked on the modern oral journey in focus on superior product quality, distribution expansion and
December 2019, by introducing VELO as a modern, premium one of its kind packaging innovations. Together the portfolio has
and innovative offer. Our guiding principles helped us target delivered a 4% volume growth at the back of powerful brands.
the right consumer, focus on relevant consumer channels, and
create impactful conversations through generating contemporary Dunhill, the leading international brand for progressive
content. To keep the fire burning, we kicked off the pilot in two consumers, delivered a stellar 72% volume growth with its
test markets – Karachi and Lahore. VELO was able to emerge as highest ever volume delivery and executed the rotational relocs
a disruptive force in the market. that marked the first of its kind packaging innovation in all
Middle East South Asia (MESA) area. The largest premium brand
The pilot launch was marred by severe lockdowns, but this did of Pakistan, John Player Gold Leaf, held its strong footing by
not deter our resolve and as part of our contingency plan, we maintaining its volume share and JPGL Special continued to
activated 3rd party E-commerce platforms which ensured that lead the Non-Full Flavour space delivering a superb 18% volume
our products were readily available to our consumers during growth. Aspirational Premium brands like Capstan Filter and John
lockdown. For the post lockdown period, we leveraged our pilot Player continued their national expansion and equity journey
market learnings as part of our robust learning agenda and saw together delivering a 32% growth for the AP space at the back of
a period of accelerated growth. rising differential between Premium & VFM pricing.
The stage was set for VELO to build on this momentum and
improve its brand salience and affinity amongst its target group.
This was made possible by the introduction of VELO Sound
Station; the biggest digital asset for the brand - a space for
contemporary music centered around the pop culture of today.
By tapping into music as a key passion point, VELO Sound
Station was the perfect fit to massify VELO for the right audience
72
Digitizing the RTM Model
2020 has been a year that many would like to forget but for us,
it was a journey of excellence, transformation and sustainability.
The ambition to stay relevant for the future by making the
Company 'Simpler, Faster & Stronger' was our mantra that led to
the complete digital transformation in the RTM (Route to Market)
and RTC (Route to Consumer) value chains which changed the
market dynamics forever.
We partnered with Pakistan’s biggest mobile financial services

provider EasyPaisa, a subsidiary of Ali Baba. This was an
industry first initiative which leveraged Mobile Financial services
to make our salesmen completely cashless by digitizing the end
to end sale transaction with the retailer. This initiative is currently
live in 50% volume contributing markets with 30% of total retail
cash in these markets digitized, essentially leading to time
saving, which is being invested back into the business.
For us, consumer centricity has always been at the heart of

our operations. The COVID-19 pandemic caused a big shift in
purchasing behaviour of the consumer and purchasing from
E-commerce platforms was one of the biggest trends in the
country with a growth of 200%+ in transactions vs 2019. We
also embarked on an exciting journey by partnering with some
of the biggest E-commerce players such as Daraz & FoodPanda
that cater more than 80% of online shopping traffic along with
24 other accounts across the country. 2020 has truly been a
transformational year for us. The holy grail for us is to further
expand our digital landscape in RTM & RTC structures to
continue the journey to becoming Simpler, Faster and Stronger.

BECOMING THE EXPORTS
HUB FOR MODERN ORAL
Our clear commitment to providing consumers with
a range of less harmful products is central to our
corporate purpose, around which our long-term ambition
is planned. This year Pakistan Tobacco Company initiated
setup of an exclusive manufacturing plant in Jhelum
for modern oral nicotine pouches. With this plant, the
Company aims to become an export hub for BAT and
potentially generate additional foreign direct inflows for
the Country. Furthermore, this factory will be the first in
BAT world to fully operate on Solar Energy.
74
In the first year since we've launched, VELO has had a remarkable
success. In our commitment for A Better TomorrowTM, we have
established a new, potentially reduced-risk category in Pakistan – but
the journey has just begun. In our quest to engage with society on a
large-scale level and for us to generate mass appeal of our vision, it was
necessary for us to dig deep into what really resonates with the people
of Pakistan. VELO saw music as a gateway to generate mass appeal for
our vision. And thus, VELO Sound Station was born.
It is the largest music platform in any market across the BAT world. The
first episode of VELO Sound Station aired on 20th November 2020 and
since then the inaugural season has had huge success.
VELO SOUND STATION : SEASON 1 OUTCOME
+2 Bn
Impressions
+550K
Followers
+500 Mn
Views & Plays
Scan to View

SECURITY THAT
MEANS BUSINESS
Crisis Management Support for Business

An uphill task this year was ensuring Business Continuity
Initiatives
Management as the pandemic spread across the globe.
Notwithstanding the above odds, the focus was on
Pakistan, when faced with a stricter lockdown in quarter
the delivery of commercial goals keeping simplicity in
1 and 2 of 2020 resulted in political instability, businesses
implementation and excellence in execution of processes
closures, restrictions on intercity and interprovincial
to ensure Zero-Tolerance Policy New Ways of Working to
movements, and civil disorder arising due to a dwindling
Security incident and to align the delivery of integrated
economy. This harmed the performance of multi-nationals
corporate security service support with integrity in line
and blue chips operating in the country. Against all odds,
with Ambition-21 by transforming the function based on
we continued to deliver products and services beyond
the new way of working.
its strategic and operational plans. Response to the
pandemic was conducted to always be ahead of time;
proactively reviewing and updating the plans. Training and Development
At the very outset of COVID-19, before it was declared a Training and Development even in these trying times
global pandemic by WHO, we had updated the existing remained key focus area within the Security Function.
pandemic plans and prepared the business response in Concept of these training sessions was based on
consonance with Regional plans and referred to the same self-learning/refresher training. BAT Ethos and Security
during the Crisis Management Team’s (CMT) meetings. Strategy–21 (SS-21) related aspects were especially
Sequel to embargos imposed by the Government, emphasized during the distance training sessions
chances of getting into unrest situation was an emerging developed and delivered by each Security team. Our
potential risk in the country mainly due to lockdown which way forward for the year 2021 and beyond is based on
impacted the huge population of daily wagers. Hence, we securing the future - for a sustainable better tomorrow.
decided to add the Potential Unrest readiness tracker to
the existing Unrest & Evac plan. This horizon scan helped
us to pre-empt the risk from impacting the business.
Information gathering process was robust which helped
CMT to make informed, timely & correct decisions. Crisis
Management training was also meticulously developed
keeping the COVID-19 scenario in mind to cater to every
aspect that could lead the business into a crisis. In the
actual situation, numerous robust and fit-for-purpose
plans were invoked which proved to be effective while
dealing with the pandemic.
76
Simplification through Empowerment, an outcome of Strategic
Leadership Agenda 2020, aims to achieve the Group’s vision of A Better
TomorrowTM. In line with our Ethos of being Bold, Fast, Empowered,
Diverse and Responsible, this pillar aims to set clear directions for
faster decision making. Paving the way for transformation, this pillar
will revolutionize the Organization to become Simpler, Faster and
Stronger. Let’s Simplify to Amplify Delivery.
Delegate - Streamline - Digitize -

Empower and Revamp Simplify Policies Connect, Automate and
New Ways of Working and Procedures Ensure Faster Delivery

2020
PERFORMANCE
Net turnover Profit After tax
60,891 Rs in Million
78
Cash Generated from
Sales Volume Operating Activities
38.5
Billion Sticks

CRITICAL PERFORMANCE
INDICATORS
1) Financial Indicators activation campaign, exciting touch points and retailer
engagement, the launch was a success and quickly
turned into the most promising brand launch in recent
Key Performance
2020 2019 history.
Indicators
Market Share
77.3% 75.4% iii) VFM (Value for Money) Segment
(Legitimate market)
Gross Turnover (Rs. In Our position in the VFM category was strengthened
166,258 149,025 through the strong performance of Capstan by Pall Mall.
Million)
The brand captured the largest market share of 51.3%
Net Turnover (Rs. In
60,891 51,975 in 2020, up by 1.8% from 2019. Further, The Value For
Million)
Money (VFM) segment witnessed Gold Flake’s migration
Gross Profit (Rs. In
31,562 26,210 to Rothmans of London with reinforcement campaigns
Million)
during the year to further enhance Gold Flake’s equity
Profit before Tax (Rs. In and mix
22,388 18,285
Million)
Profit after Tax (Rs. In
Million)
16,492 12,889 d) OEE – Overall Equipment Efficiency
Earnings Per Share In 2020, our Jhelum factory achieved 79.8% Overall
64.55 50.45 Equipment Efficiency (OEE) while Akora-Khattak factory
(Rs)
(AKF) posted OEE of 82.3%. This feat has propelled
Dividend per Share
58.0 48.0 AKF to become the 2nd most efficient factory in BAT
(Rs)
Group.
Operating Cash (Rs. In
22,215 8,564
Million)
Market Price per share
e) Lost Workday Cases (LWC)
1,609.64 2,440.55
(Rs) EH&S is key priority for the Company. Due to the
increased emphasis, the number of work-related
2) Non-Financial Indicators accidents resulting in injury to employees under the
management’s direct supervision remained minimal.
a) Market Share of the Illicit Trade
This indicator gives visibility on the business lost to duty f) Human Capital
not paid sector due to weak enforcement. Illicit sector
currently accounts for 37.6% of the total market share. i) Employee Retention
Employee development and retention is a primary
b) Trade Coverage agenda for the Company and is continuously monitored.
The Company’s trade coverage covers a total of 238,000 ii) Employee Engagement
retail outlets.
The high level of engagement we maintain with our
teams enables us to effectively convey our message
c) Legitimate Market Share Across of confidence throughout the year. In recent years,
Segments our engagement mechanisms have aimed to nurture
i) Premium Segment share an open culture, facilitating communication across all
levels of the organization. Employees are given the
77% market share in the legitimate premium segment opportunity to directly engage with the Company’s
held by JPGL - John Player Gold Leaf. senior management on current business realities and
growth prospects, while factory workers also engage
ii) Aspirational Premium Segment with management through numerous platforms including
In the Aspirational Premium segment, post successful monthly small group meetings. Employees can engage
pilot launch of John Player, a brand built on the legacy through initiatives via Your Voice – an employee opinion
of the House of John Player, was piloted in four test survey platform.
markets, followed by an expansion into the next 13
biggest cities of Pakistan. Aided by a focused consumer
80
In 2020, we were certified as a Top Employer for the h) Natural Capital
third year running by Top Employer Institute, which is a
testament of our high level of employee engagement. i) Leaf Consumption
iii) Diversity and Inclusion In 2020, we purchased 29.4 million kgs of tobacco leaf
from local farmers, thereby, supporting the livelihood
We are an equal opportunity employer and do not of farmers growing tobacco in the areas of KPK and
discriminate on the grounds of gender, race, religion Punjab.
or social class, when making decisions on recruitment
and promotions. We have aligned ourselves with the ii) Environmental Sustainability Initiatives
BAT’s diversity ambitions and continue to widen diverse Significant awareness and infrastructural improvements
representation through ensuring balanced access at have been made in relation to Environment, Health &
entry level, providing opportunities for flexible working, Safety processes and procedures at the manufacturing
increasing maternity benefits and facilitating platforms plants. Keeping in view the energy crisis, multiple
for engagement. Moreover, for its drive and consistent energy conservation initiatives were undertaken in 2020
focus on Diversity and Inclusion, the Company was also including Jhelum Factory doubling its solar generation
awarded the “Global Diversity & Inclusion, Progressive capacity to 200kW, making it the highest renewable
Award 2020”. energy generating site for us while Akora Factory has
achieved 2nd highest status in water recycling ratio in
g) Social and Relationship Capital BAT world, thereby, reducing its CO2 emissions footprint
by 850 tons.
We have always been focused on investing in community
and social initiatives. Following is the overview of various
social responsibility initiatives taken in 2020 Performance Measures
i) Afforestation Key Indicators and performance measures change as the
strategic goals evolve over time but are mostly aligned to the
Under our flagship afforestation program, we planted
Company’s overall goal of increasing shareholders value in
and distributed more than 9 million saplings, free of
the future. These indicators are integral to the assessment
cost, in 2020. A new fully solar powered nursery is also
of value generated for all our stakeholders. These indicators
under construction in Lahore. This is in addition to the
serve as a basis for the assessment of the performance of
already established five nurseries in Islamabad, Jhelum,
our Company’s operations and value generation and they
Faisalabad and Swabi.
continue to be relevant for the foreseeable future.
ii) Water Filtration
To combat water borne diseases, we have 5 water Methods and Assumptions
Used in Compiling the
filtration plants in Lahore and Jhelum benefiting millions
everyday. The Company is providing clean drinking to
the less privileged sectors of the society annually.
Indicators
iii) Mobile Doctors Units Key Performance Indicators (KPIs) measure progress toward
Under the MDU program, we dispensed medical advice the desired objectives. They provide focus for strategic
and medicines to more than 50,000 patients in 2020 free and operational improvement, create an analytical basis for
of cost. decision making and help focus attention on what matters
the most. The use of KPIs involves setting the targets (the
iv) Lift Irrigation desired level of performance) and tracking progress against
More than 450 farmers are benefiting from our lift them.
irrigation system that provides water to more than 1000
hectares of agricultural land of Buner district. Pakistan
Tobacco Company Limited through its MoU with the
Agriculture department of KPK Installed generators
in 2016. In the last four years, our efforts have helped
farmers increase the yield from their land and taken
burden off the depleted national grid.

QUARTERLY
ANALYSIS 2020
2020 2020
Rs in Million Quarter 1 Quarter 2 Quarter 3 Quarter 4 Annual
Statement of Profit or Loss
Gross Turnover 38,606,738 47,277,711 36,656,177 43,717,857 166,258,483

Excise Duties 19,038,632 22,885,900 17,801,040 21,182,007 80,907,579
Sales tax 5,654,549 6,942,365 5,384,803 6,478,676 24,460,393
Net Turnover 13,913,557 17,449,446 13,470,334 16,057,174 60,890,511

Cost of sales 7,762,318 8,219,307 6,936,907 6,410,289 29,328,821
Gross Profit 6,151,239 9,230,139 6,533,427 9,646,885 31,561,690
Selling and distribution costs 1,012,073 1,793,565 511,631 1,698,158 5,015,427

Administrative expenses 903,565 625,886 732,655 1,095,798 3,357,904
Other operating expenses 413,069 554,709 430,094 693,357 2,091,229
Other income 428 7,078 (4,444) 745,536 748,598
2,328,279 2,967,082 1,678,824 2,741,777 9,715,962
Operating profit 3,822,960 6,263,057 4,854,603 6,905,108 21,845,728
Finance income 115,938 347,482 170,671 148,775 782,866

Finance cost 59,369 50,114 69,264 61,952 240,699
Finance income - net 56,569 297,368 101,407 86,823 542,167
Profit before income tax 3,879,529 6,560,425 4,956,010 6,991,931 22,387,895

Income tax expense 1,058,851 1,766,674 1,230,155 1,839,725 5,895,405
Profit for the year 2,820,678 4,793,751 3,725,855 5,152,206 16,492,490
01 02 03 04
Quarter Quarter Quarter Quarter
Sales Billion Sticks Sales Billion Sticks Sales Billion Sticks Sales Billion Sticks
8.7 Billion 11 Billion 8.7 Billion 10.1 Billion
Net Turnover Net Turnover Net Turnover Net Turnover

Rs 13.9 Billion Rs 17.4 Billion Rs 13.5 Billion Rs 16.1 Billion
Net Profit Net Profit Net Profit Net Profit

Rs 2.8 Billion Rs 4.8 Billion Rs 3.7 Billion Rs 5.2 Billion
82
Operating Costs (Cost of Sales and all
Sales , Net Turnover and Income Profit
Operating Costs)
Q1’20 accounted for approximately 23% of total Cost of sales increased by 16% compared to Net profit for Q1’20 was
Quarter 1
sales of the Company for FY’20. Sales volume Q1’19 despite decrease in sales volume. This 1% higher than that of
in Q1’20 decreased by 22% compared to Q1’19 was primarily due to currency devaluation and Q1’19. This was primarily
primarily because of Excise led price increase in general inflation in prices of raw materials. Selling driven by higher Net
June 2019. However, the Net Turnover increased by and distribution costs decreased by 3% due to Turnover and effective cost
12% compared to Q1'19 due to Rs 20/pack excise- decrease in volume whereas administrative costs management.
led price increase. Interest income from short term increased by 29% on account of general inflation
investments decreased by 44.9% compared to Q1'19 compared to Q1'19.
because of reduction in interest rates.
Q2’20 accounted for 28% of total sales of the Cost of sales increased by 6% from Q1'20 owing Profit increased by 70%
Quarter 2
Company for FY’20. Sales volume in Q2’20 improved to increase in volume in Q2'20 and increased by compared to Q1’20.
by 27% compared to Q1’20 in anticipation of 22% from Q2'19 owing to increase in cost base This is primarily because
potential price increase post FY2020-21 budget. on account of rupee devaluation and general of higher sales volume
Net Turnover also increased by 25% against Q1'20. inflation. Selling and distribution costs increased compared to Q1'20.
Income from short term investments increased by by 77% as compared to Q1'20 due to increased Compared to Q2’19 profit
200% vs Q1'20 driven by higher funds availability volumes. was higher by 13%.
(47% higher) because of higher turnover and efficient
investment strategy. Compared to Q2'19, Net turnover
was higher by 12.1%.
Q3'20 accounted for 22% of total sales of the Decrease in sales resulted in decrease in cost Profit declined by 2%
Quarter 3
company for FY’20. Sales volume was lower by 26% of sales by 13% compared to average of Q1’20 in Q3’20 compared to
vs Q2'20. Resultantly, Net Turnover also declined by & Q2’20. Compared to Q3'19 cost of sales average of Q1’20 and
23% compared to Q2. This was on account of higher increased by 49% due to increase in sales Q2’20 due to significant
distributor on hand stocks. Compared to Q3'19 Net volume. Selling and distribution costs decreased drop in sales volume
Turnover increased by 41% due to increase in sales by 64% compared to average of Q1'20 and Q2'20 which was partially
volume by 30%. due to decrease in sales volume vs cumulative offset by effective cost
Investment in marketing activities, dividend payments quarterly average for prior periods. All other management. Profit
and payments to farmers on account of leaf operating costs of the company saw a reduction increased by 27% vs
purchases resulted in lower liquidity and as a result of 7% in Q3’20 compared to average of Q1’20 & Q3'19.
decline in income from short term investments by Q2’20.
26% compared to average of Q1'20 & Q2'20.
Q4’20 accounted for 26% of total sales of the Cost of sales decreased by 16% compared to The profit for Q4’20
Quarter 4
Company for FY’20. Sales volume picked up pace in cumulative average of prior quarters of 2020 and increased by 36%
the last quarter of the year rising by 21% compared again by 16% compared to Q4'19 on account of compared to cumulative
to Q3'20 and higher by 4% compared to Q4'19. Net effective cost management. average of prior quarters
turnover increased by 7% and 11.6% compared to Selling and distribution costs increased by 54% of 2020 mainly because of
cumulative average of prior quarters of 2020 and in Q4'20 as compared to average of last three higher costs. Compared
Q4’19 respectively. quarters of the year due to increase in sales to Q4’19 profit was higher
volume. Other operating costs increased by 47% by 77%.
compared to cumulative average of prior quarters
of 2020. Compared to Q4'19, there was an
increase of 25% in operating costs primarily due
to higher Group IT recharges.
Analysis of Variation in Interim Results with Final Accounts

The Company’s sales volume showed an upward trend in the first 6 months of the year on account of expected excise led price increases.
However, post FY 20-21 budget excise rates remained unchanged. Sales volume declined by 9% in the second half compared to the first half of
the year due to already accumulated stocks at distributors end. On the flip side, profitability improved by 17% in the second half due to effective
cost management and greater efficiency.
The Company’s input costs saw increase in first half of the year 2020 which was mainly attributable to FX devaluation and inflation. In H2’20, cost
of sales declined by 17% primarily due to reduction in sales volumes and strict cost control regime augmented by savings generated through
productivity initiatives across the Company. Following the same trend, selling and distribution costs also declined by 21% due to decline in sales
volume.
The Company’s cash flow position in second half of the year decreased by 34% primarily on account of dividend, capex, royalty and leaf
payments. As a result, interest income for second half also declined by 31% due to lower funds available for short term investments. Overall, the
Company managed to generate healthy cash flows for the year ended 2020 as a result of effective liquidity management.

GRAPHICAL PRESENTATION
of Statement of Profit or Loss & Statement
of Financial Position
Volume Gross Turnover

(Million Sticks) (Rs in Million)
46,078
42,716
166,258
39,140
38,504 149,025
36,065
34,777 137,116
129,278
125,013
111,485
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Net Turnover Excise & Sales Tax

(Rs in Million) (Rs in Million)
105,368
97,050
60,891
84,412 84,004
82,105
53,112
51,975
44,867 68,206
42,907 43,279
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Cost of Sales Selling & Distribution Costs

29,829
29,329
25,765
24,352 4,950 5,015
4,855
4,744 4,666
23,075
22,093
3,762
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
84
Profit after Tax Earnings per Share
(Rs in Million) (Rs/share)
16,492
64.55
12,889
50.45
10,361 10,338 40.55

9,574
40.46
37.47
7,046 27.58
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Dividend per Share Working Capital

(Rs/share) (Rs in Million)
58 9,611
8,512
48 7,744
37 6,124
5,756
30
24 25
2,601
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Property, Plant & Equipment Share Capital and Reserves

19,513
18,291 18,291
17,766
16,911
15,819
12,499 12,977
10,090 10,366
9,185
8,629 8,631
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020

HORIZONTAL &
VERTICAL ANALYSIS
Source Data
Rs. in million 2020 2019 2018 2017 2016 2015
Gross turnover* 166,258 149,025 137,116 111,485 129,278 125,013

Excise duties (80,908) (74,741) (63,118) (51,247) (64,976) (63,290)
Sales tax (24,460) (22,308) (20,886) (16,959) (19,436) (18,815)
Net turnover 60,891 51,975 53,112 43,279 44,867 42,907

Cost of sales (29,329) (25,765) (29,829) (23,075) (22,093) (24,352)
Gross Profit 31,562 26,210 23,284 20,204 22,774 18,555

Selling and distribution costs (5,015) (4,666) (4,950) (3,762) (4,744) (4,855)
Administrative expenses (3,358) (2,780) (2,558) (2,664) (2,185) (2,435)
Other operating expenses (2,091) (1,872) (1,382) (1,186) (1,198) (1,068)
Other income 749 783 178 242 353 137
Operating profit 21,846 17,675 14,571 12,834 15,000 10,335

Finance income 783 813 743 234 428 316
Finance cost (241) (203) (34) (56) (46) (72)
Profit before income tax 22,388 18,285 15,280 13,011 15,382 10,579

Income tax expense (5,895) (5,396) (4,942) (3,438) (5,021) (3,533)
Profit for the year 16,492 12,889 10,338 9,574 10,361 7,046

Earnings per Share - basic and diluted (Rupees) 64.55 50.45 40.46 37.47 40.55 27.58

*Gross revenue figure has been adjusted as per IFRS-15 methodology. Certain marketing costs have been deducted from total revenues from 2017 and
onwards.

Statement of Financial Position
Non Current Assets

Property, plant and equipment/ Advances for capital expenditure 15,819 12,499 10,090 8,631 8,629 9,185
Investment in subsidiary company 5 5 5 5 5 5
Long term loans - - - - - -
Long term deposits and prepayments 28 31 32 32 34 29
15,851 12,534 10,127 8,668 8,668 9,219
Current Assets
Stock-in-trade 19,483 21,423 18,489 14,461 13,619 14,008
Stores and spares 679 664 634 594 570 676
Trade debts 1 4 2 3 2 1
Loans and advances 335 126 96 73 179 182
Short term prepayments 76 15 250 213 184 170
Other receivables 1,336 2,132 1,862 969 1,049 447
Cash and bank balances/Short term investments 7,244 3,537 8,993 7,154 1,127 53
29,154 27,901 30,326 23,466 16,729 15,536
Total Assets 45,006 40,436 40,453 32,134 25,397 24,755

Current Liabilities
Trade and other payables 21,439 19,306 21,202 13,024 9,095 10,417
Accrued interest / mark-up 1 19 5 3 3 12
Short term running finance - - 76 - 95 1,220
Lease liability 679 383 148 165 164 154
Current Income tax liabilities 912 449 382 662 1,615 1,132
23,031 20,157 21,813 13,854 10,973 12,934
Non Current Liabilities
Deferred income tax liabilities 889 646 589 1,108 1,132 1,039
Lease liability 1,574 1,342 285 260 315 415
2,462 1,988 874 1,368 1,447 1,454
Share Capital & Reserves
Share capital 2,555 2,555 2,555 2,555 2,555 2,555
Revenue reserves 16,958 15,736 15,211 14,356 10,422 7,811
19,513 18,291 17,766 16,911 12,977 10,366
45,006 40,436 40,453 32,134 25,397 24,755
86
Horizontal Analysis1 Vertical Analysis2
20 Vs 19 19 Vs 18 18 Vs 17 17 Vs 16 16 Vs 15 15 Vs 14 2020 2019 2018 2017 2016 2015
Percentage (%) Percentage (%)
11.6% 8.7% 23.0% (13.8%) 3.4% 16.6%

8.2% 18.4% 23.2% (21.1%) 2.7% 16.2%
9.6% 6.8% 23.2% (12.7%) 3.3% 16.5%
17.2% (2.1%) 22.7% (3.5%) 4.6% 17.2% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

13.8% (13.6%) 29.3% 4.4% (9.3%) 6.9% 48.2% 49.6% 56.2% 53.3% 49.2% 56.8%
20.4% 12.6% 15.2% (11.3%) 22.7% 34.0% 51.8% 50.4% 43.8% 46.7% 50.8% 43.2%

7.5% (5.7%) 31.6% (20.7%) (2.3%) 25.2% 8.2% 9.0% 9.3% 8.7% 10.6% 11.3%
20.8% 8.7% (4.0%) 21.9% (10.2%) 1.5% 5.5% 5.3% 4.8% 6.2% 4.9% 5.7%
11.7% 35.5% 16.5% (1.0%) 12.2% 64.1% 3.4% 3.6% 2.6% 2.7% 2.7% 2.5%
(4.4%) 340.6% (26.6%) (31.4%) 157.4% (17.6%) 1.2% 1.5% 0.3% 0.6% 0.8% 0.3%
23.6% 21.3% 13.5% (14.4%) 45.1% 45.8% 35.9% 34.0% 27.4% 29.7% 33.4% 24.1%

(3.7%) 9.4% 217.2% (45.3%) 35.5% 58.1% 1.3% 1.6% 1.4% 0.5% 1.0% 0.7%
18.8% 498.8% (40.0%) 22.9% (36.2%) (27.5%) 0.4% 0.4% 0.1% 0.1% 0.1% 0.2%
22.4% 19.7% 17.4% (15.4%) 45.4% 47.2% 36.8% 35.2% 28.8% 30.1% 34.3% 24.7%

9.3% 9.2% 43.8% (31.5%) 42.1% 51.1% 9.7% 10.4% 9.3% 7.9% 11.2% 8.2%
28.0% 24.7% 8.0% (7.6%) 47.0% 45.3% 27.1% 24.8% 19.5% 22.1% 23.1% 16.4%
26.6% 23.9% 16.9% 0.0% (6.0%) 5.4% 35.1% 30.9% 24.9% 26.9% 34.0% 37.1%
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0.0% 0.0% 0.0% 0.0% 0.0% (100.0%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
(9.9%) (4.2%) (0.6%) (3.7%) 15.5% (10.4%) 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
26.5% 23.8% 16.8% 0.0% (6.0%) 5.3% 35.2% 31.0% 25.0% 27.0% 34.1% 37.2%

(9.1%) 15.9% 27.9% 6.2% (2.8%) 17.8% 43.3% 53.0% 45.7% 45.0% 53.6% 56.6%
2.2% 4.7% 6.8% 4.2% (15.6%) 43.1% 1.5% 1.6% 1.6% 1.8% 2.2% 2.7%
(67.3%) 174.3% (41.1%) 43.3% 103.0% (71.9%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
166.0% 31.3% 32.1% (59.3%) (1.7%) 172.3% 0.7% 0.3% 0.2% 0.2% 0.7% 0.7%
402.7% (93.9%) 17.5% 15.7% 8.0% (7.0%) 0.2% 0.0% 0.6% 0.7% 0.7% 0.7%
(37.3%) 14.5% 92.2% (7.6%) 134.9% 5.0% 3.0% 5.3% 4.6% 3.0% 4.1% 1.8%
104.8% (60.7%) 25.7% 534.7% 2023.3% (64.5%) 16.1% 8.7% 22.2% 22.3% 4.4% 0.2%
4.5% (8.0%) 29.2% 40.3% 7.7% 17.7% 64.8% 69.0% 75.0% 73.0% 65.9% 62.8%
11.3% (0.0%) 25.9% 26.5% 2.6% 12.8% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

11.0% (8.9%) 62.8% 43.2% (12.7%) (7.5%) 47.6% 47.7% 52.4% 40.5% 35.8% 42.1%
(96.9%) 253.8% 56.2% (0.7%) (70.9%) (51.1%) 0.0% 0.1% 0.0% 0.0% 0.0% 0.0%
0.0% (100.0%) 100.0% (100.0%) (92.2%) 116.7% 0.0% 0.0% 0.2% 0.0% 0.4% 4.9%
77.2% 158.3% (10.3%) 0.5% 6.5% 29.3% 1.5% 0.9% 0.4% 0.5% 0.6% 0.6%
103.0% 17.5% (42.3%) (59.0%) 42.7% 145.6% 2.0% 1.1% 0.9% 2.1% 6.4% 4.6%
14.3% (7.6%) 57.4% 26.3% (15.2%) 4.0% 51.2% 49.8% 53.9% 43.1% 43.2% 52.3%

37.5% 9.7% (46.8%) (2.1%) 9.0% (5.6%) 2.0% 1.6% 1.5% 3.4% 4.5% 4.2%
17.3% 371.1% 9.5% (17.4%) (24.1%) 3.7% 3.5% 3.3% 0.7% 0.8% 1.2% 1.7%
23.9% 127.5% (36.1%) (5.5%) (0.5%) (3.1%) 5.5% 4.9% 2.2% 4.3% 5.7% 5.9%

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 5.7% 6.3% 6.3% 8.0% 10.1% 10.3%
7.8% 3.5% 6.0% 37.8% 33.4% 43.2% 37.7% 38.9% 37.6% 44.7% 41.0% 31.6%
6.7% 3.0% 5.1% 30.3% 25.2% 29.4% 43.4% 45.2% 43.9% 52.6% 51.1% 41.9%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
1 Horizontal analysis shows changes in the amount of corresponding line items 2 For Statement of Profit or Loss, net turnover is the base figure whereas for
by comparing current period with previous period Statement of Financial Position, total assets is the base figure for calculating
vertical analysis

ANALYSIS OF STATEMENT OF
PROFIT OR LOSS & STATEMENT
OF FINANCIAL POSITION
Gross Turn Over: Net Turnover:

From 2015 to 2020, gross turnover has followed a healthy In line with the growth in gross turnover, the net turnover has
growth trend. During 2020, the gross turnover grew by 11.6% also followed a similar trend increasing from Rs 42.9 billion
which was attributable to excise led price increase in first in 2015 to Rs 60.8 billion in 2020 (CAGR of 7.22%). During
six months and impact of premium portfolio price increase 2020, the net turnover increased by 17.2% from 2019. This is
in the second half of the year even though sales volume attributable to excise led price increase impact in first half of
were lower vs 2019. However, looking back at historical the year and premium portfolio price increase in the second
numbers, the growth trend in gross revenues was disrupted half of the year 2020.
in the years 2016 and 2017 as the illicit sector grew rapidly
and their market share reached an alarmingly high level of
41.2% which resulted in steep fall in the Company’s volume.
Cost of Sales:
The policy reforms introduced in 2017/18 budget helped Cost of sales increased by 14% in comparison to previous
in the revival of legitimate industry in 2018 and resultantly year primarily due to higher inflation and FX devaluation.
the Company’s volume rebounded as the illicit sector saw a Through strict cost regime and multiple product saving
decline and consumers shifted from non-duty-paid cigarettes initiatives, the Company was able to mitigate the increase in
to duty-paid cigarettes. costs for the second half of the year by 16%.
Important to note, that Gross Turnover in 2017 and onwards,

followed the IFRS 15 revenue recognition requirements,
Selling & Distribution:
whereby, certain marketing costs were deducted from the Over the years, the Company has continued to invest in
total revenues. its brands and trade capabilities. Brand investments are
aimed at building a strong portfolio wide brand equity
FED and Sales Tax: through product upgrades, effective marketing activities
and consumer engagements. The Company ventured
PTC is one of the largest tax contributors to the national into new categories by launching VELO and its expansion
exchequer. Over the years, the contribution to the national across urban cities of Pakistan, which also contributed to an
exchequer has followed an increasing trend, except in 2016 increase in overall selling and distribution expenses. In 2020,
and 2017, when revenue growth stalled due to accelerated the selling and distribution expenses were Rs 5 billion, up by
expansion of the illicit sector and the legal industry lost 7.5% vs 2019.
volume to duty not paid products. To address the steep fall
in government revenues, fiscal reforms were introduced
in budget 17/18 and 18/19, which helped to put the tax
revenues back on the growth trajectory as elaborated above.
In 2020, the Company contributed Rs 105 billion in tax
revenues in the form of FED and Sales tax, higher by 8.5%
compared to 2019.
88
Profit After Tax Working Capital Management
Over the past six years, the Company has been able The Company’s cash advance sales model enables working
to register a healthy growth in its profits apart from the capital requirements to be managed efficiently. The growing
year 2017 when the Company’s volume took a significant profitability and supplier management systems have also
hit. During 2020, the Company increased its profit after allowed the Company to improve its working capital position
tax by 28% vs 2019. This is attributable to effective cost over the years, reaching a positive Rs 6.1 billion in 2020.
management, productivity savings and healthy finance These factors have improved the cash conversion cycle to 90
income from efficient working capital management. days in 2020 vs 153 days in 2019.
Earnings per share (EPS) Non-Current Liabilities

EPS has registered CAGR (cumulative average growth rate) Non-current liabilities (NCL) consist of lease liability
of 18.5%, growing from Rs 27.58 per share in 2015 to Rs and deferred tax liability. Over the years, the Company
64.55 per share in 2020, in line with the profitability growth experienced a period of sales growth, increased profitability,
trend over the years. EPS for 2020 registered a growth of higher liquidity and improved working capital position,
28% vs 2019. eliminating the need for long term financing. Investment
needs were easily financed through cash generated from
Property Plant & Equipment operations. The trend continued in 2020 as well with no
long-term financing options availed. However, due to the
Over the years, property, plant & equipment has increased introduction of a new accounting standard, IFRS 16 – Leases
from around Rs 9.2 billion in 2015 to Rs 15.8 billion in 2020. in 2019, there has been an increase in the lease liabilities by
The Company has invested not only to increase production 17% in lieu of new contracts entered during the year.
capacity but also to upgrade its machinery footprint, enabling
it to support future product innovations. Moreover in 2020, the
Company has initiated setup of a standalone VELO factory
Share Capital & Reserves
for production localization. To meet strict EH&S requirements, Over the years, share capital has remained the same at Rs.
the Company has also upgraded the operating infrastructure 2.6 billion. However, reserves have increased from Rs. 7.8
for ensuring a highly safe working environment for the billion in 2015 to Rs. 16.9 billion in 2020 owing to consistent
Company’s workforce. growth in profitability over the years.

SUMMARY OF STATEMENT OF
PROFIT OR LOSS, FINANCIAL
POSITION & CASH FLOWS
2020 2019 2018 2017 2016 2015
Gross turnover* Rs. million 166,258 149,025 137,116 111,485 129,278 125,013
Excise duties/Sales Tax Rs. million (105,368) (97,050) (84,004) (68,206) (84,412) (82,105)
Net turnover Rs. million 60,891 51,975 53,112 43,279 44,867 42,907
Cost of Sales Rs. million (29,329) (25,765) (29,829) (23,075) (22,093) (24,352)
Profit for the Year Rs. million 16,492 12,889 10,338 9,574 10,361 7,046
Earnings per share Rs./share 64.55 50.45 40.46 37.47 40.55 27.58

*Gross revenue figure has been adjusted as per IFRS-15 methodology. Certain marketing costs have been deducted from total revenues from 2017 onwards.
2020 2019 2018 2017 2016 2015

Statement of Financial Position
Property Plant & Equipment/Advances for Capital Expenditure Rs. million 15,819 12,499 10,090 8,631 8,629 9,185
Working Capital (Current Assets-Current Liabilities) Rs. million 6,124 7,744 8,512 9,611 5,756 2,601
Share Capital & Reserves Rs. million 19,513 18,291 17,766 16,911 12,977 10,366
Non- Current Liabilities Rs. million 2,462 1,988 874 1,368 1,447 1,454
Statement of Cash Flows
Cash flow from Operating Activities Rs. million 22,215 8,564 12,810 12,280 10,555 5,179
Cash flow from Investing Activities Rs. million (3,192) (835) (1,359) (740) 17 (1,015)
Cash flow from Financing Activities Rs. million (15,317) (13,110) (9,688) (5,418) (8,374) (4,917)
Net Change in Cash and Cash Equivalents Rs. million 3,707 (5,380) 1,763 6,122 2,198 (753)
Beginning Cash and Cash Equivalents Rs. million 3,537 8,917 7,154 1,032 (1,166) (413)
Ending Cash and Cash Equivalents Rs. million 7,244 3,537 8,917 7,154 1,032 (1,166)

Cash and Cash Equivalents comprise
Cash and Bank Balances/Short Term Investments Rs. million 7,244 3,537 8,993 7,154 1,127 53
Short Term Borrowings Rs. million - - (76) - (95) (1,220)
Rs. million 7,244 3,537 8,917 7,154 1,032 (1,166)
Direct Method Cash Flow

2020 2019
Cash flows from operating activities
Cash receipts from customers 166,257 149,037
Cash paid to Government & suppliers (137,545) (133,336)
Cash paid to employees and retirement funds (5,524) (5,462)
Interest paid (259) (182)
Other cash payments (714) (1,493)
22,215 8,564
Cash flows from investing activities
Purchase of property, plant and equipment/Advance for Capex (4,201) (1,947)
Proceeds from sale of equipment 227 299
Interest received 783 813
(3,191) (835)
Cash flows from financing activities
Dividends paid (14,801) (12,400)
Finance lease payments (516) (709)
(15,317) (13,109)
Increase / (decrease) in cash and cash equivalents 3,707 (5,380)
Cash and cash equivalents at beginning of year 3,537 8,917
Cash and cash equivalents at end of year 7,244 3,537

Cash and cash equivalents comprise:
Cash and bank balances 842 536
Short term investment 6,402 3,001
7,244 3,537
Free Cash Flows

2020 2019
Free cash flows
Profit before tax Rs. million 22,388 18,285
Adjustment non-cash items Rs. million 1,819 1,354
Changes in working capital Rs. million 3,717 (5,293)
Rs. million 27,924 14,346
Capital expenditure Rs. million (4,201) (1,947)
Free Cash flows Rs. million 23,723 12,399
90
DUPONT ANALYSIS 2020
Profit
after Tax
16,492
Rs. in Million
÷
Net Profit
Margin
27.1%
×
Net
Return on Turnover
Assets
60,891
0.39 Rs. in Million
÷
Assets
Turnover
1.43
÷
Return on Average
Equity Assets
42,721
_
88.6%
Rs. in Million
Average
Owner’s Equity
18,902
Rs. in Million
×
Average
Ownership
Liabilities
Ratio
0.44 23,819
+
Rs. in Million
Average
Assets
42,721
Rs. in Million
Average
Owner’s Equity
18,902
Rs. in Million
Dupont Analysis Summary

The Company’s net profit registered healthy growth trend of 28% in comparison to previous year.
Asset turnover increased from 1.29 to 1.43 as net turnover increased by a higher margin than the increase in average
assets in comparison to previous year. The additions in non-current asset during the year are primarily attributable to the
recognition of new Right-of-Use Assets in accordance with IFRS 16 - Leases and additions in capital work in progress
relating to enhancement of already installed machinery and construction of VELO factory. Further the current assets also
increased due to increase in short term investments as compared to the previous period.
Ownership ratio reduced from 0.45 to 0.44 because increase in owner’s equity was less than proportional increase in
average assets.

LIQUIDITY, CASH FLOWS
AND CAPITAL STRUCTURE
The Company’s Treasury function is responsible for raising the finances required by the Company, managing its liquid resources
and mitigating the financial risks that arise during its business operations. Clear policies and procedures, including levels
of authority as well as the type and use of financial instruments, have been defined and documented. All treasury related
transactions are executed as per the defined policies and procedures. These policies are reviewed and approved by the Board
of Directors or its delegated authority to the Finance Director/Treasury Committee.
Cash Flow Analysis Cash Flow from Operating Activities

(Rs. in Million)
The cashflows of the Company demonstrate the strength and

22,215
efficiency of its operations and particularly, its highly efficient
working capital management systems and processes.
1. Net Cash Generated from Operating 12,280 12,810
Activities 10,555
8,564
Cash flows from operating activities followed a healthy

trend over the years, improving from Rs. 5.2 billion in 5,179
2015 to Rs. 22.2 billion in 2020 (CAGR of 33.8%). This

was primarily driven by increase in turnover, improved
profitability and effective cash management. In its 2015 2016 2017 2018 2019 2020
journey towards working capital improvement, the

Company has been able to reduce its cash generation
Cash Flow from Investing Activities
cycle from around 153 days in 2019 to 90 days in (Rs. in Million)
2020. -0
2. Net Cash Generated from Investing -740

-835
Activities -1,015
-1,359
Cash utilized on investing activities has increased
from Rs. 0.8 billion in 2019 to Rs. 3.2 billion in 2020.
This is primarily due to increase of Rs 2.2 billion in
capital expenditure to support innovations and fund
installation and commissioning of new VELO plant and
machinery. Further, lower inflows from proceeds from -3,192
disposal of fixed assets and interest income have also 2015 2016 2017 2018 2019 2020
contributed to higher cash utilization in 2020.

Cash Flow from Financing Activities
3. Net Cash Generated from Financing (Rs. in Million)
Activities
Cash outflow on financing activities increased from
Rs 13.1 billion in 2019 to Rs 15.3 billion in 2020, as -4,917
-5,418
the Company paid out dividends of Rs 58/share

-8,374
totaling Rs 14.8 billion during the year compared -9,688
to Rs 48/share totaling Rs 12.4 billion in 2019. This

is a testament of Company’s ability to generate -13,110
sustainable value for its shareholders. -15,317
2015 2016 2017 2018 2019 2020
92
Adequacy of Capital Structure 2. Cash Flow Monitoring
The Company has an adequate capital structure comprising The Company continuously monitors both its cash
mainly of equity with a minimal portion of non-current inflows and outflows, regularly and takes commercial
liabilities. Over the years, share capital has remained the decisions to manage its liquidity. This process of
same at Rs. 2.6 billion, however, revenue reserves have regular monitoring enables the Company to get
increased from Rs. 7.8 billion in 2015 to Rs. 16.9 billion in the visibility of future liquidity requirements and
2020, primarily due to growing profitability over the years. accordingly, bridge the gaps by arranging financing
Sales growth, higher profitability and improved liquidity facilities, if required.
position has enabled the Company to support its financing
needs including those for capital expenditure from internally 3. Investment of Surplus Funds
generated cash.
The Company manages its surplus funds by investing
them in short term low risk financial instruments. At a
Financing Arrangements time, when interest rates are on the rise, the Company
is able to invest its excess liquidity at higher rates and
With a view to maximize shareholders’ returns, the Company
avoid interest expense charged at higher rates.
places high priority on internal generation of funds.
Exhaustive rolling cash flow forecasting is conducted
keeping in view the various requirements of the business. 4. Effective Control Environment
Healthy operating cash flows allow Company to avail external The Company is equipped with highly efficient
financing only on short term basis. The Company has running systems and applications that allow for speedy
finance facilities with multiple banks to drawn down funds in cash collections and disbursements, while ensuring
time of need. operation of robust controls.
Liquidity and Cash Flow Repayment of Debts and

Management Strategy to Recovery of Losses
Overcome Liquidity Problems The Company has running finance facilities arrangement with
multiple banks, however healthy operating cash flows allows
1. Effective Working Capital the Company to keep the utilization of these facilities to a
minimum.
Management
The Company has an elaborate and effective working The Management believes that the Company’s operations
capital management process, which largely centres can generate sufficient cash to meet the liquidity
around its cash advance sales approach. Additionally, requirements of the Company and thus, does not foresee any
the Company follows an elaborate supplier liquidity problems in the future. Considering the amount of
management process, which enables it to extract the unutilized borrowing facilities, availability of short-term assets
best commercial terms from its suppliers, including and ongoing ability to generate cash, the Company will be
favourable credit terms. Over the years our cash able to meet its cash needs for the future.
conversion cycle has not only improved significantly
but has also enabled us to finance all our liquidity
requirements, including those required for business
expansion, through internally generated cash.

PERFORMANCE INDICATORS
RATIOS FOR 6 YEARS
2020 2019 2018 2017 2016 2015
Profitability Ratios
1 *Gross Profit ratio % 51.8 50.4 43.8 46.7 50.8 43.2

2 *Net Profit to Sales % 27.1 24.8 19.5 22.1 23.1 16.4
3 *EBITDA Margin to Sales % 38.3 36.6 29.2 32.2 35.9 26.4
4 Operating leverage ratio Times 2.0 2.5 0.6 1.0 13.2 2.8
5 Return on Equity % 87.3 71.5 59.6 64.1 88.8 76.7
6 Return on Capital employed % 99.4 87.2 78.2 70.2 104.0 87.4

*Gross revenue figure has been adjusted as per IFRS-15 methodology from 2017 and onwards. Certain marketing costs have been deducted
from total revenues

Liquidity Ratios
1 Current ratio Times 1.3 1.4 1.4 1.7 1.5 1.2

2 Quick / Acid Test Ratio Times 0.4 0.3 0.5 0.6 0.3 0.1
3 **Cash and cash equivalents to Current Liabilities
% 31.5 17.5 41.2 51.6 10.3 0.4
4 Cash flow from operations to Sales % 13.4 5.7 9.3 11.0 8.2 4.1
**This includes short term investments as well

Activity / Turnover Ratios
1 Inventory turnover ratio Times 1.5 1.2 1.6 1.6 1.6 1.7
2 No. of Days in Inventory Days 242.5 303.5 226.2 228.7 225.0 210.0
3 Debtor turnover ratio Times 0.0 0.0 0.0 0.0 0.0 0.0
4 No. of Days in Receivables Days 0.0 0.0 0.0 0.0 0.0 0.0
5 Creditor turnover ratio Times 2.4 2.4 2.0 2.4 2.9 3.1
6 No. of Days in Payables Days 152.7 150.9 179.6 149.5 124.8 116.6
7 Total Assets turnover ratio Times 3.7 3.7 3.4 3.5 5.1 5.1
8 Fixed Assets turnover ratio Times 10.5 11.9 13.6 12.9 15.0 13.6
9 Operating cycle Days 90 153 47 79 100 93

Investment /Market Ratios
1 Earnings per share After Tax(EPS) and diluted EPS Rs 64.6 50.4 40.5 37.5 40.6 27.6
2 Price-Earning Ratio Times 24.9 48.4 71.7 57.3 35.3 40.4
3 Dividend Yield ratio % 3.6 2.0 1.3 1.4 1.7 2.2
4 Dividend Payout ratio % 89.9 95.1 96.4 80.1 61.6 87.0
5 Dividend Cover ratio Times 1.1 1.1 1.0 1.2 1.6 1.1
6 Dividend Per Share Rs 58.0 48.0 39.0 30.0 25.0 24.0
7 Stock Dividend per share Rs 0.0 0.0 0.0 0.0 0.0 0.0
8 Market value per share at year end Rs 1,610 2,441 2,900 2,147.9 1,433 1,114
9 Highest Market value per share during the year Rs 2,320 2,999 3,000 2,147.9 1,433.3 1,169
10 Lowest Market value per share during the year Rs 1,450 2,186 1,692 1,081 950 742.9
11 Break-up value per share Rs 76.4 71.6 69.5 66.2 50.8 40.6
12 Breakup value per share including investment in
related party at fair value and also the effect of
Surplus on Revaluation of Fixed Assets Rs 76.4 71.6 69.5 66.2 50.8 40.6
13 Price to Book Ratio Times 21.1 34.1 41.7 32.5 28.2 27.5

Capital Structure Ratios
1 Financial leverage ratio Times 2.3 2.2 2.1 1.9 2.1 2.5
2 ***Weighted average cost of debt % 0.0 0.0 0.0 0.0 0.0 0.0
3 ***Debt to Equity ratio (as per book value/market value)
% 0.0 0.0 0.0 0.0 0.0 0.0
4 Interest Cover/Time interest earned ratio Times 94.0 91.3 452.7 232.0 336.6 148.2

***The company does not have any long term financing arrangement
94
ANALYSIS OF PERFORMANCE
INDICATORS
Profitability Ratios Investment /Market Ratios
Over the years, our profitability ratios have followed an We aim to generate maximum value for our shareholders,
improving trend. This has been attributable to a growth in both in the short and the long term. This is reflected in
gross profit coupled with effective cost management. Gross the consistent improvement of investment ratios over the
turnover recorded an increase of 11.6% in 2020 which was years and in particular, the growth of EPS and increase in
primarily driven by the June-19 excise led price increase and dividend per share, which are certainly very attractive for our
premium portfolio price increase in second half of 2020. The shareholders. Our share price witnessed a decline of 34%
gross profit ratio increased by 3% whereas net profit ratio from 2019 along with P/E ratio declining by 28% owing to
increased by 9%. The increase in net profit ratio is clearly deteriorating macroeconomic factors and under performance
indicating that of our effective cost management, productivity of Pakistan Stock Exchange in the wake of global Covid-19
savings and greater efficiency in operations. pandemic.
Liquidity Ratios Capital Structure Ratios

Our liquidity ratios present a healthy position over the years. The capital structure ratios reflect our ability to meet our
Our cash advance sales model coupled with effective financing needs organically, including those related to capital
resource allocation enables us to meet our liquidity investment funded primarily through cash generated from its
requirements including capital expenditures. In 2020, a operations. As a result, there is no requirement for long-term
slight deviation in this trend has been witnessed with current financing, though, we avail a relatively small lease facility
ratio deteriorating slightly compared to 2019 due to lower for financing vehicles provided to our employees. The debt
inventory position as compared to 2019. However, the quick to equity ratio is zero while interest cover has seen a minor
ratio increased in 2020 due to more availability of cash and increase from 2019 owing to increase in profits during the
cash equivalents at year end. year.
Activity Ratios
The activity ratios have improved significantly over the years
mainly on account of a highly effective working capital
management approach followed by us. As per the business
model, the inventory days remain high due to a build-up of
tobacco and raw material stock essential to support higher
production in the first half of next year as well as to hedge
against unfavourable FX headwinds. Further due to better
working capital management, we have reduced our inventory
days and resultantly the cash conversion cycle decreased
from 153 days to 90 days only.

SIGNIFICANT PLANS
AND DECISIONS
increased at a national level resulting in positive sales
The Company’s key business decisions growth and a larger handler base in 2020. These
in 2020 were geared towards achieving initiatives have further propelled the Dunhill brand to
its strategic objective of sustainable new heights in Pakistan.
growth of its business. To deliver
growth, we continued with our plans 2. Trade Activities:
to strengthen our brands by directing The trade team supported the brand activities
investment towards product innovations by ensuring smooth deployment of simultaneous
and marketing activities aimed at marketing campaigns and perfection in their
execution.
enhancing the brand equity and image of
our brands among our consumers. At the very front of Sales and Distribution, we digitized
the Route to Market (RTM) and Route to Consumer
1. Brand Equity: (RTC) value chains which transformed local market
dynamics. The company piloted a ‘cashless’ journey
As part of its marketing activities, the following for its salesman and digitized end to end sales
portfolio wide initiatives were undertaken during the transactions with retailers by leveraging digital
year. payments platform offered by one of Pakistan’s largest
Telecom providers. In 2020, COVID-19 pandemic
(a) Value For Money Segment triggered a growth trend in E-commerce platforms as
a medium for consumer buying. We capitalized on this
exciting trend and partnered with some of the biggest
E-commerce players and delivered 7 Million cigarette
sticks and 25,000 VELO cans via the E-commerce
channel during the year.
the year to further enhance Gold Flake’s equity and
mix. This was a strategic intervention which has
helped the brand significantly capture lost volume 3. Investing in Talent
and market share. Embassy’s franchise base was
also successfully retained through its pack format Development
change campaign allowing it to sustain and maintain We consider Human Capital as one of our most
its distribution and consumer base respectively. valuable asset and thus, continue to invest in the
development of our employees. During the year,
Despite increase in the incidence of counterfeit, our several training programs were conducted to ensure
anti-counterfeit drive via a unique technology enabled employees’ skills remained abreast with evolving
scanning solution in the third quarter of 2020 assisted business requirements and especially, the leadership
us to gain back volume from Counterfeit brands which capabilities of its managers were further enhanced
also resulted in positive feedback from consumers, so that they are fully equipped to operate in a
retailers and LEAs. challenging environment and deliver our long-term
objectives.
(b) Aspirational Premium Segment
With people at the core of its delivery, the Company
has a strong focus on people by attracting and
retaining best talent in the country. In 2020, we were
was carried out in Q3’20 which was further aided
also awarded the Top Employer Award 2020 by
by successful interventions of limited-edition packs
Top Employer Institute. Moreover, for our drive and
resulting in improved sales traction for the brand in
consistent focus on Diversity and Inclusion, we were
Q4’20.
also awarded the “Global Diversity & Inclusion Award
2020” in six categories.
(c) Premium Segment
In the Premium segment, based on consumer trends
and positive sales results, handlers of Dunhill were
96
BUSINESS RATIONALE OF
PROJECTS UNDERTAKEN
DURING THE YEAR
The key projects undertaken by the Company along with their rationale is given below
solution that enables consumers to identify a genuine
1. “Tobacco Harm Reduction” product at the point of sale whilst serving as an
During 2020, in line with BAT Group’s vision of A effective tool for Law Enforcement Agencies (LEAs)
Better TomorrowTM, we launched modern oral nicotine for on spot detection of counterfeit products. This
pouches under the VELO brand with 73 Million initiative has been instrumental in curbing counterfeit
pouches sold in 2020. This enabled us to become incidence and has helped us retain sales and as a
the 6th biggest Modern Oral market within the BAT consequence increase Government revenues.
universe. Further, we also initiated setup of an
exclusive VELO factory which is a key milestone in our 4. EHS and Regulatory
ambition on becoming the primary export hub in Asia
Pacific and Middle East region. Compliance Projects
The Company places great importance on the safety
2. Simplification of its workplace to ensure that its operations are
safe, environmentally safe and regulatory compliant.
A key initiative undertaken in 2020 was simplification COVID-19 pandemic and its challenge to the health
of our processes to enable delivery of organizational and safety of our employees was handled in an
objectives in a “simpler”, “faster” and “stronger” organized and responsible manner during the year.
manner. This included creation of a central Company A dedicated ‘Crisis Management Team’ comprising
policy HUB for easy employee access and reference. of our leadership was formulated with the aim of
Company rewards disbursement process was also brainstorming risk mitigation strategies for crisis
revisited for greater automation with the aim of scenarios. Further, comprehensive standard operating
digitized recognition and quicker rewards delivery to procedures and ‘Zero Tolerance Policies’ were
nominated employees. Under digitization workstream, enforced, and Company-wide awareness sessions
cross functional teams initiated “We Connect” project were conducted to avoid COVID-19 contraction
which enables digitization of secured workspaces amongst our employees.
through smart meeting rooms, secured printing and
technology labs with the aim of becoming a one-stop As a result, we have invested and will continue to
solution platform for Company employees. invest in projects concerning improvement of our
EH&S systems, processes and equipment. These
3. Operational Synergies include trainings on health and safety, incident
reporting processes and systems, EH&S audits
and Product Innovations and maintenance programs to inculcate EH&S as a
Projects mindset and way of working across all levels within
the organization.
2020 was also a big year for our manufacturing
Projects Planned for Next Year

operations as both factories (Jhelum and Akora
Khattak) drove “Clean Energy” agenda with Jhelum
site doubling its solar generation capacity to 200kW, In future, the Company will remain focused on achieving
making it the highest renewable energy generating sustainable growth and creating long term value for its
site. Akora on the other hand achieved 2nd highest shareholders. We will continue to invest in our brands to
status in the BAT Group for recycling water whilst further strengthen our position in the marketplace and to
impeding CO2 emissions footprint by 850 tons. out perform the competition. This will be supplemented
by investment in our operations to support future product
We take great pride in accelerating our digital innovations, increase efficiencies and deliver productivity
transformation. IDT has now embarked on the savings, while remaining compliant to all applicable and
mission to infuse the digital DNA not just within the future regulatory requirements.
organization but also contribute externally. In one
such example, we introduced a technology enabled

STRATEGY AND
RESOURCE
ALLOCATION
CAPITAL WHAT WE DO
Financial Capital
Funds used to drive our strategic ambitions and OUR STRATEGY
support operations
Equity: Rs. 19.51 billion
Long term Debt: 0
Manufactured Capital SOURCE

Facilities and other physical infrastructure used in
manufacturing activities
Property, plant & equipment: Rs. 17.69 billion
INNOVATE
Human Capital
Skills, attitude and experience of employees
Number of employees: 1,038
Factory employees: 377
SCIENCE
Social and Relationship Capital
The stakeholder relations we have nurtured and rely
INSIGHTS
on to create sustainable value.
• Loyal Consumers • Distributors
• Retailers • Farmers
• Suppliers
Intellectual Capital
Knowledge, systems, standards and procedures
developed over the years
• Brand trademarks • Automated systems
• Product recipes
HOW WE WIN
• Inspirational foresights
Natural Capital • Remarkable innovation
Natural resources that are used in our value creation • Powerful brands
Local tobacco purchased in 2020: 29.4 million kgs • People and partnerships
98
Our strategy is the corner stone of the value creation process
and guides us to deliver sustainable value.
Our value creation model shows how we use our manufacturing

facilities, people, systems and relationships to create additional
value for our shareholders, employees, and other stakeholders.
OUTPUTS
Outputs
Cigarettes produced in 2020: 38.5 billion sticks
MANUFAC-
Shareholders
TURE
Profit after Tax: Rs. 16.49 billion
Earnings per share: Rs. 64.55
Dividend per share: Rs. 58 per share
Highest share price: Rs. 2,320 per share
MARKET
Employees
Salaries and Wages: Rs. 5.08 billion
SELL
Business Partners
Payments to tobacco farmers: Rs. 6.3 billion
Tax contributions
Tax, duties and other levies: Rs. 112 billion
OUR ETHOS
Community Investment
Free of cost saplings: 9 million
No. of patients treated for free: More than 50,000
BOLD FAST EMPOWERED DIVERSE RESPONSIBLE Water filtration plants: 5
Lift irrigation: More than 450 farmers
obtaining benefits

STATEMENT OF VALUE
GENERATED AND ITS
DISTRIBUTION
2020 2019
Rs. in million % Rs. in million %
Value Addition
Gross Revenues 166,258 149,025
Material, Services and Other Costs 30,636 24,406
Value added 135,622 124,618

Value Distribution Rs Rs
To Government
Taxes, duties and other levies 112,494 82.9% 105,069 84.3%
To Society
Contribution towards health, environment & natural disaster 266 0.2% 72 0.1%
To Employees
Salaries, benefits and other costs 5,080 3.7% 5,119 4.1%
To Shareholders
Dividend to shareholders 14,819 10.9% 12,264 9.8%
To Lenders
Mark-up/interest expense on borrowed money 241 0.2% 203 0.2%
Retained for Reinvestment
Depreciation and retained profit 2,722 2.0% 1,892 1.5%
135,622 100% 124,618 100%
*Gross revenue figure has been adjusted as per IFRS-15 methodology from 2017 and onwards. Certain marketing costs have been deducted from total revenues
Value Distribution Value Distribution

2020 2019
To Government 82.9% To Government 84.3%

To Society 0.2% To Society 0.1%
To Employees 3.7% To Employees 4.1%
To Shareholders 10.9% To Shareholders 9.8%
To Lenders 0.2% To Lenders 0.2%

Retained for Reinvestment 2.0% Retained for reinvestment 1.5%
Economic 2020 Economic 2019

Value Added 12,051 Rs. in Million Value Added 9,498 Rs. in Million
100
SHARE PRICE SENSITIVITY
ANALYSIS
Our share price is primarily impacted by the performance of the very difficult to find opportunities for business expansion.
Company in the marketplace, especially against the competition, This creates a sensitivity in share price of the Company.
and by its ability to generate value for its shareholders, both in
5. Social
the short and long term. Several factors influence the Company’s
performance, some of which are controllable as a result of
management action while others are beyond its control and thus, Pandemics such as the looming Covid threat also plays a
cannot be managed. These uncontrollable factors mostly relate major role in the overall performance of the economy of a
to the external regulatory environment in which the Company nation. Such pandemics have the potential to cause major
operates and has the potential to impact its performance and disruptions to the day to day operations of an economy or to
sustainability to a great extent. Key factors that impact the bring it to a halt. As has been witnessed globally, the stock
performance and resultantly, our share price are given below. markets are sensitive to such events which in turn impacts
investor confidence and causes volatility in the share prices
1. Duty Not Paid Sector of companies.
6. Raw Material Prices

Not only the Company but the legal tobacco industry as
a whole is impacted by the duty not paid sector, which
currently forms 37.6% of the total cigarette market. This Raw materials procured locally and internationally are
sector not only continues to sell cigarettes below the dependent on international commodity prices. Any unusual
minimum legal price, as stipulated by the local tax laws but spikes raise the cost of products manufactured, causing
also openly violates tobacco advertising and promotion profitability to be impacted and ultimately, reflecting in the
restrictions. As a result, the legal industry is placed at a share price.
serious disadvantage compared to the illicit sector, as the
price stretched consumer is encouraged to down trade
to cheap illicit products. This creates major sustainability 7. Local Currency Devaluation
issues for the legal industry and hence greatly impacts the
Having dependency on imported raw materials and
share price of the Company.
tobacco, the Company is greatly impacted by a steep and
uncertain devaluation of the local currency. This has the
2. Political Environment potential to increase the cost base and erode operating
margins. Rapid devaluation also causes inflationary
The investors are extremely sensitive to the political pressures to increase, which impact the real buying power
environment prevalent in the country. Political instability of the consumers, causing them to spend less on non-
not only jeopardizes overall economic conditions but also essential items.
discourages investors from investing their capital whereas a
stable political environment boosts investor confidence and
persuades him to invest his capital. Thus, these conditions 8. Energy
directly impact the share price changes.
Increase in electricity and gas tariffs increase the cost of
doing business. Additionally, electricity crisis causes the
3. Law and Order Company to spend on alternative sources to generate
electricity, which is more expensive. This is exacerbated
Like any other Company, we are impacted by the overall by the rise in cost of oil, as its impact spans across a
security environment of the country. As security concerns much broader spectrum. All these factors will ultimately be
increase, the Company must direct enormous amount of reflected in share price adjustment.
resources to ensure the protection of its assets, operations
and primarily the safety of its people. The resources Share Price Sensitivity
expended on enhancing security measures could easily
2,500
be used in expanding and improving the business. This 2,100
impacts profitability and hence is reflected in the share 1,800

price. 2,000
1,500
Share Price PKR
4. Economy
1,500
1,200
Volume
900
1,000
The general state of the economy plays a major role in the
performance of any Company. A flourishing economy results 600
500
in more disposable income and a higher standard of living 300
for its people. Ultimately, companies operating in such a
0.00
country have better prospects of growing their businesses 0
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
and delivering better returns to its shareholders. Whereas

businesses operating in slow or volatile economies find it Low High Volume

FORWARD LOOKING
STATEMENT
In 2020, Pakistan’s economy faced high degree of Besides, fiscal noncompliance, the illicit sector openly
uncertainty owing to the challenges posed by COVID-19 violates product advertising and promotion regulations.
pandemic. Frequent lockdowns to control the spread of This not only puts the legitimate industry at a serious
virus across the country impacted business and social disadvantage compared to the illicit sector but above
activities and as a consequence, Pakistan’s exports of $22.9 all adversely affects the government’s regulatory
Billion faced a decline of -6.8% compared to same period agenda towards tobacco control. Thus, it is evident
last year (SPLY). The Government made several targeted that the Company’s outlook will greatly be impacted by
interventions during the year aimed at enhancing economic the government’s efforts towards enforcing fiscal and
activity in the country. This was further augmented by State regulatory discipline on the illicit sector in the future.
Bank of Pakistan’s decision to reduce policy rates that
resulted in deceleration of inflation by 4.6% from a level of It is also important for the government to drive a
12.6% for SPLY. While addressing the economic challenges, balanced fiscal agenda to ensure the sustainability of
the Government is focused towards not only stabilizing the the legal industry. Historic data reveals that excise led
economy but also driving economic growth. price increases widen the price differential between
legal industry brands and duty not paid products,
Looking ahead, 2021 will be another challenging year for the which sell well below the minimum legal price. As the
Company as it will need to counter the challenges presented price differential widens, price stretched consumers
not only by a tough economic environment but also by the down trade to cheap illicit products available in the
unique dynamics of the tobacco industry. In the future, the market. Resultantly, legitimate industry starts to lose
Company aims to drive business growth by focusing on volumes to the illicit sector, creating major sustainability
delivering the following objectives and by countering the threats for the legitimate industry while at the same time
related challenges. government revenue collections start to experience a
steep decline.
1. Drive Growth Agenda Strengthen Portfolio Wide Brand

The Company’s strategic objective is to deliver
sustainable growth for its shareholders. To do this, the
Equity
Company will focus on increasing its volume base and The Company’s future actions are aligned towards
market share. further strengthening its brand portfolio. Future
marketing investment will be aimed at enhancing the
Challenges: brand equity of the Company’s brand portfolio amongst
consumers of all segments. This will be achieved
A) Illicit Trade through product innovations developed to address
The major impediment faced by the Company in driving the evolving consumer preferences and creation
volume growth is the high level of the illicit sector, which of maximum brand awareness through innovative
currently stands at 37.6%. The illicit sector thrives on campaigns directed at relevant and effective consumer
the back of non-tax paid cigarettes that sell below the touchpoints. This will aid the Company in building
minimum legal price, resulting in significant revenue a robust brand portfolio, enabling it to continuously
losses to the government exchequer and in major outperform the competition and lead in the marketplace.
sustainability issues for the legitimate industry players. By adhering to this plan, the Company will be well
Therefore, it is necessary for the relevant authorities to positioned to drive volume growth and gain market
intensify their efforts to eradicate the illicit sector and share. Thus, the Company remains confident to retain its
create a level playing field for the legitimate industry. market share leadership of the industry in the future.
This will not only enable the legal companies in driving
volume growth but also result in increasing tax revenues
for the government.
102
2. Drive Effective Resource is continuously being upgraded with the best EH&S
equipment, systems and processes to ensure a safe
Allocation and Cost working environment for all employees.
Management
The future will challenge the Company by pressuring its 4. Support ESG Agenda
large cost base due to growing inflationary pressures in In the future, the Company will continue to support
the economy and thus, the Company will take effective initiatives aimed at the betterment and uplift of
measures to mitigate the adverse impacts on its cost the communities in which the Company operates.
base. Additionally, other initiatives will also be supported to
continue driving the ESG agenda of the Company.
Challenges:
A) Currency Devaluation 5. Invest in Human Capital
It is expected that the local currency will remain weak To maintain its competitive advantage, the Company will
with minimal value appreciation, if any. As the Company continue investing in its people to develop a diverse and
imports some of its raw materials including tobacco highly competitive talent pool, fully capable of managing
globally, thus, it will be impacted adversely by unusual the future challenges of the business. Attracting,
currency movements, especially in the absence of developing and retaining the best talent will continue to
currency hedging products in local financial markets. be rooted in the organization.
This will ultimately lead to an increase in the cost base
and cause the operating margins to shrink. Analysis of Prior Period’s
Rapid devaluation also adds to inflationary pressures Forward Looking Disclosure
and dilutes the real buying power of the consumers, The Company anticipated 2020 to be a challenging year
forcing them to spend less on non-essential items with illicit trade and currency devaluation remaining a major
including cigarettes, impacting the overall industry sales. threat for the legitimate industry players. The illicit sector still
remains very high, forming around 37.6% of the total market
Therefore, the Company will need to take effective and continues to remain a major threat to the sustainability of
measures to mitigate the impact of currency devaluation the legitimate industry.
in the future.
In 2020, the Company lost volumes, however, it successfully
3. Drive Operating and mitigated the inflationary impacts on its cost base. As a
result, the Company was able to deliver a growth of 28% vs
Manufacturing Efficiencies 2019 in its profits in line with the expectations.
In the future, the Company will continue to invest in
enhancing its operating and manufacturing efficiencies. Sources of Information
This will be achieved through investment in modern
and upgraded equipment and machinery that not In the preparation of budgets, a detailed and comprehensive
only delivers better efficiencies but is also capable of budgeting activity is carried out across the Company. Sales
supporting future product innovations, necessary to forecasts are prepared based on the critical analysis of
maintain competitive advantage in the marketplace. the market demand. Costs are projected based on the
expected commodity prices, currency devaluation and future
The Company is already geared to cater for any inflation. Based on these assumptions, detailed forecasts
surge in market demand. At the same time, the are prepared, which are then approved by the Board of
Company is committed to investing in its machinery Directors. Performance of the Company is then regularly
footprint to ensure compliance to any future regulatory monitored against these forecasts.
requirements. Additionally, the operating infrastructure

FINANCIAL CALENDAR
2020
1st Quarter Results issued on May 7, 2020
2nd Quarter Results issued on July 24, 2020
3rd Quarter Results issued on October 23, 2020
Recommendation of Annual Results by the BOD February 23, 2021
74th Annual General Meeting scheduled for April 22, 2021
2019
1st Quarter Results issued on April 22, 2019
2nd Quarter Results issued on July 23, 2019
3rd Quarter Results issued on October 17, 2019
Recommendation of Annual Results by the BOD February 24, 2020
73rd Annual General Meeting held on May 8, 2020
MANAGEMENT RESPONSIBILITY
TOWARDS FINANCIAL
STATEMENTS
The management of the Company is responsible for adopting sound accounting policies, establishing and maintaining a
system of internal controls and preparation and presentation of the financial statements in conformity with the approved
accounting standards and the requirements of the Companies Act, 2017.
STATEMENT OF UNRESERVED
COMPLIANCE
Company’s financial statements have been prepared in accordance with the approved accounting standards as
applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards
(IFRSs) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Act, 2017.
In case requirements differ, the provisions or directives of the Companies Act, 2017, shall prevail.
Note 6 of the financial statements specifies the standards and interpretations which are yet to be effective in Pakistan.
The Company believes that these standards and interpretations do not have any material impact on the financial
statements.
104
STATEMENT OF ADHERENCE
WITH THE INTEGRATED
REPORTING FRAMEWORK
Our history of 73 years is a testament of our strong This report endeavours to provide key information about the
foundation, leadership and resilience. Being the legal below critical aspects of our business, thereby, enabling the
industry market leader, our remarkable success is a reflection reader to easily understand the key challenges faced by the
that we hold true to our core business values, adhere to company in generating value for its shareholders and key
a robust governance framework and operate through a stakeholders.
streamlined set of systems & processes. We engage and
cooperate with our employees, suppliers, valued business 1. Organizational Overview And External Environment
partners and other key stakeholders to ensure integrated
2. Business Model
functioning and effective utilization of our resources across
our value chain, to generate value for the organization, key 3. Risks and Opportunities
stakeholders and our shareholders. 4. Strategy and Resource Allocation
5. Performance
We adopt a similar integrated approach towards corporate
reporting and thus, our Annual Report presents a fair, 6. Governance
accurate, balanced and valuable overall assessment of the 7. Basis of Presentation
company, particularly its strategy, performance, operations,
brands, people and most importantly, its outlook in relation to 8. Outlook
the operating challenges faced by it. This report will enable
the readers to swiftly and easily understand the material Report Methodology
issues that impact our business and key stakeholders.
The compilation of data has been done on the basic
In the preparation of this report, the company has tried to scientific measurement, key finance concepts and principles
adhere to the guiding principles stipulated by the integrated and mathematical calculus methods on actual basis. In cases
reporting framework. These include. where actual data is unavailable or impractical to source, due
to numerous reasons, different logical methodologies are
1. Strategic focus and future orientation used for calculations. The data measurement techniques are
the same as used for the previous year.
2. Connectivity of information
3. Stakeholder relationships There has been no change in the reporting period, scope
and boundary of the report. There are no changes that can
4. Materiality
significantly affect the comparability of data from period
5. Conciseness to period. Previous years’ figures have been regrouped/
6. Reliability and completeness rearranged wherever found necessary to conform to this
year’s classification.
7. Consistency and comparability

NOTICE OF THE ANNUAL
GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Seventy Fourth (74th) Annual General Meeting
(“Meeting”) of Pakistan Tobacco Company Limited (“the Company”) will be held
physically at the Serena Hotel, Khayaban-e- Suhrwardy, Islamabad as well as
electronically on Thursday, the 22nd day of April 2021 at 10:30 am to transact the
following business:
ORDINARY BUSINESS:
1. To receive, consider and adopt the Company’s Audited Financial Statements for the year ended 31st day of
December 2020, together with the Reports of the Directors and Auditors thereon.
2. To approve and to declare Final Dividend for the year ended 31st December 2020 on the Ordinary Shares of the
Company as recommended by the Board.
3. To appoint Auditors and to fix their remuneration
BY THE ORDER OF THE BOARD
Islamabad: March 30, 2021 Sami Zaman COMPANY SECRETARY
NOTES:
April 2021, will be treated in time to be entitled to
1. Annual Report
attend and vote and for the entitlement of dividend
A soft copy (CD) of the Annual Report for the year payment.
ended 31.12.2020 is being sent to the shareholders
at their given addresses and posted for download
3. Participation in the Annual General
on our website www.ptc.com.pk. Shareholders who
wish to obtain a hard copy of the annual report are
Meeting
requested to inform us at PTC_AGM@bat.com, a All Members/Shareholders of the Company are
hard copy of the Annual Report will be duly sent to entitled to attend and vote at the Meeting.
them.
4. Attendance of Members
2. Closure of Share Transfer Books A. In view of the Circular No: 4 of 2021, dated
Share Transfer Books of the Company will be closed 15th February 2021, issued by the Securities &
from 16th April 2021 to 22nd April 2021 (both days Exchange Commission of Pakistan (SECP), the
inclusive) when no transfer of the Company’s shares Company is convening this AGM physically as well as
will be accepted for registration. Transfers in good electronically through video link arrangements.
order, received at the office of the Company’s
Share Registrar, FAMCO Associates (Private) i) Members can log-in through their smartphones
Limited, 8-F, Near Hotel Faran, Nursery, Block-6, or computer devices to the video link
P.E.C.H.S., Shahrah-e-Faisal, Karachi-75400 (“the arrangements after completing the meeting
Share Registrar”) by the close of business on 15th attendance formalities that will be provided to
106
the Members after completing identification i) Proxy Form. Soft copy of the proxy form has
and verification formalities. The Members are been posted on our website www.ptc.com under
requested to provide their name, CNIC (both the section Investor Relations. The scanned copy
sides scanned copies), folio / CDC account of the filled form must be sent at the following
number, cell phone number and email address email address: zeeshan.akhtar@famco.com.pk,
by 20th April, 2021 at the following email not less than forty-eight (48) hours before the
address: PTC_AGM@bat.com.The details of time of the Meeting. Proxy Form(s) received after
the video link arrangements of the AGM will be the said forty-eight (48) hours i.e. after 10:30 am
sent only to those Members who provide the on 20th April 2021 will not be treated as valid.
aforementioned details by the said date and
time. ii) Attested copies of valid CNIC or the valid
Passport of the beneficial owners and the Proxy
ii) In addition, if the participating Members also
shall be furnished with the Proxy Form.
have any comments/suggestions for discussion
on the agenda items of the AGM they should
email the same at the above-mentioned email iii) In case of a corporate entity, the Board of
address, PTC_AGM@bat.com, by 20th April Directors’ Resolution/Power of Attorney with
2021. Only those comments/suggestions on specimen signatures and attested copy of valid
the agenda items will be discussed at the AGM CNIC of the person nominated by the corporate
which have been received on the aforesaid email entity to represent and vote on its behalf, shall be
address by the said date and time. submitted.
iii) The Company will ensure that comments/

5. Submission Of CNIC/NTN Details
suggestions of the Members, submitted in
accordance with clause (ii) above, will be read Mandatory
out at the meeting by the Company Secretary A. Members who have not yet submitted a copy of their
and the responses will be made part of the valid CNIC or valid Passport to the Company, are
minutes of the meeting. once again reminded to send the same at the earliest
either to the Company or to the Share Registrar. The
B. In Person: CNIC number /NTN details is mandatory and is also
required for checking the tax status as per the Active
i) Individual members must bring their participant’s
Taxpayers List (ATL) issued by the Federal Board of
ID number and account/sub-account number
Revenue (FBR) from time to time.
along with original Computerized National
Identity Card (CNIC) or original Passport at the B. Individual Members (including all joint holders)
time of attending the Meeting. holding physical share certificates of the Company
are therefore requested to submit a copy of their
ii) In the case of corporate entity, presentation
valid CNIC to the Company or its Share Registrar
of a certified copy of the Board of Directors’
if not already provided. The shareholders while
Resolution/Power of Attorney with specimen
sending CNIC must quote their respective folio
signatures of the nominee at the time of the
numbers.
Meeting.
C. In cases of non-receipt of the copy of a valid CNIC,
the Company would be constrained under Section
C. Attendance Through Proxy:
243 (3) of the Companies Act, 2017 (“the Companies
A Member is entitled to appoint a proxy (who need Act”) to withhold divided of such shareholders.
not be a Member of the Company) who will have
the right to attend, speak and vote in place of the
appointing Member, physically as well as through
video link. The Proxy shall be appointed in the
following manner:

of Federal Board of Revenue (FBR), despite the
6. Dividend, Provision of IBAN, fact that they are filers, are advised to immediately
Mandatory make sure that that their names are entered in ATL,
It is mandatory for a listed company to pay cash otherwise tax on their cash dividend will be deducted
dividend to its shareholders only through electronic @ 30% instead of 15%.
mode by making direct remittance into their B. Withholding Tax exemption from the dividend income
respective bank account designated by the entitled shall only be allowed to a corporate shareholder if
shareholder(s) (“the Bank Account”), whose title a copy of valid tax exemption certificate is made
must commence with the principal shareholder’s available to the Company’s Share Registrar, FAMCO
name. Therefore, the Company will be remitting the Associates (Pvt) Ltd., by the first day of Book
dividend proceeds directly into the Bank Accounts Closure.
of its Member, instead of issuing physical Dividend
Warrants. In order to receive dividends directly C. Further, according to clarification received from FBR,
into their Bank Account, Members holding shares Withholding Tax will be determined separately on
in physical form are requested to submit their ‘Filer/Non-Filer’ status of Principal Shareholder as
International Bank Account Number (IBAN) using well as joint holder(s) based on their shareholding
the “Electronic Credit Mandate Form”, available on proportions, in case of joint accounts.
Company’s website i.e. www.ptc.com.pk. Please, fill
and send the completed Form along with a copy of a In this regard, all Members/Shareholders of the
valid CNIC to the Share Registrar of the Company at Company either holding shares in physical form
info.shares@famco.com.pk latest by 15th April 2021. or in CDC, who hold shares jointly are requested
Members who hold shares in CDC accounts should to provide shareholding proportions of Principal
provide their mandate to their respective participant Shareholder and Joint-holder(s) in respect of shares
or CDC Investor Account Services. Shareholders held by them (only if not already provided) to our
already receiving direct credit of dividend in their Share Registrar, in writing and in the following
bank account need not send the Electronic Credit manner:
Mandate Form again. Principal Shareholder Joint Shareholder
Company Folio/CDC Total
Shareholding Shareholding
Name Account # Shares Name &
Proportion Name & CNIC # Proportion
CNIC #
7. Deduction of Income Tax from (No. of Shares) (No. of Shares)
Dividend Mandatory:
A. Please note that withholding tax will be deducted The required information must reach the Company’s
on the basis of latest Active Taxpayers List (ATL) Share Registrar within ten (10) days of this notice;
available at FBR website as per following rates: otherwise it will be assumed that the shares are
equally held by Principal Shareholder and Joint
1. Shareholders appearing in Active Taxpayers List Holder(s).
(ATL): 15%
D. The corporate shareholders of the Company having
2. Shareholders not appearing in Active Taxpayers CDC accounts are required to have their National
List (ATL): 30% Tax Number (NTN) updated with their respective
To enable the Company to make tax deduction on participants or Investor Account Services of CDC,
the amount of cash dividend @ 15% instead of 30%, with whom their shares are placed, whereas
shareholders whose names are not appearing in the corporate physical shareholders should send a copy
Active Tax-payers List (ATL) provided on the website of their NTN certificate to either the Company or the
108
Share Registrar. The shareholders while sending NTN
or NTN certificates, as the case may be, must quote
11. Change of Address:
company name and their respective folio numbers. A. Members holding shares in physical form are
requested to immediately notify the Company’s Share
8. Zakat Deduction: Registrar of changes in their notified address.
To claim exemption from compulsory deduction B. Members holding shares in electronic form with CDC
of Zakat, shareholders are requested to submit a must notify change of address to their participants
notarised copy of their Zakat Declaration Form “CZ- or CDC Investor Account Services with whom their
50” on NJSP of Rs. 50/- to the Share Registrar. shares are placed.
9. E-Voting: 12. Contact Details:

Members can exercise their right to demand a poll Company Contact:
subject to meeting requirements under Sections Company Secretary
143-145 of Companies Act and applicable clauses of
Companies (Postal Ballot) Regulations 2018. Pakistan Tobacco Company Limited
Serena Business Complex, Khayaban-e-Suhrwardy,
10. Unclaimed Dividend / Shares U/S 244 Islamabad
of the Companies Act, 2017: + 92 51 2083200
An updated list for unclaimed dividend / shares of Share Registrar:
the Company is available on the Company’s website FAMCO Associates (Private) Limited
www.ptc.com.pk. These are unclaimed dividend /
shares which have remained unclaimed or unpaid 8-F, Near Hotel Faran, Nursery, Block-6, P.E.C.H.S.
for a period of three years from the date these have Shahrah-e-Faisal, Karachi
become due and payable.
+ 92 21 34380101-5
Claims can be lodged by shareholders on Claim
info.shares@famco.com.pk
Forms as are available on the Company’s website.
Claims Forms must be submitted to the Company’s
Share Registrar for receipt of dividend/ shares.

STATEMENT OF COMPLIANCE
With the Code of Corporate Governance
Name of Company: Pakistan Tobacco Company Limited

Year ended: December 31, 2020
The Company has complied with the requirements of the 3. The directors have confirmed that none of them
Regulations in the following manner: is serving as a director on more than seven listed
companies, including this Company;
1. Total number of Directors are twelve as per the
following: 4. The Company has prepared a code of conduct and
has ensured that appropriate steps have been taken
to disseminate it throughout the Company along with
11 Male 1 Female
its supporting policies and procedures;
2. The Board’s composition is as follows:
5. The Board has developed a vision/mission statement,
Independent Directors overall corporate strategy and significant policies of
the Company. The Board has ensured that complete
Zafar Mahmood (Chairman) record of particulars of significant policies along with
Lt. Gen. M. Masood Aslam (R) their date of approval or updating is maintained by
the Company;
Mohammad Riaz
Asif Jooma 6. All the powers of the Board have been duly exercised
and decisions on relevant matters have been taken
by the Board / shareholders as empowered by the
Non- Executive Directors relevant provisions of the Act and these Regulations;
Tajamal Shah 7. The meetings of the Board were presided over by

Belinda Joy Ross the Chairman and, in his absence, by a director
elected by the Board for this purpose. The Board
Zafar Aslam Khan
has complied with the requirements of Act and the
Syed Javed Iqbal Regulations with respect to frequency, recording and
circulating minutes of the meeting of the Board;
Executive Directors 8. The Board have a formal policy and transparent

procedures for remuneration of directors in
Usman Zahur (Managing Director and CEO)
accordance with the Act and these Regulations;
William Francis Pegel
9. The board has arranged Directors’ Training Program
Syed Asad Ali Shah for the following:
Syed Ali Akbar
1. Mr. Usman Zahur
2. Mohmmad Riaz
Female Directors 3. Syed Ali Akbar
Belinda Joy Ross
110
10. The Board has approved appointment of Chief b) HR and Remuneration Committee: One (1)
financial officer, company secretary and head of meeting was held during the year ended 31
internal audit, including their remuneration and terms December 2020.
and conditions of employment and complied with
relevant requirements of the Regulations; 15. The Board has set up an effective internal audit
function staffed with members who are suitably
11. Chief Financial Officer and Chief Executive Officer qualified and experienced for the purpose and are
duly endorsed the financial statements before conversant with the policies and procedures of the
approval of the Board; Company;
12. The Board has formed Committees comprising of 16. The statutory auditors of the Company have
members given below: confirmed that they have been given a satisfactory
rating under the Quality Control Review program
a) Audit Committee of the Institute of Chartered Accountants of
Pakistan and registered with Audit Oversight
Mohammad Riaz Member & Chairman
Board of Pakistan, that they and all their partners
Lt. Gen. M. Masood are in compliance with International Federation of
Member
Aslam (R) Accountants (IFAC) guidelines on code of ethics as
adopted by the Institute of Chartered Accountants
Belinda Joy Ross Member
of Pakistan and that they and the partners of the firm
Tajamal Shah Member
involved in the audit are not a close relative (spouse,
Asif Jooma Member parent, dependent and non-dependent children) of
the chief executive officer, chief financial officer, head
of internal audit, company secretary or director of
b) HR and Remuneration Committee
the Company;
Lt. Gen. M. Masood
Member & Chairman
Aslam (R) 17. The statutory auditors or the persons associated
with them have not been appointed to provide other
Usman Zahur Member
services except in accordance with the Act, these
Asif Jooma Member Regulations or any other regulatory requirement and
the auditors have confirmed that they have observed
13. The terms of reference of the aforesaid Committees IFAC guidelines in this regard;
have been formed, documented and advised to the
Committees for compliance; 18. We confirm that all requirements of regulations 3, 6,
7, 8, 27,32, 33 and 36 of the Regulations have been
14. The frequency of meetings (quarterly/half yearly/ complied with.
yearly) of the Committees were as per the following:
a) The Audit Committee: Four (4) quarterly meetings

were held during the year ended 31 December
2020
Zafar Mehmood Chairman Usman Zahur MD/CEO
Dated: 24 February 2021

INDEPENDENT AUDITORS’
REVIEW REPORT
To the members of Pakistan Tobacco Company Limited
Review Report on the Statement of Compliance contained
in Listed Companies (Code of Corporate Governance)
Regulations, 2019
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance)
Regulations, 2019 (the Regulations) prepared by the Board of Directors of Pakistan Tobacco Company Limited for the
year ended December 31, 2020 in accordance with the requirements of regulation 36 of the Regulations.
The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our
responsibility is to review whether the Statement of Compliance reflects the status of the Company’s compliance with
the provisions of the Regulations and report if it does not and to highlight any non-compliance with the requirements of
the Regulations. A review is limited primarily to inquiries of the Company’s personnel and review of various documents
prepared by the Company to comply with the Regulations.
As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to
consider whether the Board of Directors’ statement on internal control covers all risks and controls or to form an opinion
on the effectiveness of such internal controls, the Company’s corporate governance procedures and risks.
The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit
Committee, place before the Board of Directors for their review and approval, its related party transactions. We are only
required and have ensured compliance of this requirement to the extent of the approval of the related party transactions
by the Board of Directors upon recommendation of the Audit Committee.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance
does not appropriately reflect the Company's compliance, in all material respects, with the requirements contained in the
Regulations as applicable to the Company for the year ended December 31, 2020.
KPMG Taseer Hadi & Co.

Chartered Accountants
Islamabad
29th March 2021
112
PAKISTAN TOBACCO COMPANY LIMITED
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
INDEPENDENT AUDITORS’ REPORT
Report on the Audit of the Financial Statements

Opinion
We have audited the annexed financial statements of Pakistan Tobacco Company Limited (the Company), which comprise the
statement of financial position as at December 31, 2020 and the statement of profit or loss, and the statement of comprehensive
income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory information, and we state that we have
obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of
the audit.
In our opinion and to the best of our information and according to the explanations given to us, the statement of financial position,
statement of profit or loss, the statement of comprehensive income, the statement of changes in equity and the statement of cash
flows together with the notes forming part thereof conform with the accounting and reporting standards as applicable in Pakistan
and give the information required by the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give a
true and fair view of the state of the Company’s affairs as at December 31, 2020 and of the profit, the comprehensive income, the
changes in equity and its cash flows for the year then ended.
Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of
Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
114
Following are the Key audit matters:
S. No. Key audit matters How the matter was addressed in our audit
1 Revenue recognition Our audit procedures to assess the recognition of revenue,
amongst others, included the following:
Refer notes 7.1 and 8 to the financial statements.
• Obtaining an understanding of the process relating
The Company is engaged in the production and sale of
to recognition of revenue and testing the design,
tobacco and tobacco products. The Company recognized net
implementation and operating effectiveness of key
revenue from the sales of cigarettes/tobacco of Rs 60,891
internal controls over recording of revenue;
million for the year ended December 31, 2020.
• Comparing a sample of revenue transactions recorded
We identified recognition of revenue as a key audit matter during the year with sales orders, sales invoices,
because revenue is one of the key performance indicator of delivery documents and other relevant underlying
the Company and gives rise to an inherent risk that revenue documents;
could be subject to misstatement to meet expectations or
targets.
around the year- end with the sales orders, sales
invoices, delivery documents and other relevant
underlying documentation to assess if the related
revenue was recorded in the appropriate accounting
period;
• Assessing whether the accounting policies for revenue

recognition complies with the requirements of IFRS 15
‘Revenue from Contracts with Customers’;
• Comparing the details of a sample of journal entries

posted to revenue accounts during the year, which met
certain specific risk-based criteria, with the relevant
underlying documentation; and
• Assessing the appropriateness of disclosures in the

2 Valuation of stock-in-trade Our audit procedures to assess the valuation of stock-in
trade, amongst others, included the following:
Refer notes 7.12 and 20 to the financial statements.
• Assessing the design, implementation and operating
As at 31 December 2020, stock-in-trade is stated at Rs
effectiveness of key internal controls over valuation of
19,483 million. Stock-in-trade is measured at the lower of cost
stock-in-trade including determination of net realizable
and net realizable value.
values;
We identified existence and valuation of stock-in-trade as
• Attending inventory counts and reconciling the count
a key audit matter due to its size, representing 43% of total
results to the inventory listings;
assets of the Company as at December 31, 2020, and the
judgment involved in valuation. • Assessing the accuracy of cost of stock in trade in
accordance with the accounting policy;
• Assessing the net realizable value of stock-in-trade by

comparing, on a sample basis, management’s estimation
of future selling prices for the products and selling prices
achieved subsequent to the end of the reporting period;
and
• Comparing the net realizable value to the cost of a sample

of stock-in-trade and comparison to the associated
provision to assess whether stock-in-trade provisions are
complete.

Information Other than the Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. Other information comprises the information included in the annual report
for the year ended December 31, 2020, but does not include the financial statements and our auditors’ report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the
accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017 (XIX of 2017) and for
such internal control as management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Board of directors are responsible for overseeing the Company’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are
116
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’
report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements

Based on our audit, we further report that in our opinion:
a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
b) the statement of financial position, the statement of profit or loss, the statement of comprehensive income, the statement of
changes in equity and the statement of cash flows together with the notes thereon have been drawn up in conformity with
the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;
c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company’s
business; and
d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the company and
deposited in the Central Zakat Fund established under section 7 of that Ordinance.
The engagement partner on the audit resulting in this independent auditors’ report is Atif Zamurrad Malik.

29th March 2021 Chartered Accountants
Islamabad

STATEMENT OF PROFIT OR LOSS
For the year ended December 31, 2020
2020 2019
Note Rs ‘000 Rs ‘000
Gross turnover 8 166,258,483 149,024,648

Excise duties (80,907,579) (74,741,489)
Sales tax (24,460,393) (22,308,263)
Net turnover 60,890,511 51,974,896

Cost of sales 9 (29,328,821) (25,764,813)
Gross profit 31,561,690 26,210,083

Selling and distribution costs 10 (5,015,427) (4,666,122)
Administrative expenses 11 (3,357,904) (2,780,245)
Other operating expenses 12 (2,091,229) (1,871,999)
Other income 13 748,598 783,182
(9,715,962) (8,535,184)
Operating profit 21,845,728 17,674,899

Finance income 782,866 812,571
Finance cost 14 (240,699) (202,553)
Net finance income 542,167 610,018
Profit before income tax 22,387,895 18,284,917

Income tax expense 15 (5,895,405) (5,395,688)
Profit for the year 16,492,490 12,889,229

Earnings per share (basic and diluted)- (Rupees) 16 64.55 50.45

The annexed notes 1 to 42 form an integral part of these financial statements.
Usman Zahur William Pegel

Chief Executive Officer Chief Financial Officer / Director
118
STATEMENT OF COMPREHENSIVE INCOME
2020 2019
Other comprehensive income:
Items that will not be reclassified to profit or loss

- Remeasurement loss on defined benefit pension
and gratuity plans 33 (636,405) (144,170)

- Tax credit related to remeasurement loss on
defined benefit pension and gratuity plans 15.2 184,557 43,873
(451,848) (100,297)
Total comprehensive income for the year 16,040,642 12,788,932



STATEMENT OF FINANCIAL POSITION
2020 2019
Non current assets
Property, plant and equipment 17 15,101,755 12,322,830

Advance for capital expenditure 716,864 175,783
Long term investment in subsidiary company 18 5,000 5,000
Long term deposits and prepayments 19 27,720 30,759
15,851,339 12,534,372
Current assets
Stock-in-trade 20 19,482,676 21,422,543

Stores and spares 21 678,900 663,999
Trade debts 22 1,392 4,260
Loans and advances 23 335,205 125,644
Short term prepayments 76,415 15,921
Other receivables 24 1,336,336 2,131,912
Short term investments 25 6,401,215 3,001,058
Cash and bank balances 26 842,296 535,905
29,154,435 27,901,242
Current liabilities
Trade and other payables 27 19,202,867 16,295,217

Other liabilities 28 2,073,866 2,865,822
Lease liability 30 678,730 382,941
Unpaid dividend 31 84,856 66,740
Unclaimed dividend 77,381 78,235
Accrued interest / mark-up 583 18,859
Current income tax liabilities 912,236 449,395
(23,030,519) (20,157,209)
Net current assets 6,123,916 7,744,033
Non current liabilities
Lease liability 30 (1,573,892) (1,341,607)

Deferred income tax liabilities 32 (888,506) (645,943)
(2,462,398) (1,987,550)
Net assets 19,512,857 18,290,855
Share capital and reserves
Share capital 34 2,554,938 2,554,938

Revenue reserve - Unappropriated profit 16,957,919 15,735,917
19,512,857 18,290,855
Contingencies and commitments 35

120
STATEMENT OF CHANGES IN EQUITY
Share Revenue Reserve - Total

capital unappropriated
profit
Rs ‘000 Rs ‘000 Rs ‘000
Balance at January 1, 2019 2,554,938 15,210,686 17,765,624
Total Comprehensive income for the year:
Profit for the year – 12,889,229 12,889,229

Other comprehensive loss for the year – (100,297) (100,297)
Total Comprehensive income for the year – 12,788,932 12,788,932

Transactions with owners of the Company:
Final dividend of Rs 22.00 per share relating to the

year ended December 31, 2018 – (5,620,863) (5,620,863)
Interim dividend of Rs 13.00 per share relating to the
Total transactions with owners of the Company – (12,263,701) (12,263,701)
Balance at December 31, 2019 2,554,938 15,735,917 18,290,855

Total comprehensive income for the year – 16,040,642 16,040,642





STATEMENT OF CASH FLOWS
2020 2019
Cash generated from operations 39 27,923,964 14,361,234

Finance cost paid (258,975) (182,149)
Income tax paid (5,005,444) (5,271,843)
Contribution to retirement benefit funds (444,152) (342,950)
Net cash generated from operating activities 22,215,393 8,564,292

Purchases of property, plant and equipment (3,659,936) (2,731,002)

Advance for capital expenditure (541,081) 783,657
Proceeds from sale of property, plant and equipment 226,567 299,933
Interest received 782,866 812,571
Net cash used in investing activities (3,191,584) (834,841)

Dividends paid (14,801,378) (12,400,182)

Lease payments (515,883) (709,437)
Net cash used in financing activities (15,317,261) (13,109,619)
Net increase in cash and cash equivalents 3,706,548 (5,380,168)

Cash and cash equivalents at beginning of year 3,536,963 8,917,131
Cash and cash equivalents at end of year 7,243,511 3,536,963

7,243,511 3,536,963


122
NOTES TO THE FINANCIAL STATEMENTS
1 Corporate and general Information
The Company and its operations
Pakistan Tobacco Company Limited (the Company) is a public limited company incorporated in Pakistan on November 18, 1947
under the Companies Act, 1913 (now the Companies Act, 2017) and its shares are quoted on the Pakistan Stock Exchange Limited.
The Company is a subsidiary of British American Tobacco (Investments) Limited, United Kingdom, whereas its ultimate parent
company is British American Tobacco p.l.c, United Kingdom. The Company is engaged in the manufacture and sale of cigarettes/
tobacco.
The registered office of the Company is situated at Serena Business Complex, Khayaban-e-Suharwardy, Islamabad, Pakistan. The
Company has two manufacturing plants located at Akora Khattak and Jhelum.
These financial statements are the separate financial statements of the Company. Consolidated financial statements are prepared
separately.
Capacity and production
Against an estimated manufacturing capacity of 45,330 million cigarettes (2019: 53,381 million cigarettes) actual production was
39,113 million cigarettes (2019: 39,469 million cigarettes). The split from each industrial unit is given below.
Manufacturing Capacity
2020 2019
Site (Units in Millions) (Units in Millions)
Akora Khattak Factory 21,412 27,407

Jhelum Factory 23,918 25,974
Total 45,330 53,381
Actual Production
2020 2019

Total 39,113 39,469
Actual production is less than the installed capacity due to market demand. Capacity has been also reduced due to reduction in
demand.

Number of employees
Total number of employees as at December 31, 2020 were 1,038 (2019: 1,127). Out of the total number of employees, the number
of factory employees as at December 31, 2020 were 377 (2019: 483). Average number of employees during the year were 1,059
(2019: 1,101), whereas average factory employees during the year were 411 (2019: 458).
Impact of COVID-19
During the year ended 31 December 2020, the COVID-19 pandemic emerged which impacted the economy of country in general,
however the Company has not experienced any major disruptions to the operations or decline in revenue due to temporary lockdown
imposed by the Government to counter COVID-19 outbreak.

2 Statement of compliance
These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in
Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:
– International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards Board
(IASB) as notified under the Companies Act, 2017; and
– Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the provisions of and
directives issued under the Companies Act, 2017 have been followed.
3 Basis of measurement
These financial statements have been prepared under the historical cost convention except as otherwise stated in the respective
accounting policies notes.
4 Functional and presentation currency
Items included in these financial statements are measured using the currency of the primary economic environment in which the
Company operates (the functional currency), which is the Pakistan rupee (Rs).
5 Use of estimates and judgements
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application
of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
recognized, prospectively.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
• Note 8 – Nature and timing of satisfaction of performance obligation and revenue recognition
• Note 17 – useful lives, residual values and depreciation method of property, plant and equipment
• Note 20 and 21 – Provision for obsolescence of stock in trade and stores and spares
• Notes 15 and 32 – Provision for income tax and calculation of deferred tax
• Note 33 – Retirement benefits
• Note 36 – Financial instruments – fair values
• Note 35 – Contingencies
• Note 30 - Leases
Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair vales, for both financial and non-
financial assets and liabilities.
Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to
measure fair values, then management assesses the evidence obtained from the third parties to support its conclusion that these
valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified.
When measuring fair value of an asset or a liability, the Company uses observable and available market data as far as possible. Fair
values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
124
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1, which are observable and available for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable and available market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level of input that is significant
to the entire measurement. The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
6 New accounting standards, amendments and IFRIC interpretations that are not yet effective
The following International Financial Reporting Standards (IFRS Standards) as notified under the Companies Act, 2017 and the
amendments and interpretations thereto will be effective for accounting periods beginning on or after 01 January 2021:
• COVID-19-Related Rent Concessions (Amendment to IFRS 16) - the International Accounting Standards Board (the
Board) has issued amendments to IFRS 16 (the amendments) to provide practical relief for lessees in accounting for
rent concessions. The amendments are effective for periods beginning on or after 1 June 2020, with earlier application
permitted. Under the standard’s previous requirements, lessees assess whether rent concessions are lease modifications
and, if so, apply the specific guidance on accounting for lease modifications. This generally involves remeasuring the lease
liability using the revised lease payments and a revised discount rate. In light of the effects of the COVID-19 pandemic,
and the fact that many lessees are applying the standard for the first time in their financial statements, the Board has
provided an optional practical expedient for lessees. Under the practical expedient, lessees are not required to assess
whether eligible rent concessions are lease modifications, and instead are permitted to account for them as if they were not
lease modifications. Rent concessions are eligible for the practical expedient if they occur as a direct consequence of the
COVID-19 pandemic and if all the following criteria are met:
– the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than,
the consideration for the lease immediately preceding the change;
– any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
– there is no substantive change to the other terms and conditions of the lease.
The standard is not likely to have any effect on Company’s financial statements.
• Interest Rate Benchmark Reform - Phase 2 which amended IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 is applicable
for annual financial periods beginning on or after 1 January 2021, with earlier application permitted. The amendments
introduce a practical expedient to account for modifications of financial assets or financial liabilities if a change results
directly from IBOR reform and occurs on an ‘economically equivalent’ basis. In these cases, changes will be accounted for
by updating the effective interest rate. A similar practical expedient will apply under IFRS 16 for lessees when accounting
for lease modifications required by IBOR reform. The amendments also allow a series of exemptions from the regular,
strict rules around hedge accounting for hedging relationships directly affected by the interest rate benchmark reforms. The
amendments apply retrospectively with earlier application permitted. Hedging relationships previously discontinued solely
because of changes resulting from the reform will be reinstated if certain conditions are met. The standard is not likely to
have any effect on Company’s financial statements.
• Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) effective for the annual period beginning on
or after 1 January 2022 amends IAS 1 by mainly adding paragraphs which clarifies what comprise the cost of fulfilling a
contract, Cost of fulfilling a contract is relevant when determining whether a contract is onerous. An entity is required to
apply the amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting
period in which it first applies the amendments (the date of initial application). Restatement of comparative information is not
required, instead the amendments require an entity to recognize the cumulative effect of initially applying the amendments
as an adjustment to the opening balance of retained earnings or other component of equity, as appropriate, at the date of
initial application. The standard is not likely to have any effect on Company’s financial statements.

• Annual Improvements to IFRS standards 2018-2020:
The following annual improvements to IFRS standards 2018-2020 are effective for annual reporting periods beginning on or
after 1 January 2022.
– IFRS 9 - The amendment clarifies that an entity includes only fees paid or received between the entity (the borrower) and
the lender, including fees paid or received by either the entity or the lender on the other’s behalf, when it applies the ‘10 per
cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial liability.
– IFRS 16 - The amendment partially amends Illustrative Example 13 accompanying IFRS 16 by excluding the illustration
of reimbursement of leasehold improvements by the lessor. The objective of the amendment is to resolve any potential
confusion that might arise in lease incentives.
– IAS 41 - The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows
when measuring the fair value of a biological asset using a present value technique.

– Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) effective for the annual period
beginning on or after 1 January 2022. Clarifies that sales proceeds and cost of items produced while bringing an item of
property, plant and equipment to the location and condition necessary for it to be capable of operating in the manner intended
by management e.g. when testing etc., are recognized in profit or loss in accordance with applicable Standards. The
entity measures the cost of those items applying the measurement requirements of IAS 2. The standard also removes the
requirement of deducting the net sales proceeds from cost of testing. An entity shall apply those amendments retrospectively,
but only to items of property, plant and equipment that are brought to the location and condition necessary for them to be
capable of operating in the manner intended by management on or after the beginning of the earliest period presented in
the financial statements in which the entity first applies the amendments. The entity shall recognize the cumulative effect
of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of
equity, as appropriate) at the beginning of that earliest period presented.
– Reference to the Conceptual Framework (Amendments to IFRS 3) - Reference to the Conceptual Framework, issued in
May 2020, amended paragraphs 11, 14, 21, 22 and 23 of and added paragraphs 21A, 21B, 21C and 23A to IFRS 3 . An
entity shall apply those amendments to business combinations for which the acquisition date is on or after the beginning
of the first annual reporting period beginning on or after 1 January 2022. Earlier application is permitted if at the same time
or earlier an entity also applies all the amendments made by Amendments to References to the Conceptual Framework in
IFRS Standards, issued in March 2018.
– Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) - In response to concerns regarding
temporary accounting mismatches and volatility, and increased costs and complexity, the Board issued amendments to IFRS
4 Insurance Contracts in 2017. The two optional solutions raised some considerations which required detailed analysis and
management judgement. On the issue of IFRS 17 (Revised) Insurance Contracts in June 2020, the end date for applying
the two options under the IFRS 4 amendments was extended to 1 January 2023, aligned with the effective date of IFRS 17.
– Classification of liabilities as current or non-current (Amendments to IAS 1) effective for the annual period beginning on or
after 1 January 2022. These amendments in the standards have been added to further clarify when a liability is classified as
current. The standard also amends the aspect of classification of liability as non-current by requiring the assessment of the
entity’s right at the end of the reporting period to defer the settlement of liability for at least twelve months after the reporting
period. An entity shall apply those amendments retrospectively in accordance with IAS 8.
– Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
- The amendment amends accounting treatment on loss of control of business or assets. The amendments also introduce
new accounting for less frequent transaction that involves neither cost nor full step-up of certain retained interests in assets
that are not businesses. The effective date for these changes has been deferred indefinitely until the completion of a broader
review.
The above amendments are not likely to have an impact on the Company’s financial statements.
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7 Summary of significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements
Significant accounting policies of the Company are as follows:

7.1 Revenue recognition
Revenue comprises the invoiced value for the sale of goods net of sales taxes, rebates and discounts. Certain marketing costs
are deducted from the gross amount of sales. Revenue from the sale of goods is recognised when control of the goods passes to
customers and the customers can direct the use of and substantially obtain all the benefits from the goods. Revenue is recognized
when specific criteria have been met for each of the Company’s activities as described below.
Revenue from contracts with customers
Sale of goods
The Company manufactures and sells cigarettes to its appointed distributors. Sale of goods is recognized when the Company has
transferred control of the products to the distributor and there is no unfulfilled obligation that could affect the distributor’s acceptance
of the products.
Contract assets
Contract assets arise when the Company performs its performance obligations by transferring goods to a customer before the
customer pays its consideration or before payment is due.
Contract liabilities
A contract liability is the obligation of the Company to transfer goods to a customer for which the Company has received consideration
from the customer. If a customer pays consideration before the Company transfers goods, a contract liability is recognised when the
payment is made. Contract liabilities are recognised as revenue when the Company performs its performance obligations under the
contract.
Income on bank deposits
Income on bank deposits is accounted for on the time proportion basis using the applicable rate of return.
Income on short term investments
Short term investments, classified as financial assets at fair value through profit or loss, are re-measured to fair value at each
reporting date until the assets are de-recognised. The gains and losses arising from changes in fair value are included in the
statement of profit or loss in the period in which they occur.
Others
Scrap sales and miscellaneous receipts are recognized on realized amounts. All other income is recognized on accrual basis.
7.2 Income tax
Income tax expense for the year comprises current and deferred income tax, and is recognized in the statement of profit or loss,
except to the extent that it relates to items recognized in other comprehensive income or directly in the equity. In this case, income
tax is also recognized in other comprehensive income or directly in equity, respectively.
Current
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to
the tax payable or receivable in respect of previous years. The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on
the basis of amounts expected to be paid to the tax authorities.

Deferred
Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements.
Deferred income tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized to the
extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses
and tax credits can be utilized.
Deferred income tax is calculated at the rates that are expected to apply to the period when the differences reverse.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to income tax levied by the same taxation
authority on either the same taxable entity or different taxable entities where there is an intention to settle the balance on a net basis.
7.3 Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the obligation; and the amount could be reliably estimated. Provisions are
not recognized for future operating losses. All provisions are reviewed at each statement of financial position date and adjusted to
reflect current best estimate.
7.4 Earnings per share
The Company presents earnings per share (EPS) data for its ordinary shares. EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the
year.

7.5 Contingent assets
Contingent assets are disclosed when the Company has a possible asset that arises from past events and whose existence will
only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
Company. Contingent assets are not recognized until their realization becomes certain.
7.6 Contingent liabilities
Contingent liability is disclosed when the Company has a possible obligation as a result of past events whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Contingent liabilities are not recognised, only disclosed, unless the possibility of a future outflow of resources is considered remote.
In the event that the outflow of resources associated with a contingent liability is assessed as probable, and if the size of the outflow
can be reliably estimated, a provision is recognized in the financial statements.
7.7 Employee benefits
(a) Retirement benefit plans
The Company operates various retirement benefit schemes. The schemes are generally funded through payments to trustee-
administered funds, determined by periodic actuarial calculations or up to the limit allowed as per the Income Tax Ordinance, 2001.
The Company has both defined contribution and defined benefit plans.
A defined contribution plan is a plan under which the Company pays fixed contributions into a separate fund. The Company has
no further legal or constructive obligation to pay contributions if the fund does not hold sufficient assets to pay all employees, the
benefits relating to employees’ service in the current and prior periods.
A defined benefit plan is a plan that is not a defined contribution plan. Typically, defined benefit plans define an amount of benefit that
an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
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The Company operates:
(i) Defined benefit, approved funded pension scheme for management and certain grades of business support officers and
approved gratuity scheme for all employees. Employees also contribute to the pension scheme. The liability recognized in
the balance sheet in respect of pension and gratuity schemes is the present value of the defined benefit obligation of the
Company at the balance sheet date less the fair value of plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The
present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest
rates of government bonds denominated in Pakistan rupee and have terms to maturity approximating to the terms of the
related liability.
The current service cost of the defined benefit plan, recognised in the income statement in employee benefit expense,
except where included in the cost of an asset, reflects the increase in the defined benefit obligation resulting from employee
service in the current year, benefit changes curtailments and settlements. Past-service costs are recognised immediately in
income.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the
fair value of plan assets. This cost is included in employee benefit expense in the income statement.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or
credited to equity in other comprehensive income in the period in which they arise.
(ii) Approved contributory provident fund for all employees administered by trustees and approved contributory pension fund for
the new joiners. The contributions of the Company are recognized as employee benefit expense when they are due. Prepaid
contributions, if any, are recognized as an asset to the extent that a cash refund or a reduction in the future payments is
available.
(b) Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date or whenever
an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits when it
is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without
possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. In
the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of
employees expected to accept the offer.
(c) Medical benefits
The Company maintains a health insurance policy for its entitled employees and their dependents and pensioners and their
spouses. The Company contributes premium to the policy annually. Such premium is recognised as an expense in the statement of
profit or loss.
(d) Bonus plans
The Company recognizes a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable
to the Company’s shareholders after certain adjustments and performance targets. The Company recognizes a provision where it
is contractually obliged or where there is a past practice that has created a constructive obligation.
(e) Share-based payments
The Company has two cash-settled share-based compensation plans. Share options are granted to key management personnel
which vest over a period of three years. A liability equal to the portion of the services received is recognised at its current fair value
determined at each statement of financial position date.

Where applicable, the Company recognises the impact of revisions to original estimates in the statement of profit or loss, with a
corresponding adjustment to current liabilities for cash-settled schemes.
(i) Long Term Incentive Plan (LTIP)
Nil-cost option exercisable after three years from date of grant with a contractual life of ten years. Pay-out is subject to
performance conditions based on earnings per share, operating cash flow, total shareholder return and net turnover of the
British American Tobacco (BAT) group. Total shareholder return combines the share price and dividend performance of the
BAT group by reference to one comparator group.
(ii) Deferred Share Bonus Scheme (DSBS)
Free ordinary shares released three years from date of grant and may be subject to forfeit if a participant leaves employment
before the end of the three years holding period. Participants receive a separate payment equivalent to a proportion of the
dividend payment during the holding period. Share options are granted in March each year.
7.8 Lease liability
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by
the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to
terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which
the event or condition that triggers the payment occurs.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e. those
leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also
applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e.
below Rs 100,000). Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-
line basis over the lease term.

7.9 Property, plant and equipment
Owned assets
These are stated at cost less accumulated depreciation and any accumulated impairment losses, except freehold land and capital
work in progress which are stated at cost less impairment losses, if any. Cost includes expenditure that is directly attributable to the
acquisition of the asset.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognized.
All other repairs and maintenance expenses are recognized in the statement of profit or loss during the financial period in which they
are incurred.
Free-hold land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost less
residual value over their estimated useful lives at the following annual rates:
• Buildings on freehold and leasehold land 3%

• Plant and machinery 5%
• Air conditioners (included in plant and machinery) 20%
• Office and household equipment 20% to 33.3%
• Furniture and fittings 10% to 20%
• Vehicles – owned and leased 16%
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Depreciation on additions and deletions during the year is charged on a pro rata basis from the month when the asset is put into
use or up to the month when asset is disposed/written off.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Gains and losses on disposals of operating fixed assets are recognized in the statement of profit of loss.
Right of use assets
Right of use asset is calculated as the initial amount of the lease liability in terms of property rentals and vehicle rentals at the lease
contract commencement date. The right of use asset is subsequently depreciated using the straight-line method for a period of
lesser of useful life or actual lease term.
7.10 Impairment of non-financial asset
Assets that have an indefinite useful life are not subject to depreciation and are tested annually for impairment. Assets that are
subject to depreciation are reviewed for impairment at each statement of financial position date or whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount for which
assets carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal
of the impairment at each balance sheet date. Reversals of the impairment losses are restricted to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if
impairment losses had not been recognised. An impairment loss or reversal of impairment loss is recognised in the statement of
profit or loss.
7.11 Long term investment in subsidiary
The investment in subsidiary company is carried at cost less any impairment losses. The profit and loss of the subsidiary company
is carried in the financial statements of the subsidiary company and is not dealt with for the purpose of the separate financial
statements of the Company except to the extent of dividend declared (if any) by the subsidiary company.
7.12 Stock in trade
Stock-in-trade is stated at the lower of cost and net realizable value. Cost is determined using the weighted average method. The
cost of finished goods and work in process comprises design costs, raw materials, direct labour, other direct costs and related
production overheads. Net realizable value is the estimated selling price in the ordinary course of business, less cost of completion
and costs necessary to be incurred to make the sale.
7.13 Stores and spares
Stores and spares are stated at cost less allowance for obsolete and slow moving items. Cost is determined using weighted average
method. Items in transit are valued at cost comprising invoice value and other related charges incurred up to the statement of
financial position date.
7.14 Financial Instruments
Financial assets
i. Recognition and de-recognition
The Company initially recognises financial assets on the date when they are originated. Financial liabilities are initially recognised
on the trade date when the entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are offset, and the net amount presented in the statement of financial position when, and
only when, the Company currently has a legally enforceable right to offset the amounts and intends either to settle them on a net
basis or to realise the asset and settle the liability simultaneously.

ii. Classification
On initial recognition, a financial asset is classified as measured at:
• amortised cost;
• fair value through other comprehensive income (FVOCI); or
• fair value through profit or loss (FVTPL)
The classification of financial assets is based on the business model in which a financial asset is managed and its contractual cash
flow characteristics.
(a) Amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: (i) it
is held within a business model whose objective is to hold assets to collect contractual cash flows; and (ii) its contractual terms give
rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(b) Fair value through other comprehensive income (FVOCI)
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: (i) it is held
within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and (ii)
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(c) Fair value through profit or loss (FVTPL)
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL.
iii. Subsequent measurement
Financial assets Measured at fair value. Net gains and losses, including any interest or dividend income, are recognised
at FVTPL in profit or loss.
Financial assets Measured at amortised cost using the effective interest method. The amortised cost is reduced by
at amortised impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised
cost in profit or loss. Any gain or loss on de-recognition is recognised in profit or loss.
Debt investments These assets are subsequently measured at fair value. Interest income calculated using the effective
at FVOCI interest method, foreign exchange gains and losses and impairment are recognised in profit or loss.
Other net gains and losses are recognised in OCI. On de-recognition, gains and losses accumulated in
OCI are reclassified to profit or loss.
Equity These assets are subsequently measured at fair value. Dividends are recognised as income in profit or
investments loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net
at FVOCI gains and losses are recognised in OCI and are never reclassified to profit or loss.
Subsequent to initial recognition, financial liabilities are measured at amortized cost using the effective interest method.
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iv. De-recognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the
financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does
not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the
Company is recognised as a separate asset or liability.
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
Any gain / (loss) on the recognition and de-recognition of the financial assets and liabilities is included in the statement of profit or
loss for the period in which it arises.
v. Impairment of financial assets
The Company recognizes loss allowance for Expected Credit Losses (ECLs) on financial assets measured at amortized cost and
contract assets. The Company measures loss allowance at an amount equal to lifetime ECLs.
Lifetime ECLs are those that result from all possible default events over the expected life of a financial instrument. The maximum
period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

At each reporting date, the Company assess whether the financial assets carried at amortized cost are credit-impaired. A financial
asset is ‘credit-impaired when one or more events that have detrimental impact on the estimated future cash flows of the financial
assets have occurred.
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. The
gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial
asset in its entirety or a portion thereof.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial
liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognized in statement of profit or loss. Any gain or loss on de-recognition is also included in statement of
profit or loss.
7.15 Borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised
cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of
profit or loss over the period of the borrowings using the effective interest method.
Borrowing costs which are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as
part of the cost of that asset. All other borrowing costs are charged to statement of profit or loss.
7.16 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the financial statements in the period in which
the dividend is approved by the Company’s shareholders at the Annual General Meeting, while interim dividend distributions are
recognised in the period in which the dividends are declared by the Board of Directors.

7.17 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks and highly liquid investments with less than
three months maturity from the date of acquisition. Short term finance facilities availed by the Company, which are repayable on
demand and form an integral part of the Company’s cash management are included as part of cash and cash equivalents in the
statement of cash flows.
7.18 Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing on the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the
exchange rate prevailing at the statement of financial position date. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at year-end exchange rates are recognized in the statement of profit of loss.

7.19 Fair value measurement
Fair value’ is the price that would be received by selling an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the
Company has access at that date. The fair value of a liability reflects its non-performance risk.
A number of the Company’s accounting policies and disclosures require the measurement of fair values, both for financial and non-
financial assets and liabilities (See Note 5). When one is available, the Company measures the fair value of an instrument using the
quoted price in an active market for that instrument. If there is no quoted price in an active market, then the Company uses valuation
techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The best evidence of
the fair value of a financial instrument on initial recognition is normally the transaction price – i.e. the fair value of the consideration
given or received.
2020 2019
Rs ‘000 Rs ‘000
8 Gross turnover
- Domestic 161,274,986 147,291,473
- Export 4,983,497 1,733,175
166,258,483 149,024,648

Revenue is measured based on the consideration specified in a contract with a customer. The transaction prices are generally fixed
as per the contract with customers. The payment terms are governed by the contractual rights and obligations as defined in the
contracts with customers and payments are generally received in advance of delivering goods sold.

Revenue recognised during the year that was included in the contract liability balance at the beginning of year is Rs 16,817
thousand (2019: Rs 2,013 thousand).
134
2020 2019
Rs ‘000 Rs ‘000
9 Cost of sales
Raw material consumed
Opening stock of raw materials and work in process 19,573,174 16,944,127
Raw material purchases and expenses - note 9.1 21,026,617 21,851,976
Closing stock of raw materials and work in process (16,977,657) (19,573,174)
23,622,134 19,222,929
Government taxes and levies
Customs duty and surcharges 1,138,889 2,353,985
Provincial and municipal taxes and other duties 283,753 334,885
Excise duty on royalty 53,109 42,771
1,475,751 2,731,641
25,097,885 21,954,570
Royalty - note 9.2 531,093 (1,463,277)
(Reversal) / provision for severance benefits (169,268) 857,194
Production overheads
Salaries, wages and benefits 2,075,632 2,034,476
Stores, spares and machine repairs 690,930 604,221
Fuel and power 445,393 493,522
Insurance 38,595 20,712
Repairs and maintenance 457,110 456,565
Postage, telephone and stationery 14,775 19,182
Information technology 20,780 31,150
Depreciation 795,972 724,448
Provision for damaged stocks / stock written off 67,901 72,124
Provision / (reversal) for slow moving items / stores written off (10,428) 15,123
Sundries 45,593 256,111
4,642,253 4,727,634
Cost of goods manufactured 30,101,963 26,076,121
Cost of finished goods
Opening stock 1,859,725 1,548,417
Closing stock (2,632,867) (1,859,725)
(773,142) (311,308)
Cost of sales 29,328,821 25,764,813
9.1 Raw material purchases and expenses:

Materials 18,244,787 19,157,657
Property rentals 56,303 26,433
Insurance 36,928 14,100
Sundries 319,118 414,863
21,026,617 21,851,976

9.2 This represents royalty payable to the associated companies namely BAT (Brands) Limited, Benson & Hedges (Overseas) Limited,
BAT (Holdings) Limited and BAT Exports Limited having registered office at Globe House, 1 Water Street, London WC2R 3LA,
United Kingdom. Royalty expense for the year ended December 31, 2019 is presented net of reversals as disclosed in note 38.

2020 2019

Rs ‘000 Rs ‘000
10 Selling and distribution costs

Selling expenses 3,259,737 2,955,537
Freight 241,638 231,931
Travelling 96,343 175,689
Property rentals – 31,057
Insurance 16,200 14,440
Finished goods / wrapping material stock written off 12,422 9,945
5,015,427 4,666,122

11 Administrative expenses
Salaries, wages and benefits 757,211 844,868
Insurance 2,795 5,382
Legal and professional charges 124,585 122,204
Donations - note 11.1 28,291 13,690
Information technology 1,938,195 1,188,792
Auditor’s remuneration and expenses - note 11.2 13,292 13,463
Sundries 21,348 59,381
3,357,904 2,780,245

11.1 Details of donations exceeding Rs 1,000 thousand are as follows:
Name of Donee
Pakistan Baitul Mall 22,000 –
One To Many 5,000 10,000
Chal Foundation – 1,500
Prime Ministers’ Dam Fund – 1,390
27,000 12,890

136
There were no donations in which the directors, or their spouses, had any interest.
2020 2019

Rs ‘000 Rs ‘000
11.2 Auditor’s remuneration and expenses include:

- Statutory audit fee 2,500 2,317
- Group reporting, review of half yearly accounts, audit of
consolidated accounts, audit of staff retirement
benefit funds and other certifications and review of
Statement of Compliance with Code of Corporate Governance 10,200 10,497
- Out-of-pocket expenses 592 649
13,292 13,463

12 Other operating expenses
Workers’ Profit Participation Fund - 27.7 1,202,357 982,004
Workers’ Welfare Fund - note 27.6 407,804 411,271
Bank charges and fees 37,022 33,562
Interest to Workers’ Profit Participation Fund 1,263 –
Loss on disposal of property, plant and equipment 198,342 –
Foreign exchange loss 244,441 445,162
2,091,229 1,871,999

13 Other income
Income from sales / services rendered to associated companies:
- BAT Middle East DMCC - UAE 456,624 –
- BAT SAA Services (Private) Limited – 127,880
Recharges / other payable to associated companies written back:
-BAT ASPAC Service Center Sdn Bhd - Malaysia 253,255 519,301
-BAT (Holdings) Limited - UK 30,445 –
-BAT (Singapore) Pte Ltd. - Singapore 4,729 –
-Ceylon Tobacco Co. Ltd.- SriLanka – 52
-BAT PNG Ltd - Papua New Guinea – 51
-BAT Niemeyer Ltd - Netherland – 16
Gain on disposal of property, plant and equipment – 134,391
Miscellaneous 3,545 1,491
748,598 783,182

14 Finance cost
Interest expense on:
Bank borrowings 14,902 21,565
Lease liability 225,797 180,988
240,699 202,553

15 Income tax expense
Current:
For the year 5,722,536 4,686,603
For prior years (72,062) 600,639
5,650,474 5,287,242
Deferred 244,931 108,446
5,895,405 5,395,688


15.1 Effective tax rate reconciliation:
Numerical reconciliation between the average effective income tax rate and applicable income tax rate is as follows:
2020 2019

% %
Applicable tax rate 29.00 29.00

Tax effect of:
Prior year (reversal) / charge (0.32) 0.38
Change in applicable tax rate – 0.78
Income taxed at different rate (1.91) (0.76)
Others (0.44) 0.11
Average effective tax rate 26.33 29.51

2020 2019

Rs ‘000 Rs ‘000
15.2 Tax on items directly credited to statement of

other comprehensive income
Current tax (credit)/charge on defined benefit plans (182,189) 7,705

Deferred tax (credit) on defined benefit plans (2,368) (51,578)
(184,557) (43,873)

2020 2019
16 Earnings per share

Profit after tax (Rs ‘000) 16,492,490 12,889,229

Number of fully paid weighted average ordinary shares (‘000) 255,494 255,494

Earnings per share - Basic (Rs) 64.55 50.45

There is no dilutive effect on the basic earnings per share of the Company.
2020 2019

Rs ‘000 Rs ‘000
17 Property, plant and equipment

Operating assets - note 17.1 12,678,139 11,590,196
Capital work in progress - note 17.2 2,423,616 732,634
15,101,755 12,322,830
138
17.1 Operating assets

Right of use assets
Free-hold Buildings on Plant and Office and Furniture and Vehicles Land and Factory Vehicles Sub- Total
land free-hold machinery household fittings building vehicles-fork total
land equipment lifter trucks
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
At January 1, 2019
Cost 30,570 970,153 15,044,250 1,727,721 418,532 124,172 19,888 – 1,151,619 1,171,507 19,486,905
Accumulated Depreciation – (288,437) (8,913,556) (1,235,654) (269,726) (108,995) (12,345) – (487,916) (500,261) (11,316,629)
Net book amount January 1, 2019 30,570 681,716 6,130,694 492,067 148,806 15,177 7,543 – 663,703 671,246 8,170,276
Year ended December 31, 2019

Net book amount at January 1, 2019 30,570 681,716 6,130,694 492,067 148,806 15,177 7,543 – 663,703 671,246 8,170,276
Additions – 936 2,455,823 357,497 58,219 16,649 1,559,221 45,807 458,786 2,063,814 4,952,938
Disposals – (64) (32,463) (823) (191) (3,913) – – (128,088) (128,088) (165,542)
Depreciation charge – (18,647) (524,284) (226,383) (52,137) (2,435) (331,582) (31,411) (180,597) (543,590) (1,367,476)
Net book amount at December 31, 2019 30,570 663,941 8,029,770 622,358 154,697 25,478 1,235,182 14,396 813,804 2,063,382 11,590,196
At December 31, 2019

Cost 30,570 970,868 17,251,879 1,980,058 474,810 128,432 1,579,109 45,807 1,232,393 2,857,309 23,693,926
Accumulated depreciation – (306,927) (9,222,109) (1,357,700) (320,113) (102,954) (343,927) (31,411) (418,589) (793,927) (12,103,730)
At January 1, 2020
Cost 30,570 970,868 17,251,879 1,980,058 474,810 128,432 1,579,109 45,807 1,232,393 2,857,309 23,693,926
Accumulated Depreciation – (306,927) (9,222,109) (1,357,700) (320,113) (102,954) (343,927) (31,411) (418,589) (793,927) (12,103,730)
Net book amount January 1, 2020 30,570 663,941 8,029,770 622,358 154,697 25,478 1,235,182 14,396 813,804 2,063,382 11,590,196

Net book amount at January 1, 2020 30,570 663,941 8,029,770 622,358 154,697 25,478 1,235,182 14,396 813,804 2,063,382 11,590,196
Additions – 69,738 1,474,838 342,436 81,764 178 257,592 352,768 433,597 1,043,957 3,012,911
Disposals – (187) (294,469) (613) (535) (4,795) (31,285) – (93,025) (124,310) (424,909)
Net book amount at December 31, 2020 30,570 713,683 8,624,990 699,289 209,411 16,785 1,096,964 280,124 1,006,323 2,383,411 12,678,139

Cost 30,570 1,039,621 17,698,534 2,242,202 551,113 70,068 1,765,829 367,164 1,510,957 3,643,950 25,276,058
Accumulated depreciation – (325,938) (9,073,544) (1,542,913) (341,702) (53,283) (668,865) (87,040) (504,634) (1,260,539) (12,597,919)

17.1.1 Particulars of immovable property (land and building) in the name of the Company are as follows:
Location Total Area
Production Plants
Jhelum 58.3 Acres
Akora 61.0 Acres

Warehouses
Faujoon 163,970 Sq ft.
Shergarh 65,227 Sq ft.
Takht Bhai 54,593 Sq ft.
Umerzai 87,464 Sq ft.
Mianwali 878,694 Sq ft.
Okara 71,723 Sq ft.
2020 2019
Rs ‘000 Rs ‘000
17.2 Capital work in progress
Carrying value at the beginning of the year 732,634 960,551

Additions during the year 2,343,498 1,419,007
3,076,132 2,379,558
Transferred to operating fixed assets (652,516) (1,646,924)
Carrying value at the end of the year - note 17.2.1 2,423,616 732,634

17.2.1 Capital work in progress includes capital expenditure on projects relating to enhancement of already installed machinery.
2020 2019
Rs ‘000 Rs ‘000
17.3 Depreciation charge has been allocated as follows:
Cost of sales 795,972 724,448

Raw material purchases and expenses 197,658 155,580
Selling and distribution expenses 173,906 160,038
Administrative expenses 332,523 327,410
1,500,059 1,367,476
140
17.4 Details of property, plant and equipment disposed off during the year, having book value of Rs 500,000 or more are as
follows:

Cost Book Sale Gain/ Particulars of buyers Relationship
value proceeds (loss) on
less selling sale
expenses
Rs ‘000 Rs ‘000 Rs ‘000
Plant & machinery

- by negotiation 39,370 16,166 16,166 – Solomon Islands Associate
Tobacco Co. company
41,740 13,906 13,906 – Ceylon Tobacco Co. Ltd. Associate
company
510,624 245,432 5,282 (240,150) Scrap Buyers Contractor

Vehicles
- as per Company’s policy 2,047 573 516 (57) Bilal Bin Waheed Executive
2,047 502 409 (92) Mir M. Ali Khan Executive
2,067 783 782 (1) M.Ismail Ahmed Executive
2,067 505 412 (93) Syed Raza Imam Naqvi Executive
2,092 780 418 (362) Mazhar Mehboob Executive
2,092 981 851 (130) Usman Javed Executive
2,092 1,171 893 (278) Saad Zaheer Ex-Executive
2,092 920 934 14 Waqas Anwar Abbasi Executive
2,104 1,058 1,101 43 Syeda Rahima Ex-Executive
2,104 1,000 1,027 26 Umar A. Jilani Executive
2,249 1,212 1,364 152 Nauman Masood Butt Executive
2,402 689 568 (121) Nafies Zeb Ex-Executive
2,404 1,312 1,415 103 Uzair Qazi Executive
2,514 1,676 1,508 (168) Zainab Amin Ex-Executive
2,689 1,577 1,841 264 Azhar Mehmood Executive
2,895 2,123 2,161 38 Muhammad Ahmad Iqbal Ex-Executive
2,895 2,123 2,179 56 Hammad A. Hashmi Ex-Executive
2,895 2,007 1,929 (78) Farhan Younas Mughal Ex-Executive
2,895 2,007 1,983 (25) Bushra Rahman Ex-Executive
2,997 2,437 2,038 (400) Mir Faraz Tariq Ex-Executive
3,107 2,361 2,319 (42) Amir S. Lodhi Executive
3,127 2,460 2,076 (384) Bilal Ayub Ex-Executive
3,240 2,938 2,958 20 Harris Qamar Executive
3,483 2,879 3,093 214 Syed Shafaat Gilani Ex-Executive
3,483 3,251 3,081 (169) Mariam Iqbal Ex-Executive
3,483 3,437 3,436 (1) Usman Javed Executive
3,547 2,884 2,858 (27) Haroon Saleem Executive
6,233 4,155 4,487 332 Ali Hasan Butt Ex-Executive
6,837 4,923 4,691 (232) Sana Saad Ex-Executive
6,867 5,219 4,946 (272) Umair Luqman Ex-Executive
12,300 6,884 6,730 (154) Usman Zahur Executive
12,300 6,463 5,207 (1,256) Hussain Iqbal Jaffery Ex-Executive

- by auction 2,092 774 2,675 1,901 Through bidding in auction Auction agent
2,689 1,649 3,250 1,601 Through bidding in auction Auction agent

- by insurance claim 3,483 3,204 3,848 643 EFU General Insurance Ltd. Insurance agent

18 Long term investment in subsidiary company
This represents 500,001 (2019: 500,001) fully paid ordinary shares of Rs 10 each in Phoenix (Private) Limited, a wholly owned
subsidiary of the Company. The break up value of shares calculated by reference to net assets worked out to be Rs 10 per share
(2019: Rs 10 per share) based on audited financial statements for the year ended December 31, 2020.

Phoenix (Private) Limited is dormant company and has not commenced commercial production. Investment in subsidiary has been
made in accordance with the requirements under the repealed Companies Ordinance, 1984 (now the Companies Act, 2017).

2020 2019

Rs ‘000 Rs ‘000
19 Long term deposits and prepayments
Security deposits 27,720 30,759
27,720 30,759

20 Stock-in-trade
Raw materials 16,030,364 18,762,548

Raw materials in transit 856,470 719,314
Work in process 90,823 91,312
Finished goods 2,632,867 1,859,725
19,610,524 21,432,899
Provision for damaged / obsolete stocks - note 20.1 (127,848) (10,356)
19,482,676 21,422,543

20.1 Movement in provision for damaged stocks is as follows:
Balance as at January 1 10,356 3,154

Provision for the year 187,412 87,325
Written off during the year (69,920) (80,123)
Balance as at December 31 127,848 10,356

21 Stores and spares
Stores and spares 749,307 744,834

Provision for slow moving items - note 21.1 (70,407) (80,835)
678,900 663,999

21.1 Movement in provision for slowing moving items is as follows:

(Reversal) / provision during the year- note 9 (10,428) 15,123

22 Trade debts
These are unsecured, considered good.

142
2020 2019

Rs ‘000 Rs ‘000
23 Loans and advances
Related parties:
Advances to key management personnel for
house rent and expenses - note 23.1 1,214 2,140

Others:
Advances to executives for house rent and expenses 25,732 34,279
Advances to other parties 308,259 89,225
335,205 125,644

23.1 The following advances were outstanding as at December 31:
Mr Hassan Khalid 660 –

Mr Uzair Qazi 554 –
Mr Ahsen Altaf – 990
Mr Hassan Khalid – 450
Mr Umair Luqman – 400
Ms Sana Saad – 300
1,214 2,140

The maximum aggregate amount of advances to key management personnel outstanding at the end of any month during
the year was Rs 1,518 thousand (2019: Rs 2,140 thousand).

These loans and advances are unsecured and considered good. Advances extended to key management personnel,
executives and other employees are deducted from the individuals’ monthly payroll as per Company’s policy.
2020 2019

Rs ‘000 Rs ‘000
24 Other receivables
Related parties - unsecured:

Due from holding company / associated companies - note 24.1 899,794 188,638
Due from subsidiary company - note 24.1 20,021 20,021
Staff pension fund - note 33 316,026 881,821
Management provident fund 1,179 –
Employees’ provident fund 15,908 –

Others:
Claims against suppliers 6,576 6,576
Cash margin with banks - imports 55,815 904,202
Others 21,017 130,654
1,336,336 2,131,912

24.1.1 Ageing analysis of the amounts due from holding company / associated companies comprises:

Upto 1 1 to 6 More than
month months 6 months 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Holding company:
British American Tobacco p.l.c. - UK 10,538 – – 10,538 69,884

Associated companies:
BAT M.E DMCC - UAE 488,394 – – 488,394 –
BASS Europe SRL - Romania 117,545 2,437 – 119,982 –
BAT M.E SPC - Bahrain 113,536 – – 113,536 –
BAT Aspac Service Centre Sdn Bhd-Malaysia 56,382 1,897 – 58,279 –
BAT Nigeria Ltd-Nigeria 7,919 22,111 8,207 38,237 60,132
TDR d.o.o. - Croatia 25,010 – – 25,010 –
BAT Exports Limited - UK 18,750 – – 18,750 –
PT Bentoel International Investama - Indonesia 10,292 – – 10,292 1,431
BAT Marketing (S) Pte Ltd - Singapore 6,016 – – 6,016 5,427
BAT (Singapore) Pte Ltd-Singapore 5,798 – – 5,798 –
BAT Q LLC.- Qatar 3,483 – – 3,483 –
BAT (Romania) Trading SRL - Romania 632 – – 632 –
BAT Australia - Australia 364 – – 364 –
BAT PNG Ltd - Papua New Guinea 289 56 – 345 581
BAT Fiji Ltd-Fiji – 138 – 138 145
BAT (Investments) Ltd-UK – – – – 18,469
Solomon Islands Tobacco Co Ltd-Solomon Islands – – – – 16,022
BASS (GSD) Ltd-UK – – – – 7,771
PT Bentoel Prima - Indonesia – – – – 4,041
BAT Asia Pacific-Hong Kong – – – – 3,930
BAT Polska SA-Poland – – – – 527
Ceylon Tobacco Co. Ltd-SriLanka – – – – 160
BAT Tutun Mamulleri - Turkey – – – – 118
864,948 26,639 8,207 899,794 188,638

Subsidiary company:
Phoenix (Pvt) Limited – – 20,021 20,021 20,021
Total 864,948 26,639 28,228 919,815 208,659

24.1.2 The maximum aggregate amount of receivable from related parties at the end of any month during the year was Rs 919,815
2020 2019

Rs ‘000 Rs ‘000
25 Short term investments
At fair value through profit or loss (FVTPL):

- Market treasury bills 6,401,215 3,001,058

This represents short term investment in treasury bills issued by the Government of Pakistan and carries effective interest rate of
7.20% ( 2019 : 13.14%) per annum and are held for trading. These treasury bills have less than three months maturity from the
date of acquisition and have been disposed off subsequent to the year-end.
144
2020 2019

Rs ‘000 Rs ‘000
26 Cash and bank balances
Deposit account - note 26.1 29,705 9,075

Current accounts:
Local currency - note 26.2 492,760 379,282
Foreign currency 317,885 145,874
840,350 534,231
Cash in hand 1,946 1,674
842,296 535,905

26.1 These are security deposits being kept in separate bank account.

26.2 This includes balance amounting to Rs. 61.85 million held with National Bank of Pakistan (an associated company).
2020 2019

Rs ‘000 Rs ‘000
27 Trade and other payables

Due to holding company / associated companies - note 27.1 1,301,159 1,397,088
Others:
Creditors 6,765,058 5,206,714
Federal excise duty - note 27.2 7,314,335 7,255,338
Sales tax 1,738,194 1,283,563
Workers’ welfare fund - note 27.6 456,896 373,162
Workers’ profit participation fund - note 27.7 855,357 12,004
Other accrued liabilities 117,655 109,977
Employee incentive schemes - note 27.4 106,599 99,713
Employees’ gratuity fund - note 33 275,517 337,649
Employees’ provident fund – 5,450
Management provident fund – 14,728
Staff pension fund - defined contribution 112,587 55,805
Tobacco excise duty / Tobacco development cess - note 27.3 118,134 118,134
Security deposits - note 27.5 29,342 9,075
Contract liability 12,034 16,817
19,202,867 16,295,217

27.1 The amount due to holding company / associated companies comprises:
2020 2019
Rs ‘000 Rs ‘000
Holding company:
British American Tobacco p.l.c. - UK 197,458 195,226

BAT M.E DMCC - UAE - note 27.1.1 217,990 61,833
BAT Bangladesh Co. Ltd- Bangladesh 215,267 10,136
BAT GLP Ltd - UK 140,534 240,866
BAT Exports Limited - UK 125,955 12,457
BAT (Investments) Ltd - UK 98,297 92,321
BAT ASPAC Service Center Sdn Bhd - Malaysia 63,121 185,834
BAT JSC-Spb - Russia 61,474 –
BASS (GSD) Ltd. - UK 55,935 394,624
BAT Saudia for Trading, Saudi Arabia - note 27.1.1 35,288 –
BAT Souza Cruz Ltd - Brazil 16,015 15,041
PT Bentoel Prima - Indonesia 14,426 9,520
BAT Australia Ltd-Australia 13,339 1,716
Ceylon Tobacco Company Ltd - Sri Lanka 11,766 39
BAT Q LLC.- Qatar - note 27.1.1 10,662 –
BAT Korea Manufacturing - South Korea 6,700 14,647
BAT Myanmar Ltd - Myanmar - note 27.1.1 5,102 909
BAT M.E SPC - Bahrain - note 27.1.1 4,674 –
BAT GSD (KL) SDN BHD - Malaysia 2,818 2,052
BAT Singapore (Pte) Ltd - Singapore 2,363 121,168
Fielder & Lundgren AB. - Sweden 873 –
BAT Romania Investments Ltd - Romania 553 347
BAT Chile Tobacco - Chile 409 –
BAT Nigeria Ltd - Nigeria 140 118
Solomon Island Tobacco Co. Ltd - Solomon Islands – 31,204
BAT Tutun Mamulleri - Turkey – 2,204
BAT Nicoventures Trading Ltd-UK – 1,473
BAT Argentina - Argentina – 584
BAT Mexico Ltd - Mexico – 143
Other
Tajamal Hussain Shah - Director – 2,626
1,301,159 1,397,088

27.1.1 Rs 273,716 thousand (2019: 62,741 thousand) relates to unsecured export advance.
146
2020 2019

Rs ‘000 Rs ‘000
27.2 Federal excise duty
Balance as at January 1 7,255,338 5,288,160

Charged during the year 80,907,579 74,741,489
Payment to the Government during the year (80,848,582) (72,774,311)
Balance as at December 31 7,314,335 7,255,338

27.3 Tobacco excise duty / tobacco development cess:

Charge for the year 176,324 212,829
Payment to the Government during the year (176,324) (198,579)

27.4 Employee incentive schemes
These represent liability for unvested portion of cash-settled share-based payment schemes available to certain employees.
Such schemes require the Company to pay the intrinsic value of these share based payments to the employee at the vesting
date.
2020 2019

Rs ‘000 Rs ‘000
Long Term Incentive Plan (LTIP) - note 27.4.1

Share options exercised (17,288) (15,362)

Deferred Share Bonus Scheme (DSBS) - note 27.4.2

106,600 99,713
27.4.1 Long Term Incentive Plan (LTIP)
Details of the options movement for cash-settled LTIP scheme during the year were as follows:
2020 2019
Number of options
Outstanding as at January 1 17,373 12,158

Granted during the year 1,915 7,994
Exercised during the year (3,889) (2,779)
Outstanding as at December 31 15,399 17,373

There are no exercisable options as at 31st December, 2020.

27.4.2 Deferred Share Bonus Scheme (DSBS)
Details of the options movement for cash-settled DSBS scheme during the year were as follows:
2020 2019
Number of options



27.5 These represent amounts received as security deposits from dealers and suppliers, which are non-utilisable for the purpose
of the business in accordance with their agreements. These security deposits are being held in a separate bank account.
2020 2019

Rs ‘000 Rs ‘000
27.6 Movement in Workers’ Welfare Fund is as follows:

Charged during the year 407,804 411,271
Payment to Government /reversal during the year (324,070) (349,942)

27.7 Movement in Workers’ Profit Participation Fund is as follows:
Balance as at January 1 12,004 (159,385)

Allocation for the year 1,202,357 982,004
Payments during the year (359,004) (810,615)

28 Other liabilities
This relates to provisions for employee benefits, litigation and restructuring consequent to modernization of production processes.
During the year, the Company has consumed amounts aggregating Rs. 1,180 million (2019: Rs 973 million) and recorded further
obligations of Rs 1,066 million (2019:Rs 1,541 million).

29 Short term running finance - secured
(a) Short term running finance
Short term running finance facilities available under mark-up arrangements with banks amount to Rs 6,500 million (2019:
Rs 6,500 million), out of which the amount unavailed at the year end was Rs 6,500 million (2019: Rs 6,500 million). These
facilities are secured by hypothecation of stock in trade and plant and machinery amounting to Rs 7,222 million (2019: Rs
7,222 million). The mark-up ranges between 7.37% and 13.88% (2019: 10.52% and 14.05%) per annum and is payable
quarterly. The facilities are renewable on annual basis.
(b) Non-funded finance facilities
The Company also has non-funded financing facilities available with banks, which include facility to avail letter of credit and
letter of guarantee. The aggregate facility of Rs 2,500 million (2019: Rs 2,500 million) and Rs 600 million (2019: Rs 420
million) is available for letter of credit and letter of guarantee respectively, out of which the facility availed at the year end is
Rs 1,019 million (2019: Rs 83 million) and Rs 447 million (2019: Rs 386 million). The letter of credit and guarantee facility is
secured by second ranking hypothecation charge over stock-in-trade amounting to Rs 667 million (2019: Rs 670 million).
148
30 Lease liability
This represents lease agreements entered into with a leasing company for vehicles and IFRS 16 leases. Total lease rentals due
under various lease agreements aggregate to Rs 928,348 thousand - short term Rs 371,046 thousand and long term Rs 557,302
thousand (December 31, 2019: Rs 596,290 thousand - short term Rs 258,036 thousand and long term Rs 338,254 thousand) and
are payable in equal monthly instalments latest by December 2025. Taxes, repairs, replacement and insurance costs are to be
borne by the Company. Financing rates of 7.75% to 14.61% (December 31, 2019: 12.35% to 15.36%) per annum have been used
as discounting factor.

As per IFRS 16 all rental facilities of the Company with lease terms greater than one year have been capitalised as leased assets.
When measuring the lease liabilities for leases that were capitalised during the period, the Company discounted lease payments
using an estimated incremental borrowing rate and recorded lease obligation of Rs. 257,592 thousand during the year. Financing
rates of 9% to 14% (December 31, 2019: 10% to 14%) per annum have been used as discounting factor.

The amount of future minimum lease payments together with the present value of the minimum lease payments and the periods
during which they fall due are as follows:
2020 2019

Rs ‘000 Rs ‘000
Present value of minimum lease payments 2,252,622 1,724,548

Current maturity shown under current liabilities (678,730) (382,941)
1,573,892 1,341,607

Future minimum lease payments
Not later than one year 872,824 559,801
Later than one year 1,961,265 1,760,855
2,834,089 2,320,656
Interest (581,467) (596,108)

Present value of minimum lease payments
2,252,622 1,724,548

31 Unpaid dividend
Unpaid dividend includes amount of Rs Nil (2019: Rs Nil), payable to British American Tobacco (Investments) Limited, parent
company.

2020 2019

Rs ‘000 Rs ‘000
32 Deferred income tax liability
Deferred tax liability is in respect of:

Accelerated tax depreciation 1,325,785 1,270,770
Leased assets 47,426 100,263
1,373,211 1,371,033
Deferred tax asset is in respect of:
Remeasurement loss arising on employees’
retirement benefit (118,122) (109,389)
Provision for severance benefits (346,163) (592,257)
Provision for stock and stores (20,420) (23,444)
888,506 645,943

The gross movement on deferred income tax account is as follows:

At January 1 645,943 589,076
Charge for the year - statement of profit or loss 244,931 108,445
(Credit) for the year - statement of comprehensive income (2,368) (51,578)
At December 31 888,506 645,943
33 Retirement benefits
Investments in all contributory funds have been made in accordance with the provisions of section 218 of the Companies Act, 2017
and the rules formulated for that purpose.
2020 2019

Rs ‘000 Rs ‘000
Staff pension fund - asset - note 24 (316,026) (881,821)
Employees’ gratuity fund - liability - note 27 275,517 337,649

The latest actuarial valuation of the defined benefit plans was conducted at December 31, 2020 using the projected unit credit
method. Details of the defined benefit plans are:
Defined Benefit Defined Benefit

Pension Plan Gratuity Plan
2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
(a) The amounts recognised in the statement

of financial position:
Present value of defined benefit obligations 5,882,010 4,978,396 1,598,481 1,650,937

Fair value of plan assets (6,198,036) (5,860,217) (1,322,964) (1,313,288)
Net (assets) / liability (316,026) (881,821) 275,517 337,649
150

2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
(b) Movement in the (asset) / liability recognized

in the statement of financial position
is as follows:
Balance as at January 1 (881,821) (787,677) 337,649 210,278

Charge for the year - profit or loss (39,848) (37,069) 129,492 105,427
Employer’s contribution during the year (22,596) (30,507) (129,492) (148,794)
Benefits paid by the Company – – (70,298) –
Remeasurement (gain)/loss recognized in Other
Comprehensive Income (OCI) during the year 628,239 (26,568) 8,166 170,738
Balance as at December 31 (316,026) (881,821) 275,517 337,649

(c) The amounts recognised in the statement
of profit or loss:
Current service cost 93,114 95,605 103,704 94,064
Interest cost 612,324 627,565 204,671 201,833

Expected return on plan assets (716,248) (729,114) (163,947) (174,173)
Net interest (103,924) (101,549) 40,724 27,660

Members’ own contribution (22,921) (24,456) – –
Secondees’ own contribution (6,117) (6,669) – –
Contribution by employer in respect of secondees – – (14,936) (16,297)
(39,848) (37,069) 129,492 105,427

(d) Re-measurements recognised in Other
Comprehensive Income (OCI) during
the year:
Actuarial (gain) / loss on obligation 539,563 (80,458) (10,317) 158,282

Net return on plan assets over interest income 88,676 53,890 18,483 12,456
Total remeasurements loss / (gain)

recognised in OCI 628,239 (26,568) 8,166 170,738

(e) Movement in the present value of defined
benefit obligation:
Present value of defined benefit obligation at

January 1 4,978,396 4,628,109 1,650,938 1,474,653
Interest cost 612,324 627,565 204,671 201,833
Actual benefits paid during the year (341,387) (292,425) (350,514) (277,894)
Remeasurements: Actuarial loss /(gain)
on obligation 539,563 (80,458) (10,317) 158,282
Present value of defined benefit obligation

at December 31 5,882,010 4,978,396 1,598,482 1,650,938


2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
(f) Movement in the fair value of plan assets:
Fair value of plan assets at January 1 5,860,217 5,415,786 1,313,288 1,264,375

Interest income 716,248 729,114 163,947 174,173
Contribution by employer in respect of members 22,596 30,507 129,492 148,793
Members’ own contribution 22,921 24,456 – –
Secondees’ own contribution 6,117 6,669 – –
Contribution by employer in respect of secondees – – 14,836 16,297
Return on plan assets, excluding amounts included in
interest income (88,676) (53,890) (18,483) (12,456)
Fair value of plan assets at December 31 6,198,036 5,860,217 1,322,864 1,313,288
Actual return on plan assets 665,839 635,638 147,513 148,744

The Company expects to charge Rs 31 million for pension plan and charge Rs 115 million for gratuity plan for the year
ending December 31, 2021.

2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
(g) The major categories of plan assets:
Investment in listed equities 1,363,509 1,060,470 275,691 242,441

Investment in bonds 1,736,594 2,020,367 370,191 477,299
Cash and other assets 3,097,933 2,779,380 677,082 593,548
6,198,036 5,860,217 1,322,964 1,313,288

(h) Significant actuarial assumptions at
the statement of financial position date:
Discount rate 10.25% 12.50% 10.25% 12.50%

Pension increase rate 5.50% 6.75% – –
Expected rate of increase in salary:
First year 9.00% 11.75% 9.00% 11.25%
Second year onwards 9.00% 11.75% 9.00% 11.25%

The mortality table used for post retirement mortality is Standard Table Mortality The “80” Series PMA 80 (C=2015) and PFA
80(C=2015) for males and females respectively but rated up 2 years.
The discount rate is determined by considering underlying yield currently available on Pakistan Investment Bonds and
high quality term finance certificates and expected return on plan assets is determined by considering the expected returns
available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on
gross redemption yields as at the reporting date.
Salary increase assumption is based on the current general practice in the market.
152
(i) Sensitivity Analysis on significant actuarial assumptions
The calculation of the defined benefit obligation is sensitive to assumptions set out above. The following table summarizes
how the impact on the defined benefit obligation at the year end of the reporting period would have increased / (decreased)
as a result of a change in respective assumptions by one percent.

1 percent 1 percent 1 percent 1 percent
increase decrease increase decrease
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Discount rate (700,482) (1,472,365) (135,256) (132,066)

Salary increase 171,044 (734,174) 160,560 155,805
Increase in post retirement pension 703,199 (369,203) – –

If life expectancy increases by 1 year, the obligation of the Pension Fund increases by Rs 328,652 thousand
( 2019: 292,406 thousand).
Expected maturity profile
Following are the expected distribution and timing of benefits payments at the year end.

2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

Weighted average duration of the PBO (Years) 11.91 11.42 8.46 8.00
Risks associated with defined benefit plan

Longevity risk
The risk arises when the actual lifetime of retiree is longer than the estimate of future employee lifetime expectation. This
risk is measured at the plan level over the entire retiree population.
Salary increase risk
The most common type of retirement benefit is one where the benefit is linked with final salary. The risk arises when the
actual increases are higher than the expectations and impacts the liability accordingly.
Withdrawal risk
The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation. The
movement of the liability can go either way.
Historical Information

Present value of Net liability at Present value of Net liability at
defined benefit the end of defined benefit the end of
obligation the year obligation the year
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

2020 5,882,010 (316,026) 1,598,482 275,517
2019 4,978,396 (881,821) 1,650,938 337,649

2018 4,628,109 (787,677) 1,474,653 210,278
2017 4,759,609 (765,618) 1,416,319 139,736
2016 4,654,000 (855,329) 1,433,183 (52,951)

33.1 Salaries, wages and benefits as appearing in note 9, 10 and 11 include amounts in respect of the following:

2020 2019

Rs ‘000 Rs ‘000
Defined Contribution Provident Fund 103,230 94,106

Defined Benefit Pension Fund (39,848) (37,069)
Defined Contribution Pension Fund 118,536 116,520
Defined Benefit Gratuity Fund 129,492 105,427
311,410 278,984

33.2 Defined Contribution Plan
Details of the management and employees’ provident funds are as follows:

Un-audited Un-audited

(a) Size of the fund - total assets 1,749,791 1,747,719
Cost of investments made 1,615,045 1,588,501
Percentage of investments made 92% 91%
Fair value of investments made 1,592,984 1,583,001

2020 2019
Rs ‘000 % age Rs ‘000 % age
(b) Breakup of investments at cost
Pakistan Investment Bonds 252,041 14% 251,725 14%

Investment plus deposit certificates 589,750 34% 605,250 35%
Investment in savings account with bank 150,661 9% 118,981 7%
Investment in securities 283,661 16% 311,711 18%
Accrued interest 338,932 19% 300,834 17%
1,615,045 92% 1,588,501 91%
34 Share capital
34.1 Authorized share capital
2020 2019 2020 2019

Number of shares Rs ‘000 Rs ‘000
300,000,000 300,000,000 Ordinary shares of Rs 10 each 3,000,000 3,000,000

34.2 Issued, subscribed and paid-up capital

2020 2019 2020 2019

230,357,068 230,357,068 Issued for cash 2,303,571 2,303,571
25,136,724 25,136,724 Issued as bonus shares 251,367 251,367
255,493,792 255,493,792 2,554,938 2,554,938
British American Tobacco (Investments) Limited held 241,045,141 (2019: 241,045,141) ordinary shares at the year-end and 10,274
(2019:12,274) and 798,282 (2019:798,282) ordinary shares are held by the directors and associated company respectively.
All ordinary shares rank equally with regard to the Company’s residual assets. Holders of these shares are entitled to dividends as
declared from time to time and are entitled to one vote per share at general meetings of the Company.
154
2020 2019

Rs ‘000 Rs ‘000
35 Contingencies and commitments

35.1 Contingencies
Claims and guarantees
(i) Claims against the Company not acknowledged as debt - Note 35.1.1 75,706 75,706
(ii) Guarantees issued by banks on behalf of the Company 447,376 385,730

35.1.1 Litigation
a) In the year 1979, the Market Committee Jhelum (“the Committee”), constituted under the Punjab Agriculture Produce Market
Ordinance of 1978 demanded the Company to obtain license and pay marketing fee on all tobacco that is transported into
the Jhelum factory of the Company. Since tobacco is not an agricultural produce and no transaction of any sale or purchase
of tobacco takes place in Jhelum, the Company refused to apply for the license. In 1986, the Committee proceeded against
the Company which resulted in protracted litigation, culminating in filing of a Review before the Supreme Court of Pakistan,
which was decided against the Company on technical grounds in 2010. Meanwhile, the Committee made their own fictitious
calculation and levied fee and penalties aggregating Rs 64.9 million relating to years 1982 to 2010 against which the
Company filed a Writ Petition before the Lahore High Court, Rawalpindi Bench. The Lahore High Court granted a stay
order suspending demand of penalties amounting to Rs 60 Million and directed the Company to deposit Rs 6 Million (being
the principal amount) with the court in the shape of National Saving Certificates. Subsequent to December 31st 2020, the
Rawalpindi Bench of the Lahore High Court vide Judgement dated 20th January 2021 (Judgement) has decided the case
in PTC’s favor. However, the Committee can appeal the Judgement before the Supreme Court of Pakistan.
b) In 2009, the Punjab Employees Social Security Institution (PESSI) demanded payment of social security contribution
effective October 2007, from the Company for the non-permanent workers hired at its Jhelum factory hired through third
party contractors. The Company has filed a complaint before the Director PESSI, which was kept pending till 2018 when an
order was passed against the Company. Thereafter, PESSI demanded payment of Rs 2,306,513 for the period from October
2007 till May 2010.
In 2018, the Company filed an appeal before the Judge Punjab Social Security Court, Labour Complex, Lahore, and the
matter is since then pending.
c) Tobacco Development Cess (TDC) is a tax levied and collected by the KPK pursuant to S. 11 of the KPK Finance Act, 1996
( “the Act”). The term “tobacco” was however not defined by the Act. Each year the Pakistan Tobacco Board (PTB), on the
demand of each tobacco buyer, fix Quota (i.e. the quantity of tobacco) to be purchased by each such tobacco buyer from
the farmers. The calculation of quantum of TDC to be paid by each tobacco buyer is based on the quantities indicated and
purchased in terms of Quota. Till 2002, TDC was collected from the tobacco buyers directly by Excise & Taxation Depart
(ETD). However, in 2003, the provincial government, through an amendment in law, imposed TDC also on the surplus
tobacco purchased by tobacco buyers (i.e. purchase of tobacco beyond the Quota amount) (“the Surplus”). Additionally, the
amended law also stipulated that while the TDC on Quota shall be collected by ETD, TDC levied on the Surplus shall be
collected by a contractor to whom ETD has leased the collection through a public tender. Contract for the year 2005/06 was
awarded to Malik Tilla Muhammad (“the Contractor”) by PTB. The Contractor demanded payment of Rs 8.8 Million from PTC
on account of TDC, which claim was rejected by PTC. The Contractor then filed a suit for recovery of Rs 8.8 Million before
a civil judge but the matter was referred to Arbitration, with Chairman PTB as the Arbitrator. The Arbitrator passed an award
whereby PTC was to pay Rs 8,375,071 to Malik Tilla Muhammad Tilla. The said order was challenged by the Company
through an appeal before the District judge Peshawar and the appeal was finally decided in Company’s favor on June 29,
2019. The matter was remanded back to the trial court / civil judge for cross examination of the arbitrator and deciding the
matter afresh and the case is still pending.
d) Employees’ Old-Age Benefits Institution (EOBI) constituted under the Employees’ Old-Age Benefits Act, 1976 (“the Act”)
requires contributions to be made by industries and establishments against workers employed by it. PTC has been making
prompt contributions under the Act. PTC has contractual arrangements with Logistics Service Providers for the shipment of
its raw material and finished goods. In the year 2015, the EOBI Jhelum issued a show cause notice dated March 4th, 2015,
demanding payment of Rs 3,024,000 against non-payment of contribution of 200 hundred employees. These employees
were in fact employees of five transport concerns with which PTC had contractual arrangements. PTC filed complaint
against the said show cause before Adjudicating Authority – III, EOBI Islamabad and raised the objection that this liability
is of the five transport concerns who are independent entities. The Adjudicating Authority however passed an order against
PTC on February 14th, 2017, upholding the demand earlier raised by the EOBI Jhelum. PTC has filed an appeal in May
2017 against the order before the Board of Trustees EOBI Head Quarter at Karachi which is pending adjudication.

e) The Company hired the services of Tariq & Saad Associates (“T&S”) for providing consultancy services for the construction
of “Mianwali Mega Barn Project”. T&S started the work. Thereafter, during a meeting between Company and T&S, it was
verbally agreed that T&S would charge @ 2.25 % of estimated cost of the Project. The payments to T&S were delayed due
to which T&S served Notice of Termination and subsequently filed a civil suit for recovery in the district court of Islamabad.
The matter is pending adjudication.

The Company expects favorable outcome in these matters and accordingly, no provision is recognised in the financial
statements.

35.2 Commitments
(a) All property rentals before adoption of IFRS 16 were under cancellable operating lease arrangements and were due as
follows:
2020 2019

Rs ‘000 Rs ‘000
Not later than one year – 99,777

Later than one year and not later than five years – 375,899
Later than five years – 285,199

(b) Letters of credit outstanding at December 31, 2020 were Rs 1,018,701 thousand (2019: Rs 83,392 thousand).
36 Financial Instruments - Fair Values And Risk Management
36.1 Accounting classification and fair value
The following tables shows the carrying amounts and fair values of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable approximation of fair value.

December 31, 2020 Fair value
Fair value Amortised Total Level 1 Level 2 Level 3

through profit cost
or loss

Financial assets measured at fair value
Short-term investments 25 6,401,215 – 6,401,215 – 6,401,215 –
Financial assets not measured at fair value
Deposits 19 – 27,720 27,720 – – –
Trade debts 22 – 1,392 1,392 – – –
Other receivables 24 – 1,336,336 1,336,336 – – –
Cash and bank balances 26 – 842,296 842,296 – – –
6,401,215 2,207,744 8,608,959

Financial liabilities measured at fair value – – – – – –
Financial liabilities not measured at fair value
Trade and other payables 27 – (8,375,451) (8,375,451) – – –
Lease liability 30 – (2,252,622) (2,252,622) – – –
Accrued interest/mark-up – (583) (583) – – –
– (10,628,656) (10,628,656)
156

through profit cost
or loss

Deposits 19 – 30,759 30,759 – – –
Trade debts 22 – 4,260 4,260 – – –
3,001,058 2,702,836 5,703,894

Lease liability 30 – (1,724,548) (1,724,548) – – –
Accrued interest/mark-up – (18,859) (18,859) – – –
(8,627,685) (8,627,685)
36.2 Financial risk management
The Company has exposure to the following risks from financial instruments:

- credit risk
- liquidity risk
- market risk

36.2.1 Financial risk management framework
The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the financial performance. Risk management is carried out by the Treasury Committee
(the Committee) under policies approved by the board of directors (the Board). The Board provides written principles for
overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate risk,
credit risk and investment of excess liquidity. All treasury related transactions are carried out within the parameters of these
policies.
36.2.2 Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual
obligations that arise principally from trade debts, other receivables, deposits with banks and investment in treasury bills
issued by the Government of Pakistan. The carrying amount of financial assets represents the maximum credit exposure.
Due to the Company’s long standing business relationships with these counterparties and after giving due consideration to
their strong financial standing, management does not expect non-performance by these counter parties on their obligations
to the Company. Accordingly the credit risk is minimal.

Financial assets amounting to Rs 8,609 million (2019: Rs 5,704 million) do not include any amounts which are past due or
impaired. The table below shows bank balances held with counterparties at the reporting date.


Counterparty Rating Rating agency
Short term Long term 2020 2019

Rs ‘000 Rs ‘000

Cash at bank:
MCB Bank Ltd A-1+ AAA PACRA 434,786 317,091
Habib Bank Ltd A-1+ AAA VIS 10,851 15,647
Deutsche Bank AG P-2 A3 Moody’s 151,296 147,132
MCB Islamic Bank A-1 A PACRA 6,737 53,006
National Bank of Pakistan A-1+ AAA PACRA 61,851 893
Standard Chartered Bank A-1+ AAA PACRA 173,017 48
Citibank N.A. P-1 Aa3 Moody’s 1,812 414
840,350 534,231
Short term investments:

Government of Pakistan B3+ Moody’s 6,401,215 3,001,058
7,241,565 3,535,289

As at December 31, 2020, maximum exposure to credit risk for finiancial assets by geographic was as follows:
Carrying amount
2020 2019

Rs ‘000 Rs ‘000
Pakistan 7,709,165 5,515,256

United Kingdom 29,288 96,124
Asia & other 870,506 92,514
8,608,959 5,703,894

As at 31 December 2020, the ageing of financial assets was as follows:
Carrying amount
2020 2019

Rs ‘000 Rs ‘000
Not due 8,547,516 5,616,409

1-30 days 26,639 60,728
31-90 days 8,207 160
90 days 26,597 26,597
8,608,959 5,703,894
36.2.3 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or risking to the Company’s reputation.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and
undiscounted, and include contractual interest payments and exclude the impact of the netting arrangements:
158
Carrying Carrying Contractual cash flows

amount Total 12 months 1 to 5
or less years
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
31 December 2020
Trade and other payables 8,375,451 (8,375,451) (8,375,451) –

Lease liability 2,252,622 (2,834,089) (872,824) (1,961,265)
Accrued interest/mark-up 583 (583) (583) –
10,628,656 (11,210,123) (9,248,858) (1,961,265)

31 December 2019
Trade and other payables 6,884,278 (6,884,278) (6,884,278) -

Lease liability 1,724,548 (2,320,656) (559,801) (1,760,855)
Accrued interest/mark-up 18,859 (18,859) (18,859) –
8,627,685 (9,223,793) (7,462,938) (1,760,855)

Cash flows included in the maturity analysis are not expected to occur significantly earlier or at significantly different
amounts.
36.2.4 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates will affect the Company’s
income or the value of its holding of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.

Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. This exists due to the Company’s exposure resulting from outstanding payments on account of
import of goods and services. The currencies in which these transactions are primarily denominated are euro, sterling and
US dollars.

The summary quantitative data about the Company’s exposure to currency risk is as follows:

December 31, 2020 December 31, 2019
Euro Sterling US dollars Euro Sterling US dollars
Other receivables 223,812 3,321,168 817,041 55,953 187,712 5,928

Cash and bank balances – – 1,989,270 – – 941,945
Trade and other payables (1,362,654) (783,979) (1,318,157) (903,640) (2,751,771) (4,447,951)
Net exposure (1,138,842) 2,537,189 1,488,154 (847,687) (2,564,059) (3,500,078)

The following significant exchange rates have been applied:

Average rate Year-end spot rate
2020 2019 2020 2019

Euro 1 184.77 167.62 195.52 173.84
Sterling 1 207.64 191.06 218.44 205.16
US dollar 1 161.79 149.79 159.80 154.87

A 10 percent strengthening (weakening) of the Rupee against euro, sterling and US dollar at the reporting date would have
affected the measurement of financial instruments denominated in a foreign currency and affected the equity and profit
or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remains
constant and ignores any impact of forecast sales and purchases.
Profit or loss Equity, net of tax

Strengthening Weakening Strengthening Weakening
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
31 December 2020
Euro 22,267 (22,267) 15,696 (15,696)

Sterling (55,422) 55,422 (39,067) 39,067
US dollar (23,781) 23,781 (16,763) 16,763

31 December 2019
Euro 14,736 (14,736) 10,388 (10,388)

Sterling 52,604 (52,604) 37,081 (37,081)
US dollar 54,206 (54,206) 38,210 (38,210)

Interest rate risk
This represents the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is not exposed to fair value interest rate risk as it does not hold any fixed rate
instruments. The Company does not have any significant long-term interest-bearing financial assets or financial liabilities
whose fair value or future cash flows will fluctuate because of changes in market interest rates.
Financial liabilities include balances of Rs. 2,252,622 thousand (2019: Rs 1,724,548 thousand) which are subject to interest
rate risk. Applicable interest rates for these financial liabilities have been indicated in respective notes.

At statement of financial position date, if interest rates had been 1% higher/lower, with all other variables remain constant,
profit for the year would have been Rs 22.526 million (2019: Rs 17.245 million) lower/higher, mainly as a result of higher/
lower interest expense on floating rate borrowings.
37 Remuneration of Chief Executive, Directors and Executives
The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to Chief Executive,
Executive Directors and executives are as follows:-

Chief Executive Executive Directors Executives Total
Key Management Other

Personnel Executives
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Managerial remuneration 39,717 36,918 157,241 79,596 139,658 267,380 734,414 631,659 1,071,030 1,015,553
Corporate bonus 27,518 22,995 43,522 39,193 102,811 141,618 230,626 195,814 404,477 399,620
Leave fare assistance 1,364 1,603 6,596 5,618 1,252 8,021 – – 9,212 15,242
Housing and utilities 14,970 14,990 14,722 10,010 61,261 73,370 320,128 275,640 411,081 374,010
Medical expenses 152 261 1,319 578 9,536 7,221 55,891 40,780 66,898 48,840
Post employment benefits 1,120 10,426 8,507 6,590 36,064 37,940 187,939 146,784 233,630 201,740
84,841 87,193 231,907 141,585 350,582 535,550 1,528,998 1,290,677 2,196,328 2,055,005
Number of persons 1 1 3 3 18 30 302 252 324 286
160
37.1 The Company, in certain cases, also provides individuals with the use of company accommodation, cars and household
items, in accordance with their entitlements.

37.2 The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to eight (2019:
eight) non-executive directors of the Company amounted to Rs 7,846 thousand (2019: Rs 11,438 thousand).
38 Transactions with related parties
British American Tobacco (Investments) Limited (BAT-IL) holds 94.34% (2019: 94.34%) shares of the Company at the year end.
Therefore, all the subsidiaries and associated undertakings of BAT-IL and the ultimate parent company British American Tobacco,
p.l.c (BAT) are related parties of the Company. The related parties also include directors, major shareholders, key management
personnel, employee funds and the entities over which the directors are able to exercise significant influence. The amounts due
from and due to these undertakings are shown under receivables and payables. The remuneration of the chief executive, directors,
key management personnel and executives is given in note 37 to the financial statements. Transactions with employee funds and
associated payable/receivable balances are provided in note 33 to the financial statements.

As National Bank of Pakistan is an associated company under the Companies Act 2017 due to common directorship, yet does
not fall under the definition of related party as interpreted from IAS 24 “Related Party Disclosures”. Accordingly, transactions and
balances with National Bank of Pakistan have not been disclosed in the related party disclosure.

2020 2019

Rs ‘000 Rs ‘000
Procurement of goods and services from:

Holding company 1,664,897 1,396,342
Associated companies 3,386,385 3,423,682
Director 34,834 32,349

Sale of goods and services to:
Holding company 10,522 83,672

Dividend paid to:
Holding company 14,027,499 12,263,702

Royalty charged by:
Holding /associate company
Charged 531,093 427,710
Reversed – (1,714,439)
531,093 (1,286,729)

Expenses reimbursed to:
Associated companies 22,687 4,552

Expenses reimbursed by:

Payment under employee incentive schemes:
Key management personnel 38,832 55,848

Other income:
Associated company:
Recharges written back 288,504 519,420

38.1 Following are the names of associated companies, related parties and associated undertakings with whom the Company had
entered into transactions or had agreements and arrangements in place during the year. Names of associated companies,
related parties and associated undertakings, incorporated outside Pakistan are included in note 38.2.
Aggregate % of
Associated company Basis of relationship shareholding
Pheonix (Private) Limited Subsidiary Nil

BAT SAA Service (Private) Limited Common Directorship Nil
THS & Co. Common Directorship Nil
National Bank of Pakistan Common Directorship Nil

Retrirment benefit funds:
Pension Funds Post employment benefits Nil
Provident Funds Post employment benefits Nil
Gratuity Fund Post employment benefits Nil

Zafar Mahmood Director 0.000196%
Usman Zahur Director 0.000978%
William Pegel Director 0.000978%
Syed Asad Ali Shah Director 0.000196%
Syed Javed Iqbal Director 0.000196%
Syed Ali Akbar Director 0.000196%
Tajamal Shah Director 0.000196%
Zafar Aslam Director 0.000196%
Belinda Ross Director 0.000196%
Asif Jooma Director 0.000196%
Mohammad Riaz Director 0.000196%
Lt. Gen (Rtd.) Muhammad Masood Aslam Director 0.000196%
Syed Hammad Ali Naqvi Key management personnel Nil
Waqas Ahmed Khan Key management personnel Nil
Ahsen Altaf Key management personnel Nil
M. Idries Ahmed Key management personnel 0.000025%
Sami Zaman Key management personnel 0.000059%
Khubaib Akram Key management personnel Nil
Khan Muhammad Mohmand Key management personnel Nil
Muhammad Asim Key management personnel Nil
Hassan Khalid Key management personnel Nil
Uzair Qazi Key management personnel Nil
Haroon Saleem Key management personnel Nil
Qadeer Hussain Key management personnel Nil
Khuram Javaid Rajpoot Key management personnel Nil
38.2 Following particulars relate to associated companies incorporated outside Pakistan with whom the Company had entered
into transactions during the year or have arrangement / agreement in place.
Basis of Aggregate % Country of

Associated company relationship of Shareholding Incorporation
British American Tobacco p.l.c. Ultimate Parent Company 0.00% United Kingdom
BAT (Investments) Limited Holding Company 94.34% United Kingdom
BAT Rothmans International Holding Company 0.31% United Kingdom
BAT Exports Limited Fellow Subsidiary 0.00% United Kingdom
Ceylon Tobacco Company Limited Common Directorship 0.00% Sri Lanka
162

British American Tobacco Myanmar Limited Common Directorship 0.00% Myanmar

British American Tobacco Argentina Fellow Subsidiary 0.00% Argentina
British American Tobacco Australia Fellow Subsidiary 0.00% Australia
BAT Bangladesh Company Limited Fellow Subsidiary 0.00% Bangladesh
Souza Cruz Ltd. Fellow Subsidiary 0.00% Brazil
BAT Switzerland SA Fellow Subsidiary 0.00% Switzerland
British American Tobacco Chile Fellow Subsidiary 0.00% Chile
BAT Germany GmbH Fellow Subsidiary 0.00% Germany
BAT (Brands) Limited Fellow Subsidiary 0.00% United Kingdom
Benson & Hedges (Overseas) Limited Fellow Subsidiary 0.00% United Kingdom
BAT (Holdings) Limited Fellow Subsidiary 0.00% United Kingdom
BASS (GSD) Limited Fellow Subsidiary 0.00% United Kingdom
British American Tobacco (GLP) Limited Fellow Subsidiary 0.00% United Kingdom
BAT Nicoventures Trading Ltd Fellow Subsidiary 0.00% United Kingdom
British American Tobacco Asia Pacific Region Ltd Fellow Subsidiary 0.00% Hong Kong
Fielder & Lundgren AB Fellow Subsidiary 0.00% Sweden
BAT Pecsi Dohanygyar KFT Fellow Subsidiary 0.00% Hungary
British American Tobacco Kenya Ltd Fellow Subsidiary 0.00% Kenya
BAT Korea Ltd Fellow Subsidiary 0.00% South Korea
BAT Korea Manufacturing Ltd Fellow Subsidiary 0.00% South Korea
British American Tobacco Mexico Fellow Subsidiary 0.00% Mexico
BAT AsPac Service Centre Sdn Bhd Fellow Subsidiary 0.00% Malaysia
BAT GSD (KL) Sdn Bhd. Fellow Subsidiary 0.00% Malaysia
BAT Nigeria Ltd Fellow Subsidiary 0.00% Nigeria
BAT Marketing Nigeria Ltd. Fellow Subsidiary 0.00% Nigeria
British American Tobacco Niemeyer Fellow Subsidiary 0.00% Netherlands
British-American Tobacco Polska S.A Fellow Subsidiary 0.00% Poland
BAT Romania Investment Ltd. Fellow Subsidiary 0.00% Romania
BAT (Romania) Trading SRL. Fellow Subsidiary 0.00% Romania
BASS Europe SRL. Fellow Subsidiary 0.00% Romania
JSC BAT-Spb Fellow Subsidiary 0.00% Russia
British-American Tobacco (Singapore) Pte Ltd Fellow Subsidiary 0.00% Singapore
BAT Marketing (Singapore) Pte Ltd Fellow Subsidiary 0.00% Singapore
British American Tobacco Tutun Mamulleri Fellow Subsidiary 0.00% Turkey
TDR D.O.O Fellow Subsidiary 0.00% Croatia
West Indian Tobacco Co. Ltd Fellow Subsidiary 0.00% Trinidad & Tobago
PJSC A/T B.A.T Prilucky Tobacco Co. Fellow Subsidiary 0.00% Ukraine
R J Reynolds Tobacco Company Fellow Subsidiary 0.00% United States
British American Tobacco South Africa (Pty) Ltd. Fellow Subsidiary 0.00% South Africa
British American Tobacco ME DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Saudia for Trading Fellow Subsidiary 0.00% Saudi Arabia
BAT GCC DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Middle East DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Qatar LLC Fellow Subsidiary 0.00% Qatar
BAT Middle East S.P.C. Fellow Subsidiary 0.00% Bahrain
BAT Egypt Ltd. Fellow Subsidiary 0.00% Egypt
Central Manufacturing Company Ltd Fellow Subsidiary 0.00% Fiji
PT Bentoel International Investama Fellow Subsidiary 0.00% Indonesia
PT Bentoel International Prima Fellow Subsidiary 0.00% Indonesia
PT Export Leaf Fellow Subsidiary 0.00% Indonesia
British American Tobacco (Malaysia) Fellow Subsidiary 0.00% Malaysia
Tobacco Importers and Manufacturers Fellow Subsidiary 0.00% Malaysia
British American Tobacco (PNG) Ltd Fellow Subsidiary 0.00% Papua New Guinea
British American Tobacco Vranje AD Fellow Subsidiary 0.00% Serbia
BAT Services Ltd., Taiwan Branch Fellow Subsidiary 0.00% Taiwan
Tabacalera Hondurena S.A. Fellow Subsidiary 0.00% Honduras
Solomon Islands Tobacco Co. Ltd. Fellow Subsidiary 0.00% Solomon Islands
British American Tobacco (Cambodia) Fellow Subsidiary 0.00% Cambodia

2020 2019
Rs ‘000 Rs ‘000
39 Cash generated from operations
Profit before taxation 22,387,895 18,284,917

Adjustment for non-cash items:
- Depreciation / impairment 1,500,059 1,367,476
- Gain on disposal of property, plant and equipment 198,342 (134,391)
- Finance cost 240,699 202,553
- Finance income (782,866) (812,571)
- Foreign exchange loss 244,441 445,162
- Provision /(Reversal of provision) for slow moving
stores and spares (10,428) 15,123
- Provision / (reversal of provision) for stock-in-trade 117,492 7,202
- Provision for staff retirement benefit plans 311,410 278,984
1,819,149 1,369,538
Changes in working capital:
- Stock-in-trade 1,822,375 (2,940,355)
- Stores and spares (4,473) (45,093)
- Trade debts 2,868 (2,707)
- Loans and advances (209,561) (27,684)
- Short term prepayments (60,494) 234,014
- Other receivables 229,781 (181,189)
- Trade and other payables 2,725,341 (2,898,684)
- Other liabilities (791,956) 567,124
3,713,881 (5,294,574)
Changes in long term deposits and prepayments 3,039 1,353
27,923,964 14,361,234
40 Reconciliation of movement of liabilities to cash flows arising from financing activities
Liabilities Equity Total

Unclaimed / Finance lease Revenue
Unpaid Dividend obligations reserves

Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Balance at January 1, 2019 281,456 433,090 15,210,686 15,925,232
Changes from financing cash flows:
Finance lease payments – (709,437) – (709,437)

Dividend declared 12,263,701 – (12,263,701) –
Dividend paid (12,400,182) – – (12,400,182)
Total changes from financing cash flows (136,481) (709,437) (12,263,701) (13,109,619)

Other changes:
New leases – 2,000,895 – 2,000,895

Total equity-related other changes – – 12,788,932 12,788,932
Balance at December 31, 2019 144,975 1,724,548 15,735,917 17,605,440
164


Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Balance at January 1, 2020 144,975 1,724,548 15,735,917 17,605,440
Lease payments – (515,883) – (515,883)

Changes in Dividend payable
Dividend paid (14,801,378) – – (14,801,378)
Total changes from financing cash flows 17,262 (515,883) (14,818,640) (15,317,261)

Other changes:
New leases – 1,168,267 – 1,168,267

Retirements – (124,310) – (124,310)

41 Events after the reporting date
In respect of the year ended December 31, 2020 final dividend of Rs 28.00 (2019: Rs 23.00) per share amounting to a total dividend
of Rs 7,153,826 thousand (2019: Rs 5,876,357 thousand) has been proposed at the Board of Directors meeting held on February
23, 2021. These financial statements do not reflect this proposed dividend.
42 General
42.1
Date of authorization for issue

These financial statements have been authorized for circulation to the shareholders by the Board of Directors of the
Company on February 23, 2021.



166
PAKISTAN TOBACCO COMPANY LIMITED
CONSOLIDATED
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
CHAIRMAN’S REVIEW
(CONSOLIDATED ACCOUNTS)
I am pleased to share the Annual Report for the year 2020.
2020 Performance
The legitimate tobacco industry remained under pressure due to The Company also requires its employees to operate and deliver
the widening price differential between duty not paid (DNP) brands with integrity and strongly discourages malpractice. This message is
and legitimate brands following the 93% increase in excise rates in cascaded and internalized across the Company through face to face
2018 and 2019 that fuelled illicit market share growth in 2020. The and online trainings conducted throughout the year as part SoBC
Government’s decision not to change excise rates was a positive refreshers. Furthermore, channels have been established and made
outcome from FY 2020-21 budget that provided consumer price available for anyone working in or with the Company to raise their
stability, but this was short-lived as key brands in the illicit sector concerns in confidence and without fear of reprisal.
reduced their selling prices by 25% post budget to Rs 30/pack.
Enhanced enforcement support by the Government is key to ensure
fair competition within the tobacco industry and would prevent loss of
further tax revenues towards the national exchequer.
Business Sustainability
PTC’s strategic objectives are aimed at building a business which can
Growing Illicit market share was the primary driver behind PTC’s be sustained over a long-term period. 2020 was a landmark year for
volume decline in 2020, however, the Company’s overall financial PTC as it ventured into new categories by launching nicotine pouches
position has remained healthy. The Company delivered EPS growth of called ‘VELO’ with the aim of driving ‘tobacco harm reduction’
28% which was achieved by keeping a strong focus on effective cost agenda. This was delivered on the back of bold and agile initiatives
management, lean operations and investment in brands portfolio to including national expansion of VELO, launch of VELO sound station
and setup of an exclusive local factory for VELO. On the cigarettes
offer products which reflect evolving consumer preferences.
and cut-tobacco exports front, $31 Million in foreign direct inflows
were generated to further augment the Company’s ambition of
Corporate Social becoming the primary export hub for the region. Pakistan has also
emerged as a front runner for setting up a shared services hub.
Responsibility This may serve as a talent incubator enabling Pakistan to become
a Services Exports market unlocking enormous potential for future
This year is poised to be the year of Sustainability. PTC has a long foreign direct investment.
standing tradition of giving back to society; since 1981, the company
has been running one of the largest private sector afforestation The presence of a large illicit sector remains an area of concern,
programs across the country. Under this initiative, the Company as it continues to create major sustainability issues for the legitimate
plants and distributes tree saplings free of cost. During 2020, the industry while causing revenue losses of close to Rs 70 Billion for the
Company planted and distributed more than 9 Million saplings. A new Government. Thus, it is in the best interest of all stakeholders that
fully solar powered nursery is also under construction in Lahore in stringent action is taken by the relevant law enforcing authorities to
collaboration with Lahore Ring Road Authority. curb the illicit sector.
Amongst our other CSR initiatives, the Company continued to provide In addition, it is necessary to note the regulations issued in early
free medical advice and medicines under its Mobile Doctor Unit March 2020 by the Ministry of National Health Services, Regulations
program. In 2020, more than 50,000 patients took medical advice and Coordination to prohibit tobacco and tobacco products’
and medicines under this program. To ensure local community is advertising, promotion and sponsorship have the potential to
protected from water borne diseases, the Company is providing adversely affect the Company’s business. Local DNP brands continue
clean drinking to the less privileged sectors of the society through to violate the previous laws and the new regulation which not only
5 water filtration plants filtering 64,000 litres of water per day. Our disrupted the creation of a level playing field within the tobacco
lift irrigation system provided water to more than 1,000 hectares of industry but also negatively impacted Government tax revenues.
agricultural land of Buner district benefitting more than 450 farmers.
To mitigate water scarcity in the Country, PTC installed drip irrigation PTC also believes in recruiting the best talent in Pakistan which will
systems in Buner and Mansehra that enabled water conservation of provide us the human capabilities to excel in a challenging business
927 Million litres. environment. The senior management of the Company and I have full
confidence in the long-term sustainability of our business and in the
efficacy of its leadership.
Corporate Governance
Our business rests on strong and durable foundations, which have
PTC takes pride in its compliance with good corporate governance stood the test of time, and it has the necessary dynamism and
practices. A comprehensive system of controls, governance and risk enterprising spirit to ensure the delivery of sustainable growth for the
management is in place to ensure that the Company’s assets and long-term. I have faith that the Company will continue to provide an
the interests of the shareholders are protected. With the acquisition attractive value for its shareholders in the future.
of Reynolds American Inc. by the BAT Group and subsequent

adherence to all of the Sarbanes-Oxley Regulations (SOx), the
Company’s controls and governance environment has improved
significantly. The compliance to all the SOx controls is monitored by
external auditors and the Group’s internal compliance teams.
Zafar Mehmood Chairman
168
DIRECTOR’S REPORT
The Directors Present the Annual Report of Pakistan Tobacco Company Limited
(PTC) Along with the Audited Financial Statements of the Company for the year
Ended December 31, 2020.
Macroeconomic Environment
Graph 1
In 2020, the global economy faced high degree of Illicit Market Share (%)
uncertainty owing to the challenges posed by COVID-19
pandemic, with Pakistan being no different. The first half of
the year was particularly stressed due to frequent lockdowns 37.6
across the country impacting business and social activities. 36.9

36.7
Due to manufacturing and supply chain disruptions caused

by the pandemic as a consequence of the national lockdown
to control the spread of the virus, Pakistan’s exports of $22.9
Billion faced a decline of -6.8% compared to same period 31.9
last year (SPLY) 31.4
To curtail the negative impacts of COVID-19, the Government

made a number of targeted interventions to enhance
economic activity in the country by introducing schemes with
Graph 2
low markup such as Temporary Economic Refinance Facility
for investment in plant and machinery to enhance domestic
production capacities, Export Refinance Facility to enhance 100%
export operations and Salary Refinancing for providing Rs 112.5 bn (68% of PTC’s Gross Revenue)
working capital relief to businesses. This was further Total payment to Govt vs Rs 16.5 bn PAT
augmented by a reduction in policy rates announced by

State Bank’s Monetary Policy Committee during 2020 which
helped reduce inflation from the previous level of 12.6% for 68%
10%
SPLY by 4.6%. 17%
5%
Contrary to expectation, foreign worker remittances to Gross Revenue GST. Excise,

Income Tax &
Cost of Sales Operating
Expenses
PAT
Regulatory
Pakistan grew by 6.4% reaching $23.1 Billion in FY 2019-20. Duties
This provided much needed stability to the current account 68% of Gross earnings given as Govt Revenue
with the PKR depreciating only ~3% year-on-year from Rs Graph 3

Legit Brands
154.9/USD in Dec’19. Illicit Brands Price Index
Key illicit Brands
Industry Overview 80
80.0 80.0 80.0 80.0
Fiscal Environment
210+
64
During the FY 2018-19 and FY 2019-20, excise duty on Value
for Money (VFM) brands increased by 93% which resulted in
250+
48
widening the price gap between duty paid and duty not paid
(DNP) brands. The sell-out price for duty paid VFM brands 32
stood at Rs 80/pack compared to Rs 37.7/pack for Illicit
brands in 2020 which resulted in an increase in Illicit share as 16
depicted in Graph-1:
0
Q1 - 20 Q2 - 20 Q3 - 20 Q4 - 20

Director’s Report
In FY 2020-21 budget, the Government did not change Regulatory Environment

the excise rates to reduce price differential between DNP Towards end of Q1’20, the Ministry of National Health
and legitimate VFM brands. This had a positive outcome Services, Regulations and Coordination issued a Statutory
that provided consumer price stability in the tobacco Regulatory Order further prohibiting the advertisement,
sector. Contrary to expectation, the price gap between promotion and sponsorship of tobacco and tobacco
duty paid and DNP products increased to +250% as key products. This has further negatively impacted the
brands in the illicit sector reduced their selling prices by legitimate players within the tobacco sector as the local
25% (down to Rs 30.5/pack). DNP brands continue to violate the previous laws and the
new legislation with impunity.
The disparity between Duty paid and DNP brands
continues to pose a serious challenge to the legitimate PTC has challenged this in Sindh High Court due to
tobacco sector where selling prices of DNP brands are certain provisions in the S.R.O that go beyond the scope
not just lower than the Government mandated minimum of “The Prohibition of Smoking and Protection of Non-
price of Rs 62.75/pack, but even lower than the minimum Smokers Health Ordinance 2002” (NSO 2002).
excise and sales tax payable on a pack of 20 cigarettes
i.e. Rs 42.12/pack. This consistent tax avoidance not only
impacts the sustainability of the tax-paying legitimate Company Performance
industry but also results in Government revenue loss of The Company witnessed a decline in sales volume
approximately Rs 70 Billion per annum. of 7% during the year under review. This is primarily
attributable to consumers downtrading to duty not paid
Enforcement remains a key pillar to curtail growth of the cigarettes following the 93% increase in excise rates
DNP segment. Enforcement efforts by the Government announced in FY 2018-19 and FY 2019-20 budgets and
need to be significantly scaled up with dedicated human ~Rs 10/pack price reduction of key DNP brands post FY
and financial resources to ensure a level playing field 2020-21 budget. The Company continued to maintain
in the legitimate tobacco industry which will positively its market share leadership in the legitimate segment
impact revenue collection for the Government. growing market share by 1.3% in 2020, reaching 76.2%.
In 2020, PTC contributed Rs 112.5 Billion to the National
During 2020, there was rapid growth in counterfeit Exchequer in the form of excise duties, sales tax, income
incidence of the PTC brands. According to one tax and regulatory duties.
independent research, counterfeit incidence of PTC
brands amounted to an annualized volume loss of 2.8 The Company continues to focus on enhancing
Billion sticks with a potential revenue loss of Rs 6 Billion productivity across its value chain by ensuring effective
for the Government. As a countermeasure, the company cost management, lean operations, and modernization
introduced a technology enabled solution to arrest of machinery infrastructure. In 2019, the Company
volume decline to 1.2 Billion sticks. This solution not only embarked on its very first “Made in Pakistan” exports
enables consumers to identify a genuine product at the journey by becoming a new export hub for the BAT Group
point of sale but also serves as an effective tool for Law and in 2020 – its first year of full-scale operation, provided
Enforcement Agencies (LEAs) for on-spot detection of the Country with $31.1 Million in Foreign Direct Inflows.
counterfeit products. This initiative has been instrumental PTC’s export operation has huge potential to grow in the
in curbing counterfeit incidence and has helped PTC coming years which will generate additional valuable
retain sales and as a consequence increase payment to foreign currency inflows into the Country.
the national exchequer.
170
The Company’s cost base remained under pressure
Rs. (million)
throughout 2020 in the wake of the decline in volumes,
currency devaluation, inflation and COVID-19 associated FY 2020 FY 2019
costs. Despite these challenges, the Company continued Domestic Turnover 161,275 147,292
to focus on effective cost management and delivered Exports Turnover 4,983 1,733
multiple efficiency improvement projects, thereby allowing
FED & Sales Tax 105,368 97,050
it to keep costs in check.
Net Turnover 60,891 51,975
BAT Group is driving the agenda for A Better Tomorrow TM Cost of Sales 29,329 25,765
by reducing health impact of its business and offering Gross Profit 31,562 26,210
reduced risk products* to its adult consumers. The Operating Profit 21,846 17,675
group has invested approximately $5 Billion in research
Profit Before Tax – PBT 22,388 18,285
and development for new categories which comprise of
reduced risk products*. In 2020, PTC in line with Group’s Profit After Tax – PAT 16,492 12,889
agenda for tobacco harm reduction, ventured into new Earnings Per Share – EPS
64.55 50.45
categories by launching oral nicotine products, VELO. (Rs)
Currently, the VELO distribution network has expanded to
17 key cities across Pakistan and significant efforts are Profit & Loss Analysis
underway to leverage its potential in keeping with PTC’s During 2020, PTC continued its commitment with the
aim for A Better TomorrowTM. Government as one of the largest tax paying companies
in Pakistan. It contributed Rs 112.5 Billion in revenues
With people at the core of its delivery, the Company has to the Government, which translated to 68% of gross
a strong focus on people by attracting and retaining earnings, and retained 10% of revenues for distribution
the best talent in the country. PTC was awarded the Top amongst shareholders and re-investment in the business
Employer for 2020 by Top Employer Institute. Moreover, for as depicted by Graph-3
its drive and consistent focus on Diversity and Inclusion,
the Company was also awarded the “Global Diversity & Domestic turnover increased by 10% vs Same Period Last
Inclusion, Progressive Award 2020” by Global Diversity Year (SPLY) despite 7% volume decline due to the first
and Inclusion Benchmarks. half (Jan-Jun’ 20) impact of the Jun’ 19 excise-led price
increase. Exports Turnover was driven by a significant
PTC runs one of the largest private sector afforestation increase in export volumes as compared to SPLY, which
programs and a Mobile Doctor Unit (MDU) program. is a testament of the Company’s commitment to the
Under its flagship afforestation program running since Governments’ agenda of driving export growth. The
1981, the Company planted and distributed more than Company exported 2.3 Billion cigarette sticks and 4.1 Mn
9 million saplings free of cost in 2020. A new fully solar kgs of raw tobacco in 2020 with turnover amounting to
powered nursery is also under construction in Lahore. $31.1mn
Under the MDU program, the Company dispensed
medical advice and medicines free of cost to more than Cost of Sales also increased primarily due to devaluation
50,000 patients in 2020. To ensure local community is of local currency, increase in exports and inflationary
protected from water borne diseases, the Company is pressures. These were mitigated through multiple
providing clean drinking to the less privileged sectors of productivity savings initiatives and focused cost
the society through 5 water filtration plants filtering 64,000 management to reduce overall cost base.
litres of water per day.
Selling & distribution expenses declined by 3% which is
linked to reduction in sales volume. However, significant
investments have been made in trade activities, COVID
compliance initiatives and national expansion of new
categories.
* Based on the weight on the evidence and assuming a
complete switch from cigarette smoking. These products are
not risk free and are addictive.

Director’s Report
Other Operating Expenses increased by 12% during Liquidity Management

2020. The major portion of this increase is attributable
PTC’s Treasury function is responsible for raising
to one-off disposal of obsolete plant and machinery
finances for the Company as required, managing its
equipment across PTC’s manufacturing sites with the aim
cash resources and mitigating the financial risks that
of footprint optimization.
arise during its business operations. Clear parameters
have been established, including levels of authority as
Net Finance Income decreased by 11% in 2020,
well as the type and use of financial instruments. All
attributable to the decline in average interest rates.
treasury related activities are executed as per defined
policies, procedures and limits. These are reviewed and
Statement of Financial Position Analysis approved by the Board or the delegated authority to the
Property, plant & equipment increase in 2020 was Finance Director/Treasury Committee. Detailed review
primarily driven by upgrades to existing manufacturing of Company’s liquidity management and financing
capacities and infrastructure to support better product arrangements is provided in this Annual Report on page
quality, innovation and higher operating efficiencies. PTC 92.
has also initiated Velo localization whereby construction
of a standalone manufacturing facility has been initiated. Contribution to National Exchequer
Despite the challenges faced from the DNP sector, PTC
Stock in trade decrease was attributable to lower raw
continues to remain one of the largest contributors to the
material stock.
national exchequer. Despite volume reduction in 2020, the
Company’s contribution to the National Exchequer was Rs
Loans and advances include advances paid to media
112.5 Billion in excise duties, sales tax, income tax and
agencies for on-going VELO marketing campaigns.
regulatory duties.
Other receivables mainly includes balances related to
In order to maintain growth in revenues from the Tobacco
cash margins withheld by banks to comply with State
industry, the Government needs to have a sharper focus
Bank import regulation to deposit 100% cash margin
on enforcement and curtailing the growth of the DNP
against arrangements/contracts for import of raw
sector. Increase in market share of the illicit sector, is
material. Balance under this head decreased in 2020 due
indicative of the huge revenue loss of approximately
to settlement of margins with banks.
Rs 70 Billion per annum. Thus, it is imperative that the
illicit sector is curtailed through use of both fiscal and
Short term investments are done in Government treasury
administrative measures.
bills which recorded an increase from previous year due
to higher availability of surplus funds from sales cash
inflows at year end. Profit Distribution & Reserve Analysis
The Company started the year with reserves of Rs
Current liabilities increased due to higher payables 15.8 Billion. During the year, final dividend of Rs 23
outstanding at year end to internal and external vendors. per share related to year ended 2019, was approved
by shareholders and was subsequently paid. In 2020,
the Company earned net profit of Rs 16.5 Billion and
declared two interim dividends of Rs 15 per share in
Q2’20 and Rs 20 per share in Q3’20. The net reserves
position of the Company at year end stands at Rs 16.9
Billion. The details of appropriations are also elaborated
in the table below:
172
Rs. (million) Rs. Per Share Operations Review
Opening Reserves 15,736 PTC has a full seed to smoke business encapsulating
Final Dividend 2019 (5,876) 23.00 two factories and one of the largest leaf operations in
Net Profit 2020 16,492 64.55
the BAT Group. With the aim of enhancing productivity
throughout the value chain, the Company has a strong
Other Comprehensive Loss (452)
focus on effective cost management, lean operations, and
Available for appropriation 25,900 continuous modernization of the machinery infrastructure.
Appropriation: In 2019, the Company, in line with Government’s vision,

launched its export initiative titled “Made in Pakistan” and
Interim Dividends 2020 (8,942) 35.00
earned the position of being an export hub for the BAT
Closing Reserves 16,958 Group. Under this initiative in 2020 – its first full year of
operation, PTC exported over 2.3 Billion Cigarettes and
Final Dividend around 4.1 million KGs of tobacco worth $31.1 Mn.
The Board of Directors of PTC in its meeting held on
February 23, 2021 is pleased to recommend a final As part of the tobacco harm reduction agenda, PTC has
cash dividend of Rs. 28.0 per share for the year ended invested more than £10 Million in Modern Oral plant and
December 31, 2020 (2019: Rs. 23.0 per share), for the machinery for an independent factory at Jhelum site. It is
shareholders’ approval. This recommendation will be expected that the factory will start producing modern oral
subject to approval of the shareholders in the Annual nicotine pouches in the first half of 2021 to enable PTC
General Meeting, scheduled on April 22, 2021. further its agenda towards tobacco harm reduction and
cement its position as an export hub for BAT Group.
Consolidated Financial Statements and
Segmental Review EH&S – Environment, Health & Safety
COVID-19 pandemic and its challenge to the health and
Consolidated financial statements, as included in this
safety of PTC’s employees was handled in an organized
Annual Report, combine performance of Pakistan
and responsible manner in 2020. A dedicated ‘Crisis
Tobacco Company Limited and its wholly owned
Management Team’ comprising of PTC’s leadership was
subsidiary, Phoenix (Private) Limited. The subsidiary
formulated with the aim of brainstorming risk mitigation
company is dormant and has not commenced
strategies for crisis scenarios. Further, comprehensive
commercial operations.
standard operating procedures and ‘Zero Tolerance
Policies’ were enforced, and company-wide awareness
Subsequent Events Review sessions were conducted to avoid COVID-19 contraction
The Management has assessed events arising amongst PTC’s employees.
subsequent to the end of the financial year of the
Company till the date of the report and hereby, confirms Significant awareness and infrastructural improvements
that no material changes and commitments affecting the have been made in relation to Environment, Health &
financial position of the Company have occurred during Safety processes and procedures at the manufacturing
this period. plants. Keeping in view the energy crisis, multiple energy
conservation initiatives were undertaken in 2020 including
Jhelum Factory doubling its solar generation capacity
to 200kW, making it the highest renewable energy
generating site for PTC while Akora Factory has achieved
2nd highest status in water recycling ratio in BAT world,
thereby, reducing its CO2 emissions footprint by 850 tons.
PTC’s manufacturing has been globally recognized in BAT
Group for the efforts and outstanding results delivered
through this drive for excellence.

Director’s Report
Marketing Review Risk Management & Internal

Consumer affordability continued to come under stress Controls
in 2020 due to global pandemic-led economic tightening
The Board is responsible for managing the risks
and the widening price differential between legitimate
and challenges faced by the Company in its course
and DNP brands. However, despite the challenges faced,
of operations, while maintaining a strong control
focused investments were made for a future-fit brands
environment. The Company’s risk management and
portfolio.
internal controls framework is aimed at safeguarding the
shareholders’ investment and the Company’s assets,
while minimizing the impact of the risks that may impede
the delivery of the Company’s objectives. Details of this
are captured in the section on Risk & Opportunity of the
Annual Report.
the year to further enhance Gold Flake’s equity and mix.
This was a strategic intervention which has helped the
Comprehensive policies and procedures, structured
brand significantly capture lost volume and market share.
governance mechanisms and a conducive organizational
Embassy’s franchise base was also successfully retained
culture have facilitated a strong compliance and control
through its pack format change campaign allowing it to
environment across the Company. All heads of functions
sustain and maintain its distribution and consumer base
are required to carry out a comprehensive assessment
respectively.
of globally defined key controls that are expected to be
in place and operating effectively. Any non-compliances
Despite increase in the incidence of counterfeit, PTC’s
and material weakness are reported along with action
anti-counterfeit drive via a unique technology enabled
plans to address them. Additionally, all employees are
scanning solution in Q3’20 enabled the Company to gain
required to sign off an annual Statement of Compliance
back volume from Counterfeit brands which also resulted
to the Company’s Standards of Business Conduct.
in positive feedback from consumers, retailers and LEAs.
Furthermore, the Company is also fully compliant to all
the requirements of Sarbanes Oxley Act (SOx) which has
further strengthened the internal controls of the Company.
was carried out in Q3’20 which was further aided by
successful interventions of limited-edition packs resulting Corporate Governance
in improved sales traction for the brand in Q4’20.
Good Corporate Governance
In the Premium segment, based on consumer trends and The Directors confirm compliance with the Corporate
positive sales results, handlers of Dunhill were increased and Financial Reporting Framework of the Securities and
at a national level resulting in positive sales growth and a Exchange Commission of Pakistan’s Listed Companies
larger handler base in 2020. These initiatives have further (Code of Corporate Governance) Regulations, 2019 (“the
propelled the Dunhill brand to new heights in Pakistan. Code of Corporate Governance”) for the following:
a) The financial statements, prepared by the management

of the Company, present fairly its state of affairs, the
result of its operations, cash flows and changes in
equity.
174
b) Proper books of accounts of the Company have been Composition of the Board
maintained.
The Board comprises a total of 12 directors: 8 non-
c) Appropriate accounting policies have been consistently executive directors, of whom 4 are independent directors,
applied in preparation of financial statements and the and 4 executive directors.
accounting estimates are based on reasonable and
prudent judgement. The current composition of the Board is as below.
d) International Financial Reporting Standards, as No. of

Name of Director
applicable in Pakistan, have been followed in Directors
preparation of the financial statements and any • Male Directors 11
departures therefrom have been adequately disclosed • Female Director 1
and explained.
a. Independent Directors 4
e) The system of internal controls is sound in design and (i) Mr. Zafar Mahmood (Chairman)
has been effectively implemented and monitored.
(ii) Lt. Gen. M. Masood Aslam (R)
f) There are no significant doubts about the Company’s (iii) Mr. Mohammad Riaz
ability to continue as a going concern.
(iv) Mr. Asif Jooma
g) There has been no material departure from the best b. Non- Executive Directors 4
practices of corporate governance, as detailed in the (i) Mr. Tajamal Shah
Code of Corporate Governance and listing regulations.
(ii) Ms. Belinda Joy Ross
h) All major Government levies in the normal course of (iii) Mr. Zafar Aslam Khan
business, payable as at December 31, 2020 have been
disclosed in the notes to the financial statements. (iv) Syed Javed Iqbal
c. Executive Directors 4
i) Key operating and financial data for last six years in
(i) Mr. Usman Zahur (Managing Director
summarized form is provided separately in this Annual
and CEO)
Report.
(ii) Mr. William Francis Pegel
j) Values of investments in employee’s retirement funds (iii) Mr. Syed Asad Ali Shah
for the year ended December 31, 2020 are as follows.
Further details are provided in Note 33 to the separate (iv) Mr. Syed Ali Akbar
Fund Name Rs. (million)

Staff Pension Fund 5,492
Employees Gratuity Fund 1,173
Management Provident Fund 735
382
Provident Fund
Staff Defined Contribution Pension Fund 659

Director’s Report
There is female representation on the Board in

Name of Director Attendance
compliance with the regulatory requirement.
Zafar Mahmood
Chairman 5/5
The overall effectiveness of the Board is enhanced by
the diversity and breadth of perspective of its members, Usman Zahur
Managing Director and CEO 5/5
who combine professional and academic skills and
experience, local and international, and collectively William Francis Pegel
the Board also has sufficient financial acumen and Director Finance & IT 5/5
knowledge. PTC conforms to the regulatory requirements Syed Asad Ali Shah
on the composition and qualification of the Board of Director Legal & External Affairs 5/5
Directors. Syed Ali Akbar
Director Marketing 4/5
Directors’ detailed profiles including their names, status Syed Javed Iqbal
(independent, executive, non-executive), in addition to Non-Executive Director 1/5
industry experience and directorship of other companies, Belinda Joy Ross
have been provided separately in the Annual Report. Non-Executive Director 4/5
The status of directorship (independent, executive, non-
Zafar Aslam Khan
executive) is indicated in the Statement of Compliance
with the Code of Corporate Governance.
Independent Director 5/5
Changes in the Board
Mohammad Riaz
No changes in Board were announced in 2020. Independent Director 5/5
Asif Jooma
Meetings of the Board Independent Director 5/5
Under the applicable regulatory framework, the Board is Tajamal Shah
legally required to meet at least once in every quarter to Non-Executive Director 4/5
ensure transparency, accountability, and monitoring of
the Company’s performance. Special meetings are also Board Meetings Held Outside Pakistan
held during the year to discuss important matters, as and In 2020, PTC conducted all its Board meetings in
when required. In 2020, 5 Board meetings were held, out Pakistan.
of which the 1st meeting was held on 24th February 2020.
The notices / agendas of the meetings were circulated

Committees of the Board
in advance, in a timely manner and in compliance with The Board has four committees, which assist the Board
applicable laws. All meetings of the Board held during in the performance of its functions. Details of all Board
the year surpassed the minimum quorum requirements of Committees, including attendance and their functions, are
attendance, as prescribed by the applicable regulations. provided separately in the Annual Report.
The Company Secretary acts as the Secretary to the

Board. All decisions made by the Board during the
meetings were clearly documented in the minutes of the
meetings maintained by the Company Secretary and were
duly circulated to all the Directors for endorsement and
were approved in the subsequent Board meetings.
176
Directors’ Remuneration Offices of the Chairman & CEO
As per the requirements of the Code of Corporate To promote transparency and good governance, the
Governance, there is a formal and transparent procedure offices of the Chairman of the Board of Directors and the
in place for fixing the remuneration packages of individual Chief Executive Officer are held by separate individuals
Directors. No Director is involved in deciding his/her own with clear segregation of roles and responsibilities.
remuneration.
Brief Roles & Responsibilities of the
These remuneration packages are approved as per
Chairman & CEO
requirements of the regulatory framework and internal
procedures, while ensuring that they are not at a level that Roles and responsibilities of the Chairman and the CEO
could be perceived to compromise the independence of have been clearly and distinctly defined by the Board.
non-executive directors.
The Chairman is basically a leader and mediator to head
The remuneration of executive directors including the the meeting of the Board of Directors effectively and
CEO, key management personnel and other executives is take decisions after a free and open sharing of views
given in note 37 to the financial statements. within a limited time quickly and efficiently. The Chairman
is responsible for the overall discharge of the Board’s
duties.
Evaluation of Board’s Performance
The Company has designed an “Evaluation Tool” to assist the The CEO is the executive head of the Company, who
Board to: heads all facets of the Company through respective
heads of functions and manages the day to day
• understand and recognise what is working well; operations of the Company and provides leadership
• identify areas for improvement; towards the achievement of the Corporate Plan. The CEO
is responsible for leading, developing and executing the
• discuss and agree on priorities for change, which
Company’s short- and long-term strategies with a view
can be addressed in the short-and long-term;
to enhance shareholders’ value. The CEO liaises with the
• agree on an action plan. Board and communicates on behalf of the Management.
The Evaluation Tool comprises an evaluation

questionnaire, which is circulated to all the Directors in
which each Director must evaluate himself/herself as
well as the Board. In order to encourage open and frank
evaluations, as well as to ensure anonymity, the evaluation
process is directed by the Company Secretary, who mails
the questionnaire to each Director and then collates the
results into a report including a summary of the results,
and recommendations to the Board. The Report is then
discussed in the next Board Meeting to address the areas
of concern and improve the Board’s performance.

Director’s Report
CEO’s Performance Evaluation by the Last AGM

Board The Company’s 73rd AGM (Annual General Meeting) was
The Board appoints the CEO for a term of 3 years, in held on May 8, 2020. All shareholders, including minority
compliance with applicable laws. His performance shareholders, were proactively sent out invites informing
is reviewed annually, based on the yearly corporate them about the time and place of the meeting, well in
plan, besides his responsibilities under the regulatory advance. High quality and comfortable arrangements,
framework. aimed at facilitating the shareholders of the Company,
were made to conduct the AGM.
Performance for the year 2020 is demonstrated by
achievement of the corporate plan and compliance with During the meeting, general clarifications on the
the applicable regulatory requirements. published financial statements and the impact of illicit
trade were sought by the shareholders and investors. No
issues were reported in that meeting.
Formal Orientation At Induction
Newly inducted Board members are taken through an
Auditors
Induction Plan for their orientation and familiarization
towards the Company’s vision, organizational structure, Statutory Audit for the Company for the financial year
roles and responsibilities of senior executives, major ended December 31, 2020 has been concluded and the
pending or threatened litigation, policies relating to Auditors have issued their Audit Reports on the Company
dividends, whistleblowing, summary of Company’s major Financial Statements, Consolidated Financial Statements
assets, liabilities and noteworthy contracts etc. and the Statement of Compliance with the Code of
Corporate Governance. The Auditors, Messers KPMG
As part of the Induction Plan, senior executives of the Taseer Hadi & Co., shall retire at the conclusion of the
Company present the performance of their respective Annual General Meeting, and they have indicated their
department to the newly inducted Directors. willingness to continue as Auditors for PTC. They have
confirmed to have achieved satisfactory rating by the
Institute of Chartered Accountants of Pakistan (ICAP) and
Directors’ Training Program
compliance with the Guidelines on the Code of Ethics
PTC has ensured compliance with the applicable of the International Federation of Accountants (IFAC) as
regulatory requirements regarding Directors training. adopted by ICAP. The Board proposes their appointment
More than half of the Directors have obtained certification as Auditors for the financial year ending December 31,
under Directors’ Training Program (DTP) approved by 2020 on the recommendation of the Audit Committee.
SECP. This shall be subject to the approval of the shareholders
in their meeting scheduled for April 22, 2021.
178
Pattern of Shareholding The Board reviews compliance with the BCM Manual
on an annual basis. Responsibility and accountability
Our holding company, British American Tobacco
for ensuring compliance with the Standards and for the
(Investments) Limited (BAT-IL), incorporated in United
implementation of the BCM process has been delegated
Kingdom holds 94.34% shares of the Company at the
to the Managing Director. Operational management of
year end. The pattern of shareholding as at December
BCM is delegated to the Head of Security who is the lead
31, 2020 alongside the disclosure as required under
for BCM in the Company. Heads of Functions are the risk
Code of Corporate Governance is provided separately in
owners and are responsible for enabling and maintaining
this Annual Report.
an effective BCM capability within their respective
functions. The Business Continuity Manager facilitates
Trading In Shares by Directors and and coordinates the BCM process in the Company.
Executives
The Directors, Chief Executive Officer, Chief Financial By implementing a BCM process, the Company ensures
Officer, Company Secretary and their spouses and minors that:
have reportedly not performed any trading in the shares
of the Company. • Its people, assets and information are protected,
and employees receive adequate support and
communications in the event of a disruption;
Review of BCP
PTC recognizes the importance of Business Continuity • The relationships with other organizations, relevant
Management (BCM) as the means to ensure that the regulators or government departments, local
business can continue to succeed in times of crisis and authorities and the emergency services are properly
during the recovery process. To this end, the Company developed and documented, and stakeholder
has established a BCM Manual as per International requirements are understood and can be delivered;
Standards which enables the Company to: and
• Proactively plan and prepare in the case of an • The Company has an enhanced capacity to protect
incident; its reputation and remains compliant with its legal
and regulatory obligations.
• Understand how to respond should an incident
occur;
• Know how to manage the situation effectively; and
• Return to Business as Usual (BAU) as quickly as

possible to minimize the negative impact on the
business.
Zafar Mehmood Usman Zahur
Chairman MD/CEO

INDEPENDENT AUDITORS’ REPORT
Opinion
We have audited the annexed consolidated financial statements of Pakistan Tobacco Company Limited (PTC) and its subsidiary
(the Group), which comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated
statement of profit or loss, and the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies and other explanatory information.
In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the Group as
at 31 December 2020, and (of) its consolidated financial performance and its consolidated cash flows for the year then ended in
accordance with the accounting and reporting standards as applicable in Pakistan.
Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered
Accountants of Pakistan (the Code), and we have fulfilled our other ethical responsibilities in accordance with the Code. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
180
Following are the Key audit matters:
S. No. Key audit matters How the matter was addressed in our audit
1 Revenue recognition Our audit procedures to assess the recognition of revenue,
amongst others, included the following:
Refer notes 7.2 and 8 to the consolidated financial
statements. • Obtaining an understanding of the process relating
to recognition of revenue and testing the design,
The Group is engaged in the production and sale of tobacco.
implementation and operating effectiveness of key
The Group recognised net revenue from the sales of
internal controls over recording of revenue;
cigarettes/tobacco of Rs 60,891 million for the year ended 31
December 2020. • Comparing a sample of revenue transactions recorded
during the year with sales orders, sales invoices,
We identified recognition of revenue as a key audit matter delivery documents and other relevant underlying
because revenue is one of the key performance indicator documents;
of the Group and gives rise to an inherent risk that revenue
could be subject to misstatement to meet expectations or
around the year- end with the sales orders, sales
targets.
invoices, delivery documents and other relevant
underlying documentation to assess if the related
revenue was recorded in the appropriate accounting
period;
• Assessing whether the accounting policies for revenue

recognition complies with the requirements of IFRS 15
‘Revenue from Contracts with Customers’;
• Comparing the details of a sample of journal entries

posted to revenue accounts during the year, which met
certain specific risk-based criteria, with the relevant
underlying documentation; and
• Assessing the appropriateness of disclosures in the

2 Valuation of stock-in-trade Our audit procedures to assess the valuation of stock-in
trade, amongst others, included the following:
Refer notes 7.12 and 18 to the consolidated financial
statements. • Assessing the design, implementation and operating
effectiveness of key internal controls over valuation of
As at 31 December 2020, stock-in-trade is stated at Rs
stock-in-trade including determination of net realizable
19,483 million. Stock-in-trade is measured at the lower of cost
values;
and net realisable value.
• Attending inventory counts and reconciling the count
We identified existence and valuation of stock-in-trade
results to the inventory listings;
as a key audit matter due to its size, representing 43% of
total assets of the Group as at 31 December 2020, and the • Assessing the accuracy of cost of stock in trade in
judgement involved in valuation. accordance with the accounting policy;
• Assessing the net realizable value of stock-in-trade by

comparing, on a sample basis, management’s estimation
of future selling prices for the products and selling prices
achieved subsequent to the end of the reporting period;
and
• Comparing the net realizable value to the cost of a sample

of stock-in-trade and comparison to the associated
provision to assess whether stock-in-trade provisions are
complete.

Information Other than the Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. Other information comprises the information included in the annual report
for the year ended 31 December 2020, but does not include the consolidated financial statements and our auditors’ report
thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Responsibilities of Management and the Board of Directors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with accounting and reporting standards as applicable in Pakistan and Companies Act, 2017 and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Group’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable
in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgement and maintain
professional skepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
● Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are
182
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’
report. However, future events or conditions may cause the Group to cease to continue as a going concern.
● Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditors’ report is Atif Zamurrad Malik.

29th March 2021 Chartered Accountants
Islamabad

CONSOLIDATED STATEMENT OF
PROFIT OR LOSS
2020 2019
Gross turnover 8 166,258,483 149,024,648

Excise duties (80,907,579) (74,741,489)
Sales tax (24,460,393) (22,308,263)
Net turnover 60,890,511 51,974,896

Cost of sales 9 (29,328,821) (25,764,813)
Gross profit 31,561,690 26,210,083

Selling and distribution costs 10 (5,015,427) (4,666,122)
Administrative expenses 11 (3,357,904) (2,780,245)
Other operating expenses 12 (2,091,229) (1,871,999)
Other income 13 748,598 783,182
(9,715,962) (8,535,184)
Operating profit 21,845,728 17,674,899

Finance income 782,866 812,571
Finance cost 14 (240,699) (202,553)
Net finance income 542,167 610,018
Profit before income tax 22,387,895 18,284,917

Income tax expense 15 (5,895,405) (5,395,688)

Earnings per share (basic and diluted)- (Rupees) 64.55 50.45

The annexed notes 1 to 40 form an integral part of these consolidated financial statements.

184
COMPREHENSIVE INCOME
2020 2019
Other comprehensive income:
Items that will not be reclassified to profit or loss

- Remeasurement loss on defined benefit pension
and gratuity plans 31 (636,405) (144,170)

- Tax credit related to remeasurement loss on
defined benefit pension and gratuity plans 15.2 184,557 43,873
(451,848) (100,297)
Total comprehensive income for the year 16,040,642 12,788,932



FINANCIAL POSITION
2020 2019
Non current assets
Property, plant and equipment 16 15,126,803 12,347,878

Advance for capital expenditure 716,864 175,783
Long term deposits and prepayments 17 27,720 30,759
15,871,387 12,554,420
Current assets
Stock-in-trade 18 19,482,676 21,422,543

Stores and spares 19 678,900 663,999
Trade debts 20 1,392 4,260
Loans and advances 21 335,205 125,644
Short term prepayments 76,415 15,921
Other receivables 22 1,316,315 2,111,891
29,134,414 27,881,221
Current liabilities
Trade and other payables 25 19,202,894 16,295,244

Other liabilities 26 2,073,866 2,865,822
Lease liability 28 678,730 382,941
Unpaid dividend 29 84,856 66,740
Unclaimed dividend 77,381 78,235
Accrued interest / mark-up 583 18,859
Current income tax liabilities 912,236 449,395
(23,030,546) (20,157,236)
Net current assets 6,103,868 7,723,985
Non current liabilities
Lease liability 28 (1,573,892) (1,341,607)

Deferred income tax liabilities 30 (888,506) (645,943)
(2,462,398) (1,987,550)
Net assets 19,512,857 18,290,855
Share capital and reserves
Share capital 32 2,554,938 2,554,938

Revenue reserve - Unappropriated profit 16,957,919 15,735,917
19,512,857 18,290,855
Contingencies and commitments 33

186
CHANGES IN EQUITY
Share Revenue Reserve - Total
capital unappropriated
profit
Rs ‘000 Rs ‘000 Rs ‘000

Total Comprehensive income for the year – 12,788,932 12,788,932



Total comprehensive income for the year – 16,040,642 16,040,642





CASH FLOWS
2020 2019
Cash generated from operations 37 27,923,964 14,361,234

Finance cost paid (258,975) (182,149)
Income tax paid (5,005,444) (5,271,843)
Contribution to retirement benefit funds (444,152) (342,950)
Net cash generated from operating activities 22,215,393 8,564,292

Purchases of property, plant and equipment (3,659,936) (2,731,002)

Advance for capital expenditure (541,081) 783,657
Proceeds from sale of property, plant and equipment 226,567 299,933
Interest received 782,866 812,571
Net cash used in investing activities (3,191,584) (834,841)

Dividends paid (14,801,378) (12,400,182)

Lease payments (515,883) (709,437)
Net cash used in financing activities (15,317,261) (13,109,619)
Net increase in cash and cash equivalents 3,706,548 (5,380,168)

Cash and cash equivalents at beginning of year 3,536,963 8,917,131
Cash and cash equivalents at end of year 7,243,511 3,536,963

7,243,511 3,536,963


188
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1 Corporate and general Information
The Group and its operations
Pakistan Tobacco Company Limited (the Company) is a public limited company incorporated in Pakistan on November 18, 1947
under the Companies Act, 1913 (now the Companies Act, 2017) and its shares are quoted on the Pakistan Stock Exchange Limited.
The Company is a subsidiary of British American Tobacco (Investments) Limited, United Kingdom, whereas its ultimate parent
company is British American Tobacco p.l.c, United Kingdom. The Company is engaged in the manufacture and sale of cigarettes/
tobacco.
The registered office of the Company is situated at Serena Business Complex, Khayaban-e-Suharwardy, Islamabad, Pakistan. The
Company has two manufacturing plants located at Akora Khattak and Jhelum.
Phoenix (Private) Limited (PPL) is a private limited company incorporated on March 9, 1992 in Azad Jammu and Kashmir under the
Companies Ordinance, 1984 (now the Companies Act, 2017. The registered office of PPL is situated at Bin Khurma, Chichian Road,
Mirpur, Azad Jammu and Kashmir. The object for which the PPL has been incorporated is to operate and manage an industrial
undertaking in Azad Jammu and Kashmir to deal in tobacco products. PPL is dormant and has not commenced its commercial
operations.
For the purpose of these consolidated financial statements, the Company and its wholly owned subsidiary PPL is referred to as the
Group.
Capacity and production
Against an estimated manufacturing capacity of 45,330 million cigarettes (2019: 53,381 million cigarettes) actual production was
39,113 million cigarettes (2019: 39,469 million cigarettes). The split from each industrial unit is given below.
Manufacturing Capacity
2020 2019

Total 45,330 53,381
Actual Production
2020 2019

Total 39,113 39,469
Actual production is less than the installed capacity due to market demand. Capacity has been also reduced due to reduction in
demand.

Number of employees
Total number of employees as at December 31, 2020 were 1,038 (2019: 1,127). Out of the total number of employees, the number
of factory employees as at December 31, 2020 were 377 (2019: 483). Average number of employees during the year were 1,059
(2019: 1,101), whereas average factory employees during the year were 411 (2019: 458).
Impact of COVID-19
During the year ended 31 December 2020, the COVID-19 pandemic emerged which impacted the economy of country in general,
however the Group has not experienced any major disruptions to the operations or decline in revenue due to temporary lockdown
imposed by the Government to counter COVID-19 outbreak.

2 Statement of compliance
These consolidated financial statements have been prepared in accordance with the accounting and reporting standards as
applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:

International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards Board (IASB) as
notified under the Companies Act, 2017; and
- Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the provisions of and
directives issued under the Companies Act, 2017 have been followed.
3 Basis of measurement
These consolidated financial statements have been prepared under the historical cost convention except as otherwise stated in the
respective accounting policies notes.
4 Functional and presentation currency
Items included in these consolidated financial statements are measured using the currency of the primary economic environment
in which the Group operates (the functional currency), which is the Pakistan rupee (Rs).
5 Use of estimates and judgements
In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect
the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
estimates are recognized, prospectively.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
• Note 8 – Nature and timing of satisfaction of performance obligation and revenue recognition
• Note 16 – useful lives, residual values and depreciation method of property, plant and equipment
• Note 18 and 19 – Provision for obsolescence of stock in trade and stores and spares
• Notes 15 and 30 – Provision for income tax and calculation of deferred tax
• Note 31 – Retirement benefits
• Note 34 – Financial instruments – fair values
• Note 33 – Contingencies
• Note 28 - Leases
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair vales, for both financial and non-
financial assets and liabilities.
Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to
measure fair values, then management assesses the evidence obtained from the third parties to support its conclusion that these
valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified.
When measuring fair value of an asset or a liability, the Group uses observable and available market data as far as possible. Fair
values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
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• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1, which are observable and available for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable and available market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level of input that is significant
to the entire measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
6 New accounting standards, amendments and IFRIC interpretations that are not yet effective
The following International Financial Reporting Standards (IFRS Standards) as notified under the Companies Act, 2017 and the
amendments and interpretations thereto will be effective for accounting periods beginning on or after 01 January 2021:
• COVID-19-Related Rent Concessions (Amendment to IFRS 16) - the International Accounting Standards Board (the
Board) has issued amendments to IFRS 16 (the amendments) to provide practical relief for lessees in accounting for rent
concessions. The amendments are effective for periods beginning on or after 1 June 2020, with earlier application permitted.
Under the standard’s previous requirements, lessees assess whether rent concessions are lease modifications and, if so,
apply the specific guidance on accounting for lease modifications.

This generally involves remeasuring the lease liability using the revised lease payments and a revised discount rate. In light
of the effects of the COVID-19 pandemic, and the fact that many lessees are applying the standard for the first time in their
financial statements, the Board has provided an optional practical expedient for lessees. Under the practical expedient,
lessees are not required to assess whether eligible rent concessions are lease modifications, and instead are permitted to
account for them as if they were not lease modifications. Rent concessions are eligible for the practical expedient if they
occur as a direct consequence of the COVID-19 pandemic and if all the following criteria are met:
– the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than,
the consideration for the lease immediately preceding the change;
– any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
– there is no substantive change to the other terms and conditions of the lease.
The standard is not likely to have any effect on Group’s financial statements.
• Interest Rate Benchmark Reform - Phase 2 which amended IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 is applicable
for annual financial periods beginning on or after 1 January 2021, with earlier application permitted. The amendments
introduce a practical expedient to account for modifications of financial assets or financial liabilities if a change results
directly from IBOR reform and occurs on an ‘economically equivalent’ basis. In these cases, changes will be accounted for
by updating the effective interest rate. A similar practical expedient will apply under IFRS 16 for lessees when accounting
for lease modifications required by IBOR reform. The amendments also allow a series of exemptions from the regular,
strict rules around hedge accounting for hedging relationships directly affected by the interest rate benchmark reforms. The
amendments apply retrospectively with earlier application permitted. Hedging relationships previously discontinued solely
because of changes resulting from the reform will be reinstated if certain conditions are met. The standard is not likely to
have any effect on Group’s financial statements.
• Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) effective for the annual period beginning on
or after 1 January 2022 amends IAS 1 by mainly adding paragraphs which clarifies what comprise the cost of fulfilling a
contract, Cost of fulfilling a contract is relevant when determining whether a contract is onerous. An entity is required to
apply the amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting
period in which it first applies the amendments (the date of initial application). Restatement of comparative information is not
required, instead the amendments require an entity to recognize the cumulative effect of initially applying the amendments
as an adjustment to the opening balance of retained earnings or other component of equity, as appropriate, at the date of
initial application. The standard is not likely to have any effect on Group’s financial statements.

• Annual Improvements to IFRS standards 2018-2020:
The following annual improvements to IFRS standards 2018-2020 are effective for annual reporting periods beginning on or
after 1 January 2022.
– IFRS 9 - The amendment clarifies that an entity includes only fees paid or received between the entity (the borrower) and
the lender, including fees paid or received by either the entity or the lender on the other’s behalf, when it applies the ‘10 per
cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial liability.
– IFRS 16 - The amendment partially amends Illustrative Example 13 accompanying IFRS 16 by excluding the illustration
of reimbursement of leasehold improvements by the lessor. The objective of the amendment is to resolve any potential
confusion that might arise in lease incentives.
– IAS 41 - The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows
when measuring the fair value of a biological asset using a present value technique.
– Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) effective for the annual period
beginning on or after 1 January 2022. Clarifies that sales proceeds and cost of items produced while bringing an item of
property, plant and equipment to the location and condition necessary for it to be capable of operating in the manner intended
by management e.g. when testing etc., are recognized in profit or loss in accordance with applicable Standards. The
entity measures the cost of those items applying the measurement requirements of IAS 2. The standard also removes the
requirement of deducting the net sales proceeds from cost of testing. An entity shall apply those amendments retrospectively,
but only to items of property, plant and equipment that are brought to the location and condition necessary for them to be
capable of operating in the manner intended by management on or after the beginning of the earliest period presented in
the financial statements in which the entity first applies the amendments. The entity shall recognize the cumulative effect
of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of
equity, as appropriate) at the beginning of that earliest period presented.
– Reference to the Conceptual Framework (Amendments to IFRS 3) - Reference to the Conceptual Framework, issued in
May 2020, amended paragraphs 11, 14, 21, 22 and 23 of and added paragraphs 21A, 21B, 21C and 23A to IFRS 3 . An
entity shall apply those amendments to business combinations for which the acquisition date is on or after the beginning
of the first annual reporting period beginning on or after 1 January 2022. Earlier application is permitted if at the same time
or earlier an entity also applies all the amendments made by Amendments to References to the Conceptual Framework in
IFRS Standards, issued in March 2018.
– Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) - In response to concerns regarding
temporary accounting mismatches and volatility, and increased costs and complexity, the Board issued amendments to IFRS
4 Insurance Contracts in 2017. The two optional solutions raised some considerations which required detailed analysis and
management judgement. On the issue of IFRS 17 (Revised) Insurance Contracts in June 2020, the end date for applying
the two options under the IFRS 4 amendments was extended to 1 January 2023, aligned with the effective date of IFRS 17.
– Classification of liabilities as current or non-current (Amendments to IAS 1) effective for the annual period beginning on or
after 1 January 2022. These amendments in the standards have been added to further clarify when a liability is classified as
current. The standard also amends the aspect of classification of liability as non-current by requiring the assessment of the
entity’s right at the end of the reporting period to defer the settlement of liability for at least twelve months after the reporting
period. An entity shall apply those amendments retrospectively in accordance with IAS 8.
– Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
- The amendment amends accounting treatment on loss of control of business or assets. The amendments also introduce
new accounting for less frequent transaction that involves neither cost nor full step-up of certain retained interests in assets
that are not businesses. The effective date for these changes has been deferred indefinitely until the completion of a broader
review.
The above amendments are not likely to have an impact on the Group’s financial statements.
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7 Summary of significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements
Significant accounting policies of the Group are as follows:

7.1 Basis of consolidation
These consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary company
i.e. PPL, collectively called “the Group”.
Subsidiaries are all entities over which the Group has the control or a shareholding of more than half of the voting rights. The Group
controls an entity when it is expose to, or has rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which the control is
transferred to the Group. They are derecognized from the date the control ceases.
7.2 Revenue recognition
Revenue comprises the invoiced value for the sale of goods net of sales taxes, rebates and discounts. Certain marketing costs
are deducted from the gross amount of sales. Revenue from the sale of goods is recognised when control of the goods passes to
customers and the customers can direct the use of and substantially obtain all the benefits from the goods. Revenue is recognized
when specific criteria have been met for each of the Group’s activities as described below.
Revenue from contracts with customers
Sale of goods
The Group manufactures and sells cigarettes to its appointed distributors. Sale of goods is recognized when the Group has
transferred control of the products to the distributor and there is no unfulfilled obligation that could affect the distributor’s acceptance
of the products.
Contract assets
Contract assets arise when the Group performs its performance obligations by transferring goods to a customer before the customer
pays its consideration or before payment is due.
Contract liabilities
A contract liability is the obligation of the Group to transfer goods to a customer for which the Group has received consideration
from the customer. If a customer pays consideration before the Group transfers goods, a contract liability is recognised when the
payment is made. Contract liabilities are recognised as revenue when the Group performs its performance obligations under the
contract.
Income on bank deposits
Income on bank deposits is accounted for on the time proportion basis using the applicable rate of return.
Income on short term investments
Short term investments, classified as financial assets at fair value through profit or loss, are re-measured to fair value at each
reporting date until the assets are de-recognised. The gains and losses arising from changes in fair value are included in the
statement of profit or loss in the period in which they occur.
Others
Scrap sales and miscellaneous receipts are recognized on realized amounts. All other income is recognized on accrual basis.
7.3 Income tax
Income tax expense for the year comprises current and deferred income tax, and is recognized in the statement of profit or loss,
except to the extent that it relates to items recognized in other comprehensive income or directly in the equity. In this case, income
tax is also recognized in other comprehensive income or directly in equity, respectively.

Current
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to
the tax payable or receivable in respect of previous years. The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on
the basis of amounts expected to be paid to the tax authorities.
Deferred
Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements.
Deferred income tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized to the
extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses
and tax credits can be utilized.
Deferred income tax is calculated at the rates that are expected to apply to the period when the differences reverse.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to income tax levied by the same taxation
authority on either the same taxable entity or different taxable entities where there is an intention to settle the balance on a net basis.
7.4 Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the obligation; and the amount could be reliably estimated. Provisions are
not recognized for future operating losses. All provisions are reviewed at each statement of financial position date and adjusted to
reflect current best estimate.
7.5 Earnings per share
The Group presents earnings per share (EPS) data for its ordinary shares. EPS is calculated by dividing the profit or loss attributable
to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the year.
7.6 Contingent assets
Contingent assets are disclosed when the Group has a possible asset that arises from past events and whose existence will only
be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
Contingent assets are not recognized until their realization becomes certain.
7.7 Contingent liabilities
Contingent liability is disclosed when the Group has a possible obligation as a result of past events whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
Contingent liabilities are not recognised, only disclosed, unless the possibility of a future outflow of resources is considered remote.
In the event that the outflow of resources associated with a contingent liability is assessed as probable, and if the size of the outflow
can be reliably estimated, a provision is recognized in the financial statements.
7.8 Employee benefits
(a) Retirement benefit plans
The Group operates various retirement benefit schemes. The schemes are generally funded through payments to trustee-
administered funds, determined by periodic actuarial calculations or up to the limit allowed as per the Income Tax Ordinance, 2001.
The Group has both defined contribution and defined benefit plans.
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A defined contribution plan is a plan under which the Group pays fixed contributions into a separate fund. The Group has no further
legal or constructive obligation to pay contributions if the fund does not hold sufficient assets to pay all employees, the benefits
relating to employees’ service in the current and prior periods.
A defined benefit plan is a plan that is not a defined contribution plan. Typically, defined benefit plans define an amount of benefit that
an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The Group operates:
(i) Defined benefit, approved funded pension scheme for management and certain grades of business support officers and
approved gratuity scheme for all employees. Employees also contribute to the pension scheme. The liability recognized in
the balance sheet in respect of pension and gratuity schemes is the present value of the defined benefit obligation of the
Group at the reporting date less the fair value of plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The
present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest
rates of government bonds denominated in Pakistan rupee and have terms to maturity approximating to the terms of the
related liability.
The current service cost of the defined benefit plan, recognised in the income statement in employee benefit expense,
except where included in the cost of an asset, reflects the increase in the defined benefit obligation resulting from employee
service in the current year, benefit changes curtailments and settlements. Past-service costs are recognised immediately in
income.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the
fair value of plan assets. This cost is included in employee benefit expense in the income statement.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or
credited to equity in other comprehensive income in the period in which they arise.
(ii) Approved contributory provident fund for all employees administered by trustees and approved contributory pension fund for
the new joiners. The contributions of the Group are recognized as employee benefit expense when they are due. Prepaid
contributions, if any, are recognized as an asset to the extent that a cash refund or a reduction in the future payments is
available.
(b) Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date or whenever
an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is
demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without
possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. In
the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of
employees expected to accept the offer.
(c) Medical benefits
The Group maintains a health insurance policy for its entitled employees and their dependents and pensioners and their spouses.
The Group contributes premium to the policy annually. Such premium is recognised as an expense in the statement of profit or loss.
(d) Bonus plans
The Group recognizes a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable
to the Group’s shareholders after certain adjustments and performance targets. The Group recognizes a provision where it is
contractually obliged or where there is a past practice that has created a constructive obligation.

(e) Share-based payments
The Group has two cash-settled share-based compensation plans. Share options are granted to key management personnel
which vest over a period of three years. A liability equal to the portion of the services received is recognised at its current fair value
determined at each statement of financial position date.
Where applicable, the Group recognises the impact of revisions to original estimates in the statement of profit or loss, with a
corresponding adjustment to current liabilities for cash-settled schemes.
(i) Long Term Incentive Plan (LTIP)
Nil-cost option exercisable after three years from date of grant with a contractual life of ten years. Pay-out is subject to performance
conditions based on earnings per share, operating cash flow, total shareholder return and net turnover of the British American
Tobacco (BAT) group. Total shareholder return combines the share price and dividend performance of the BAT group by reference
to one comparator group.
(ii) Deferred Share Bonus Scheme (DSBS)
Free ordinary shares released three years from date of grant and may be subject to forfeit if a participant leaves employment
before the end of the three years holding period. Participants receive a separate payment equivalent to a proportion of the dividend
payment during the holding period. Share options are granted in March each year.
7.9 Lease liability
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to
be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.
The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event
or condition that triggers the payment occurs.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e. those
leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also
applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e.
below Rs 100,000). Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-
line basis over the lease term.

7.10 Property, plant and equipment
Owned assets
These are stated at cost less accumulated depreciation and any accumulated impairment losses, except freehold land and capital
work in progress which are stated at cost less impairment losses, if any. Cost includes expenditure that is directly attributable to the
acquisition of the asset.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance expenses are recognized in
the statement of profit or loss during the financial period in which they are incurred.
Free-hold land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost less
residual value over their estimated useful lives at the following annual rates:
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• Buildings on freehold and leasehold land 3%
• Plant and machinery 5%
• Air conditioners (included in plant and machinery) 20%
• Office and household equipment 20% to 33.3%
• Furniture and fittings 10% to 20%
• Vehicles – owned and leased 16%
Depreciation on additions and deletions during the year is charged on a pro rata basis from the month when the asset is put into
use or up to the month when asset is disposed/written off.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Gains and losses on disposals of operating fixed assets are recognized in the statement of profit of loss.

Right of use assets
Right of use asset is calculated as the initial amount of the lease liability in terms of property rentals and vehicle rentals at the lease
contract commencement date. The right of use asset is subsequently depreciated using the straight-line method for a period of
lesser of useful life or actual lease term.
7.11 Impairment of non-financial asset
Assets that have an indefinite useful life are not subject to depreciation and are tested annually for impairment. Assets that are
subject to depreciation are reviewed for impairment at each statement of financial position date or whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount for which
assets carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal
of the impairment at each balance sheet date. Reversals of the impairment losses are restricted to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if
impairment losses had not been recognised. An impairment loss or reversal of impairment loss is recognised in the statement of
profit or loss.
7.12 Stock in trade
Stock-in-trade is stated at the lower of cost and net realizable value. Cost is determined using the weighted average method. The
cost of finished goods and work in process comprises design costs, raw materials, direct labour, other direct costs and related
production overheads. Net realizable value is the estimated selling price in the ordinary course of business, less cost of completion
and costs necessary to be incurred to make the sale.
7.13 Stores and spares
Stores and spares are stated at cost less allowance for obsolete and slow moving items. Cost is determined using weighted average
method. Items in transit are valued at cost comprising invoice value and other related charges incurred up to the statement of
financial position date.
7.14 Financial Instruments
Financial assets
i. Recognition and de-recognition
The Group initially recognises financial assets on the date when they are originated. Financial liabilities are initially recognised on
the trade date when the entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are offset, and the net amount presented in the statement of financial position when, and
only when, the Group currently has a legally enforceable right to offset the amounts and intends either to settle them on a net basis
or to realise the asset and settle the liability simultaneously.

ii. Classification
On initial recognition, a financial asset is classified as measured at:
• amortised cost;
• fair value through other comprehensive income (FVOCI); or
• fair value through profit or loss (FVTPL)
The classification of financial assets is based on the business model in which a financial asset is managed and its contractual cash
flow characteristics.
(a) Amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: (i) it
is held within a business model whose objective is to hold assets to collect contractual cash flows; and (ii) its contractual terms give
rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(b) Fair value through other comprehensive income (FVOCI)
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: (i) it is held
within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and (ii)
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(c) Fair value through profit or loss (FVTPL)
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL.
iii. Subsequent measurement
Financial assets Measured at fair value. Net gains and losses, including any interest or
at FVTPL dividend income, are recognised in profit or loss.
Financial assets Measured at amortised cost using the effective interest method. The amortised cost is reduced by
at amortised impairment losses. Interest income, foreign exchange gains and losses and impairment are
cost recognised in profit or loss. Any gain or loss on de-recognition is recognised in profit or loss.
Debt investments These assets are subsequently measured at fair value. Interest income calculated using the effective
at FVOCI interest method, foreign exchange gains and losses and impairment are recognised in profit or loss.
Other net gains and losses are recognised in OCI. On de-recognition, gains and losses accumulated in
OCI are reclassified to profit or loss.
Equity investments These assets are subsequently measured at fair value. Dividends are recognised as income in profit or
at FVOCI loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net
gains and losses are recognised in OCI and are never reclassified to profit or loss.
Subsequent to initial recognition, financial liabilities are measured at amortized cost using the effective interest method.
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iv. De-recognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the
financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not
retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group
is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
Any gain / (loss) on the recognition and de-recognition of the financial assets and liabilities is included in the statement of profit or
loss for the period in which it arises.
v. Impairment of financial assets
The Group recognizes loss allowance for Expected Credit Losses (ECLs) on financial assets measured at amortized cost and
contract assets. The Group measures loss allowance at an amount equal to lifetime ECLs.
Lifetime ECLs are those that result from all possible default events over the expected life of a financial instrument. The maximum
period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.
At each reporting date, the Group assess whether the financial assets carried at amortized cost are credit-impaired. A financial asset
is ‘credit-impaired when one or more events that have detrimental impact on the estimated future cash flows of the financial assets
have occurred.
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. The
gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial
asset in its entirety or a portion thereof.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial
liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognized in statement of profit or loss. Any gain or loss on de-recognition is also included in statement of
profit or loss.
7.15 Borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised
cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of
profit or loss over the period of the borrowings using the effective interest method.
Borrowing costs which are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as
part of the cost of that asset. All other borrowing costs are charged to statement of profit or loss.
7.16 Dividend distribution
Dividend distribution to the Group’s shareholders is recognised as a liability in the financial statements in the period in which
the dividend is approved by the Group’s shareholders at the Annual General Meeting, while interim dividend distributions are
recognised in the period in which the dividends are declared by the Board of Directors.

7.17 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks and highly liquid investments with less
than three months maturity from the date of acquisition. Short term finance facilities availed by the Group, which are repayable
on demand and form an integral part of the Group’s cash management are included as part of cash and cash equivalents in the
statement of cash flows.
7.18 Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing on the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the
exchange rate prevailing at the statement of financial position date. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at year-end exchange rates are recognized in the statement of profit of loss.
7.19 Fair value measurement
‘Fair value’ is the price that would be received by selling an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group
has access at that date. The fair value of a liability reflects its non-performance risk.
A number of the Group’s accounting policies and disclosures require the measurement of fair values, both for financial and non-
financial assets and liabilities (See Note 5). When one is available, the Group measures the fair value of an instrument using the
quoted price in an active market for that instrument. If there is no quoted price in an active market, then the Group uses valuation
techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The best evidence of
the fair value of a financial instrument on initial recognition is normally the transaction price – i.e. the fair value of the consideration
given or received.
2020 2019
Rs ‘000 Rs ‘000
8 Gross turnover
- Domestic 161,274,986 147,291,473
- Export 4,983,497 1,733,175
166,258,483 149,024,648

Revenue is measured based on the consideration specified in a contract with a customer. The transaction prices are generally fixed
as per the contract with customers. The payment terms are governed by the contractual rights and obligations as defined in the
contracts with customers and payments are generally received in advance of delivering goods sold.

Revenue recognised during the year that was included in the contract liability balance at the beginning of year is Rs 16,817
200
2020 2019
Rs ‘000 Rs ‘000
9 Cost of sales
Raw material consumed
Opening stock of raw materials and work in process 19,573,174 16,944,127
Raw material purchases and expenses - note 9.1 21,026,617 21,851,976
Closing stock of raw materials and work in process (16,977,657) (19,573,174)
23,622,134 19,222,929
Government taxes and levies
Customs duty and surcharges 1,138,889 2,353,985
Provincial and municipal taxes and other duties 283,753 334,885
Excise duty on royalty 53,109 42,771
1,475,751 2,731,641
25,097,885 21,954,570
Royalty - note 9.2 531,093 (1,463,277)
(Reversal) / provision for severance benefits (169,268) 857,194
Production overheads
Insurance 38,595 20,712
Information technology 20,780 31,150
Provision / (reversal) for slow moving items / stores written off (10,428) 15,123
Sundries 45,593 256,111
4,642,253 4,727,634
Cost of goods manufactured 30,101,963 26,076,121
Cost of finished goods
Opening stock 1,859,725 1,548,417
Closing stock (2,632,867) (1,859,725)
(773,142) (311,308)
Cost of sales 29,328,821 25,764,813
9.1 Raw material purchases and expenses:

Materials 18,244,787 19,157,657
Property rentals 56,303 26,433
Insurance 36,928 14,100
Sundries 319,118 414,863
21,026,617 21,851,976

9.2 This represents royalty payable to the associated companies namely BAT (Brands) Limited, Benson & Hedges (Overseas) Limited,
BAT (Holdings) Limited and BAT Exports Limited having registered office at Globe House, 1 Water Street, London WC2R 3LA,
United Kingdom. Royalty expense for the year ended December 31, 2019 is presented net of reversals as disclosed in note 38.

2020 2019

Rs ‘000 Rs ‘000
10 Selling and distribution costs

Selling expenses 3,259,737 2,955,537
Freight 241,638 231,931
Insurance 16,200 14,440
Finished goods / wrapping material stock written off 12,422 9,945
5,015,427 4,666,122

11 Administrative expenses
Salaries, wages and benefits 757,211 844,868
Insurance 2,795 5,382
Legal and professional charges 124,585 122,204
Donations - note 11.1 28,291 13,690
Information technology 1,938,195 1,188,792
Auditor’s remuneration and expenses - note 11.2 13,292 13,463
Sundries 21,348 59,381
3,357,904 2,780,245

11.1 Details of donations exceeding Rs 1,000 thousand are as follows:
Name of Donee
Pakistan Baitul Mall 22,000 –
One To Many 5,000 10,000
Chal Foundation – 1,500
Prime Ministers’ Dam Fund – 1,390
27,000 12,890

There were no donations in which the directors, or their spouses, had any interest.
202
2020 2019

Rs ‘000 Rs ‘000
11.2 Auditor’s remuneration and expenses include:

- Statutory audit fee 2,500 2,317
- Group reporting, review of half yearly accounts, audit of
consolidated accounts, audit of staff retirement
benefit funds and other certifications and review of
Statement of Compliance with Code of Corporate Governance 10,200 10,497
- Out-of-pocket expenses 592 649
13,292 13,463

12 Other operating expenses
Workers’ Profit Participation Fund - 25.7 1,202,357 982,004
Workers’ Welfare Fund - note 25.6 407,804 411,271
Bank charges and fees 37,022 33,562
Interest to Workers’ Profit Participation Fund 1,263 –
Loss on disposal of property, plant and equipment 198,342 –
Foreign exchange loss 244,441 445,162
2,091,229 1,871,999

13 Other income
Income from sales / services rendered to associated companies:
- BAT Middle East DMCC - UAE 456,624 –
- BAT SAA Services (Private) Limited – 127,880
Recharges / other payable to associated companies written back:
-BAT ASPAC Service Center Sdn Bhd - Malaysia 253,255 519,301
-BAT (Holdings) Limited - UK 30,445 –
-BAT (Singapore) Pte Ltd. - Singapore 4,729 –
-Ceylon Tobacco Co. Ltd.- SriLanka – 52
-BAT PNG Ltd - Papua New Guinea – 51
-BAT Niemeyer Ltd - Netherland – 16
Gain on disposal of property, plant and equipment – 134,391
Miscellaneous 3,545 1,491
748,598 783,182

14 Finance cost
Interest expense on:
Bank borrowings 14,902 21,565
Lease liability 225,797 180,988
240,699 202,553

15 Income tax expense
Current:
For the year 5,722,536 4,686,603
For prior years (72,062) 600,639
5,650,474 5,287,242
Deferred 244,931 108,446
5,895,405 5,395,688


15.1 Effective tax rate reconciliation:
Numerical reconciliation between the average effective income tax rate and applicable income tax rate is as follows:
2020 2019

% %
Applicable tax rate 29.00 29.00

Tax effect of:
Prior year (reversal) / charge (0.32) 0.38
Change in applicable tax rate – 0.78
Income taxed at different rate (1.91) (0.76)
Others (0.44) 0.11
Average effective tax rate 26.33 29.51

2020 2019

Rs ‘000 Rs ‘000
15.2 Tax on items directly credited to statement of

other comprehensive income
Current tax (credit)/charge on defined benefit plans (182,189) 7,705

Deferred tax (credit) on defined benefit plans (2,368) (51,578)
(184,557) (43,873)
2020 2019

Rs ‘000 Rs ‘000
16 Property, plant and equipment

Operating assets - note 16.1 12,681,503 11,593,560
Capital work in progress - note 16.2 2,445,300 754,318
15,126,803 12,347,878
204
16.1 Operating assets

Right of use assets
Free-hold Buildings on Plant and Office and Furniture and Vehicles Land and Factory Vehicles Sub- Total
land free-hold machinery household fittings building vehicles-fork total
land equipment lifter trucks
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
At January 1, 2019
Cost 33,934 970,153 15,044,250 1,727,721 418,532 124,172 19,888 – 1,151,619 1,171,507 19,490,269
Accumulated Depreciation – (288,437) (8,913,556) (1,235,654) (269,726) (108,995) (12,345) – (487,916) (500,261) (11,316,629)
Net book amount January 1, 2019 33,934 681,716 6,130,694 492,067 148,806 15,177 7,543 – 663,703 671,246 8,173,640

Net book amount at January 1, 2019 33,934 681,716 6,130,694 492,067 148,806 15,177 7,543 – 663,703 671,246 8,173,640
Additions – 936 2,455,823 357,497 58,219 16,649 1,559,221 45,807 458,786 2,063,814 4,952,938
Disposals – (64) (32,463) (823) (191) (3,913) – – (128,088) (128,088) (165,542)

Cost 33,934 970,868 17,251,879 1,980,058 474,810 128,432 1,579,109 45,807 1,232,393 2,857,309 23,697,290
Accumulated depreciation – (306,927) (9,222,109) (1,357,700) (320,113) (102,954) (343,927) (31,411) (418,589) (793,927) (12,103,730)
At January 1, 2020
Cost 33,934 970,868 17,251,879 1,980,058 474,810 128,432 1,579,109 45,807 1,232,393 2,857,309 23,697,290
Accumulated Depreciation – (306,927) (9,222,109) (1,357,700) (320,113) (102,954) (343,927) (31,411) (418,589) (793,927) (12,103,730)
Net book amount January 1, 2020 33,934 663,941 8,029,770 622,358 154,697 25,478 1,235,182 14,396 813,804 2,063,382 11,593,560

Net book amount at January 1, 2020 33,934 663,941 8,029,770 622,358 154,697 25,478 1,235,182 14,396 813,804 2,063,382 11,593,560
Additions – 69,738 1,474,838 342,436 81,764 178 257,592 352,768 433,597 1,043,957 3,012,911
Disposals – (187) (294,469) (613) (535) (4,795) (31,285) – (93,025) (124,310) (424,909)

Cost 33,934 1,039,621 17,698,534 2,242,202 551,113 70,068 1,765,829 367,164 1,510,957 3,643,950 25,279,422
Accumulated depreciation – (325,938) (9,073,544) (1,542,913) (341,702) (53,283) (668,865) (87,040) (504,634) (1,260,539) (12,597,919)

16.1.1 Particulars of immovable property (land and building) in the name of the Company are as follows:
Location Total Area
Production Plants
Jhelum 58.3 Acres
Akora 61.0 Acres

Warehouses
Faujoon 163,970 Sq ft.
Shergarh 65,227 Sq ft.
Takht Bhai 54,593 Sq ft.
Umerzai 87,464 Sq ft.
Mianwali 878,694 Sq ft.
Okara 71,723 Sq ft.
Mirpur-Azad Jammu and Kashmir 178,324 Sq ft.
2020 2019
Rs ‘000 Rs ‘000
16.2 Capital work in progress
Carrying value at the beginning of the year 754,318 982,235

Additions during the year 2,343,498 1,419,007
3,097,816 2,401,242
Transferred to operating fixed assets (652,516) (1,646,924)
Carrying value at the end of the year - note 16.2.1 2,445,300 754,318

16.2.1 Capital work in progress includes capital expenditure on projects relating to enhancement of already installed machinery.
2020 2019
Rs ‘000 Rs ‘000
16.3 Depreciation charge has been allocated as follows:
Cost of sales 795,972 724,448

Raw material purchases and expenses 197,658 155,580
Selling and distribution expenses 173,906 160,038
Administrative expenses 332,523 327,410
1,500,059 1,367,476
206
16.4 Details of property, plant and equipment disposed off during the year, having book value of Rs 500,000 or more are as
follows:

Cost Book Sale Gain/ Particulars of buyers Relationship
value proceeds (loss) on
less selling sale
expenses
Rs ‘000 Rs ‘000 Rs ‘000
Plant & machinery

- by negotiation 39,370 16,166 16,166 – Solomon Islands Associate
Tobacco Co. company
41,740 13,906 13,906 – Ceylon Tobacco Co. Ltd. Associate
company
510,624 245,432 5,282 (240,150) Scrap Buyers Contractor

Vehicles
- as per Company’s policy 2,047 573 516 (57) Bilal Bin Waheed Executive
2,047 502 409 (92) Mir M. Ali Khan Executive
2,067 783 782 (1) M.Ismail Ahmed Executive
2,067 505 412 (93) Syed Raza Imam Naqvi Executive
2,092 780 418 (362) Mazhar Mehboob Executive
2,092 981 851 (130) Usman Javed Executive
2,092 1,171 893 (278) Saad Zaheer Ex-Executive
2,092 920 934 14 Waqas Anwar Abbasi Executive
2,104 1,058 1,101 43 Syeda Rahima Ex-Executive
2,104 1,000 1,027 26 Umar A. Jilani Executive
2,249 1,212 1,364 152 Nauman Masood Butt Executive
2,402 689 568 (121) Nafies Zeb Ex-Executive
2,404 1,312 1,415 103 Uzair Qazi Executive
2,514 1,676 1,508 (168) Zainab Amin Ex-Executive
2,689 1,577 1,841 264 Azhar Mehmood Executive
2,895 2,123 2,161 38 Muhammad Ahmad Iqbal Ex-Executive
2,895 2,123 2,179 56 Hammad A. Hashmi Ex-Executive
2,895 2,007 1,929 (78) Farhan Younas Mughal Ex-Executive
2,895 2,007 1,983 (25) Bushra Rahman Ex-Executive
2,997 2,437 2,038 (400) Mir Faraz Tariq Ex-Executive
3,107 2,361 2,319 (42) Amir S. Lodhi Executive
3,127 2,460 2,076 (384) Bilal Ayub Ex-Executive
3,240 2,938 2,958 20 Harris Qamar Executive
3,483 2,879 3,093 214 Syed Shafaat Gilani Ex-Executive
3,483 3,251 3,081 (169) Mariam Iqbal Ex-Executive
3,483 3,437 3,436 (1) Usman Javed Executive
3,547 2,884 2,858 (27) Haroon Saleem Executive
6,233 4,155 4,487 332 Ali Hasan Butt Ex-Executive
6,837 4,923 4,691 (232) Sana Saad Ex-Executive
6,867 5,219 4,946 (272) Umair Luqman Ex-Executive
12,300 6,884 6,730 (154) Usman Zahur Executive
12,300 6,463 5,207 (1,256) Hussain Iqbal Jaffery Ex-Executive

- by auction 2,092 774 2,675 1,901 Through bidding in auction Auction agent

- by insurance claim 3,483 3,204 3,848 643 EFU General Insurance Ltd. Insurance agent

2020 2019

Rs ‘000 Rs ‘000
17 Long term deposits and prepayments
Security deposits 27,720 30,759
27,720 30,759

18 Stock-in-trade
Raw materials 16,030,364 18,762,548

Raw materials in transit 856,470 719,314
Work in process 90,823 91,312
Finished goods 2,632,867 1,859,725
19,610,524 21,432,899
Provision for damaged / obsolete stocks - note 18.1 (127,848) (10,356)
19,482,676 21,422,543

18.1 Movement in provision for damaged stocks is as follows:

Provision for the year 187,412 87,325
Written off during the year (69,920) (80,123)

19 Stores and spares
Stores and spares 749,307 744,834

Provision for slow moving items - note 19.1 (70,407) (80,835)
678,900 663,999

19.1 Movement in provision for slowing moving items is as follows:

(Reversal) / provision during the year- note 9 (10,428) 15,123

20 Trade debts
These are unsecured, considered good.

208
2020 2019

Rs ‘000 Rs ‘000
21 Loans and advances
Related parties:
Advances to key management personnel for
house rent and expenses - note 21.1 1,214 2,140

Others:
Advances to executives for house rent and expenses 25,732 34,279
Advances to other parties 308,259 89,225
335,205 125,644

21.1 The following advances were outstanding as at December 31:
Mr Hassan Khalid 660 –

Mr Uzair Qazi 554 –
Mr Ahsen Altaf – 990
Mr Hassan Khalid – 450
Mr Umair Luqman – 400
Ms Sana Saad – 300
1,214 2,140

The maximum aggregate amount of advances to key management personnel outstanding at the end of any month during
the year was Rs 1,518 thousand (2019: Rs 2,140 thousand).

These loans and advances are unsecured and considered good. Advances extended to key management personnel,
executives and other employees are deducted from the individuals’ monthly payroll as per Company’s policy.
2020 2019

Rs ‘000 Rs ‘000
22 Other receivables

Due from holding company / associated companies - note 22.1 899,794 188,638
Staff pension fund - note 31 316,026 881,821
Management provident fund 1,179 –
Employees’ provident fund 15,908 –

Others:
Claims against suppliers 6,576 6,576
Cash margin with banks - imports 55,815 904,202
Others 21,017 130,654
1,316,315 2,111,891

22.1.1 Ageing analysis of the amounts due from holding company / associated companies comprises:

Upto 1 1 to 6 More than
month months 6 months 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Holding company:
British American Tobacco p.l.c. - UK 10,538 – – 10,538 69,884

BAT M.E DMCC - UAE 488,394 – – 488,394 –
BASS Europe SRL - Romania 117,545 2,437 – 119,982 –
BAT M.E SPC - Bahrain 113,536 – – 113,536 –
BAT Aspac Service Centre Sdn Bhd-Malaysia 56,382 1,897 – 58,279 –
BAT Nigeria Ltd-Nigeria 7,919 22,111 8,207 38,237 60,132
TDR d.o.o. - Croatia 25,010 – – 25,010 –
BAT Exports Limited - UK 18,750 – – 18,750 –
PT Bentoel International Investama - Indonesia 10,292 – – 10,292 1,431
BAT Marketing (S) Pte Ltd - Singapore 6,016 – – 6,016 5,427
BAT (Singapore) Pte Ltd-Singapore 5,798 – – 5,798 –
BAT Q LLC.- Qatar 3,483 – – 3,483 –
BAT (Romania) Trading SRL - Romania 632 – – 632 –
BAT Australia - Australia 364 – – 364 –
BAT PNG Ltd - Papua New Guinea 289 56 – 345 581
BAT Fiji Ltd-Fiji – 138 – 138 145
BAT (Investments) Ltd-UK – – – – 18,469
Solomon Islands Tobacco Co Ltd-Solomon Islands – – – – 16,022
BASS (GSD) Ltd-UK – – – – 7,771
PT Bentoel Prima - Indonesia – – – – 4,041
BAT Asia Pacific-Hong Kong – – – – 3,930
BAT Polska SA-Poland – – – – 527
Ceylon Tobacco Co. Ltd-SriLanka – – – – 160
BAT Tutun Mamulleri - Turkey – – – – 118
864,948 26,639 8,207 899,794 188,638

22.1.2 The maximum aggregate amount of receivable from related parties at the end of any month during the year was Rs 899,794
2020 2019

Rs ‘000 Rs ‘000
23 Short term investments
At fair value through profit or loss (FVTPL):

- Market treasury bills 6,401,215 3,001,058

This represents short term investment in treasury bills issued by the Government of Pakistan and carries effective interest rate of
7.20% ( 2019 : 13.14%) per annum and are held for trading. These treasury bills have less than three months maturity from the
date of acquisition and have been disposed off subsequent to the year-end.
210
2020 2019

Rs ‘000 Rs ‘000
24 Cash and bank balances
Deposit account - note 24.1 29,705 9,075

Current accounts:
Local currency - note 24.2 492,760 379,282
Foreign currency 317,885 145,874
840,350 534,231
Cash in hand 1,946 1,674
842,296 535,905

24.1 These are security deposits being kept in separate bank account.

24.2 This includes balance amounting to Rs. 61.85 million held with National Bank of Pakistan (an associated company).
2020 2019

Rs ‘000 Rs ‘000
25 Trade and other payables

Due to holding company / associated companies - note 25.1 1,301,159 1,397,088
Others:
Creditors 6,765,085 5,206,741
Federal excise duty - note 25.2 7,314,335 7,255,338
Sales tax 1,738,194 1,283,563
Workers’ welfare fund - note 25.6 456,896 373,162
Workers’ profit participation fund - note 25.7 855,357 12,004
Other accrued liabilities 117,655 109,977
Employee incentive schemes - note 25.4 106,599 99,713
Employees’ gratuity fund - note 31 275,517 337,649
Employees’ provident fund – 5,450
Management provident fund – 14,728
Staff pension fund - defined contribution 112,587 55,805
Tobacco excise duty / Tobacco development cess - note 25.3 118,134 118,134
Security deposits - note 25.5 29,342 9,075
Contract liability 12,034 16,817
19,202,894 16,295,244

25.1 The amount due to holding company / associated companies comprises:
2020 2019
Rs ‘000 Rs ‘000
Holding company:
British American Tobacco p.l.c. - UK 197,458 195,226

BAT M.E DMCC - UAE - note 25.1.1 217,990 61,833
BAT Bangladesh Co. Ltd- Bangladesh 215,267 10,136
BAT GLP Ltd - UK 140,534 240,866
BAT Exports Limited - UK 125,955 12,457
BAT (Investments) Ltd - UK 98,297 92,321
BAT ASPAC Service Center Sdn Bhd - Malaysia 63,121 185,834
BAT JSC-Spb - Russia 61,474 –
BASS (GSD) Ltd. - UK 55,935 394,624
BAT Saudia for Trading, Saudi Arabia - note 25.1.1 35,288 –
BAT Souza Cruz Ltd - Brazil 16,015 15,041
PT Bentoel Prima - Indonesia 14,426 9,520
BAT Australia Ltd-Australia 13,339 1,716
Ceylon Tobacco Company Ltd - Sri Lanka 11,766 39
BAT Q LLC.- Qatar - note 25.1.1 10,662 –
BAT Korea Manufacturing - South Korea 6,700 14,647
BAT Myanmar Ltd - Myanmar - note 25.1.1 5,102 909
BAT M.E SPC - Bahrain - note 25.1.1 4,674 –
BAT GSD (KL) SDN BHD - Malaysia 2,818 2,052
BAT Singapore (Pte) Ltd - Singapore 2,363 121,168
Fielder & Lundgren AB. - Sweden 873 –
BAT Romania Investments Ltd - Romania 553 347
BAT Chile Tobacco - Chile 409 –
BAT Nigeria Ltd - Nigeria 140 118
Solomon Island Tobacco Co. Ltd - Solomon Islands – 31,204
BAT Tutun Mamulleri - Turkey – 2,204
BAT Nicoventures Trading Ltd-UK – 1,473
BAT Argentina - Argentina – 584
BAT Mexico Ltd - Mexico – 143
Other
Tajamal Hussain Shah - Director – 2,626
1,301,159 1,397,088

25.1.1 Rs 273,716 thousand (2019: 62,741 thousand) relates to unsecured export advance.
212
2020 2019

Rs ‘000 Rs ‘000
25.2 Federal excise duty
Balance as at January 1 7,255,338 5,288,160

Charged during the year 80,907,579 74,741,489
Payment to the Government during the year (80,848,582) (72,774,311)
Balance as at December 31 7,314,335 7,255,338

25.3 Tobacco excise duty / tobacco development cess:

Payment to the Government during the year (176,324) (198,579)

25.4 Employee incentive schemes
These represent liability for unvested portion of cash-settled share-based payment schemes available to certain employees.
Such schemes require the Company to pay the intrinsic value of these share based payments to the employee at the vesting
date.
2020 2019

Rs ‘000 Rs ‘000
Long Term Incentive Plan (LTIP) - note 25.4.1


Deferred Share Bonus Scheme (DSBS) - note 25.4.2

106,600 99,713
25.4.1 Long Term Incentive Plan (LTIP)
Details of the options movement for cash-settled LTIP scheme during the year were as follows:
2020 2019
Number of options



25.4.2 Deferred Share Bonus Scheme (DSBS)
Details of the options movement for cash-settled DSBS scheme during the year were as follows:
2020 2019
Number of options



25.5 These represent amounts received as security deposits from dealers and suppliers, which are non-utilisable for the purpose
of the business in accordance with their agreements. These security deposits are being held in a separate bank account.
2020 2019

Rs ‘000 Rs ‘000
25.6 Movement in Workers’ Welfare Fund is as follows:

Charged during the year 407,804 411,271
Payment to Government /reversal during the year (324,070) (349,942)

25.7 Movement in Workers’ Profit Participation Fund is as follows:
Balance as at January 1 12,004 (159,385)

Allocation for the year 1,202,357 982,004
Payments during the year (359,004) (810,615)

26 Other liabilities
This relates to provisions for employee benefits, litigation and restructuring consequent to modernization of production processes.
During the year, the Company has consumed amounts aggregating Rs. 1,180 million (2019: Rs 973 million) and recorded further
obligations of Rs 1,066 million (2019:Rs 1,541 million).

27 Short term running finance - secured
(a) Short term running finance
Short term running finance facilities available under mark-up arrangements with banks amount to Rs 6,500 million (2019:
Rs 6,500 million), out of which the amount unavailed at the year end was Rs 6,500 million (2019: Rs 6,500 million). These
facilities are secured by hypothecation of stock in trade and plant and machinery amounting to Rs 7,222 million (2019: Rs
7,222 million). The mark-up ranges between 7.37% and 13.88% (2019: 10.52% and 14.05%) per annum and is payable
quarterly. The facilities are renewable on annual basis.
(b) Non-funded finance facilities
The Company also has non-funded financing facilities available with banks, which include facility to avail letter of credit and
letter of guarantee. The aggregate facility of Rs 2,500 million (2019: Rs 2,500 million) and Rs 600 million (2019: Rs 420
million) is available for letter of credit and letter of guarantee respectively, out of which the facility availed at the year end is
Rs 1,019 million (2019: Rs 83 million) and Rs 447 million (2019: Rs 386 million). The letter of credit and guarantee facility is
secured by second ranking hypothecation charge over stock-in-trade amounting to Rs 667 million (2019: Rs 670 million).
214
28 Lease liability
This represents lease agreements entered into with a leasing company for vehicles and IFRS 16 leases. Total lease rentals due
under various lease agreements aggregate to Rs 928,348 thousand - short term Rs 371,046 thousand and long term Rs 557,302
thousand (December 31, 2019: Rs 596,290 thousand - short term Rs 258,036 thousand and long term Rs 338,254 thousand) and
are payable in equal monthly instalments latest by December 2025. Taxes, repairs, replacement and insurance costs are to be
borne by the Company. Financing rates of 7.75% to 14.61% (December 31, 2019: 12.35% to 15.36%) per annum have been used
as discounting factor.

As per IFRS 16 all rental facilities of the Company with lease terms greater than one year have been capitalised as leased assets.
When measuring the lease liabilities for leases that were capitalised during the period, the Company discounted lease payments
using an estimated incremental borrowing rate and recorded lease obligation of Rs. 257,592 thousand during the year. Financing
rates of 9% to 14% (December 31, 2019: 10% to 14%) per annum have been used as discounting factor.

The amount of future minimum lease payments together with the present value of the minimum lease payments and the periods
during which they fall due are as follows:
2020 2019

Rs ‘000 Rs ‘000

Current maturity shown under current liabilities (678,730) (382,941)
1,573,892 1,341,607

Future minimum lease payments
2,834,089 2,320,656
Interest (581,467) (596,108)

Present value of minimum lease payments
2,252,622 1,724,548

29 Unpaid dividend
Unpaid dividend includes amount of Rs Nil (2019: Rs Nil), payable to British American Tobacco (Investments) Limited, parent
company.

2020 2019

Rs ‘000 Rs ‘000
30 Deferred income tax liability
Deferred tax liability is in respect of:

Accelerated tax depreciation 1,325,785 1,270,770
Leased assets 47,426 100,263
1,373,211 1,371,033
Deferred tax asset is in respect of:
Remeasurement loss arising on employees’
retirement benefit (118,122) (109,389)
Provision for severance benefits (346,163) (592,257)
Provision for stock and stores (20,420) (23,444)
888,506 645,943

The gross movement on deferred income tax account is as follows:

At January 1 645,943 589,076
Charge for the year - statement of profit or loss 244,931 108,445
(Credit) for the year - statement of comprehensive income (2,368) (51,578)
At December 31 888,506 645,943
31 Retirement benefits
Investments in all contributory funds have been made in accordance with the provisions of section 218 of the Companies Act, 2017
and the rules formulated for that purpose.
2020 2019

Rs ‘000 Rs ‘000
Staff pension fund - asset - note 22 (316,026) (881,821)
Employees’ gratuity fund - liability - note 25 275,517 337,649

The latest actuarial valuation of the defined benefit plans was conducted at December 31, 2020 using the projected unit credit
method. Details of the defined benefit plans are:

2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
(a) The amounts recognised in the statement

of financial position:
Present value of defined benefit obligations 5,882,010 4,978,396 1,598,481 1,650,937

Fair value of plan assets (6,198,036) (5,860,217) (1,322,964) (1,313,288)
Net (assets) / liability (316,026) (881,821) 275,517 337,649
216
2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
(b) Movement in the (asset) / liability recognized

in the statement of financial position
is as follows:
Balance as at January 1 (881,821) (787,677) 337,649 210,278

Charge for the year - profit or loss (39,848) (37,069) 129,492 105,427
Employer’s contribution during the year (22,596) (30,507) (129,492) (148,794)
Benefits paid by the Company – – (70,298) –
Remeasurement (gain)/loss recognized in Other
Comprehensive Income (OCI) during the year 628,239 (26,568) 8,166 170,738
Balance as at December 31 (316,026) (881,821) 275,517 337,649

(c) The amounts recognised in the statement
of profit or loss:
Interest cost 612,324 627,565 204,671 201,833

Expected return on plan assets (716,248) (729,114) (163,947) (174,173)
Net interest (103,924) (101,549) 40,724 27,660

Members’ own contribution (22,921) (24,456) – –
Secondees’ own contribution (6,117) (6,669) – –
Contribution by employer in respect of secondees – – (14,936) (16,297)
(39,848) (37,069) 129,492 105,427

(d) Re-measurements recognised in Other
Comprehensive Income (OCI) during
the year:
Actuarial (gain) / loss on obligation 539,563 (80,458) (10,317) 158,282

Net return on plan assets over interest income 88,676 53,890 18,483 12,456
Total remeasurements loss / (gain)

recognised in OCI 628,239 (26,568) 8,166 170,738

(e) Movement in the present value of defined
benefit obligation:
Present value of defined benefit obligation at

January 1 4,978,396 4,628,109 1,650,938 1,474,653
Interest cost 612,324 627,565 204,671 201,833
Remeasurements: Actuarial loss /(gain)
on obligation 539,563 (80,458) (10,317) 158,282
Present value of defined benefit obligation

at December 31 5,882,010 4,978,396 1,598,482 1,650,938

2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
(f) Movement in the fair value of plan assets:
Fair value of plan assets at January 1 5,860,217 5,415,786 1,313,288 1,264,375

Interest income 716,248 729,114 163,947 174,173
Contribution by employer in respect of members 22,596 30,507 129,492 148,793
Members’ own contribution 22,921 24,456 – –
Secondees’ own contribution 6,117 6,669 – –
Contribution by employer in respect of secondees – – 14,836 16,297
Return on plan assets, excluding amounts included in
interest income (88,676) (53,890) (18,483) (12,456)
Fair value of plan assets at December 31 6,198,036 5,860,217 1,322,864 1,313,288
Actual return on plan assets 665,839 635,638 147,513 148,744

The Company expects to charge Rs 31 million for pension plan and charge Rs 115 million for gratuity plan for the year
ending December 31, 2021.

2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
(g) The major categories of plan assets:
Investment in listed equities 1,363,509 1,060,470 275,691 242,441

Investment in bonds 1,736,594 2,020,367 370,191 477,299
Cash and other assets 3,097,933 2,779,380 677,082 593,548
6,198,036 5,860,217 1,322,964 1,313,288

(h) Significant actuarial assumptions at
the statement of financial position date:
Discount rate 10.25% 12.50% 10.25% 12.50%

Pension increase rate 5.50% 6.75% – –
Expected rate of increase in salary:
First year 9.00% 11.75% 9.00% 11.25%
Second year onwards 9.00% 11.75% 9.00% 11.25%

The mortality table used for post retirement mortality is Standard Table Mortality The “80” Series PMA 80 (C=2015) and PFA
80(C=2015) for males and females respectively but rated up 2 years.
The discount rate is determined by considering underlying yield currently available on Pakistan Investment Bonds and
high quality term finance certificates and expected return on plan assets is determined by considering the expected returns
available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on
gross redemption yields as at the reporting date.
Salary increase assumption is based on the current general practice in the market.
218
(i) Sensitivity Analysis on significant actuarial assumptions
The calculation of the defined benefit obligation is sensitive to assumptions set out above. The following table summarizes
how the impact on the defined benefit obligation at the year end of the reporting period would have increased / (decreased)
as a result of a change in respective assumptions by one percent.

1 percent 1 percent 1 percent 1 percent
increase decrease increase decrease
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Discount rate (700,482) (1,472,365) (135,256) (132,066)

Salary increase 171,044 (734,174) 160,560 155,805
Increase in post retirement pension 703,199 (369,203) – –

If life expectancy increases by 1 year, the obligation of the Pension Fund increases by Rs 328,652 thousand
( 2019: 292,406 thousand).
Expected maturity profile
Following are the expected distribution and timing of benefits payments at the year end.

2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

Weighted average duration of the PBO (Years) 11.91 11.42 8.46 8.00
Risks associated with defined benefit plan

Longevity risk
The risk arises when the actual lifetime of retiree is longer than the estimate of future employee lifetime expectation. This
risk is measured at the plan level over the entire retiree population.
Salary increase risk
The most common type of retirement benefit is one where the benefit is linked with final salary. The risk arises when the
actual increases are higher than the expectations and impacts the liability accordingly.
Withdrawal risk
The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation. The
movement of the liability can go either way.
Historical Information

Present value of Net liability at Present value of Net liability at
defined benefit the end of defined benefit the end of
obligation the year obligation the year
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

2020 5,882,010 (316,026) 1,598,482 275,517
2019 4,978,396 (881,821) 1,650,938 337,649

2018 4,628,109 (787,677) 1,474,653 210,278
2017 4,759,609 (765,618) 1,416,319 139,736
2016 4,654,000 (855,329) 1,433,183 (52,951)

31.1 Salaries, wages and benefits as appearing in note 9, 10 and 11 include amounts in respect of the following:

2020 2019

Rs ‘000 Rs ‘000
Defined Contribution Provident Fund 103,230 94,106

Defined Benefit Pension Fund (39,848) (37,069)
Defined Contribution Pension Fund 118,536 116,520
Defined Benefit Gratuity Fund 129,492 105,427
311,410 278,984

31.2 Defined Contribution Plan
Details of the management and employees’ provident funds are as follows:

Un-audited Un-audited

(a) Size of the fund - total assets 1,749,791 1,747,719
Cost of investments made 1,615,045 1,588,501
Percentage of investments made 92% 91%
Fair value of investments made 1,592,984 1,583,001

2020 2019
Rs ‘000 % age Rs ‘000 % age
(b) Breakup of investments at cost
Pakistan Investment Bonds 252,041 14% 251,725 14%

Investment plus deposit certificates 589,750 34% 605,250 35%
Investment in savings account with bank 150,661 9% 118,981 7%
Investment in securities 283,661 16% 311,711 18%
Accrued interest 338,932 19% 300,834 17%
1,615,045 92% 1,588,501 91%
32 Share capital
32.1 Authorized share capital
2020 2019 2020 2019

300,000,000 300,000,000 Ordinary shares of Rs 10 each 3,000,000 3,000,000

32.2 Issued, subscribed and paid-up capital

2020 2019 2020 2019

230,357,068 230,357,068 Issued for cash 2,303,571 2,303,571
25,136,724 25,136,724 Issued as bonus shares 251,367 251,367
255,493,792 255,493,792 2,554,938 2,554,938
British American Tobacco (Investments) Limited held 241,045,141 (2019: 241,045,141) ordinary shares at the year-end and 10,274
(2019:12,274) and 798,282 (2019:798,282) ordinary shares are held by the directors and associated company respectively.
All ordinary shares rank equally with regard to the Company’s residual assets. Holders of these shares are entitled to dividends as
declared from time to time and are entitled to one vote per share at general meetings of the Company.
220
2020 2019

Rs ‘000 Rs ‘000
33 Contingencies and commitments

33.1 Contingencies
Claims and guarantees
(i) Claims against the Group not acknowledged as debt - Note 33.1.1 75,706 75,706
(ii) Guarantees issued by banks on behalf of the Group 447,376 385,730

33.1.1 Litigation
a) In the year 1979, the Market Committee Jhelum (“the Committee”), constituted under the Punjab Agriculture Produce Market
Ordinance of 1978 demanded the Company to obtain license and pay marketing fee on all tobacco that is transported into
the Jhelum factory of the Company. Since tobacco is not an agricultural produce and no transaction of any sale or purchase
of tobacco takes place in Jhelum, the Company refused to apply for the license. In 1986, the Committee proceeded against
the Company which resulted in protracted litigation, culminating in filing of a Review before the Supreme Court of Pakistan,
which was decided against the Company on technical grounds in 2010. Meanwhile, the Committee made their own fictitious
calculation and levied fee and penalties aggregating Rs 64.9 million relating to years 1982 to 2010 against which the
Company filed a Writ Petition before the Lahore High Court, Rawalpindi Bench. The Lahore High Court granted a stay
order suspending demand of penalties amounting to Rs 60 Million and directed the Company to deposit Rs 6 Million (being
the principal amount) with the court in the shape of National Saving Certificates. Subsequent to December 31st 2020, the
Rawalpindi Bench of the Lahore High Court vide Judgement dated 20th January 2021 (Judgement) has decided the case
in PTC’s favor. However, the Committee can appeal the Judgement before the Supreme Court of Pakistan.
b) In 2009, the Punjab Employees Social Security Institution (PESSI) demanded payment of social security contribution
effective October 2007, from the Company for the non-permanent workers hired at its Jhelum factory hired through third
party contractors. The Company has filed a complaint before the Director PESSI, which was kept pending till 2018 when an
order was passed against the Company. Thereafter, PESSI demanded payment of Rs 2,306,513 for the period from October
2007 till May 2010.
In 2018, the Company filed an appeal before the Judge Punjab Social Security Court, Labour Complex, Lahore, and the
matter is since then pending.
c) Tobacco Development Cess (TDC) is a tax levied and collected by the KPK pursuant to S. 11 of the KPK Finance Act, 1996
( “the Act”). The term “tobacco” was however not defined by the Act. Each year the Pakistan Tobacco Board (PTB), on the
demand of each tobacco buyer, fix Quota (i.e. the quantity of tobacco) to be purchased by each such tobacco buyer from
the farmers. The calculation of quantum of TDC to be paid by each tobacco buyer is based on the quantities indicated and
purchased in terms of Quota. Till 2002, TDC was collected from the tobacco buyers directly by Excise & Taxation Depart
(ETD). However, in 2003, the provincial government, through an amendment in law, imposed TDC also on the surplus
tobacco purchased by tobacco buyers (i.e. purchase of tobacco beyond the Quota amount) (“the Surplus”). Additionally, the
amended law also stipulated that while the TDC on Quota shall be collected by ETD, TDC levied on the Surplus shall be
collected by a contractor to whom ETD has leased the collection through a public tender. Contract for the year 2005/06 was
awarded to Malik Tilla Muhammad (“the Contractor”) by PTB. The Contractor demanded payment of Rs 8.8 Million from PTC
on account of TDC, which claim was rejected by PTC. The Contractor then filed a suit for recovery of Rs 8.8 Million before
a civil judge but the matter was referred to Arbitration, with Chairman PTB as the Arbitrator. The Arbitrator passed an award
whereby PTC was to pay Rs 8,375,071 to Malik Tilla Muhammad Tilla. The said order was challenged by the Company
through an appeal before the District judge Peshawar and the appeal was finally decided in Company’s favor on June 29,
2019. The matter was remanded back to the trial court / civil judge for cross examination of the arbitrator and deciding the
matter afresh and the case is still pending.
d) Employees’ Old-Age Benefits Institution (EOBI) constituted under the Employees’ Old-Age Benefits Act, 1976 (“the Act”)
requires contributions to be made by industries and establishments against workers employed by it. PTC has been making
prompt contributions under the Act. PTC has contractual arrangements with Logistics Service Providers for the shipment of
its raw material and finished goods. In the year 2015, the EOBI Jhelum issued a show cause notice dated March 4th, 2015,
demanding payment of Rs 3,024,000 against non-payment of contribution of 200 hundred employees. These employees
were in fact employees of five transport concerns with which PTC had contractual arrangements. PTC filed complaint
against the said show cause before Adjudicating Authority – III, EOBI Islamabad and raised the objection that this liability
is of the five transport concerns who are independent entities. The Adjudicating Authority however passed an order against
PTC on February 14th, 2017, upholding the demand earlier raised by the EOBI Jhelum. PTC has filed an appeal in May
2017 against the order before the Board of Trustees EOBI Head Quarter at Karachi which is pending adjudication.

e) The Company hired the services of Tariq & Saad Associates (“T&S”) for providing consultancy services for the construction
of “Mianwali Mega Barn Project”. T&S started the work. Thereafter, during a meeting between Company and T&S, it was
verbally agreed that T&S would charge @ 2.25 % of estimated cost of the Project. The payments to T&S were delayed due
to which T&S served Notice of Termination and subsequently filed a civil suit for recovery in the district court of Islamabad.
The matter is pending adjudication.

The Company expects favorable outcome in these matters and accordingly, no provision is recognised in the financial
statements.

33.2 Commitments
(a) All property rentals before adoption of IFRS 16 were under cancellable operating lease arrangements and were due as
follows:
2020 2019

Rs ‘000 Rs ‘000
Not later than one year – 99,777

Later than one year and not later than five years – 375,899
Later than five years – 285,199

(b) Letters of credit outstanding at December 31, 2020 were Rs 1,018,701 thousand (2019: Rs 83,392 thousand).
34 Financial Instruments - Fair Values And Risk Management
34.1 Accounting classification and fair value
The following tables shows the carrying amounts and fair values of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable approximation of fair value.


through profit cost
or loss

Deposits 17 – 27,720 27,720 – – –
Trade debts 20 – 1,392 1,392 – – –
6,401,215 2,187,723 8,588,938

Lease liability 28 – (2,252,622) (2,252,622) – – –
Accrued interest/mark-up – (583) (583) – – –
– (10,628,683) (10,628,683)
222

through profit cost
or loss

Deposits 17 – 30,759 30,759 – – –
Trade debts 20 – 4,260 4,260 – – –
3,001,058 2,682,815 5,683,873

Lease liability 28 – (1,724,548) (1,724,548) – – –
Accrued interest/mark-up – (18,859) (18,859) – – –
(8,627,712) (8,627,712)
34.2 Financial risk management
The Company has exposure to the following risks from financial instruments:

- credit risk
- liquidity risk
- market risk

34.2.1 Financial risk management framework
The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the financial performance. Risk management is carried out by the Treasury Committee
(the Committee) under policies approved by the board of directors (the Board). The Board provides written principles for
overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate risk,
credit risk and investment of excess liquidity. All treasury related transactions are carried out within the parameters of these
policies.
34.2.2 Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual
obligations that arise principally from trade debts, other receivables, deposits with banks and investment in treasury bills
issued by the Government of Pakistan. The carrying amount of financial assets represents the maximum credit exposure.
Due to the Company’s long standing business relationships with these counterparties and after giving due consideration to
their strong financial standing, management does not expect non-performance by these counter parties on their obligations
to the Company. Accordingly the credit risk is minimal.

Financial assets amounting to Rs 8,589 million (2019: Rs 5,684 million) do not include any amounts which are past due or
impaired. The table below shows bank balances held with counterparties at the reporting date.


Counterparty Rating Rating agency
Short term Long term 2020 2019

Rs ‘000 Rs ‘000

Cash at bank:
MCB Bank Ltd A-1+ AAA PACRA 434,786 317,091
Habib Bank Ltd A-1+ AAA VIS 10,851 15,647
Deutsche Bank AG P-2 A3 Moody’s 151,296 147,132
MCB Islamic Bank A-1 A PACRA 6,737 53,006
National Bank of Pakistan A-1+ AAA PACRA 61,851 893
Standard Chartered Bank A-1+ AAA PACRA 173,017 48
Citibank N.A. P-1 Aa3 Moody’s 1,812 414
840,350 534,231
Short term investments:

Government of Pakistan B3+ Moody’s 6,401,215 3,001,058
7,241,565 3,535,289

As at December 31, 2020, maximum exposure to credit risk for finiancial assets by geographic was as follows:
Carrying amount
2020 2019

Rs ‘000 Rs ‘000
Pakistan 7,689,144 5,495,235

United Kingdom 29,288 96,124
Asia & other 870,506 92,514
8,588,938 5,683,873

As at 31 December 2020, the ageing of financial assets was as follows:
Carrying amount
2020 2019

Rs ‘000 Rs ‘000
Not due 8,547,516 5,616,409

1-30 days 26,639 60,728
31-90 days 8,207 160
90 days 6,576 6,576
8,588,938 5,683,873
34.2.3 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or risking to the Company’s reputation.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and
undiscounted, and include contractual interest payments and exclude the impact of the netting arrangements:
224
Carrying Carrying Contractual cash flows
amount Total 12 months 1 to 5
or less years
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
31 December 2020
Trade and other payables 8,375,478 (8,375,478) (8,375,478) –

Lease liability 2,252,622 (2,834,089) (872,824) (1,961,265)
Accrued interest/mark-up 583 (583) (583) –
10,628,683 (11,210,1250) (9,248,885) (1,961,265)

31 December 2019
Trade and other payables 6,884,305 (6,884,305) (6,884,305) -

Lease liability 1,724,548 (2,320,656) (559,801) (1,760,855)
Accrued interest/mark-up 18,859 (18,859) (18,859) –
8,627,712 (9,223,820) (7,462,965) (1,760,855)

Cash flows included in the maturity analysis are not expected to occur significantly earlier or at significantly different
amounts.
34.2.4 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates will affect the Company’s
income or the value of its holding of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.

Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. This exists due to the Company’s exposure resulting from outstanding payments on account of
import of goods and services. The currencies in which these transactions are primarily denominated are euro, sterling and
US dollars.

The summary quantitative data about the Company’s exposure to currency risk is as follows:

December 31, 2020 December 31, 2019
Euro Sterling US dollars Euro Sterling US dollars
Other receivables 223,812 3,321,168 817,041 55,953 187,712 5,928

Cash and bank balances – – 1,989,270 – – 941,945
Trade and other payables (1,362,654) (783,979) (1,318,157) (903,640) (2,751,771) (4,447,951)
Net exposure (1,138,842) 2,537,189 1,488,154 (847,687) (2,564,059) (3,500,078)

The following significant exchange rates have been applied:

Average rate Year-end spot rate
2020 2019 2020 2019

Euro 1 184.77 167.62 195.52 173.84
Sterling 1 207.64 191.06 218.44 205.16
US dollar 1 161.79 149.79 159.80 154.87

A 10 percent strengthening (weakening) of the Rupee against euro, sterling and US dollar at the reporting date would have
affected the measurement of financial instruments denominated in a foreign currency and affected the equity and profit
or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remains
constant and ignores any impact of forecast sales and purchases.
Profit or loss Equity, net of tax

Strengthening Weakening Strengthening Weakening
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
31 December 2020
Euro 22,267 (22,267) 15,696 (15,696)

Sterling (55,422) 55,422 (39,067) 39,067
US dollar (23,781) 23,781 (16,763) 16,763

31 December 2019
Euro 14,736 (14,736) 10,388 (10,388)

Sterling 52,604 (52,604) 37,081 (37,081)
US dollar 54,206 (54,206) 38,210 (38,210)

Interest rate risk
This represents the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is not exposed to fair value interest rate risk as it does not hold any fixed rate
instruments. The Company does not have any significant long-term interest-bearing financial assets or financial liabilities
whose fair value or future cash flows will fluctuate because of changes in market interest rates.
Financial liabilities include balances of Rs. 2,252,622 thousand (2019: Rs 1,724,548 thousand) which are subject to interest
rate risk. Applicable interest rates for these financial liabilities have been indicated in respective notes.

At statement of financial position date, if interest rates had been 1% higher/lower, with all other variables remain constant,
profit for the year would have been Rs 22.526 million (2019: Rs 17.245 million) lower/higher, mainly as a result of higher/
lower interest expense on floating rate borrowings.
35 Remuneration of Chief Executive, Directors and Executives
The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to Chief Executive,
Executive Directors and executives are as follows:-

Chief Executive Executive Directors Executives Total
Key Management Other

Personnel Executives
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Managerial remuneration 39,717 36,918 157,241 79,596 139,658 267,380 734,414 631,659 1,071,030 1,015,553
Corporate bonus 27,518 22,995 43,522 39,193 102,811 141,618 230,626 195,814 404,477 399,620
Leave fare assistance 1,364 1,603 6,596 5,618 1,252 8,021 – – 9,212 15,242
Housing and utilities 14,970 14,990 14,722 10,010 61,261 73,370 320,128 275,640 411,081 374,010
Medical expenses 152 261 1,319 578 9,536 7,221 55,891 40,780 66,898 48,840
Post employment benefits 1,120 10,426 8,507 6,590 36,064 37,940 187,939 146,784 233,630 201,740
84,841 87,193 231,907 141,585 350,582 535,550 1,528,998 1,290,677 2,196,328 2,055,005
Number of persons 1 1 3 3 18 30 302 252 324 286
226
35.1 The Company, in certain cases, also provides individuals with the use of company accommodation, cars and household
items, in accordance with their entitlements.

35.2 The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to eight (2019:
eight) non-executive directors of the Company amounted to Rs 7,846 thousand (2019: Rs 11,438 thousand).
36 Transactions with related parties
British American Tobacco (Investments) Limited (BAT-IL) holds 94.34% (2019: 94.34%) shares of the Company at the year end.
Therefore, all the subsidiaries and associated undertakings of BAT-IL and the ultimate parent company British American Tobacco,
p.l.c (BAT) are related parties of the Company. The related parties also include directors, major shareholders, key management
personnel, employee funds and the entities over which the directors are able to exercise significant influence. The amounts due
from and due to these undertakings are shown under receivables and payables. The remuneration of the chief executive, directors,
key management personnel and executives is given in note 35 to the financial statements. Transactions with employee funds and
associated payable/receivable balances are provided in note 31 to the financial statements.

As National Bank of Pakistan is an associated company under the Companies Act 2017 due to common directorship, yet does
not fall under the definition of related party as interpreted from IAS 24 “Related Party Disclosures”. Accordingly, transactions and
balances with National Bank of Pakistan have not been disclosed in the related party disclosure.

2020 2019

Rs ‘000 Rs ‘000
Procurement of goods and services from:

Holding company 1,664,897 1,396,342
Director 34,834 32,349

Sale of goods and services to:

Dividend paid to:
Holding company 14,027,499 12,263,702

Royalty charged by:
Holding /associate company
Charged 531,093 427,710
Reversed – (1,714,439)
531,093 (1,286,729)

Expenses reimbursed to:

Expenses reimbursed by:

Payment under employee incentive schemes:
Key management personnel 38,832 55,848

Other income:
Associated company:
Recharges written back 288,504 519,420

36.1 Following are the names of associated companies, related parties and associated undertakings with whom the Company had
entered into transactions or had agreements and arrangements in place during the year. Names of associated companies,
related parties and associated undertakings, incorporated outside Pakistan are included in note 36.2.
Aggregate % of
Associated company Basis of relationship shareholding
BAT SAA Service (Private) Limited Common Directorship Nil

THS & Co. Common Directorship Nil
National Bank of Pakistan Common Directorship Nil

Retrirment benefit funds:
Pension Funds Post employment benefits Nil
Provident Funds Post employment benefits Nil
Gratuity Fund Post employment benefits Nil

Zafar Mahmood Director 0.000196%
Usman Zahur Director 0.000978%
William Pegel Director 0.000978%
Syed Asad Ali Shah Director 0.000196%
Syed Javed Iqbal Director 0.000196%
Syed Ali Akbar Director 0.000196%
Tajamal Shah Director 0.000196%
Zafar Aslam Director 0.000196%
Belinda Ross Director 0.000196%
Asif Jooma Director 0.000196%
Mohammad Riaz Director 0.000196%
Lt. Gen (Rtd.) Muhammad Masood Aslam Director 0.000196%
Syed Hammad Ali Naqvi Key management personnel Nil
Waqas Ahmed Khan Key management personnel Nil
Ahsen Altaf Key management personnel Nil
M. Idries Ahmed Key management personnel 0.000025%
Sami Zaman Key management personnel 0.000059%
Khubaib Akram Key management personnel Nil
Khan Muhammad Mohmand Key management personnel Nil
Muhammad Asim Key management personnel Nil
Hassan Khalid Key management personnel Nil
Uzair Qazi Key management personnel Nil
Haroon Saleem Key management personnel Nil
Qadeer Hussain Key management personnel Nil
Khuram Javaid Rajpoot Key management personnel Nil
36.2 Following particulars relate to associated companies incorporated outside Pakistan with whom the Company had entered
into transactions during the year or have arrangement / agreement in place.

British American Tobacco p.l.c. Ultimate Parent Company 0.00% United Kingdom
BAT (Investments) Limited Holding Company 94.34% United Kingdom
BAT Rothmans International Holding Company 0.31% United Kingdom
BAT Exports Limited Fellow Subsidiary 0.00% United Kingdom
Ceylon Tobacco Company Limited Common Directorship 0.00% Sri Lanka
British American Tobacco Myanmar Limited Common Directorship 0.00% Myanmar
228
British American Tobacco Argentina Fellow Subsidiary 0.00% Argentina

British American Tobacco Australia Fellow Subsidiary 0.00% Australia
BAT Bangladesh Company Limited Fellow Subsidiary 0.00% Bangladesh
Souza Cruz Ltd. Fellow Subsidiary 0.00% Brazil
BAT Switzerland SA Fellow Subsidiary 0.00% Switzerland
British American Tobacco Chile Fellow Subsidiary 0.00% Chile
BAT Germany GmbH Fellow Subsidiary 0.00% Germany
BAT (Brands) Limited Fellow Subsidiary 0.00% United Kingdom
Benson & Hedges (Overseas) Limited Fellow Subsidiary 0.00% United Kingdom
BAT (Holdings) Limited Fellow Subsidiary 0.00% United Kingdom
BASS (GSD) Limited Fellow Subsidiary 0.00% United Kingdom
British American Tobacco (GLP) Limited Fellow Subsidiary 0.00% United Kingdom
BAT Nicoventures Trading Ltd Fellow Subsidiary 0.00% United Kingdom
British American Tobacco Asia Pacific Region Ltd Fellow Subsidiary 0.00% Hong Kong
Fielder & Lundgren AB Fellow Subsidiary 0.00% Sweden
BAT Pecsi Dohanygyar KFT Fellow Subsidiary 0.00% Hungary
British American Tobacco Kenya Ltd Fellow Subsidiary 0.00% Kenya
BAT Korea Ltd Fellow Subsidiary 0.00% South Korea
BAT Korea Manufacturing Ltd Fellow Subsidiary 0.00% South Korea
British American Tobacco Mexico Fellow Subsidiary 0.00% Mexico
BAT AsPac Service Centre Sdn Bhd Fellow Subsidiary 0.00% Malaysia
BAT GSD (KL) Sdn Bhd. Fellow Subsidiary 0.00% Malaysia
BAT Nigeria Ltd Fellow Subsidiary 0.00% Nigeria
BAT Marketing Nigeria Ltd. Fellow Subsidiary 0.00% Nigeria
British American Tobacco Niemeyer Fellow Subsidiary 0.00% Netherlands
British-American Tobacco Polska S.A Fellow Subsidiary 0.00% Poland
BAT Romania Investment Ltd. Fellow Subsidiary 0.00% Romania
BAT (Romania) Trading SRL. Fellow Subsidiary 0.00% Romania
BASS Europe SRL. Fellow Subsidiary 0.00% Romania
JSC BAT-Spb Fellow Subsidiary 0.00% Russia
British-American Tobacco (Singapore) Pte Ltd Fellow Subsidiary 0.00% Singapore
BAT Marketing (Singapore) Pte Ltd Fellow Subsidiary 0.00% Singapore
British American Tobacco Tutun Mamulleri Fellow Subsidiary 0.00% Turkey
TDR D.O.O Fellow Subsidiary 0.00% Croatia
West Indian Tobacco Co. Ltd Fellow Subsidiary 0.00% Trinidad & Tobago
PJSC A/T B.A.T Prilucky Tobacco Co. Fellow Subsidiary 0.00% Ukraine
R J Reynolds Tobacco Company Fellow Subsidiary 0.00% United States
British American Tobacco South Africa (Pty) Ltd. Fellow Subsidiary 0.00% South Africa
British American Tobacco ME DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Saudia for Trading Fellow Subsidiary 0.00% Saudi Arabia
BAT GCC DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Middle East DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Qatar LLC Fellow Subsidiary 0.00% Qatar
BAT Middle East S.P.C. Fellow Subsidiary 0.00% Bahrain
BAT Egypt Ltd. Fellow Subsidiary 0.00% Egypt
Central Manufacturing Company Ltd Fellow Subsidiary 0.00% Fiji
PT Bentoel International Investama Fellow Subsidiary 0.00% Indonesia
PT Bentoel International Prima Fellow Subsidiary 0.00% Indonesia
PT Export Leaf Fellow Subsidiary 0.00% Indonesia
British American Tobacco (Malaysia) Fellow Subsidiary 0.00% Malaysia
Tobacco Importers and Manufacturers Fellow Subsidiary 0.00% Malaysia
British American Tobacco (PNG) Ltd Fellow Subsidiary 0.00% Papua New Guinea
British American Tobacco Vranje AD Fellow Subsidiary 0.00% Serbia
BAT Services Ltd., Taiwan Branch Fellow Subsidiary 0.00% Taiwan
Tabacalera Hondurena S.A. Fellow Subsidiary 0.00% Honduras
Solomon Islands Tobacco Co. Ltd. Fellow Subsidiary 0.00% Solomon Islands
British American Tobacco (Cambodia) Fellow Subsidiary 0.00% Cambodia

2020 2019
Rs ‘000 Rs ‘000
37 Cash generated from operations
Profit before taxation 22,387,895 18,284,917

Adjustment for non-cash items:
- Depreciation / impairment 1,500,059 1,367,476
- Gain on disposal of property, plant and equipment 198,342 (134,391)
- Finance cost 240,699 202,553
- Finance income (782,866) (812,571)
- Foreign exchange loss 244,441 445,162
- Provision /(Reversal of provision) for slow moving
stores and spares (10,428) 15,123
- Provision / (reversal of provision) for stock-in-trade 117,492 7,202
- Provision for staff retirement benefit plans 311,410 278,984
1,819,149 1,369,538
Changes in working capital:
- Stock-in-trade 1,822,375 (2,940,355)
- Stores and spares (4,473) (45,093)
- Trade debts 2,868 (2,707)
- Loans and advances (209,561) (27,684)
- Short term prepayments (60,494) 234,014
- Other receivables 229,781 (181,189)
- Trade and other payables 2,725,341 (2,898,684)
- Other liabilities (791,956) 567,124
3,713,881 (5,294,574)
Changes in long term deposits and prepayments 3,039 1,353
27,923,964 14,361,234
38 Reconciliation of movement of liabilities to cash flows arising from financing activities


Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Balance at January 1, 2019 281,456 433,090 15,210,686 15,925,232
Finance lease payments – (709,437) – (709,437)

Dividend paid (12,400,182) – – (12,400,182)
Total changes from financing cash flows (136,481) (709,437) (12,263,701) (13,109,619)

Other changes:
New leases – 2,000,895 – 2,000,895

230


Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Balance at January 1, 2020 144,975 1,724,548 15,735,917 17,605,440
Lease payments – (515,883) – (515,883)

Changes in Dividend payable
Dividend paid (14,801,378) – – (14,801,378)
Total changes from financing cash flows 17,262 (515,883) (14,818,640) (15,317,261)

Other changes:
New leases – 1,168,267 – 1,168,267

Retirements – (124,310) – (124,310)

39 Events after the reporting date
In respect of the year ended December 31, 2020 final dividend of Rs 28.00 (2019: Rs 23.00) per share amounting to a total dividend
of Rs 7,153,826 thousand (2019: Rs 5,876,357 thousand) has been proposed at the Board of Directors meeting held on February
23, 2021. These financial statements do not reflect this proposed dividend.
40 General
40.1
Date of authorization for issue

These consolidated financial statements have been authorized for circulation to the shareholders by the Board of
Directors of the Group on February 23, 2021.



PATTERN OF SHAREHOLDING
As at December 31, 2020
No. of Shareholders Categories Total Shares
1,426 From 1 To 100 44,714

1,112 From 101 To 500 312,030
338 From 501 To 1,000 236,525
240 From 1,001 To 5,000 508,395
29 From 5,001 To 10,000 202,924
5 From 10,001 To 15,000 60,334
2 From 15,001 To 20,000 34,223
6 From 20,001 To 25,000 140,019
1 From 25,001 To 30,000 27,000
1 From 30,001 To 35,000 31,978
1 From 35,001 To 40,000 37,000
1 From 40,001 To 45,000 44,402
1 From 45,001 To 50,000 49,280
2 From 55,001 To 60,000 114,390
2 From 60,001 To 65,000 121,461
2 From 165,001 To 170,000 335,714
1 From 190,001 To 195,000 191,000
1 From 300,001 To 305,000 300,752
1 From 385,001 To 390,000 386,800
1 From 795,001 To 800,000 798,282
1 From 1,755,001 To 1,760,000 1,755,873
1 From 8,715,001 To 8,720,000 8,715,555
1 From 241,045,001 To 241,050,000 241,045,141
3,176 255,493,792
232
PATTERN OF SHAREHOLDING
As at December 31, 2020
No. of Shares
Associated Companies, Undertakings and Related Parties 241,843,423
NIT and ICP 515
Directors, CEO and their spouse and minor children 10,000
Executives 274
Banks, Development Finance Institutions, Non-Banking
Finance Institutions, Insurance companies, Modaraba and Mutual Funds 2,090,554
Individuals 2,372,464
Others 9,176,562
255,493,792
Categories of Shareholders Number Shares Held %
Directors, CEO and their spouse and minor children 12 10,000 0.0
Executives 7 274 0.0
Associated Companies, Undertakings and Related Parties 2 241,843,423 94.7
Investment Companies 1 515 0.0
Modarabas & Mutual Funds 4 1,760,153 0.7
Insurance Companies 3 327,119 0.1
Banks, Development and other Financial Institutions 8 3,282 0.0
Individuals 3,094 2,372,464 0.9
Others 45 9,176,562 3.6
Total 3,176 255,493,792 100.0

No. of Shares
Associated Companies, Undertakings and Related Parties
British American Tobacco (Investments) Limited 241,045,141
Rothmans International 798,282

NIT and ICP (name wise details)

National Bank of Pakistan 515

Directors, CEO and their spouse and minor children (name wise details)
Zafar Mahmood 500
Usman Zahur 2,500
William Francis Pegel 2,500
Syed Asad Ali Shah 500
Syed Ali Akbar 500
Syed Javed Iqbal 500
Tajamal Shah 500
Asif Jooma 500
Mohammad Riaz 500
Belinda Ross 500
Zafar Aslam Khan 500
Muhammad Masood Aslam 500

Executives
Sami Zaman 150
M.Idries Ahmed 65
Syed Aamir Iqbal 10
Farkhanda Naheed 17
Awais Hussain Kazi 15
Shahid Yamin 9
Arshad Javed 8

Shareholders holding 10% or more voting interest
British American Tobacco (Investments) Limited 241,045,141

234
236
238
240
Graph 1
Illicit Market Share (%)

37.6
36.9
36.7
31.9
31.4
Graph 2
100%
Rs 112.5 bn (68% of PTC’s Gross Revenue)

Total payment to Govt vs Rs 16.5 bn PAT
68%
10%
17%
5%
Gross Revenue GST. Excise, Cost of Sales Operating PAT

Income Tax & Expenses
Regulatory
Duties
68% of Gross earnings given as Govt Revenue
Legit Brands Graph 3

Illicit Brands Price Index
Key illicit Brands
80.0 80.0 80.0 80.0

80
210+
64
250+
48
32
16
0
Q1 - 20 Q2 - 20 Q3 - 20 Q4 - 20

242
244
GLOSSARY AND DEFINITIONS
Acid Test Ratio Debt-to-Equity Ratio ICP ORA

The ratio of liquid assets to current The ratio found by dividing total debt Investment Corporation of Pakistan Overall Risk Assessment
liabilities by the equity (all assets minus debts)
held in stock (This is a measure of IDT P.l.c
AGM financial risk) Information and Digital Technology Public Limited Company
Annual General Meeting Dividend Payout Ratio IFAC Price-Earnings Ratio (P/E)
AJK The ratio found by dividing the annual International Federation of The ratio found by dividing market
Azad Jammu and Kashmir dividends per share by the annual Accountants price per share by earnings per share
earnings per share (This ratio indicates what investors
AKF IT think of the firm’s earnings’ growth
DNA
Akora Khattak Factory Information Technology and risk prospects)
Deoxyribonucleic Acid
ALT ITIL PPEs
Earnings Per Share
Area Leadership Team Information Technology Infrastructure Personal Protective Equipments
Earnings found by dividing the Library
Amortisation net income of the Company by PTC
the number of shares of common IWS “Pakistan Tobacco Company Limited”
To charge a regular portion of an outstanding stock
expenditure over a fixed period of Integrated Work System or “The Company”
time EBITDA QRP
JF
AmSSA Earnings before Interest, Taxes, Quick Risk Prediction
Depreciation and Amortization Jhelum Factory
Americas & Sub-Saharan Africa R&D
EH&S JV
APME Research and Development
Environment, Health & Safety Joint Venture
Asia Pacific & Middle East RAI
ENA KPIs
APL Reynolds American Incorporated
Europe & North Africa Key Performance Indicators
Approved Product List Return on Equity (ROE)
ExCo KPK
ASOP The value found by dividing the
Executive Committee Khyber Pakhtunkhwa
Area Sales Operations Planning Company’s net income by its net
FBR LLB assets (ROE measures the amount a
ATL company earns on investments)
Federal Board of Revenue Bachelor of Laws
Active Taxpayers List RMC
FED M.A
BA Risk Management Committee
Federal Excise Duty Masters in Arts
Bachelors in Arts SAA
Fiscal Deficit MBA
BAT South Asia Area
Fiscal deficit occurs when a Masters in Business Administration
British American Tobacco government’s total expenditure SECP
MCB
BCP exceeds the revenue that it generates, Securities Exchange Commission of
excluding money from borrowings Muslim Commercial Bank Pakistan
Business Continuity Planning
FMCG MD SfD
BOM
Fast Moving Consumer Goods Managing Director Strength from Diversity
Battle of Minds
FTSE MIS SoBC
CDC
Financial Times Stock Exchange Management Information Systems Standards of Business Conduct
Central Depository Company
FX MoU SOx
CEO
Foreign Exchange Memorandum of Understanding Sarbanes-Oxley
Chief Executive Officer
GB MS SPLY
CFO
Gilgit-Baltistan Masters in Sciences Same Period Last Year
Chief Financial Officer
Gearing Ratio NIT TFP
CGS
Compares some form of owner’s National Investment Trust Teach For Pakistan
Chief of General Staff equity (or capital) to borrow funds
NEBOSH TSS
CMA GG
National Examination Board in Technical Security Standards
Certified Management Accountant Global Graduate Occupational Safety and Health
UK
CNIC GLT Net Working Capital:
United Kingdom
Computerized National Identity Card Green Leaf Threshing Current assets minus current liabilities
USA
COO HR & RC NJSP
United States of America
Chief Operating Officer Human Resource and Remuneration Non-Judicial Stamp Paper
Committee VFM
CSR NRSP
HR Value for Money
Corporate Social Responsibility National Rural Support Programme
Human Resource vs.
CTC NTN
IBM Versus
Ceylon Tobacco Company National Tax Number
International Business Machines WMS
Current Ratio Operating Cycle
ICAP Wrapping Material
The current ratio indicates a The average time between
company’s ability to meet short-term Institute of Chartered Accountants of purchasing or acquiring inventory and WOW
debt obligations Pakistan receiving cash proceeds from its sale
Way of Working

246
FORM OF PROXY
I/We
of
being a member(s) of Pakistan Tobacco Company Limited (“Company”), holding
Ordinary Share(s) as per Register Folio No./CDC account No.
hereby appoint Mr./Ms.
Folio No. / CDC Account No.(if member) of
or failing him/her, Mr./Ms.
Folio No. / CDC Account No. (if member)

as my/our proxy in my/our absence to attend and vote for me/us, and on my/our behalf at the 74th Annual General Meeting
of the Company to be held on the 22nd day of April 2021 and at any and every adjournment thereof.
Signed by
Signed under my/our hand this the day of 2021.
WITNESS – 1 WITNESS – 2
Name: Name:
CNIC: CNIC:
Address: Address:

NOTE:
a. The signature should match with the specimen signature registered with the Company or with that on CNIC (in case
of a CDC shareholder).
b. A Proxy need not be a member of the Company.
c. Proxy Forms (scanned copies) properly completed along with attested copies of CNIC or the Passport of the Proxy
shall be sent to zeeshan.akhtar @famco.com.pk not less than 48 hours (excluding closed days) before the Meeting.
d. The Proxy Form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned
on the Form.
e. In case of a corporate entity, the Board of Directors’ Resolution / Power of Attorney with specimen signature shall be
sent at zeeshan.akhtar@famco.com.pk along with Proxy Form.

248

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At PTC, we have been delivering shareholder value and

creating valued employment for over 70 years. Today, we find

106 110 112

114 118 119 120 121 122

Consolidated Financial Statements

168 169 180 184 185 186

187 188 189 232 241 244

245 247 248

CONSUMERS SOCIETY EMPLOYEES SHAREHOLDERS

BOLD FAST EMPOWERED

Annual Report 2020 05

Europe and North Africa United States of America

• our unique global marketing and distribution

United States Americas and Sub-

Annual Report 2020 09

Climate change Human rights Business ethics

Creating shared value for

CONSUMERS SOCIETY EMPLOYEES SHAREHOLDERS

Annual Report 2020 13

Annual Report 2020 15

Registered Office Company Secretary Auditors

Annual Report 2020 17

Since the COVID-19 outbreak, we have moved quickly

enable our employees to work remotely, have helped

23-29 March 15 May

28 June 1 November 31 December

Annual Report 2020 21

As challenges in our operating landscape continue to Risk Governance

Statement from Board of

Names of Directors who have obtained certification from

1. Syed Javed Iqbal

Annual Report 2020 25

Annual Report 2020 27

Audit Human Resource MD/CEO Share Transfer

Finance & Head of Country Security

Head of Corporate Sr. HR Business Security Manager -

Area Commercial Security Manager -

Sr. Commercial Finance HR Business Partner - Risk & Resilience

Legal & External Head of

Executive Supply Chain Planning As at 31st December 2020

Area Quality Group Brand

Area EHS Executive

Annual Report 2020 29

Tobacco Tobacco Cigarette

Pakistan Tobacco Company

Sourcing Manufacturing Warehousing Distribution

Overseas Sindh & Balochistan Sale to Distributor

GLT + Leaf Warehouses Southern Punjab Sale to Distributor

Local Akora Khattak Central Punjab Sale to Distributor

Jhelum North Sale to Distributor

Jhelum Jhelum Factory Exported to MESA Region

All Distribution Sale to Distributor

Annual Report 2020 31

Zafar Mahmood Usman Zahur William Pegel

Annual Report 2020 33

Tajamal Hussain Shah Belinda Joy Ross Lt. Gen. M.

Annual Report 2020 35

Usman Zahur Syed Asad Ali Shah William Pegel