PRIVATE & COFIDEINTIAL
TOBACCO DIVISION BOARD OF MANAGE.MENT
Minutes of Meeting lield on Tuesday, 7th August
1973.
Present: Mr. P. Macadam (Chairman)
-M r .K.E. Haines
Mr. C.H. Stewart Lockhart
Mr. A.D. McCormick
.\fr. P. Sheehy
In Attendance: \fr. P.J. Ricketts (Acting
Secretary)
Absent: Mr. J.T. Husbands
Mr. T.A.H. Slack
Mr. E.J. Symons
Also attended for the first item:
Mr. G. Rawlinson
Marketine Services - International Brands
A team from Marketing Services made a presentation
on plans for
our main inte~nauional brands including the
proposed strategy
and the priorities as tl-.ey stand at the moment.
Mr. Short
introduced the presentat;on %vith some comments on
organisation
a copy of which is atrac'-Ied to these Minutes.
11/2 Rothmans Interna-ional - Tobacco Taxation
Reference: Minute 10/13 of 31st JuIv.
Mr. Stewart Lockhart reported that Mr. Kriel,
Marketing
Direc&.r of Rot' manf Intsrnational (based in
Monaco) and
Mr. had visited to discuss
harmanisation of tobacco taxation in the E.E.C.
They
complimented BAT on taking the initiative in
organising a
c mm n front b,- the enternrise industry and
agreed
~te -
s -o the Benelux governments in favour
pr La ion .
of high specific element in tobacco taxation which
was a
reversal of t~ie;r pre,icus positicn. Mr. Blake is
going to
.Mcnaco this eek to assist witi, preparation of
the case.
11/1, BAT/Imnerial Discussions
Mr. Macadam reported that settlement had almost
been reached
on the outstanding matter of the duty-free trade
within
Europe, with Imperial agreeing to grant BAT the
right to
handle the trade so lonz as it remained duty-free.
Imperial
will probably seek to restrict this to the 13
Imperial brands
currently handled by I.E.D. but BAT will press for
the right
in respect of all Imperial brands which are to be
transferred
back although we will accept Imperial's right to
handle new
brands launched under their traditional House
names. Traditional
Houses will also be aereed.
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11/4 Responsibilities of Tobacco Division
Reference: Minute 10/19 of 31st July.
It was agreed to issue an edited version of the
finally
approved document to No. I's overseas and Heads of
Departments
and Finance Advisers within Millbank.
(Secretary
11/5 International Brands - CHARLTON
Reference: Minute 10/18 of 31st July.
Mr. Macadam reported that I.E.D. had agreed to
adopt CHARLTON
in place of HIBERNIA in I.E.D. markets. Mr. Liddle
attended
the meeting to report an the board situation and
confirmed
that board for 20 million CHARLTON was already at
Mardons
and a further delivery sufficient for 70 million
CHARLTON
is due at the end of November. Small quantities of
board
sufficient for 40 million cigarettes could be
obtained at
short notice to fill any gap between the 20
million and
70 million referred to above. It was agreed that
the
CH.-IRLTON programme should be reviewed by Messrs.
Macadam,
Doran and Short and Purchasing Department advised
of I.E.D.Is
precise requirements by the end of this week.
(.%fr. Macadam Mr. Slack
Mr. Short
Mr. Doran
Mr. Brown)
11/6 Filters - Loneer Plu2---
Reference: Mr. Doran's note of 20th July.
The arguments in fa%-cur of longer plugs were
noted and it
was agreed that there would be advantages in
adopting longer
plugs for all international markets. It was
suggested that
I.E.D.Is conversion programme was too slow and it
was agreed
that Mr. Haines would investigate and report back
on the
various alternative means of speeding up the
machinery
conversion timetable.
(Mr. Haines Mr. Doran)
11/7 Transfer of Technolozv
Reference: Scientific Developments Committee
Minute
19/3 of 30th July.
The recommendation that Co-ordinators should
handle the
negotiation of royalty payment by associated
companies on
new processes and products developed by R. & D.
-as approved.
It was a greed, however, that R. & D. should
indicate which
processcs and products involve a real
technological develop- U~j
ment in which cases Co-ordinators should not, in
general, CD
agree to an%- transfer without payment of
rovalties. C)
(Dr. Green All Co-ordinators) CD
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11/8 PRT-71 Project - Brazil
Reference: Minute 10/1 of 31st July.
It was agreed that Mr. Haines should organise a
team (including
pertinent experts from Millbank and Wiggins Teape)
to make a
preliminary project study on the feasibility of
installing a
PRT plant in Brazil. Mr. E.J. Rigby will be in
Millbank at
the end of August and can then be consulted.
(Mr. Haines Mr. Tindley
Mr. Bowra
Dr. Green
11/9 Leaf Develooment
Reference: Minute 10/2 of 31st July.
It was agreed that Territorial Directcrs should
alert No. l's
overseas to the anticipated long-term world
shortage of good
quality leaf so that opportunities for leaf
development can
be investigated.
(All ~.embers
il/lo Tobacco Taxation - U.K. Drawback RateS
Reference: Mr. Blake's note of 2nd August.
It was agreed to accept the TAC proposal not to
collect
arawback in respect of the Common Cu5-1z)ms Tariff
(the 'nev_ad
valorem element) to be applied under E.E.C.
arrangements Irom
Ist January 1974. This accords wit- C-,-istoms
advice and has
been agreed with the rest of the U.K. industry in
order to
protect AOC profits (BAT - 14.5 million or more
per annum)
until full harmonisation within the E.E.C.
scheduled for Ist
January 1978 and to avoid undermining rhe U.K.'s
position in
the specific -v- ad valorem argument in the
harmonisation
negotiations.
(Mr. Srewart Lockhart
Mr. Doran
Mr. Blake)
11/11 Allowances in U.K. for visitors from India,
Pakistan
and Sri Lanka
Reference: Minute 8/1 of 17th July and \.1r.
McCormick's note
of 26th July. CD
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It was agreed to make no changes in tne Sterling
Travelling
Allcwances z)re-.,-iously acreed.
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11/12 BAZr3LA.DESH No. 1.
Reference: Mr. McCormick's note of 26th July.
It was agreed to select Mr. F.F. Hogan as
successor to
Mr. H.H.V. Spreadbury as No. I in Bangladesh on
the under-
standing that the appointment would be for not
less than
3 years but that in the event of unforeseen
circumstances.
his present post of Production Adviser in Millbank
would
remain available to him.
It was noted that Mr. Cargegie-Brown at present
Production
Director in Malaya could be released to replace
Mr. Hogan as
Production Adviser in Millbank.
(Mr. McCormick Mr. Haines
Mr. Sheehy
Mr.
Dunbar)
11/13 Marketine Executive Committee
Reference: Mr. Slack's note of 30th July.
It was agreed to defer consideration of the future
operation
of the M.E.C. until a decision has been taken on
whether a
Tobacco Board Marketin~_, Committee (comprising
the Marketing
and Territorial Directors under the Chairmanship
of Mr. Macadam)
should be established.
(Mr. Macadam Nfr. Slack)
11/14 Indonesia - Capitalisation
Reference: T.A.D.Is note of 2nd August.
The proposal that P.T. British-American Tobacco
Manufacturers
(Indonesia) should capitalise all reserves at 30th
September
1971 to increase the paid up share capital from Rp
113 to
Rp 1,700,000 was approved subject to Bank of
England and
HAM. Treasury consents.
(Mr. Sheehy Mr. McClelland
T.A.D.
C)
11/15 Pakistan - Senior Executive Aooointments CD
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Reference: Mr. McCormick's note of 3rd Augusz.
The proposed appointment of Riaz Mahmood as
General Manager
Marketinz cf Pakistan Tcbacco Company was noted.
(Mr. McCormick Secre-ar7)
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11/16 Imasco Board
Reference: Mr. Macadam's note of 6th August.
It as noted that Imasco propose to approach Mr.
Jean-Luc
Pepin and Mr. Purdy Crawford for appointment as
non-executive
directors of Imasco and that the CPC was already
a-are of
the proposal.
11/17 Malava - Management and ComDuter Services
Sendirian Berhad
Reference: T.A.D.Is note of 2nd August.
It was agreed to recommend to the CPC that Malaya
Tobacco
Compan,..r should continue negotiations with
InclicaDe Berhad to
sell 48.4% from its 90% interest in MACS under a
scheme whereby
MTC will have to write off part of. its losses in
this invest-
ment 4n order to obtain a partner to assist in
restoring
MACS to profitability.
(CPC
11/18 Indone-zia - Leaf Development ComDanv
Reference: T.A.D.Is note of 2,-,d August.
It ~a_= agreed to recommend to the CPC the
proposal of B.A.T.
(Indo:~esia) that a new company be formed ith an
initial
capital not exceeding i100,000 to cover leaf
development work
in the -hree islands off the main island of Java
as a joint
venture with local partners (such as development
banks) to
the e:.:-ent of 40% initially. Bank of England and
H.M.Treasury
consenzs will be required when details of the
project have
been Settled.
(CPC
11/19 U.S-%. - Major Project (Export Leaf Tobacco
Ltd.)
Reference: T.A.D.Is note of 3rd August.
It was agreed to recommend to the CPC the proposal
of ELT
that a new plant and leaf storage facilities
should be
constructed in Wilson, N.C. at an estimated
project cost of
U.S. :-111.6 million (.i4.64 million) to replace
the two existing
plants at Wilson and th,~ Richmond plant. Finance
Department
calculate that ELT will have sufficient funds to
finance
this oroject (the cost of which is estimated will
be recovered
within a 6 year payback period including receipts
of approxi-
mate 1v 42 million on disposal of reduridan,
properties) subject
to increased borrowing requirements particularly
at the peak
of the leaf buying season.
(CPC
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11/20 Tanzania - Negotiations with N.D.C.
Reference: Mr. Sheehy's note of 3rd August.
It -,~as agreed to recommend to the CPC that we
again respond
to the N.D.C.'s latest approach to re-negotiate
the Managing
Agency Agreement by offering to sell our remaining
40%
interest in B.A.T. Tanzania Ltd. to the Go~ernment
on a
similar to basis to that established for the sale
of the
original 60% interest .
(CPC
11/21 Venezuela - Agreement with R.J, Revnolds
Reference: Mr. Purdon's note of 24th Jul-Y.
It ,-as agreed to recommend to the CPC the
proposal that
Bizott snc-_,1d enter into an agreement kith R.J.
Reynolds
InEernati~,nal for the manufacture of WINSTON
under licence
in Venezuela.
(CPC
11 Ch a i rma n the Me e t i ng
The senior B,,LT Director presenz will take the
Chair o.~
Tc'L&cco Ci-.-isicn Board of Management Meetings
in the a .r, senc e
of Mr. Mac_=dam which will be %fr. Slack or in his
absence
Mr. Husbands or in his absence \fr. McCormick.
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BATCo document for Province of British Columbia 27
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