Industry

Philip Morris Pakistan closes one cigarette manufacturing plant

 

“The company also layoff 194 employs”

Karachi, March 04, 2019: Philip Morris (Pakistan) Limited has announced to closes one of its manufacturing facility and layoff of 194 employs following a strategic review for sustainable future growth.

Industry sources said that company was deprived of growing share of illicit cigarettes in the domestic market that was is not only hurting the documented cigarette industry, but also costing exchequer Rs 35 billion annually in term of revenue.

Share of illicit trade of cigarette in the country is gradually increasing due to non-implementation of law and Pakistan’s documented tobacco industry including Philip Morris (Pakistan) was facing a critical challenge with the visible presence of non-tax paid cigarettes, which market share presently stand at 33.4 percent.

Pakistan’s legal cigarette industry comprises of two multinational companies, which are contributed Rs 89 billion in excise duties and taxes during the last fiscal year (FY18). But despite that government’s efforts toward implementation of law against illicit cigarette industry in the country were very poor, that force the company to shut down its one of plant.

According to an announcement by Philip Morris (Pakistan) Limited (PMPKL) on Monday, it will reorganize its cigarette-manufacturing operations, following a strategic review to optimize process efficiencies and operational effectiveness and to position PMPKL for sustainable future growth.

This will involve closure of the cigarette-manufacturing facility in Kotri, Sindh and will impact 194 employees, all of whom will be offered separation packages that will exceed what is required by law in order to facilitate them through this difficult transition period.

Commenting on today’s announcement, Joao Martins, Managing Director PMPKL said that PMPKL remains committed to operating in Pakistan, through our manufacturing facility in Sahiwal, the Green Leaf Threshing plant in Mardan and by maintaining a strong ongoing commercial presence.

The wide presence of illicit cigarettes in the country has impacted the legal industry volumes, as a result our manufacturing footprint was in excess of requirement, hence PMPKL decided to consolidate its current manufacturing footprint to achieve greater efficiency and for a sustained business outlook, he added.

“Our priority will be to treat all our employees fairly and with respect and dignity. We appreciate the contributions that each and every colleague has made over the years and we understand that this is difficult news for our employees”, he said.

Martins said that Philip Morris has a big vision, to create a smoke-free world, and we are transforming our business to achieve that vision and change at this scale is never easy.

“Our strong global combustibles business has enabled us to develop better alternatives for smokers but the increase in illicit trade in Pakistan, together with the global industry volume trend, has impacted legal sales volumes in Pakistan to such an extent that our current manufacturing footprint has become unsustainable”, he mentioned.

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