BAT Bangladesh to shut Mohakhali factory, relocate HQ after lease rejection

Infographics: TBS

British American Tobacco (BAT) Bangladesh, a cigarette manufacturer, has decided to shut down operations at its Dhaka factory from 1 July, following the Supreme Court's rejection of its appeal to extend the land lease agreement.

The publicly listed company will also relocate its head office from Mohakhali DOHS to Ashulia on the same date, according to a stock exchange filing today (19 June).

According to its annual report for 2024, BAT Bangladesh has been leasing the factory premises from the Dhaka Cantonment Board since 1964. Each lease term spans 30 years, with the option to renew for a total duration of up to 90 years.

The company had applied to renew the lease for the remaining 30 years, but after the board declined to extend it, BAT Bangladesh initiated legal proceedings to enforce what it claimed were contractual rights.

On 29 May, the Appellate Division, led by Chief Justice Syed Refaat Ahmed dismissed BAT Bangladesh's appeal, which challenged a previous High Court order regarding the lease dispute.

Earlier, on 12 December last year, the High Court also dismissed the company's writ petition contesting the cantonment board's decision not to renew the lease agreement for the Mohakhali DOHS land.

BAT Bangladesh has three factories located at Mohakhali, Savar and Manikganj, and a green leaf trash plant in Kushtia.

The first factory in Bangladesh (then East Pakistan) was set up in 1949 at Fauzdarhat in Chattogram, and in 1965, the second factory of Pakistan Tobacco Company was set up at Mohakhali.

After Bangladesh's independence, the company became Bangladesh Tobacco Company Limited, and in 1998, the company changed its name and identity to British American Tobacco Bangladesh, aligning the corporate identity with other operating companies in the BAT Group.

A BAT Bangladesh spokesperson said today they are currently working to achieve a smooth transition to a new head office.

He told TBS, "BAT Bangladesh had a 90-year lease from the Cantonment Board since 1964, extendable every 30 years. Following a verdict from the Appellate Division of the Supreme Court on 29 May, our appeal to extend the lease period was dismissed. We respect the decision of the honourable Supreme Court and have aligned with the Bangladesh Army to vacate the premises by mid-July 2025". 

The spokesperson continue, "In line with our long-term plan for business sustainability, we have already planned beyond the current premises and set up a factory in Savar. Significant investments have been made in our Savar facility in the recent years, as part of our continued foreign direct investment in Bangladesh.

"Given the scale of our business and the sudden nature of this change, we anticipate certain challenges and adverse impact on our business operations. However, we are taking all necessary measures to minimise this impact and protect the interests of our shareholders."

BAT Bangladesh got listed on the bourse in 1977. Every year, the multinational has been paying a handsome dividend to its shareholders. 

In 2024, it made a gross revenue of Tk43,231 crore, and after paying supplementary duty and value-added tax (VAT) to the national exchequer, its net revenue stood at Tk9,944 crore.

It made a profit of Tk1,750 crore with an earnings per share (EPS) of Tk32.42. It paid a 300% cash dividend to its shareholders for 2024.

In the first quarter from January to March of 2025, BAT Bangladesh recorded Tk9,597 crore in gross revenue despite a sharp decline in cigarette sales.

According to the company's unaudited Q1 financials, its net profit dipped 23% to Tk318 crore, down from Tk413 crore last year. Its EPS fell to Tk5.89.

At the end of trading today, the company's share price closed at Tk283.90 each, which was 1.05% down from the previous session.