KUALA LUMPUR (March 17): British American Tobacco (Malaysia) Bhd (BAT) is closing down its factory along Jalan Universiti, Petaling Jaya, at the intersection that used to be a roundabout colloquially named after the tobacco company's former name Rothmans, following a challenging business environment.

BAT, in a filing with Bursa Malaysia today, said that its wholly-owned subsidiary Tobacco Importers and Manufacturers Sdn Bhd will wind down its factory operations in stages up to the second half of next year.

The group will then lay off 230 workers, and they will be provided with a benefits package and the option to undergo a career-transition programme.

"The restructuring is in line with the company's efforts towards realising a new and more sustainable business model, amidst an increasingly challenging business environment. The high excise environment has ultimately led to the sharp rise in illegal cigarettes and significantly lower legal sales volumes resulting in rising cigarette production costs," BAT explained of its rationale behind the move.

It added that the ascendingly challenging environment forces BAT to restructure and transform its business which, apart from winding down its Petaling Jaya factory, will include sharpening its commercial capabilities and optimising the supply chain and transaction activities.

These will be done "to ensure that BAT remains a competitive consumer-focused market leader".

BAT then said that it will dispose of the land on which the factory sits with a public tender exercise proposed to be launched after today. It is scheduled to be completed around May of this year, the group said.

BAT, an FBM KLCI constituent, closed 28 sen or 0.51% higher at RM55.32 today. It has a market capitalisation of RM15.8 billion.