We want to be poor owners of a rich company: Akij Managing Director
From selling bidi and stocked goods, Akij is now a company worth Tk14,000 crore
Sheikh Bashir Uddin has been the managing director of Akij Group for over 15 years.
After finishing his undergraduate education at home, he declined the chance to further his studies abroad and instead began working at Akij as a stationery purchase officer in 1988, following his completion of SSC exams.
Fast forward a decade, and in 1998 Sheikh Bashir Uddin had risen to the position of Planning Director for the company. By 2006, at just 33 years old, he was appointed as the Managing Director of the Tk4,000 crore company.
In 2020, the International Finance Corporation (IFC), a subsidiary of the World Bank Group, released a report on the private sector in Bangladesh. The report listed Akij Group among the top 10 companies with a billion-dollar turnover.
The organization has a diverse portfolio of investments across many industries in the nation and is exploring new opportunities, following the divestiture of its tobacco operations.
He recently spoke to The Business Standard about their new investment plans and current business.
Current business dynamics
At present, Akij has a wide range of businesses, including cement, ceramics, food products, textiles, plastics, jute, printing and packaging, particle board, shipping, tea gardens and agro-based industries.
From the business of bidi and stocked goods, Akij is now a company worth Tk14,000 crore with 35 companies under the group, of which more than 30 are operational.
Over the past few decades, the group experienced a growth rate of 20%. Despite facing some slowdown in the beginning of the Covid-19 pandemic, the business has now regained its momentum and is making strides towards growth. Additionally, the group is making new investments in various industries to expand its reach.
According to Sheikh Bashir Uddin, “The majority of the companies were established during my father’s era. After his passing, we expanded the business. Presently, our company employs around 55,000 individuals.”
The sale of Akij tobacco
Akij expanded its business through its tobacco company. In 2018, it sold the tobacco business to Japan Tobacco for Tk12,400 crore – the biggest sale of a Bangladeshi entity to a foreign company in the country’s history.
What has Akij done with the money?
“We do not usually disclose these issues. Japan Tobacco will pay the money, step by step, over a long time. A portion of the money will go to government taxes.
Akij has utilized the remaining funds for the establishment of new ventures and the growth of current ones. As an example, the acquisition of Janata Jute Mills for a sum of Tk725 crore was made. Bashir Uddin stated that Akij has also taken over two companies, Robin Resources and Robin MDF, in Malaysia.
Additionally, Akij is a company that is spread out over various fields. The company aims to venture into new industries and has now set its sights on the construction sector. Investments are being made in agriculture, agricultural products, ceramic and floating glass factories, and the pipe industry.
Gradually, there will be more investment in new sectors,” the managing director added.
With regards to the country’s agro-processing sector, Bashir Uddin said, “A Chinese company has bought the world’s largest poultry-supplying company. Although China is the world’s largest producer of it, they acquired the company because of the brand value.
According to him, there is a vast possibility for growth in the agro-processing sector in our nation. However, a major hindrance is the absence of trust. To overcome this, he believes that the establishment of a regulatory body is necessary to guarantee consumer confidence in the products. He stressed the importance of the state taking action in this matter.
Akij wants to tap into all potential
Sheikh Bashir Uddin thinks there is a bright future ahead for private sector investment in the country.
“Our GDP and per capita income are growing. People will be ready to spend their money. This will create opportunities for manufacturers. If people spend, then products and services become necessary.
The market will grow both in the country as well as globally. Over the next few decades, I see both opportunities at once,” he said.
Where will Akij stand in the next 10 years?
“No business is stable. You have to go backwards or forwards. If you make mistakes, you will be left behind. We have not yet thought about where we will be after 10 years. But we will try to use all opportunities.
We will try to do the best we can. We don’t think we have to do anything too quickly. We think tomorrow is more important than today. Maintaining such a large company with huge manpower is a very big responsibility,” explained the managing director.
Akij Uddin’s philosophy behind branding
When Akiz Uddin, the founder of the group, was manufacturing bidis, there were many such manufacturers in the market. But there was no packet, printed name or brand like now. But everyone knew Akiz Bidi because he used to separate his products by tying a little red thread in the Bidi. And that was the first brand idea.
Bashir Uddin said, “Then the demand was more than the production capacity. So we just had to produce. But there was no difference between the products made by different producers.
My father realized that he needed a distinct identity for his products. And from this thought he tied the red thread. He started branding even though it was expensive. Looked at Guna. He was then in his early twenties.
Dad used to say that Akiz’s products must be the best in terms of quality in the market.”
Bashir Uddin adds, “My father used to insist on building his own supply chain instead of a wholesale market-oriented business. It would have cost him more.
But that was the strength of his business strategy. Akiz still holds that strategy. We still have the strength to invest more in the business to produce quality products.”
Quality depends on machinery and raw materials
All the machinery of the recently established Akiz Ceramic Factory is imported from Germany.
The factory was built on German technology. The company has set up almost all factories including float glass, flour mill, cement VRM (vertical roller mill) using European technology. Sheikh Bashir Uddin said that although the cost of setting up a factory with the best technology is high, it gives good results in terms of the company’s profit.
“The reason we emphasize machinery is because it minimizes the chance of mistakes.
We have some projects which are ranked in European journals due to good quality. A television crew from Switzerland came to see our flour mill. It is the most modern flour mill in the world,” said Bashir Uddin.
“We were the first to use VRM technology in the cement sector. Now all cement companies in the country have adopted this technology. Following our flour mills, everyone has come to adopt the technology. Our food and beverage industry has also inspired others to adopt our technology. .
I don’t think about cost when I do a project. This is what my father taught me. Productivity can be increased if the project is done at low cost. But if you spend more money and start working with better equipment, the number of rejected products will decrease and the cost of production will decrease in the long run,” he adds.
“When a project is done with machines made in an Asian country, the rejection rate increases. The cost increases due to the down time of those machines. On the other hand, the customer does not get a good product.
For example, we have invested Rs 150 crore in the handling section alone in our pipe factory. People don’t spend that much in factories with this capacity. We did this by bringing technology from a German company. I saw such a project in Saudi Arabia and tried to implement the idea.
At first it seemed that it would cost more to build that factory, but in the end we made a profit. Because we have no downtime here, there is no disruption to production. The product quality is also quite good. It’s definitely cheaper,” Bashiruddin explained.
Poor owner of a rich company
Akiz is essentially a zero-dividend company. The directors of the company do not take any dividend.
After establishing the company 80 years ago, Akiz Uddin has never taken any dividend from the company. Current directors are also following his example. The company’s entire earned income goes into new investments.
Bashir Uddin said, “My father used to say that there are two types of companies in the world. First, the company is poor but the owner is rich. Second, the owner is poor but the company is rich. My father was poor. The owner of a rich company. We also do not live a very luxurious life. Taught to take wealth responsibly.
We are an old company. We don’t really need wealth. We strive to produce the best product at the lowest possible cost. We are so busy with production and marketing that we don’t have a chance to really enjoy ourselves. I still don’t think it’s necessary to use an expensive car. We want to be poor owners of rich companies. That’s our philosophy,” he said.
“My father was a very simple man. He didn’t buy a car after 1977. Then he had a Mitsubishi car. He lived a very simple life until his death in 2006. When he walked, he walked with humility. Cats. He was simple. He wore cotton Punjabi-pajamas.
Wealth was never important to him,” adds Bashiruddin.
