First Bangladeshi company ready to export generators

After achieving the milestone of making 500 large diesel generators under its own brand GLAD, Energypac Power Generation Limited now plans on exporting the high-quality electromechanical product.

During a recent media visit to the company's Sreepur plant in Gazipur, its General Manager Mohammad Masum Parvez said, "We just need some policy support to begin exports."

The logo of GLAD generators includes the country's full name BANGLADESH and the brand name comes from the four letters in the middle.

"It is our founders' dream to bear the flag of our country abroad on the body of large generators, and it is very possible, just like our export of electric transformers, even to the crowded market of India," said Parvez, the power and energy division head of the electromechanical conglomerate.

Alongside neighbouring markets, the company is foreseeing a huge potential in some African markets if cost competitiveness is ensured.

"We are making the highest standard diesel generators to serve mega projects, prominent real estates and large factories," Parvez said, adding, "We need fiscal incentives and also non-tariff state support to clear away the export barriers that come in diversified forms like certification, supply chain, and transportation."

Currently, his team of nearly 100 Bangladeshis, of which 80% are engineers, is capable of assembling 300 units of diesel generators per year ranging from 20KVA to 1000 KVA capacity. The local value addition to the finished products are over one-third .

The company plans to get equipped for an annual assembling capacity of 1,000 units of generators soon, he added.

 Importer turns manufacturer

It all began in 1995 when Energypac started importing FG Wilson diesel generators from the United Kingdom.

Crossing the second decade in 2015 and stepping into the third decade as the marketer of the world's top diesel generator brand, the company pioneered generator assembling in Bangladesh.

Industrial generators – treated as capital machineries – are subject to a meagre 8-9% total duties and taxes if imported as completely built units (CBU).

As the lone generator builder, Energypac's cost for duties and taxes is only 5 percentage points less due to exemption from value added tax.

"The difference is not sufficient if we talk about the protection for local industries," said Masum Parvez.

His company is selling nearly 200 CBU units of FG Wilson generators a year, mainly to high-end clients who value quality and brand over price.

The company sold more than 255 GLAD generators in the last one year at a price at least 15-20% lower.

FG Wilson and GLAD together have made Energypac the top player in the large generator market in Bangladesh. An FG Wilson units' capacity can go as high as 2,500 KVA.

 Inside the GLAD plant

"We are doing our best in terms of local value addition – building the steel base, acoustic enclosure and panels that contain the huge generators entirely. complex parts are sourced from the world's top vendors," said Mohd Touhidur Rahman, a mechatronics engineer at the GLAD plant.

GLAD generators run on UK-made Perkins engines, Stamford or Leroy-Somer alternators, and ComAp or Woodward or Deep Sea control systems, all of which are world famous.

Having ISO certification, regular BUET tests, and of course a strong internal research and development wing, Touhidur Rahman's team builds and paints the generator body, assembles the completely knocked down parts and tests the load capacity of the assembled units.

Nearby Steelpac plant – another business unit of Energypac serving a selective industrial market for building prefabricated steel structures – supports the GLAD plant with some shared expertise.

Long experience in handling the world's top brand helps the company to excel in after sales services, which are free for the first year and extended paid services onwards.

The local market

Annual sales of large generators are more than 3,500 in Bangladesh, while all except the 255 GLADs are imported CBU units.

Energypac can make up to 500 units of GLAD generators a year if the plant runs 12 hours a day instead of the current 8-hour shift.

However, in the fifth year of journey, GLAD is attracting an increasing number of quality conscious buyers and the company is building another shed nearby to expand the floor for GLAD.

"Our target is to get equipped for an annual assembly capacity of 1,000 units soon," said Masum Parvez, adding, "Some basic incentives for the local industry would boost sales of the assembled units."

Widening the import duty gap between CBU and CKD brands up to 25-30 percentage points from existing 5 percentage points would meaningfully protect the market of the local industry, he observed.

In Bangladesh, currently there are around two dozen regular professional importers of large CBU generator units, while some few dozen come to try their luck if opportunities emerge.

Some large importers might prefer assembling if policy incentivises GLAD, said Parvez, adding that the level of local value addition would mean a lot when a large unit costs over Tk1.5 crore, and small ones costing as low as Tk6 lakh.

"The market would grow manifolds – around 20% annually, like it did over the last decade – in the coming years of industrialisation and economic prosperity and therefore it is time to think of a localisation of the generator industry," he added.

Bangladesh is already a Tk3,000 crore market at least, and if the smaller generators are taken into account, the annual sales might have touched Tk4,000 crore, he figured.

Government projects are the buyers of at least 15% large generators now. If the government makes it mandatory to buy those generators from a local plant, that also would be a support to the local industry.

The GLAD plant is ready to build and deliver up to 1,500 KVA generators right now.