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 completing his undergraduate studies at home, he gave up an opportunity to continue his higher studies abroad. He had however started working at Akij as a stationery purchase officer after his SSC examination in 1988.
Fast forward 10 years, Sheikh Bashir Uddin became the planning director of the company in 1998. In 2006, at the age of 33, he took over as the managing director of the Tk4,000 crore company.
In 2020, the International Finance Corporation (IFC), an organisation of the World Bank Group, published a report on the private sector in Bangladesh. Akij Group was listed among the top 10 companies with a billion-dollar turnover.
The group has investments in almost all sectors of the country, and is investing in new sectors, after selling its tobacco business.
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.
The growth rate of the group has been 20 percent in the past decades. However, the business lost some momentum at the beginning of the Covid-19 pandemic, but now it is back on track. It is also making new investments in several sectors.
"Most of the businesses were started during my father's time. We expanded the business after his death. Currently, around 55,000 people are working in our company," said Bashir Uddin.
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 invested the rest of the money on new business and expansion of existing businesses. For example, we bought Janata Jute Mills for Tk725 crore. In Malaysia, Akij has acquired two companies, Robin Resources and Robin MDF," said Bashir Uddin.
Furthermore, "Akij is a diversified company. We want to go into new businesses. Now we are expanding our business to the construction industry. We are also investing in agriculture and 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.
There is a huge potential for agro-processing in our country, but we lack trust. Here we need a regulatory body for ensuring consumer trust in products. The state must act here," he said.
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 move backward or forward. If you make a mistake, you will be left behind. We have not yet thought about where we will go after 10 years. But we will try to use all opportunities.
We will try to do whatever we can within our capacity. We don't think we have to do anything very quickly. We think tomorrow is more important than today. It is a very big responsibility to maintain such a big company with a huge workforce," explained the managing director.
Akij Uddin's philosophy behind branding
When Akij Uddin, the founder of the group, was producing bidis, there were many such producers in the market. But there were no packets, printed names or brands like now. But everyone knew Akij Bidi because he used to separate his product by tying a little red thread to the bidi. And that was the first brand idea.
Bashir Uddin said, "At the time, the demand was higher than production capacity. So all you needed to do was produce. But there was no distinction among the products made by different producers.
My father understood that he needed a different identity for his products. And from this thought, he tied the red thread. Although it was expensive, he started branding. He looked at the quality. He was a little over 20 at that time.
Dad used to say that Akij's products must be the best in terms of quality in the market."
Bashir Uddin added further, "My father used to insist on creating his own supply chain instead of the wholesale market-oriented business. It would cost him more.
But that was the power of his business strategy. Akij still holds on to that strategy. We still have the strength to produce quality products with more investment in business."
Quality depends on machinery and raw materials
All the machinery of the recently established Akij Ceramics factory has been imported from Germany.
The factory was built with German technology. The company has set up almost all its factories, including floating glass, flour mill, cement VRM (vertical roller mill) using European technology. Sheikh Bashir Uddin said that although the cost of setting up factories with the best technology is high, it gives good results in terms of the company's profit.
"The reason we emphasise on machinery is because it lessens the chance of mistakes.
We have some projects that have been featured in European journals due to their good quality. A television team from Switzerland came to see our flour mill. It is the most modern flour mill in the world," Bashir Uddin said.
"We are the first to use VRM technology in the cement sector. Now all the cement companies in the country have adopted this technology. Everyone came to adopt the technology following our flour mill. Our food and beverage industry also inspired others to adopt our technology.
When I do a project, I don't think about the cost. This is what my father taught me. If the project is done at a low cost, the productivity may increase. But if you start working with good machinery by spending more money, the amount of rejected products will be reduced and it would reduce production costs in the long run," he added.
"If a project is done with machinery 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 Tk150 crore on the handling section alone in our pipe factory. People do not spend so much on a factory with this production capacity. We did it by bringing technology from a German company. I saw a project in Saudi Arabia like this and tried to implement the concept.
At first it seemed to cost more to build that factory, but in the end, we benefited. Because we do not have downtime here, as a result, production is not hampered. The product quality is also quite good. It is definitely cheaper," explained Bashir Uddin.
Poor owner of a rich company
Akij is mainly a zero-dividend company. The directors of the company do not take any dividends.
After the establishment of the company 80 years ago, Akij Uddin never took dividends from the company. The current directors are also following his example. The entire retained earnings of the company go to 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 the poor owner of a rich company. We also do not live a very luxurious life. Father taught us to take our resources responsibly.
We are an old company. We do not really need resources. We try to produce the best product at a slightly lower cost. We have to be so busy in production and marketing that we do not really have the opportunity to enjoy. I still do not think that it's necessary to use an expensive car. We also want to be poor owners of a rich company. This is our philosophy," he said.
"My father was a very ordinary man. He did not buy a car after 1977. He had a Mitsubishi car at that time. He lived a very ordinary life till his death in 2006. When he walked, he would walk with humility like a cat. He wore ordinary cotton punjabi-pajamas.
Wealth was never that important to him," Bashir Uddin added.
