BSRM – Bangladesh Steel Re-rolling Mills – is the largest steel manufacturing company in Bangladesh. The 70-year-old company currently has eight factories which produce 16 lakh tonnes of MS (mild steel) rods and 18 lakh tonnes of MS billets a year. Even though the demand for rods dropped soon after the outbreak of the coronavirus pandemic, the company continued production without laying off any workers. Later, when the demand and prices of the product increased, the stockpiled products brought maximum profit to the company in 2020-21. At present, BSRM employs around 4,500 people. A new factory of the company is set to go into production in 2023, producing seven lakh tonnes of rods annually.
Aameir Alihussain, managing director of BSRM, shared the story of the long journey of his company, and its various achievements since its inception with The Business Standard's Chattogram Bureau Chief Shamsuddin Illius and Staff Correspondent Jobaer Chowdhury.
How did BSRM start? How has your journey been so far?
BSRM started its first steel production in Chattogram in 1952. Following the partition of India in 1947, our family migrated to Karachi from Gujarat. From there, our family came to Chattogram in 1948. Then, we were involved in trading mostly between East Pakistan and West Pakistan. At that time, my grandfather and his brother took cognizance of the fact that there was no factory in Chittogram. Most industries in Pakistan were based in the western wing of the country. Then, they decided to set up a rolling factory in Chattogram with the industry already having a strong footing in India and my family had good communication with the people there. In 1952, our family set up a rolling factory in the Nasirabad industrial area of Chattogram – the first of its kind in this part of the country. Our first product was grade 40 steel. We gradually increased our production capacity. The ship-breaking industry also started its journey in Bangladesh through our family. We kept adding new innovations to the industry.
After the 1971 liberation, all our property went into the possession of the state as it was decided that all industries would be nationalised and the government would run most of those.
After independence, Bangabandhu Sheikh Mujibur Rahman visited our plant. He was acquainted with our family. Sheikh Mujib Shaheb realised that we wanted to stay here and that we wanted to invest here. Subsequently, in 1973, everything was returned to us.
At that time, the condition of the industrial sector in the country was not good. We have been investing ever since. We launched a semi-automated plant in the 1980s. Then, we started to produce grade 60 steel following international standards. The steel industry expanded the most post-1990 and we have just moved on utilising our long experience. We have adopted new technologies and brought the latest machinery. This is how we have expanded our business.
Sheikh Mujib Shaheb's vision and goals were very big. At that time, the economic condition of the country was also very weak. There were not many factories here. So, he wanted large industries to be built and returned industries to the private sector. That very decision changed everything. Today's BSRM is an excellent example of how a good decision or policy of the head of government can make a big difference.
How did BSRM work during the pandemic?
When everything was shut down, the demand for the products was low. But, the stimulus given by the government has helped us.
We did not downsize during the pandemic. We faced a lot of hardship in the first two months of the Covid outbreak. There was a lot of pressure and tension then. People in all sectors were losing their jobs. But, our policy was that we would try to survive as long as we could because we were a family together. Our officers and employees suffered a lot. We kept our factories in operation. Although big projects were slow, we kept supplying steel as per the requirement. We had to reduce our production by 30% during the pandemic. At that time, our sales went down sharply, and yet we were continuing production and building up stocks.
BSRM posted record profit in the financial year 2020-21. Its sales have increased by one-third. Demand for steel has increased in the wake of an improvement in the pandemic situation. How is BSRM managing this huge demand?
Demand for steel was low in the first year of the pandemic. The pent-up demand has led to a significant increase in our sales. Besides, the government provided us with stimulus. It has capped the lending rate at a single-digit. As a result, the financial cost of the entire industry has come down. Hopefully, the government will keep the interest rate at the current level. This will help the private sector flourish further.
Does BSRM have any plans to launch new products or take up new projects?
We have started a new unit to manufacture wire. We manufacture the ACSR core wire there, which had to be imported earlier. We are also manufacturing PC wire, which was also fully import-dependent.
Aside from producing different types of wire, we manufacture a lot of products related to safety and security. These are new for our country. Because of the pandemic, technical people did not come to the country from China and Europe. So, the whole process of production and supply of all this equipment was slow. But, now it is going at a good pace.
Does BSRM want to expand business in any new field?
There are no such plans at this moment. In our country, it is very easy to step into a new sector. There is growth, but our resources are limited. Our industrial sector is capital-reliant. It takes a lot of capital, so we have kept investing. In addition, we have started a new rod manufacturing project. It will increase our production capacity by seven lakh tonnes. Construction work on this new project has begun and it is expected to go into production in 2023.
China is now reducing steel production. Countries in the African continent, however, are raising their steel manufacturing capacity because there are scopes for development. Many development projects are underway in Bangladesh. There is a demand for steel here. What are the prospects for the steel industry in Bangladesh?
Bangladesh needs to develop its infrastructure within the next 20-30 years. The infrastructural condition of the neighbouring countries is much better than ours. Our infrastructural investment in setting up the entire communication system is negligible when compared to the per capita income. Roads in many parts of the country are still in very bad shape. Travelling is time-consuming here. We have to work on this area. Many resources are not being utilised due to infrastructural deficiency.
Four-lane and six-lane roads have to be constructed everywhere. The potential of the tourism industry has to be tapped. A proper communication network needs to be established across the country.
Tell us about the export potential of BSRM.
Bangladesh has good potential in export trade. Because there is enough manpower here. Let the economic zones be fully opened. Let the port infrastructure be developed. There are more freights in the country when compared to neighbouring countries.The government needs to focus on how to reduce this. The government needs to formulate a policy whether it will increase the capacity of the ports or introduce specific lines so that the number of freight as well as import costs is reduced.
Do you expect any government policies to take the country's steel industry forward?
We need to reform our tax policies. It is very complicated. Because our tax policy is very conflict-ridden, there always remain some problems when any company is audited in the country. A radical change is needed here.
What is BSRM thinking about climate change and production management?
Among the steel mills, the basic steel product manufacturing ones emit carbon. We produce steel by reusing scraps. We runan eco-friendly industry as the extent of carbon emission is very low in our steel-making process. We also have air pollution control systems. We have attained international recognition for reducing carbon emissions.