HM Steel, a sister concern of Chattogram-based conglomerate Mostafa Hakim Groups' Golden Ispat, started its journey in March 2021. The mother company, now a third-generation family business, launched the $95 million venture which generates 1,100 jobs at a time when many factories laid-off employees owing to pandemic fallout.
The factory has a capacity to produce 1,200 tonnes of steel products per day including 500-550W, 400/60 grade rods, billets, angles, square bars, flat bars, and channels.
In the current economic climate, launching a new venture certainly faces numerous challenges.
Mohammad Sarwar Alam, director of HM Steel, talked to The Business Standard about the challenging journey and how he joined the third-generation family business.
What does HM stand for?
HM represents my parents' name. H for my mother Hosne Ara Begum and M for my father Manjur Alam.
What brought you into business?
Business is in my blood. Throughout my childhood, both my father and brothers encouraged me to pursue the family business. Since I was in secondary school, I began visiting factories to gain practical experience by talking to the workers and seeing their works.
I have studied business as well, and running the business using both practical experience and theoretical knowledge. Besides, I had a business and political family environment during my childhood. My father was a ward councillor and later became the Chattogram City Corporation mayor as one of my cousins is the incumbent member of the parliament. We take business and politics to serve the people, not for profit.
Mostafa Hakim Group's businesses include ship-breaking, cement, auto bricks, oxygen, real estate, liquefied petroleum gas, textiles, jute, imports, and distribution. We have been in the steel manufacturing since 1984, and one of the glaring examples of third generation family business in Chattogram.
Who is your mentor?
My father is my mentor. He taught me three things – how to run a business, how to live an honest life, and how to make a living honestly. My uncles also inspired me since we are an extended family.
Your family business is now in its third generation. How do you keep it going?
My father, uncles, brothers, and cousins still get together every day after the night prayers. We usually talk about family, social affairs and businesses for around two hours. There we would discuss the whole day's activities. This is how my grandfathers, fathers, uncles did the business and now we run it together.
Family business requires a generous spirit and a mentality that we have learnt from the family.
What impacts does the pandemic have on your new venture?
It delayed the launch by eight months. We did not achieve the expected business growth thanks to the pandemic. Our factory cannot operate at its full capacity due to the virus situation. We are now utilising only 60-70% of our capacity.
The fallout is all-encompassing on our other businesses too. Raw material procurements are the major challenge we face during the pandemic.
In pre-pandemic times, we used to get the products within 45 to 60 days after opening the LC (Letter of Credit). But now it takes 120 to 150 days. Besides, container shortage also affected our imports.
Since we import our chemicals from India, the long-term lockdown there also hampered the supply-chain as we could not import chemicals in time. A series of lockdowns in Bangladesh also put us in trouble.
In addition, monsoon usually is a dull season for construction material businesses as people are less likely to build an establishment in the rainy days compared to the winter. We hope the construction business will start to turn around within the next two months.
On top of that, we are adapting the future plan keeping Covid-19 situation in mind.
What are your sources of raw materials?
The main raw material for steel manufacturing is scraps salvaged from old ships. We have 13 shipbreaking yards. Our 30% materials come from our yards and we have to import the rest of the materials from different countries including Australia, USA, Canada, Brazil, Latin America, China and India.
What are the products the new factory will be manufacturing?
The capacity of the new mill is 1,200 tonnes per day. Of it, we produce 600-700 tonnes of mild steel (MS) bars and 400-500 tonnes of billet.
We hope we will be able to complete our structure mills by February 2022, where we will be making 500-600 tonnes of angles, channels, square bars, and flat bars every day.
How do you feel about the future steel market?
Despite the goal to be a middle-income country, our steel consumption is still very low compared to the neighbouring countries.
However, a number of mega-projects such as Karnaphuli tunnel and metro-rail are now going on as some others are in the pipeline. If you look at the market data of the last five years, you will find demand for steel is edging up.
Besides, the completion of the ongoing mega projects will take another four to five years. The development mantra – "our villages will be towns" – means there will be enormous infrastructural developments in upcoming days where steel will be in the spotlight. The demand for steel will remain upward in upcoming decades.
Thank you too.