BSRM – Bangladesh Steel Re-rolling Mills – is the largest steel manufacturing company in Bangladesh. The 70-year-old company currently has eight factories that produce 16 lakh tons of MS (mild steel) rods and 18 lakh tons of MS billets annually. Even though demand for rods plummeted shortly after the outbreak of the coronavirus pandemic, the company continued production without laying off workers. Later, when the demand and prices for the product increased, the stocked products brought maximum profit to the business in 2020-21. Currently, BSRM employs around 4,500 people. A new factory in the company is expected to go into production in 2023, producing seven lakh tonnes of rods per year.
Aameir Alihussainmanaging director of BSRM, shared with Shamsuddin Illius, Chattogram bureau chief of The Business Standard, and 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 trade mainly between East Pakistan and West Pakistan. At that time, my grandfather and his brother learned 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, as the industry was already well established in India and my family had good communication with the people there. In 1952, our family set up a rolling factory in the Chattogram Industrial Estate in Nasirabad – 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 shipbreaking industry also started its journey in Bangladesh through our family. We continued to add new innovations to the industry.
After the 1971 liberation, all of our property became state property as it was decided that all industries would be nationalized and the government would run most of them.
After independence, Bangabandhu Sheikh Mujibur Rahman visited our factory. He knew our family. Sheikh Mujib Shaheb realized that we wanted to stay here and we wanted to invest here. Later, in 1973, everything was returned to us.
At that time, the state of the industrial sector in the country was not good. Since then, we have been investing. We started a semi-automated plant in the 1980s. Then we started producing grade 60 steel to international standards. The steel industry developed the most after 1990 and we have just put our long experience to good use. We have adopted new technologies and brought the latest machines. This is how we developed our business.
Sheikh Mujib Shaheb’s vision and goals were very big. At that time, the country’s economic situation was also very weak. There weren’t many factories here. Thus, he wanted big industries to be built and returned the industries to the private sector. This very decision changed everything. Today’s BSRM is an excellent example of how a good decision or policy by the head of government can make a big difference.
How has BSRM operated during the pandemic?
When everything was closed, the demand for the products was low. But, the stimulus given by the government has helped us.
We have not reduced our workforce during the pandemic. We faced many difficulties during the first two months of the Covid outbreak. There was a lot of pressure and tension then. People from all sectors were losing their jobs. But, our policy was that we tried to survive as long as we could because we were a family together. Our officers and employees have suffered greatly. We kept our factories running. Although major projects have been slow, we have continued to supply steel as needed. We had to reduce our production by 30% during the pandemic. At that time, our sales fell sharply, and yet we continued to produce and build up stocks.
BSRM posted a record profit in the 2020-21 financial year. Its sales increased by a third. The demand for steel has increased following an improvement in the pandemic situation. How does BSRM manage this huge demand?
Steel demand was weak in the first year of the pandemic. Pent-up demand resulted in a significant increase in our sales. In addition, the government provided us with incentives. He capped the lending rate at single digits. As a result, the financial cost of the whole industry has decreased. Hopefully the government will keep the interest rate at the current level. This will help the private sector to prosper more.
Does BSRM plan to launch new products or undertake new projects?
We have started a new yarn manufacturing unit. We manufacture the ACSR core wire there, which had to be imported earlier. We also manufacture PC wire, which was also entirely dependent on imports.
In addition to producing different types of wires, we manufacture many safety and security related products. These are novelties for our country. Due to the pandemic, technicians did not come to the country from China and Europe. So the whole process of producing and supplying all this equipment was slow. But now it’s going at a good pace.
Does BSRM wish to develop its activities in a new area?
There are no such plans at the moment. In our country, it is very easy to enter a new sector. There is growth, but our resources are limited. Our industrial sector is dependent on capital. It takes a lot of capital, so we kept investing. In addition, we have started a new rod manufacturing project. This will increase our production capacity by seven lakh tons. Construction work on this new project has begun and it is expected to go into production in 2023.
China is currently reducing its steel production. However, countries on the African continent are increasing their steel production capacity because there are opportunities 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 in the next 20 to 30 years. The state of infrastructure in neighboring countries is much better than ours. Our infrastructural investment in setting up the whole communication system is negligible compared to per capita income. Roads in many parts of the country are still in very poor condition. Traveling takes time here. We have to work in this area. Many resources are not used due to a lack of infrastructure.
Four and six lane roads must be built everywhere. The potential of the tourism industry must be exploited. A proper communication network should be established across the country.
Tell us about BSRM’s export potential.
Bangladesh has good potential in export trade. Because there are enough manpower here. Let the economic zones be completely open. That the port infrastructure develops. There are more freights in the country than in neighboring countries. The government needs to focus on how to reduce this. The government must formulate a policy, whether it is to increase the capacity of the ports or to introduce specific lines in order to reduce the number of freights as well as the import costs.
Do you expect government policies to drive the country’s steel industry forward?
We need to reform our tax policies. It’s very complicated. Since our tax policy is very divisive, there are always problems when a company is audited in the country. A radical change is needed here.
What does BSRM think of climate change and production management?
Among steel mills, those that produce basic steel products emit carbon. We produce steel by reusing offcuts. We lead an environmentally friendly industry as the magnitude of carbon emissions is very low in our steelmaking process. We also have air pollution control systems. We have achieved international recognition for reducing carbon emissions.