Business Person of the Year 2003

Where steel meets life

Monjur Mahmud

Borrowing money from banks to set up businesses and making timely repayments --without seeking time extensions or interest waivers -- are rare in our present-day society. But there are a few entrepreneurs who are outside the mainstream. They work diligently with honesty and sincerity to achieve their goals. Mohammed Mizanur Rahman is such a businessman.

He has set many examples in his 41-year career -- eight years in banking and 33 years in business. A pioneer in the ship breaking industry, Rahman showed the courage to import the first very large crude carrier (VLCC) in 1985. He was also the first entrepreneur to set up a cold roll coil industry in the country in 1997. Now Rahman, founder chairman of PHP Group, is envisioning the country's first integrated steel mill to produce CI sheets from the basic ingredient of iron ore.

Born in 1941 in Rupganj thana under Narayanganj district, Rahman started his career in a private company, for a meager Tk 100 monthly salary, just after completing his HSC education in 1963. Two years later, he joined the National Bank of Pakistan (now Sonali Bank) completing his graduation and a diploma in banking. The year 1966 was a turning point for his career as he joined the Eastern Mercantile Bank (now Pubali Bank) with a five-grade promotion at a time.

But soon his banking career drew to an end as he decided to switch over to self-employment. Rahman's father -- Sufi Mohammed Daemuddin -- inspired him to start his own venture. "If you know how to do business, money will be no problem," his father told him in his early life. Rahman understood the meaning of these words later.

Just after independence, he resigned from work and started a small business with hardly any capital. With only Tk 1,483 in hand, he got involved in importing tyres, tubes and later trading CI sheets. He had learnt the export-import business while working in the foreign exchange departments of various banks which now helped him immensely. And the tremendous scope for doing business in the post-liberation period greatly encouraged him. "Life consists of a few decisions and it is very important to take the right decision at the right time," Rahman said as he recalls successfully utilising the business opportunities existing at that time.

As he maintained good relationships with banks and earned their confidence, banks would open letters of credit for him with nil margin and grant him trust receipt under which he could take delivery of imported goods. After selling the products, he could make payments to the banks. "I always thought I had taken money from someone and I must repay on time. Sometimes I repaid the banks' money though I could not make any profit. I never requested them for waiving interests or extending time for repayment and, in turn, on many occasions banks helped me out."

The genuine entrepreneurs are paying heavily for a default culture. It is very difficult to survive for a business after paying 14 percent interest on loans. Entrepreneurs could get loans at five percent interest if banks' money is properly utilised and loans are repaid on time, Rahman feels.

"Entrepreneurs face impediments at every stage of achieving their goals. The present working environment, particularly in government offices, is not conducive. There are many people who can really do something for the country but, due to lack of policy support, they are lagging behind."

The first project of the group was a ship-breaking plant set up in 1982 involving huge risks. But when Rahman succeeded, other entrepreneurs got involved in the same business. They used to purchase 4,000-5,000 tons capacity ships at this stage. But Rahman took another risk purchasing a 40,000-ton capacity very large crude carrier for the first time in 1985. This initiative added a new dimension to the ship-breaking industry.

Then Rahman set up a re-rolling mill to manufacture MS rods. In 1986, the group expanded its business by setting up a CI sheet mill and, in a short period of time, two more units were added. Setting up of the first cold roll coil (CR coil) mill in the country in 1997 was a turning point for the group.

In these areas, the group obtained technical support from Kobe Steel Industry of Japan. "We have tried to infuse Japanese business culture in our organisation -- in terms of product, quality, management, marketing, administration, research and development and human resource development. We have been successful as our quality is now equivalent to that of Japanese products," Rahman observes.

At present the group has around 5,000 employees in different units and Rahman is very much sincere in ensuring their welfare. Rafiqul Islam, an employee of the business group, died of cancer in 1994 but his family did not face any financial problem after his death as the company continued to extend all financial benefits to the family including the increments and bonuses he used to enjoy when he was alive.

The group also believes in investing for its long-term goals. Many of the employees' children are now doing their higher studies abroad and the group is ready to welcome them after completing their education. All of Rahman's seven sons went abroad for their education. After completing, five have already returned home and taken responsibilities of different companies of the group to take it forward further.

PHP has been able to build confidence not only at home but also in the international arena. Korean company Posco, which owns the largest steel mill in the world, exports its hot roll coils to very few selected buyers, of which PHP is one. PHP is also an active exporter in the global market. PHP Shipbreaking & Recycling Industries Ltd exports copper and other products to Japan, South Korea, Taiwan and other countries. Other products of the group are exported to Myanmar, China, Sri Lanka, Malaysia and many African countries. Total exports amounted to Tk 98.27 crore in 2003.

A follower of Sufism, Mizanur Rahman is the chief patron of Allama Rumi Society named after father of Sufism Rumi. Rahman likes to speak on Sufism and other religious issues. He has interests in reading books, singing and meeting great people in his leisure time.

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Enterprise of the Year 2003

Still brewing excellence

Shahnila Azher

Blessed with a 184-year-old heritage, the House of Ispahani is one of the most respected business concerns in the entire subcontinent today. The company's historical roots can be traced way back to 1820 when its founder Haji Mohammed Hashem moved from Isfahan, Persia to Bombay and started a business that soon expanded phenomenally in both scale and coverage. In Bangladesh, the first branch office was opened in Dhaka in 1888; after 1947, the corporate headquarters of M. M. Ispahani Ltd. was shifted from Calcutta to Chittagong. Today, the company -- still continuing in its private limited structure -- is involved in numerous sectors as diversified as textiles and tea, real estate and poultry, shipping and internet services. It has corporate offices in Chittagong, Dhaka and Khulna employing more than 20,000 people in its various concerns. The founding family is still very much hands-on involved in existing and new businesses. Three brothers -- Ali Behrouze, Salman, and Shakir -- are now at the helm, but over time, the owners have also been able to instill professional and structured management across the businesses at different levels so that processes are self-sustaining.

The Ispahani group has been the forerunner in numerous fields and has achieved noteworthy success in its many endeavours. Ispahani Tea is a household name and is the largest tea trading company in the country. It dominates the domestic tea market by capturing about 50 percent of the national branded tea market and 80 percent of the branded tea-bag segment. Particularly, the Mirzapore brand is a widely popular name distribution partners often identify the entire company as the "Mirzapore Tea" company. Pahartali Textile and Hosiery Mills (PTHM), established in 1954 with 18,000 spindles, is one of the pioneers in local textile manufacturing. The shipping division has been representing many world-renowned shipping lines and non-vessel operating common carriers in Bangladesh for the last 50 years. M.M. Ispahani Ltd. was again a pioneer in private sector power generation in 1951 at Pahartali. Turnover of the core group of companies amounted to more than Tk 200 crore in 2003; its export figures are also impressive. Tea and cotton yarns exported in 2003 were worth Tk 82.7 crore bringing the cumulative total amount exported in the last five years to about Tk 263.8 crore.

Why is the company involved in such a diverse range of activities? Mirza Salman Ispahani, managing director of the group, replied, "Different businesses emerged because of different reasons -- we entered the travel and ISP sectors by spinning of internal departments which were doing a good job. The foods segment was an attractive idea considering the distribution synergies with the existing tea business". Salman feels the name Ispahani represents something of value to the average person today -- it stands for dependability and quality product, a perception that has been possible only after years of consistent performance. Other strengths of the company include continuous investment in infrastructure to ensure quality production, investment in human resources training, price competitiveness which comes from economies of scale in purchasing and marketing, ability to respond quickly to market changes, and established goodwill in the market.

Challenges facing this generation of Ispahanis are different from those handled by predecessors. The overall market is now more competitive, quality and productivity are more critical factors today than ever before. Management, however, considers the future to be promising for both tea and textiles -- the primary revenue-generating sectors of the group. Tea has increasingly become less vulnerable to volatility in international markets since 80 percent of local production is now consumed domestically. Forecasts for textiles are also optimistic since competitiveness and short lead times in the future will have to mean local sourcing. In that scenario, anyone offering quality products at competitive prices -- while managing cost efficiencies, productivity, and up-to-date learning -- should be able to survive the post-MFA (multi fibre arrangement) challenges. Future plans of the company include expansion of tea, textiles, ISP and poultry divisions of the group. Up until now, the group's financing strategies have remained outside the realm of the public stock market but the owners may consider it as an option for new businesses. Salman explained the reason, "Since our initial equity was invested in 1934 -- which has grown manifolds over the years -- a public offering at this point of time will result in huge capital gains tax. But it is a plan for smaller and new investments".

Ever heedful of its social responsibilities, the Ispahani family has spent huge amounts, over the years, to support and advance worthwhile causes. Family members have established numerous schools and colleges in both Dhaka and Chittagong; Ispahani Mirzapore Tea has been sponsoring the National Cricket League for the last three years. Furthermore, the Ispahani group often sponsors various cricket, football, golf and tennis tournaments in Chittagong. The Islamia Eye Hospital was founded in Dhaka in 1960 as a charitable dispensary and has now been upgraded to a 200-bed state-of-the-art eye hospital. Supported by a specialist lineup of 75 surgeons and doctors, this one-of-a-kind institution has played an outstanding role in meeting the eye care needs of this country.

Since the theme of the Bangladesh Business Awards is "Bringing Global Corporate Standards to Bangladesh", we asked what global standards Ispahani has succeeded in implementing locally. Salman's answer was, "Exposure to international benchmarks. We send managers from the tea and textiles divisions abroad regularly to attend training sessions and trade fairs so that they can keep abreast of what's happening in their fields". Today, after centuries of business in the subcontinent, the House of Ispahani is still dedicated to its mission of excellence in providing high quality goods and services, making a positive impact on the overall community, and attaining leadership positions in all its operating sectors.