Making Of A Dream

Sharif Zahir
Managing Director of Ananta Group

Since its establishment in 1991 by the Late Humayun Zahir, Ananta Group has grown to become one of the leading apparel producers in Bangladesh. Today, the group employs around 22,000 people while exporting to major retailers in the American and European markets. Sharif Zahir has been spearheading the operational activities of Ananta Group over the last 13 years helping to substantially grow the business with Ananta’s key accounts. Since 2006 he has been responsible for all executive decisions of the company as the Managing Director. Under his tenure, the Group’s annual turnover clocked a consistent 30% on average year-to-year growth during the last few years. Sharif is also the Director of United Commercial Bank, National Finance Ltd. and Vanguard Asset Management Ltd. He graduated from University of Texas at Austin, USA with a degree in Finance and Economics.

Ananta Group boats a number of significant accomplishments including annual turnovers of around $200 million and 30% annual growth over the past few years. What do you attribute this success to?
We all know the garment sector is quite a difficult industry to operate in. Thus, reaching this position in such a competitive sector requires a lot of hard work and perseverance over the years. At the Board level, we have a team of talented young and energetic individuals, who have studied in the best universities of the world have working experience in multinational companies. At the management level we have a team of professional and experienced people who have been with the company for many years. Since 2006 we have grown by almost 30% every year. This is possibly down to our decision to focus on our core interests. This focus along with our drive allowed us to bring it to where it is today.

“None of these labor unions or the BGMEA has really focused on improving the efficiency of the workers. Today, factories are running at 45% efficiency or less in Bangladesh.”

How is Ananta Group looking to grow its operations over the coming years?
Over the years, we’ve been growing strategically to achieve a certain scale of operations. The company started out as a jeans manufacturer and when I first started running the business we had 15 lines with 1,600 employees. Currently, in the jeans business, we have 4 factories with almost 100 lines, producing around 3 million jeans per month. We’ve achieved our targeted scale of operations while diversifying our product base. Today we are manufacturing men’s suits, which is a unique product for Bangladesh. We’ve gotten into value-added heavy knits (such as sweaters) and we’re about to start our lingerie operations.
In the future, we can move vertically. We can choose to move backwards on the fabric side or forward with buying houses and design/development support for the customers. Both forward and backward linkages will be essential for our future development. On the forward side, we’ve been adding more value to our products by offering our own designs. However, we will look at more backwards integration in the future to improve our operational performance. In this regard, we have to refine our processes so the lead time is reduced. We, at Ananta Group, have to work closely with our associated mills or build our own mills. Countries like Pakistan are providing a serious challenge when it comes to this area. This is down to their vertical integration, better lead time and competitive prices.

What sets your factories and operations apart from that of other apparels producers? What can you tell us about the technological enhancements you’ve made to your factories?
Anyone who knows Ananta in the industry will know that we have been trying to run this organization very professionally with qualified people in every department. Unlike the traditional way of doing business, we do not have person-centric departments so we have teams operating in every area of our business. On the tech side, we’ve made some heavy investments over the years including Fast React Systems for planning, GSD for industrial engineering, an appropriate ERP system from Infor which we implemented last year and GPRO technology for bundle tracking.

What kind of role is IT playing in your operations?
We’ve strategically spent a great deal on the software side of our operations so we obviously have the accounting and HR packages. I can’t imagine managing around 22,000 without a proper system in place. Additionally, for our entire $240 million business, we have the ERP system running (as I’ve mentioned previously) which provides proper accountability for our operational process.

What are your comments on the recent worker unrest incidents in Ashulia?
If you carefully observe the pattern of the unrest you can tell that it’s been instigated by external sources. Prior to the incident we had not heard of any concerns from the workers regarding the pay. There is systematic annual increment every year both inside the EPZs and outside. There is a group working in the industry who, whether for their own benefit or for some misunderstanding, have been trying to instigate the workers. Thankfully, the government has played an instrumental role in helping us handle the situation very strictly and professionally.

What are your recommendations regarding avoiding such scenarios?
Going forward, it is up to the owners to make sure incidents like this don’t occur again. As an association and as a group of owners we have to think proactively and look out for the welfare of our workers. There has to be a gradual increase in their wages but this has to come in an organized and planned manner. Roadmaps have to be created and followed based on aspects such as their cost of living.
Another issue that needs to be addressed is the lack of conversation regarding productivity improvement. None of these labor unions or the BGMEA has really focused on improving the efficiency of the workers. Today, factories are running at 45% efficiency or less in Bangladesh. Individually, each company is trying to improve this but it is difficult when you also have to face problems regarding worker retention and migration to other factories. As an industry altogether, we need to take this challenge regarding increasing the productivity of the workers. As the efficiency levels go up from 45 to 60% we can pay the workers better wages. That is the proper structured approach that needs to be followed.

What are your recommendations for the RMG sector to grow as a whole?
This industry has grown like a cottage industry over the years without proper planning or infrastructure support. If we target a $50 billion export industry, we need a proper road map to achieve this. We need to provide the proper support facilities for the industry to sustain this growth and avoid disasters that we faced over the last few years. We need to educate our owners to run better organizations through proper marketing, costing, negotiation and industrial engineering. We need to educate our workers through training in industrial behaviors and productivity improvements. This industry is vital to Bangladesh’s development as the entire business community is reliant on it, whether it’s the banks or insurance companies or freight forwarders. We have almost 5 million workers employed in this industry, yet we haven’t established institutions which can provide the essential vocational training for them. Where can a fresh worker go to develop his skills? They’re going straight to the factories where they’re taking two-three years to gain the necessary skills. Furthermore, I think we also need to train our local supervisors and line chiefs. The government or the BGMEA can step in and set up training facilities which can become extremely beneficial for the industry. Lastly, we also need to become more innovative. There has to be research and learning cells where we can develop new techniques of production. We should be able to modify or make our own machines. All of this will help raise our competitiveness in the international market.
The better companies are trying to do all this individually, but it’s difficult when they simultaneously have to address high migration along with other expansion issues. However, if we had these training centers or textile institutes in place already, imagine what the country could be earning from the increased efficiency. So why not invest in this?

How important is it for companies in the Apparels industry to focus on maintaining environmental standards?
We have our washing factory and we have ETPs which are world class. We’ve made a lot of improvements over the years and we can probably say that and we have taken care of our discharges and affluent treatment plants better than in most other cases. On the environmental side we are working continuously to improve our energy efficiencies so we’re always looking to reduce the requirement of utilities. Our newest factories are going for the LEED Certification but you’d be surprised by how many factories are going for this certification nowadays. This makes you think that it has become some sort of marketing ploy. I feel they’ve compromised a little bit on their auditing part so it maybe that they’re not fully serious about who they’re giving these certifications to. If we are trying to reduce our carbon footprint, it has to be in effective ways, it shouldn’t be just for the sake of the certification.

What road blocks have impeded the development of this sector and our country?
Standards are improving vastly but we need to look at the bigger picture. I must regrettably say that compared to our neighboring countries, we are lagging behind. If you look at how they grew, we can see that their primary source of energy is coal. India is generating most of their power from coal. However, we have been reliant on gas. Our development and industrialization process has been seriously hindered by the unavailability of this resource. Now we want to hear from the policy makers what alternatives we can find for building factories. To grow we need to build fabric mills, chemical factories and etc. so the demand for power is huge. However, we have yet to be given an alternate source to power this growth. Without it our economy will stagnate.
I’m not saying coal should be our alternative as it isn’t environmentally suitable but we still need to know what alternatives we have as we need energy to grow.
I’m a bit worried about the sector’s growth as we are too confident. The government is doing its part but if you want the private sector to grow you first have to construct a roadmap for that growth. After incidents like the Rana Plaza collapse and the Holey Artisan tragedy we need to vastly improve our image. Many buyers are changing their buying decisions because of our poor image so we cannot remain complacent. We haven’t branded ourselves properly so we could lose more of them to producers from China, India and other African and South American countries. The industry moves very fast so things could go south any time.

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