Leading the Charge
We caught up with Khourshed Alam, Director, Sales and Marketing at Akij Ceramics Limited and Akij Particle Board Mills Ltd to discuss the current developments Bangladeshi ceramics industry, how Akij Group is taking the fight against COVID-19 head-on and what it takes to become a successful marketer.
The ceramic industry has been one of the burgeoning manufacturing sectors of Bangladesh. However, there are some challenges like inconsistent gas supply and over-reliance on raw material imports. How can the government help remove the barriers that impede expansion and ensure robust growth of the industry?
The construction industry has grown by almost 15% in the last couple of years, a direct reflection of which can be observed in the ceramics industry. As per our projection, double-digit growth was forecasted over the next 5 years. Now ceramic products are being used more frequently than ever and the user group are now spread across the geography, in both rural and urban areas. Local manufacturers are enjoying 85% of domestic tiles demand, Akij is exporting sanitaryware to the Middle-East and the UK. Bangladesh now exports an impressive quantity of Tableware products to all the continents of the world.
However, the industry is suffering from being dependent on foreign raw materials. More than 90% of the raw materials are purchased from abroad and the duty structure for this import is not favourable at all. For example, clay is the main ingredient for ceramic products and we have to pay duty on the total volume of our purchase. But the clay we are bringing in contains more than 30% moisture. Which means we have to pay duty for 100% of the import of which only 70% is usable. This is a huge loss that adversely impacts our production cost. This gap needs to be rectified.
Also, our government should rethink the tariff value of imported tiles to protect the local tiles industry. It was at 6-12 taka/S.Ft but in this budget, it came down to 5-11tk/S.Ft which will reduce the price of foreign tiles by 10% and increase competition for the locally produced tiles. This is not a good decision for our industry.
Besides, the government has imposed 10% SD on sanitary items which are a huge blow to the ceramics industry. We hope that the government will withdraw this SD to save the industry.
Natural gas is the lifeline for the ceramics industry as it is important for burning the ceramic items at a very high temperature. An uninterrupted flow of natural gas is a must to maintain quality but we hardly get our desired supply of natural gas which forces the companies to invest in their own CNG and coal facilities increasing their production costs significantly.
The government should ensure a consistent supply of natural gas and revise the duty structure to encourage the growth of the ceramics industry. As the global economy is experiencing drastic change due to the current COVID-19 pandemic, we are seeing promising opportunities to compete against China in the international market. If our government looks into the duty issue of raw materials with a positive mindset and increases the export incentive, we can gain an impressive market share and bring invaluable foreign currency for our country.
How has the pandemic affected the demand for Akij Ceramics and Akij Particle Board? Has there been an uptick (in demand) since the lockdown has been relaxed?
Yes, the pandemic has affected Akij as like other players of the industry. The whole industry has done zero business in April including Akij. We had to halt all our operations to focus on the safety of our employees.
From May, we continued our operations; thanks to our dedicated team who are working relentlessly at the factory and on the front lines with great courage. Due to their excellent performance, our industry has started operation at 50-60% level of regular demand. Compared to industry performance, Akij did well, MashaAllah.
Throughout the lockdown, Akij has prioritized the safety of its people. By creating a hotline and immediately appointing 6 doctors along with some resident doctors, we ensured 24/7 medical support to our employees. We assisted our employees with getting tested and hospital admissions when required. Putting aside all business targets at that time, our Managing Director Mr. Sk Bashir Uddin set only one target for us- keeping our people safe.
Our employees feel assured and confident with our management which enables them to give their best even in this dire situation. Also, our teams were fully engaged with our channel partners in helping the people who were in need which gained us the full confidence of our valued partners.
In June, we observed demand levels close to regular as there was the pressure of June closing of Govt projects and also regular construction across the country has resumed with the easing of lockdown.
Due to the pandemic, numerous logistical obstacles in the supply chain may impede sales. What steps have been taken to ensure that the supply chain remains uninterrupted?
The full cycle of the supply chain depends on sales, meaning liquidation of finished products. If we consider the raw materials of our finished products cycle (inbound); Akij as a large company always maintains sufficient (efficiently) raw materials in their stock which has helped us in facing the challenges posed by the pandemic.
To support the market demand, we kept our factories running for some time even after our sales operations were halted. And again, we started our factory operations well before starting our sales operations, which enabled us to stock enough finished products to sell.
In our outbound operations, we faced real difficulties in managing transportations to fulfil the market demand. We had to take special initiatives to overcome this challenge like incentivizing the loading facilities for factory distribution teams and transport providers.
The social distancing and hygiene regulations have disrupted tangible marketing activities which are pivotal in the Bangladeshi market. What contingency measures have you taken to overcome/substitute this new challenge?
We are trying to maintain the highest possible level of hygiene across the entirety of our operations. The company has provided PPE to employees who are at high risk of being exposed to the virus. We discourage our employees to use public transports for market visits.
Akij has directed its employees to continue their marketing activities remotely with the help of technology. Only people who have access to official individual vehicles are travelling to the markets outside the urban areas which are within a day’s distance. We believe human resources are assets of our company and we have to take very good care of them.
Even in this pandemic situation, we have successfully launched our new tiles brand ‘Aura’ through online platforms with our dealers and teams from all over the country. This is actually the new normal and society and businesses will have to accommodate accordingly. The faster we can adapt to this, the better.
As a leader, how challenging has the experience of handling the crisis (COVID-19) been for you? What are the qualities one must possess to become a successful marketer?
The COVID-19 pandemic is the first of its kind in human history. No one in our or our previous generation has experienced this kind of situation in their lifetime. So, we had very little knowledge about how to face it.
I had to take a moment, contemplate the options and work hard to execute new strategies. Situational leadership has played a vital role in this period.
Initially, I was in a state of panic. We just went through a tremendous sales spell and was about to start the last quarter of 2019-20 financial year. Normally, we would’ve started our next year planning during this time. Everything was going smooth but suddenly, we had to stop all our work and we don’t even know what to do next!
After a few days, we cleared our heads and stepped up. We started revising and redesigning all our plans and operations. That’s how we started our response to this global pandemic.
We focused on the health and safety of our people along with the well-being of the members of our value chain. Concurrently, we started our support activities towards the people in need. These activities have strengthened our morals and have boosted our confidence. Now we know that with the blessings of Almighty Allah, we can overcome this global crisis if we work together. Coexistence is the key to survival until we come up with a vaccine.
We have discussed this realization with our teams and our business partners. Then we started thinking about how to run the business at a lower scale. This is how we are going to tackle this crisis and eventually come out from homes.
Qualities of a good marketer are endless. But the one thing they all have in common is that they know how to adapt, how to change their mindset according to the situation and how to embrace the new. Sense of responsibility is another key quality a marketer should have to possess along with modesty.