Diversification makes them stronger

Diversify or die — thus goes a warning to businesspersons against standing in the same place for too long. Acting on this nugget of business wisdom, many Bangladeshi apparel entrepreneurs have ventured into such diversified businesses like housing, hospital, ceramic tiles, and even power generation in the last four decades.

Such strategic business decisions have helped them grow bigger and stronger over time as they chose not to keep all their eggs in one basket.          

Envoy Group Chairman Kutubuddin Ahmed explains why he has ventured into the real-estate business: "Our philosophy was to support another business if one faces any trouble."

To MA Rahim Feroz, vice chairman of garment maker DBL Group that has made a foray into pharma business, diversification is a means to sustain business growth.

Mohammadi Group says it stepped into information technology and power generation responding to the needs of the time.

But the case was different for Shanta Group, which has washed its hands off the garment business as it felt that it had done enough in apparels and has more to do in education and health to improve quality of life. 

Here are the stories of some big names in readymade garments who made their mark in other businesses too.

According to sector insiders, about 100 companies from this sector have diversified their business into other sectors, and some of them have achieved enviable success.

Envoy Group

After its inception in 1984, Envoy Group had just a small factory that would do Tk7 lakh business per month.

Now the number of its factories has risen to 15, making the company one of the largest garment exporters in the country.  

Envoy Group has expanded dramatically over the past three decades with primary focus on ready-made garments and textile manufacturing and most recently textile division.

Envoy Textiles Ltd has become the world's first platinum certified denim textile mill.

Besides the garments and textiles, the group has diversified its business into other sectors such as washing plant, healthcare, banking, financial institution, banking automation, local and international trading, freight forwarding, information technology, energy and power sector, and consumer products.

Now the group represents about 40 business enterprises with an annual turnover of $400 million and a workforce of about 21,000 people.

"To start new business beyond RMG, our philosophy was to support other businesses if one faces any trouble," said Kutubuddin Ahmed, chairman of Envoy Group and Sheltech Group.

Four years after the inception of Envoy's garment manufacturing unit, the group in 1988 established real-estate venture Sheltech Ltd aiming to provide quality living in Dhaka. Since then, Sheltech has constructed over 3800 residential and commercial units all around the capital.

"Now Sheltech is a separate group that holds 17 business enterprises with local sales of around Tk1,400 crore annually," said Tanvir Ahmed, managing director of Sheltech Group, and also a director of Envoy Group.

Another major focus of Sheltech is the service sector as we now employ about 2,000 people, he added.

Sheltech Group's operations include real-estate development, industrial construction, tiles manufacturing, pole manufacturing, ceramic tiles making, abrasive paper manufacturing, urban area planning and stock brokerage.

"Now Sheltech is one of the largest manufacturers in the premium category ceramic floor and wall tiles industry," said Kutubuddin Ahmed.

Bengal Meat Processing Industry is also associated with Sheltech and Envoy Group that is an export oriented world class meat industry with retail presence all over Bangladesh.

"We are a proud partner of Square Hospitals Limited and the leading contributor of private healthcare services in Bangladesh," said Abdus Salam Murshedy, a director of Square Hospital, who is a member of parliament and managing director of Envoy group, and a director of Premier Bank.

Ha-Meem group

Garment manufacturer Ha-Meem Group started the journey in the early 1980s. AK Azad, the head of the company, started diversifying his business in the 1990s.

He expanded the businesses into printing, embroidery, washing, labels, poly and packaging, carton, belt and tape, shipping, TV channel, newspapers and tea gardens.

With more than 60,000 employees and diversified businesses, Ha-Meem's newspaper Daily Samakal and television Channel Channel24 also hold a strong position in the media industry.

However, despite diversifying the business, garment and textile still remain in the main focus of Ha-Meem — the highest woven exporter of Bangladesh.

DBL Group

Dulal Brothers Limited (DBL) is one of the largest garment exporters in the country. After its inception in 1991, the company has expanded its business into other sectors including textiles, textile printing, washing, garments accessories, packaging, ceramic tiles, pharmaceuticals, dredging, semiconductor design, ICT, and telecommunications.

The company, which started with only 300 workers two decades ago, now has about 40,000 employees. The turnover of DBL Group in the 2018-19 fiscal year was around $600 million.

However, the main business of the group is still ready-made garments. Around 30,000 employees of the group work in the garment sector and the remaining are in other industries.

DBL Group is marketing the products of the famous German brand Puma in Bangladesh. After Banani, the second outlet of Puma has started business in Dhanmondi last week. The group is the sponsor of a BPL team — the country's most popular T20 cricket show.

The group has invested in pharmaceutical business under the name of DBL Pharmaceuticals, which will start marketing from next November. The group has also been successful in investing in ceramics, telecommunications, garment accessories and textiles.

MA Rahim Feroz, vice chairman of DBL Group told The Business standard, "Businesses should be diversified to make them sustainable since the clothing business will not always be good. There is a need to keep a second option," he told The Business Standard.

Team Group

Team Group started its journey in 2009 with a lone garment factory. Now it is a family of over 18,000 employees at its 12 units.

It has diversified business in sourcing, pharmaceuticals, IT, real-estate and local retails.

Team Sourcing, the largest buying house of the country that has business with over 100 garment factories, is fully owned by the group.

Team Pharmaceuticals Limited has already curved out its niche in the market within only four years of its establishment.

Intellier Limited, which is the IT concern of the Team Group, provides software and hardware solutions including cloud integration, migration and ERP services, while the Team Developers Limited has secured a unique position in the real-estate industry for its eco-friendly architectural designs.

The group has also created a local fashion brand "Twelve". After starting its journey in 2012, Twelve rapidly expanded its operation across Bangladesh.

The clothing brand has its stores at 27 locations all over Bangladesh. Apart from physical stores, Twelve also sells fashionable dresses for all ages through its e-commerce site and facebook-based store.

In the last year, the group's turnover was $360 million as it plans to reach the $1 billion turnover-mark by the next five years. It will also start a new denim factory with zero discharge washing plant at the end of 2022.

Team Group Managing Director Abdullah Hil Rakib said, "My business model is very simple. I train my employees and try to empower them. Once they are empowered, they take the lead in operating the businesses."

"Our diversification approach comes from the trading concept that helps build a balanced business," he added.

Pacific Jeans Limited

Pacific Jeans Limited is the largest denim garment exporter of the country with $450 million annual export from its five units. Recently, the company has introduced a knit composite factory to meet the growing demand of active wear in the global market.

Besides, the group is also waiting to launch a five-star hotel with Marriott, in Chattogram.

In 1984, the group started the journey with a garment factory and only 200 employees. Currently, it employs 31,000 people.

Two entities of Pacific Jeans — Universal Jeans Limited and Pacific Jeans Limited — have been winning gold and silver national export trophies for the last couple of years.

"Through business diversification we want to diversify our export basket. We invested in a knit unit as Bangladesh lags behind in active wear," said Syed M Tanvir, managing director of Pacific Jeans.

"A number of mega projects including the Mirsarai Economic Zone are going on in Chattogram. But the city still lags behind in the hospitality sector. That is why we are investing in this sector. I hope that global brand Marriott would also help branding the city," he added.

Mohammadi Group

Mohammadi Group started its garment business in 1986, at the beginning of the garment sector in Bangladesh. The entrepreneurs Anisul Haq, Habib Rahman and Faruk-Al-Nasir quit their jobs at Desh Garments and started exporting garments on their own. Mohammadi Group is currently owned by the family of the late Anisul Haq.

Anisul Haq, the founder of the company, became the mayor of Dhaka North City Corporation after leading the Bangladesh Garment Manufacturers and Exporters Association and Federation of Bangladesh Chambers of Commerce & Industries. He died while serving as mayor. His wife and children are now currently looking after his business.

The group started business diversification in the late 1990s. It diversified over the years and excelled in real-estate, power generation, information technology, media and entertainment. The company's latest endeavour Nagorik Television launched in March 2018.

Mohammadi Group started its journey with only 52 workers, and now has 10,000 employees.

The company first started diversifying outside the garment sector in 1999 through an information technology business named Technovista. It then expanded to other sectors. It has invested Tk2,000 crore in power generation. Mohammadi Group now has investments in 21 sectors.

Navidul Haq, managing director of Mohammadi Group, told The Business Standard, "When discussions began in the 1990s to lift the quota system in Bangladesh's garment exports, my father [Anisul Haq] wondered what could be done. It would not be right to keep all the eggs in one basket, he thought. That's when business diversification began, through investing in the IT sector. That is followed by a gradual investment in housing and power."

Navidul Haq said, "We considered investment in the power sector in 2007-08 when there was a power shortage in the country. But now many have invested in this sector. We have investment plans for renewable energy in the future. Apart from this, we do not have any need to invest in any new sector. We want to do healthy business in the sectors in which we have already invested."

Shanta Holdings Ltd

After starting with Shanta Garments in 1986, the group started diversifying its business in the late 90's. Khondoker Monir Uddin, the head of the group, has invested in housing, health and education sectors. Now, the group does not have any garment factory as it has sold all the garment units one by one.

Shanta Group has merged with Tropica Group and Sepal Group to form STS Group. This group owns Evercare Hospital Dhaka (Apollo Hospitals Dhaka), International School Dhaka (ISD) and the Delhi Public Schools.

Sepal Group also started its business with RMG, led by the present Commerce Minister Tipu Munshi.

Under Shanta Holdings Ltd, there are companies such as GDS Chemical Bangladesh Ltd, Shanta Securities Ltd and Shanta Asset Management Ltd. Khondoker Monir Uddin has investments in Dhaka Bank too.

Khondoker Monir, his son and daughter take care of the businesses.

Saif Khondoker, director of Shanta Holdings Ltd, said, "We achieved a lot with RMG. But it is more stressful. And my father always wanted to be involved in business related to quality living. That is why he has focused on health, education and housing. He built a world class hospital [now Evercare] for the first time with the aim of providing world class healthcare in Bangladesh."

"The same goes for education and real-estate. Shanta Holdings Ltd has already handed over 30 projects, with 25 more ongoing. We would expand our businesses more in future," he added.