Ifad Autos profited in a pandemic year. It’s secret? Treat employees better
Ifad Autos Ltd stood out from competitors in the post-shutdown quarter as the only company that posted growth in the sector. A focus on LCVs, tractors and rising demand for buses helped, but most importantly, it was their employees that brought them this far
The automobile and automotive industry had been growing fast in Bangladesh. From 2015 to 2018, the country witnessed a boom in the sales of commercial vehicles.
As the industry entered the second half of 2019 with mounting expectations, the rising sector found itself engulfed in an economic slowdown instead.
So, 2020 should have been the year when this industry recovers from a sluggish 2019. But in reality, it turned out worst for not only the automobile industry, rather business as a whole.
Keep updated, follow The Business Standard's Google news channel
The pandemic ate away the sales and profits of most companies.
Following reopening after months' shutdown, as automotive companies are reel back with a moderate recovery after an unprecedented shock, one company has stood out and reported growth - Ifad Autos.
After a troublesome 2019 and the pandemic, Ifad Autos has instead witnessed growth in profits in the post-shutdown quarter.
In a global flop year marked with a prolonged slump in car sales and production, the experts predicted a sizable decrease of as much as 19 million cars, or 21 percent in auto production, compared to 2019. The industry is not expected to recover in the next two years.
"But there is a difference between a global and Bangladesh perspective. Whereas countries like the United States, Europe, Japan, South Korea, or China are manufacturing countries, Bangladesh is not into manufacturing yet. Had this been a manufacturing base, things would have been different," said Taskeen Ahmed, the managing director of Ifad Autos Ltd.
Like all others in the automotive sector, Ifad's sales too came to a staggering stop in April, and this dragged on till June. But right after everything reopened, industry demand also rebounded as people got back to work.
A stronger comeback
Taskeen believes that the Ifad Autos came back twice more robust than the industry as a whole because "we handled our business smartly."
Explaining Ifad's "smart business", it's managing director shed light on their focus on light commercial vehicles (LCV), tractors, and rising demand for buses.
"What contributed more in our comeback was our focus in the light commercial vehicles (LCV). It is a joint venture product of Ashok Land and Nissan. We hit the LCV market at the beginning of this year," said Taskeen.
In defiance of the staggering impact of the pandemic, the high LCV demand eventually tripled Ifad's sales in July to August period, in comparison to its previous sales.
"Surging sales of LCVs propelled our business to profit," he added.
Besides LCVs, Ifad also witnessed the rising demand for buses.
Ifad Autos Ltd is the sole marketer of Ashok Leyland commercial vehicles and TVS three-wheelers in Bangladesh. According to Taskeen, Ifad-Ashok Leyland holds a 70 percent share of the bus market in Bangladesh.
So, when the economy was reopened, with rising demand in the bus sector, Ifad also jumped back to profit.
"Our revenue was almost zero in the last quarter. But thanks to our focus in the bus, tractors and the LCV sector, we came back stronger. Our competitors, TATA and Mahendra had LCVs in the market for a long, but Ashok did not have them. So, we took up LCV aggressively this year, and it paid off," said Taskeen.
Ifad was a dealer of Ashok Leyland in the past. But now it is their strategic partner. They set up a facility plant for progressive manufacturing in 2017.
"In the first two years, we produced only larger trucks. Then we assembled buses. From next year, we will be assembling LCVs as well."
A diverse portfolio
The success of Ifad, however, cannot exclusively be credited to its automobile sector.
At the group level, it produces various other products.
"The automobile sector was closed, but some other factories like food and salts were functioning. Although our export fell, we provided domestic consumption successfully in this period," said Taskeen.
"In the last five years, our sales and market share grew significantly. We are also utilising the digital platforms industry. A few companies are out there in the automobile industry in Bangladesh. To make a difference, we are going forward smartly," he added.
"If you can take care of your people, they will take care of your business"
This pandemic saw a frenzy of layoff and pay cuts in almost every sector except for the government.
As there was no business, there was less or no money at all. So, companies had enough reasons to justify the layoffs and pay cuts.
Ifad, in this regard, also could not profit in that quarter just like the others; but it did not choose that path.
"No matter what, there will be no layoff or pay cut. You have to pay the employees even if that means to deliver them from your bank account," Ifad Chairman Iftekhar Ahmed Tipu instructed the management.
Taskeen said that Ifad considers human resource as one of its most significant assets.
"Around 3000 people are working in our automotive sector. We ensured that our human resource is motivated. We maintained a healthy communication and took care of them. We even provided medical services to our employees who caught coronavirus. Our focus in human resource has helped in the surge of our recovery and sales," Taskeen added.
Ifad MD said that the company follow a motto that "if you can take care of your people, they will take care of your business."
He believes that the company's dedication to the employees helped the company in return as the human resources doubled down on their efforts for more sales.
From the scrap to manufacturing
Ifad's chairman Iftekhar Ahmed Tipu founded Ifad Autos in 1985 with some of his friends.
The journey began with Ifad working in various government projects, followed by its involvement in the tyre sector.
Ifad was all about autos until 2002, when it endeavoured in the industrial compressor business, then gradually expanded to foods, salts and biscuits sectors over the years.
In an expansion mood, Ifad is now dreaming of going for manufacturing.
"The garments sector is the backbone of our economy. But globally, the light engineering market is almost 15 times bigger than garments. It is a seven trillion-dollar market while the automotive sector is two trillion-dollar market. But in Bangladesh, the automobile market is roughly Tk2,000 crore only. We want to make a difference here," said Taskeen.
Ifad has recently submitted a Tk450 crore expansion project in the Mirsarai Economic Zone. If granted, IFAD will move towards auto component manufacturing. Next few years, Ifad will focus on auto components.
"We are talking to some auto component manufacturers in Japan, China and India, to come and invest. At present, we need technical expertise; whether they are through a joint venture or technical collaboration."
"Our businessmen have money, but all we need is technical collaboration. I hope Bangladesh will see robust growth in automobile component in next 10 to 15 years," Taskeen concluded.
