'With Tk7,000 in my account, I rented an office for Tk5,000'
Two employees of electrical engineering product companies saw the potential of after sales service for electrical products in the country, and founded the Basic Power Engineering Company. Today, they manufacture around 10 electrical engineering products and see the potential to go global
Md Jahir Uddin, an electronic engineer, used to work at Techno Venture Limited - an electrical engineering products company based out of Mirpur.
His friend Ohiduzzaman also worked at another electrical engineering company in Mirpur, called Adex Corporation Limited, on the operational side, as he came from a social science background.
After work, they would often hang out at the Sher-e-Bangla National Cricket Stadium in Mirpur.
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One afternoon in August, 2006, Jahir proposed to Ohiduzzaman that they start a business together. By then, Jahir had already been working at Techno Venture for eight years.
"The demand for after-sales service-related work for electrical products was high," said the 41-year-old Jahir while sitting at his factory in Tongi, Gazipur. "We decided to start a service-related business for electrically engineered products like electrical panels, switchgears and transformers."
Jahir, back then, had a bank account with the Dutch-Bangla Bank, where he had around Tk7,000. Just three days after his discussion with Ohiduzzaman, Jahir withdrew Tk5,000 from the bank and rented a small room in Mirpur.
"We paid the Tk5,000 as an advance for renting the room and this was our first investment," said Jahir, who has a degree in electrical and electronic engineering from Green University. They received a table and a chair as a gift to decorate the room. This was how the Basic Power Engineering Company came into being.
Today, the annual turnover of Jahir's company stands at around Tk10 crore and is growing rapidly. The company manufactures at least 10 types of electrical engineering products along with distributing transformers, and HT and LT switchgears.
The growth
As Jahir and his colleagues worked with reputed electrical engineering companies before, people in different industries knew them well. On the third day of their journey, they received an offer from HR Textile Mills Limited to make an electrical panel. The company's official called them and asked whether they were capable of making an electrical panel.
"We said that we would be able to do that. They asked us how much money it would cost and we said 'an estimated Tk3 lakh'. However, we didn't have any money with us. They gave us Tk2 lakh in cash. We bought the raw materials from a familiar shop on credit," Jahir recalled.
"We made the panel in another workshop and delivered it within the allocated five days. We made a profit of Tk50,000 on the first product," Jahir said, adding that one year into the business, their company had a capital of Tk15,00,000.
In 2008, they set up their own workshop and their business started to take off. With the expansion of electricity in the country, the prospect of electrical engineering products has grown as well.
Jahir said that the market size of power engineering products in Bangladesh is now worth more or less Tk50,000 crore. However, half of all products are still coming from abroad while Energypac, one of the leading power engineering companies, holds a large share of the market.
The Basic Power Engineering Company, in general, manufactures distribution and power transformers with a capacity of 50kVA to 3150kVA. The cost of these transformers ranges from Tk1.5 lakh to Tk36 lakh. However, the company also manufactures high-capacity transformers which can cost as much as Tk1.5 crore. The company has attained the ISO 9001: 2015 certification.
The company also manufactures HT and LT switchgears. In an electric power system, switchgear is composed of electrical disconnect switches, fuses or circuit breakers used to control, protect and isolate electrical equipment. These products are mainly used in industries.
"The prices of a unit of HT switchgear and LT switchgear depends entirely on its specifications. The specification is determined on the customer's demand. The price of a unit of HT switchgear starts at around Tk10 lakh while the cost of a LT switchgear starts at Tk50,000," informed Jahir.
The company also supplies and installs Busbar Trunking System (BBT), a flexible and reliable electrical distribution system which is a replacement to traditional cable and panel distribution. The price of BBT varies depending on the customer's demand.
"Besides our products, we also provide power and electrical engineering consultancy to many industries," Jahir told the correspondent. He added that they also import circuit breakers, Busbar Trunking System and other raw materials from France, China and India.
"We feel that our customers are satisfied with our product, firstly because we meet our commitment of timely delivery and maintain product quality," Jahir said, adding that they take orders keeping capacity in mind. As a result, they can deliver on time.
Attractive prospect
Jahir said that the electrical engineering products industry has good prospects in the country as the ruling government has been improving the power sector and expanding electrification across the country. The demand for electrical engineering products is increasing in both public and private sectors.
Jahir elaborated, "Apart from China and India, Bangladesh has the opportunity of becoming the third largest electrical engineering products exporting country in the world. There is huge demand for these products globally."
He further stated that Germany decided to stop manufacturing transformers due to environmental issues. Many European countries are focusing on other products instead of transformers.
Bangladesh has the scope to penetrate these markets as the countries are importing these from other countries.
"Our neighbouring countries, Maldives and Nepal, can import these products from us as they haven't developed that infrastructure there. Our company has supplied a substation even in India," said Jahir.
The problems
Jahir said that many companies have sprung up in the city which care little about product quality and certification. They are selling low-quality products at cheap prices to customers.
"As a result, customers cannot trust us all. The unqualified companies are tarnishing other companies' goodwill," Jahir said.
Jahir said that they have to face problems when testing a product for quality standards.
As of yet, there is no government accredited testing facility in the country. The companies have to take product samples by road to India for testing.
"We now have to test a small transformer of Tk4 lakh for Tk25 lakh in India. We do not need to give India money for testing," said Jahir. He added that BUET has a testing facility but its capacity is very low. BUET can test a transformer of a maximum capacity of 630kVA.
"There are 10,000kVA and 20,000kVA transformers being made in the country. The utility service companies attach conditions that it requires such and such tests. Who has the facilities? India has the facilities. And after testing the product, you will be able to bid via a tender," Jahir said, who tests his transformers from Central Power Research Institute in India.
"There is huge potential in the electrical engineering industry, and as a small entrepreneur, Basic Power Engineering Company, has succeeded due to our main investments: hard work and honesty," Jahir said with confidence.
