'Akij Resources wishes to provide relief to essential products market'

Akij Resources Limited, which is one of the five clusters of Akij following its mutual split, operates 10 companies, including cement, steel, ready-mix, polyfibre, shipping, IT, and publication.

Recently, Akij Resources has also entered the consumer goods business. Minhaz Ahmad, chief strategic officer at Akij Resources Limited, spoke to The Business Standard about the country's consumer goods market and Akij's entry into this business.

Why did Akij come to the market for essential products?

As we have studied, farmers have been getting out of paddy cultivation for several years. Many farmers in Rajshahi and Naogaon have taken up mango cultivation, leaving aside the production of essential commodities including paddy. The main reason for this is that we are not getting fair prices. On the other hand, consumers have to buy products at higher prices. Compared to neighbouring countries, our product prices are higher in many cases. This is because of the effect of middlemen in the market. We want to eliminate this issue.

We feel that farmers will get a fair price if big groups like Akij are in the market for agricultural products. This is the main reason we are in this industry. Apart from this, we want to ensure that people also get quality products at a fair price. We want to bring a normal trend into the market by reducing the profit margin.

Our main aim is to create a fair market so that both farmers and consumers will benefit. Akij is also getting good business from other entities. We want to play a role like the Trading Corporation of Bangladesh (TCB), a state-run agency that sells food items at a subsidised rate, in the consumer goods market.

What is Akij's current position in the essential product market? With which brand have you entered the market?

Our brand name is Essential. Under this brand, there are essential products including rice, lentils, flour, wheat flour, oil, sugar, and salt. Although we have now started on a small scale, most of it is contract manufacturing.

One of our factories has gone into production in Bandar upazila of Narayanganj. We installed a flour mill with a capacity of 600 tonnes there. Here we will produce flour, wheat flour, and semolina. We have also set up two lentil mills and one feed mill at the same place. The main objective of our production is to provide products at a fair price to consumers. For this, we have studied more about the place of collection. We believe that Akij can play a big role in stabilising the market during the next Ramadan.

What products do you have on the market this Ramadan?

On the occasion of Ramadan, we gave more importance to the white pea (dubli). We have imported 50,000 tonnes in bulk for this month. The market for white peas is now stable. We are also trying other products, albeit on a smaller scale. We now have all types of rice. Along with rice, there is flour, wheat flour, and semolina. We are doing contract manufacturing of sugar and salt. Also, we are doing contract manufacturing of soybean oil. We are bringing products in bulk and doing contract manufacturing. Our margins on these items are very low. Still, we are trying to give some relief to people.

You are speaking of giving products at a lower price than the regular market; how is this possible?

The selling price depends on the rate of collection of any product. We emphasise this. We are applying the best method during the collection of products, including paddy, wheat, lentils, and crude oil. We have our own ocean-going shipping as well as huge lighter vessels. As a result, the cost of transportation of goods will be less. Moreover, there are instructions from our board of directors to reduce the profit margin too. We also have a plan to get the raw materials at a low price by connecting with the production system. Along with this, we are planning to reduce the price by being strategic in the supply chain system.

Will Akij be able to maintain its quality and reputation in volatile markets for consumer goods? 

There are challenges in the market. It will remain. But we will do business by maintaining the standard. Akij never compromises on product quality. This matter has also been on our minds when it comes to the market for consumer goods meeting the standard. Akij never compromises on product quality. This matter has also been on our minds when it comes to the market for consumer goods. In this case, product collection is important. Essential products have different horizons. The quality depends on the production of each product, including rice, wheat, oil, and sugar. The quality depends on where the product is sourced from. We are trying to collect the best products.

Our aim is to give people relief. When people go to the market, we will try to be on their list of preferences. We will create a trend in the market so that others are also forced to set a fair price. Our mission is to be involved in agriculture in an agriculture-dependent country and help farmers.

Our consumer goods market is currently experiencing volatility. What is the reason for this? What is the way out?

A major cause of volatility in our market is a weak monitoring system. The failure to take advantage of the price reduction in the international market is the other reason. 

Freight charges and commodity prices have come down in the international market. But we cannot take advantage of this because our letter of credit (LC) facility is restricted. Now, what the banks are allowing cannot be called a letter of credit. For imports, 100% of the money has to be deposited in banks in advance. The money that traders keep against imports is again taken on loan. He has to pay interest at 9% on this money. As a result, it finally affects the price of the product. So people are not getting products at a fair price.

Keeping stock is important, along with monitoring and supply systems. Potato prices have been stable for the past few years due to stocking opportunities. In the case of paddy, there is no scope for stocking for more than 15 days. As a result, its market becomes unstable. In the case of vegetables, too, logistics and legal arrangements like keeping stock should be made.