World's biggest jute mill nears commercial production

At a time when many businesses are hesitant to make fresh investments due to economic slowdowns, the enterprising sons of the late Sheikh Akij Uddin, founder of Akij Group, are defying the odds and continuing to pour money into Bangladesh's jute industry.

Sheikh Bashir Uddin, the youngest of the Akij brothers, has already invested around Tk1,500 crore in this sector over the past three years. Now his elder brother, Sheikh Nasir Uddin, chairman of Akij Group and owner of Akij Jute Mills, has taken the lead with an even more substantial investment of approximately Tk2,500 crore. This massive sum is being used to establish what will be the world's largest jute mill in Muksudpur upazila in Gopalganj.

The jute mill, named Akij Jute Mills, had a soft launch last month and is currently busy installing machinery for commercial production scheduled to begin this December. Covering a sprawling area of 450 bighas, the mill will have six factories, each spanning an impressive 175,000 square feet.

With a staggering production capacity of 600 tonnes per day, the mill "will be the largest jute composite textile mill in the world", said G Murshid Bappi, director (operations) of Akij Jute.

"We are focusing on producing jute fabrics in the mill. Also, our goal is to introduce printing techniques on these fabrics, similar to those commonly seen on cotton cloths," Bappi, a seasoned member of Akij Jute Mills with more than two decades of experience, told The Business Standard.

Industry insiders said these strategic moves have firmly established the Akij brothers as significant players in the jute sector, with their mills' combined capacity now accounting for around 50% of Bangladesh's jute production.

Since 2020, Sheikh Bashir Uddin, former managing director of Akij Group, who formed Akij Bashir Group, has made significant acquisitions in the jute industry, purchasing Janata Jute Mills and Sadat Jute Mills, with a combined cost of over Tk700 crore. He also bought Partex Jute Mills from Partex Group, reportedly at a price of around Tk500 crore. That was not the end for Bashir as he continued to invest in the jute to modernise his mills and diversify products.

Helal Ahmed, chief operating officer of Akij Bashir Group who looks after the group's jute business, said they are currently the market leader with their production in Janata, Partex and Sadat jute mills.

"After taking over Janata in June 2020, we have invested to expand and diversify the capacity of the mill," said Helal, who has been working for Akij Group for 35 years and has vast experience in the jute sector.

In addition to Nasir and Bashir's endeavours, their brother Sheikh Afil Uddin has been successfully running Afil Jute Weaving Mills for several years. His mill is the largest supplier of jute sacks, used for packaging rice and potatoes in the country, having 170 million consumers.

Remarkably, they have not only expanded their operations but also positioned themselves as competitors in producing similar jute goods.

Though Bashir and Nasir have a focus on the export markets, Afil works with the local market.

Currently, 13 items including rice, flour, potato, pulse, onion and poultry and fish feeds are under the mandatory jute packaging rules, but it is not being followed properly, according to jute industry insiders.

"If the mandatory packaging rules are followed diligently, the demand for jute in the local market will double from present two lakh tonnes per year," said an official of Afil Jute Weaving Mills, preferring not to be named as he was not authorised to talk to the media.

Bangladesh's jute industry

Bangladesh produces 11-12 lakh tonnes of jute per year. Of which, two lakh tonnes of raw jute are exported directly and another two lakh tonnes are utilised locally. The remaining seven lakh tonnes are used for making different products, especially yarn, for export to the world markets.

Bangladesh exported $912 million worth of jute and jute goods in the fiscal year 2022-23, down by 19% from a year ago. Of these export earnings, nearly $500 million came from yarn and twine, down by over 28% compared to a year ago.

Exporters blamed the global economic slowdown for the degrowth in jute exports. Export to Turkey, the biggest market for Bangladesh's jute yarn and twine, has declined significantly – from over two lakh tonnes to around one lakh tonnes now, industry insiders said. 

Export to other major markets such as Iran, India and China are also declining. They said the high price of raw jute – Tk6,000 per maund – two years ago forced many buyers to look for alternatives to jute products.

Akij brothers are taking the leaf

When many mills, especially smaller ones are getting shut down in the last few years, due to their inability to become competitive, the brothers of Akij Group continue to venture into the sector.

Cost of production has increased significantly in the last several years, while the prices of products went down in the international markets, causing closure of small mills, industry insiders said.

According to Bangladesh Jute Spinners Association,  out of 80 mills in the country, 12 are fully closed and over a dozen factories are struggling for survival.