KSRM – from a shipbreaker to owning largest fleet of oceangoing vessels

Behind every success there is an unseen struggle, dedication and hard work. The Chattogram-based KSRM Group navigated through ups and downs before it reached the peak of success.

Starting with shipbreaking nearly four decades ago, the company has now grown into the country's one of the leading steel manufacturers and the holder of the largest fleet of oceangoing ships. KSRM Group owns 23 oceangoing bulk carriers.

Mohammed Shahjahan Kabir founded the company at a young age and his two sons – Sarwar Jahan Rokon and Shahriar Jahan Rahat have taken it to heights.

Shahriar Jahan Rahat, deputy managing director at KSRM Group, in an interview with Shamsuddin Illius of The Business Standard talks about their journey of becoming an industry leader.

The making of KSRM

My grandfather Kabir Ahmed died on 13 April 1983 soon after having bought a shipbreaking yard in the Bhatiary area in Chattogram. As the eldest son, my father Mohammed Shahjahan Kabir had to take over though he was just a college student with no idea about business. His struggle began when he was turned down by one after another bank for a loan as his credentials as a young man did not qualify for that.

But, he did not give up and continued his efforts and eventually managed financing for importing a scrap ship in 1991.

But the bad times did not seem to be leaving my father as the deadliest tropical cyclones of 29 April 1991, which killed around 2,00,000 coastal people in Bangladesh, washed away the vessel into the Bay of Bengal.

A few days later, the tracing of his missing vessel proved to be a turn of the tide. We have since never looked back.

We have established a small steel mill that has gradually now grown into one of the largest in the country. We now produce 7,00,000 tonnes of rods annually. The factory, which started off with only 50-60 workers, now has around 5,000 workers.

In 1999, we entered into a cement business in partnership under the brand name Royal Cement.

Into shipping business

During his ship-breaking business times, my father dreamt of owning a ship; and seeing a bright future of shipping business, he started buying one ship after another. In 2003, he first bought a vessel named F Jahan (Fatema Jahan).

We now have 23 oceangoing vessels. We also have assets amounting to Tk5,000 crore. We have 12 sister concerns, such as Kabir Oxygen Limited, KSRM Power Plant, and Kabir Shipbreaking Industries.

Dealing with pandemic onslaughts

We could keep on production as we were fortunate to have 6-7 months of inventories during the pandemic. But we faced challenges in the shipping industry as five-six of our vessels remained idle month after month with no cargo movement in those trying times.

When the shipping resumed movements after the pandemic-led shutdown and freight costs went up, we offset the losses.

We did not cut salaries, rather paid bonuses to our employees on time. We had also taken many measures to stand by them.

Our shipping business has now been on a hot streak. Last year, our turnover broke the previous 10 years' record. We made a good profit as we had a stock of enough steel products and raw materials when demand marked a sudden rise with the reboot of economic activities following the pandemic-led closure.

Bright future for steel industry but market saturation feared

Undoubtedly, the steel industry, which is now growing 15% a year, will continue to have a good run in Bangladesh, with more and more construction taking place in line with the ongoing economic growth. 

But the way investments are coming in lest there is market saturation after a certain period. For example, our production capacity is 90 lakh tonnes while the demand is 75 lakh tonnes. That is why our factories are not operating at full capacity. On top of it, many big companies are coming up with new investments. We have no plan to increase our production capacity.

Obstacles along the growth lane

The steel industry is mainly facing crises of water, gas and electricity, which are impeding its development. They are having problems related to water, land, electricity, and gas. 

The gas crisis has somewhat eased through the supply of LNG. The biggest issue now we have is water scarcity. If necessary water supply to steel industries is not ensured, production may be disrupted at any time, which will have an impact on the overall economy.

Transporting goods by road is also being hampered owing to load limitations. Road capacity does not match vehicle capacity. Because of this, to transport a certain amount of goods, we need more vehicles. Thus, fuel costs along with rental costs rise.

The port's inadequate capacity also has a significant impact on this industry. It takes a considerable amount of time to unload raw materials after imports. It costs an importer millions of dollars, which can be avoided by enhancing the port capacity. 

Policies not favouring steel business 

The steel industry is facing a heavy tax burden. They have to pay high taxes during raw material imports. The high tax rate affects all – government projects are getting more expensive and consumers do not have much buying power. So, tax relief is very essential for them. 

Despite the fact that the country needs to boost its revenue mobilisation, such a burden on a particular industry is not appropriate. In addition, our roads are not up to international standards so we cannot load goods into vehicles at full capacity. As a result, per-metric-tonne delivery costs are increasing.