Bashundhara goes big to utilise first-mover advantage

Bashundhara Group, one of the leading business conglomerates in Bangladesh, is going to make more than Tk8,000 crore investment in steel, according to officials, aiming at leading the local steel manufacturing market.    

Bashundhara Multi Steel Industries Limited, a sister concern of the group, has already put in Tk4,350 crore in steel-making in the first phase at Bashundhara Industrial Economic Zone at Bangabandhu Shilpa Nagar in Chattogram.

"The comprehensive commissioning of phase-2 will enable us to cater to the diverse import-oriented flat steel market and there we want to accomplish first-mover advantage," Safwan Sobhan, managing director of Bashundhara Multi Steel Industries Limited and vice-chairman of Bashundhara Group, told The Business Standard.

First-mover advantage refers to an advantage gained by a company that first introduces a product or service in the market.

According to the steel-maker, Bashundhara flat-products will offer sourcing industry inputs locally for ship building, structural constructions, automobiles, rural housing, electronics, LPG cylinder, furniture and more.

"This specific facility will directly contribute to building our national economy through saving a large sum of foreign exchange," added Safwan Sobhan.

The first phase plant will go into commercial production by 2025, according to Bashundhara Multi Steel Industries Limited.

Bashundhara recently signed a technology transfer deal with the Germany-based SMS GmbH Group for the second plant. Safwan Sobhan said the construction of the second plant will begin within a year.

With the first and second phases of investments totalling around Tk12,350 crore, Bashundhara's annual manufacturing capacity will be more than 30 lakh tonnes per year, said company officials.

Terming the Tk12,350 crore steel investment "the biggest boost" for the local market, steel manufacturers said the size of the local market is around Tk55,000 crore. The local market now features some 40 companies which altogether have a total capacity of 90 lakh tonnes per year.

According to the sources of BSRM and Market research by IDLC Finance Ltd, now BSRM leads the local market with an annual production capacity of 16 lakh tonnes, while Abul Khair Steel is producing 14 lakh tonnes annually.  In terms of capacity, other major steel manufacturing brands are KSRM, GPH and Anwar Steel.

According to Bashundhara's deal with SMS GmbH Group, the German iron and steel technology giant will install CSP hybrid technology to produce hot rolled coils and plates.

Italy-based Danieli S.p.A. will provide the technology support to the first phase plant, according to Bashundhara officials.

Bashundhara's production lines will include low relaxation prestressed concrete steel, reinforcing steel or reinforcement steel, coiled reinforcing bar, solid metal bar with a square cross section, welding electrode and wire rod, said officials.

According to market studies, Bangladesh's public sector accounts for 60% of steel consumption annually, as household and commercial constructions stand for 25% and 15% steel consumption respectively.

Local steel demand is growing rapidly given that the country used 16 lakh tonnes of steel per year even a decade ago. The demand escalated to 90 lakh tonnes in 2021 and is expected to rise to 1.80 crore tonnes by 2030. From FY17 to FY21, Bangladesh's steel export increased at 22.73% per annum.

Thermo-mechanically treated bars, commonly known as rods, remain at the core of production by local steel brands.