Running a big company in a big industry is not an easy task. Today we talk to an inspirational person, someone who is undertaking such a task very successfully. Let’s take a look.
Briefly, can you please tell us about the history and success of Uttara Group?
Uttara group of companies (UGC), one of the leading and pioneer business concern, was established in March 1972 with a vision to serve the nation with automotive services acquiring the customer satisfaction along with making a contribution to the socio-economic growth in the country by offering a wide range of multi-disciplinary manufacturing and marketing products and services. Currently, we are engaged in diversified areas of industry like automobiles, securities, tea plantation, textiles, knit dyeing and knit garments, general Insurance and life insurance, financial services, and social activities. Over the decades, we could retain ourselves as a leading conglomerate in Bangladesh withholding major market share.
What is your view of the current automotive industry in Bangladesh?
Transportation plays a very important role in the progress of society as demand for transportation increases in tandem with the development process. It is one of the major industrial sectors of an economy. Over the years, Bangladesh achieved considerable economic growth (GDP more than 7 percent and 8.13% in the last fiscal year) with a stable unemployment rate and a significant rise in foreign investments. As a result, the purchasing power of individuals has risen along with the demand for cars, motorbikes, and commercial vehicles. The demand ranges from luxury inter-district buses to small sedans. To meet these demands, Bangladesh has to depend on imported vehicles as they are not manufactured in Bangladesh. Among the importing countries, Japan and India are the top sellers of vehicles in the country. The government has imposed taxes on imported vehicles increasing the duty structure and thus price which makes it unaffordable to the middle-income earners. This calls for an initiative to be taken to develop the automobile industry to manufacture vehicles at a reasonable cost and to offer affordable prices to the user. Bangladesh needs to put some efforts to expand heavy industry as it can contribute to enhancing economic development. The development in the shipbuilding industry is an encouragement indicating huge potentials in developing other areas of heavy industries as well, and automobile manufacturing is one of them. The market condition is mature enough to go for Assy-cum-manufacturing import-substitute vehicles of different categories, bus, mini-bus, truck, and especially sedan car and motorcycle including electric vehicles.
What are the challenges and obstacles that restrict the growth of this industry?
- Non-availability of skilled manpower: The scarcity of efficient and skilled labor is a major weakness for the automobile industry in Bangladesh.
- Higher Investment & Switching Cost: The initial investment is very high in the automotive sectors. If an investor starts a business then it’s not easy to switch over to another business. This is one of the major weaknesses of this sector.
- Environmental Concern: Emission from vehicles is the main causative factor for air pollution in Dhaka city. Mainly vehicles that run on diesel, pollute the air to a great extent. In Bangladesh, there is perhaps, no single electric car charging station and electric vehicles are yet to be in place. In general environmental awareness in our country is much low. So it may take longer to start importing electric cars.
- Higher Cost: Higher fixed cost, raw material price, and higher investment in research & developments are important factors for the growth of the industry.
- More risk in Credit: Trend shows, it takes huge risk involvement by the companies providing credit to the customers. Most of the times, companies have to face embarrassing situations in recovering money from customers.
- Policy Support: Government policies & initiatives are not enough for the growth of the automobile industry. Govt. should focus this sector to encourage FDI and Local Investments.
- Government Regulations: The rules & regulations imposed by the government are not so inspiring for the automobile industry. Especially, newly implemented “Roads Transport Act, 2018” needs to be aligned with the viability of our context in some respects. Used cars import to be phased out to allow new investment in the Automobile industry.
Could you please highlight Uttara Group’s role in the automobile industry?
In the early 1980s, Uttara started its automobile line, which has now grown into the largest automobile house in Bangladesh. UML’s product range includes motorcycles, auto-rickshaws, passengers, and commercial vehicles that are manufactured & assembled here in Bangladesh by some of the sister companies. Other products such as passenger cars, SUVs, pickup & buses are imported in CBU condition and Tire from the respective manufacturers in Japan, India, Indonesia & Thailand. Uttara is now assembling a wide range of branded vehicles, such as Isuzu and SML Isuzu in Bangladesh as well as Marketing & Distributing Suzuki vehicles in the country. As a manufacturer, assembler & distributor of various range of vehicles, we have ensured not only people’s comfort in life but also the employees.
The global market trend is slowly moving away from ICE (internal combustion engine) and Hybrid to fully electric vehicles. Based on this, what is your view on Eclectic Vehicle (EV) and their role in Bangladesh?
Electric Vehicles are adding a new dimension to the transportation sector as well as consuming huge electrical power. Although it becomes popular due to several benefits such as – limits fossil fuel consumption, increases environmental sustainability through low GHG (Green House Gas) emission, less sound pollution, and cost-effective transport medium. However, EV adoption in Bangladesh becomes very challenging due to several barriers. Challenges of EV adaptation in Bangladesh have been mentioned below:
- Lack of charging stations
- Power quality issues
- Battery price and capacity
- High charging cost and time
- Poor road quality
Good news for us, Bangladesh government has recently drafted guidelines for the electric vehicles stipulating registration, fitness certificate and tax token mandatory for them. The private sector should be included in consultations and deliberations related to the framing of the rules to grow up this industry.
Dose Uttara Group have any plans to introduce any EV in the near future?
Yes, we have a plan. We are keeping close contact with our OEM for introducing EV.
Moving back to Internal Combustion vehicles, What is your opinion about the motorcycle CC limit in Bangladesh ?
We had several rounds of discussions with the Government for increasing CC Limit of Motorcycle but approval was given up to 165 CC. But still, we are optimistic that the Government will review their decision for the greater interest of the Industry.
Does Uttara Motors have any plans to set up local Production Plants? If so, can you please with them with us?
We have already set up the State-of-the-Art Motorcycle Manufacturing Plant in Bangladesh which is being expanded with increased product portfolio.
Other than the auto Industry, what ventures does Uttara Group have?
Other than the automobile industry, we have the following ventures:
- Securities Companies
- Fabric Dyeing Plant
- Knit Garment Industry
- Service Industries
- Tea & Tea Plantation
- Lease Financing & Investment
- General Insurance
- Life Insurance etc.
Now to some personal questions, what is your proudest personal achievement?
Made Uttara Motors as a Market Leader in the 2W & 3W segment
Achieved the government approval for Motorcycle CC limit increase
Employment generation by setting up various industries
Achievement of Atish Dipankar Gold Medal for extraordinary contribution to Social development.
Member of the Executive Committee of BAPLC (Bangladesh Association of Publicly Listed Companies)
Former President of DCCI
President of Bangladesh Motorcycle Assemblers & Manufacturers Association
In your personal opinion, what are the key components for a successful business? What is the best way to achieve long term success?