Square turnover to hit $1.0b in 2013, Tapan Chowdhury says

Express (July 13, 2011)

Square Group's revenue will hit one billion dollars in 2013, boosted by steady expansion in core businesses such as medicine, toiletries, textiles and healthcare and new forays into power and eco-toursim.

Group managing director Tapan Chowdhury made the bold prediction this week, saying Square is on course to emerge as the country's largest conglomerate within a few years.

"This year our turnover will be around $780 million. But the year 2013 will be a turning point when our turnover is expected to hit $1.0 billion threshold," Mr. Chowdhury told the FE.

He said the Group has no plan to invest in new sectors after the latest enrties into a 100 megawatt power plant and eco-tourism, whose operation would begin by 2013.

"The core businesses are enough to push our revenue past the billion dollar mark. If we keep the growth intact, we'll be there in time," he said.

The mark will place Square into the country's elite club of business groups whose turnover has crossed billion dollars threshold over the past two years.

Chittagong-based Abul Khair was the first local group to have achieved the distinction. Commodity leaders City and Meghna and realtor Basundhara could be the other members of the billion dollar club.

Group patriarch Samson H Chowdhury first set up Square Pharmaceuticals in 1958. But the group has since branched off into toiletries, textiles and real estate.

Square is still the country's largest medicine maker accounting for nearly 20 per cent of the drug market. The flagship firm makes up some 25 per cent of the Group's turnover.

The Group owns a big stakes in Pioneer Insurance, a non-life insurer, Sheltech and a leading private bank. It's a pioneer in spices, agro vets and bakery items.

This year has proved to be a big success for the Group with the textile unit bagging an export award and the spinning unit posting hefty profit despite facing global headwinds.

The world's biggest bank Hongkong and Shanghai Banking Corporation (HSBC) gave the Export Excellence Awards 2010 to Square Textiles for block-busting shipment.

"We are very happy as any award is a recognition that we have done the job well. It also highlights the whole organization," a beaming Mr. Chowdhury said.

Tapan Chowdhury is a former advisor of the caretaker government and is the MD of Square Pharmaceuiticals, Square Textiles and Square Hospital Ltd.

"We are here because of the team work of each member of Square family. They have transformed the group into one of the most successful business firms in Bangladesh," he said.

Last year Square stood out among hundreds of local textile millers as they bled red due to volatile prices of cotton in the international market.

"We made a good profit when the cotton prices were up and we gave it as dividend to our shareholders," Mr Chowdhury said.

"It delights us when we see a Square shareholder uses the dividend to send his son abroad for higher education or spends the money at his daughter's wedding," he said.

Mr. Chowdhury, however, admitted that choppy cotton prices have emerged as a major headache for Bangladeshi textile entrepreneurs.

"We are not a cotton producer. As a result, volatile cotton prices affect us most. Local textile millers are under huge pressure to monitor the market intensely," he added.

The Square Textiles MD said local spinners have a huge volume of unsold yarn, which they stockpiled when the cotton prices went up.

"Naturally as a result, Bangladeshi knitters and weavers ignored local spinners and purchased the fabrics from India at a dumping rate," he said.

"We didn't make the mistake. Initially we made some losses. It didn't affect us due to our financial strength as we made profit when the prices were up," he explained.

Mr. Chowdhury said Bangladesh could still emerge as the world's leading textile maker provided the exporters continue to offer competitive prices and ensure better living standards for workers.

"We have to be cost competitiveness. Offering only cheap labour won't take us anywhere," he said.

"Bangladesh has enormous potentials in textile sector. We have a cohesive workforce who shares a common language and a common culture, which is not the case in India, Vietnam and China." Mr Chowdhury said.

"What we need is to train our millions of workers and take care of their interest. If we maintain the standards in safety and wages, the buyers are bound to pay us more."

He suggested that the government impose tariff and non tariff barriers on textile fabrics import in an effort to protect local textile millers, hit hard by the recent European Union duty-free access rules.

"It can be done as many nations have done it to protect their local industry," he said.

"It is good sign that woven and knit manufacturers along with textile millers now realize the long term impact of the new EU GSP rules."

Mr Chowdhury also spelled out his strong reservation against foreign direct investment in textiles, saying the sector should be protected for local entrepreneurs.

"We need FDI only in gas and power sectors because the two need huge investments, which local investors don't have."

He said flagship Square Pharmaceuticals has been the top drug maker since 1985, and is now on its way to become a high performance global player.

He agreed that the export growth of pharma sector is "not remarkable" despite efforts by the country's scores of medicine makers.

"Overseas registration is a big barrier. We need about $3.50 million just to register a drug in a foreign market," he said, stressing local investment in medicine raw materials.

"If we can produce Active Pharmaceutical Ingredients at home, we can easily capture medicine market in 49 least developed nations. We can also ship products to emerging markets," he said.

Square is now shipping medicines in a limited scale to the United Kingdom, several Asian, South America and African countries.

"We hope the TRIPS agreement will extend beyond 2016," he said, referring to a World Trade Organisation deal in 2001 which allowed the LDCs to export medicines anywhere without complying stringent rules.

The flagship Square Pharmaceuticals was converted into a public limited company in 1991. Its sales was more than Taka 11.46 Billion ($ 163.71 million) in the year to March 2010, having a year-on-year growth of 17 per cent.

Mr. Chowdhury said some 33,000 people work for the Group.

As part of a corporate social responsibility, Square is setting up a nursing institute where 50 nurses will be trained every year to meet the country's growing healthcare need.