“Based on the Hurdles in Export and Import Operation ‘A study on Khaleque Group of Industries’ “
Executive Summary
Khaleque Group of Industries has emerged as a renowned Cosmetics & Toiletries manufacturer of Bangladesh and also as a leading manufacturer and exporter of Knit Garments products with 3 spinning mills as a backward linkage. Mr. Abdul Khaleque Pathan, a very hard working young man started his business carrier as a Brick manufacturer in 1983 under the name and style of Khaleque & Co. with trademark ‘K & Co’. The bricks brought name and fame for unique quality of brick and for pleasant personality and integrity of Mr. Khaleque and to meet the market demand he soon started another brickfield named M/s. Bandu Bricks. Then embarked with production of garments products and cosmetics & toiletries items. Khaleque group of Industries now consists of the following allied concerns:-
- Khaleque Knitting & Garments Inds. (Pvt.) Ltd.
- Keya Cosmetics Ltd. (Public Limited Company)
- Keya Detergent Ltd. (Public Limited Company)
- Keya Soap Chemicals Ltd.
- Keya Spinning Mills Ltd.
- Keya Cotton Mills Ltd. (Spinning Mills)
- Keya Yarn Mills Ltd. (Spinning Mills)
- Keya Knit Composite Ltd. (Composite Knit Garments project with 80MT daily production capacity)
- Khaleque & Co. (Pvt.) Ltd.
Keya Beauty Soap is a renowned Brand in Bangladesh as well as in India and huge exports are being done regularly in India, Bhutan & Middle East. Mr. Abdul Khaleque Pathan with export Trophy for consecutive 3 years 2002-2003, 2003-2004 & 2004-2005. In recognition of exceptional garments exports, Mr. Khaleque was awarded export Trophy in the year 1994 and for export performance of Knit Garments Mr. Khaleque was selected as CIP for year 1997 & 1998.
The present employees/workers of Khaleque Group of Industries are about 12000 of which near 900 male and female workers are “Deaf & Dumb” who have been turned into manpower from downtrodden social burden. Now they are happy efficient workers.
Present Annual Turnover of the Group is about 1000 Crores which is ever increasing, but the recent global recession has caused much damage to the group’s emerging which will take some time for healing.
The largest hurdles faced by Khaleque Group of Industries, in export and import sector, are the inefficient Customs and administrative export trade processes, as well as the inadequacy of the current transport and shipping infrastructure. The duplication of Customs formalities, low operational efficiency at the Port of Chittagong and poor transport infrastructure result in lengthy delays and exorbitant shipment costs that constrain the Bangladesh economy. The shortcomings of the Customs and administrative procedures should be addressed through phased trade facilitation initiatives that are synchronized with upgrading of vital transportation infrastructure. This will enable Bangladesh’s economy to significantly progress and the garment sector will remain one of the most competitive in the world.
Chapter 01
1. Introduction
This report is based on the “Hurdles in export and import operation- ‘A study on Khaleque Group of Industries’ “. Export and import are very common and widely practiced form of international business. Khaleque Group is the top local Cosmetics & Toiletries manufacturer of Bangladesh and also a leading manufacturer and exporter of Knit Garments products with 3 spinning mills as a backward linkage. So have chosen it for our report so that we can have a wider view of our concern topic. Basically what we want to cover is the current export and import situation of the company, the problem that it is facing and solutions they are applying. Besides these have also recommended some suggestions from our end which can be applied for the betterment of their export and import business.
1.1 Origin of the Report:
This report is based on an internship program. Khaleque Group of Industries arranges this internship program to gather practical knowledge about export and import activities. Topic for this internship report is “Hurdles in Export and Import operations of Khaleque Group of Industries” This exposure is very helpful for oneself to know how things move and to find the gap as well as the similarities between theoretical and practical knowledge.
1.2 Objectives of the Study:
I have divided the objectives of this report into two parts. One is general and the other is more specific. These objectives are stated below:
(i) General Objective:
The topic with which I assigned was identifying problems and solutions of a particular company of export-import industry of Bangladesh. While completing this task firstly have chosen Khaleque Group of Industries.
Therefore, my general objective was to understand the current export and import situation of the company and hurdles during its operation.
(ii) Specific Objective:
Main focus of our report was to study the areas as follows:
- The problems that Khaleque Group of Industries are facing while exporting and importing their products.
- To analyze the various concept of marketing, formal hierarchy, standardized export policies & rules etc.
- To appraise activities of Commercial Department
- To identify the difficulties and barriers faced in the international market.
- To recommend the measures needed to be taken for the betterment of their export and import business.
1.4 Scope of the Study:
As working in Audit Department and for preparing my report had to collect information from the company. During internee period got chances to visit factory, supervise much production process & completed many sample program. For gathering other departmental data, I got little time beside my routine work. But here tried to cover whatever data got from other departments rather than Audit Department. This case study will help to analyze the various concept of marketing, formal hierarchy, standardized export & import policies & rules, organizational network, decision making in stable & unstable situation which will enrich my experience for future career.
1.5 Methodology:
To complete the term paper, tried to collect information from two sources. One is primary sources and other is secondary sources. Then analyzed all the gathered data to meet our general and specific objectives.
(i) Primary Sources:
- Personal interview with Directors.
- By taking interviews of the employees.
- Personal experience gained by visiting other departments.
- By discussing several ideas with familiar business organization.
(ii) Secondary Sources:
- Gathering information from Annual Report.
- Gathering information from website.
- Files or documents of the mills.
- Published documents.
- Relevant books, internet, journals etc.
- Primary Data.
1.6 Limitations of the Study:
Some limitations or barriers were faced while conducting the study. The limitations which faced during study are as follow:
- Found so many difficulties in searching information.
- The employees of the company were so much busy that it was completely a hard work to take important information from them.
- The information given is not sufficient to prepare a complete internship report.
- There is so much work pressure in the company.
- There are many code names in garments industry that is very important for production process and memorizing those codes was difficult.
- In garments factory most of the employees don’t have any educational background so they do their job only with experiences.
Chapter 02
2. Overview of the Company
2.1 History of the Company:
Bangladesh has been a land of splendid arts and artifacts. In ancient word, this was the very centre of sophistication and perfection in weaving and textile. Once, the muslin of Bengal was held as a unique symbol of beauty and aristocracy all over the world. The time has changed, yet we have successfully nourished our extraordinary craft and texture of our textile in zamdani, handloom, silk etc.
Khaleque Group of Industries has emerged as renowned Cosmetics & Toiletries manufacturer of Bangladesh and also as a leading manufacturer and exporter of Knit Garments products with 3 spinning mills as a backward linkage.
Mr. Abdul Khaleque Pathan, a very hard working young man started his business carrier as a Brick manufacturer in 1983 under the name and style of Khaleque & Co. with trademark ‘K & Co’. The bricks brought name and fame for unique quality of brick and for pleasant personality and integrity of Mr. Khaleque and to meet the market demand he soon started another brickfield named M/s. Bandu Bricks. He then embarked with production of garments products and cosmetics & toiletries items.
However, in the age of globalization, another wonder that made Bangladesh distinct is the readymade garments industry and with a vision to enhance this field further Khaleque Group of Industries (KGI) started its journey in 1991.
Khaleque group of Industries now consist of the following allied concerns:-
- Khaleque Knitting & Garments Inds. (Pvt.) Ltd.
- Keya Cosmetics Ltd. (Public Limited Company)
- Keya Detergent Ltd. (Public Limited Company)
- Keya Soap Chemicals Ltd.
- Keya Spinning Mills Ltd.
- Keya Cotton Mills Ltd. (Spinning Mills)
- Keya Yarn Mills Ltd. (Spinning Mills)
- Keya Knit Composite Ltd. (Composite Knit Garments project with 80MT daily production capacity)
- Khaleque & Co. (Pvt.) Ltd.
Keya Spinning Mills Ltd. and Keya Cotton Mills Ltd. are spreaded in a complex of 30 acres. The factory has a state of art technology and it produces 40 tons of yarn everyday. The capacity of both spinning mills is 70 thousand spindles. The capacity of yarn mill is 50 thousand spindles. The factory is equipped with machineries manufactured by world leaders like Rieter, Toyota, Uster etc.Every step of production has to undergo modern and scrupulous quality control process. It also has a hi-tech testing lab to ensure desired quality standard. Both Keya Spinning Mills Ltd. and Keya Cotton Mills Ltd. have proudly achieved ISO 9001 certificate.
The factory not only meets up the demand of Khaleque Knitting and Garments Industries (PVT) Ltd. unit and Keya Knit Composite Ltd. but also gets it exported overseas too.
Keya Beauty Soap is a renowned Brand in Bangladesh as well as in India and huge exports are being done regularly in India, Bhutan & Middle East. In recognition of exceptional export performance of Cosmetics, the Government of Bangladesh has honored Mr. Abdul Khaleque Pathan with export Trophy for consecutive 3 years 2002-2003, 2003-2004 & 2004-2005.
In recognition of exceptional garments exports, Mr. Khaleque was awarded export Trophy in the year 1994 and for export performance of Knit Garments, Mr. Khaleque was selected as CIP for year 1997 & 1998.
The present employees or workers of Khaleque Group of Industries are about 12000 of which near 900 male and female workers are “Deaf & Dumb” who have been turned into manpower from downtrodden social burden. Now they are happy efficient workers.
Present Annual Turnover of the Group is about 1000 Crores which is ever increasing, but the recent global recession has caused much damage to the group’s emerging which will take some time for healing.
Khaleque Group, a leading business conglomerate with firm mission and vision for creating new avenues for employment, improving quality of products with a team of efficient workers and IT based management will contribute significantly in the GDP of the country.
2.2 Mission of KGI:
Thus KGI’s mission is to satisfy the customers and to be the market leader, in providing all sorts of knitted garments from Bangladesh to customers around the globe.
KGI is committed optimizing product quality and ensuring cost effective operations.
2.3 Vision of KGI:
KGI believes quality is not a miracle. It is indeed the result of sharp direction, perfect execution, sincere effort and high aspiration.
2.4 Organizational Goals of KGI:
“No compromise with Quality” is our key objective. We are passionate to serve high quality Garments, Cosmetics & Toiletries products within an affordable price. We are committed to serve our best towards the stakeholders.
2.5 Objectives of KGI:
- A truly international outlook for exporting
- A long-term commitment for exporting
- A strategic approach to the development of new export market
- Credibility and close and long-term relationship in export market
- An international reputation for quality
- Resources available for export support
2.6 Board Of Directors:
- Abdul Khaleque Pathan Managing Director
- Mrs. Feroza Begum Chairman
- Mrs. Khaleda Parvin
- Mr. Masum Pathan
2.7 Management Team:
(i) Executive Committee:
- Alhaj Md. Akkas Ali Pathan
- Mrs. Shahrina Nasri
- Mr. Anamul Haque
- Syed Noorul Alam
(ii) Management Committee:
- Mr. Anamul Haque
- Mrs. Shahrina Nasri
- Mr. Faizuddin
- Mr. Kazimuddin
- Mr. M. A. Mannan
- Mr. Parimal Kumar Pramanik
(iii) Share Management & Corporate Affairs:
- Syed Nurool Alam
- Md. Robiul Awal
- Md. Saiful Islam
- Md. Noor Hossain
(iv) Audit Committee:
- Mrs. Khaleda Pervin
- Mr. M.A. Mannan
- Mr. M. Anwarul Ghani
- Mr. Masum Pathan
2.8 Company Profile:
Corporate Headquarter:
Jarun, Konabari, Gazipur
Liaison Office:
House # 108, Mosque Road Old D.O.H.S. Banani, Dhaka 1206
Factory :
Jarun, Konabari, Gazipur
Year of Establishment: 1991
Business Lines:
Manufacturing and Marketing of Cosmetics & Toiletries Products, Knit Garments products
Export Outlets:
USA, UK, India, Bhutan, UAE, Nepal, Kuwait, Srilanka, Saudi Arabia &Myanmar
Number of Employees : 12000.
2.9 Social Responsibility:
Apart from contributing largely in the national economy and employment sector of the country, KGI performs social responsibilities as well. It has helped physically challenged people to establish their lives. Out of a total of 12000 employees it has so far employed 600 deaf people in their factories. It further denotes a significant amount of money to different educational institutes. In addition to that KGI provides possible medical treatments free of charge as complimentary to the employees. Thus KGI intends to take part in the development process of the country and keep on prospering.
Chapter 03
3. Products Overview, Production Capacity and Export Import Analysis
3.1 Products Overview:
3.1.1 Knit Garments products
Khaleque Group of Industries has emerged as a renowned Cosmetics & Toiletries manufacturer of Bangladesh and also as a leading manufacturer and exporter of Knit Garments products with 3 spinning mills as a backward linkage.
- T-Shirt
- Polo Shirt
- Tank Top
- Vest
3.1.2 Cosmetics and Toiletries products:
Keya Cosmetics Ltd., a reputed name in the cosmetics & toiletries products manufacturing & selling sector in the country. Keeping all our efforts concentrated upon product development, quality control and standardization, a philosophy of continuous improvement at all units. All our products are derived through rigorous research and each of them is incorporated with globally recognized quality norms. That’s why, clients from all over the world rely upon us as a brand synonymous to trust, reliability and innovative products. Products overview are presenting below:
Products of Keya Cosmetic:
|
3.2 Production Capacity :
3.2.1 Garments Production Capability
(i) Knitting Department :
Knitting Capacity: 1950 M.Tons/Month.
Single Jersey, S/Lacoste, Double Lacoste, Rib, Interlock, etc.
Flat Knit Collar Knitting capacity: 210,000 Pcs/Month.
(Machine List is enclosed)
(ii) Dyeing & Finishing Department:
Dyeing & Finishing capacity: 1650 M.Tons/Month.
(Machine List is enclosed)
(iii) Garments Division:
Total Nos. of Lines: 95 (Ninety Five)
Production Capacity: 7 Million Pcs/Month.
(Machine List are enclosed)
3.2.2 Cosmetics and Toiletries Items Production Capability:
- Beauty Soap———————–375000 PCS/Day
- Laundry Soap———————-450000 PCS/Day
- Detergent—————————–4 TONS/Day
- Tooth Paste—————————10000 PCS/Day
- Shaving Cream————————8000 PCS/Day
3.2.3 List of Machineries:
| Knitting Machine Profile: |
| Type of Fabrics | Dia | Gauge | Qty Sets | Production Capacity (Kgs.) Per Machine | Total Production Per Day (Kgs.) | Brand | Origin |
| 1×1, 2×2 With Lycra Rib | 18 | 16 | 2 | 120×2 | 240 | Keumyong | Korea |
| 1×1, 2×2 With Lycra Rib | 30 | 18/14 | 2 | 210×2 | 420 | Fukahama | Taiwan |
| 1×1, 2×2 With Lycra Rib | 32 | 18 | 4 | 210×4 | 840 | Fukahama Mayer | Taiwan Germany |
| 1×1, 2×2 With Lycra Rib | 34 | 18 | 4 | 220×4 | 880 | Fukahama Mayer | Taiwan Germany |
| 1×1, 2×2 With Lycra Rib | 36 | 18 | 4 | 230×4 | 920 | Fukahama Mayer | Taiwan Germany |
| 1×1, 2×2 With Lycra Rib | 25 | 18 | 1 | 200×1 | 200 | Mayer | Germany |
| 17 | 3500 | ||||||
| Flat Knit Normal Design Collar & Cuff | 14 | 10 | 500×10 | 5000 | Matsuya | Japan |
|
Sewing Machine Profile: |
||||
| Machine Details | Type | Total | Country of Origin | |
| Plain Machine | 505 | Japan & Malaysia | ||
| Flat lock | Flat Bed(Hem) | 86 | Japan, Singapur & Malaysia | |
| Flat Lock | Flat Bed(Tape Binding) | 96 | Japan, Singapur & Malaysia | |
| Flat Lock | Cylinder Bed | 185 | Japan, Singapur & Malaysia | |
| Over Lock | 4 Thread | 715 | Japan, Singapur & Malaysia | |
| Flat Lock | 2 Niddle Chain Stitch Feet of the Arm | 101 | Japan, Singapur & Malaysia | |
| Febric Trimmer (Dust Drum) | 10 | Japan, Singapur & Malaysia | ||
| Button Hole | 8 | Japan & Malaysia | ||
| Button Stich | 8 | Japan & Malaysia | ||
| Rib Cutting | 32 | TSSM (Taiwan) | ||
| Cutting Machine | 32 | USA | ||
| Thread Re- Winding | 6 | China | ||
| Vacuming Table | 243 | Indonesia | ||
| Kawakamp | 1 | Japan | ||
| Mini Compact Press | 6 | Taiwan | ||
| Stam Iron | 324 | Japan | ||
| Movable Heat Transfer Machine | 6 | Bangladesh | ||
| Padprinting Machine | 10 | Japan | ||
| Total | 2374 | |||
| Dyeing Section: | |||||||
| Machine Type | One Time Loading Capacity in Kgs. | Quantity (Sets) | Total One Time Loading Capacity in Kgs. | Brand/Country Of Origin | |||
| Vertical Winch (Computerized) | 200 | 3 | 600 | Fongs (China) | |||
| 400 | 3 | 1,200 | Fongs (China) | ||||
| 400 | 1 | 400 | Fongs (China) High Temp. | ||||
| 600 | 1 | 600 | Fongs (China) High Temp. | ||||
| 600 | 3 | 1,800 | Fongs (China) | ||||
| 800 | 4 | 3,200 | Fongs (China) | ||||
| 1,200 | 4 | 4,800 | Fongs (China) | ||||
| 1,600 | 3 | 4,800 | Fongs (China) | ||||
| 2,400 | 1 | 2,400 | Fongs (China) | ||||
| 23 | 19,800 | ||||||
| Sample Winch (Computerized) | 30 | 1 | 30 | Fongs (China) | |||
| 60 | 1 | 60 | Fongs (China) | ||||
| 60 | 1 | 60 | Fongs (China) | ||||
| 20 | 1 | 20 | Fongs (China) | ||||
| 30 | 1 | 30 | Fongs (China) | ||||
| 60 | 1 | 60 | Fongs (China) | ||||
| 6 | 260 | ||||||
| Vartical Winch (Semi Auto) | 300 | 2 | 600 | Korian | |||
| 400 | 2 | 800 | Korian | ||||
| 1,000 | 3 | 3,000 | Korian | ||||
| 7 | 4,400 | ||||||
| Finishing Section: | |||||||
| Machine Type | Production Capacity Per Day (Kgs.) | Quantity (Sets) | Total Production Capacity Per Day (Kgs.) | Brand/Country Of Origin | |||
| Squeezer | 8,000 | 6 | 48,000 | Akab (Sweden) | |||
| Wet Calender | 3,000 | 1 | 3,000 | Heliot (France) | |||
| Dryer | 9,000 | 5 | 45,000 | Fongs (Korea), Askme(Taiwan) L.K (Taiwan),Heliot(France) | |||
| Tube- Tex | 6,000 | 8 | 48,000 | USA | |||
| Stenter (Slitting) | 7,000 | 2 | 14,000 | Bruckner (Germany) | |||
| Boiler | 11,000 | 5 | 55,000 | LC (Taiwan), Loos (Germany) | |||
| Water Treatment Plant: | ||||||
| Machine Type | Production Capacity Per Hour | Quantity (Sets) | Brand/Country Of Origin | |||
| WTP-01, WTP-02, WTP-03, WTP-04, WTP-05,WTP-06 | 100 m3/h | 6 | India | |||
| ETP-01 | 4000m3/day | 1 | Italy | |||
| Lab-Machine Profile: | ||||||
| Machine Type | Total Quantity (Pcs.) | Machine Details | ||||
| Lab Machine | 5 | Ahiba (USA) | ||||
| Light Box | 4 | Verivide (England) | ||||
| PH’ Meter | 4 | Germany | ||||
| Crockmaster | 2 | Crockmaster (James H. Heal & Co. Ltd.) England | ||||
| Wash fastness | 1 | Gyrowash (James H. Heal & Co. Ltd.) England | ||||
| Washing | 1 | Wascator (James H. Heal & Co. Ltd.) England | ||||
| Washing | 1 | Wirlpool (Heavy Duty Series 8 ) U.S.A | ||||
| Tumbler Dryer | 1 | Zanussi (England) | ||||
| Tumbler Dryer | 1 | Wirlpool U.S.A | ||||
| Datacolor | 4 | Spectro Photometer 600 (USA) | ||||
| Woven | 1 | Binder Germany | ||||
| INCUBATURWoven | 3 | James .H.Heal & co England | ||||
| True Brust | 1 | James .H.Heal & co England | ||||
| Random Tumble Pilling Tester | 2 | James .H.Heal & co England | ||||
| Therma plate | 1 | James .H.Heal & co England | ||||
| Perspirometer | 1 | James .H.Heal & co England | ||||
| Orbitor Pilling & Snagging Tester | 1 | James .H.Heal & co England | ||||
| Pilling assesment viewer | 1 | James .H.Heal & co England | ||||
3.2.4 Value Chain of Khaleque Group:
The following value chain of the companies belonged to the Khaleque Group.
Exhibit: Value Chain of Textile Companies belonged to Khaleque Group
3.2.5 Functional Departments for Export and Import Analysis of KGI :
All the functions of Merchandising Inc. are operated under four major departments:
- Merchandising department.
- Sampling department.
- Commercial department.
- Accessory supply department.
- Production department.
- Distribution department.
(i) Merchandising Department:
This department of M. Inc. is responsible for the following activities:
(a) Searching buyers:
The task of this department started with the searches of buyers, who want to import garment products from our country, to get the order of the garment product manufacturing.
(b) Introduce letter:
After finding suitable buyers this department issues an introducing letter to the respective buyers which describes M. Inc.’s total years of experience, its parameter of total activities, efficiency and effectiveness and relationship with existing buyers.
(c) Cost of Making:
CM is another important activity that stands for Cost of Making. Here the merchandiser of this dept. determines what things are required to make a unit or dozen of an order. Then he makes calculation of per unit cost on the basis of accessories consumption, fabric consumption, labor cost and other relevant costs.
(d) Price negotiation:
When this department has the clear idea about the cost involved in the desired transaction, they start price negotiation to determine a final price that the buyer agrees to pay.
(e) Select supplier:
Merchandising department recognizes the effectiveness of their commitment to buyers and there by it shoulders the responsibility of finding out efficient buyers. The bases of efficiency include supplier’s adequate administrative setup to prepare all necessary documents for exports, supplier’s financial status and adequate capacities etc.
(ii) Sampling Department:
It starts its activities after receiving the original sample or sketch sample from the buyer with an intention to testify the capability of M. Inc. to meet the desired standard of the products. Two people contribute towards the efficiency of sampling dept. They are sampling man and pattern master of M. Inc.
(iii) Commercial Department:
The commercial department of M. Inc prepares pro-forma invoice for the respective buyer. The invoice includes the quantity of the buyer’s order, its unit price and total price. The commercial department also transfers master L/C on the name of selected supplier. This department also maintains all clerical activities such as maintaining the accounts of daily transaction, maintaining payroll, keeping the accounts of daily expenditure etc.
(iv) Accessory supply department:
For a smooth manufacturing, the assurance of on time delivery of fabric and accessories is must. The responsibility of supplying accessories to the suppliers lands on this department. To assure this supply, Merchandising Inc. utilizes two sources. One is its sister concern FM. Printing and Packaging Company. Another is the outsourcing from its suppliers of long term relationship. As a result the manufacturer doesn’t need to be worried about the availability of accessories.
(v) Production Department:
Although named as production department, this service department rather follows up production, dividing its activities into following sections of Responsibilities, Quality monitor and control. This dept. supervises the manufacturing process to maintain the quality and scheduled progress of the manufacturing on behalf of Merchandising Incorporation.
Final Inspection: For its reputation, buyers usually delegate the responsibility of final inspection on the shoulder of quality Inspector of Merchandising Incorporation. The efficient inspection is the responsibility of the quality Inspector of Merchandising Inc.
(vi) Distribution Department:
As the name mentions the task of shipping department of M. Inc starts with receipt of final goods from the supplier factory after the final inspection and ends with loading of the goods bound for supplier. This department also prepares the supporting documents for export such as bill of exchange, bill of lading, commercial invoice, certificate of origin, packing list etc.
3.5 Export Import Analysis:
3.5.1 Export Analysis:
The year 2008-09 became an economic crisis spanning the world and unparalleled in history. When the year came to a conclusion, there was no end in sight. Economic uncertainty prevails throughout the year. We at Keya have responsibility to grow. Instead of saying that there are only few ways left for surviving but also continuing to live profitably despite this economic uncertainty. We owe our stability to the strategy.
(i) Export Analysis of Cosmetics & Toiletries Items:
Our 100% Halal Beauty Soap of International Standard (TFM 80%) has earned wide fame at home and abroad. We are making substantial export in the country of India, Bhutan, Pakistan, Italy, KSA, UK, Djibouti, Mali, Chad, Senegal and etc. Our products are also in high demand in the Middle East.
Due to relentless efforts standard by the management and marketing professional, the volume of sales increased in export sales.
(ii) Export Sales of Cosmetics & Toiletries Items:
| Sales Revenue (Tk.) | 2008-09 | 2007-08 | 2006-07 | 2005-06 |
| Export Sale | 135,397,055 | 114,817,326 | 106,172,510 | 113,541,230 |
Fig: Last four years export performance of Cosmetics & Toiletries Item
(iii) Export Analysis of Knit Garments products:
Khaleque Group of Industries is a leading manufacturer and exporter of Knit Garments products with 3 spinning mills as a backward linkage. The above mentioned value chain chart depicts that presently total daily capacity of two knit composite units is 80 MT, whereas the daily capacity of three spinning units is 78.4 MT yarn, which can fulfill 98% of total yarn requirement.
(iv)List of Present Buyers:
- Hanes Brands Inc,Brasil
- Hanes Brands Europe GmbH, Germany
- Anvil Knitwear Inc. Newyork,USA
- Roochi. Traders Inc, USA
- Solo Invest, Paris.
(v) Export Sales of Knit Garments products:
| Year | Export Quantity | Export Value($) | Export Value(TK) |
| 2009 | 46,933,640 | $41,886,245.80 | 2,865,019,212.72 |
| 2008 | 73,339,853 | $70,030,122.11 | 4,790,060,352.32 |
| 2007 | 40,742,044 | $40,439,546.93 | 2,766,065,010.01 |
Fig: Last three years export performance of Knit Garments products.
3.5.2 Import Analysis:
KGI is a 100% export oriented Knit Garments products manufacturing company. They mainly produce Yarn and export it to fabrics manufacturing company and fabrics manufacturing company exports it to garment industry through Back to Back L/C. Garment industry exports this fabrics against master L/C after certain process in this sense. KGI is an exporter of garments products but in the commercial term these kinds of exporters are called deem exporter. As the main job of KGI is manufacturing and exporting of Yarn so they need some raw materials and axillaries to manufacture this product. Main raw materials of KGI are various types of raw cotton. As KGI is a vertical integrated company so they have forward and backward linkage facility. They have fabrics manufacturing company and garments manufacturing company. Keya Knit Composit Ltd. gets 100% L/C from their own Garment Industry and Khaleque Group of Industries gets 60% L/C from their own company.
(i) Import:
As the main raw material of Keya Yarn Mills Ltd. is raw cotton, so they procure their raw materials under two ways:
- Local Import
- Foreign Import
(a) Local Import:
As KGI is one of the largest finest yarn manufacturing companies of Bangladesh, they need various types of raw cotton. But we cannot produce high quality of raw cotton in our country. So we are 100% depended on imported cotton, so KGI’s local import is Nil.
(b) Foreign Import:
As we know that to produce high quality of yarn, need high quality of raw cotton. High quality of raw cotton means which cotton exists length fiber is long and fibers are matured. To produce high quality of raw cotton, mainly need favorable weather condition but we do not have that. So ultimately we are fully depended on imported raw cotton for our textile mills. KGI mainly procures central Asia’s cotton. Uzbekistan’s, Turkmenistan’s, Kazakhstan’s and Tajikistan’s raw cotton as per their buyers satisfaction. Though the price of central Asia’s raw cotton are higher than the others cotton. Sonali Textiles also procure raw cotton from Zimbabwe, Syria, USA, India, West Africa, Indonesia, Thailand etc. through cash L/C.
Chapter 04
4. Bottlenecks Retarding Export and Import Operation
This vital and vibrant export oriented industry has been facing some problems from local forces, which may be termed as weaknesses (or the Nation’s weakness) and some problems caused by forces beyond our geographical/political boundary, which may be termed as threats to our industry. The Readymade Garment Industry is already 20 years old but during the last two decades no planned, fruitful policy to build up a backward linkage textile industry to feed the RMG industry has been taken by the authorities. Even the existing textile industries are not capable of producing high standard fabrics to offset the foreign ones from the market. Shortage of capital, necessary to develop local sources for quality raw cotton, is a major weakness.
The reason behind the shortage of capital, however, can be attributed to the socio economic condition of the country; enabling foreign direct investment could however, compensate for this. Furthermore, although the Government has responded to the RMG industry’s request for devaluation of the local currency- the Taka from time to time, it has failed to decrease the current rate of interest. At the same time, our financial policy measures are not sufficient to attract entrepreneurs to invest in the textile industry. Anomalies in the banking sector, problems at the port, vindictive political environment, bureaucratic shackles, electricity crisis and currency adjustment policy pursued by the country and the lack of some policy support from the government to sustain the country’s falling competitiveness against its competitors in the international market are other serious weaknesses. Without ‘miscellaneous’ expenditures, no file is moved, no UC is cashed, no imported raw materials are released. There are many eager hands in the public service agencies that the industries have to fill with ready cash. Without this practice no job can be done timely. The public service agencies work very slowly and ‘speed’ money becomes the only solution to hasten the procedure. This is however done increasing by miscellaneous expenditures.
The raw materials the industry imports, say within 7 days, take an additional 15 days to reach warehouses from the Chittagong port. About 54 formalities (with miscellaneous expenditure) have to be observed to release a shipment of raw materials. These formalities increased the industry’s lead-time against overseas competitors.
The weaknesses, which have been mentioned above, could be classified into the following categories:
- Unstable political environment and unfavorable law and order.
- Insufficient development of political measures for the RMG sector.
- Inadequate financial measures.
- Infrastructural bottlenecks.
- Inefficient service support.
- Inappropriate development management and institutional initiatives.
4.1 Unstable Political Environment and Law and Order:
4.1.1 Political Instability:
Due to the last non-cooperation movement in 1995-96, the industry suffered a loss of about Tk. 4,500 crore (Tk. 45 billion) and about 300 factories were forced to take loans of over Tk.200 crore (Tk. 2 billion). Due to Hartal (general strike) and other such political programs such as order cancellations and stock-lot gluts arose in the ready-made garment industry. Banks started showing its reluctance to open L/Cs. Ultimately many affected factories were on the verge of winding-up and declaring bankruptcy. The export oriented garment industry bore production losses equivalent to Tk 6-9 crore (Tk. 60-90 million) per hour. During the period of Caretaker Govt, the country went through emergency period. In the interest of 1.5 million workers and owners of over 3000 garment factories, the political differences should be solved politically in the parliament.
4.1.2 Unfavorable Law and Order Situation:
The disrupting law and order situation is another heavy constraint which hinders not only the development of the national economy but also the development of the export-oriented RMG sector. Due to the depreciating law and order situation, the interest of both the employers and the employees are being affected. In this relation it should be mentioned that the Factories’ Act and Labor Laws of the country are old and do not support the development of the export-oriented RMG sector. The changed environment must be reviewed and in this process interested and involved parties should be integrated.
4.2 Infrastructural Bottlenecks:
4.2.1 Port Congestion and Crisis:
Due to unchecked interest by a section of politicized dock laborers, the Chittagong Port has remained closed for about 30 days during the last three years. Go-slow and congestion are chronic problems. Chittagong port being the largest seaport in the country contributes to 80% of import and 75% of export of the total international trade. As the normal activities in export and import are hampered due to the complexity created by various reasons like dock labor unionism, go slow principle, strike etc. usage of the seaport traders has been disturbed and declining. This is definitely influencing the national economy negatively. The Garment Exporters and Garment Input Importers have been facing problems in export and import for years. It is worth mentioning that due to delay in unloading of raw materials for the Garment Industry, it is not possible for the entrepreneurs to produce the garments within the Letter of Credit (L/C) period. Thus the L/C becomes invalid and the exporters face great financial loss. Consequently, buyers are losing interest in trade with Bangladesh. Moreover the entrepreneurs have to take the responsibilities of the loss on their own shoulders. A large number of garment factories are classified as sick as they have been unable to recover from the stock-lot problem, which is also one of the causes for bottlenecks in the port area. Heavy congestion in the Chittagong port has been prevailing for the last four years. This congestion affects the normal activities of the port. Loading and unloading of goods are always delayed and ships remain in the outer anchorage for long periods of time. As a result, port utility has been lessened which is also damaging the reputation and image of the port internationally. The handling equipment at the port is insufficient to cope with the rising volume of the export-import business from the garment industry and other export oriented industries. The country should start setting up new jetties immediately to increase the loading and unloading capacity of the Chittagong Port because an average size jetty takes about 4 years to be set up. The port is taken hostage by a handful of people for their egotistic interest, posing a serious threat to the export-trade of the country. The government should play a stronger role in addressing the port crises. Handing over port activities to private sector enterprises perhaps can ensure a sustainable solution.
4.2.2 Frequent Interruption in Energy Supply:
For the last two years the electricity crisis has been unparalleled. To better describe the situation it would be safe to say that the power grid has been at its peak capacity for the last decade or two. A survey in the RMG sector in May 1997, indicated that in Jan-May 1997, the RMG sector had already suffered losses in excess of Tk.1700 crore (Tk.17 billion). Presently on an average, we are losing production worth about US$ 1.6 million per day (or US$ 46.4 million per month or US$ 561.6 million per year) just owing to the electricity crisis alone. For obvious reasons the chain-effect is more serious. RMG production could be increased by 10-15 % if reliable power supply was available.
4.2.3 Congestion in Road and Railway Communication and Traffic Jam:
A good transport system is a prerequisite for economic development. A lack of it creates road congestion, as a result it may take a longer time to get imported raw materials from the port and transport the finished products to the port from the factory. It also causes additional transport cost. A congestion-free road and rail communication, especially between Dhaka and Chittagong, linking the garment industry is vital for further development of the export-oriented RMG sector.
4.3 Problems and Corruptions of Chittagong Port
Chittagong Port is considered the heart of the economy of Bangladesh. The geographical location of this port creates the opportunity of easy and cost-effective foreign trade to be carried out through this port with all the South Asian countries as well as other Asian countries.