Interviewed by Syed Md. Rakeen, Team MBR

With over 20 years of experience at the largest and leading industrial conglomerate in the steel industry, Bangladesh Steel Re-Rolling Mills (BSRM) Limited, Mr. Shekhar Ranjan Kar FCA has established himself as one of the most prominent faces in the steel industry. He is a Fellow Chartered Accountant (FCA) of The Institute of Chartered Accountants of Bangladesh (ICAB) and his instrumental role in the department of finance and accounts of BSRM has led him to become unparalleled in this arena. He is currently working as the Group CFO and Company Secretary at BSRM. Team MBR was in conversation with Mr. Shekhar Ranjan Kar FCA and was fortunate enough to receive his take on the current challenges of the steel industry.

Syed Md. Rakeen: Steel plays an instrumental role in Bangladesh’s current development and megaprojects while supporting industries such as heavy engineering, energy, transportation, and construction by providing required steel products. From your perspective, how has the demand for steel evolved in Bangladesh over the last decade?

Shekhar Ranjan Kar FCA: When we talk about steel, the name of BSRM pops up at the top of our mind. Even though BSRM started its journey in 1952, the steel industry gained momentum in Bangladesh in the early 1990s. The steel demand evolved over the last decades primarily due to private sector investment, individual investment in urban and rural areas, as well as investment in government mega projects like Rooppur Nuclear Power plant, Padma Bridge, Padma Rail Link, Bangabandhu tunnel, MRT, 100 Economic Zones and various power projects, etc. Many big projects will be implemented in the public sector and continue for the next 15-20 years to support heavy engineering, energy, and transportation sectors, leading to enhanced steel production.

Syed Md. Rakeen: Currently, the government is planning to carry out a dozen mega projects with the majority of construction materials sourced locally as opposed to imports. In your opinion, which factors have played an influential role in the increasing contribution of local companies for raw materials?

Shekhar Ranjan Kar FCA: The private sectors are fully established with the capacity to meet the market demand for quality steel. We cannot produce specific steel sizes in our mills, and only this part is being imported, which is minimal in terms of percentage. Further, local products’ quality is comparable to any other products as we meet all quality standards with full compliance. Apart from our BSTI American Society for Testing Materials (ASTM) consists of certain steel standards that are pivotal to classifying, evaluating, and specifying the material, chemical, mechanical, and metallurgical properties depending on the different types of steel. We follow all the standards for quality steel production in the country. By establishing mega steel mills, Bangladesh has created jobs by promoting a competitive business environment, increasing human capital, building a skilled labor force, building efficient infrastructure, and saving substantial foreign currencies while contributing to the government exchequer.

Syed Md. Rakeen: According to the World Steel Association, the per capita steel consumption in Bangladesh stood at around 43kg in 2022, while the likes of India and China consumed 81kg and 645 kg, respectively, during the same period. Would you kindly address the areas where Bangladesh currently lags behind its South Asian counterparts when it comes to steel consumption?

Shekhar Ranjan Kar FCA: Per capita steel consumption is a significant indicator of a country’s development. Steel consumption is closely aligned with a country’s economic growth. The per capita steel consumption was 45kg in 2020, dropping to 43 kg in 2022 which is vastly post- COVID and the Ukraine war. However, the rapid modernization of our economy, construction, infrastructure and manufacturing industries will support increasing the steel consumption in Bangladesh. Further, more new mega projects and construction works of economic zones will be started from next year to achieve its vision of attaining upper middle- income status by 2031.

Syed Md. Rakeen: The steel industry is closely associated with environmental concerns such as water pollution, air pollution, and carbon dioxide emissions. In your opinion, which new technologies can be integrated to reduce the adverse effects of steel manufacturing on the environment?

Shekhar Ranjan Kar FCA: By installing pollution control equipment, we can capture and treat pollutants emitted from the production processes of steel industries, reducing the amount of pollutants released into the environment. Water pollution can be addressed by ensuring zero discharge of processed water before treatment. Carbon dioxide emission can be controlled by consuming less power per ton of crude steel produced which can be attainable by making the process more efficient. In BSRM we use different measures to keep our water and air vis-à-vis the environment clean.

Syed Md. Rakeen: Bangladesh currently exports steel to various countries, largely due to facilities like economic zones and the availability of workforces. In your opinion, how can Bangladesh enhance its competitiveness in this sector in the context of exports?

Shekhar Ranjan Kar FCA: At present, Bangladesh exports a small portion of steel products to seven sister states of India. Furthermore, we export a part of the bi-products of steel to China and Indonesia. To increase the competitiveness of exports, the government can increase the export benefits and infrastructural facilities in the ports for the steel industry which will enhance export and foreign currency for our country.

Syed Md. Rakeen: As reported by the Business Standard, almost 80–90% of the raw materials required for steel rod manufacturing are sourced from the ship-breaking industry. How can Bangladesh reduce its dependency on raw materials for manufacturing steel rods from the ship-breaking industry?

Shekhar Ranjan Kar FCA: Above 90% of the raw materials of steel mills in Bangladesh are sourced from overseas. About 5%-10% of the scrap can be procured from the shipbreaking industry. So steel industries are not dependent on the shipbreaking industry. However, non-graded mills are using plates generated from ship-breaking industries.

Syed Md. Rakeen: The steel industry endured difficult times during COVID-19 and the Russia-Ukraine war owing to the oil and gas crisis, disruptions in electricity, raw material shortages, and the dollar crisis. From your perspective, how can the steel industry navigate through the current challenges and expedite its growth in this sector?

Shekhar Ranjan Kar FCA: Though all industries faced supply chain and production disruption during COVID-19, the manufacturing sectors ultimately performed well during that time, barring some exceptions like the tourist industry, which suffered a lot for long periods. However, the current challenges lie in opening Letter of Credit (LC), the devaluation of BDT against USD, increased gas, electricity and the cost of all other utilities. Finally, slow economic movements due to geopolitical crisis and stability have affected our country’s economy as a whole.

Syed Md. Rakeen: Do you think the policy support is adequate for the industry? What are the areas in which policymakers can work to help the industry flourish even better?

Shekhar Ranjan Kar FCA: The steel industry of Bangladesh is struggling with the burden of high minimum income taxes, which needs to be reduced. Considering the profitably of steel industries, the government should change the minimum tax procedures. Companies should not be impacted by paying income tax, which is more than the regular tax rate. Only steel and cement industries are burdened with minimum tax, collected at the import stage of raw materials. Furthermore, income tax refund is a big issue and a massive amount of capital is blocked by the government. Both the issues should be addressed by the policymakers well for the benefit of our overall economy.