PROBLEM STATEMENT

Picture: Opex and Sinha Textile Group, once one of the largest garment manufacturing
conglomerates in Asia, shut down its factories

Opex & Sinha Textile Group, once one of Asia's largest garment and textile makers, has
decided to close big operations at Kanchpur, Narayanganj from October 2019 following a
reduction of work orders and financial losses. The group's chairman, Anisur Rahman Sinha had
been trying to run the factories even after incurring losses since 2012. He even sold land and
other properties to pay workers' salaries so that production continued smoothly. But he gave up
due to financial losses, a reduction of work orders in the severe fallout of the Covid-19, workers'
indiscipline and lower efficiency. The group was set up in 1984 and gradually expanded on 43
acres of land in Kanchpur, some 20 kilometres away from Dhaka. There had been regular labour
unrest in the factories for many years and the fallout of the Covid-19 ushered the closure as the
management was struggling to make any profit. The group had been paying workers some
additional benefits like attendance and performance bonuses and light meal allowance but could
 not continue providing all during the pandemic for incurring losses.This led to workers starting
protests and abstaining from work at a time when all efforts should have been on recovery from
the pandemic's fallout. The management will need Tk 45 crore to Tk 50 crore to complete paying
workers and staff. Gas crisis, regular air shipments due to production delays,work order
cancellations during the pandemic's peak last year,payment delays by international retailers and
brands and regular labour unrest and disturbance in production.

These were few of the major factors for the shutdown.

Anisur Rahman Sinha, chairman of Opex & Sinha Textile Group, told “I have invested a lot.”
Although the infrastructure is very strong, in the current situation, like everyone else, our
business is going bad.He said that people’s attitude towards spending money has changed,
adding that there was a culture of wearing good clothes before, but now that culture is changing.
Now people’s spending habits on technology products, especially electronics products, have
increased. In other words, people have reduced the cost of buying clothes. Even after that we had
nothing to fear. Bangladesh’s garment industry could have returned to its previous state if covid
had not come and pushed. Corona has made a lot of things uncertain. The economy has been
severely affected. We must survive in this time.

About the factory lay-off, Anisur Rahman Sinha said, “Not everything, only a few people have
fallen into the lay-off.” If there are ten lines, the lay-off is done only if there is less work in two
lines.

Sources in the industry say that over the years, the Opex and Sinha textile group’s factories have
been experiencing frequent problems. The workers used to put pressure on the authorities with
various unreasonable demands. Although not mentioned in the law, Anisur Rahman Sinha was
forced to give various benefits. This has made the financial situation of his organization worse.
Now it is not possible to keep such a large production capacity fully operational. For Anisur
Rahman Sinha, empire has now become a burden. It is not possible for him to bear this burden.
Intoxicated with work, he undertook one expansion project after another. But now they are the
cause of his frustration. He can’t find a way to get rid of the burden in any way. His back is also
working. For this reason, the implementation of the plan to move to the only child in the UK is
repeatedly delayed.

Multiple factors are responsible for the shutdown of such old and good factories.They include a
gas crisis, regular air shipments due to production delays, work order cancellations during the
pandemic's peak last year, payment delays by international retailers and brands and regular
labour unrest and disturbance in production.

Anisur Rahman Sinha opened a business office across the borders of the country. Opex & Sinha
Textiles also has offices in the United Kingdom, Hong Kong, China, Germany and the United
States. The UK has a liaison office called Opex Fashion Limited. The company was launched in
May 2010. He started the office with the aim of coordinating and expanding the work of all the
big buyers in the world. His only child Tanzia Sinha is the chief executive. Opex Fashion UK
claims that more than 140 factories in China and India, including Bangladesh, are used as
production areas of Opex Fashion UK.

Large production capacity had caused major problems for the Opex and Sinha Group. Sources
said that in order to use the full capacity of the units of Opex and Sinha Textile Group in
Kanchpur, at least 1 to 1.5 crore pieces of garments would have to be made per month. But this
big investment would not be a problem if there was work.

Opex & Sinha Textile Group had many problems in the past but they were evident in the
aftermath of the Rana Plaza collapse. The Accord Accord and the Alliance, which are engaged in
factory evaluations, inadvertently further clouded the situation with building defects in Sinha’s
factory units. Many big buyers used to work for Opex and Sinha. They begin to turn their backs
on the violence of the Accord-Alliance. In addition to canceling huge orders, many products are
stored in his factory.

Recurrent workers agitations on various pretexts, risking the company by providing additional
benefits to workers going beyond the labour law, the founder's failure to create a worthy
successor to run his business, issues created with regard to Accord and Alliance visits to factories
and the subsequent leaving of some buyers, and latest fall in work orders amid the coronavirus
pandemic.

At present, Anisur Rahman Sinha’s business has been made more difficult by debt liability.
There were no large-scale bank loans before the Rana Plaza collapse, his bank debt has
increased. Although it still has the capacity to take export orders, it is not possible without the
cooperation of the bank. In this situation, the businessman has continued to try to restructure the
classified loans.

The owner wants to open the closed factory. But it is not possible in the financial crisis.

Anisur Rahman Sinha had taken the initiative to sell the group he had formed more than once.
Some other companies, including Reliance of India, have also examined the possibility of buying
it. But the amount of investment becomes much larger with debt. And Mr. Anisur Rahman also
does not want to leave at a lower price. That is why the buyer of such a big project could not be
found even after trying.

The mismanagement of the manpower Mr. Anisur Rahman has employed in the management of
the factory is also one of the major causes of the present misery.

Both capital-intensive and labour-intensive investments in one place, creating excessive capacity,
and mismanagement in running factories are deemed by industry insiders as the major reasons
that have culminated in the shutting down of all garment units of Opex Group at Kanchpur,
Narayanganj.
One of the biggest mistakes that Anisur Rahman made was that he concentrated both labour-
intensive and capital-intensive investments in one place.

After the Tazreen Fashion and Rana Plaza incidents, Accord and Alliance started inspecting
factories in the country. Anisur Rahman's disagreements with them put pressure on foreign
brands not to do business with his companies."

Once one or two large buyers stopped doing business with the company, other buyers also started
to follow suit, "And this is what dealt the biggest blow to Opex Group."

Again, unlike most other entrepreneurs in the country's apparel sector Anisur Rahman Sinha,
who is now in his 80s, could not create a worthy heir to run his businesses. His only daughter
lives in London. She occasionally comes to the country to look after the businesses but is yet to
adapt.

His brother, Arifur Rahman Sinha owns Medler Apparels Ltd. He has investments in the power
sector as well. He is busy looking after his own businesses, said the BGMEA leader.

Non-cooperation from banks. Banks were not helping the Opex Group.

Lessons for Entrepreneurs

overcapacity poses a risk to a factory itself as well as for the entire sector.

The decision to keep capital and labor intensive investments in the same place has proved to be
wrong, at least in the context of Bangladesh.

The location of the factory has also become important. If you cannot decide who will run the
business in your absence, it will not be a wise decision to make the business bigger.

The group had been paying workers some additional benefits like attendance and performance
bonuses and light meal allowance but could not continue providing all during the pandemic for
incurring losses. SO workers started protests and abstaining from work at a time when all efforts
should have been on recovery from the pandemic's fallout.

The management will need Tk 45 crore to Tk 50 crore to complete paying workers and staff, Mr.
Sinha had been trying to run the factories even after incurring losses since 2012. He even sold
land and other properties to pay workers' salaries so that production continued smoothly.

Mr. Sinha gave up due to financial losses, a reduction of work orders in the severe fallout of the
Covid-19, workers' indiscipline and lower efficiency.

A big group is very painful for any garment industry, it was really difficult for the group
chairman to manage such a large number of workers.
 The Kanchpur factories had as many as 45,000 workers even a few years ago but it was down to
12,000 when the closure was announced.

Imprudence, mishandling behind Opex Sinha’s fall because Mr. Anisur Rahman Sinha tried to
control everything, but failed to control anything.

High-flying ambition and imprudence, coupled with mismanagement and the pandemic shock,
led to the downfall of Opex Sinha, once one of the largest garment manufacturing conglomerates
in Asia.

The factory was shut for a long period during the Covid-19 outbreak. The authorities failed to
pay wages, triggering workers’ demonstrations,” a security guard said.

The Opex group said that when Rana Plaza collapsed Accord and Alliance came to Bangladesh
and started factory visits. When they visited Opex’s factories, they placed a lot of
recommendations for improving factory safety.

The Business Post that Opex was bound to invest more than Tk 1 billion to meet the
recommended standards of Accord and Alliance. “But at the same time buyers stopped placing
new orders, putting the company in a bind,”.

The buyer alliances found some safety issues at the Opex group and started to turn away from it.
A huge amount of work order had been cancelled. It is one of the main reasons of fall behind of
Sinha as well as Opex.

The buyers had “betrayed” Mr. Sinha. “His losses mounted as buyers turned away from him,”.

Overcapacity as one of the major reasons for the Opex’s fall.

One of Sinha’s acquaintances said Sinha did not trust anyone properly.

He tried to control everything and in the end, could not control anything. Sinha spent on some
unnecessary sectors. His bank liabilities increased but he did not pay heed. He realised how bad
his situation was once banks stopped supporting him but that it was too late by then.

The inefficiency and corruption of his mid and top-level employees was one of the biggest
reasons for the fall.

Sinha as a dreamer. Many new entrepreneurs became garment owner with Sinha’s help. But now
he has lost everything. He failed to pay his workers in time, all of the garments units are now
closed and he has huge bank liabilities.

He was pessimistic. He did not confirm whether he will continue his business or not.
Mr. Sinha expanded his business without any plan. His high ambitions cause him to fall from the
apex.

Opex’s production capacity was much high and to meet its demand, he occasionally had to
export goods at a lower production cost. He was highly dependent on buyers.