From the Air, the 200-acre Beximco Industrial Park in Sarabo could belong to any developed nation—a perception that continues on the ground. There’s an executive enclave with a basketball court, a swanky gym, geese swimming languidly in a placid lake, and an enclosure with spotted deer. Move away from the industrial park, however, and the scene is vastly different. A muddy stream meanders sluggishly through paddy fields and there’s little to show that this is home to Bangladesh’s biggest conglomerate, the Beximco Group.

Ten years ago, when the Rahman brothers, Sohail and Salman, came to Sarabo near Dhaka, there was nothing but the fields and stream. “We had to get the local boys to ferry us in their boats to check out the land,” says 60-year-old Salman Rahman, Beximco Group’s vice chairman.

The progress made in the past decade has been swift; the soggy land has been drained and Beximco’s ceramics and textiles factories stand on it. Some 8,000 workers flock to the site every day to churn out bone china crockery, cloth, and jeans. The textile factories run the gamut of operations from spinning and weaving to dyeing and finishing garments.

With $834 million (Rs 3,832 crore) in revenue, 45,000 employees, and a market capitalisation of $1.7 billion on the Dhaka Stock Exchange, Beximco is Bangladesh’s largest private conglomerate with five listed companies and 23 unlisted ones that straddle aviation, textiles, pharmaceuticals, media, real estate, financial services, energy, and ceramics. The numbers might not seem impressive when compared with companies in neighbouring India and Pakistan (by revenue, it’s about the size of India’s Godrej Industries, which was ranked 185 on the Fortune India 500, and much smaller than Pakistan’s Nishat Group, which has annual revenues of $2 billion).

Bextex handles the full range of textile manufacturing operations from spinning to finishing garments.
Bextex handles the full range of textile manufacturing operations from spinning to finishing garments.

But it’s the context that makes Beximco’s growth impressive. It was born when the country was in the midst of a bloody battle for independence from Pakistan. When Bangladesh appealed for international aid in 1971, Henry Kissinger, the U.S. national security advisor to the Richard Nixon administration, then in power, famously dismissed the idea, saying “the place is, and will always be, a basket case”. A few years before, in 1966, the Rahmans’ father, Fazlur Rahman, died, leaving a small jute mill in south Dhaka to Sohail Rahman. The mill was in debt and not doing much business. From 1966 to 1971, Sohail Rahman slashed the company’s debt and increased output. He had planned to make the mill entirely export oriented when the war for independence broke out.

The violence of the early 1970s did not affect the brothers much. Their father had belonged to Pakistan’s political establishment (he was the first Bengali to enter the central cabinet, as well as Pakistan’s first commerce minister), but they wanted no part of it.

Their closest brush with the war for independence was Salman Rahman’s brief involvement in a student protest against the then Pakistani president Ayub Khan. By then, the jute mill had been put back on its feet, and might even have turned out to be a comfortably profitable family business had history been different. But upon independence in December 1971, Bangladesh nationalised the jute industry, and Rahman had to cede control of the factory in 1972. He had to wait almost a decade for the government to relax its rules and privatise some jute mills before he could get his factory back.

Not that the brothers sat back and waited for their inheritance to be returned. Soon after nationalisation, they realised that although jute was the golden fibre, they had to look elsewhere if they wanted to prosper in their new country. Staying far away from jute and allied products, the brothers set up the Bangladesh Export and Import Company—Beximco—in 1972. They started by exporting seafood, as well as crushed bones to pharmaceutical companies in Belgium, France, Britain, Germany, and the Netherlands. In turn, they imported medicines. The business proved almost instantly successful, generating an annual turnover of around $30 million.

WHAT STARTED OUT AS AN export-import company grew into Bangladesh’s biggest conglomerate—the country’s Tata Group, if you will. And as the Rahman brothers added diverse companies to the group over the years, swelling the balance sheet, Bangladesh’s GDP has kept pace, clipping along at a steady 5% to 6%. By 2010, the country’s GDP stood at $258 billion (India, which is around 24 years older, has a GDP of $1.4 trillion). It is part of the N-11—a term coined by Goldman Sachs to include 11 nations most likely to next show the kind of economic growth after the BRIC countries, and J.P. Morgan’s similar club called “Frontier Five”.

It’s also a member of Standard Chartered Bank’s “7% Club”, named after a group of countries pegged to grow at a rate of 7% for more than a decade at a stretch, starting 2010. “In itself, that’s no great shakes, but what it means is that at the end of the decade you have growth that will double,” says Samiran Chakraborty, economist and head of research for Standard Chartered Bank in Mumbai. “Its [Bangladesh’s] population is very young. The average age is 23, while it’s 29 in India.”

Bangladesh has seen its share of political turmoil, and the fallout has occasionally hurt the Rahmans. Although the brothers claim to eschew politics, they have always been involved with politicians. Sheikh Hasina Wajed, Prime Minister of Bangladesh, is the sister of the Rahmans’ childhood friend, Sheikh Kamal. In the late 1990s, Salman Rahman flirted briefly with the idea of entering politics, and even set up a political party, the Prosperous Bangladeshi Movement, in 1996. The idea was short-lived, and Rahman threw his weight behind Sheikh Hasina after her Awami League lost the 2001 general elections. He later became her advisor for private sector development when she was a leader of the Awami League.

That alliance has stood the brothers in good stead, especially after Sheikh Hasina returned to power in 2008; it always pays to know the leader of a country. “Who the biggest conglomerate is often depends on politics and who is in power,” says Abdul Matlub Ahmad, president of the India-Bangladesh Chamber of Commerce and Industry. “Today, I feel Beximco is one of the biggest and certainly the most cash rich.”

Politics is perhaps just a convenient sideshow: The Rahman brothers’ focus has always been on business. Whether by accident or design, they have split the responsibilities between them. “Salman knows and is in touch with the Prime Minister’s office, Sohail is not. Salman is always in the papers, Sohail hardly ever. Salman is member of a dozen associations. Sohail is not,” says Farookh Sobhan, former foreign secretary and now president of the Bangladesh Enterprise Institute, a think tank.

Beximco’s pharmaceuticals business (above left) and garments companies are key to the group’s portfolio.
Beximco’s pharmaceuticals business (above left) and garments companies are key to the group’s portfolio.

No matter what the political climate, one brother was always deep in the background ensuring it was business as usual. When Bangladesh became independent, it made only 10% of the medicines it consumed. The government, which did not have sufficient foreign exchange to buy pharma products globally, declared pharmaceuticals a “priority item”. Beximco, at the time, was importing pharmaceuticals from Europe, Britain, and the U.S., but realised that manufacturing drugs could be both profitable and socially useful. In 1976, the Rahmans set up Beximco Pharmaceuticals, which began operations in 1980. The company was listed on the Dhaka Stock Exchange in 1985 and, in 2005, became the first Bangladeshi company to list on London’s Alternative Investment Exchange.

Between 1980 and 2006, the brothers Rahman were on a diversification spree. Chemicals, pharma, banking, seemed there was no industry without Beximco. Happily for them, their first business, jute, was also privatised and their company reclaimed in this period. In 1982, the government under Lieutenant General H.M. Ershad opened the doors to private participation in the banking sector. Till then, Bangladesh had only four state-run banks—Rupali Bank, Janata Bank, Sonali Bank, and Agrani Bank. The Rahmans were quick to take advantage of this, and partnered with the Dubai-based Galadari Brothers Group to found the Arab Bangladesh Bank.

By 1985, the Rahmans decided to exit, and sold their stake to the remaining partners. At the same time, they bought a 30% stake in International Finance Investment and Commerce Bank (IFIC); that involvement continues today, and Salman Rahman is the chairman of this private commercial bank.

WHILE THESE VENTURES ARE no doubt profitable, Beximco’s golden goose is its textiles business, Bextex. Set up in 1984, the company began production in 1990 and was listed on the Dhaka Stock Exchange in 1992. Last year, the board of directors allowed the amalgamation of Bextex and Beximco (five shares of Bextex for one of Beximco). In the Bextex annual report for 2010, the chairman wrote that the financial benefits for the combined entity would include a 323% increase in the earnings per share. The percentage of debt is also likely to fall by around 39%.

Inside the Bextex factory at the Beximco Industrial Park, women (Rahman says they form a bulk of the workforce here because they have a better eye for intricate detail) work on finishing garments, largely jeans. The denim is woven and distressed at a nearby plant, also part of Beximco. The finished products are then shipped to buyers such as DKNY, Levi’s, Calvin Klein, and J.C. Penney. The textiles and garments industry is one of Bangladesh’s biggest money-spinners. Companies based in the U.S. and other developed markets seek to take advantage of the lower cost of labour in Bangladesh, and source the bulk of their inventory from such countries.

This kind of large-scale export (Bextex supplies 44 million garments to international buyers every year) has also led to allegations of Bangladesh’s companies encouraging sweatshops. Beximco’s closest competitor, the Square Group, has also been accused of running sweatshops. Beximco itself has been accused of paying half the minimum recommended wage and of ill-treating labourers. Company officials, however, say that this is not true. They claim that a Beximco factory hand takes home $110 a month on average; Bangladesh’s minimum monthly wage is $43. Even paying so much above the minimum wage, Beximco gets to take advantage of the labour arbitrage. Salman Rahman says this is likely to continue for some time. “It’s [labour arbitrage] a stepping stone; along the way, you can acquire skills,” he says.

One of the reasons companies such as Beximco and Square are sitting pretty is that wages in China, the world’s factory, have been going up by 17% a year, according to the Boston Consulting Group. Even after the Bangladesh government doubled the minimum wage to $43, it’s still a third of the cost in China. That’s also one of the reasons, presumably, that Beximco pays so much more than the minimum wage. Conditions inside the factory might not be comparable with those inside a similar factory in the West, but they are not as bad as often made out. The working area is not cramped, and there’s plenty of drinking water available. Fans, lights, and warning signs are found in abundance.

Salman Rahman says China is losing international textile customers because of rising prices. These customers end up coming to Bangladesh—often to Beximco. “In the next five years, I see our textile revenue trebling,” he says.

It’s not just textiles. Beximco’s ceramics factory, Shinepukur Ceramics, has seen a growth of customers. Last December, the Porsgrund porcelain factory of Norway moved all its orders to Shinepukur when a Chinese factory shut down. The Bangladeshi company had to produce Christmas plates and cups, which were in great demand abroad. “We had to load three 747 jets with these plates. At the time, we weren’t totally sure we could pull off the order,” says Rahman. But Shinepukur gave it a shot and succeeded. That’s the sort of entrepreneurial instinct that drives industrialists such as Rahman. “Here we are all first-generation businessmen,” says Sohail Rahman. He is also convinced that the country has an advantage because its population of 160 million Muslims, mostly Sunni, is culturally homogenous and, therefore, more stable than most.

STABILITY IS NOT THE WORD that comes to mind when looking at the performance of the Dhaka Stock Exchange’s benchmark index DGEN between December 2010 and January 2011. The index lost over 29% in that time, and fluctuated by as much as 10% on a single day. In Dhaka’s business circles, there are whispers of Salman Rahman having manipulated the market and engineered massive sell-offs, resulting in the crash. Salman Rahman, who is also chairman of the Bangladesh Association of Publicly Listed Companies, says these rumours are baseless. The reason for the rumours? By the mid-1990s, Beximco had acquired the stature of a giant. Its listed companies accounted for almost 20% of the Dhaka Stock Exchange. “There were fewer participants then,” says Sohail Rahman with a laugh. “Today, Beximco’s share is around 4%.” But even this vastly reduced share has the potential to destabilise the exchange.

Salman Rahman is no stranger to accusations. In 2007, the military-installed caretaker government arrested him and some 200 other industrialists and businessmen. He was in jail for a couple of years, his brother was forced to flee the country, and business suffered. The charges against the Rahmans by an anti-corruption commission included falsification of documents to obtain bank loans and possession of wealth beyond their income. That government was replaced by the Sheikh Hasina-led alliance, and in 2010, the courts dismissed all the charges against the brothers.

These shifts in political power see business interests being directly affected, with arrests, political exiles and, sometimes, assassinations. An economist in Dhaka says that a volatile political system compromises the nation’s potential. And as the country enters a phase of growth that some describe as “India, 15 years ago”, watching how Beximco is navigating its growth tells a story of new opportunities. Old economy opportunities such as textiles and pharmaceuticals are no longer interesting. It’s the new sectors such as media, hospitality, aviation, and retail that could mirror India’s growth pattern.

While Beximco’s retail garment brand ‘Yellow’ has moved beyond Bangladesh, to Pakistan, its bone china crockery is sourced by names such as Porsgrund of Norway.
While Beximco’s retail garment brand ‘Yellow’ has moved beyond Bangladesh, to Pakistan, its bone china crockery is sourced by names such as Porsgrund of Norway.

Late in 2010, India’s finance minister Pranab Mukherjee, and the then railway minister Mamata Banerjee, visited Bangladesh as part of a joint committee. This year, there’s been a flurry of visits by Indian ministers, bureaucrats, and politicians, all leading up to Prime Minister Manmohan Singh’s scheduled visit in September. The talks then will no doubt centre around mutual interests such as border security and trade policy, but for Bangladesh’s business houses, the greater concern will be how internal politics can be stabilised for longer periods of time. A Bangladeshi economist, who asked not to be named, says the country could see GDP growth of 8% every year if parties in power showed some resilience.

Sohail Rahman likens the Indo-Bangladesh relationship to that between the U.S. and Mexico. “Big brother and little brother, except that the U.S. does invest a lot in Mexico,” he says. “India is an economic giant in the subcontinent, but if it really wants to have influence in the region it has to become an engine of and for growth for its neighbours as well.”

Some of that is changing. India’s imports from Bangladesh for the first two quarters in 2010-2011 are up by 20% to $360 million from last year. In April, India increased the quota of duty-free import of garments from Bangladesh by 2 million pieces to 10 million.

The Rahmans are ethnically Bengali, but that hasn’t helped improve trade with India. “It’s easier for me to export to the U.S. than it is to India,” says Sohail Rahman. That’s why Beximco operates sales offices out of New York and Dallas. It has also invested $25 million to build a pharmaceutical inhaler plant in Jubail, Saudi Arabia, and launched two retail garment stores under its brand name ‘Yellow’ in Pakistan, with plans to go to China and the Far East.

Bangladesh adopted the global attitude early, says Imtiaz Ahmed, professor of international relations at the University of Dhaka. “Over the decades, the influence of nationalised sectors has been reduced and the state has moved closer to capitalism, despite whatever rhetoric may exist on social welfare.”

Talk to Tapan Chowdhury, managing director of the Square Group, about a global perspective in relation to his biggest competitor, Beximco, and he’ll nod. “As a group, Beximco was the first to break away from the whole family-owned management style and get into hiring multinationals to run its companies,” he says.
Beximco has 169 foreign employees from 20 countries, including India, the U.S., Spain, Italy, Colombia, Britain, and Pakistan.

BEL TOWER, BEXIMCO'S OFFICE in Dhaka’s posh Gulshan neighbourhood, is a whitewashed multistorey building with tight security. A fleet of Range Rovers, S-Class Mercedes-Benzes, and Lexuses draw attention, in a country where import duties for large engine cars can range between 500% and 1,100% and can take the price of such cars as high as BDT 14 crore (Rs 8.6 crore). That’s more than what the average Bangladeshi, with an annual income of BDT 48,000, might make in a lifetime.

On the fourth floor are ultra-modern facilities, with spotless floors, wireless computers, and conference rooms. Walls display modern art by Bangladeshi artists Munir, Kibria, and Shahabuddin—the leading artists in the country. Salman Rahman mostly operates out of his son Shayan’s office, which is designed like an ultra-modern lounge: red and black leather furniture, and a Louis Vuitton ashtray on a corner table. What dominates the room is the panel of Bang & Olufsen tower speakers and a giant flat panel TV tuned to Beximco’s latest venture—a 24-hour Bangla news channel called Independent TV.

It’s one of the first in Bangladesh that transmits in MPEG 4 compression format, is HD ready, with a tapeless workflow, all housed in a purpose-built facility. “It looks great but the needs to be tweaked a little,” says Rahman. It’s a project that Beximco pumped $10 million into, and got off the ground with the help of consultants from NDTV.

Shayan Rahman: Director, Beximco
Shayan Rahman: Director, Beximco

Shyatto Raha, CEO of NDTV Worldwide, says the group already was in the media space with a newspaper (The Independent), but with the channel, the Rahmans knew exactly what they were going after. “They wanted to set up a game changer that would be unlike anything in Bangladesh.” It’s the most technologically advanced electronic platform in Bangladesh, and most companies in India don’t have its capabilities, he adds. The long-term goal, he says, is to go global, starting with the Gulf countries.

It’s just one of the new businesses that Beximco has aggressively jumped into in recent times. Visible from a window is the mosque that Salman Rahman goes to, as is the Westin Dhaka hotel, in which Beximco picked up a 15% stake for $31 million in 2009. “It’s a pure hospitality play, as Dhaka only has three other five-star hotels,” Salman Rahman says.

In Katakhali, northern Bangladesh, Beximco’s latest venture—Northern Power—is a 50 MW furnace oil power plant that supplies energy to the government grid. “It’s what we call an IPP or independent power plant,” explains Salman Rahman, adding that as and when he does scale up, it will be with coal. In the capital, demand for power is at about 1,400 MW daily but supply is just at about 650 MW to 700 MW.

And then, there’s the airline. As late as in 1981, “you couldn’t get a ticket to fly abroad without having to go to the central bank [Bangladesh Bank] and getting permission”, says Salman Rahman. Even after permissions were made easier, there were few international carriers operating to or from Bangladesh.

Today, Beximco controls GMG Airlines, a troubled private carrier with eight planes, including two 767 jets that they snagged for $71 million (as part of an equity infusion that became a majority stake) in 2009. “Initially, we thought it’d be like a PE play. Restructure it and then have a profitable exit,” he says. But that changed after the group brought on global management consultants Bain & Co. to run the project and they saw its potential.

“Domestic growth which has potential is still limited for a group like ours that is ambitious and wants to get to the next level,” says Salman Rahman. “If you take a look at the Indian conglomerates for example, phase two for all of them shows exponential growth.”

GMG Airlines, the first private carrier in the country, for example, is one company that the family looks to expand to that end. Textile and pharmaceutical production have always been export oriented but the new businesses will feed local demand before going global.

“To achieve a global footprint, we’ll have to take our hub outside of Bangladesh,” says Shayan Rahman, director with Beximco. He says the group is in the process of looking at setting up manufacturing in the Gulf Cooperation Council countries, while maintaining Bangladesh as a base.

Meanwhile, as the country entered the month of Ramadan, the brothers charted their own paths and had their work cut out for them. Salman Rahman headed to Mecca, and his brother left for London.

On the airstrip of Dhaka’s airport, a neatly lined row of GMG’s brightly coloured jumbo jets and other planes wait, a vision of global modernity in a rural landscape, ready to take flight.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.