Imprudence, mishandling behind Opex Sinha’s fall

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.

At its height at the turn of the 21st century, it raked in $500 million in annual turnover and employed around 45,000 people. It was a time when buyers had to wait in line to place orders. The group had three liaison offices outside Bangladesh, in the UK, US and Hong Kong.

But 20 years later, the group announced the closure of its factories on October 19 this year.

Sources said Opex group closed its factories on several occasions when the pandemic hit the country last year. On October 1 this year, the group closed all factories and kept the textiles department running, with sources saying it was uncertain whether the factories would ever reopen.

Md Abu Zafor, general manager (policy) of Opex Sinha, told The Business Post that they are trying to clear the workers’ dues. On October 17, the group paid workers’ two months dues, but workers said they were not sure about getting their service benefits.

“I joined the factory around 16 years ago when it was passing its golden era under the leadership of Anisur Rahman Sinha, founder and Managing Director of Opex Group,” said Md Shahjahan.

“I am still their employee but I have not received any salary in the last three months. Now, I peddle rickshaw for the survival,” he told to The Business Post last week, when this correspondent visited Kanchpur, around 20 kilometres from Dhaka. Security personnel deployed at the factory site said around 1,500 workers were working in the textiles department. “The number of workers has been declining for about a decade now. During the pandemic the problem became apparent. 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.

Since the last Eid-ul Azha, the workers had protested several times for their dues. In early October this year, they gathered in front of the Department of Labour in Dhaka for several days. After a meeting with the government bodies, the factory authorities had fixed October 17 to pay workers’ dues.

BKMEA Executive President Mohammad Hatem said the company needs around Tk 45 crore to pay workers’ dues and gratuities. “The company is trying to pay the workers by selling its land and others resources.”

“It’s heartbreaking to hear that workers of the Opex group had to demonstrate for their salaries. But before a decade, he (Anisur Rahman Sinha) helped many factory owners to pay salaries on time,” Rupa Group’s MD Shahidul Islam told The Business Post.

Beginning of a dream

Sinha, former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), established more than two dozen factories under Opex group since 1984 and earned worldwide reputation for quality.

Opex Group had garments division, bottom factories, shirt factories, knit garment factories, jacket factory, and sweater factory, dry and wet processing facilities, backward linkage and vertical setup, denim village, and accessories factory.

The factories were spread across 43 acres and with around 35,000 workers.

Rupa Group’s MD Shahidul Islam told The Business Post that for many like himself, Sinha was an inspiration. “Now he is an example of frustration,” he said.

Opex Group insiders said reputed fashion brands of Europe and US sourced their goods from them. Levi’s, VF, American Eagle, Nautica, JCPenney, Target, PVH, GAP, Hanes, Haggers, Perry Ellis, Sears, Oxford, Aeon (Japanese), H&M, OVS, Macy, NEXT, and Oshkosh was among the top buyers of the group.

The group had over 18,000 sewing machines distributed to 300 production lines and had specialised Jacquard Sweater production unit. It was able to produce over 2,20,000 pieces of garment products every day, according to Opex Group.

The company had over 200 bottom production lines and produced over 1,25,000 pieces of garments daily. Opex also had 16 dedicated specialised denim production lines, equipped with fully automated computerised sewing and finishing range machines with 35,000–40,0000 pieces daily capacity.

It had 59 dedicated shirt lines which produce 60,000 pieces of casual, sports and formal dress shirts daily, another 12 lines jacket factory in Kanchpur and 10 lines in AEPZ with a monthly capacity of 3,00,000 pieces per month. The company had a capacity to produce 2,50,000 pieces of sweater, two milion pieces of denim bottoms and jackets per month.

Rana Plaza and Covid-19 nightmares

Senior officials of 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.

Before Rana Plaza collapse, this company had a few bank liabilities, but after Accord-Alliance came into the picture, Opex’s bank liabilities surged, making Sinha a defaulter. That’s why he failed to sell this company though local and foreign investors including Reliance Group, India were interested, they said.

An Opex official said they invested a huge sum of money to improve safety standards as recommended by Accord and Alliance. “We were bound to invest because the buyers pressured us to follow Accord and Alliance’s recommendations,” an official of Opex group said.

Mansoor Ahmed, senior vice president of BKMEA, told 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,” he said.

Rupa Group’s Sahidul said, “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.”

Former BGMEA president Anwarul Alam Parvez said he felt the buyers had “betrayed” Sinha. “His losses mounted as buyers turned away from him,” he said.

Overcapacity, mismanagement, imprudence

BGMEA President Faruque Hassan identified overcapacity as one of the major reasons for the Opex’s fall.

“I think this group had overcapacity which was difficult to manage. Opex finally felt the heat when Covid-19 hit Bangladesh,” he said, advising BGMEA members to remain cautious about overcapacity. “It is not sustainable,” he said.

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 man said.

“The inefficiency and corruption of his mid and top-level employees was one of the biggest reasons for the fall,” he said.

Faisal Samad, former senior vice president of BGMEA, said the group was in a difficult situation and a comeback would be very difficult.

“We knew 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,” said Samad.

He met Sinha in early October. “He was pessimistic. He did not confirm whether he will continue his business or not.”

Another garment leader said that 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’ fancy,” he said.