Learning to take the wheel of family firm

For Farhan Azim, the global financial crisis was both bane and boon. Bane in the sense—it did crush his hope for landing a dream job in the global automobile industry. It was in 2008—or the height of the crisis—when he graduated from Penn State University with a degree in electrical engineering.  He even had a phone interview with BMW. “The whole Detroit was idled,” recalled Mr Farhan, whose industrialist father previously served with the state-controlled car assembler Pragoti Industries Limited. The week he left the United States in 2009, there were 70,000 layoffs. “Things were looking not good,” he said.
He didn’t study business to help shape his future business leadership in the family company. Instead, he chose a discipline, for which he has nurtured passion since childhood; his father is also a mechanical engineer by training. And as a kid, he used to dismantle toy parts after toy parts, which made his parents fretful, they even attempted to consult with psychiatrists to see what went wrong with the child. “I broke open toys and was kind of curious: ‘what is inside?’” said Mr Farhan, casually clad in snow-white pajama and panjabee.
While a debilitating recession robbed his dream— it proved to be a boon, opening up the door of possibility of “keeping up” the family business, an apparel empire with 19 factories in Dhaka and Chittagong, the port city where the company started life in mid-70s. The company says it employs close to 30,000 people.
Azim Group, which turned over $220 million last year, churns out shirts, jackets, and bottoms and its major clients include top western retailers such as PVH, Kohl’s, VF Asia, Gap and Aldi. Although the company folded knitwear business by 2010, it still produces sweaters that make up 10 per cent of the company’s annual sales. Men’s shirt hauls the major slice of the revenue, according to company officials.
On the learning curve
Mr Farhan, now 29, is too shy to flaunt his role in the group he directs, even if he is an heir to his businessman-turned politician’s huge fortune. “I don’t have designation. I don’t like high designation. You need to have knowledge to deliver something (against) expectations,” he said, showing his business card where his title field is empty.
Having returned home in early 2009, Mr Farhan stumbled straight into the group’s Savar factory to oversee the installation of a denim washing plant equipped with modern and advanced technology—far from the comforts of his father’s opulent home in upscale Gulshan neighbourhood.
At the factory, he gathered experience in dealing with contractors, his first since joining the company. “We were making shirts, polo shirts, thick jackets, but denim was never our product line,” he said. After commissioning the plant, he devoted himself to product development for the next two years. The outcome? “It (washing project) is now successful.”
In 2012, he got married to a scion of listed textile producer Hamid Fabrics and the couple moved to Hong Kong, the group’s sourcing and marketing hub.  His objective was twin: To get the hang of marketing while capitalising on his wife’s pedigree in fabric business. The company is overwhelmingly reliant on imported fabric, compelled by the absence of backwards—his father blamed complicated technology, prohibitively high bank interest and a not-so-deep capital market for the deficit, a common phenomenon in the industry’s woven segment. “It requires an investment of Tk 6.0 billion-Tk 10 billion to set up a textile unit. We can’t raise such a big amount from the country’s equity market, which is not developed yet,” so was the explanation of his father, Mohammad Fazlul Azim.
Mr Farhan said he is learning every day from elder staffers of the company and he has respect for them.
He regards Syed Mohammad Mohiuddin, a Hong Kong-based general manager of the group, as his mentor with whom he has worked for two years, learning “valuable things.”
His mentor called Mr Farhan a good team member, articulate in business meetings.
“He (Farhan Azim) is very smart, learns fast, catches up things very fast,” he said in an e-mailed response.
‘Work in progress’
One thing Mr Farhan noticed since joining was slow-paced ‘educated’ decisions. The reason is simple—all decisions were coming from the company head, his father. It is like top-down management style of old time. Besides business, his father is involved in politics, making it difficult for the senior management to reach him in time. “Team leaders look at him authoritatively. Since decisions come from top, it makes things slower,” he said in a recent afternoon.
To bridge the gap, he is acting as a go-between to speed up decisions. “I can talk to him (father) over lunch, even at mid-night, which is not possible for them.”
But Mr Farhan said changing the way the company is managed will require more time. “It’s a work in progress. Rome was not built in a day.”
Championing low-cost
Mr Farhan said he wants to become a champion of low-cost, but efficient production and he will do it in two ways— installation of cutting-edge machinery and injection of fresh mindset.
He, however, agreed that upgrading machinery line-up is easier to do, changing the mindset of the employees not.
He claimed that the group houses some of the most experienced professionals in the industry and he is upbeat on cultivating the new culture by changing the perspective of the current strength, not hiring fresh manpower.
Looking ahead
His father started garment business along with his long-time friend, Abdul Mannan of Sunman Group in 1975, but the pair opted for split afterwards.
While Sunman group expanded into telecom, insurance, financial and many more sectors over the years, Azim Group remained mostly stuck up in clothing manufacture, only recently it got into information technology and online media—both struggling.
As the next leader of the company, Mr Farhan is determined to push ahead with his diversification agenda— creating more units. To achieve that goal, he is ready to keep exports from growing at a rapid clip, not at the current double-digit. The company’s overseas sales, he said, have been chalking up 10 per cent growth in the past five years or so.
He said the group plans to broaden its footprint into other manufacturing areas without moving away from its core garment production—at least in the near future.
He was coy about disclosing the company’s future plans, saying “We are a conservative company and it is in our DNA to play it safe. Thus we do not like to get excited about future plans, which are still in research.”
Ifty Islam, a partner with investment bank Asian Tiger Capital Partners, is optimistic about the quality of second generation entrepreneurs, noting they will be diversified and globalised, thanks to their education in good universities abroad.
“Unlike fathers, next generation business leaders are open to new ideas and new management thinking,” said Mr Islam, a former managing director and head of macro strategy and hedge fund research at Citigroup in London.
‘Trouble-shooter’
One of his greatest achievements since getting involved in the family-controlled  business, Mr Farhan said, was to minimise what he described as “ego barriers” plaguing the group’s employees stationed in three locations by playing the role of a trouble-shooter.
“I felt like nobody was open to communications,” he said.
To elaborate on how he handles the issue, he said: “Basically I encourage everybody to consider me as a trouble-shooter.  In the process I get to participate in frank discussions of different departments often concerning intra-company affairs, such as communication or transaction of one department with another.” “Having me by their side always gives them a boost of confidence in expressing their mind.”
He said, “Also, I always encourage the younger crew to participate wherever possible.”
Waiting in the wings?
A key challenge Mr Farhan—and the management—faces is to lure back runway buyers who delayed or stopped placing orders after separate investigations by a US rights group and a renowned apparel firm found female trade union leaders were assaulted by the company-hired hooligans in November last year. On December 22, New York Times ran a story on the incident. Azim Group, through a law firm, denied its involvement in the incidents and told Times that the November dispute “arose between the workers and union leaders.” Mr Farhan would not comment on the matter to the FE.
The company’s sales target this year is $275 million. Boosting overseas sales is critical not only for Azim Group, also for the industry that aims to double exports to $50 billion by 2021.
It’s not yet decided when Mr Farhan takes the wheel of the group founded by his dad, who is revered as one of founding fathers of the country’s $25-billion apparel industry.
Mr Farhan, who now frequently shuttles between Dhaka and Hong Kong, said he will be settling in Dhaka soon— perhaps taking on a bigger role.
Long derided as ‘sweatshop’, the country’s garment industry’s repute also took a battering on the heels of recent industrial accidents such as Rana Plaza complex collapse and Tazreen Fashions fire, but Mr Farhan said he never looked at it as a not-so-elegant business, rather a challenging one.
“I grew up in garment business and it is my responsibility to keep up this. I want to run business like machine,” he said radiating confidence.
Already, expectations of change from employees are high. “(We) look forward to seeing him as the CEO of the group,” said Mr Mohiuddin.
 

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