58 BRAC Annual Report 2011
BRAC enterprises and investments
Enterprises in 2011: Efficiency and profitability
Investments in 2011: Maximising impact
For enterprises, the primary objective in 2011 was to increase efficiency and profitability of all enterprises. Aarong expanded distribution, opened a flagship outlet (the largest retail space in Bangladesh) and their eleventh store in Moulvibazar. The enterprise is also automating the design process with a design management system. BRAC dairy conducted a feasibility study of setting up a production facility in North Bengal, achieved a production target of 100,000 litres per day, and received a ISO 22000 certification. BRAC poultry increased production capacity by 22,000 parent birds. BRAC tea estates invested a significant amount of money on the workers’ welfare, which includes schools, tube wells, day care centres and latrines, as well as irrigation to counter weather dependency.
BRAC investments are comprised of financially profitable investments and financial service businesses geared towards generating economic returns while adhering to underlying socially responsible causes such as housing, microfinance, small enterprise loans, information technology and clean development mechanism. Dividends from our investments support the financial sustenance of both our enterprises and development interventions by acting as a hedge or safety net against future liquidity crises. These investments contribute significantly to reducing our dependency on external funding and enable BRAC to maximise the impact of its mission of alleviating poverty.
BRAC fisheries, which won a first prize award from the Fisheries Department, Ministry of Fisheries and Livestock, moved from prawn PL concentration to tilapia and food fish. BRAC chicken introduced value-added products, such as nuggets, wings, drumsticks and burger patties. BRAC salt introduced a new product, MinaMix, which is a feed additive for cattle. BRAC feed increased efficiency in capacity utilisation and market expansion. BRAC sanitary napkins and delivery kits improved quality of products and increased efficiency in production. BRAC Kanon was launched this year, a retail space to showcase the green initiatives of BRAC, housing products from four BRAC enterprises – solar, nursery, recycled handmade paper, and sericulture. BRAC solar restructured sales, collections and pricing to reduce non performing loan risk. BRAC nursery introduced ornamental plants and reduced seasonality of earnings, while receiving an award from the Forest Department, Ministry of Environment and Forest. BRAC sericulture restructured and reorganised to introduce new products, including woven material. BRAC recycled handmade paper increased production capacity and introduced new products.
For the performance of BRAC investments, it was a relatively good year. BRAC Bank Limited was affected by liquidity, stock market and inflation issues in the banking industry and BRAC EPL Investment Ltd & BRAC EPL Stock Brokerage Ltd were hit by the stock market volatility, but b-Kash, BRAC Bank’s mobile banking unit, was successfully launched and BRAC Sajaan Exchange made a turnaround and is making profits after capturing a 16 per cent market share. BRAC Net has also turned around and is now profitable.
BRAC Bank received the award for the best bank of the year for 2010 from the Financial Times-IFC and Asian Banker and took steps to promote inclusivity, including the launching of financial and non-financial products and arranged financial training for small and medium enterprises (SMEs) and women. It also undertook public-private partnerships initiatives with Rupali Bank. BRAC EPL Investment Limited launched a sustainable/impact financing division, while BRAC EPL Stock Brokerage Limited was ranked number one on a broker ranking, capturing 90 per cent of foreign investments into Bangladesh’s capital markets. It is now the third largest stock brokerage firm in terms of volume. This year, they signed a brokerage agreement with Macquarie Bank, Harvest Capital, Templeton Securities, Exotic Capital, and Morgan Stanley, and worked as an agent for ADB for share offloading. BRAC Soft conducted user acceptance test for integrated software solutions for BRAC International in 2011, and finally, a Delta BRAC Housing Finance Ltd received the AAA rating for the fifth year in a row.
NEW INITIATIVE IN 2011 Mainul Islam is using BRAC Bank’s Krishak card, a debit card with a revolving loan facility at a lower interest rate to buy agricultural materials.