RAK Ceramics to invest Tk52.50cr for increasing production capacity

RAK Ceramics (Bangladesh) Limited, a United Arab Emirates-based company, will invest Tk52.50 crore in increasing its tiles production capacity by upgrading machinery in their existing factory.

After the completion of upgrading, the company's production capacity will increase by 8.76 lakh square meters per annum. The company has expressed hope that the upgrade work in its plant will finish by next year.

RAK Ceramics manufactures tiles and sanitary ware under several brand names. It has four tile plants in Bangladesh with an annual production capacity of 12.30 crore square metres.

Sadhan Kumar Dey, chief operating officer and chief financial officer of RAK Ceramics, told The Business Standard, "Too many companies are involved in the tiles business, but the demand for our products is still increasing by the day. That is why we need to increase our production capacity along with ensuring the energy efficiency and the product quality by using new technology."

Despite the lockdown from July to August across the country due to the pandemic, the company reported a 9% growth in consolidated sales to Tk157.45 crore in the July-September quarter this year.

Its consolidated net profit also grew by 59% to Tk19.51 crore during the period.

At the end of the first three quarters of this year, its consolidated net revenue stood at Tk484.32 crore and net profit at Tk63 crore, which was 42% and 600% higher respectively compared to the previous year.

Sadhan Kumar Dey said, "We have adopted a new marketing strategy to boost the sales amid the pandemic. Earlier, we saw a disruption in the supply chain during the general holiday announced over Covid-19. But this time our team was ready to face any kind of obstacle. So, we facilitated our dealers and supported them financially for carrying out their business activities."

"Operating in the market for nearly 20 years, RAK Ceramics has built a strong base and brand image, which would shield our business from growing competition," said Sadhan Kumar Dey.

The company currently highlights its product features designed to save the environment. RAK in its 2020 annual report said its technologically-advanced flush systems save as much as 33% water.

The annual report underscores resource recycling to ease pressure on landfills, and a clean development mechanism to reduce carbon footprints in the manufacturing process.

"Our industry has faced many periods of market volatility and shifting consumer preferences, and we have always navigated through them to emerge stronger with a more competitive position," Abdallah Massad, chairman of the company, said in the report.

RAK Ceramics (Bangladesh) started its journey in 2001 and got listed in the stock exchanges in 2010. The company has paid a 10% cash dividend to the shareholders for the last year despite a 59% profit fall due to the pandemic.

At the end of Wednesday's trading session, RAK Ceramics share prices closed at Tk47 each in the Dhaka Stock Exchange.

Ceramic industry booms on surging demand

Bangladesh's ceramics sector commenced its journey in the 1960s, but it started gaining momentum during the last two decades.

The industry has witnessed substantive investments in the last decade or so as ceramic imports have now been replaced by exports.

According to the RAK Ceramics' annual report, the domestic ceramic market size is pegged at about Tk6,000 crore annually.

The country's ceramics industry is estimated to double in size by 2023, aided by the growing domestic real estate industry, the emergence of the affordable housing industry, attractive mortgage finance rates, rising demand for products in the EU markets and trade tensions between the US and China that is expected to benefit cost-effective manufacturing destinations, said the report.

Total investments amounting to Tk8,616 crore have been made in the sector, which employs more than half a million people.

Currently, there are more than 60 ceramic manufacturers in the country, with 20 more in the pipeline, including those who make tableware, tiles and sanitary ware.

Major market players in this sector are Great Wall Ceramics, X Ceramics, DBL Ceramics, Akij Ceramics, and Sheltech Ceramics.

Local production can cater to 96% of tableware, 77% of tile and 89% of sanitary-ware demand.