LafargeHolcim resumes aggregates business right after securing HC judgment

LafargeHolcim Bangladesh Ltd (LHBL) resumed its aggregates business on Wednesday, immediately after winning its legal battle against the Ministry of Industries.

The company informed about continuing with its business of crushing and selling aggregates with a disclosure on the Dhaka Stock Exchange (DSE) website on Thursday. 

Following the full hearing, the High Court (HC) Bench made the 11 October ruling against the ministry absolute, the cement-maker added, in the disclosure.

The legal battle

In mid-September 2021, the Ministry of Industries directed LHBL to stop its aggregates business citing lack of the needed approval.

The company challenged the legality of the ministry's directive and on 11 October, the HC issued a rule against the ministry.

On 16 November, the Division Bench heard the matter and passed a one-month stay order against the ministry's directive.

The company started its aggregates business once again after the stay order. 

But on the next day, the ministry went to the Appellate Division. A Chamber Bench, upon hearing the parties, again stayed the Division Bench's stay order for two weeks. The company once again had to stop its aggregates business.

Eventually LafargeHolcim won the HC judgment on Wednesday and its aggregates business will continue unless the Industries Ministry goes for an appeal petition.

Company's appreciation

The company's Chief Corporate Affairs Officer and Human Resources Director, Asif Bhuiyan, said in a statement "We acknowledge the favorable verdict from the Honorable High Court Division of the Supreme Court of Bangladesh, which has passed the order to resume our aggregates operations after a full hearing and review of our legal [standing] and compliance in relation to the aggregates."  

"We firmly believe that recommencement of the aggregates operations shall have a positive impact on foreign investors."

"As the demand for aggregates far exceeds the supply in a market which is fully dependent on imports, local production by the company shall help in creating jobs, generating revenue for the exchequer, and savings in valuable foreign exchange, reducing supply disruptions," the statement read.

The aggregate business dispute

Prior to the ministry's directive, a high powered government committee found that LHBL was crushing aggregates at an unapproved facility in Chhatak, Sunamganj.

The ministry launched its investigation based on the complaints of local aggregates crushers and merchants that the company was doing business with unfair advantages in taxes and duties.

LafargeHolcim Bangladesh began crushing and selling aggregates in January 2021, and its profits began to soar with high profit margins in the construction commodity.

Analysts earlier told The Business Standard that their aggregates business was contributing to around one-fifth of LHBL's revenue for the first nine months of 2020, and making up at least one-third of the company's profits over the same period.

Following news regarding closure of the company's most profitable business segment, LHBL stock in the DSE stopped rallying in early October and underwent a sharp correction until late-December.

In less than three months, its stock price dropped below Tk70 per share from a six-year high of Tk107.

Following news of the aggregates business starting up again, LHBL shares closed 4.8% higher at Tk81.5 each on Thursday in the DSE.

The company posted Tk2.66 in earnings per share for the January-September period of 2021, which was Tk1.29 for the same timeframe in the previous year.

At the end of last September, its net asset value per share stood at Tk16.61.