Confidence Group looks to Dhaka zone market, plans new cement factory

Infographic: TBS

Confidence Group, one of the largest conglomerates in Bangladesh, is investing Tk815 crore in building a new cement factory near the capital, the intention being to expand the business and grab the Dhaka-centric cement market.

The new factory – Confidence Cement Dhaka Limited – is being constructed at Danga in Palash Upazila of Narsingdi. With an annual production capacity of 18 lakh tonnes, the plant is expected to go into production in the third quarter of next year, said officials.

The group, involved in the manufacturing of mid-tech engineering products since its inception in 1991, already owns Confidence Cement Ltd, which has a major stake in the cement market of Chattogram.

Imran Karim, vice-chairman of Confidence Cement, told The Business Standard, "We have a strong presence in the cement market of Chattogram, but not in the Dhaka-based market. This new factory is being established to expand our presence in the market of Dhaka and its surroundings."

Under the group's plan, around 70% of the total estimated cost of building the factory will come from bank loans and 30% from equity.

The group aims to take out a loan of Tk570.70 crore from a syndication of banks led by Prime Bank Limited. The tenure of this loan will be 7.5 years with a moratorium period of 18 months.

The state-run Sonali Bank, which is a member of the syndicate, has already taken a preliminary decision to provide a loan of Tk150 crore at its board meeting held last month.

A few other banks will provide the rest of the money, but their names are yet to be disclosed.

Factories and investments

According to Confidence Group officials, the group has already invested about Tk200 crore in the construction of the new factory. Letters of Credit (LCs) have been opened to bring in machinery.

Imran Karim said, "As an old cement manufacturing company in the country, we should have had a factory near Dhaka by now. But it did not happen. Now we are building one. Dhaka is in the centre of the country and it is easier to supply products across the country from there."

Asked whether there is a problem in importing new machinery in view of the dollar crisis, he said, "We opened LCs before the dollar crisis began or intensified. Some machinery for the cement factory has already arrived and some big machinery is yet to arrive."

When asked about the condition of the cement market, Imran said, "Due to the economic decline, all sectors have contracted, the cement sector being no exception. Different cement brands have already established their places in the Dhaka market, but we will not have any problem as a new player in capturing this market."

Confidence Group officials said Confidence Cement Ltd has 50% shares in Confidence Cement Dhaka Limited.

In 2019, Confidence Cement, a listed company, sold 816.73 decimals of land to Confidence Cement Dhaka Limited for Tk9.80 crore.

Confidence Cement financials 

Confidence Cement, a flagship company of Confidence Group, is engaged in manufacturing cement, aggregates and ready-mix concrete.

The company started its journey in 1991 and became one of the largest producers of cement in the country. Its cement production capacity is 12 lakh tonnes annually.

In the first nine months of the 2022-23 fiscal year, the revenue of Confidence Cement stood at Tk332.39 crore, registering a 4% growth over the corresponding period of the previous 2021-22 fiscal year.

Its net profit after tax stood at Tk49 crore, which is 25% lower than in the first nine months of the 2021-22 fiscal.

According to its unaudited financials, it made a profit of Tk16.55 crore from operation activities, but after paying bank interest, and foreign currency exchange losses, it incurred losses in the first nine months of FY23.

But owing a significant gain of Tk89.10 crore from the income of investment in shares, it finally made a net profit of Tk48.56 crore.