RAK Ceramics set to emerge as largest tableware exporter

A Z M Anas

RAK Ceramics-Bangladesh, wagering on the success of its sanitarywares and ceramic tiles, will go for tableware manufacturing, officials said Wednesday, in a potentially significant inroad into the ceramic export market.

The country's largest sanitaryware and ceramic tiles maker, majority controlled by the Ras Al Khaimah-based RAK Ceramics, will set up a porcelain plant in Habiganj district to grind out tableware items, eying exports of Tk 2.5 billion a year, they said.

The Board of Investment (BoI), the official agency responsible for foreign investment registration, said it has already approved the RAK's project proposal.

"It's the outcome of our business success here. We've already established our track record as an internationally competitive local enterprise," a Dhaka-based company official said.

"Our production capacity will be massive. So will be our exports. Tableware exports may go beyond Tk 2.5 billion a year. RAK wants to be the leader in this area, too," the official told the FE.

The UAE-Bangladesh joint venture, which started operation in 2000, has captured as much as 60 per cent share of the country's booming ceramic tiles and sanitaryware market.

Buoyed by surging demand, the company underwent major expansion in 2002, drawing down a credit line from the International Finance Corporation, the World Bank's private lending arm. It had doubled its annual production capacity of tiles by 2.0 million to 4.0 million per square metres (psm), and set up a sanitaryware plant having 2.5 million psm capacity.

RAK's new bet, analysts and industry insiders say, is sure to shake the country's Tk 4.0 billion ceramic industry, traditionally dominated by Monno and Shinepukur, to give it a new identity--the country's largest tableware exporter.

Bangladesh's exports of ceramic items average Tk 2.5 billion a year, of which the two major players alone control nearly 80 per cent.

Monno Ceramic, which enjoyed industry leadership until 2000, lost out to Shinepukur Ceramics that became the largest ceramic items manufacturer in just two years after its operation.

Half a dozen other smaller players are also competing in the industry that has been steadily growing over the years, thanks to a robust middle-class consumerism. However, a relatively new entrant, Artisan Ceramics, is faring well, focussing mainly on up-market items and exports.

Shahidul Islam, an independent financial analyst, said that the R.A.K. would gain considerable "synergy" as it could use the company's global supply and distributional channels, while also sharing the management boundary.

The R.A.K. Ceramics, the cross-border group's parent company, is a US$ 500 million conglomerate, exporting ceramic products to more than 130 countries across the world. R.A.K is one of seven Emirates of the oil-rich United Arab Emirates.

"I think, they (RAK) will have an added edge over the existing players. It has the potential to be the market leader," Mr Islam, a former banker with Credit Agricole and Citibank NA, said.

Company officials said the plant, to be set up at a cost of Tk 1.25 billion, is expected to go into operation this year. The proposed plant will create employment for nearly 1000 people.

RAK officials said the company would initially concentrate on exports, leaving little scope for serving the local market "at the moment."

The official said that majority of the stakes of the new concern would be held by the RAK Ceramics.

So far, investments from the R.A.K. state-owned enterprises in Bangladesh have totaled Tk 3.5 billion in ventures ranging from ceramics and real estate to pharmaceuticals and aviation.

RAK Investment Authority (RAKIA), a holding company of the Emirate's ruling family, is also awaiting the Bangladesh government's green signal for investing in building a theme park, a special economic zone, upscale hotels, a golf club and satellite townships.

RAK's head Dr Khatter Massaad, who jetted to the country last year for talks with the caretaker government on the proposed plan, said his agency is ready to invest more than US$1.0 billion into the projects.