Lafarge Surma Cement has tied up with local Metrocem Cement in a bid to increase its market share in the Dhaka region.
The multinational company, whose plants are located at Chhatak, Sunamganj, will supply its clinker to the Muktarpur-based cement manufacturer, which will add other raw materials to manufacture Portland composite cement for Lafarge. The cement will be marketed and distributed under the brand name of 'Duracrete'.
Lafarge is one of the top three market leaders and the new deal will help the company to increase its market share from its existing 7.5 percent. Though the Duracrete brand cement will be manufactured at the Metrocem factory, Lafarge's specification and quality will be maintained.
“One of the core objectives of this agreement is to increase our capacity and capability to serve our customers in Dhaka and its adjoining regions better and faster,” said Masud Khan, finance director of Lafarge Surma Cement.
Apart from the location advantage, the reduction in distribution costs will also be an added advantage, considering the fact that distribution cost is generally higher for cement, he said.
Metrocem Cement, a unit of Metrocem Group, started its journey in 2001 with 800 tonnes production capacity a day.
This is not the first time that Lafarge has signed a deal, dubbed the “toll grinding agreement”.
The company inked an agreement with Madina Cement Industries, another local manufacturer located at Sonargaon in Narayanganj, last year.
Under the deal, Madina Cement now produces the 'Powercrete' brand cement for Lafarge Surma.
Lafarge, manufacturer of Supercrete brand cement, produces 13 lakh tonnes clinker per year, while the cement production capacity is 14 lakh tonnes per annum.
The annual demand for cement in Bangladesh is around 1.8 crore tonnes a year, while the combined production capacity of active manufacturers comes to around 3.5 crore tonnes, almost double the local demand.
Lafarge, which started commercial production in 2006, was listed in the stock-market as a Greenfield company in 2003.
On the Dhaka Stock Exchange yesterday, each Lafarge share traded between Tk 86.80 and Tk 83.40, before closing at Tk 83.60.