Fierce competition among too many producers has forced Emirates Cement Bangladesh, the owning company of Ultratech, to sell its entire stakes in Bangladesh to Germany’s HeidelbergCement.
HeidelbergCement Bangladesh in a statement yesterday announced that the board of directors of the company has approved the acquisition of 100 percent of Emirates Cement Bangladesh and Emirates Power Company at a cost of nearly Tk 183 crore ($21.59 million).
The company also said transaction is subject to completion of the necessary regulatory formalities and approvals in compliance with the laws of Bangladesh.
Ultratech had entered into the Bangladesh market following India’s Aditya Birla Group’s acquisition of Dubai-based ETA Star Cement in 2010 at a price of $380 million, giving it direct access to markets in the Middle East and Bangladesh.
The cement maker incurred losses in five years since the commencement of production in 2011 and made profits in the remaining years.
At the end of fiscal 2018-19, its reserve and surplus stood Tk 56.69 crore in the negative.
Bangladesh has the capacity to produce 60 million tonnes of cement, exceeding a market demand of 35 million tonnes, according to industry people.
Of the 75 cement manufacturers in Bangladesh, around three dozens are actively making cement.
Producers often blamed overcapacity of plants and competition in the market on selling cement at lower prices.
Heidelberg’s yearly cement production capacity is 2.37 million tonnes, according to the company’s 2018 annual report.
It has two brands: Scan Cement and Ruby Cement.
Heidelberg, which has paid-up capital of Tk 565.04 crore, posted profit of Tk 80.98 crore in 2018, with an earnings per share of Tk 14.33.
On the other hand, Ultratech’s Bangladesh plant has an annual capacity of 0.5 million tonnes.