An unhealthy competition plagues Bangladesh’s cement sector for a 43 percent overcapacity but this seems to have done little to dissuade Premier Cement from realising plans of doubling its annual production by next March.
“We have constructed two more units in Narayanganj and Chattogram involving Tk 1,300 crore,” the company’s managing director, Mohammed Amirul Haque, said during a conversation with The Daily Star recently.
He said to have taken up the expansion plans way back in 2017 foreseeing demand taking the lead within 2021.
The promise comes from the past, with demand continually growing for eight years by around 15.6 percent on the back of government plans on implementing mega projects.
The new units are up and ready for trial runs, he said, adding that its Dhaka Stock Exchange disclosure would come following an annual general meeting in this fiscal year’s third quarter.
The Narayanganj unit is taking up Tk 800 crore and the Chattogram one the rest.
Standard Chartered Bank, Pubali Bank and City Bank provided 70pc of the cost as loan while a Danish bank another $35 million or Tk 280 crore for purchase of capital machinery.
Haque claims their expansion in annual output from 2.4 to 5.2 million tonnes would be a record for a single entity in the country.
Vertical roller mills, which can generate extremely fine powder using 20 percent less power, of Danish entity FLSmidth will be used to attain production rates of 460 and 270 tonnes per hour for the units in Narayanganj and Chattogram respectively.
Moreover, the company hopes to double the number of staff from the existing 1,100 in its five units.
Haque said despite the sector’s challenges, such as the need for all raw materials to be imported, Premier Cement has always been in profit, providing handsome dividends to shareholders. He even claimed that his brand accounted for around 25 percent of Bangladesh’s cement export to India.
Cement business is different providing no scope of quick profits, so interested businesspersons thinking otherwise should reconsider, recommended Haque.
There are 37 active cement factories in Bangladesh which invested over Tk 30,000 crore to attain a combined annual production capacity of 58 million tonnes against a demand of 33 million tonnes.
According to Bangladesh Cement Manufacturers Association, local companies dominate the market where annual sales have reached $3 billion, or Tk 25, 500 crore.
Of the total consumption, individuals account for 25 percent, real estate companies and developers 30 percent and the government 45 percent.
Bangladesh’s per capita cement consumption is around 181 kilogrammes. It is expected to increase to 220 kg by 2020.