Cementing the leading position

FE Report

HeidelbergCement Bangladesh Ltd., sold more than one million tonnes of cement in calendar 2006, maintaining the company's market leadership.The leading cement company's sales volume rose to 1,010,478 tonnes in the year ended December 31, 2006 from 816,470 tonnes of the corresponding period of the previous year."Our two brands -- ScanCement and RubyCement -- maintained a leading position in cement market due to high quality and uninterrupted supply that helped achieve a new milestone in sales volume in the year," director of the company Md Ziaul Haque Khondker told the FE Sunday.The company held the 18th annual general meeting (AGM) June 7 and approved a cash dividend at the rate of 16 per cent and stock dividend at the rate of 5.0 per cent against each share for 2006.The cash dividend was 8.0 per cent and stock dividend 10 per cent for 2005.The company's net profit whopped to Tk 521.57 million in 2006 from Tk 148.69 million in the previous year. Earlier, the company incurred losses for two consecutive years in 2004 and 2003."The previous years were somewhat challenging for our shareholders, but 2006 was an exceptional year in the company's history in every way," Daniel Lavalle, (French?)chairman of HeidelbergCement Bangladesh said in the latest annual report.The company's net sales turnover rose to Tk 5.0 billion in 2006 from Tk 3.65 billion in 2005.According to the company's post balance sheet events, sales from January 2007 to March 2007 were 250,090 tonnes against 292,139 tonnes of the previous year.The earning per share soared to Tk 97 in 2006 from Tk 31 in 2005.Commenting on the cement sector's overall situation, managing director of the company, Jean-Claude Jamar said the sector attained a growth of 10.8 per cent in 2006 against an estimate of 8.0 per cent because of delayed monsoon and prompt fund release for the construction projects of the government. Shortage of clinker, frequent power outages and higher freight cost affected the sector in 2006, the annual report pointed out.The company, A-category share, was traded at Tk 1232 against the face value of Tk 100 each Sunday on the DSE. The company, previously known as Chittagong Cement Clinker Grinding Co Ltd., got listed on the DSE in 1989.Later in early 2003, the scheme of amalgamation of Scancement International Ltd., and Scancem Bangladesh Ltd., with Chittagong Cement was approved by the high court.The other listed companies in cement sub-sector on the DSE are Lafarge Surma, Meghna Cement, Niloy Cement, Padma Cement, Confidence Cement, Aramit Cement and Modern Cement.

Good going by Heidelberg, I wonder how Lafarge Surma is playing the catch-up game. Any headway in their legal tussle with Indian authorities?

Concrete Answer to Limestone Challenges

Total demand of cement in Bangladesh is 8 million tons per year, the country's GDP is growing at a rate between 6-7% per year. So demand for cement is set to grow constantly. Sensing the bright prospects in a overly populated developing country like ours, Lafarge Surma Cement has set its guns to right targets. It has the only integrated dry process cement plant which produces its own clinker of high international quality in Bangladesh. All other major cement producers in Bangladesh are grinding mills that depend entirely on import of clinker. Import of clinker is not only expensive due to high freight cost, duties, handling/rehandling, charges etc. sourcing of clinker for uniform quality and uninterrupted supply is also a big challenge. With an initial production capacity of 1.5 million tons Lafarge Surma is the only clinker producer using energy-efficient dry process in Bangladesh.

So much so for Lafarge Surma, but how is it going to deal with the Indian decision to stop sourcing limestone from Meghalayan mountains? The company has a 17km long conveyor belt which carries limestone generated in Meghalaya to its plants in Bangladeshi territory. This recent move is no wonder a challenge for Lafarge Surma to keep its competitive position strong in the market. We are witnessing how it deals the blow, gives a 'concrete' answer to challenges, keeps shareholders happy and continue developing...both buildings, infrastructure and economy.

Holcim enters Indian market

Bangladesh is finally going to export cement in bulk to the northeastern Indian states from early next month. Holcim Bangladesh (Pvt) Ltd recently got thumbs up from the Indian government to export cement to Assam, Meghalaya and other northeastern states. The multinational cement manufacturer is already exporting cement to Tripura. Holcim also entered an agreement in April to supply cement for a big government-financed project--construction of highways in Assam, he said. India generally does not allow Bangladesh Standard and Testing Institute (BSTI) certification for import of cement from Bangladesh (why?).The local cement manufacturers need to get the standard certificate from the Bureau of Indian Standard (BIS), which takes time. Local manufacturers have long been saying that such a certification is a major barrier other than tariff to exporting cement to the Indian market, especially to the northeastern states. The BIS finally accepted the BSTI certificate for import of Holcim cement.

Commerce ministry officials said a team of experts from India would come to Dhaka soon to assess capabilities of Bangladeshi testing labs for certification of cement. Bangladesh would take measures to strengthen the BSTI after the assessment, the officials said. Holcim began its journey in September 2000 through acquisition of Hyundai Cement Bangladesh. Later, Holcim bought out United Cement Industries at Meghnaghat and Saiham Cement Industries at Mongla to strengthen its position in Bangladesh. Holcim's combined capacity now stands at 1.3 million tonnes a year. Bangladesh has 21 cement factories with an annual production capacity of around 80 lakh tonnes. The local annual demand is about 60 lakh tonnes. Good going Holcim, I wonder what Lafarge Surma Cement, Heidelberg, Shah Cement etc. are doing on the export front? Do they export? What are their capacities?