Cement Industry in Bangladesh Bangladesh Cement Market Growth:
Bangladesh cement industry market in the world. Despite the recent global economic upheavals, the Bangladesh economy continues its steady march with growth in excess of 6% over the past few years. years. Current Currently ly capacity of the industry industry is is about 20 million million tonnes. Top 10 players are alone controlling over 70 % of the total industry capacity. The industry is growing at the rate of 20-25% in the recent years. Per capita consumption consumption is is 65 kg (FY2009 (FY2009)) while while India and Pakistan, Pakistan, our two neighbors, neighbors, have per capita consumption consumption of 135kg and 130kg respectively. respectively. This indicates indicates massive massive scope for growth in the Bangladesh cement industry in the long term. The pricing of cement of various players players in the industry are very close to one another. Currently, Currently, the standard standard price of one bag of cement produced produced by the multinational multinational & local cement companies ranges within BDT 450 to BDT 500 5 00 per bag. Cement companies listed on the Dhaka Stock Exchange (DSE) account for only three percent of total market capitalization. Even then, the companies are proving to be lucrative scrips in recent times. The po The port rtfo foli lio o is ma made de up of tw two o mu mult ltin inat atio iona nall an and d th thre reee lo loca call ce ceme ment nt co comp mpan anie ies. s. Th Thee multinationals are: Heidelberg, which listed on the Dhaka Stock Exchange in 1989, and Lafarge Surma, which was listed in 2003.Of the local companies, Confidence Cement and Meghna Cement listed in 1995 and Aramit Cement debuted in 1998. The high performance or earnings, dividend payout ratio and handsom handsomee capital gains made by the retail investors on cement securities make the companies lucrative.
Growth Factors
Cement consumption was 1.3 crore tonnes in 2009 and 1 crore tonnes in 2008. Consumption in 2010 201 0 1. 1.45 45 wa wass cr crore ore to tonne nnes. s. Dh Dhaka aka and Ch Chit itta tagon gong g acc accou ount nt for nea nearl rly y 65 per perce cent nt of to tota tall consumption. consumpt ion. Bangladesh Bangladesh is self-sufficient self-sufficient in producing producing cement and can meet the local demand entirel ent irely y fro from m dom domest estic ic proc proctio tion. n. Cur Curren rently tly the agg aggreg regate ate prod producti uction on capa capacit city y of all cem cement ent compani com panies es are mor moree than mar market ket dem demands ands.. Infr Infrast astruc ructure ture,, indu industr striali ialisat sation, ion, urb urbanis anisatio ation n and housing are the major factors that can have an impact on demand for cement. After meeting local demand Bangladesh is now exporting cement in Indian market. In the rainy season, construction works, especially on housing projects in rural and urban areas, go slow. With high demand for cement comes greater competition. It is a market for maximum volume but minimum profit,
Although Bangladesh is self sufficient in cement production, it needs to import all the raw materials used in cement manufacturing. The main ingredients for cement include clinker, gypsum and fly ash, which are mainly imported from Thailand, Malaysia, Vietnam and China. Bangladesh has surplus production capacity of cement, and with existing growth domestic demand can be met by local production in next 4 to 5 year.
Market Composition
In 2002, there were 70 cement companies in operation in Bangladesh, whereas in 2008 there were 34. This consolidation is likely to continue. In Bangladesh, there are around 55 cementmanufacturing companies, most of which are in operations either on a large or small scale. A total of 34, including multinational cement manufacturers, are in commercial production. Among local brands, Shah Cement, Meghna Cement, Crown Cement, Fresh Cement, Premier Cement and Seven Circle Cement are well known across the country. The five multinational cement companies in operation are Holcim, Heidelberg, Lafarge Surma, Cemex and Emirates.
Raw Materials and Sources
Clinker,Gypsum and Fly ash are the main raw materials of Cement Industry.All the cement companies
import
raw
materials
from
Thailad,Indonisia,Malasia,China,philipines and
India.Though Lafarge Cement produce raw materilas in their manufacturing plant, racently they
have started to import raw materials from out side the country due to unavailibility of limestone in Bangladesh.
Market Composition
In Bangladesh there are two types of cement companies one local companies another one is mulatinational compancompanies. Local Companies
Markt Share
Shah cement
14.2%
Heidelberg Cement
9.3%
Meghna Cement (MCML-King)
7.4%
Seven Circle BD Ltd.
6.9%
Unique Cement (Fresh)
6.1%
MI Cement (Crown)
5.9%
Premier Cement
4.5%
Akij Cement
4.2%
Royal Cement
4.0%
Mongla Cement (SKS)-Elephant
3.9%
MTC Cement (Tiger)
3.8%
Total
70.2 Source: BCMA
Multinational Companies
Market Share
Heidelberg
9.31%
Lafarge Surma
7.67%
Holcim
7.45%
Cemex
3.0%
Emirates
2.0%
Total
29.8
Heidelbergcement Bangladesh LTD
Heidelberg Cement Bangladesh Limited meets 13% of the Bangladesh demand for cement from two plants located at Dhaka & Chittagong. Heidelberg Cement Bangladesh Limited is a sister concern of Heidelberg Cement Group, founded in Germany in 1873, with its core products being cement, ready-mixed concrete, aggregates and related activities, is one of the leading producers of building materials worldwide. The company with 2 million tones annual cement production has become a major force in the Bangladesh Cement industry over the last eight years. In Bangladesh, Heidelberg group is one of the largest foreign investors having an investment of 100 million US$ with more than 260 employees working round the clock to materialize the mission of this great global company.
Figure: Share Holders Composition(2011)
years
Dividend
2007
TK.25 per share(Cash Dividend)
2008
TK.33 per share(Cash Dividend)
2009
No Dividend
2010
TK.43 per share(Cash Dividend)
TK. 4.5 per share of TK 10/- each
2011
Figure: Dividends paid over the last five years
Years
Dividend yields
2011
1.76
2010
1.18
2009
1.77
2008
2.72
2007
2.07
Figure: Dividends yields over the last five years
*Beta Coefficient of HEIDELBCEM= 0.690118025346 Covariance= 2.99299847095 Variance= 4.33693710499 * on 10th June 10, 2012
