Fu-Wang Ceramic to invest Tk650cr in greenfield tiles plant

Fu-Wang Ceramic Industry Limited has decided to invest Tk650 crore to build a new tiles factory in Gazipur to meet the growing demand for construction materials in the country.

The tiles manufacturer's board took the investment decision at a meeting on 1 September.

"Fu-Wang Ceramic wants to increase its daily production capacity by 15,000 square feet tiles through establishing a greenfield factory," read a statement signed by Company Secretary A Halim Thakur.

"That is why it will purchase more land adjacent to its existing factory and will set up a three-line production unit."

The company said the new investment decision will now require approval from its shareholders in an annual general meeting or extraordinary general meeting.

Fu-Wang Ceramic Managing Director Javed Opgenhaffen declined to comment on the investment plan.

A company insider, wishing anonymity, said, "This is a long-term project. But currently, the company is not in a position to invest from its own funds. Discussions on financing are ongoing with local and foreign lenders."

Fu-Wang Ceramic's expansion plan came months after tiles market leader RAK Ceramics decided to invest around Tk900 crore to boost its production capacity.

According to industry insiders, in the last couple of years, several big companies such as DBL Ceramic, Akij Ceramic, and Sheltech Ceramic have invested heavily in their tiles manufacturing units focusing on future growth as the tiles business has huge opportunities. And the big investments have already created stiff competition in the tiles market.

With a double-digit growth over a decade, the local market is estimated to have attained an annual size of over Tk6,000 crore. Data from the association of the tiles companies suggests that over five dozen local manufacturers cater to around 85% of the market.

SS Steel, another company of Javed Opgenhaffen, is listed on the stock market. In January 2021, it announced the purchase of 75% shares of Southeast Union Ceramics for Tk200 crore. For this, the company took the approval of the shareholders by arranging an extraordinary general meeting. However, it is reported that there is no progress regarding the purchase of these shares.

Earlier, the company bought Chattogram-based Saleh Steel for Tk160 crore. Also, it is in the process of acquiring another company named Al-Falah Steel. SS Steel claims that the companies are being bought with bank loans and own funds.

The ceramic company

Formed in 1995, Fu-Wang Ceramic went into commercial production in 1996. It became public in 1998 with listings on both the bourses of the country.

Fu-Wang Ceramic posted earnings per share (EPS) of Tk0.23 for the first nine months of fiscal 2021-22, which was 18% lower than the previous year in the same period. It had paid a 2% cash dividend to its shareholders for FY21.

On Thursday, its shares closed at Tk18.60 each on the Dhaka Stock Exchange.

Meanwhile, its sponsors and directors could not hold at least 30% of the company's total shares, which is a violation of the securities regulator's rules.

In such a situation, the company wrote to the Bangladesh Securities and Exchange Commission, saying it is trying to comply with the minimum shareholding requirement.