RAK Ceramics (Bangladesh) Limited - DSE

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matters, age over pitfalls of traditional marbles & stones. It has become priorityof literate segment in urban and semi-urban areas to use ceramics &homogenoustiles due to its better excelled tested & recognized norms ofinternational technical parameters, to name a few terms- water absorption,surface flatness, linear thermal expansion, modulus of rapture, resistance toabsorption & thermal shocksThe reforming budget for 2009-10 has introduced various schemes for housingand realty sector which will strengthen tiles and sanitary ware demand incoming years. The silent features of provisions of Finance Budget 2009-2010having positive impact on Tiles and sanitary ware products summarized asfollows:a) Vision 2021: Government shall provide accommodation for all by 2021.As a preliminary step, the ministry of Housing and Public works hasworked out to develop 22,800 plots and construct 26,000 apartments inthe next 3 years for lower and middle income group.b) Government has taken the steps to revise National Housing Policy, 1999to make housing and construction activities safer, sustainable andstreamlined.c) Acceptance of investment incurred for the purchase of flat orconstruction of house without any question by paying a tax at thespecified rate.d) To discourage import of tiles and sanitary ware items supplementaryduty on imports increased to 45% in place of existing 20%.e) Targeted GDP growth rate 10% by 2017 and share of industry 40% inplace of existing 28%(d)Market RisksMarket risk refers to the risk of adverse market conditions affecting the salesand profitability of the company. Mostly, the risk arises from falling demand forthe product or service which would harm the performance of the company. Onthe other hand, strong marketing and brand management would help thecompany increase their customer base.Management perceptionRAK has strong brand equity in the local market and due to their foreignaffiliation; they are able to produce quality products at affordable prices.Moreover, for a growing economy like Bangladesh, there would always bedemand for Tiles and Sanitary Ware. The recent movement of the Governmentto permit the more in the housing sector will also roar the ceramic industry as aresult RAK is expecting to have a significant market share in the upcomingdays. Additionally, RAK is continuously penetrating new markets anddeveloping new products to minimize the risk. The real estate developers havecontributed immensely to the growing urbanization of the country. Thefinancing provided by the specialized house finance institutions, multi productfinancial institutions and banks have provided a fillip to the real estate industry
and, in tandem with the real estate developers contributed to a boom in thesector. This scenario is expected to continue in the foreseeable future.Therefore, the demand for tiles & sanitary wares in the country will continue toincrease significantly. The industry friendly reformist budget for 2009-10 hasintroduced various schemes for housing and real estate sector which willstrengthen construction & contracting sector demand in coming years.(e)Technology related RisksTechnology always plays a vital role for the existence of any industrial concern,ensuring better services to the customers and minimizing the cost in variousaspects. The production facilities of the company are based on currentlyavailable technology. Any invention of new and more cost-effective technologymay cause technological obsolescence and negative operational efficiency. Anyserious defects in the plant and machinery may affect production andprofitability calling for additional investment for replacement.Management perceptionRAK is continuously upgrading its technological levels and making itcomparable to that of any other country. Establishment of new technology, on aregular basis substantially reduces cost & risk factors. RAK Ceramics has beenknown as modern technology and state of the art facilities with R&Dinfrastructure and shall be able to adapt to any new inventions with moderateinvestments. It uses latest Italian technology for its Tiles & sanitary wareproduction and also has a very modern testing lab. The Company has access tointernational/multinational companies for supplying appropriate technologyand technical management support for operation of new projects & its foreignaffiliation with RAK Ceramics PSC, UAE for technical know-how and technicalassistance, the company is expected to be always ahead of the other producersin the local market which ultimately reduces the technology related risks for thecompany.(f)Potential or Existing Government RegulationsThe Company operates under Companies Act 1994 and other relatedregulations, Income Tax Ordinance 1984, Income Tax Rules 1984, Value AddedTax (VAT) Act 1991 and Value Added Tax (VAT) Rules 1991. Any abruptchanges of the policies made by the regulatory authorities may adversely affectthe business of the Company.Management perceptionUnless any policy change that may negatively and materially affect the industryas a whole, the business of the Company is expected not to be affectedsignificantly. Ceramic industry in Bangladesh is an emerging sector withconsiderable local demand for differentiated product lines. Therefore, it is highlyunlikely that the Government will initiate any fiscal measure having adverseeffect on the growth of the industry.
Page 1 and 2: RAK Ceramics (Bangladesh) Limited(I
Page 3 and 4: Executive SummaryDate of Incorporat
Page 5 and 6: Directors’ involvement in other o
Page 7 and 8: Performance at a Glance:Tk. in mill
Page 9 and 10: Net Tangible Asset per Shareas on 3
Page 11 and 12: IPO process under Book Building Met
Page 13 and 14: (ii)Valuation based on Dividend Dis
Page 15 and 16: Consent of the Eligible institution
Page 17: Company. If exchange rate is increa
Page 21 and 22: Management perceptionThe Company pl

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