RAK Ceramics (Bangladesh) Limited - DSE

RAK is greatly dependent on imported raw materials and also, supply of thoseraw materials cannot be ensured locally in case of crisis. Additionally, there isalways a natural resources constraint in any specific area. Moreover, the localsources of raw material may be affected by any uncontrollable event or countryrisk to transaction or political barrier.Management perception: RAK is currently importing major raw materialsfrom overseas based on quality and competitive prices. RAK has diversifiedsources to procure raw material and it is able to utilize the sources of parentCompany RAK Ceramics PSC, UAE. RAK has backward integrated ventureswhich are always on task to globally source alternative sources. It has highlyqualified R&D team at head quarter which is capable to alternativecombination, mix to mitigate/absorb input price/source risk. Therefore, theoperational risk involved with the input materials is insignificant for thecompany. The management perceives raw material risk to be a manageable riskas the company has sustainable margin of safety.(n) Risk associated with capital market:An active trading market for RAK’s shares may not develop. The prices of theirshares on the Stock Exchanges may fluctuate as a result of several factors,including:• Volatility in the Dhaka and Chittagong securities markets.• Results of operations and performance, in terms of market share.• Performance of Bangladesh economy and changes in governmentpolicies.• Changes in future business operation and expansion of RAK’sbusiness.Management perception:Bangladesh capital market in last two years has grown significantly. Expertsview the Bangladesh market as one of the emerging markets in Asia. Moreover,the company has been showing steady earnings growth since its inception, and,therefore, the chance of adverse fluctuation in its market price because of thechange in the performance of the company is remote. The Government hastaken the development of securities market as a challenge and initiated anumber of market friendly policies. Therefore, management expects that themarket will be gradually matured and stabilized. Management also expects thatthe forthcoming developments in fiscal and environmental regulations will makethe market more buoyant.