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. Currently capacity of the industry is about 20 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 is 65 kg (FY2009) while India and Pakistan, our two neighbors, have
per capita consumption of 135kg and 130kg respectively. This indicates massive scope for
growth in the Bangladesh cement industry in the long term.

The pricing of cement of various players in the industry are very close to one another. Currently,
the standard price of one bag of cement produced by the multinational & local cement
companies ranges within BDT 450 to BDT 500 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 portfolio is made up of two multinational and three local cement companies. The
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 handsome 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 1.45 was crore tonnes. Dhaka and Chittagong account for nearly 65 percent of total
consumption. Bangladesh is self-sufficient in producing cement and can meet the local demand
entirely from domestic proction. Currently the aggregate production capacity of all cement
companies are more than market demands. Infrastructure, industrialisation, urbanisation 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 cement-
manufacturing 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)

2011 TK. 4.5 per share of TK 10/- each

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