Abul Khair acquires Fahim Ceramics for Tk 500m
Sunday, 15 May 2011
Jasim Uddin Haroon
The country's largest conglomerate, Abul Khair Group, has made a forceful entry into Bangladesh's fast-booming ceramics sector after it bought leading manufacturers Fahim Ceramics for about Tk500 million. The steel-cement-milk-tobacco group has completed the purchase last month, nearly eight months after it inked a memorandum of understanding to take over the industrial plant and all its debts and liabilities, sources said. The purchase has firmed up the Chittagong-based company's presence in the construction sector where it has dominant stakes in cement, corrugated iron sheet and iron rod manufacturing. Owners are tightlipped about the acquisition, but officials told the FE that the company had already opened up a ceramics division within the group to double Fahim's production capacity and scour talents to run its business. "We have ordered new European machinery for the plant. We hope Fahim will emerge as a leading sanitary-ware maker once we overhaul its operation," said an Abul Khair official, speaking on condition of anonymity. He said the company first signed a MoU with Fahim's owner Faiz Ullah Khan in September last year. But Mr. Khan's untimely death just weeks after the deal delayed the handover process. Shamim Reza, brother in-law of Khan, told the FE Saturday that Fahim Ceramics had over Tk 300 million debt with Islami Bank and over Tk 100 million with a leasing company. "Under the deal, Abul Khair has assumed all of Fahim's debts and liabilities. It has already cleared Tk 100 million debt that we took from a leasing company," he said. He, however, refused to reveal full financial details of the acquisition. Officials claimed the figure to be over Tk500 million. Ghorasal-based Fahim Sanitary Wares and Fahim Marbles was part of a now defunct Shamanta Group, established by Khan in 2005. Mr. Khan set up the factory after returning from the United States. Built on 145,000 sft area on the bank of the river Meghna, Fahim can produce 25,000 units of sanitary wares a month. It is equipped with machinery from the world's top sanitary equipment maker, Segni of Italy. At present, RAK Ceramics is the country's largest sanitary-ware maker, manufacturing 3,000 pieces a day and accounting for some 40 per cent of the market. State-owned BISF and Dacca Ceramics are distant a second and third. Abul Khair's foray into the ceramics has created buzz in the fast-booming sector, with experts forecasting a consolidation and a new round of investment in the sector, worth around Tk 30 billion a year. Fakhrul Islam, professor of Glass and Ceramics department of BUET, told the FE sale of ceramics sanitary ware has been growing at an impressive 20 per cent a year ---almost double the growth of the construction industry. He said Bangladeshi companies have so far been focused on domestic market because of growing urbanization and a building boom in the country's major cities and district towns. "But the sector has some natural advantages that can make it a big export earner. We've natural clay at Bijoypur and abundant cheap labours that most of our competitors don't have," he told the FE. Islam said the deal made perfect sense for Abul Khair as it would help the company branch off into new construction sub-sector. "The same truck that carries Abul Khair's tin, rod and cement, will also carry sanitary ware. So the company won't need any extra investment to market its products," he said. Besides, Fahim has industrial gas connection, which made the company lucrative for acquisition at a time when it is impossible to get gas supply for a green-field plant, he added. Earlier, Mir Ceramics owned by leading businessman Mir Nasir Hossain wanted to buy the company but it backed off at the last moment because of Fahim's huge debt burden. "Our accounts department advised us not to strike a deal," Mir Nasir told the FE. Based at Asadganj, old Chittagong, the Abul Khair has grown into the country's largest commodity-to-construction conglomerate in recent years with annual sales around Tk100 billion. The group has stakes in steel, CR Coil, cement, powdered milk, tea, tobacco, condensed milk, match-box, juice, shipping, processed food and trading.
The country's largest conglomerate, Abul Khair Group, has made a forceful entry into Bangladesh's fast-booming ceramics sector after it bought leading manufacturers Fahim Ceramics for about Tk500 million. The steel-cement-milk-tobacco group has completed the purchase last month, nearly eight months after it inked a memorandum of understanding to take over the industrial plant and all its debts and liabilities, sources said. The purchase has firmed up the Chittagong-based company's presence in the construction sector where it has dominant stakes in cement, corrugated iron sheet and iron rod manufacturing. Owners are tightlipped about the acquisition, but officials told the FE that the company had already opened up a ceramics division within the group to double Fahim's production capacity and scour talents to run its business. "We have ordered new European machinery for the plant. We hope Fahim will emerge as a leading sanitary-ware maker once we overhaul its operation," said an Abul Khair official, speaking on condition of anonymity. He said the company first signed a MoU with Fahim's owner Faiz Ullah Khan in September last year. But Mr. Khan's untimely death just weeks after the deal delayed the handover process. Shamim Reza, brother in-law of Khan, told the FE Saturday that Fahim Ceramics had over Tk 300 million debt with Islami Bank and over Tk 100 million with a leasing company. "Under the deal, Abul Khair has assumed all of Fahim's debts and liabilities. It has already cleared Tk 100 million debt that we took from a leasing company," he said. He, however, refused to reveal full financial details of the acquisition. Officials claimed the figure to be over Tk500 million. Ghorasal-based Fahim Sanitary Wares and Fahim Marbles was part of a now defunct Shamanta Group, established by Khan in 2005. Mr. Khan set up the factory after returning from the United States. Built on 145,000 sft area on the bank of the river Meghna, Fahim can produce 25,000 units of sanitary wares a month. It is equipped with machinery from the world's top sanitary equipment maker, Segni of Italy. At present, RAK Ceramics is the country's largest sanitary-ware maker, manufacturing 3,000 pieces a day and accounting for some 40 per cent of the market. State-owned BISF and Dacca Ceramics are distant a second and third. Abul Khair's foray into the ceramics has created buzz in the fast-booming sector, with experts forecasting a consolidation and a new round of investment in the sector, worth around Tk 30 billion a year. Fakhrul Islam, professor of Glass and Ceramics department of BUET, told the FE sale of ceramics sanitary ware has been growing at an impressive 20 per cent a year ---almost double the growth of the construction industry. He said Bangladeshi companies have so far been focused on domestic market because of growing urbanization and a building boom in the country's major cities and district towns. "But the sector has some natural advantages that can make it a big export earner. We've natural clay at Bijoypur and abundant cheap labours that most of our competitors don't have," he told the FE. Islam said the deal made perfect sense for Abul Khair as it would help the company branch off into new construction sub-sector. "The same truck that carries Abul Khair's tin, rod and cement, will also carry sanitary ware. So the company won't need any extra investment to market its products," he said. Besides, Fahim has industrial gas connection, which made the company lucrative for acquisition at a time when it is impossible to get gas supply for a green-field plant, he added. Earlier, Mir Ceramics owned by leading businessman Mir Nasir Hossain wanted to buy the company but it backed off at the last moment because of Fahim's huge debt burden. "Our accounts department advised us not to strike a deal," Mir Nasir told the FE. Based at Asadganj, old Chittagong, the Abul Khair has grown into the country's largest commodity-to-construction conglomerate in recent years with annual sales around Tk100 billion. The group has stakes in steel, CR Coil, cement, powdered milk, tea, tobacco, condensed milk, match-box, juice, shipping, processed food and trading.