Bangladesh is now going through a major development phase with a number of mega projects like Padma Bridge, Rooppur Nuclear Plant, Rampal Power Plant etc. Obviously, there is a spree in the demand for cement as a vital construction material. Being a leader in the domain of cement manufacturing and providing solutions, LafargeHolcim Bangladesh Ltd. (LHBL) is utilising every opportunity to contribute to this pace of economic progress as well as to help consolidate sustainable development in the country.
Rajesh Surana, CEO of LafargeHolcim Bangladesh Limited recently spoke to The Financial Express about the opportunities and challenges of the industry as well as on the company's vision.
The excerpts are as follows:
Q1: What is the present scenario of cement industry in Bangladesh?
Ans: In terms of the market size Bangladesh cement capacity is approximately 50 million tonnes (MT) while the demand is approximately 30 million tonnes. There are approximately 35 cement players which is dominated by domestic grinders. LafargeHolcim Bangladesh is the only major fully integrated cement manufacturer with our own mines in India & clinker & cement producing facilities in Chhatak & other locations.
Bangladesh is now going through an extensive development phase. Obviously, there is a huge demand for cement as a key construction material. With a consistent GDP growth of 7.0 per cent above, the demand for cement is expected to grow consistently. Rapid urbanisation and increasing ability of individual builders always push the demand up while realization of mega projects including several infrastructure development programs would play a dominant role in raising the demand.
Q2: It is said that the cement industry in Bangladesh is already saturated. Do you agree?
Ans: The current industry is fragmented with multiple players in the market and lower capacity utilisation. The competition is cut throat, which is beneficial for the end customer.
In the long run the market is expected to expand further. The per capita cement consumption is approximately 120 Kg which is much lower than other South Asian countries such as India, Malaysia, Singapore etc.
Q3: Given the fact that urbanisation is growing fast and there is concentration for mega infrastructure Projects, do you think there will be more opportunities for cement industry to expand?
Ans: Certainly. The cement manufacturing sector will become more vibrant with massive infrastructure projects coming up. However, demand for specialised cement will also grow as several projects will need that for appropriate build-up and sustainability. LH has pioneered on specialised solutions globally and bringing in state of the art technology and innovative solutions to Bangladesh.
Q4: The two big companies - Lafarge and Holcim have merged. How do you think the investors as well as the customers will be benefitted?
Ans: The Integration of two premium and well respected Companies has lot of synergies and benefits to the customer. Now LH Bangladesh has one fully integrated plant in Chhatak and three grinding stations in Dhaka and Khulna. With over 4.2 million tonnes of cement capacity and Pan Bangladesh presence, we are able to supply to customers much faster. The technical support team continues to develop innovative products and solutions of the benefit of the customers. With over 500Mn USD investment we are very proud to create together a direct and indirect employment opportunity for over 2500 people.
Our Corporate Social Activities (CSR) have helped changing the landscape of Chhatak and communities on both side of the border. With every tonne of clinker produced by us, the country saves approximately 30 USD in foreign exchange. We are also one of the highest taxpayers in the country.
We are proud to be an effective partner in nation building and together at LH we expect to continue this journey even more strongly than before.
Q5: As a merged entity, you are a major and powerful player in the cement market. Do you think that this will be a threat for the smaller operators?
Ans: Not at all. In fact we are very small compared to the market. Together we have approximately 8.0 per cent market share only. The Bangladesh Cement market is 80 per cent local producers and multinational Companies have less than 20 per cent share.
Out contribution is more towards bringing new products and solutions, improving cost and efficiency, bring in customised solution than gaining and dominating market share. We are very happy to remain in that place.
Q6: What are the basic differences between your plants and those of the others?
Ans: Our investment by far is the largest in building material industry with 100 per cent value addition. We create significant job opportunities for the local people. We also have a number of success stories where local Bangladeshis are now working at senior roles outside Bangladesh in our various group Companies and in head office. Our investment in Chhatak is also a symbol of friendship between India and Bangladesh. It's a unique set up where the basic raw material is extracted from Meghalaya India and is brought to Bangladesh through a 17 Km long Conveyor belt. In addition, our investment has created a number of other opportunities for people around the communities and have given rise to new avenues for growth (ancillary businesses such as transportation, food).
Q7: Recently you have started producing specialized cement. Do you think the Bangladesh market is ready for such specialized cement?
Ans: Bangladesh is already poised for an appreciable socio economic standard. There are some key installations being constructed which very much need specialized cement for better sustainability. The Rooppur nuclear power plant is one such example where we have already supplied specialized cement. Moreover, recently we have launched Plastercrete which is also a special quality cement that ensures smooth finishing thus satisfying customer's desire for aesthetic quality. We hope the demand for specialised products will grow in near future.
Q8: What would you like to see your company to be in the next five years?
Ans: I would like to see LafargeHolcim Bangladesh Limited to be the best building materials solutions and services provider in Bangladesh. We want to be the most trusted name in the sector, the employer of choice and an accepted name for quality and reliability. With our strong values of health and safety standards and integrity & compliance, we want to be a proud partner in the future of Bangladesh.