UAE's RAK Ceramics to raise capacity in India, Bangladesh

RAS AL KHAIMAH Tue Apr 1, 2014 8:58pm IST

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RAS AL KHAIMAH (Reuters) - UAE-based Ras Al Khaimah Ceramics RKCE.AD, one of the world's biggest makers of floor tiles, plans to invest $80 million this year on plant expansions in India and Bangladesh as well as technology upgrades at other plants, its chief executive told Reuters.

"This year we have an expansion coming," Abdallah Massaad said, adding that new Indian production would start coming onstream in June.

The company, which makes ceramic wall tiles and sanitary ware as well as floor tiles and is part owned by the ruling family of the emirate of Ras Al Khaimah, posted revenues of 3.5 billion dirhams last year.

"This year we have spending on CAPEX of $80 million."

It is boosting annual production in India to almost 800,000 pieces of sanitary ware from 300,000 to meet rising demand.

Besides India, it runs plants in the United Arab Emirates, which accounts for around 70 percent of its overall production capacity, Bangladesh, China, Iran and Sudan. Its capital expenditure totalled $60 million in 2013.

In Bangladesh, RAK Ceramics RAKC.DH plans to increase annual capacity by 3.5 million square metres of tiles from the current 7 million, and by 350,000 pieces of sanitary ware from 1 million, Massaad said.

The company is also upgrading technology at factories in the UAE and elsewhere. "Within the next two months, we will have technologies to produce the largest slabs available worldwide," he said.

RAK Ceramics, in which Ras Al Khaimah's ruler Sheikh Saud bin Saqr al-Qassimi owns nearly 48 percent of the shares and the emirate's government holds a further 5 percent, will finance its expansion through bank loans. Bond issues have not been considered, Massaad said.

Overall, the group has an annual capacity of 117 million square metres of tiles and 4.5 million pieces of sanitary ware, its core businesses. It can also produce 24 million pieces of tableware annually.

The company's Abu Dhabi-listed shares are up 24 percent so far this year, outperforming a 15 percent rise in the stock market index .ADI.

EXPANSION

Massaad said a decision was likely to be made this year on possible further expansion plans, given a strong outlook for the construction industry as the UAE and other markets emerged from the global financial crisis.

"We are studying opportunities for expansions ... in our core business, tiles and sanitary ware. It might be in Ras Al Khaimah or outside," he said.

RAK Ceramics saw its consolidated net profit jump 22 percent to 272 million dirhams in 2013 while revenue rose 11 percent.

In March, a source familiar with the matter told Reuters that the ruling family of Ras Al Khaimah was exploring a sale of its shares in RAK Ceramics; the family wanted to sell a minimum of 25 percent of the company and conceivably all of its stake, the source said.

Massaad said he could not comment on the issue as the company had not been briefed about its major shareholder's intentions.

(Editing by Andrew Torchia and Susan Fenton)

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