SS Steel to acquire Southeast Union Ceramics

SS Steel Limited – a listed company in the engineering sector – is going to acquire the country's largest coal-based Southeast Union Ceramics Industry Limited.

As part of the move, SS Steel will buy the ceramic company's 75% share.

The SS Steel board of directors decided to invest Tk200 crore to acquire 75% shares of the ceramic company, subject to approval of the shareholders in an extraordinary general meeting (EGM). The EGM venue, date and time will be notified later.

The company's Chairman Javed Opgenhaffen told The Business Standard that the ceramic sector, especially when it comes to manufacturing tiles, has a huge scope of doing good business in local and overseas markets.

"We want to buy the company following the approval of the shareholders as well as the regulators concerned. After the completion of purchase, shareholders will benefit from this investment," he said.

A detail on the investment will be disclosed in the EGM, he added.

Southeast Union Ceramics Chairman SM Amzad Hossain, however, refused to comment on the acquisition of the ceramic industry.

Located in Bagerhat, Southeast Union Ceramics is a China-Bangladesh joint-venture initiative with an investment of Tk950 crore.

A few Chinese investors and Lockpur Group are currently the owner of the company that manufactures ceramic tiles.

Currently, SM Amzad Hossain is the chairman of Southeast Union Ceramics, Lockpur Group and South Bangla Agricultural Bank altogether.

SS Steel's share price rose 59% to Tk22.80 at the Dhaka Stock Exchange (DSE) in the last one month.

Javed Opgenhaffen is also the chairman Fu-wang Ceramic Industries Limited, which is listed on the capital market.

In August 2020, SS Steel acquired Chattogram-based Saleh Steel Industries Limited worth Tk160 crore.

In November, the stock market regulator set up an inquiry committee to investigate the SS Steel decision to invest around Tk160 crore in the acquisition of 99% of Saleh Steel Industry's stakes.

Southeast Union Ceramic

In June 2016, Lockpur Group and Chinese investors signed a Memorandum of Understanding (MoU) to set up a coal-based ceramic industry in Bangladesh. The ceramic company started commercial operation in April 2017.

In an inaugural press briefing, SM Amzad Hossain said: "We set up the coal-based ceramic industry because it is more likely to get an uninterrupted gas supply compared to gas-based ceramic industries in Bangladesh.

This industry's tiles production capacity is 4.30 lakh square feet daily. About 1,050 technical staff and workers work for this industry, of whom, 50 are Chinese nationals.

The company runs under the Chinese management in which Le U is the managing director.

According to the company, all raw materials including coal are imported from China, Malaysia, Indonesia, Vietnam and India to meet the industry demand.

It also sells tiles in the local market under Seucl and Fondi brand name.

Ceramic Sector

According to the Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA), the sector has a total investment of Tk8,958.70 crore and it has shown 200% production growth over the last 10 years.

At present, there are 66 ceramic brands in Bangladesh including those of tableware, tiles and sanitary ware. Every year, ceramic products worth about Tk6,000 crore are sold in the local market.

At present, about 5 lakh people are directly and indirectly involved in the industry.

Over the period, some companies including Monno, RAK, Shinepukur, Fu-Wang and Mir ceramics made huge investments in the sector.

However, they showed more interest in producing tableware ceramics. As demand for tiles and sanitary ware increased, investment also grew in the last decade. 

BCMEA president Md Shirajul Islam Mollah said: "I hope the ceramic industry will be the third largest export sector in Bangladesh by 2024 after the garment and leather industries."