'RAK rises at people’s footfalls'

RAK Ceramics Bangladesh Ltd, a joint venture of UAE-based ceramic giant RAK, entered the industry in the early 2000s and has played a vital role in the industry's gradual dominance over imports. RAK is leading a fast-growing local market for ceramic tiles and sanitary ware. Its Finance and Operations boss Sadhan Kumar Dey recently talked to The Business Standard Staff Correspondent Ahsan Habib Tuhin.

TBS: Earlier tiles were a fancy material for average homebuilders, but now it is almost an integral part of construction. As a leading company did RAK play any role in this change?

Sadhan Kumar Dey: The transition of a product from the list of luxury items to necessity depends on the product's advantage and utility. Examples include the aviation and cellphone industries. These have become popular as people began to understand the value of time and communication.

Moreover, to consider a luxury item as a necessity, two things are very important-- price and per capita income.

The per capita income of Bangladeshis is increasing day by day. On the other hand, if the product price is high, it will remain a luxury item for people.

Once tiles used to cost over Tk70 per square feet due to import dependency. After we started production locally, it dropped to Tk40.

Affordability has brought tiles within the reach of the mass people and RAK has been playing an important role in helping people prefer tiles.

It would not be an exaggeration to say that the evolution of the ceramics industry in the country has been tagged with the success of RAK Ceramics.

Our vision is rooted in our past and in addressing the future even as we deal with today's reality.

Our role is to ensure that RAK continues to play a leading role more as an institution than as a business entity.

RAK rises at your footfalls. We are counting your footfalls at RAK.

TBS: How do you see the current market for ceramics?

Sadhan Kumar Dey: Today we cannot think of any modern building floor without ceramic tiles because all the other flooring options-- marble, wood, net cementing and mosaic-- are either expensive or less hygienic or non-environment friendly and labour-intensive.

Flooring tiles have some unique advantages as well as being free from any of those problems.

Therefore, the market has grown steadily and is still growing.

Between 1962 and 2000 there were only four tile manufacturers, and by 2010 another nine companies entered the market. RAK is an early entrant among the second group.

In the period 2011-2021 the industry witnessed 18 more companies entering the business.

Now the combined manufacturing capacity of the industry is over 5 lakh square meters per day.

The data itself speak about the market, but it is important to note that the industry is almost reaching its ultimate market equilibrium point. Any additional supply can trigger rivalry between firms, leading to an erosion of profit to a point of no profit.

If aspiring entrepreneurs fail to assess that risk, it will not be long before history repeats itself in the cement industry.

TBS: Is there any problem with the tax structure for the ceramics sector?

Sadhan Kumar Dey: In my opinion the tax network is more important than tax structure. Once the tax net is larger, the tax structure will be more business friendly and both the government and the business community will enjoy the benefits.

With all due respect for the rules and regulations in place, there is always scope for improvement, to rethink or review. Our association is updating matters from time to time.

TBS: What steps did you take to offset the pandemic-driven disruptions?

Sadhan Kumar Dey: Like everyone else, we also had to face adversity because of the Covid-19 pandemic. After the 2020 shocks, we have increased our production and significantly strengthened the distribution channel to stay ahead in the market.

We have also started production of some sanitary ware, which was earlier being imported.

TBS: Ceramic is a resource hungry industry. Is your company doing anything to protect the environment?

Sadhan Kumar Dey: We are very much committed to protecting the environment. We are using recycled water up to 60%. A project is going on for recycling water up to 100%.

Besides, we are installing solar power at our factory premises, introducing a heat recovery system and reducing energy consumption.

In the last year, we have reduced 4-5% energy consumption in our factory. We are also reusing broken tiles to manufacture some components in the factory.

TBS: In this competitive market, why in your opinion are people buying your products?

Sadhan Kumar Dey: Our business is growing despite the increasing competition.

Here, we need to understand why RAK Ceramics is a preferential international brand in Bangladesh. Now-a-days people are searching for products that are authentic and the desire to become unique has become important.

Take any project. For example, different renowned builders bring different experiences to their customers, different projects create different emotions for their users.

There is also an increased desire for transparency from brands, so consumers can walk with the brands that align with their personal values.

We ensure that we value customers' desires and have top-quality products in the country in line with international standards.

We offer the same product—tiles and sanitary ware, as our competitors do. But the difference is our products embody people's emotions and dreams crafted on fire clay.

TBS: Why can't we export tiles and sanitary ware?

Sadhan Kumar Dey: Export potentiality depends on how your product is evaluated by your global customers. World class products do not ensure markets at the global level unless they fulfil some preconditions necessary to be export worthy first.

In our context, the ceramics tiles or sanitary ware industry faces some challenges in export. Material cost is high here compared to other neighbouring countries. Then there is the need for more care in handling tiles and sanitary ware that increases shipping cost, and the safeguard duty regime in some potential markets is top of the list.

I hope tiles and sanitary ware made in Bangladesh will be an attractive choice for global customers once the industry is allowed to operate from a dedicated economic zone, a trade treaty with potential markets will be in place and the transportation infrastructure will improve.

TBS: People are still using imported tiles and sanitary products. Can we get out of this trend?

Sadhan Kumar Dey: I do not think we can get out of this trend fully because of our perception about imported products, perception about our pride or even perception about richness.

This trend will continue even if all the world-famous tile companies are setting up their plants in Bangladesh. Imported tiles will still have a portion of the pie of the whole demand.

The good thing is, the localisation revolution has already taken place in Bangladesh.