RAK Ceramics downgraded to Z for the first time over dividend default

RAK Ceramics (Bangladesh) Limited, the local arm of the UAE-based multinational ceramics manufacturer, has been downgraded to the "Z" category — commonly referred to as the junk category — for the first time in its history, due to its failure to disburse dividends on time.

The Dhaka Stock Exchange (DSE), in a notice published on its website, announced that RAK Ceramics has been moved from the "A" to "Z" category, effective from Monday. 

It also advised stockbrokers and merchant bankers to refrain from providing margin loan facilities for purchasing the company's shares.

Following the announcement, RAK Ceramics' share price dropped by 3.74%, closing at Tk20.60 — the lowest in over two years.

Back on 27 January, the company had proposed a 10% cash dividend, equivalent to Tk43 crore for 2024, which shareholders approved at the annual general meeting (AGM) held on 22 March.

According to listing regulations, listed companies must disburse declared dividends and submit a compliance report within 30 working days of the AGM. Failure to do so results in downgrading to the Z category, as per a directive from the Bangladesh Securities and Exchange Commission (BSEC).

Muhammad Shahidul Islam, company secretary of RAK Ceramics, told TBS that a significant portion of the company's shares is owned by UAE-based investors. Disbursing dividends to these foreign shareholders requires prior approval from the National Board of Revenue (NBR).

"We applied to the NBR for the necessary approval, but have yet to receive consent. That's why we couldn't complete the full dividend disbursement," he said, adding that dividends for local shareholders have already been paid.

"We hope to get the NBR's approval soon, and once the dividend is disbursed to foreign shareholders, we expect to return to the 'A' category," he added.

According to the company's shareholding report, UAE-based RAK Ceramics PJSC holds 68.13% shares of the Bangladesh part, while SAK Ekramuzzaman, managing director of RAK Bangladesh, owns 3.95% shares, and the remaining shares are owned by the general shareholders.

Production setbacks amid gas shortage

RAK Ceramics Bangladesh experienced a significant 15% decline in revenue in 2024, as disrupted gas supply prevented the company from fully utilising its production capacity.

In a disclosure, the company stated that inadequate gas supply had severely impacted production, resulting in a net loss of Tk2.73 crore for the year. Its revenue fell to Tk667 crore, down from Tk782 crore the previous year. The company also reported a loss per share of Tk0.06 at the end of 2024.

Explaining the financials, the company said the decline in sales stemmed from a demand-supply gap caused by the underutilisation of plant capacity due to the unstable gas supply from the national grid.

The downward trend continued into the first quarter of 2025, with RAK Ceramics reporting a net loss of Tk2.53 crore. Revenue during the quarter dropped by 17% year-on-year to Tk147 crore.

Sadhan Kumar Dey, chief executive officer of RAK Ceramics, said, "We have been going through a very difficult period over the past few years, mainly due to the acute gas crisis."

"In my entire career, I have never experienced such a situation. It's highly uncertain when or if we will receive a full-pressure gas supply," he added.

To address the issue, Sadhan said the company has applied to Titas Gas for a dedicated gas line, but has yet to receive a response.