RAK Ceramics to begin local faucet production soon

RAK Ceramics, a UAE-based multinational firm, is one of the market leaders in the country's ceramic industry for years. 

In an interview with The Business Standard, SM Arafatur Rahman, deputy general manager of the company, discussed the challenges the company is currently facing, the strategic measures being implemented to overcome them, and the future plans aimed at sustaining growth and expanding market presence.

Amid the various challenges currently faced by business communities, such as high inflation, foreign currency issues, and gas shortages, how is your company surviving?

The gas shortage is our main problem. Due to this, we have been operating the factory at 50% capacity, which has resulted in our inability to meet market demand. The situation has also increased our overhead costs, leading to a reduction in the company's profit margin.

Additionally, RAK Ceramics is entirely dependent on imported raw materials, as they are not available in the local market. The continuous depreciation of the taka against the dollar has been driving up the cost of these raw materials.

However, high inflation has not diminished our demand, which is the only respite for the company. This is because we are pioneers in the premium segment, a market where high inflation has not had a significant impact.

Have you found any alternatives to alleviate the gas shortage?

We believe the gas crisis will not end soon, so we have made several alternative arrangements. In the meantime, we have installed the latest technology generators, which provide double the output with less gas. Additionally, we are keeping the option to use LNG open.

How much have the product prices increased in line with surging costs?

It is not possible to maintain high-quality products while compromising on retail prices due to the rising cost of raw materials. Therefore, we have increased product prices, but this has not been sufficient to improve our profit margin, as the company cannot fully pass the inflation burden onto customers.

What measures have you taken to cut the company's costs?

We have not laid off any staff due to cost overruns, as it is not a permanent solution. Instead, we have increased cost efficiency in product manufacturing and sales.

The market has become increasingly competitive over the past decade. How is this creating challenges for RAK?

In the competitive market, we are ahead in terms of revenue, even though the sales volume of others has increased, because we are the main choice of customers in the premium segment. However, a price war is ongoing due to the rise in competitors.

As a multinational company, RAK always provides high-quality products and ensures compliance with VAT and tax laws, which results in higher costs and, consequently, higher product prices. When we increase prices, we engage in a price war with competitors who compromise on quality to offer lower prices.

RAK has factories in 153 countries. Our parent company in the UAE boasts a strong research and development wing that continuously introduces new designs and quality improvements. We simply adopt these new items and implement them here, putting us far ahead of our local competitors.

Tell us about your sanitary ware business.

RAK is the number one company in the country's sanitary ware segment. We produce sanitary ware locally, maintaining the international standards set by our parent company. Our business in this segment grows by around 15% annually.

Is there an opportunity to export tiles and sanitary products from Bangladesh?

Currently, we are exporting some products, but most of them are orders from our parent company.

There is an opportunity to export products from Bangladesh, but it is difficult because our main raw materials, clay and silica sand, are completely import-dependent. China and India source these raw materials domestically, making it challenging to compete with them in the international market.

However, if the government provides special facilities for export, there is potential for us to do well in the international market.

What are the company's future plans?

We are constantly updating our technology for producing tiles and sanitary ware. Along with increasing demand, we are also expanding our production capacity.

Beyond this, we have entered the faucets market. Currently, we are importing these products from our parent company and supplying them to the local market. 

We have a factory in Gazipur to manufacture faucets locally, and it is expected that this factory will go into production soon.