Two business groups are set to join the cement manufacturing market with about Tk 5 billion investment by the beginning of next year amid the sector's steady growth of around 15 per cent annually.
Bengal Group of Industries and Aman Group are planning to put their money in this sector as they see a shining future of cement, one of the key backward linkages of the growing construction and real estate sectors.
"Bangladesh has been rapidly urbanising and the speed of urbanisation will be geared up in the future. So the investment in cement manufacturing will be an intelligent move," Bengal Group director Firoz Alam told The Financial Express.
The group, a pioneer in plastic processing industry in the country, is stepping into this sector for the first time after expanding their business in media, real estate, packaging, chemical, food processing, paper etc.
"We have decided to primarily invest around Tk 2.3 billion to set up a plant with capacity to produce 3200 tonnes cement per day," said Mr. Alam, who is looking after the new venture.
Bengal Group is a market leader in producing cement bags which will be a great advantage for the business group, he said.
Aman Group is already in the cement business under the name of Aman Cement Ltd with very little capacity. The new venture will be named Aman Cement Mills Unit-2 Ltd. with a production capacity of around 5000 metric tonnes per day.
Aman Group is constructing their factory in Munshiganj on 300 acres of land. The total investment of the company in the new project is around 2.7 billion, company sources said.
"We will use only 60 per cent of production capacity primarily and produce only high-value products in the second unit," Sirajul Islam, a senior officer (admin) told FE. He is looking after the project.
"We expect the new Aman Cement project will come to the market by March next year," he said.
Like other sectors, the cement industry was affected in 2013 due to political unrest. Still the sector saw around 10 per cent growth.
In 2014, cement consumption grew 12 to13 per cent, according to an industry insider.
According to a market research firm, cement consumption growth was 3 per cent in January, 13 per cent in February and 23 per cent in March this year.
Abdur Razzak Chowdhury, general manager of Tiger Cement, said the installed capacity of cement factories in the country is 33-35 million tonnes a year, while annual demand is 20-21 million tonnes as of 2014.
He said: "Most plants operate at 50 to 60 per cent efficiency, which is why we still have scope for cement growth."
There are 31 companies operating in the market now although some 71 companies are registered with the Office of The Registrar of Joint Stock Companies and Firms.
"Some of them stopped operating," Mr. Chowdhury said.
Contacted, Policy Research Institute (PRI) executive director Ahsan H Mansur said there are huge opportunities of investment in the sector, but it needs restructuring.
"Some companies will be out of the market, some big players will join," he said adding that Bangladesh is largely non-urbanised, so the potential is there.
Firoz Alam said it is very common in the business that uncompetitive companies leave the market to competitive players.
"It is true that political instability left scars on the businesses of the country, but our research says there is massive potential in the sector," he said.
He said Bangladesh has become cement exporting country and there is also huge potential to grow.
Bangladesh exports 40,000 to 50,000 tonnes of cement a month to the 'seven sister' states of India.
However, Indian manufactures are now offering cement at lower rates than Bangladeshi companies due to tax benefits.
Mr Chowdhury said it is very much possible to export again to India and other new markets if government takes some measures including giving tax benefits to the exporters.
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