Confidence Cement in Bangladesh has announced an investment of approximately BDT8.15bn (US$6.1m) to construct a new cement factory near the capital, Dhaka. This initiative aims to expand its operations and capture a larger share of the Dhaka-centric cement market. The plant, located in Narsingdi, is expected to commence operations in the first quarter of next year, with a production capacity of 1.8Mta.
In related news, local media reported that Confidence Cement has requested the Bangladesh Securities and Exchange Commission (BSEC) reconsider its recent decision to reject the company’s proposal to raise BDT1000m through a rights issue. The company urges the regulator to approve the proposal in the best interest of the capital market and its shareholders. However, the BSEC issued a letter on 29 June, stating that it was "not in a position to grant consent" for the capital raising plan.
In a letter dated 10 July, the Chattogram-based cement manufacturer requested that the regulator review its earlier decision, asserting, "We believe that the rejection may have resulted from some misinterpretation or inadequate consideration of supporting facts and documents."
Confidence Cement, a subsidiary of Confidence Group, further clarified that its stand-alone net operating profit has been under pressure due to macroeconomic factors and industry-specific challenges, such as foreign exchange volatility and rising raw material costs. Nevertheless, the proposed rights issue is part of a strategic financial plan designed to strengthen the company’s fundamentals.
According to the letter, 50 per cent of the proceeds from the rights issue will be allocated to repaying existing loans, which is expected to reduce the company’s annual interest expenses by over BDT70m and enhance future cash flows. The remaining funds will be invested in Confidence Cement Dhaka Ltd, currently an associate company, to convert it into a majority-owned subsidiary.
"This strategy is intended to ensure a turnaround in core profitability and improve the company's ability to pay dividends post-implementation," the letter stated.
by Abdul Rab Siddiqi, Pakistan
