Confidence Cement investing Tk 815cr to set up new factory

Confidence Cement PLC, a cement maker based in Chattogram, is investing Tk 815 crore to set up a new production facility on 10 acres of land in Narsingdi and cater to the future demand.

The move comes at a time when cement sales have nearly halved over the past few months as most private and public construction works have come to a screeching halt following the recent change in government.

Bangladesh has been gripped with economic uncertainty ever since the Sheikh Hasina-led Awami League government was ousted through a mass uprising on August 5, with many development projects now being put on hold or cancelled.

Md Delowar Hossain, company secretary of Confidence Cement, said they are establishing the new unit as their existing facility in Chattogram is only capable of meeting demand in that region.

Once complete, the new unit dubbed "Confidence Cement Dhaka Ltd" will be capable of producing 6,000 tonnes of the key construction material daily, he added.

Hossain also informed that the unit will create an opportunity for the direct employment of about 1,000 people once it begins operations in the first quarter of next year.

"About 80 percent of the construction is complete," he said.

According to Bangladesh Cement Manufacturers Association, there are roughly 30 factories across the country that can collectively churn out about 78 million tonnes of cement each year against a demand for around 40 million tonnes.

Some 13 banks and non-bank financial institutions are financing 70 percent of the total project cost while the rest is being paid from company equity.

Md Shafiqul Islam, vice president and head of debt capital market at Prime Bank PLC, said they and have successfully raised their share of Tk 558 as lead arranger through a syndicated blended credit facility.

Among the contributors, Bangladesh Infrastructure Finance Fund Limited provided support for purchasing energy efficient machinery with a 10-year repayment period.

Meanwhile, the loans from the remaining 10 banks and two non-bank financial institutions have a repayment tenure of up to seven and a half years.

Pointing out how Confidence Cement began operations back in 1994, Islam said the company is a pioneer in the domestic cement manufacturing and distribution business.

"But in the face of higher transportation and distribution costs, it has become difficult for the company to supply its cement products in Dhaka and the surrounding areas," he added.

Much of the demand for cement is Dhaka-centric as most private and public construction works are based in the capital.

Against this backdrop, the financiers of Confidence Cement Dhaka decided to facilitate the construction of a new manufacturing plant with an annual production capacity of 18 lakh tonnes in Palash upazila of Narsingdi, Islam said.

He also informed that the unit will be equipped with energy efficient machinery from Loesche, a leading German manufacturer of cement-making equipment like vertical roller mills.

"We are financing the project as our assessment found it is commercially viable," Islam said.