RAK Ceramics weighs up India IPO

RAK Ceramics raised US $250 million in Bangladesh.

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RAK Ceramics, the global tile manufacturer based in Ras Al Khaimah, is considering an initial public offering in India to capitalise on the company’s distribution success in the country and raise new funds.

The issuance would follow the US$250 million raised by the company in an IPO in Bangladesh, where the company has one of its factories, said the marketing manager to Construction Week yesterday.

“In India three out of every four tiles is from RAK Ceramics,” said Abdullah Mahmood. “In Bangladesh we had set a record for the IPO with the highest subscription rate, at 1.8 million, and we raised US$250million. Given that success we are very much looking at the Asia market and right now are considering an IPO in India.”

The initial valuation for the Bangladesh IPO stood at 48 taka, added Mahmood, though the stock price of the company quickly rose to as high as 270 taka.

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RAK Ceramics, a US$1billion conglomerate with a main showroom just outside the main city in the emirate, produces tiles, kitchen and sanitary-ware. It has been one of the most successful construction-linked manufacturers in the last year, producing a capacity of 117,000 million square metres of tiles annually, distributing to more than 150 countries.

Last year saw sales growth of 16.5% and a 20% increase in profits, according to Abdallah Massaad, deputy chief executive.

“Today, despite a downturn in Europe that saw some countries reduce demand by as much as 40%, RAK Ceramics has grown to be even stronger than before the crisis,” he told journalists. “There were a lot of small traders that disappeared, and we took more market share even if the volumes decreased.”

The expansion plans – with the company already selling into Africa, MENA and Australia - mirror the customised tiles produced, he added. “You will see form our ranges that they are very diversified. In each factory there are designers and we have between 25-30 designers in this office.”

RAK Ceramics' stock price has declined almost a third so far this year on the Abu Dhabi Exchange, closing yesterday at 69 fils having started the year at AED1.03. Massaad declared a fall in volumes of between 10-15% "not really an issue" to its growth expectations.