Confidence Cement PLC has announced plans to sell its entire stake in its Dhaka-based subsidiary to Confidence Power Holdings Ltd, citing a combination of financial obligations, strategic restructuring, and market headwinds in the cement sector.
The proposed transaction involves 14.09 crore ordinary shares priced at Tk 10 each, totaling Tk 140.97 crore, according to a disclosure on the Dhaka Stock Exchange (DSE) website yesterday.
Approved by the board on September 4, the deal is subject to shareholder approval at an upcoming general meeting.
Speaking to The Daily Star on the matter, Confidence Cement Company Secretary Delwar Hossain said the decision to divest its Dhaka unit is part of a “broader strategic shift,” as the company seeks liquidity to meet operational and financial obligations in a tightening market.
He also dismissed speculation in the industry that the transaction was a form of internal financial maneuvering.
“Not exactly. When a group has multiple units, each must maintain its own legal identity. That’s all this is,” he said.
“The process is fully transparent and aligns with all applicable guidelines,” he added.
Confidence Cement’s Dhaka unit, which has a production capacity of 6,000 tonnes per day, has yet to reach full commercial operation.
Citing macroeconomic factors and a prolonged slowdown in infrastructure projects, Hossain said, “The industry is going through a tough phase. There’s a notable slowdown in government infrastructure projects, which has significantly impacted overall demand.”
“To operate the production unit efficiently, we need funding. Since we currently lack adequate liquidity, we’re handing it over to a stronger entity that can manage it better,” he explained.
He confirmed that the unit’s name will remain unchanged: Confidence Cement Limited.
The move underscores the increasing financial strain faced by cement manufacturers, many of whom are being forced to rethink their business models amid a myriad of challenges, including declining demand, squeezed profit margins, falling investments, higher input costs, reduced private sector activity, and weak infrastructure spending by the government.
Confidence Cement’s stock closed at Tk 63.30 on the DSE yesterday, rising 1.44 percent from the previous day.
The company reported a profit of Tk 24.84 crore in the January-March quarter of this year, although earnings per share fell to Tk 2.88, down from Tk 3.00 in the same period last year.
DSE data show that, as of August 31, sponsors and directors held 30.34 percent of the company’s shares, while institutional investors owned 37.63 percent and the general public 32.03 percent
https://www.thedailystar.net/business/news/confidence-cement-sell-subsidiary-sister-company-3980146
