RAK Ceramics acquires its Iranian subsidiary RAK Iran

UAE-based RAK Ceramics announced that it has acquired 20 per cent of the minority share in its Iranian subsidiary RAK Iran, fully buying the unit.

The deal is subject to regulatory approvals, the company said in a statement.

With full ownership of the subsidiary, RAK Ceramics said that it has “a long term vision for the Iranian market both domestically and as an export centre in Central Asia as the sanctions regime gets lifted.”

The company did not specify whether it will expand into newer markets within the Central Asian region or ramp up production within its Iranian facility post the deal.

Financed by the World Bank, RAK Ceramics first set up Iranian operations in 2003 in order to tap into the country’s natural resources. The move also provided RAK Ceramics with easy access to markets including Russia, Central Europe and Central Asia.

Currently RAK Ceramics has three production lines in Iran with an annual production capacity of nine million square metres.

“Our facility in Iran which, like the rest of our global manufacturing units, is equipped with the best machinery and infrastructure in our industry,” said RAK Ceramics CEO Abdallah Massaad.

“Therefore, once sanctions are lifted, we are fully prepared to maximise our operations by integrating the Iran facility seamlessly into the group. This strategy is in line with our value creation plan and will not only unlock hidden value, but position us to increase market share in high-end markets”

RAK Ceramics’ acquisition comes even as the firm booked losses in its Iran and Sudan units last year due to hyperinflation.

The ceramics maker sold off the loss-making unit in Sudan and has closed its manufacturing operations in China earlier this year, as it closely pursued a policy of dispensing its non-core assets to boost profits.

In another string of sell-offs, RAK Ceramics divested its share in the adhesives firm RAK Laticrete while it exited from RAK Pharmaceuticals in Bangladesh last year.

Massaad has previously said that the company will continue to concentrate on its ceramics production, focusing mainly on its factories in India and Bangladesh to drive profits.