UAE-based RAK Ceramics has announced that its Bangladesh unit is exiting RAK Pharma, its pharmaceutical interest in an effort to refocus on its core business of ceramics production.
RAK Ceramics Bangladesh, which currently has a 55 per cent stake in RAK Pharma, said that its board has approved the sale of 77.5 per cent of shares of the pharmaceutical unit for $9.5 million to an undisclosed buyer.
The company will sell its entire stock in RAK Pharma along with some minority shareholders, a statement said.
“The decision to sell RAK Pharma was taken for two reasons,” said Abdallah Massaad, CEO, RAK Ceramics.
“Firstly, our strategy is to focus on our core activities – tiles, sanitary ware, taps and faucets and tableware.
“In addition, RAK Pharma is currently a loss-making division so it makes good business sense to sell it at this time. The RAK Ceramics Bangladesh board had previously approved the increase in capacity of tiles and sanitary ware production in Bangladesh and this expansion is already underway and will be completed in 2015.”
Massad was quoted as saying earlier this year that RAK Ceramics was looking to refocus on its core strategy after the company’s earnings were dragged down by its non-core businesses.
In line with this strategy, the company recently announced its exit from its Sudan business. It said that it will use the cash from the deal to fund its UAE business expansion.
Providing a boost to its business in the Emirates, RAK Ceramics said that it is planning to raise its annual sanitary ware capacity in the UAE to 500,000 pieces.
The company also invested around $80 million in upgrading technology in its factories in India and Bangladesh earlier this year.
RAK Ceramics operates plants in India, the UA (which accounts for around 70 per cent of its overall production capacity), Bangladesh, China and Iran.