Chairman's Message

Dear shareholders,

RAK has a long and proud history with a product portfolio that spans hundreds of designs, patterns and sizes, meshed with functionality and affordability. This appeal was not lost of our customers, as they selected us as their go-to destination for tiles and sanitaryware products. It is the validation of brand trust and confidence that our Company was bestowed with the prestigious ‘No. 1 Ceramics Tiles Brand 2018’ honour, awarded by Bangladesh Brand Forum in partnership with Nielsen! This is truly an incredible achievement when one considers the plethora of choice available to customers in a highly competitive ceramics market of the country. This eminent honour is also an attestation of our efforts in successful brand management, and a reaffirmation of our commitment to our brand charter.

Through this statement, I would like to discuss the four key pillars that together make our enterprise a case in deep-rooted ceramic capabilities. These four pillars comprise:

  • Customer-centricity
  • Alignment of supply chain with demand
  • Consumer segmentation
  • Strong sense of current and future trends

Let us take each one of these for articulation in detail.

Customer-centricity

Customer-centricity is the most vital component of our success. Being customer-centric is a fulltime responsibility, and where we are far ahead vis-à-vis our competitors is in our ability to elevate a customer transaction into a fulfilling experience. While products and service can have a sort of a standardisation, what truly differentiates the customer engagement is their experience with us.

 In-store, we offer our customers the ability to select products based on the all-important ‘human touch’. This touch is represented by our highly knowledgeable and expertly trained staff who are ready with any information that a customer might need to decide on the purchase. Furthermore, our sales team is adept in managing all kinds of customers – first-timers, interior designers and other influencers, which supports the conversion of walk-in into sales.

Alignment of supply chain with demand

In our business, the calibration or alignment of supply chain with market growth is crucial. A mismatch can either lead to empty shelves, or overstocking, both undesirable situations. While unavailability of products can erode customer trust in the brand, overstocking can dent the business of the dealer, impacting market reputation of the brand. Hence, a delicate balance has to be ensured with a view to sustain viability.

At our Company, we not only operate a manufacturing scale that outcompetes our competitors, but also align this output with market demand in a way that our products meet the accessibility aspirations of our customers, while creating a fast-moving inventory for our dealers. We leverage the use of technology and our multiyear relationships with our logistics partners that together ensure a just-in-time supply that enable us to meet the objectives of all our stakeholders.

Furthermore, our vast design repertoire plays a meaningful role in accelerating product offtake.

Consumer segmentation

As in most countries around the world, Bangladesh too has a population that lives across the socioeconomic ladder. What amplifies the demarcation is the fact that the country has 163 million strong population, which means that consumer segmentation is not an option but a necessity. While most other businesses have a one-size-fitsall orientation, where we are different is we have engaged in extensive consumer segmentation that has not only enabled us to initiate targeted customer value propositions, but has also reinforced our ability to provide customised and best-fit solutions.

We have a no compromise culture, which means that we place quality and aesthetics above everything else. This means that even our lowestpriced tiles come with the highest quality assurance. This has hoisted the confidence our customers have reposed in us, enabling strong brand acceptance, which has made the Company rather resilient to the cyclicality of the business.

Strong sense of current and future trends

 If you think of us as a fast-moving brand, we think of ourselves as being in the fashion business. Just like the fast-fashion industry in which designs and styles change dynamically and very quickly, designs and styles in our tiles and sanitaryware businesses also need to change swiftly with a view to keep pace with consumer trends.

What differentiates us in this aspect is our parentage. Our parent company is a global ceramics institution that has operations all over the world. This presence is geo-strategic in the sense that it enables our Company to stay up-to-date with global trends and developments that are quickly adapted to suit tastes and sensibilities in Bangladesh. This ability sets us apart as far as consumer choice is concerned because we have the widest range of styles, designs and sizes available both in tiles and sanitaryware products.

Our design and distribution capabilities act as an added bulwark as new styles are introduced in the market within the shortest possible time. This also ensures product freshness. There is no better way to delight the customer than by them visiting our store to find a completely new wash of products on display! We have come to believe that if we empower the customer with choice, they will consider us as the go-to shopping destination.

Outlook

From our position, we see the underlying indicators improving and increasingly becoming supportive of our growth intentions and revenue targets. Though we are mindful of market volatility and competitive challenges, we will continue to support the growth objectives and operational priorities that remain central to our expectations of 2019. RAK Ceramics (Bangladesh) has a strong balance sheet and we believe that the Company’s innovative product range and strong market positions means it is well-placed to deliver continued growth and operational profit improvements in the current year and beyond. What is also supportive of our ambitions is a country that is quickly climbing up the socio-economic ladder with an aspiring consumer at the heart of this transformation.

Appreciation

As a vibrant institution operating in a dynamic environment, our Company is changing every day. Embracing change is never an easy process and we deeply appreciate the commitment evident at every level. I am also grateful for the support and insight of my fellow Board members, and the dedication of the executive team. Furthermore, willing engagement from key stakeholders, particularly all levels of government and industry bodies, is especially valuable. We also sincerely thank our shareholders for their continued support and their confidence in our ability to execute our strategy for long-term value creation.

Going into 2019, we will continue to ensure that your investment in us is safe and protected.

Thank you.

         Sd/-

(Abdallah Massaad)

Chairman

RAK Ceramics (Bangladesh) Limited