Financial Analysis of Top Cement Companies

Financial Analysis of Five Major Financial Analysis of Five Major Players of Pakistan Cement Players of Pakistan Cement

IndustryIndustry

GROUP MEMBERSGROUP MEMBERS::

Mohammad MustafaMohammad Mustafa BME-663BME-663

Faisal Bin Hasan Faisal Bin Hasan BM-15024BM-15024

PRESENTED TOPRESENTED TO;; Dr. NoorDr. Noor

MBA MAJORSMBA MAJORS:: FinanceFinance

COURSE CODECOURSE CODE:: MKT-606MKT-606

RESEARCH OBJECTIVERESEARCH OBJECTIVE

To know the Financial position of Top To know the Financial position of Top Companies of our cement industry & to take an Companies of our cement industry & to take an overview of Pakistan Cement Industry. overview of Pakistan Cement Industry.

PRESENTATION ROAD MAPPRESENTATION ROAD MAP

IntroductionIntroduction Growth of Cement IndustryGrowth of Cement Industry Current ScenarioCurrent Scenario ProductionProduction ConsumptionConsumption ExportsExports Future ProspectsFuture Prospects Giants Of Pakistan Cement Giants Of Pakistan Cement

IndustryIndustry Financial Analysis of Top Five Financial Analysis of Top Five

Cement CompaniesCement Companies Swot Analysis of Cement IndustrySwot Analysis of Cement Industry ConclusionConclusion RecommendationsRecommendations

INTRODUCTION-HISTORY OF OUR INTRODUCTION-HISTORY OF OUR CEMENT INDUSTRYCEMENT INDUSTRY

Cement is one of the major industry of Pakistan’s economyCement is one of the major industry of Pakistan’s economy.. Pakistan is rich in cement raw material (Clinker,Limestone, Gypsum)Pakistan is rich in cement raw material (Clinker,Limestone, Gypsum) Currently many cement plants are operating in private sector. Currently many cement plants are operating in private sector. Our Cement industry has huge potential for export to neighboring Our Cement industry has huge potential for export to neighboring

countriescountries. . At the time of independence in 1947, only one or two units were At the time of independence in 1947, only one or two units were

producing grey cement producing grey cement During 1948-58, the number of cement units increased to six. During 1948-58, the number of cement units increased to six. During the Ayub Khan era (1958-68) the number of units increased to During the Ayub Khan era (1958-68) the number of units increased to

9. 9. Because of nationalization in Z.A . Bhuto’s era (1971-77) , no new unit Because of nationalization in Z.A . Bhuto’s era (1971-77) , no new unit

was set up.was set up. In the era of Zia Ul Haq (1977-88) denationalization of industrial units In the era of Zia Ul Haq (1977-88) denationalization of industrial units

boosted the investments with housing & construction industries picking boosted the investments with housing & construction industries picking up which increased the demand for cement. The number of units up which increased the demand for cement. The number of units increased to 23.increased to 23.

INTRODUCTION-HISTORY OF OUR CEMENT INTRODUCTION-HISTORY OF OUR CEMENT INDUSTRY INDUSTRY

Privatization and effective price control in 1991-92 ushered in a new era in Privatization and effective price control in 1991-92 ushered in a new era in which the industry has reached a level where surplus production after which the industry has reached a level where surplus production after meeting local demand is expected yearlymeeting local demand is expected yearly

The Cement Industry of Pakistan entered the export markets more than a The Cement Industry of Pakistan entered the export markets more than a decade ago (2000).decade ago (2000).

Currently total number of units are around 30, comprising 4 units in the Currently total number of units are around 30, comprising 4 units in the public sector & 25 units in the private sector.public sector & 25 units in the private sector.

The cement plants are located in every province of Pakistan.The cement plants are located in every province of Pakistan. The industry is divided into two broad regions:The industry is divided into two broad regions: The northern region has over 87 percent share in total cement dispatches .The northern region has over 87 percent share in total cement dispatches . Southern region contributes 13 percent to the annual cement sales. Southern region contributes 13 percent to the annual cement sales. The province-wise distribution of cement plants is as under:The province-wise distribution of cement plants is as under:

ProvinceProvince UnitUnit Capacity in Million TonnesCapacity in Million Tonnes

1-1- PunjabPunjab 1212 19.54819.548

2-2- SindhSindh 8 8 10.10510.105

3-3- NWFPNWFP 6 6 12.96 12.96

4-4- Baluchistan Baluchistan 3 3 1.99 1.99

Total UnitsTotal Units 2929 44.603 44.603

Source: All Pakistan Cement Manufacturing Association of Pakistan Source: All Pakistan Cement Manufacturing Association of Pakistan (APCMA)(APCMA)

Purpose of StudyPurpose of Study Our Research study was descriptive b/c we did financial analysis of major cement Our Research study was descriptive b/c we did financial analysis of major cement

companies in Pakistan involving various different variables and their affects on the companies in Pakistan involving various different variables and their affects on the companies’ financial position.companies’ financial position.

Research ObjectivesResearch Objectives The objective of our research was to know the past and present of Pakistan‘s cement The objective of our research was to know the past and present of Pakistan‘s cement

Industry & to highlight the future prospects of the industry. During this study we did the Industry & to highlight the future prospects of the industry. During this study we did the financial analysis of top five major cement industry players in Pakistan.financial analysis of top five major cement industry players in Pakistan.

Research MethodologyResearch Methodology Since this research tries to gain a deeper understanding of cement industry; a Since this research tries to gain a deeper understanding of cement industry; a

QualitativeQualitative approach was found feasible by us approach was found feasible by us Data CollectionData Collection: It: It was done through:was done through: Newspapers, Internet, BooksNewspapers, Internet, Books All Pakistan Cement Manufacturers Association ReportsAll Pakistan Cement Manufacturers Association Reports Economic Survey of Pakistan, Federal Bureau of Statistics Publications, State Bank of Economic Survey of Pakistan, Federal Bureau of Statistics Publications, State Bank of

Pakistan Annual ReportsPakistan Annual Reports

Cement Industry of Pakistan-Cement Industry of Pakistan-GrowthGrowth

The growth of cement industry is The growth of cement industry is slow but sure since slow but sure since independence.independence.

We have analyzed the trend since We have analyzed the trend since 1990.1990.Due to political instability and lack Due to political instability and lack of availability of funds for public of availability of funds for public sector development program, sector development program, cement industry of Pakistan was cement industry of Pakistan was in the recession phase and in the recession phase and registered an average growth rate registered an average growth rate of 2.96% for the period from 1990 of 2.96% for the period from 1990 to 2002.to 2002.For the period from 2003 to 2007 For the period from 2003 to 2007 cement industry of Pakistan had cement industry of Pakistan had registered an average growth rate registered an average growth rate of 20%. Another 20-25 % growth of 20%. Another 20-25 % growth is expected till the end of the is expected till the end of the current year. current year.

The last few years have been a golden The last few years have been a golden period for cement manufacturers, when period for cement manufacturers, when the government increased spending on the government increased spending on infrastructure development. High infrastructure development. High commercial activity and rising demand commercial activity and rising demand for housing on account of higher per for housing on account of higher per capita income has made cement capita income has made cement sector to take off growth in double sector to take off growth in double digits.digits.

The demand of Pakistani cement is The demand of Pakistani cement is expected to continue to grow at the rate expected to continue to grow at the rate of 20 per cent for about four years to of 20 per cent for about four years to come. It may then follow traditional come. It may then follow traditional growth rate of seven per cent per year. growth rate of seven per cent per year. Announcement of major dams will Announcement of major dams will dramatically increase this demand. dramatically increase this demand. Deregulation after accession of Deregulation after accession of Pakistan to WTO is expected to open Pakistan to WTO is expected to open the window of competition from cheaper the window of competition from cheaper markets.markets.

The boost in cement sector is because of the rising construction activity in the country, reconstruction activity in Afghanistan and increasing development expenditure by the government.

Cement Industry of Pakistan-Cement Industry of Pakistan-Current ScenarioCurrent Scenario

Presently, the cement industry of Pakistan is heavily burdened due to levy of Presently, the cement industry of Pakistan is heavily burdened due to levy of heavy taxation & duties.heavy taxation & duties.

In addition to Federal Excise Duty and General Sales Tax, cement industry is In addition to Federal Excise Duty and General Sales Tax, cement industry is also paying the provincial levies (Royalty and Excise Duty) on acquiring of also paying the provincial levies (Royalty and Excise Duty) on acquiring of raw material for production of cement i.e. lime stone and shall clay. raw material for production of cement i.e. lime stone and shall clay.

A comparison of taxation and retail prices with other regional countries A comparison of taxation and retail prices with other regional countries revealed that taxation in Pakistan is highest while cement retail prices are revealed that taxation in Pakistan is highest while cement retail prices are lowest.lowest.

Contribution to National Economy By Cement SectorContribution to National Economy By Cement Sector ::

Direct and Indirect TaxesDirect and Indirect Taxes Rs. 23.50 BillionRs. 23.50 Billion

Value of Fixed Assets Deployed Value of Fixed Assets Deployed Rs. 85.21 BillionRs. 85.21 Billion

Loans from Financial Institutions Loans from Financial Institutions Rs. 79.53 BillionRs. 79.53 Billion

Shareholders Equity Shareholders Equity Rs. 80.00 BillionRs. 80.00 Billion

Employment (Direct & Indirect) Employment (Direct & Indirect) 150,000 (Approx.)150,000 (Approx.)

Source: All Pakistan Cement Manufacturing Association of Pakistan (APCMA)Source: All Pakistan Cement Manufacturing Association of Pakistan (APCMA)

Cement Industry of PakistanCement Industry of Pakistan

Cement Industry of Pakistan-Cement Industry of Pakistan-Current ScenarioCurrent Scenario

Contribution to National Income by Cement SectorContribution to National Income by Cement Sector:: The cement Industry is contributing Rs 30 billion to the national exchequer in The cement Industry is contributing Rs 30 billion to the national exchequer in

the form of tax. This sector has invested about Rs 100 billion in capacity the form of tax. This sector has invested about Rs 100 billion in capacity expansion over the last four years. expansion over the last four years.

What Is Going on in Related Sector:What Is Going on in Related Sector: Pakistan has one of the highest population growth rates in the world. This has Pakistan has one of the highest population growth rates in the world. This has

prompted a sizable demand for housing facilities in the country. There is a lot of prompted a sizable demand for housing facilities in the country. There is a lot of scope for importing latest technological advancements/hi-tech building materials.scope for importing latest technological advancements/hi-tech building materials.

Tax structureTax structure: : Instead of providing any relief in the budget, the sector was further Instead of providing any relief in the budget, the sector was further penalized with an increase in sales tax to. So far, the manufacturers have been penalized with an increase in sales tax to. So far, the manufacturers have been able to pass on the increase to consumers but the situation is unlikely to able to pass on the increase to consumers but the situation is unlikely to continue.continue.

Latest Situation Mar-Apr 2011Latest Situation Mar-Apr 2011:T:The prices of cement have increased once more he prices of cement have increased once more which is affecting the construction industry because they cannot buy cement at a which is affecting the construction industry because they cannot buy cement at a expensive rate. There is a lot of demand for construction after earth quake & expensive rate. There is a lot of demand for construction after earth quake & recent floods & increasing population; but due to heavy price of cement; the recent floods & increasing population; but due to heavy price of cement; the construction industry cannot make new homes in abundance b/c they cannot sell construction industry cannot make new homes in abundance b/c they cannot sell them at a higher price due to lowering of property rates. People nowadays don’t them at a higher price due to lowering of property rates. People nowadays don’t buy property at a high price.buy property at a high price.

Cement Industry of Pakistan-Cement Industry of Pakistan-ProductionProduction

There are 29 cement production units in the country. Upto May 2010, the total installed cement There are 29 cement production units in the country. Upto May 2010, the total installed cement production capacity is 44.603 million tonnes. By the end of June 2011, the installed cement production capacity is 44.603 million tonnes. By the end of June 2011, the installed cement production capacity is expected to touch the level of 46.871 million tonnes.production capacity is expected to touch the level of 46.871 million tonnes.

The cement demand would increase in future due to government policies as the Pakistan The cement demand would increase in future due to government policies as the Pakistan People’s Party’s (PPP’s) slogan has always been ‘roti, kapra aur makan’ (bread, clothing and People’s Party’s (PPP’s) slogan has always been ‘roti, kapra aur makan’ (bread, clothing and housing). In this regard a statement of the government confirmed that it would encourage housing). In this regard a statement of the government confirmed that it would encourage industries and construct small dams.industries and construct small dams.

Types of Cement produced in Pakistan:Types of Cement produced in Pakistan:

1-1- Ordinary Portland Cement (OPC)Ordinary Portland Cement (OPC)

2-2- Sulphate Resisting Cement (SRC)Sulphate Resisting Cement (SRC)

3-3- Blast Furnace Slag Cement (BFSC)Blast Furnace Slag Cement (BFSC)

4-4- White CementWhite Cement Main Utilities used for Cement Production:Main Utilities used for Cement Production:

1-1- Fuel Oil , Natural Gas and CoalFuel Oil , Natural Gas and Coal

2-2- ElectricityElectricity

3-3- WaterWater

Cement Industry of Pakistan-ProductionCement Industry of Pakistan-Production Cement Plants: Cement Plants:

www.cement.com.pk

Product type:Product type: Since cement is a specialized product, requiring sophisticated infrastructure and production location. So, most of Since cement is a specialized product, requiring sophisticated infrastructure and production location. So, most of

the cement industries in Pakistan are located near/within mountainous regions that are rich in clay, iron and the cement industries in Pakistan are located near/within mountainous regions that are rich in clay, iron and mineral capacitymineral capacity. .

Production FY10:Production FY10:

North Zone Inst. Cpy (Clinker) Inst. Cpy (Cement) North Zone Inst. Cpy (Clinker) Inst. Cpy (Cement)

34,012,85734,012,857 35,713,500 35,713,500

South Zone Inst. Cpy (Clinker) Inst. Cpy (Cement)South Zone Inst. Cpy (Clinker) Inst. Cpy (Cement) 8,316,190 8,889,500 8,316,190 8,889,500

G.T (N+S) 42,329,047G.T (N+S) 42,329,047 44,603,000 44,603,000

Projected 2010-2011Projected 2010-2011

44,489,04744,489,047 46,871,000 46,871,000 Current Situation:Current Situation: The industry is now calling on the government to step in, as profits take a beating. High energy costs for all, in The industry is now calling on the government to step in, as profits take a beating. High energy costs for all, in

addition to the cost of transporting imported coal to producers in the north of the country, has placed a addition to the cost of transporting imported coal to producers in the north of the country, has placed a significant financial burden on producers that has reportedly left many on the verge of collapse. Though the cost significant financial burden on producers that has reportedly left many on the verge of collapse. Though the cost of cement production has risen exponentially, it is difficult to pass that price rise on to consumers in such a of cement production has risen exponentially, it is difficult to pass that price rise on to consumers in such a depressed market.depressed market.

Cement Industry of Pakistan-ProductionCement Industry of Pakistan-Production

Cement Industry of Pakistan-Cement Industry of Pakistan-

Cement Industry of Pakistan-Cement Industry of Pakistan-ConsumptionConsumption

Per capita consumption of cement is an indicator of rate with which any Per capita consumption of cement is an indicator of rate with which any country is developing. Unfortunately per capita consumption of cement in country is developing. Unfortunately per capita consumption of cement in Pakistan is less if we compare it with other developing countries. Pakistan in Pakistan is less if we compare it with other developing countries. Pakistan in the recent past was trailing behind all other developing countries in the the recent past was trailing behind all other developing countries in the region with lowest per capita consumption of cement. region with lowest per capita consumption of cement.

This less consumption is due to the negligence given to the construction This less consumption is due to the negligence given to the construction sector. However in last few years consumption of cement showed some rise sector. However in last few years consumption of cement showed some rise due to increased commercial activities, infrastructural development and due to increased commercial activities, infrastructural development and increasing demand of constructing houses. However, some circles are also increasing demand of constructing houses. However, some circles are also carrying an impression that the cement manufacturers and the cement carrying an impression that the cement manufacturers and the cement dealers have formed a cartel to create an artificial shortage of cement in the dealers have formed a cartel to create an artificial shortage of cement in the market with the rise in demandmarket with the rise in demand

Per Capita Consumption at 70 kgs. in Pakistan is one of the lowest in the Per Capita Consumption at 70 kgs. in Pakistan is one of the lowest in the world. According to a study conducted by Q-Consult, 42 countries of the world. According to a study conducted by Q-Consult, 42 countries of the world having similar per capita income as that of Pakistan have DOUBLE world having similar per capita income as that of Pakistan have DOUBLE per capita cement consumption than that of Pakistan. This is indicative of per capita cement consumption than that of Pakistan. This is indicative of the fact that in Pakistan resource allocation of the Government is not the fact that in Pakistan resource allocation of the Government is not development oriented. This problem needs to be addressed by the Planning development oriented. This problem needs to be addressed by the Planning Division in Islamabad.Division in Islamabad.

Cement Industry of Pakistan-Cement Industry of Pakistan-ExportsExports

The cement industry of Pakistan entered the export markets a few The cement industry of Pakistan entered the export markets a few years back, and has established its reputation as a good quality years back, and has established its reputation as a good quality product .Pakistan is currently ranked fifth in the world in cement product .Pakistan is currently ranked fifth in the world in cement exports after a huge increase of 47 percent in exports during last fiscal exports after a huge increase of 47 percent in exports during last fiscal year. Pakistan cement factories continue to make significant progress year. Pakistan cement factories continue to make significant progress in cement exports. in cement exports.

Currently, the export demand is expected to be from India along with Currently, the export demand is expected to be from India along with other countries like Gulf Cooperation Council (GCC) countries, due to other countries like Gulf Cooperation Council (GCC) countries, due to rising oil prices-led economic growth. More countries like South Africa rising oil prices-led economic growth. More countries like South Africa which imported cement from Pakistan for football stadiums for the which imported cement from Pakistan for football stadiums for the World Cup and Sri Lanka also approached Pakistani companies for World Cup and Sri Lanka also approached Pakistani companies for cement imports. However, export depends on factors such as: ability cement imports. However, export depends on factors such as: ability to produce cement at Rs 85 per bag.to produce cement at Rs 85 per bag.

Some of the big players from Pakistan who can possibly play a major Some of the big players from Pakistan who can possibly play a major role in the export of cement to India are Lucky Cement, DG Khan role in the export of cement to India are Lucky Cement, DG Khan Cement Co, Maple Leaf Cement, Attock Cement, among others. Cement Co, Maple Leaf Cement, Attock Cement, among others.

We are leading exporter of Ordinary Portland Cement (Grade 42.5 N/R), We are leading exporter of Ordinary Portland Cement (Grade 42.5 N/R), Sulphate Resistant Cement (SRC) and Slag Cement from Pakistan. Our Sulphate Resistant Cement (SRC) and Slag Cement from Pakistan. Our popular export destinations are India, South Asia, Gulf region, popular export destinations are India, South Asia, Gulf region, Afghanistan, South Africa and many African countries. Afghanistan, South Africa and many African countries.


Export FY05-10:Export FY05-10:

Export of Cement and Clinker (Quantity In Metric Tonnes )Export of Cement and Clinker (Quantity In Metric Tonnes )

Years Afg.via land (Cement)

Ind.Via sea & land (Cement)

OtherCountries via sea (Cement)

Clinker OtherCountries via sea

TotalExports(Cement & Clinker )

PercentageIncrease Or decrease

05-06 1.41 ml - 0.091 - 1.50 ml -3.83 %

06-07 1.725 ml - 1.09ml 0.39ml 3.21 ml 113.50%

07-08 2.77 ml 0.78 ml 3.04 1.10 7.71 ml 140.13 %

08-09 3.14 ml 0.63 ml 6.06 0.90 10.75ml 39.340%

09-10 4.01 ml 0.72 ml 5.63 0.28 10.65ml -0.89 %

10-11 3.27 ml 0.38 ml 2.90 0.159 6.72 ml -14.46 %


Export Outlook:Export Outlook: There was sluggishness in the growth of cement exports in Pakistan There was sluggishness in the growth of cement exports in Pakistan

during the first nine months of FY09/10, which can be explained by during the first nine months of FY09/10, which can be explained by examining the slowdown in construction in the GCC. However, there examining the slowdown in construction in the GCC. However, there was significant growth in the cement export figures to other African was significant growth in the cement export figures to other African nations, and so many Pakistani cement manufacturing companies nations, and so many Pakistani cement manufacturing companies are actively targeting this marketare actively targeting this market

On the export front, depreciation of rupee has rendered Pakistani On the export front, depreciation of rupee has rendered Pakistani cement as a highly attractive option. The north has primarily cement as a highly attractive option. The north has primarily contributed to the impressive increase in exports.contributed to the impressive increase in exports.

Afghanistan accounts for 28 percent of the exports Afghanistan accounts for 28 percent of the exports Studies have shown that cement demand is highly correlated with the Studies have shown that cement demand is highly correlated with the

growth rate of GDP. Recently, the ministry of finance has further growth rate of GDP. Recently, the ministry of finance has further revised the GDP growth target downward to 3.4 percent from 3.5 revised the GDP growth target downward to 3.4 percent from 3.5 percent, which will further erode cement demand.percent, which will further erode cement demand.

Companies exporting cement from the land-locked north of the Companies exporting cement from the land-locked north of the country via sea have suffered the loss of many export orders due to country via sea have suffered the loss of many export orders due to the devastating transportation charges from their plants to the ports.the devastating transportation charges from their plants to the ports.

The first nine months of the current FY10-11 have seen the exports The first nine months of the current FY10-11 have seen the exports decline by 14.46 % .decline by 14.46 % .

However this situation can improve in couple of years if the However this situation can improve in couple of years if the government provides relief to cement industry in the coming years. government provides relief to cement industry in the coming years.

Cement Industry of Pakistan-Cement Industry of Pakistan-Future ProspectsFuture Prospects

The cement industry tends to rely on growth in agriculture income, along with The cement industry tends to rely on growth in agriculture income, along with government spending on infrastructure. However in 2011, there will be no government spending on infrastructure. However in 2011, there will be no demand from these two important sectors. On the contrary, further fallout from demand from these two important sectors. On the contrary, further fallout from the flooding will result in large demands on the government finances, while the the flooding will result in large demands on the government finances, while the majority of farmers in Pakistan will have limited funds due to the extensive majority of farmers in Pakistan will have limited funds due to the extensive destruction of crops and the resultant decrease in income.destruction of crops and the resultant decrease in income.

Right now, the future prospects of the Pakistan cement industry are good. A Right now, the future prospects of the Pakistan cement industry are good. A manifold increase in cement exports to African nations and the Middle East manifold increase in cement exports to African nations and the Middle East should occur. Additionally, there is massive reconstruction taking place in both should occur. Additionally, there is massive reconstruction taking place in both Iraq and Afghanistan, which should rely extensively on cement imports from Iraq and Afghanistan, which should rely extensively on cement imports from Pakistan. Pakistan.

It is possible that the cement industry in Pakistan may undergo widespread It is possible that the cement industry in Pakistan may undergo widespread growth in 2014, as a result of projected regional and local demand. growth in 2014, as a result of projected regional and local demand.

The overall future of Pakistan Cement is bright b/c after earth quake & flooding The overall future of Pakistan Cement is bright b/c after earth quake & flooding there is a huge demand for constructing new houses. The population is there is a huge demand for constructing new houses. The population is increasing rapidly creating more demand for houses & cement. Moreover increasing rapidly creating more demand for houses & cement. Moreover people are moving from villages to cities in search for jobs & better conditions people are moving from villages to cities in search for jobs & better conditions creating more demand for housing. The government should decrease duties on creating more demand for housing. The government should decrease duties on the sector so that its price becomes low & it is consumed locally more the sector so that its price becomes low & it is consumed locally more beneficially. There is also a need to find better export avenues other than the beneficially. There is also a need to find better export avenues other than the ones they already have. Power shortage also affects all industries including ones they already have. Power shortage also affects all industries including cement sector. There is a need to develop more cheap electricity projects to cement sector. There is a need to develop more cheap electricity projects to fulfill the demand of electricity by the industrial sector .fulfill the demand of electricity by the industrial sector .

Giants of Pakistan Cement Industry-Giants of Pakistan Cement Industry-Lucky CementLucky Cement

Sponsored by well known “Yunus Brothers Group” – one of the largest export Sponsored by well known “Yunus Brothers Group” – one of the largest export houses of Pakistan, Lucky Cement Limited currently has the capacity of producing houses of Pakistan, Lucky Cement Limited currently has the capacity of producing 25,000 tons per day of dry process Ceme25,000 tons per day of dry process Cement.nt.

Lucky Cement Limited is Pakistan’s largest cement manufacturing Lucky Cement Limited is Pakistan’s largest cement manufacturing company with the production capacity of 7.75 million tons per annum. company with the production capacity of 7.75 million tons per annum. Lucky Cement Limited is also Pakistan’s first and largest exporter of Lucky Cement Limited is also Pakistan’s first and largest exporter of loose cement and is the only cement manufacturer to have loading and loose cement and is the only cement manufacturer to have loading and storage terminal at Karachi Port. Other exclusive attributes that allow storage terminal at Karachi Port. Other exclusive attributes that allow Lucky Cement to stand ahead of its competitors is the transportation Lucky Cement to stand ahead of its competitors is the transportation fleet of 77 bulkers as well as 2 ship loaders. fleet of 77 bulkers as well as 2 ship loaders.

Lucky Cement came into existence in 1996 with a daily production Lucky Cement came into existence in 1996 with a daily production capacity of 4,200 tons per day, currently is an omnipotent cement plant capacity of 4,200 tons per day, currently is an omnipotent cement plant of Pakistan, and rated amongst the few best plants in Asia.of Pakistan, and rated amongst the few best plants in Asia.

With production facilities in Pezu (Production capacity: 13,000 Tons per With production facilities in Pezu (Production capacity: 13,000 Tons per day) as well as in Karachi (Production capacity: 12,000 tons per day), it day) as well as in Karachi (Production capacity: 12,000 tons per day), it has the tendency to become the hub of cement production in Asia.has the tendency to become the hub of cement production in Asia.

Giants of Pakistan Cement Industry-Giants of Pakistan Cement Industry-Attock CementAttock Cement

Attock Cement Pakistan Limited (ACPL) is a public limited company, listed on Attock Cement Pakistan Limited (ACPL) is a public limited company, listed on the Karachi Stock Exchange since June 2002. Main business of the company is the Karachi Stock Exchange since June 2002. Main business of the company is manufacturing and sales of cement. ACPL is part of the Pharaon Group, which manufacturing and sales of cement. ACPL is part of the Pharaon Group, which in addition to investment in cement industry has diversified stakes in Pakistan in addition to investment in cement industry has diversified stakes in Pakistan mainly in the oil and gas sector, power and real estate sector. mainly in the oil and gas sector, power and real estate sector.

The project is a Pak-Saudi ventureThe project is a Pak-Saudi venture ACPL's manufacturing plant is located in Tehsil Hub, District ACPL's manufacturing plant is located in Tehsil Hub, District

Lasbela, Balauchistan, at a distance of about 45 kilometers north Lasbela, Balauchistan, at a distance of about 45 kilometers north west of Karachi. ACPL has attained ISO 9001:2000 and ISO 14000 west of Karachi. ACPL has attained ISO 9001:2000 and ISO 14000 certifications from Lloyds Register Quality Assurance (LRQA) in certifications from Lloyds Register Quality Assurance (LRQA) in 2002 and 2006. ACPL is making substantial contribution to the 2002 and 2006. ACPL is making substantial contribution to the country's economy. country's economy.

The Plant's original capacity was 2000 TPD of Clinker and it was The Plant's original capacity was 2000 TPD of Clinker and it was the first plant in the country to be based on the latest the first plant in the country to be based on the latest SUSPENSION, PRE-HEATER/PRE-CALCINATION, dry process SUSPENSION, PRE-HEATER/PRE-CALCINATION, dry process technology which results in substantial savings in fuel and energy technology which results in substantial savings in fuel and energy costs besides balanced plant operationscosts besides balanced plant operations

The cement manufactured and being marketed under the The cement manufactured and being marketed under the “FALCON” brand is of the highest standard and truly the market “FALCON” brand is of the highest standard and truly the market leader. leader.

Giants of Pakistan Cement Industry-Giants of Pakistan Cement Industry- D.G.Khan Cement D.G.Khan Cement

D.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is the D.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is the largest cement-manufacturing unit in Pakistan with a production capacity of largest cement-manufacturing unit in Pakistan with a production capacity of 5,500 tons clinker per day. It has a countrywide distribution network and its 5,500 tons clinker per day. It has a countrywide distribution network and its products are preferred on projects of national repute both locally and products are preferred on projects of national repute both locally and internationally due to the unparallel and consistent quality. It is listed on all the internationally due to the unparallel and consistent quality. It is listed on all the Stock Exchanges of Pakistan.Stock Exchanges of Pakistan.

DGKCC was established under the management control of State Cement DGKCC was established under the management control of State Cement Corporation of Pakistan Limited (SCCP) in 1978. DGKCC started its Corporation of Pakistan Limited (SCCP) in 1978. DGKCC started its commercial production in April 1986 with 2000 tons per day (TPD) clinker commercial production in April 1986 with 2000 tons per day (TPD) clinker based on dry process technology. Plant & Machinery was supplied by UBE based on dry process technology. Plant & Machinery was supplied by UBE Industries of Japan.Industries of Japan.

Nishat Group acquired DGKCC in 1992 under the privatization initiative of the Nishat Group acquired DGKCC in 1992 under the privatization initiative of the government.government.

DG Khan Cement Co. Ltd., production processes are environment friendly and DG Khan Cement Co. Ltd., production processes are environment friendly and comply with the World Bank’s environmental standards. It has been certified for comply with the World Bank’s environmental standards. It has been certified for “Environment Management System” ISO 14001 by Quality Assurance Services, “Environment Management System” ISO 14001 by Quality Assurance Services, Australia. The company was also certified for ISO-9002 (Quality Management Australia. The company was also certified for ISO-9002 (Quality Management System) .By achieving this landmark, DG Khan Cement became the first and System) .By achieving this landmark, DG Khan Cement became the first and only cement factory in Pakistan certified for both ISO 9002 & ISO 14001.only cement factory in Pakistan certified for both ISO 9002 & ISO 14001.

Giants of Pakistan Cement Industry- Giants of Pakistan Cement Industry- Maple Leaf CementMaple Leaf Cement

At the time of privatization in 1992, the capacity of Maple Leaf to produce At the time of privatization in 1992, the capacity of Maple Leaf to produce Ordinary Portland Cement (OPC) was 1000 tonnes per day (tpd). A Ordinary Portland Cement (OPC) was 1000 tonnes per day (tpd). A second plant of 4000 tpd was commissioned in 1998 and a third plant of second plant of 4000 tpd was commissioned in 1998 and a third plant of 6700 tpd came into production in 2006. It increased the total capacity to 6700 tpd came into production in 2006. It increased the total capacity to 11,700 tpd. The capacity of White Cement has also increased from 100 11,700 tpd. The capacity of White Cement has also increased from 100 tpd to 500tpd with the addition of a new plant. This plant also has tpd to 500tpd with the addition of a new plant. This plant also has provisions for doubling the capacity to 1000tpd. Presently Maple Leaf provisions for doubling the capacity to 1000tpd. Presently Maple Leaf cement has 9% of the market share of OPC and is a leading brand in cement has 9% of the market share of OPC and is a leading brand in Pakistan with a diverse customer base. It is also the largest producer of Pakistan with a diverse customer base. It is also the largest producer of White Cement in the country with 80% of market share. . White Cement in the country with 80% of market share. .

In order to ensure the highest efficiency and process control the plants In order to ensure the highest efficiency and process control the plants comprise of equipment with the latest design and technology. To maintain comprise of equipment with the latest design and technology. To maintain the highest quality standards a laboratory is also set up at site for the the highest quality standards a laboratory is also set up at site for the testing of raw materials and cement. All Maple Leaf plants comply with testing of raw materials and cement. All Maple Leaf plants comply with National Environment Control standards. National Environment Control standards.

Maple Leaf has developed a niche market for specialized cement such as SRC Maple Leaf has developed a niche market for specialized cement such as SRC (Sulphate Resistant Cement).(Sulphate Resistant Cement).

Giants of Pakistan Cement Industry-Giants of Pakistan Cement Industry-Lefrage CementLefrage Cement

Lafarge Pakistan Cement (LP) is a part of Lafarge, world leader of construction Lafarge Pakistan Cement (LP) is a part of Lafarge, world leader of construction materials. The state-of-the-art plant commenced Commercial Operations in materials. The state-of-the-art plant commenced Commercial Operations in December 2006 with an annual cement production capacity of 2.5m tons,December 2006 with an annual cement production capacity of 2.5m tons,

The plant is located at Kalar Kahar, District Chakwal in the The plant is located at Kalar Kahar, District Chakwal in the province of Punjab, an area rich in lime stone reserves. The province of Punjab, an area rich in lime stone reserves. The quality of lime stone in this area is considered to be the best in quality of lime stone in this area is considered to be the best in the region. In addition to Ordinary Portland Cement (OPC) the the region. In addition to Ordinary Portland Cement (OPC) the plant can also produce Sulphate Resistant Cement (SRC) with the plant can also produce Sulphate Resistant Cement (SRC) with the packaging options of 50 kg bags, 1.5 tons, 2 tons jumbo bags and packaging options of 50 kg bags, 1.5 tons, 2 tons jumbo bags and bulk carriers.bulk carriers.

LP is proud of its product PAKCEM which is the leader on all LP is proud of its product PAKCEM which is the leader on all quality scales.quality scales.

LP’s aim of being at the forefront in creating foundations for a LP’s aim of being at the forefront in creating foundations for a prosperous tomorrow is backed by the Company’s philosophy of prosperous tomorrow is backed by the Company’s philosophy of providing outstanding value to its customers, a safe and providing outstanding value to its customers, a safe and stimulating work environment for its employees, superior returns stimulating work environment for its employees, superior returns for its shareholders and special focus on social responsibility and for its shareholders and special focus on social responsibility and environmental protectionenvironmental protection

LP is committed to providing outstanding value to its customers, a LP is committed to providing outstanding value to its customers, a safe and stimulating work environment for its employees and safe and stimulating work environment for its employees and superior returns for its shareholders.superior returns for its shareholders.

Financial Analysis of Top Five Financial Analysis of Top Five Cement Companies-Cement Companies-

Profit & Loss Statement AnalysisProfit & Loss Statement Analysis Profit & Loss Ratios:Profit & Loss Ratios: Profitability Ratios:Profitability Ratios: 1) Gross profit margin:1) Gross profit margin: Gross profit margin is computed by dividing earnings before interest and taxes Gross profit margin is computed by dividing earnings before interest and taxes

by total operating revenue and thus they express profit as a percentage of by total operating revenue and thus they express profit as a percentage of operating revenue.operating revenue.

Gross Profit Margin Gross Profit Margin == Gross profit / salesGross profit / sales

20082008 20092009 20102010 1-1- D. G. Khan CementD. G. Khan Cement 32%32% 16%16% 17%17% 2-2- Lucky CementLucky Cement 26%26% 37%37% 33%33% 3-3- Attock CementAttock Cement 22%22% 32%32% 26%26% 4-4- Maple Leaf CementMaple Leaf Cement 17%17% 32%32% 22%22% 5-5- Lafarge CementLafarge Cement 13%13% 12%12% 12%12% 2) Net Profit Margin:2) Net Profit Margin: Net profit margin is computed by dividing net income by total operating Net profit margin is computed by dividing net income by total operating

revenue and thus they express profits as a percentage of operating revenue.revenue and thus they express profits as a percentage of operating revenue.

Net Profit Margin Net Profit Margin = = Net income / SalesNet income / Sales


Profit & Loss Statement AnalysisProfit & Loss Statement Analysis20082008 2009 2009 2010 2010

1-1- D. G. Khan CementD. G. Khan Cement 0.43%0.43% 2.91%2.91% 1.43% 1.43%

2-2- Lucky CementLucky Cement 15.79%15.79% 17.46% 17.46% 12.80% 12.80%

3-3- Attock CementAttock Cement 8.70%8.70% 17.54%17.54% 13.26% 13.26%

4-4- Maple Leaf CementMaple Leaf Cement -8.65%-8.65% -6.45% -6.45% -18.95% -18.95%

5-5- Lafarge CementLafarge Cement -16.70% -16.70% -15.73%-15.73% -13.78% -13.78%

Net Profit Margin Illustrated in Chart:Net Profit Margin Illustrated in Chart:

3) Operating Profit Margin:3) Operating Profit Margin: Operating Profit Margin Operating Profit Margin == EBIT / SALESEBIT / SALES

20082008 2009 2009 20102010 1-1- D. G. Khan CementD. G. Khan Cement 12.11%12.11% 18.76%18.76% 13.89% 13.89% 2-2- Lucky CementLucky Cement 18.14%18.14% 27.41%27.41% 17.31% 17.31% 3-3- Attock CementAttock Cement 16.57%16.57% 24.78%24.78% 19.12% 19.12% 4-4- Maple Leaf CementMaple Leaf Cement 5.74% 5.74% 16.28%16.28% 3.74% 3.74% 5-5- Lafarge CementLafarge Cement 0.90% 0.90% -0.29%-0.29% 0.90% 0.90%

Interest Coverage Ratio:Interest Coverage Ratio:

One of the most traditional of the coverage ratios is the interest coverage ratio, or One of the most traditional of the coverage ratios is the interest coverage ratio, or times interest earned. This ratio is simply the ratio of earning before interest and times interest earned. This ratio is simply the ratio of earning before interest and taxes for a particular reporting period to the amount of interest charges for the period taxes for a particular reporting period to the amount of interest charges for the period to the amount of interest charges for the period..to the amount of interest charges for the period..


Profit & Loss Statement AnalysisProfit & Loss Statement Analysis


Profit & Loss Statement AnalysisProfit & Loss Statement Analysis Interest Coverage Ratio = Earnings before interest and taxes (EBIT) / Interest expenseInterest Coverage Ratio = Earnings before interest and taxes (EBIT) / Interest expense

20082008 20092009 20102010

1-D. G. Khan Cement1-D. G. Khan Cement -0.14-0.14 0.300.30 0.190.19

2-Lucky Cement2-Lucky Cement 21.13 21.13 3.723.72 4.194.19

3-Attock Cement3-Attock Cement 2.83 2.83 12.4712.47 17.8817.88

4-Maple Leaf Cement4-Maple Leaf Cement -0.37 -0.37 -0.29-0.29 -1.25-1.25

5-Lafarge Cement5-Lafarge Cement -0.83-0.83 -1.04-1.04 -0.94-0.94 Earning per Share:Earning per Share:

Earning per share is calculated Profit after Tax divided by No. of Ordinary shares, it shows current rate of Earning per share is calculated Profit after Tax divided by No. of Ordinary shares, it shows current rate of per share of the company.per share of the company.

Earning per Share Earning per Share = Profit after taxes / No. of ordinary Shares= Profit after taxes / No. of ordinary Shares

20082008 20092009 20102010

1-1- D. G. Khan CementD. G. Khan Cement -.021-.021 1.961.96 0.720.72

2-2- Lucky CementLucky Cement 9.84 9.84 14.2114.21 9.709.70

3-3- Attock CementAttock Cement 6.03 6.03 20.6920.69 11.7411.74

4-4- Maple Leaf CementMaple Leaf Cement -1.96-1.96 -2.78-2.78 -6.94-6.94

5-5- Lafarge CementLafarge Cement -1.01-1.01 -0.97-0.97 -0.72-0.72

Detailed Profit & Loss Statements of major companies provided in Annexure ADetailed Profit & Loss Statements of major companies provided in Annexure A

Balance Sheet AnalysisBalance Sheet Analysis Balance Sheet RatiosBalance Sheet Ratios Liquidity Ratios:Liquidity Ratios: 1) Current ratio:1) Current ratio: The most widely used measure of short-term debt paying ability is the current ratio. This The most widely used measure of short-term debt paying ability is the current ratio. This

ratio is computed by dividing total current assets by total current liabilities. The higher the ratio is computed by dividing total current assets by total current liabilities. The higher the current ratio, the more liquid company appears to be.current ratio, the more liquid company appears to be.

Current Ratio Current Ratio = = Current assets / current liabilitiesCurrent assets / current liabilities

20082008 20092009 2010 2010

1-1- D. G. Khan CementD. G. Khan Cement 1.591.59 0.840.84 1.191.19

2-2- Lucky CementLucky Cement 1.061.06 1.301.30 0.710.71

3-3- Attock CementAttock Cement 1.511.51 2.432.43 2.622.62

4-4- Maple Leaf CementMaple Leaf Cement 0.810.81 0.520.52 0.540.54

5-5- Lafarge CementLafarge Cement 0.730.73 0.310.31 0.260.26

2) Quick Ratio :2) Quick Ratio :

Inventory and pre-paid expenses are the least liquid of the current assets. Therefore same Inventory and pre-paid expenses are the least liquid of the current assets. Therefore same short term creditors prefer the quick ratio to the current ratio as a measure of short term short term creditors prefer the quick ratio to the current ratio as a measure of short term solvency.solvency.

Financial Analysis of Top FiveCement Companies-

Balance Sheet Analysis


Balance sheet Analysis Balance sheet Analysis Quick Ratio Quick Ratio = Current asset – inventory / current liabilities= Current asset – inventory / current liabilities

20082008 20092009 20102010





5-5- Lafarge CementLafarge Cement 0.550.55 0.210.21 0.190.19 Debt Ratios:Debt Ratios: 1) Debt to Total Asset Ratio: 1) Debt to Total Asset Ratio: It highlights the relative importance of debt financing to the firm by showing the percentage of the firm’s It highlights the relative importance of debt financing to the firm by showing the percentage of the firm’s

assets that are supported by debt financing. It is derived by dividing a firm’s total debt by its total assets that are supported by debt financing. It is derived by dividing a firm’s total debt by its total assets assets

Debt to Total Asset Debt to Total Asset == total debt/ total assettotal debt/ total asset

20082008 20092009 20102010







Balance sheet Analysis Balance sheet Analysis 2) Debt to Equity :2) Debt to Equity : The debt equity ratio is the value of total debt divided by the book value of equity which The debt equity ratio is the value of total debt divided by the book value of equity which

implies how much time total liabilities are greater than the share holder equity.implies how much time total liabilities are greater than the share holder equity. Debt to Equity Debt to Equity = = total debt / equitytotal debt / equity

20082008 20092009 20102010

1-1- D. G. Khan Cement= D. G. Khan Cement= 0.730.73 1.041.04 0.770.77



4-4- Maple Leaf Cement=Maple Leaf Cement= 2.132.13 2.822.82 5.075.07

5-5- Lafarge CementLafarge Cement 0.990.99 1.021.02 1.211.21 Asset Activity Ratios: Asset Activity Ratios: 1) Inventory Turnover Ratio: 1) Inventory Turnover Ratio: Measures how many times the inventory has been turned over (sold) during the year; Measures how many times the inventory has been turned over (sold) during the year; Inventory Turnover Ratio= Inventory Turnover Ratio= Cost of Goods Sold / Inventory Cost of Goods Sold / Inventory

20082008 20092009 20102010



20082008 20092009 2010 2010


4-4- Maple Leaf Cement=Maple Leaf Cement= 14.9614.96 15.8215.82 21.18 21.18

5-5- Lafarge CementLafarge Cement 6.82 6.82 9.879.87 9.64 9.64

2) Total Asset Turnover : 2) Total Asset Turnover :

The relationship of net sales to total assets is known as the total asset turnover, or The relationship of net sales to total assets is known as the total asset turnover, or capital turnover ratio. Measures relative efficiency of total assets to generate sales.capital turnover ratio. Measures relative efficiency of total assets to generate sales.

Total Asset Turnover Total Asset Turnover == Sales/ total assetSales/ total asset

20082008 20092009 20102010







Balance sheet Analysis Balance sheet Analysis

Total Asset Turnover Illustrated in Chart:Total Asset Turnover Illustrated in Chart:


Balance sheet AnalysisBalance sheet Analysis

Detailed Balance Sheets of major companies provided in Annexure B


Cash Flow Statement Analysis Cash Flow Statement Analysis

Year 2008 2009 2010

D.G.Khan (7,370,648) (8,824,733) (9,354,850)

Lucky (1,438,749) 910,890 333,629

Attock 110,957 871,826 442,109

Maple Leaf 104,134 99,932 73,265

Lafrage (2,362,601) (2,245,868) (4,494,847)

Cash & Cash Eqvivalents at the end of year

With regards to cash flow statements Attock Cement has the best cash flow currently followed by Lucky Cement & Maple Leaf..


Analysis of Statement of Changes in Analysis of Statement of Changes in Equity / CapitalEquity / Capital

Total Equity / Capital at the end of year

Year 2008 2009 2010

D.G.Khan 30,080,257 20,918,442 26,519,220

Lucky 18,655,42323,251,972 25,095,929

Attock 3,531,579 4,777,867 5,395,419

Maple Leaf 8,360,889 6,717,801 4,134,208

Lafrage 11,034,404 9,763,928 8,815,433

DG Khan Cement holds the highest equity currently (FY!0) followed by Lucky Cement & Lafrage Cement..Detailed Statements of Changes in Equity of major companies provided in Annexure D..

SWOT SWOT Analysis of Cement Analysis of Cement IndustryIndustry

StrengthsStrengths Availability of Raw MaterialAvailability of Raw Material Imported Machinery and plants are available in most of companiesImported Machinery and plants are available in most of companies Pakistan already established its position as an exporter of cement Pakistan already established its position as an exporter of cement

and clinker in the regionand clinker in the region Availability of foreign investment and loans Availability of foreign investment and loans The compressive strength is a very important factor of cement. The compressive strength is a very important factor of cement.

The Portland cement achieves its maximum strength in 28 daysThe Portland cement achieves its maximum strength in 28 days Cement industries in Pakistan are currently operating at their Cement industries in Pakistan are currently operating at their

maximum capacitymaximum capacity Effect of GDP:Effect of GDP: Following effects of GDP govern the growth of cement industry in Following effects of GDP govern the growth of cement industry in

Pakistan:Pakistan: Higher GDP growth has positive impact on cement demandHigher GDP growth has positive impact on cement demand

SWOT Analysis of Cement SWOT Analysis of Cement IndustryIndustry

Cement demand growth rate was double the GDP growth rate in last three Cement demand growth rate was double the GDP growth rate in last three yearyear

GDP growth is expected to continue to have same positive impact GDP growth is expected to continue to have same positive impact on demand growthon demand growth

Housing demand to growHousing demand to grow Government’s development spending shall continue to rise Government’s development spending shall continue to rise Most of the cement plants, that used to operate on furnace oil, have now Most of the cement plants, that used to operate on furnace oil, have now

been converted into coal system, which has substantially reduced cost of been converted into coal system, which has substantially reduced cost of production.production.

The most modern selection of production equipment possible The most modern selection of production equipment possible

WeaknessesWeaknesses The stage of industrial development, in most of the segments, is The stage of industrial development, in most of the segments, is

still at a very low level of technology and the existing industrial still at a very low level of technology and the existing industrial base is very narrow base is very narrow


The customer has no choice at all to switch between two brands of cement The customer has no choice at all to switch between two brands of cement due to cartel of all of the cement manufacturers in Pakistandue to cartel of all of the cement manufacturers in Pakistan

The freight charges are a massive 20% of the retail pricesThe freight charges are a massive 20% of the retail prices Consumers face a tough decision with regards to prefer which brand over Consumers face a tough decision with regards to prefer which brand over

which because of the similar pricing of cement industrywhich because of the similar pricing of cement industry

OpportunitiesOpportunities The local cement industry faces high upfront fuel costs. In order to facilitate The local cement industry faces high upfront fuel costs. In order to facilitate

their conversion to coal, which is widely available in the country, the their conversion to coal, which is widely available in the country, the government has given incentives for imported plant and equipment for coal government has given incentives for imported plant and equipment for coal firing units.firing units.

The demand of Pakistani cement is expected to continue to grow at the rate The demand of Pakistani cement is expected to continue to grow at the rate of 20 per cent for about four years to come. It may then follow traditional of 20 per cent for about four years to come. It may then follow traditional growth rate of seven per cent per year. Announcement of major dams will growth rate of seven per cent per year. Announcement of major dams will dramatically increase demand..dramatically increase demand..


Deregulation after accession of Pakistan to WTO is expected to open the Deregulation after accession of Pakistan to WTO is expected to open the window of competition from cheaper markets. There may be no tariff after window of competition from cheaper markets. There may be no tariff after this deregulation on import of cement allowing its entry into Pakistan from this deregulation on import of cement allowing its entry into Pakistan from cheaper market at lower rate.cheaper market at lower rate.

ThreatsThreats Unanticipated increase in interest rates or less than expected demand Unanticipated increase in interest rates or less than expected demand

growth might create severe crises for the sector couple of years forwardgrowth might create severe crises for the sector couple of years forward

A price war was witnessed which ended up with no conqueror. Similar A price war was witnessed which ended up with no conqueror. Similar apprehensions exist for the future when there will be plenty of excess apprehensions exist for the future when there will be plenty of excess capacity. capacity.

Pakistan's cement industry has mostly converted their plants to coal Pakistan's cement industry has mostly converted their plants to coal

but its price in international markets has gone up but its price in international markets has gone up Instead of appreciating the marketing skills of cement manufacturers to Instead of appreciating the marketing skills of cement manufacturers to

explore new markets for cement, the industry is being pressurized explore new markets for cement, the industry is being pressurized constantly by Governmentconstantly by Government

Burden of increased manufacturing costs due to heavy taxation borned by Burden of increased manufacturing costs due to heavy taxation borned by the consumers..the consumers..

Cement Industry of PakistanCement Industry of Pakistan

ConclusionConclusion The law and order situation in the country is deteriorating day by day which The law and order situation in the country is deteriorating day by day which

affects all the industries including cement industry. The economic crisis which affects all the industries including cement industry. The economic crisis which hit the entire world is another element which is affecting the cement industry hit the entire world is another element which is affecting the cement industry businessbusiness

Government of Pakistan should make a concrete strategy and control the law Government of Pakistan should make a concrete strategy and control the law and order situation and order situation

During this Project We did Financial Analysis of top five companies of During this Project We did Financial Analysis of top five companies of Pakistan cement Industry along with a brief overview of overall Pakistan Pakistan cement Industry along with a brief overview of overall Pakistan Cement Industry. Our Financial analysis included Profit & Loss Statement Cement Industry. Our Financial analysis included Profit & Loss Statement analysis, Balance Sheet analysis, Cash Flow Statement Analysis, Financial analysis, Balance Sheet analysis, Cash Flow Statement Analysis, Financial Ratio Analysis, and Statement of changes in capital of top five Major Ratio Analysis, and Statement of changes in capital of top five Major Companies of Pakistan Cement Industry. Companies of Pakistan Cement Industry.

According to our analysis Attock Cement is one of the best with regards to According to our analysis Attock Cement is one of the best with regards to Net Profit having a net profit of 13.26% Attock Cement is also the highest if Net Profit having a net profit of 13.26% Attock Cement is also the highest if we see its Earning per Share in the market which is Rs.11.74. Attock we see its Earning per Share in the market which is Rs.11.74. Attock Cement’s Current ratio is also the best right now which is 2.62Cement’s Current ratio is also the best right now which is 2.62

The Debt to asset ratio of Attock Cement is also the best or lowest which is The Debt to asset ratio of Attock Cement is also the best or lowest which is 0.24 which means it relies on debt financing the least of all the five 0.24 which means it relies on debt financing the least of all the five companies..companies..

Attock Cement’s Debt to equity ratio is also the lowest which is 0.31.Attock Cement’s Debt to equity ratio is also the lowest which is 0.31. Inventory turnover of Lucky Cement is the best with 27.15 %. Attock Cement has the best Inventory turnover of Lucky Cement is the best with 27.15 %. Attock Cement has the best

Total Asset turnover which is 1.09.Total Asset turnover which is 1.09. With regards to cash flow statements Attock Cement has the best cash flow currently With regards to cash flow statements Attock Cement has the best cash flow currently

(FY10) with cash flow of Rs.442109 followed by Lucky Cement Rs.333629 & Maple Leaf (FY10) with cash flow of Rs.442109 followed by Lucky Cement Rs.333629 & Maple Leaf Rs.73265.Rs.73265.

When we went through the Statement of Changes in Equity of top companies we found that When we went through the Statement of Changes in Equity of top companies we found that D.G Khan Cement has the highest equity currently (FY10) with over 26.5 m followed by D.G Khan Cement has the highest equity currently (FY10) with over 26.5 m followed by Lucky Cement 25 m & Lafarge Cement 8.8 m.Lucky Cement 25 m & Lafarge Cement 8.8 m.

For FY 08 Lucky Cement can be termed as the best with regards to major financial ratios For FY 08 Lucky Cement can be termed as the best with regards to major financial ratios b/c its N.P & EPS was the best of the five.b/c its N.P & EPS was the best of the five.

For FY 09 Attock Cement was the best when we see its major financial ratios which For FY 09 Attock Cement was the best when we see its major financial ratios which indicate that it performed best for the year.indicate that it performed best for the year.

We can conclude by stating that Attock Cement is the best cement company currently We can conclude by stating that Attock Cement is the best cement company currently (FY10) with regards to major financial statement analysis followed closely by Lucky (FY10) with regards to major financial statement analysis followed closely by Lucky Cement..Cement..

ConclusionConclusion

RecommendationsRecommendations The Cement Industry of Pakistan is one of the industries which is in a better The Cement Industry of Pakistan is one of the industries which is in a better

state of affairs compared to other industries. The demand for cement is high state of affairs compared to other industries. The demand for cement is high both locally & abroad. The future prospects for its augmentation are bright & both locally & abroad. The future prospects for its augmentation are bright & optimistic. We recommend the following measures to improve the industry optimistic. We recommend the following measures to improve the industry further so that it’s production & export can be increased for bringing foreign further so that it’s production & export can be increased for bringing foreign exchange in to the Pakistan ‘s exchequer:exchange in to the Pakistan ‘s exchequer:

Special Rebate should be given to the Cement exporting companies.Special Rebate should be given to the Cement exporting companies. Import Duties should be very low on the import of machinery & other Import Duties should be very low on the import of machinery & other

equipments required for commencing a Cement Manufacturing Plant so equipments required for commencing a Cement Manufacturing Plant so that more companies enter the Cement Market.that more companies enter the Cement Market.

MFI (Most Favored Industry) status should be initiated by the Government MFI (Most Favored Industry) status should be initiated by the Government & Cement Industry of Pakistan should be given MFI status in order to boost & Cement Industry of Pakistan should be given MFI status in order to boost production & export b/c our Cement Industry has a great potential to grow in production & export b/c our Cement Industry has a great potential to grow in the future.the future.

The government should develop communication network so that The government should develop communication network so that transportation cost can be reducedtransportation cost can be reduced

RecommendationsRecommendations The prices of cement currently are very high & the demand for cement is very The prices of cement currently are very high & the demand for cement is very

high too b/c more & more people are moving from villages to towns creating high too b/c more & more people are moving from villages to towns creating more demand for housing projects. The Construction industry wants to buy more demand for housing projects. The Construction industry wants to buy more cement but it cannot buy cement at a high price b/c people are not ready more cement but it cannot buy cement at a high price b/c people are not ready or cannot afford houses at high prices. Also due to population rise there is a or cannot afford houses at high prices. Also due to population rise there is a increasing demand for more houses but since the prices of cement are high; increasing demand for more houses but since the prices of cement are high; Construction Companies are redundant to make houses at high prices. The Construction Companies are redundant to make houses at high prices. The problem with Construction industry is that if they buy cement at a high price; problem with Construction industry is that if they buy cement at a high price; they would build houses at expensive prices too, considering their own profit they would build houses at expensive prices too, considering their own profit margin also but a major chunk of people cannot afford houses at expensive margin also but a major chunk of people cannot afford houses at expensive prices. Therefore cement prices should be brought down substantially & prices. Therefore cement prices should be brought down substantially & immediately.immediately.

The power shortage affects every industry including Cement . Steps should The power shortage affects every industry including Cement . Steps should be taken to make more small dams b/c a large dam like Tarbela takes almost be taken to make more small dams b/c a large dam like Tarbela takes almost ten years to complete., Import power stations from China & Iran at cheaper ten years to complete., Import power stations from China & Iran at cheaper price , low dependence on thermal power which is costly & Special price , low dependence on thermal power which is costly & Special Consideration should be given to Industrial Units with regards to Load Shedding Consideration should be given to Industrial Units with regards to Load Shedding which happens almost throughout the year..which happens almost throughout the year..

THANK YOUTHANK YOU

Documents

Financial Analysis of Top Cement Companies