Asif Nafees Cement Thesis

NEWPORTS INSTITUTE OF COMMUNICATION & ECONOMICS
THE COSTING AND FINANCIAL ISSUES OF CLINKER
By
Asif Nafees
Research Report Submitted to:
Sir Asim Mashkoor
MBA Finance
APPROVAL SHEET
The research study permitted a THE COSTING AND FINANCIAL ISSUES OF CLINKER is prepared and presented by ASIF NAFEES. It has therefore been declared as a partial accomplishment of the condition for the degree of Master (in Business Administration in Banking and Finance).
Sir Asim Mashkoor
Examiner
LETTER OF ACCEPTANCE
The research study entitledTHE COSTING AND FINANCIAL ISSUES OF CLINKER is equipped and presented by ASIF NAFEES. It has therefore been declared as a partial accomplishment of the condition for the degree of Master (in Business Administration in Banking and Finance).
Chief Executive Officer
NEWPORTS INSTITUTE OF COMMUNICATION AND ECONOMICS
DEDICATION
I Dedicate
This Research Report
To My
DEAREST MOTHER
Who Instructed At the
All Stages Of Life
M. Asif Nafees ACKNOWLEDGEMENT

I wish to express my sincere gratitude to Sir Asim Mashkoor , whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the subject and create the skills to develop this thesis. This project bears on imprint of many peoples. I sincerely thank to my project guides my friends and my family members for guidance and encouragement in carrying out this project work I also wish to express my gratitude to the officials and other staff members of LUCKY CEMENT PVT LTD who rendered their help during the period of my project work. My special thanks to SIR Ahtasham-ud-Din Farooqi MANAGER (FINANCE) of the company for their kind co-operation to the completion of my project work. Last but not least I wish to avail myself of this opportunity, express a sense of gratitude and love to my friends and my beloved parents for their manual support, strength, help and for everything.
TABLE OF CONTENTS
LIST OF TABLE
CHAPTER # 1 INTRODUCTION TO COSTING AND FINANCIAL ISSUES OF CLINKER
INTRODUCTION: Cement clinkers are formed by the heat processing of cement elements in a kiln. Limestone, clay, bauxite, and iron ore sand in specific proportions are heated in a rotating kiln at 2,770 Fahrenheit (1,400 Celsius) until they begin to form cinder lumps, which are also known as cement clinkers. Cement clinkers are usually ground with gypsum to
produce the fine powder later mixed with liquid to produce cement, although some manufacturers ship cement clinkers in their lump form to cut down on dust. Resource efficiency means using fewer virgin raw materials. Increasingly, cement plants are turning to industrial byproducts and materials that otherwise would be discarded as sources for the basic elements needed for cement making. After completing detailed analyses on their chemical characteristics to determine the effect on process chemistry and facility emissions, many cement plants can utilize byproducts from the electric power industry as a raw material in the manufacture of the clinker, the intermediate product in the process, or as an ingredient in the final cement product. Three general classes of byproducts from electric power plants can be used in the manufacture of Portland cement, white cement and clinker. Clinker is the modern form of cement and it is used in replacement of cement as it is convenient and it perform better than cement. Clinker was introduced in Pakistan in recent years and it has limited supplier and manufacturarers in Pakistan. Lucky Cement is the one of the biggest manufacturer of clinker in Pakistan. Technological enhancement for producing clinker has always been a major problem in Pakistan. After Lucky cement Portland cement clinker is a dark grey nodular material made by heating ground limestone and clay at a temperature of about 1400 C-1500 C. The nodules are ground up to a fine powder to produce cement, with a small amount of gypsum added to control the setting properties. Clinker is used in Pakistan usually for huge projects and it is not in the approach of small users due to its high cost. Cost of crinkle in Pakistan is affected by the High cost of energy and transportation. Plant of crinkle can not be established in city due to environment issues. Clinker is supplied in huge bowlers from long distances to end users because of this cost is effected. Taxation rates are high in Pakistan. Manufacturers have to pay the taxes in every step of processing. Complicated tax system affects the cost and profitability of organization. Unfortunately, law in order situation of Pakistan has affected the all industry of Pakistan. Similarly it has worse affect on cement industry.
BACKGROUND: We will analyze the issues of processing the crinkle from raw material to end users. Further the cost affects and the financial issues of production of clinker. A clinker is an incombustible fragment that can be found in ash residue after burning heating fuels such as coal or wood. In relation to burning wood for heat in a wood stove or fireplace, a clinker looks like a chunk of ash, and is composed of wood residue and ash. The concern is that
clinkers can contain live or active spark. When cleaning/removing the ash build-up from the fire box of your stove or fireplace, clinkers in the ash may appear to be cold and harmless. However, clinkers can harbor live ash which can re-ignite when introduced to the air. For this reason, always use a metal pan or pail to remove the stove ash and dispose of all ash carefully. In cement clinker production installations, especially with short rotary tubular kiln, in order to find a way in which the thermally highly stressed rotary kiln intake chamber can be protected from overstress and therewith the entire production installation can be reliably operated it is proposed, according to the invention, to introduce directly into the rotary kiln intake chamber, a finely granular non-preheated substance usable in the cement clinker production process, to suspend or disperse it there in the rotary kiln exhaust gas and thereby to continuously cool the kiln intake chamber, and to discharge the heated finely granular substance with the exhaust gas from the kiln intake chamber and to add it to the process raw meal or direct it elsewhere. A process for the production of cement clinker from raw meal which is preheated in at least one heat exchanger train traversed by exhaust gas from a rotary tubular kiln having a cyclone suspended gas-heat exchanger system, said raw meal being precalcined if necessary in a precalcination stage and burned in a sintering zone of the rotary tubular kiln into cement clinker, which cement clinker is cooled in an after-engaged clinker cooler, in which process there are used in the precalcination stage the exhaust gas stream from the rotary tubular kiln and an exhaust air stream from the clinker cooler, separately or together, for the precalcination of the raw meal, comprising the steps of introducing a fine granular non-preheated substance usable in the cement clinker production process directly into an intake chamber of the rotary kiln, suspending or dispersing the fine granular substance there in the rotary kiln exhaust gas and thereby continuously cooling the kiln intake chamber, after which the heated fine granular substance with the exhaust gas is discharged from the kiln intake chamber.
OBJECTIVES: Following are the basic objectives of this research: -
To determine the cost issues for the production of clinker.
To evaluate the process of production of clinker. To describe the method to increase the profitability for the manufacturer. To assess the problems and its solution for providing the clinker to end user.
To describe the elements of high cost and the way to decrease the cost. To access the procedure to modernize the production of clinker.
PROBLEMS: Problems of clinker industry can be described as follows:
To decrease the additional cost of transportation, handling and grinding of coal.

To find out the alternative of Electricity, which is the major problem.
To build a handsome infrastructure for production and distribution. The implementation of high tax rate on cement sector. The poor cash flow rendering the units incapable of debt servicing.
METHODOLOGY: In a similar vein, the term methodology has been defined in various ways, indeed normatively and structurally. Normatively, it has been defined in the sense of theory of knowledge (epistemology) or philosophy of science. The dominant theory, of course, is logical positivism, a philosophical tradition that holds that all facts are derived from experience, defined minimally in terms of senses, and that all knowledge is
based on experience. Judgments of values cannot be accepted as knowledge. In this research we will use the comparative method of research:
Comparative method
A specific comparative research methodology is known in most social sciences. Its definition often refers to countries and cultures at the same time, because cultural differences between countries can be rather small , whereas very different cultural or ethnic groups may live within one country . Comparative studies have their problems on every level of research, i.e., from theory to types of research questions, Operationalization, instruments, sampling, and interpretation of results Sampling, Random; Sampling, Nonrandom
The major problem in comparative research, regardless of the discipline, is that all aspects of the analysis from theory to datasets may vary in definitions and/or categories. As the objects to compare usually belong to different systemic contexts, the establishment of equivalence and comparability is thus a major challenge of comparative research. This is often operationalized as functional equivalence, i.e., the functionality of the research objects within the different system contexts must be equivalent. Neither equivalence nor its absence, bias, can be presumed. It has to be analyzed and tested for on all the different levels of the research process. Equivalence has to be analyzed and established on at least three levels.
CHAPTER # 2 THEORITICAL STUDY REVIEW REGARDING COSTING AND FINANCIAL ISSUES OF CLINKER
INTRODUCTION OF CEMENT INDUSTRY IN PAKISTAN:

Growth of cement industry is rightly considered a barometer for economic activity. In 1947, Pakistan had inherited 4 cement plants with a total capacity of 0.5 million tons. Some expansion took place in 1956-66 but could not keep pace with the economic development and the country had to resort to imports of cement in 1976-77 and continued to do so till 1994-95. The industry was privatized in 1990 which led to setting up of new plants.
Although an oligopoly market, there exists fierce competition between members of the cartel today. The industry comprises of 29 firms (19 units in the north and 10 units in the south), with the installed production capacity of 44.09 million tons. The north with installed production capacity of 35.18 million tons (80 percent) while the south with installed production capacity of 8.89 million tons (20 percent), compete for the domestic market of over 19 million tons. There are four foreign companies, three armed forces companies and 16 private companies listed in the stock exchanges. The industry is divided into two broad regions, the northern region and the southern region. The northern region has around 80 percent share in total cement dispatches while the units based in the southern region contributes 20 percent to the annual cement sales. Cement industry is indeed a highly important segment of industrial sector that plays a pivotal role in the socio-economic development. Since cement is a specialized product, requiring sophisticated infrastructure and production location. Mostly of the cement industries in Pakistan are located near/within mountainous regions that are rich in clay, iron and mineral capacity. Cement industries in Pakistan are currently operating at their maximum capacity due to the boom in commercial and industrial construction within Pakistan. Cement industry is indeed a highly important segment of industrial sector that plays a pivotal role in the socio-economic development. Though the cement industry in Pakistan has witnessed its lows and highs in recent past, it has recovered during the last couple of years and is buoyant once again.
STRUCTURE:
A market is a group of buyers and sellers exchanging goods that are highly substitutable for one another. Markets are defined by demand conditions; they embody the zone of consumer choice for the goods. Now, market for Cement in Pakistan exists in two main dimensions:
1. Product type 2. Geographic area. PRODUCT TYPE: 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 mineral capacity. Structure of Cement industry in Pakistan is as such that there is not much substitutability to buyers. Which shows that the Cross elasticity of demand is negligible. GEOGRAPHICAL AREA: The other factor i.e. geographic location also doesnt affects a lot considering the flexibility of demand. Example can be taken from the fact that if DG cement in DG KHAN raises its price and MAPLE LEAF CEMENT in DaudKhel will raise its price to match DG cements. This is due to cartel of all of the cement manufacturers in Pakistan. Thus the customer has no choice at all to switch between two brands of cement. As the cement market is moving from a virtual 'sellers' market' to an over-supply situation, it is expected that when prices stagnate and profitability becomes a function of volume and economies of scale, location advantage and proximity to markets will become extremely important factors. At present the freight charges are a massive 20% of the retail prices. The plants located very close to each other and tapping the same market will have to expand their markets which will increase their freight expenses. Dandot, Pioneer, Maple Leaf and Garibwal are all located within a radius of 100 kilometers and are selling bulk of their production in the same areas and will thus face serious competition from each other.
MARKET SHARE:
The market share if Cement industry is as such that since large number of manufacturers are in the market and are targeting the entire market through the formation of Cartel. So the dominancy of market share is yet to be analyzed by us. This dominancy can be attributed to two factors: 1. Brand name 2. Product quality.
Since pricing is similar so production capacity can provide a vague idea with regards to the market share of all the players.
CONDUCT:
Cement industries in Pakistan are currently operating at their maximum capacity due to the boom in commercial and industrial construction within Pakistan. Consumers face a tough decision with regards to prefer which brand over which because of the similar pricing of cement industry. The formation of cartel by the cement manufacturers have exploited local consumers a lot and this has led to the concentrated degree of oligopoly, where the firms are acting as a single unit to perform their monopoly. Their combined market power is simply a diluted version of the dominance that a single firm with a monopoly market share can exert.
PERFORMANCE:
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 growth rate of seven per cent per year. Announcement of major dams will dramatically increase this demand. Deregulation after accession of Pakistan to WTO is expected to open the window of competition from cheaper markets. There may be no tariff after this deregulation on import of cement allowing its entry into Pakistan from cheaper market at lower rate. Cement from cheaper markets may also block Pakistans export of cement to its neighboring countries. Global market has vigorously taken up the advantage of economy of scales and multinational giants now control more than 40 per cent of world production(China not included). The recent acquisition of Chakwal Cement by an Egyptian giant, Orascom may be a beginning of such an entry in Pakistan by multinationals. New avenues for export of cement are opening up for the indigenous industry as Sri Lanka has recently shown interest to import 30,000 tons cement from Pakistan every month. If the industry is able for avail the opportunity offered, it may secure a significant share of Sri Lanka market by supplying 360,000 tons of cement annually.
RELATED GOVERNMENTAL REGULATIONS:

The policy of the Government is to keep a balance between rapid economic development, on the one hand, and social justice and consumers protection, on the other. There is a traditional conflict between these two aims. It is, therefore, necessary to regulate trade, commerce or industry in the interest of free competition therein. The Ordinance was promulgated to provide for measures against un-due concentration of economic power, growth of un-reasonable monopoly power and un-reasonably restrictive trade practices. Thus cement industry too is monitored and answerable to rules and regulations developed by the monopoly control authority of Pakistan.
The government is considering allowing further concessions and additional incentives for cement export, with a view to increase overall export volume. These measures will immensely help in promoting and protecting high investments made in cement sector in recent years. In the wake of its huge surplus production as a result of massive capacity expansion undertaken it rather seems imperative for Pakistani cement industry, on one hand, to sustain existing export markets and, on the other, explore new markets.
HERFINDAHL INDEX:
In Pakistan there are 27 cement manufacturers that are playing a vital role in the build up of countrys economy and contribution towards growth and prosperity. For the calculation of Herfindahl index we have chosen 5 dominant industries of Pakistan, on the basis of their production capacity. The market share of these firms is as follows:

Askari cement (NZP) DG cement Lucky cement Maple leaf Pioneer cement
7.6% 9.8% 12.7% 7.1% 5.5%
(0.127^2)+ (0.098^2) + (0.076^2) + (0.071^2) + (0.055^2) = 0.395 Since the Hirfindahl index is above the standard set of (0.18) for an unequally distributed market share industry. This indicates that there is a high concentration in the cement industry.
ADVERTISEMENT:
The firms optimal level of advertising intensity (Advertisement/Revenue) is equal to the ratio of its elasticity of demand to the price elasticity of demand that it faces. The important implication of this demonstration is that the level of advertising is chosen simultaneously with the level of price, there is no cause and effect relationship between these two variables.
For oligopolistic competition as in cement industry, the firms have to make decisions taking into account the decision of their rivals. So advertising decisions are measured to the extent on which amount of reaction it would generate from the rival firms. In brief we can conclude that advertising is an instrument of an oligopolistic competition.
NEW PRODUCT DEVELOPMENT:

Assume two firms A and B who want to decide whether they should attempt to produce a new product with marginal cost c. The demand for the good is P = a-bQ and as for the R&D effort, the costs of setting up a research lab are K and the probability that the lab will successfully develop the product is %. If both firms successfully develop the product they will be a Cornet duopoly. While, if one of them develops a new product then the first mover advantage would embark rewarding the developer to maintain a monopoly. Everybodys doing it, so why shouldnt we? This is probably the thought reverberating through every cement magnates mind these days. The current expansion spree now seems to be a bandwagon effect. Cement manufacturers, especially the larger ones, are sitting on the horns of a dilemma where the only way to maintain market share is to expand capacity, but only at the expense of increasing future unutilized capacity. It does tend to seem as if the industry may be gradually, albeit inadvertently, digging its own grave. A proverbial David vs. Goliath scenario seems to be developing where the larger players like Lucky, DG Khan, Bestway, Pakistan Cement, etc. may cause a few smaller (especially those not expanding) cement manufacturers to struggle for existence, or eventually sell out operations to one of these large producers. However, within the group of large producers, we could have an interesting scenario in itself, where the local cement industrys big boys, Lucky and DG Khan, are likely to be given a tough time by the international veterans like Orascom and Bestway.
CAPICITY EXPENSION CYCLE:

The capacity expansion cycle in cement industry is governed by following factors:
Cement industry being a commodity industry provides very few barriers to entry. Positive demand and profitability outlook attract new entrants until profitability is affected.
Industry went through two such capacity addition cycles during 90s. However, current capacity addition cycles is the largest as industry capacity will be increased from 20.045mn tpa in FY05 to 43.9mn tpa by FY08. These factors indicate that although it is considerably easier for a new entrant to enter into the business with regards to the conditions. But the staggering amount of investment required makes in quite a difficult task
Capacity expansions are targeted at domestic markets:
The research made on our part has shown following indications with regards to capacity expansion in cement industry of Pakistan: Capacity expansions are largely concentrated in the northern zone Capacity in the northern zone will grow from 14.7mn tpa in FY05 to 33.8mn tpa by FY08. Concentration of expansion projects away from sea routes indicates these projects are targeted at domestic markets
DEMAND AND EXPENSION:

We expect domestic demand to grow at 13% Capacity growth rate (CAGR) during next five years. But certain other factors will also affect the growth of cement industry as well. These are as follows: Backlog in development activities Strong DGP growth
Housing sector growth Government Development Expenditures Earthquake Rehabilitation Announcement of large dams
BACKLOG IN DEVELOPMENT ACTIVITIES: Backlog in developmental activities will help in such a way as the Cement demand remained stagnated during 90s owing to lack of development activities. And if we conduct a comparison of per capita consumption between Pakistan and India we can find out that demand of cement in Pakistan with respect to its geographic size has stagnated. Per capita consumption was 73kg during FY97 in both countries. Consumption in India during FY05 was 115kg/capita whereas ours was 95kg/capita. Our consumption is low compared to region countries and world average and so our per capita consumption may well remain below world average in the medium run.
EFFECT OF GDP: Following effects of GDP will govern the growth of cement industry in Pakistan:

Higher GDP growth has positive impact on cement demand. Cement demand growth rate was double the GDP growth rate in last three years. GDP growth is expected to continue to have same positive impact on demand growth.
HOUSING DEMAND TO GROW: Following indications have showed a considerable demand of cement in Pakistan:
Housing projects consume roughly 40% of cement demand Currently 0.3mn houses are built annually against demand of 0.5mn Low interest rates, post 9/11 remittances inflow, and real estate boom have helped housing sector growth
Easy mortgage availability and announcement of low cost housing schemes will determine housing sector growth in the long-run.
Governments development spending shall continue to rise due to:
Government development expenditures count for one third of total cement consumption Increase in development expenditures has helped cement demand to grow at very high rates Increase in PSDP- as announced in Medium Term Development Framework 200510 - will help cement demand to grow in the country Infrastructure development in a region triggers private development projects having even positive impact on cement demand
EARTHQUAKE REHABILITION TO BOOST DEMAND:
After the earthquake of October 8th, the demand for cement rose tenfold due to the rehabilitation and developmental programs. The conditions that constitute this growth due to earthquake are as follows: Earthquake losses are estimated at USD 5.2bn
Reconstruction work will boost construction material demand Some portion of development expenditures will be allocated to this project Reconstruction work is expected to generate cement demand of 4mn tons over next 3-4 years Positive impact on demand will be much more evident from 2HFY07 onwards. Cement manufacturers in northern zone will be the main beneficiaries of this demand growth
Demand generation from large dams: The demand for cement will also increase due to following observations:
Construction of four large dams will generate demand of 3.7mn tons as construction activities start Our estimate does not include demand generation from Skardu-Katzarah dam as its feasibility study in not yet completed. Extent of demand generation will depend on size of dam, type of dam, and extent of relocation/resettlement activities required. Bhasha dam will generate maximum demand as it is RCC concrete dam whereas other dams being Earthfill/Rockfill dams will require less cement for their construction. Resettlement activities for Kalabagh dam will generate maximum demand as it is located in a highly populated area.
COMPETIOTION IN EXPORT MARKETS:

With regards to the competition in export markets, we have observed following behaviors of cement industry in Pakistan:
Cement exports started in FY02 to Afghanistan that is still a major market Iraqi market can become a potential target after peace is restored India and Iran are the major competitors for Pakistan in the Middle Eastern region
Upcoming capacity expansions in Iran and other GCC countries will create tough competition for Pakistan Export prices are presently touching USD 75/ton in the exports market, however they are likely to come down as new capacities comes online
PROBLEMS OF OVERCAPACITY:
Overcapacity situation in local market is due to: Cement industry has grown at 31% CAGR from capacity of 20mn tpa to 43.9mn tpa by FY08 Current wave of new capacity expansions have reduced capacity utilization rates despite demand growth of 13% CAGR We expect capacity utilization levels to decline to 60% in FY07 and 56% during FY08
PROBLEM OF OVERSUPPLY SITUATION:

Following problems might arise with the oversupply situation in cement industry: Lower capacity utilization will reduce benefits of economies of scale. High leverage will also adversely affect profitability of new plants New plants will gain market share at the cost of older players which are not undergoing expansion Large idle capacity is will create panic in players This may result in price wars in the coming year
FINANCIAL OBLIGATIONS WILL DETERMINE PRICE STRATEGY:

Level of financial obligations will play key role in determining pricing strategy for manufacturers. Players with higher debt obligations will have greater incentive to cheat from current cartel arrangements and as the Financial and depreciation costs were PKR690/ton in FY04 that will increase to PKR1260/ton during FY07. Similarly, at 60% capacity utilization level, financial obligations/ton (current maturity + interest expenses)
will be PKR 298/ton for Pioneer and PKR 1158/ton for Maple Leaf cement during FY07. And an increase of 10% in capacity utilization level declines financial obligations per ton by 14%. And if capacity utilization levels are increased to 70%, financial obligations will decline to PKR 256/ton for Pioneer and PKR 998/ton for Maple Leaf cement
PRICE REDUCTIONS ARE LIKELY IN THE COMING YEARS:

This observation is mainly due to following factors: Cement industry is currently enjoying historically high prices, margins and utilization rates Historically, lower capacity utilization rates have resulted in price wars among manufacturers Effect of capacity utilization levels will start to decline from 1QFY07 Lower sales volume and high leverage due to expansion will create problems for players to meet debt obligations This is likely to trigger price wars as players will try to gain market share Price wars will lower margins creating further problems for players We expect price reduction of 10% in FY07 and 5% in FY08
HISTORY OF CEMENT INDUSTRY IN PAKISTAN:

In 1947, Pakistan had inherited 4 cement plants with a total capacity of 0.5 million tons. Some expansion took place in 1956-66 but could not keep pace with the economic development and the country had to resort to imports of cement in 1976-77 and continued to do so till 1994-95. The industry was privatized in 1990 which led to setting up of new
plants. Although an oligopoly market, there exists fierce competition between members of the cartel today. The industry comprises of 29 firms (19 units in the north and 10 units in the south), with the installed production capacity of 44.09 million tons. The north with installed production capacity of 35.18 million tons (80 percent), while the south with installed production capacity of 8.89 million tons (20 percent), compete for the domestic market of over 19 million tons. There are four foreign companies, three armed forces companies and 16 private companies listed in the stock exchanges. The industry is divided into two broad regions, the northern region and the southern region. The northern region has around 80 percent share in total cement dispatches while the units based in the southern region contributes 20 percent to the annual cement sales. Cement industry is indeed a highly important segment of industrial sector that plays a pivotal role in the socio-economic development. Since cement is a specialized product, requiring sophisticated infrastructure and production location. Mostly of the cement industries in Pakistan are located near/within mountainous regions that are rich in clay, iron and mineral capacity. Cement industries in Pakistan are currently operating at their maximum capacity due to the boom in commercial and industrial construction within Pakistan.
GROWTH OF PAKISTAN CEMENT INDUSTRY:

The cement industry of Pakistan entered the export markets a few years back, and has established its reputation as a good quality product. The latest information is that India will import more cement from Pakistan. So far 130,000 tones cement has been exported to the neighboring country.
The last few years have been a golden period for cement manufacturers, when the government increased spending on infrastructure development. High commercial activity and rising demand for housing on account of higher per capita income has kept cement offtake growth in double digits. During the financial year-07, cement sales registered a growth of 31 percent to 17.53 million tonnes as against 13.5 million tonnes sold last year. The cement sales during July-February-08 showed an increase, both in domestic and regional markets to 18.17 million tonnes. The domestic sales registered an increase of 7.2 percent to 14.4 million tonnes in the current period as compared to 13.5 million tonnes last year whereas exports stood at 3.7 million tonnes as against 1.8 million tonnes in the corresponding period last year, showing an increase of 110 percent . The cement sector is contributing Rs 30 billion to the national exchequer in the form of taxes. This sector has invested about Rs 100 billion in capacity expansion over the last four years. There are four foreign companies, three armed forces companies and 16 private companies listed in the stock exchanges. The industry is divided into two broad regions, the northern region and the southern region. The northern region has over 87 percent share in total cement dispatches while the units based in the southern region contributes 13 percent to the annual cement sales. The cement demand grew 19 percent and 13 percent during FY05 and FY06 respectively. During the first nine months of FY07-08, production increased by 30 percent as compared to last year. The demand for cement was forecasted to grow by 26 percent during FY07 and 17 percent in FY08. The per capita consumption of cement has risen from 117 kg in FY06 to 131 kg in FY07. The main factors behind increase in demand of cement were: 60 percent higher Public Sector Development Projects (PSDP) allocation, seven percent GDP growth, increasing number of real estate development projects for commercial and residential use, developing export market and expected construction of mega dams. The operating capacity of cement in FY05 and FY06 was 18 million and 21million tonnes, which rose to 37 million tonnes by the end of FY07.
The cement manufacturers added eight million tonnes to the capacity and the total production was expected to be 45 million tonnes by the end of 2010. It may result in a supply glut of 11 million, nine million and seven million tonnes in 2008, 2009 and 2010 respectively. Despite an excess supply of 11 million tonnes in 2008, it is estimated that the price would increase in domestic as well in regional markets that may surely boost the profitability and give relief to the industry on its new investment. The cement demand would increase in future due to government policies as the Pakistan Peoples Partys (PPPs) slogan has always been roti, kapra aur makan (bread, clothing and housing). In
this regard a statement of the new government confirmed that it would encourage industries and construct small dams. As cement capacity is increasing to cater the rising domestic and regional demand, it started facing a tougher time because of price fall after the first quarter of FY06 due to increase in supply, energy prices started surging and higher expansion led to mounting finance and depreciation costs. After reaching Rs 430 per bag at the retail level earlier last year, cement prices fell sharply during 2007. Average cement prices were Rs 220 per bag as on April 27, 2008, as compared to Rs 315 per bag in 2006. However, the cost and exports may be affected due to weakness of the US dollar causing coal, electricity charges and freight prices, comprising 65 to 70 percent of the cost. The PSDP allocation has been cut by Rs 75 billion and feared further cuts would curtail cement demand. Major capacities of countries like India and Iran are expected to come online by FY10 and onwards which are likely to convert these countries from dependent importers to potential exporters. Moreover, this rising trend is expected to be short-lived due to higher interest rates and inflationary concerns are likely to make it disadvantageous for investors to enter the construction industry. In addition to this, to control real estate prices the government is considering imposing a tax on it. The export may reach to $ 500 million increase during 2008. Data for the first quarter of FY08 shows that Afghanistan is Pakistans largest cement export market. The prospects for cement exports seem bright in the medium term due to rising domestic as well as regional cement demand. Pakistan also achieved improved access to India after the complete removal of the 12.5 percent custom duty on Portland cement imports in this country from January 2007, showing improved export opportunities for Pakistan. India is planning to import more cement from Pakistan to stabilise prices in the market and the government wants a balance in demand and supply of cement in the current fiscal year.
The import of cement from Pakistan has increased manifold during last four months. India has registered a number of Pakistani cement manufacturers, a requirement to facilitate import of cement. Pakistan has already increased the frequency of trains from one to three in a week to carry cement from Pakistan to Wagah border. Due to boom in the construction industry, India needs cement in bulk to meet its growing needs. The success of the sector depends on exports, its profitability from depressed local prices and cost appreciation. The exports for FY08 have already surpassed the last whole years export of 3.19 million tonnes and are likely to reach to 6.67 million tonnes in 2008.
The targets for exports for 2009 and 2010 are set to be 9.99 million and 10 million tonnes respectively. Currently, the export demand is expected to be from new inductee India along with other countries like Gulf Cooperation Council (GCC) countries, due to rising oil prices-led economic growth. More countries like South Africa to make the football stadiums for the World Cup and Sri Lanka are also expected to approach Pakistani companies for cement imports. However, export depends on factors such as: ability to produce cement at Rs 85 per bag. Export strategy should be made for at least three years, 2008-10, after which new plant will start production in the region. In the meantime industry should explore new markets for export or ready to lower prices of cement in local market. The sharp decline in cement prices were due to domestic competition among producers has dampened the profitability of the industry. To cope with this situation the manufacturers have strengthen cartel to set minimum cement prices. The example was marketing arrangement that increased cement prices to the extent of 20 percent despite coal prices have gone down in the international market to $124 from nearly $ 140 in November 2007 to January 2008. To break-up cartel the Competition Commission of Pakistan raided the offices of Association of Cement Manufacturers of Pakistan and confiscated computers and office record. The association condemned this action and said it is against business norms. They said the commission is blaming cement manufacturers for making a cartel for the last 10 years but could not able to prove it. The capital structure of cement companies may change as most of the expansions during last two to three years have been debt financed and companies are expected to retire these debts rapidly during next three to five years. Moreover, the slow down in economy may occur due to political uncertainty which might result in reducing cement demand in future. However, in case of construction of hydropowered dams, there will be a sudden jump in the local sales of those companies located near these dams.
CONTRIBUTION OF CEMENT INDUSTRY IN PAKISTANS ECONOMY:

The cement sector is contributing above Rs 30 billion to the national exchequer in the form of taxes. Cement industry is also serving the nation by providing job opportunities and presently more than 150,000 persons are employed directly or indirectly by the industry. The industry had exported 7.716 million tons cement during the year 2007-08 and had
earned $450 million, while is expected to export 11.00 million tons of cement during 200809 and earn approximately $700 million. Fiscal Performance 2008-09 Business Recorder reported that Pakistans cement exports witnessed a healthy growth of 65%, to over 6 million tons during 7 months of the current fiscal year mainly due to rise in international demand. The exports may reach to 11 million tonnes and earn approx $ 700 million during 2008-09. The statistics of All Pakistan Cement Manufacturers Association also showed that cement exports had mounted to over 6 million tons in 7 months as compared to 3.62 million tons of same period of last fiscal year, depicting an increase of 2.38 million tons. Cement exports during January 2009 went up by 30% to 0.81 million tons as compared to 0.623 million tons in January 2008. However, slow construction activities in the country during the period badly upset domestic sale of cement, which depicted decline of 15%, to 10.77 million tons as compared to 12.59 million tons of last fiscal year. On MoM basis, local dispatches of cement during January 2009 showed a decline of 8%, to 1.51 million tons from 1.65 million tons of January 2008. Overall dispatches, including export and local sales, reached 16.77 million tons during July to January of 2008-09 as against 16.20 million tons of last fiscal year, depicting an increase of 3%. By September 2009, after witnessing substantial growth in all three quarters of fiscal year (FY) 2008-09, cement sector concluded the fourth quarter with a handsome growth of 1,492 percent on yearly basis, All Pakistan Cement Manufacturers Associations report revealed on 29th September 2009. Higher retention prices (up 59 percent) and high rupee based export sales amid rupee depreciation (20 percent) drove profits up north. However, this growth is magnified, as FY2007-08 was an abnormally low profit period for the sector.
Moreover, the performance is skewed towards large players with export potential as profitable companies in both years posted increase of just 109 percent. Cumulative profitability of companies in FY09 stood at Rs 6.2 billion or $78.2 million as compared to Rs 386 million or $6.2 million depicting a massive growth of 1,492 percent. Companies with profits in both the years posted 109 percent earnings improvement. Though total dispatches were down 2 percent, net sales grew by 55 percent to Rs 101.4 billion or $1.3 billion on the back of higher net retention prices (up 59 percent) and improved export based revenues. Cost of sales/tone also rose by 33 percent on yearly basis amid higher realized coal prices and inflationary pressures, the analyst maintained.
Production Capacity In Pakistan, there are 29 cement manufacturers that are playing a vital role in the building up the countrys economy and contribution towards growth and prosperity. After 2002-3, most of the cement manufacturers expanded their operations, and increased production. This sector has invested about $1.5 billion in capacity expansion over the last six years. The operating capacity of cement in 1991 was 7 million tons, which increased to become 18 million tons by 2005-06 and by end of 2007 rose to above 37 million tones, and currently the production capacity is 44.07 million tones. Cement production capacity in the north is 35.18 million tons (80 percent) while in the south it is only 8.89 million tons (20 percent). The cement manufacturers in 2007-08 added above eight million tons to the capacity and the total production was expected to exceed 45 million tons by the end of 2010. It may result in a supply glut of seven million tons in 2009 and 2010. Actual Cement Production (in million tons) According to Government Board of Investment, 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 9.83 10.85 12.86 16.09 18.48 22.73 26.75 20.28
PRODUCTION OF CEMENT INDUSTRY

Cement is one of major industries of Pakistan. Pakistan is rich in cement raw material. Currently many cement plants are operating in private sector. Pakistan Cement Industry has huge potential for export of cement to neighboring countries like India, U.A.E, Afghanistan, Iraq & Russian States. There has been a robust growth of cement demand seen both in domestic and exports market during the financial year ended June 30, 2007. The industry achieved an overall growth of 32% with domestic demand of cement increased by 24.95% whereas the exports increased by 111.86%. The overall growth achieved by many cement factories for the year under review was 111.29% consisting of domestic and export markets at 71.02% and 335.12% respectively.
Pakistan Cement industry has been successful to capture export markets of various GCC and African countries which are new markets for the Country other than the conventional export markets of Afghanistan and Iraq.
Pakistan Cement industry has been successful to capture export markets of various GCC and African countries which are new markets for the Country other than the conventional export markets of Afghanistan and Iraq.
Browse Major Pakistan Cement Plants in left menu
Cement Clinker
TYPICAL CHEMICAL ANALYSIS REPORT OF OPC CLINKER PAKISTAN ORIGIN Chemical Analysis Test LOI 1.00% more than SiO2 AL2O3 Fe2O3 CaO MgO % % % % % 21.94 4.78 3.96 64.41 2.43 No Limit No limit limit No limit limit No limit limit Not more than No limit No No No Not Unit % Result 0.30 Limits (as per BS:12/1996 for Cement) Not more than 3.00% Offered Not
4.00% 2.80% more than F.CaO % 1.70 2.00% Na2O % 0.53 0.60% 0.60% 0.49 0.60% Cl I.R 1.50% LSF SM C3S % % % 0.92 2.40 57.62 55.oo% C3A % 5.97 % % 0.01 0.30 No limit more than Not
SO3
3% more than 0.10 Not more than 1.50% more than Range 0.66-1.02 0.91-0.94 No limit No limit than More than 3.50% than 8.00%
Not
0.10 Not
Range No limit More
Less
Clinker in 50-kg bag or Jumbo bag not available for export. Clinker shall only be exported in bulk (Loose). The commitment of the Seller shall be subject to the policy of the Government of Pakistan and Force Majeure; Firm prices based on FOB Pakistan Port and C&F Destinations shall be subject to the following conditions: All LC charges outside Pakistan shall be on buyers account 1. FOB prices shall be subject to change at the time of shipment due to increase in the cost of Furnace Oil, Electricity, Natural Gas, Coal and Other inputs; 2. Due to an increase in excise duty, sales tax or other direct and indirect taxes; 3. Due to a change in Government regulations affecting the Ex-Factory Cost and/or price of Cement / Clinker or a general change in Cement Industry; 4. Impact on the price and on the availability of the clinker before or at the time of shipment, due to any of the above factors or all factors shall be at the risk and cost of the buyers. 5. Any increase in the ocean freight rate at the time of shipment shall also be at the risk and cost of the buyers.
INSPECTION: Test Laboratory Certificates issued from the Manfacturers Plant, while inspection from independent surveyors shall at the risk and cost of the Buyers account
PRICING ISSUE:
Another problem faced earlier by the Industry was the high taxation. The general sales tax (GST) was 186% higher than India. The impact of this tax and duty structure resulted in almost 40% increase in the cost of a cement bag (50 Kg). A bag in India earlier cost Rs. 160 as compared to Rs. 220 in Pakistan. In the budget of 2003-04, a duty cut of 25% was permitted to the cement sector with assurance from the cartel to pass on this benefit to the consumers. In 2006, the price of a bag went up to Rs. 430 however in 2007 it has stabilized at Rs. 315 per bag. In mid 2008, cement prices stabilized further at Rs. 220 per bag. The Government has reduced central excise duty (CED) on cement in the budget for 2007-08 in order to boost construction activity. Average industry cost of cement bag/50Kg = Rs.193 Average industry price of cement bag/50Kg = Rs.235
GLOBAL EXPORTS OF CEMENT FROM PAKISTAN

The export of cement from pakistan has increased 52% in initial nine months of 2009 to reach 7.9 million tonnes. According to All Pakistan Cement Manufacturers Association (APCMA), local cement dispatches in first nine months fell by 17 percent to stand at 13.9 million tonnes, though of pace of growth has slowed down in recent months. The consumption of cement in local market depends a lot on climatic conditions therefore, on monthly basis local dispatches went up to 1.7 million tonnes as winter season has worn off and local projects have gradually started to gain momentum. Exports have also increased by 10 percent on monthly basis to 1,032,000 in March. Based on estimates, exports have crossed the 1 million mark first time ever. On the export front, depreciation of rupee has rendered Pakistani cement as a highly attractive option. The north has primarily contributed to the impressive increase in exports. The exports primarily increased due the demand coming from Afghanistan that accounts for 28 percent of the exports (36 percent in FY08). This is because the incremental exports have primarily been directed towards the cement thirsty UAE, the elaborate construction projects of which have yet to take a hit from the looming economic slowdown, an analyst said.Demand from Middle East and African countries continued to drive exports, though there is a risk that global economic downturn may affect future export orders. As a result, share of exports in total sales has risen to 36 percent in the first nine months of FY09 as against 24 percent in the corresponding period of last year. Exports are expected to register a decelerating growth, as the global economic slowdown deepens further reducing demand for housing and construction activities. The demand and supply gap in the international market is expected to narrow down further as other countries gear up with more capacity, thus reducing export demand, analysts said. Pressure is being exerted on local demand, primarily due to macro-economic slowdown, high interest rates, sky-high cement prices, which leaped by 65 percent during the said period. The local prices are currently hovering around an average retail price of Rs 355 per 50 kg bag (Rs 7,100 per tonne) and a retention price of Rs 255 per 50 kg bag (Rs 5,109 per tonne). Studies have shown that cement demand is highly correlated with the growth rate of GDP. Recently, the ministry of finance has further revised the GDP growth target downward to 3.4 percent from 3.5 percent, which will further erode cement demand.
Popular Cement Export Destinations

In recent years, tremendous growth is seen in export of cement from Pakistan. Our competitive prices, experience in shipment handling and flexible payment terms has made us premium choice for cement importers around the world. We are exporting cement to several GCC Countries including U.A.E (Jebel Ali, Abu Dhabi), Muscat, Qatar (Doha), Bahrain, Kuwait, Sharjah, Um-e-Qasr, Basra, Port Rashid, Shuaikah Port and other coutnries in Middle East. African Countries We are first exporter in Pakistan to export cement to South Africa. We are well aware of all NRCS requirements and our product is approved by SABS. We can also arrange delivery in South Africa against our LOA number. If you want delivery in South Africa at any place on Delivery Duty Paid (DDP) basis then please feel free to contact us. In addition to above we also export cement to many other African Countries including Djibouti, Port Sudan, Ethiopia, Kenya, Zaire, Tanzania, Botswana, Zambia, Mozambique and several other West African countries under development. India India is one of our biggest potential market for cement export. Currently we are exporting BIS approved cement to India by land and sea. We are exporting cement to buyers in India on weekly basis through Wagah Border. We also export cement to India on popular ports like Tuticorin, Nhava Sheva, Cochin and Chennai. Afghanistan Afghanistan is the largest market of Pakistan origin cement. We deliver cement to Afghanistan on Ex-factory basis as well as on Peshawar Ringroad- Torkham Border basis. South Asia We are exporting cement to South Asian countries like India, Srilanka, Nepal, Burma and Banglasdesh on regular basis. Indian Ocean We are continously working to reach other destinations and ports in Indian Ocean such as Comoros Island, Mauritius, Maldives, Madagscar and other small islands.
Packing and Transportation

We offer top quality cement in 50Kg Polypropylene woven bags or 1 Tonne Jumbo Bags for sea-worthy transportation with sufficient safeguard against moisture. We have multiple packing and shipping options as per client requirements. Cement is normally shipped through containerized or break-bulk shipments with and without sling-bags. We also have necessary arrangements to print batch number, importer's name and license number on cement bag as per client requirement. For example, our all shipments to South Africa carry necessary printing and mixing instructions along with batch number and LOA number of importer as per SABS requirement. We have our own logistics support for transportation of containerized shipments from factory to loading port in Karachi. Our years of experience in sea transportation and freight ensure safe and on time delivery of shipments at destination ports. Special requirements for Bulk shipment and Self Discharge Pneumatic Vessel is also available. We have special arrangement with shipping lines and carriers to offer cheapest CFR & CIF prices. Our expertise, local presence and monthly volumes help us to get best freight charges, shortest transit time, maximum free time at destination ports and waiver of several port charges
Representation
We represent world renowned manufacturers, consultants and equipment suppliers. We work closely with our Principals to achieve goals and target through trust of our customers. If you are manufacturer or service provider and want to establish or extend your presence in local market then we can help you in mulitple ways. Business Opportunities In close collaboration with manufacturers, Cement Pakistan Co. works with the companies to adjust or even redefine their brand to address the local cultural & business conditions. A very competitive global team of the experts and business analysts help you to transpose existing brands into local variants that have same impact in the target market and culture as in the international. Strategy: Selling Abroad To sell abroad, you will need two things, above all : localized marketing know-how , links & necessary local sales force to handle inquiries. We have spent enough time in this business to understand the anatomy as well as gained necessary experience & links to market your product.
Support: Brand Representation
Competitive team of experts coupled with a presence to handle inquiries is all you need to jump start your presence in local market. We can allocate a portion of our local sales force for selling your products. We are representing many World famous brands and our sales team is currently providing industrial machinery, spares & equipments to various local endusers. Getting There: Sales support & Logistics When sales are transacted, you will need a company with experience for getting your product to its destination. Munir Associates has been importing and exporting products for past two decades and has expertise in the custom laws, procedures, quality certification, and many types of shipping procedures. In addition, many companies abroad prefer to deal with a local company and our local sales team can further coordinate transactions so that all parties involved feel comfortable doing business with each other.
Spare Parts for Cement Plants

Spare parts are of vital importance for smooth operation of cement plants. By performing regular service checks on vital equipment, ensuring staff are trained on preventative maintenance, and providing a dependable supply of high-quality wear parts, we ensure the availability of production lines. Above all, we are committed to supplying every spare part or service your plant needs to operate. When unexpected problems occur, you can trust us to respond rapidly and accurately: as part of our quality assurance program, we always double check the documentation to ensure that the correct part is ordered. Our long experience in the manufacture and specification of spare parts can help ensure optimum performance and cost-effective operation at your plant even when it comes to spare parts for older legacy control systems. One-stop service: Instead of buying replacement parts from a large number of different suppliers, leave the handling work to us. We have years of experience in sourcing parts from the most suitable suppliers. As a one-stop supplier we can purchase all your necessary OEM and third-party items, which are received, collected and safely packed at our Spare Parts Terminal before dispatch to your plant. We can provide you all spares and equipments for Cement Industry regardless of your location.
PER CAPITA CEMENT CONSUMPTION:

Pakistan currently has a per capita consumption of 131kg of cement, which is comparable to that for India at 135kg per capita but substantially below the World Average 270kg and the regional average of over 400kg for peers in Asia and over 600kg in the Middle East. Cement demand remained stagnated during 90s owing to lack of development activities. In 1997, per capita consumption was 73 kg in both Pakistan and India. By 2005-06, consumption in India rose to become 115 kg/capita whereas ours rose to 117 kg/capita. A comparison of few countries in 2005: Name Of Country Bangladesh Pakistan India USA Iran Malaysia EU China UAE PER CAPITA 50 kg/capita 117 kg/capita 115 kg/capita 375 kg/capita 470 kg/capita 530 kg/capita 560 kg/capita 625 kg/capita 1095 kg/capita
CHALLENGES TO CEMENT INDUSTRY:
The cost and exports may be affected due to weakness of the US dollar causing coal, electricity charges and freight prices, comprising 65 to 70 percent of the cost. The PSDP allocation for 2009 has been cut by Rs 75 billion and feared further cuts would curtail cement demand. Major capacities of countries like India and Iran are expected to come online by FY10 and onwards which are likely to convert these countries from dependent importers to potential exporters. Moreover, this current rising trend is expected to be shortlived due to higher interest rates and inflationary concerns are likely to make it disadvantageous for investors to enter the construction industry. In addition to this, to control real estate prices the government is considering imposing a tax on it. Major General Rehmat Khan, Chairman of All Pakistan Cement Manufacturers Association (APCMA), told Business Recorder, cement industry is getting Rs 24 per ton as day dutydrawback for export of cement which needs to be revised. In view of todays calculation for duty drawback, which works out to Rs 130 per ton, he proposed that duty drawback be increased to Rs 130 per ton ,instead of Rs 24 per ton. Referring to taxation on cement, he said that cement dispatches are subject to payment of federal excise duty @ Rs 900 per ton, general sales tax @ 16 percent, special excise duty @ 1 percent, marking fee @ 0.1 percent of ex-factory price, besides provincial duties and taxes. These taxes come to around Rs 96 per bag which is the highest in the world. Cement, it appears, is being treated as a luxury item for the purpose of taxes and duties. He proposed that the government should reduce excise duty by Rs 450 per ton in the forthcoming budget while the remaining half should be eliminated altogether along with the special excise duty. Besides this, sales tax should not be charged on excise duty paid value. He also proposed withdrawal of customs duty on Pet Coke and remove it from negative list for import from India because cement industry imports Coal and Pet Coke as fuel for production and customs duty on imported coal is zero while on Pet Coke it is charged @ 5 percent.
CEMENT PRODUCTS:
Cement products can be defined as follows:
PORTLAND CEMENT:
Cement is made by heating limestone with small quantities of other materials (such as clay) to 1450C in a kiln. The resulting hard substance, called clinker, is then ground with a small amount of gypsum into a powder to make Ordinary Portland Cement, the most commonly used type of cement (often referred to as OPC). Portland cement is a basic ingredient of concrete, mortar and most non-speciality grout. The most common use for Portland cement is in the production of concrete. Concrete is a composite material consisting of aggregate (gravel and sand), cement, and water. As a construction material, concrete can be cast in almost any shape desired, and once hardened, can become a structural (load bearing) element. Portland cement may be gray or white.
Portland cement Blends: These are often available as inter-ground mixtures from cement manufacturers, but similar formulations are often also mixed from the ground components at the concrete mixing plant. Portland Blastfurnace Cement: It contains up to 70% ground granulated blast furnace slag, with the rest Portland clinker and a little gypsum. All compositions produce high ultimate strength, but as slag content is increased, early strength is reduced, while sulfate resistance increases and heat evolution diminishes. Used as an economic alternative to Portland sulfate-resisting and low-heat cements. Portland Flyash Cement:
It contains up to 30% fly ash. The flyash is pozzolanic, so that ultimate strength is maintained. Because flyash addition allows a lower concrete water content, early strength can also be maintained. Where good quality cheap flyash is available, this can be an economic alternative to ordinary Portland cement. Portland Pozzolan Cement: It includes fly ash cement, since fly ash is a pozzolan, but also includes cements made from other natural or artificial pozzolans. In countries where volcanic ashes are available (e.g. Italy, Chile, Mexico, the Philippines) these cements are often the most common form in use. Portland Silica Fume cement: Addition of silica fume can yield exceptionally high strengths, and cements containing 520% silica fume are occasionally produced. However, silica fume is more usually added to Portland cement at the concrete mixer. Masonry Cement : Masonry Cement is used for preparing bricklaying mortars and stuccos, and must not be used in concrete. They are usually complex proprietary formulations containing Portland clinker and a number of other ingredients that may include limestone, hydrated lime, air entrainers, retarders, waterproofers and coloring agents. They are formulated to yield workable mortars that allow rapid and consistent masonry work. Subtle variations of Masonry cement in the US are Plastic Cements and Stucco Cements. These are designed to produce controlled bond with masonry blocks. Expansive Cement: It contains, in addition to Portland clinker, expansive clinkers (usually sulfoaluminate clinkers), and are designed to offset the effects of drying shrinkage that is normally encountered with hydraulic cements. This allows large floor slabs (up to 60 m square) to be prepared without contraction joints.
White blended cement: It may be made using white clinker and white supplementary materials such as high-purity metakaolin. Colored cement: Colored cement is used for decorative purposes. In some standards, the addition of pigments to produce "colored Portland cement" is allowed. In other standards (e.g. ASTM), pigments are not allowed constituents of Portland cement, and colored cements are sold as "blended hydraulic cements". Very finely ground cement: It is made from mixtures of cement with sand or with slag or other pozzolan type minerals which are extremely finely ground. Such cements can have the same physical characteristics as normal cement but with 50% less cement particularly due to there increased surface area for the chemical reaction. Even with intensive grinding they can use up to 50% less energy to fabricate than ordinary Portland cements.
NON PORTLAND HYDRAULIC CEMENT:
Pozzolan-lime cement: Mixtures of ground pozzolan and lime are the cements used by the Romans, and are to be found in Roman structures still standing (e.g. the Pantheon in Rome). They develop strength slowly, but their ultimate strength can be very high. The hydration products that produce strength are essentially the same as those produced by Portland cement. Slag-lime cement: Ground granulated blast furnace slag is not hydraulic on its own, but is activated by addition of alkalis, most economically using lime. They are similar to pozzolan lime cements in their properties. Only granulated slag (i.e. water-quenched, glassy slag) is effective as a cement component.
Supersulfated cement: These contain about 80% ground granulated blast furnace slag, 15% gypsum or anhydrite and a little Portland clinker or lime as an activator. They produce strength by formation of ettringite, with strength growth similar to a slow Portland cement. They exhibit good resistance to aggressive agents, including sulfate. Calcium aluminate cement: It is hydraulic cements made primarily from limestone and bauxite. The active ingredients are monocalcium aluminate CaAl2O4 (CA in Cement chemist notation) and Mayenite Ca12Al14O33 (C12A7 in CCN). Strength forms by hydration to calcium aluminate hydrates. They are well-adapted for use in refractory (high-temperature resistant) concretes, e.g. for furnace linings.
Calcium sulfoaluminate cement:
It is made from clinkers that include yeelimite (Ca4(AlO2)6SO4 or C4A3 in Cement chemists notation) as a primary phase. They are used in expansive cements, in ultra-high early strength cements, and in "low-energy" cements. Hydration produces ettringite, and specialized physical properties (such as expansion or rapid reaction) are obtained by adjustment of the availability of calcium and sulfate ions. Their use as a low-energy alternative to Portland cement has been pioneered in China, where several million tonnes per year are produced. Energy requirements are lower because of the lower kiln temperatures required for reaction, and the lower amount of limestone (which must be endothermically decarbonated) in the mix. In addition, the lower limestone content and lower fuel consumption leads to a CO2 emission around half that associated with Portland clinker. However, SO2 emissions are usually significantly higher. Natural Cements: Ccorrespond to certain cements of the pre-Portland era, produced by burning argillaceous limestones at moderate temperatures. The level of clay components in the limestone (around 30-35%) is such that large amounts of belite (the low-early strength, high-late strength mineral in Portland cement) are formed without the formation of excessive amounts free lime. As with any natural material, such cements have very variable properties. Geopolymer cements: It is made from mixtures of water-soluble alkali metal silicates and aluminosilicate mineral powders such as fly ash and metakaolin.
CEMENT PROCESS
Cement acts as a bonding agent, holding particles of aggregate together to form concrete. Cement production is highly energy intensive and involves the chemical combination of calcium carbonate (limestone), silica, alumina, iron ore, and small amounts of other materials. Cement is produced by burning limestone to make clinker, and the clinker is blended with additives and then finely ground to produce different cement types. Desired physical and chemical properties of cement can be obtained by changing the percentages of the basic chemical components (CaO, Al2O3, Fe2O3, MgO, SO3, etc.). Most cement produced is portland cement: other cement types include white, masonry, slag, aluminous, and regulated-set cement. Cement production involves quarrying and preparing the raw materials, producing clinker through pyroprocessing the materials in huge rotary kilns at high temperatures, and grinding the resulting product into fine powder. The following detailed description is borrowed from the World Energy Council .
Raw Materials Preparation

Raw materials preparation involves primary and secondary crushing of the quarried material, drying the material (for use in the dry process) or undertaking a further raw grinding through either wet or dry processes, and blending the materials. The energy consumption in raw materials preparation accounts for a small fraction of overall primary energy consumption (less than 5%) although it represents a large part of the electricity consumption.
Clinker Production
Clinker production is the most energy-intensive step, accounting for about 80% of the energy used in cement production in the United States. Produced by burning a mixture of materials, mainly limestone (CaCO3), silicon oxides (SiO2), aluminum, and iron oxides, clinker is made by one of two production processes: wet or dry; these terms refer to the grinding processes although other configurations and mixed forms (semi-wet, semi-dry) exist for both types. In the wet process, the crushed and proportioned materials are ground with water, mixed, and fed into the kiln in the form of a slurry. In the dry process, the raw materials are ground, mixed, and fed into the kiln in their dry state. The choice among different processes is dictated by the characteristics and availability of raw materials. For example, a wet process may be necessary for raw materials with high moisture content (greater than 15%) or for certain chalks and alloys that can best be processed as a slurry. However, the dry process is the more modern and energy-efficient configuration. Once the materials are ground, they are fed into a kiln for burning. In modern kilns, the raw material is preheated (in four to five stages) using the waste heat of the kiln, or it is precalcined. During the burning or pyroprocessing, the water is first evaporated after which the chemical composition is changed, and a partial melt is produced. The solid material and the partial melt combine into small marble-sized pellets called clinker.
FINISH GRINDING
Cooled clinker is ground in tube or roller mills and blended by simultaneous grinding and mixing with additives (e.g., gypsum, anhydrite, pozzolana, fly-ash or blast furnace slags) to produce the cement. Drying of the additives may be needed at this stage.
CEMENT CONSUMPTION IN PAKISTAN:

The resumption of countrywide construction activities after the winter spell has skyrocketed the local consumption of cement to 63 percent higher than last January. The construction activity has shot up both in public and private sectors besides the Northern Areas, and the cement demand has received a sudden jump. The industry sources are expecting further rise in consumption in the days to come while disagreeing with the impression that the cement prices would touch again the highest-ever figure of Rs 400 per 50 kg bag. However, some circles are also carrying an impression that the cement manufacturers and the cement dealers have formed a cartel to create an artificial shortage of cement in the market with the rise in demand. But according to the All Pakistan Cement Manufacturers Association (APCMA), local dispatches Analysis of Cement Industry of Pakistan during January 2007 rose to 1,853,487 metric tonnes against 1,141,443 of January 06, registering a phenomenal growth of 63 percent. Similarly, the cement exports during January 07 have risen to 244,886 metric tonnes against 47,282 metric tonnes during January 06. Resultantly, the total dispatches have reached to 2,098,373 metric tonnes in January 07 against 1,188,725 metric tonnes in January 06, registering a growth of 76.52 percent. As far as July 06-Jan 07 figures are concerned, the local dispatches are recorded at 11,829,260 metric tonnes against 9,122,447 metric tonnes in the corresponding period, showing an increase of 30 percent. On the exports front, the total dispatches during July 06-Jan 07 have reached to 1,447,580 metric tonnes against 822,730 metric tonnes in the corresponding period. The total dispatches during July 06-Jan 07 have recorded a phenomenal growth of 33.50 percent, as it remained 13,276,840 metric tonnes in July 06-Jan 07 against 9,945,177 in July 05-Jan 06.Per capita cement consumption in Pakistan had increased from 75 to 120kg, but it was still far below the 1,780kg per capita consumption countries like Korea.
The industry sources believe that the opening up of roads to the Northern Areas has given a boost to the construction activities there. Similarly, they added, the public sector construction work has also registered a phenomenal growth with the end of the half fiscal and the upcoming general elections. According to them, the demand from the government contractors is rising with every passing day. An increase in local demand can be assessed with the simple fact that dispatches from the cement factories were recorded at 84,000 metric tonnes on Feb, followed by 55,000 tonnes on Feb 4 and 60,000 metric tonnes on Feb 5. This year again could be critical for the industry like the previous one, said one cement manufacturer. However, a few others believe otherwise. According to them, the production capacity of the sector has risen to 15 million tonnes per annum, from 18 million tonnes per annum in July 2005 to 33 million tonnes in Jan 2007, therefore no big gap in supply and demand is expected. The prices would therefore be within the reach of the common man, they added. These circles have also expressed the view that the recent increase in price (which reached at Rs 250 per 50 kg bag within a few days) would be cooled down soon. However, they have disagreed with the impression that the manufacturers of the dealers have formed any cartel, as they said, the cement manufacturers are lacking the harmony in their approach like the year earlier.
CEMENT PRODUCTION
This is a complete list of major Cement production countries in the world over various years.
Country World Total Brazil China Egypt France Germany India Indonesia Iran Italy Japan Korea, Republic of Contry Russia Saudi Arabia
2001 1700000 39500 626500 24500 19839 28034 100000 31100 26650 39804 76550 52012 2001 35100 20608
2002 1800000 39500 705000 23000 20000 30000 100000 33000 30000 40000 71800 55500 2002 37700 21000
2003 1860000 40000 750000 26000 20000 28000 110000 34000 31000 40000 72000 56000 2003 40000 23000
Spain Thailand Turkey USA Other Countries
40512 27913 30120 90450 361000
42500 31700 32600 91300 360000
40000 35000 33000 92600 360000
Source : Mineral Commodity summaries 2003-2004
THE GLOBAL CEMENT BATTLE

Put simply, Cimpor is a jewel. It has operations in 20 countries, including promising stars like China, India, South Africa and Turkey. And it would have added nicely to CSNs existing facilities. Thats especially true considering heightened demand in Brazil. So naturally, CSN wants to build up operations enough to handle the growing need there. The Brazilian cement market is experiencing fast-paced growth. Sales grew from 45 millions tons in 2007 to 52 million tons in 2009. This year, analysts expect it to reach 55 million in 2010.
Brazil is the third most rapidly growing cement market, behind only China and India. And with the country hosting both the 2014 World Cup and 2016 Olympics, it should spend even more on cement as it speeds up infrastructure projects. So CSN had every reason to enlarge its position. Unfortunately, two of its large, local competitors Votorantim and Camargo Correa dont want the extra rivalry. So they both purchased large enough stakes in Cimpor to block CSN. This Brazilian three-way tussle is hardly the first and certainly not the last heated battle in the global cement market. But it is a great way for investors to get involved. The Global Mix in Cement Consider the following facts:

Cement demand in developed economies is down. Cement demand in developing countries is up.
These conditions have sparked a war between cement makers around the world. They all want a larger share of the rapidly growing markets that actually matter. And they dont want to suffer the painful adjustment they see ahead for the U.S., European and Japanese construction industries. As government debt rises, those countries will have to cut back wherever they can including infrastructure. And despite all the talk of stimulus, cement companies say they still dont feel the promised effects. Worst yet, they dont expect any improvements for at least three to five years. Cement demand on both sides of the Atlantic has fallen sharply in the past two years. The Portland Cement Association expects U.S. demand to fall by 44% this year compared to 2006. And Euroconstruct sees European demand dropping by 30% compared to 2007. Admittedly, the consultancy forecasts European demand picking up slightly in 2012. But internationally savvy companies have no intention of waiting for that to happen. Global Cement Giants: Lafarge and Holcim Frances Lafarge ADR (OTC: LFRGY) and Switzerlands Holcim ADR (PINK: HCMLY) the worlds two biggest cement companies have led the charge into the emerging markets. In fact, Lafarge began investing in China as far back as 1994, when it was a virtually untapped market. Their forward thinking stands in stark contrast to Cemex, the number three company, which continues to focus on the stagnant U.S. In doing that, it ignored the increasing demand for better housing and infrastructure elsewhere.
Specifically, China now accounts for half of global cement demand. And India and Brazil make up for impressive amounts as well. Lafarge Executive Vice-President Jean Desazars de Montgailhard says: The growth we are seeing in China is incomparable with other markets. There is no question now that it will be the engine of expansion for not just cement, but all construction activity during the next 20 years. That shift wont happen tomorrow, however. China, for one, has had to force closures of inefficient cement plants In the short-term, closing them down creates lower prices, as condemned companies rush to dump their product on the market. But over the medium and long-term, supply and demand will be much better balanced. The positives definitely outweigh the negatives for the cement companies regardless. At least, it does for those investing in the emerging markets. And thanks to the rapidly expanding middle class in those countries, that trend should last for some time
OVERVIEW OF WORLD CEMENT MARKET

Introduction The cement industry is the building block of the nation's construction industry. Few construction projects can take place without utilizing cement somewhere in the design. Annual cement industry shipments are currently estimated at $10.0 billion for 2008; down from $15.0 billion in 2006. U.S. cement production is widely dispersed with the operation of 113 cement plants in 36 states. The top five companies collectively operate 54.4% of
U.S. clinker capacity with the largest company representing 15.9% of all domestic clinker capacity. An estimated 80.0% of U.S. clinker capacity is owned by companies headquartered outside of the U.S. Cement Consumption In 2008, the United States consumed 93.6 million metric tons of portland cement, reflecting a -15.2% decrease over 2007 levels. The industry down turn was first linked to the mortgage foreclosure crisis which decreased residential construction spending activity by -18.5% in 2007 and -29.9% in 2008. The financial troubles in the residential sector and the subsequent collapse of the U.S. banking system have spilled over to the detriment of corporate profits, employment, and government revenues extending construction spending activity declines to nonresidential and public construction spending. Cement consumption is dependent on the time of year and prevalent weather conditions. Nearly two-thirds of U.S. cement consumption occurs in the six months between May and October. The seasonal nature of the industry can result in large swings in cement and clinker (unfinished raw material) inventories at cement plants over the course of a year. Cement producers will typically build up inventories during the winter and ship them during the summer. The majority of all cement shipments are sent to ready-mix concrete operators. The rest are shipped to manufacturers of concrete related products, contractors, materials dealers, oil well/mining/drilling companies, as well as government entities. The domestic cement industry is regional in nature. The cost of shipping cement prohibits profitable distribution over long distances. As a result customers traditionally purchase cement from local sources. Nearly 98% of U.S. cement is shipped to its customers by truck. Barge and rail modes account for the remaining distribution modes.
Imports Fill Production Gap According to PCA estimates, U.S. cement plants achieved an average capacity utilization rate of 82.0% in 2008. Even at this operating rate, domestic production alone does not satisfy total United States cement consumption. The gap between domestic production and consumption was filled in 2008 by 11.5 million metric tons of imported cement and cement clinker. About 90.2% of cement and clinker imported in 2008 came from five major countries: China, Canada, Columbia, Mexico, and the Republic of Korea.
Heavy reliance on imports to satisfy consumption subjects the United States' market to sometimes volatile global economic conditions regarding the availability of foreign cement and ships used for importing cement (dry bulk carriers). As a result, the cement industry is currently engaged capacity expansion. By 2012 more than 25 million metric tons of new capacity is expected to come on line, representing more than $6 billion in investment. Exports of cement exceeded 1% of total U.S. production. Nearly all exports service the neighboring Canadian and Caribbean markets. Efficiency Gains Employment in the U.S. cement industry has declined dramatically during the past 20 years. In 2005, the cement industry employed 16,877 workers--a 23% reduction compared to 1985 levels. This drop in employment is the result of industry efforts to increase efficiency by automating production and closing small kilns. The average kiln in use today produces nearly 78.6% more cement than an average kiln produced 20 years ago: 584,000 metric tons in 2008 compared with 327,000 metric tons in 1988. The cement industry has boosted efficiency by concentrating new capital investment in plants that use the dry process of cement manufacture, and by phasing out operations that rely on the more energy-intensive wet process. Since 1974, the number of wet process kilns has dropped from 234 to 46 -- a decline of 80% -- while the number of dry process kilns has only been reduced from 198 to 131. Nearly 73% of existing U.S. clinker production capacity has been built since 1975 -- all utilizing the dry manufacturing process. Currently, about 85% of the cement produced in the United States is manufactured using dry process technology.
LUCKY CEMENT
COMPANY PROFILE
Sponsored by well known Yunus Brothers Group one of the largest export houses of Pakistan, Lucky Cement Limited currently has the capacity of producing 25,000 tons per day of dry process Cement. Lucky Cement came into existence in 1996 with a daily production capacity of 4,200 tons
per day, currently is an omnipotent cement plant of Pakistan, and rated amongst the few best plants in Asia. 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 has the tendency to become the hub of cement production in Asia. FOUNDER A BRIEF PROFILE OF MR. ABDUL RAZZAK TABBA LATE CHAIRMAN OF YUNUS BROTHERS GROUP Dynamism, loyalty and a vision to make our country stronger among the other nations of the world by bringing in more and more industrialization and technology transfers these were some of the many goals set by our late Chairman & Chief Executive Mr. A. Razzak Tabba. Yunus Brothers Group is one of the largest export house of Pakistan that has grown up remarkably over the last 50 years. The YB Group is engaged in diversified textile manufacturing activities consisting of Spinning, Weaving, Processing, Finishing and Stitching. The Group also owns one of the largest cement manufacturing plant and the second largest yarn manufacturing capacity in the Country. Besides manufacturing, the Group is also engaged in International Trading of various commodities. The Group consists of the following Companies, with an annual turnover of over Rs. 27 Billion or US$ 450 Million during year 2004~2005 out of which exports amounted to US$ 300 Million. 1. 2. 3. 4. 5. 6. 7. 8. Lucky Cement Limited Gadoon Textile Mills Limited Fazal Textile Mills Limited Yunus Textile Mills Lucky Energy (Private) Limited M/s. Yunus Brothers Lucky Textile Mills Security Electric Power Company Limited
Mr. Abdul Razzak Tabba was the Chairman of YB Group. Mr. Tabba was awarded SITARA-I-IMTIAZ on 23rd March, 2005 for Public Service and the highest exports. Under the leadership of Mr. Abdul Razzak Tabba, the Group has received more than 20 Exports Trophies from the Government of Pakistan for the highest overall exports from the Country as well as the highest exports in Textile Sector. It may be pertinent to point out that during the financial year 2004-2005, the textile mills owned by the Group i.e. Yunus Textile Mills, Lucky Textile Mills, Gadoon Textile Mills and Fazal Textile Mills have in total exported textile goods worth more than Rs. 18 Billion.
Unfortunately, the group lost its dynamic and great leader on 19th May, 2005. Mr. A. Razzak Tabba suffered a heart stroke on 19th May, 2005 and died the same day. Mr. A. Razzak Tabba was a Director of National Bank of Pakistan and had been involved in policy making of the bank. In addition to this, he was an active member of the board of governors of the Institute of Business Management (IBM). He was also a member of academic syndicate of Dow Medical University, as well as a member of advisory committee of Citizen Police Liaison Committee, a trustee of Saark Health Foundation, ice chairman Kidney Foundation and trustee of World Memon Foundation Community Centre where technical education is being given to more than 2300 girls every year. Being very conscious of social responsibility of corporate sector, Mr. A. Razzak Tabba had established Aziz Tabba Foundation for the welfare of the community at large, which is engaged in a number of social welfare activities for the benefit of poor and needy people. The major social welfare centres sponsored by the Aziz Tabba foundation are Aziz Tabba Dialysis Centre and Tabba Heart Institute. The Aziz Tabba Kidney Centre in Karachi having 20 modern Toray dialyses machines serving more than 200 patients every day and installed capacity for atleast 240 patients. The Tabba Heart Institute inaugurated by the prime minister Mr. Shaukat Aziz on 8th March, 2005 is a most modern state of the art 120 bedded heart institute, equipped with latest state of art equipment for cardiac surgery and pre & post surgery procedures
HISTORY
Lucky Cement Limited was founded in 1996 by Tabba. The company initially started with factories in the Pezru district of the North West Frontier Province N.W.F.P. It now, also, owns a factory in Karachi. Lucky Cement Limited has been sponsored by one of the largest business groups in Pakistan, the Yunus Brothers Group YB Group, based in Karachi and has grown remarkably over the last 50 years. The YB Group is engaged in diversified manufacturing activities including textiles, spinning, weaving, processing, finishing, stitching and power generation. The Group consists of a number of industrial establishments other than Lucky Cement Limited, including Lucky Textile Mills, Fazal Textile Mills Limited, Gadoon
Textile Mills Limited, Lucky Energy Private Limited, Yunus Textile Mills and Lucky Textile Mills - established in 1983 Lucky Cement Limited has been sponsored by Yunus Brothers Group (YB Group) which is one of the largest business groups of the Country based in Karachi and has grown up remarkably over the last 50 years. The YB Group is engaged in diversified manufacturing activities including Textile, Spinning, Weaving, Processing, Finishing, Stitching and Power Generation. The Group consists of a number of industrial establishments other then Lucky Cement Limited, they include: LUCKY GROUP Lucky cement Limited

The largest Portland cement producer in Pakistan Present capacity 7.75 mtpa Dry process technology runs on 100% coal firing system ISO-9001:2000 certified Captive power Generation capacity of 140 mw Public listed company
Yunus Brothers Group

Yunus brothers Group (YB) was founded by 1962 as a commercial exporter of cotton yarn to Far East countries. Active player in international trading of various commodities Specializes in trading of rice and wheat
Lucky Textile Mills

Consists of 3 weaving plants comprising of 800 looms State-of-the-art dyeing, printing and finishing unit Captive power Generation of 6.20 MW
Aziz Tabba Foundation

Incorporated in 1987 Launched various humanitarian projects in the fields of health, education and housing. Provides financial support to Aziz Tabba kidney center and Tabba Heart Institute
Fazal Textile Mills Limited
Spinning mill with 65,000 installed spindles
Produces 100% Grey cotton Ring spun yarn and wide range of Blended and Heather yarns ISO- 9001:2000 certified
Gadoon Textile Mills Limited

First of the only two mills in the world which started producing compact core spun yarn 194,392 installed spindles. Produces high quality compact yarn and 100% Grey cotton Ring spun yarn Oko Tex standard 100 certified Power Generation capacity of 34.36 MW
Lucky Energy (pvt) limited

NEPRA Approved captive power unit Supplies uninterruptible power to Fazal Textile Mills and lucky Textile Mills Generation capacity of 17.60MW
Aziz Tabba Kidney Center

Providing dialysis facilities at very subsidized rates since last fourteen years Treats patients without any discrimination, financial or otherwise 24 dialysis machines catering to an average 100 dialysis per day working round the click State-of-the-art health and laboratory facilities
Yunus Textile Mills Limited

State-of-the-art machinery for weaving, printing, dyeing and finishing Completely vertically integrated textile mill The largest exporter of home textiles from Pakistan With a subsidiary branch in new jersey USA by the name of Royale linens. Captive power Generation capacity of 14.00 MW
Tabba Heart Institute

State-of-the-art 120 bed hospital Treated more than 30,000 patients since inception four years ago One of the kind clinical laboratory services and satellite outlets throughout the cit
BUSINESS STRATEGY
The Company incurred total expenditures of Rs.8.4 billion as addition to buildings and plant & machinery mainly consisted of Line G at Karachi plant, loose. Capital Expenditures The Company incurred total expenditures of Rs.8.4 billion as addition to buildings and plant & machinery mainly consisted of Line G at Karachi plant, loose Cash Flow Strategy The Company has an effective Cash Flow Management System in place whereby cash inflows and outflows are projected on regular basis. Repayments of all long term and short term loans due in 2009 and onwards have been accounted for. Working capital requirements have been planned through internal cash generations and short term borrowings. During the year under review, an amount of Rs.6.5 billion was generated from operating activities of the Company which was spent mainly on net capital expenditures of Rs.5.8 billion. The Company is well placed for its commitments towards long and short term loans. The Board is satisfied that there are no short or long term financial constraints because of efficient and timely debt discharging history with strong financial statement
BUSINESS STRATEGY
Your Company has been focusing on a four tier business strategy; each is briefly narrated as under: Exploring and Establishing Export Markets The management of your Company has successfully established a well diversified export market to mitigate the risk of shortfall in exports. Your Company has exported its high quality cement in more than 23 countries across Middle East, Africa and South East Asian countries and its brand is recognized and known as the best quality product amongst the high profile buyers.
Economy of Scale with Foreign Operations After commissioning of Line G, your Company has reached a new height of scale of production. The operation of Line G has been very smooth and its capacity utilization has reached to almost 90% within a short period of three months.The management of your Company is now actively pursuing the setup of grinding facilities abroad for capitalizing the vast experience of its management together with its international brand recognition. Cost Reduction with Efficient Operation Without cost reduction measures and efficient operations, no company can achieve sustainable growth in its business operation in a highly competitive world. The management of your Company has successfully implemented various cost reduction measures taken earlier except for the heat recovery project which is progressing according to schedule. As a result of various cost reducing measures, your Company is one of the lowest cost producers of cement in the country with hybrid technology. The Kiln operation of our Karachi Plant has achieved a milestone of 342 days of continuous running. Strong Infrastructure Logistics and cost effective infrastructure are very vital for handling large scale export operations. After the commissioning of cement terminal project at Karachi Port, the turnaround of sea going vessels has been increased drastically enabling your Company to further enhance its exports. Your Company has so far achieved the record single day loading of 14,203 tons loose cement in 24 hours on sea going vessel through the terminal facility.
KEY COMPANY FIGURES

Production & Sales Volume Performance: During the year under review, Company achieved all time high volume of production and sales as enumerated below: (i) Sales Performance During the year under review, your Company achieved an overall net sales revenue growth of 55% as compared to same period last year. Increase in revenue was attributed due to both increases in volume by 6% and net retention by 46%. Your Company continued to focus more on exports because of strong establishment of its brand in various export
markets with higher retention margins. The domestic sales revenue registered a hefty growth of 38% because of increase in prices of cement in the domestic market as compared to last year on the back drop of increase in cost of manufacturing. The export sales registered a growth of 70% because of both volume and better retention as compared to last year. The ratio of sales revenue from exports was 60% whereas the local sales accounted for 40% during the financial year under review. The average combined net retention prices per ton improved by 46% over the comparative period last year. The prices of cement in the international markets remained firmed however slight reduction was observed in last quarter. The prices in domestic market were stable throughout the year except for adjustment of Excise Duty benefit passed on to the consumer as a result of Rs.200 per ton duty reduced through Finance Act 2009. (ii) Cost of Sales During the year under review, the cost of sales in terms of absolute value increased by 31% whereas cost per ton of cement increased by 23% as compared to same period last year. The major cost component is the energy cost which constitutes 72.62% of the total cost of production. In line with the international oil prices, the prices of coal in the international market were reduced during the second half of the financial year under review and prevailed in the range of US$ 65 to US$ 85 per ton. (iii) Gross Profit Your Company achieved a gross profit rate of 37.26% for the year ended June 30, 2009 compared to 25.73% gross profit rate achieved during the same period last year. However, the gross profit in terms of absolute value was increased by 125% because of the volumetric growth, and better retention prices achieved
. (iv) Finance Costs The financing cost of your Company during the year under review was increased to Rs.1,237 million from Rs.126.7 million during the same period last year. The finance cost was mainly increased due to winding up of cross currency swap transactions during first quarter of this financial year which were providing interest rates hedging. Moreover, the markup rates were also increased by the State Bank of Pakistan during the year under review which also increased the financing cost of your Company. (v) Distribution Costs The distribution cost incurred by the Company was increased due to increase in volume of export sales, sea freights as well as increase in prices of oil consumed on transportation.
The percentage of distribution cost to exports sales was 14.4% for the year ended June 30, 2009 as compared to 12.51% last year. (vi) Deferred Taxation During the year under review, the deferred tax provision of Rs.419.493 million was provided in the profit and loss account making the total deferred tax liabilities to Rs.1.478 billion appearing in the balance sheet as on June 30, 2009 on account of temporary timing differences between the accounting and tax records. (vii) Contribution to the National Exchequer Your Company contributed a total amount of Rs.5.339 billion (2008: Rs.3.907 billion) to the Government Treasury in shape of taxes, levies, excise duty and sales tax. In addition to that your Company earned precious foreign exchange of approximate US$ 208 million during the year under review from export
CORPORATE PHILOSPHY:
VISION We envision being the leader of the cement industry by identifying and capitalizing on new market opportunities, meeting expectations of the stakeholders, contributing towards industrial progress and sustainable future, while being responsible corporate citizens MISSION Our mission is to expand our business network by forming strategic alliances in the global market. We endeavor to equip our business with the latest technology to produce quality
cement while conserving energy and reducing CO2 emission to reinforce eco-friendly business practices; thus meeting international standards STRATEGIES t Lucky Cement, we work together to achieve the following strategies:
1. Market Penetration and Development
We believe in depth and width expansion, and have therefore broadened our horizons to do business globally.
2. Supporting Diversification
Diversity is our Strength. From producing a variety of cement brands, providing a range of logistic and transportation solutions and catering to a variety of markets globally, we have achieved it all!
3. Technological Advances
At lucky, we keep ourselves in line with technological advances to further improve cement quality and production methods to achieve optimum efficiency.
4. Human Resource Significance
we value our human resources for providing a framework that serves as a guiding force for the organization as a hole.
5. Production Edges
we employ the latest production techniques and the finest quality of raw materials to ensure optimum effiency at all stages of production. The efficiency and effectiveness of our production methods helps us complete in the market and meet the growing demands of our customers.
CORE VALUES Our values are reflected within the name of LUCKY itself. Leadership: - We don't just innovate industry practices; we are defining the way business will be done in the future. We are the pioneers. Understanding: - We understand the demand of cement industry at a global level, parallel to the needs of the people associated with us in one way or the other. Commitment: - One world that sums it all at Lucky Cement is the "commitment" of people to quality, relationships and importantly to our customers.
Knowledge: - We are keen to learnand explore new areas of knowledge that would contribute to the growth of our organization. Yield: - We yeld results to increase the value for our shareholders and to keep our customers satisfied, ensuring optimum level of efficinecy is achieved at all stages.
CORPORATE ACHIEVEMENTS:
CORPORATE MEMBERSHIP
World Economic Forum The World Economic Forum (WEF) is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Realizing the importance of networking with various internationally renowned companies, Lucky Cement Limited has obtained the membership of an elite group of companies that are driving the world economy forward. The WEF Membership is offered to global enterprises which rank among the top companies within their industry and/or country and
plays a leading role in shaping the future of their industry and/or region. Lucky Cement is proud to be a Foundation Member of this prestige Forum. Apart from being a Foundation Member, Lucky Cement Limited is amongst the only four companies from Pakistan who have also qualified to be included in the WEFs Community of Global Growth Companies (GGC). The World Economic Forums Community of GGC was formed in 2007 to engage dynamic high-growth companies with the potential to be tomorrows industry leaders and to become a driving force of economic and social change. Members of this Community of Global Growth Companies have an opportunity to benefit from new business opportunities across industries and regions; Networking with the worlds leading businesses and policy experts; Peer-to-peer collaboration and experience exchange; and industry-specific and crossindustry knowledge sharing. The Forum selects companies on the basis of their revenue, growth rate, internationalization and leadership. Key selection criteria include: Annual growth rate exceeding industry and regional average by 15% Minimum turnover between US$ 100 million and US$ 5 billion, depending on the industry Demonstrated growth potential Capacity and intent to build a global business Exemplary executive leadership
Pakistan Business Council Lucky Cement Limited is proud to be a leading member of the Pakistan Business Council (PBC). PBC was established by 14 of the country's leading Groups and Companies that cover a diversity of business activities. PBC is not a trade body. It has been created as a forum for Pakistani business to address the challenges arising from progressive global and regional free trade, and from the relatively sluggish trends in current national Investment flows, against the much higher levels needed to sustain GDP growth. PBCs work would consist of producing position papers for review by business and appropriate Government authority; holding lectures and seminars; and sponsoring research. In time, PBC would expect to be able to broaden its membership and activities, to include advisory and consultative services both to Pakistani and foreign investors. Pakistan Institute of Corporate Governance
Good corporate governance is an essentialpre - requisite for the integrity and credibility of any company. It builds greater confidence and trust by ensuring transparency, fairness and accountability with respect to shareholders and other stakeholders. Giving due importance to this objective, Lucky Cement Limited has obtained corporate membership of the Pakistan Institute of Corporate Governance (PICG). PICG aims to strengthen compliance and conformance by companies, corporations and other institutions to applicable laws and regulations and generally to enhance self-regulating practices that are comparable with the best global practices in good governance. PICG is involved in training and education, creating awareness, undertaking research, publishing guidelines and other resource material. It also provides a forum for discussion on corporate governance. Being an associate member of the PICG, Lucky Cement aims to take full advantage of these resources at PICG to implement best practices and good corporate governance throughout the Company
AWARDS & ACHIEVEMENTS

Lucky Cement is recognized all across the country for its achievements. From bringing innovative services in the market to remarkable charity work and sustainability initiatives; its innovation and commitment to deliver the best has earned the company applauds from various international and local sources. Various government and private institution conferred Lucky Cement with following reverences during the year: 1. National CSR Excellence Award The CSR Association of Pakistan has awarded Lucky Cement with the National CSR Excellence Award which aims at recognizing and appreciating companies which are extensively contributing towards a more sustainable future for the communities they work in and the society at large.
2. Brand of the Year Award Lucky Cement was declared as the Brand of the Year - 2009 in category of cement. This award represents our increasing brand popularity, product availability, quality and consistency. 3. Global HR Award Lucky Cement was honored with the Global HR Recognition Award 2010 in the category of having the Most Innovative Infrastructure Technology based HR System. The award was organized by Global Media Links. 4. Annual Environment Excellence Award National Forum for Environment and Health (NFEH) awarded Lucky Cement with the Environment Excellence Award 2010 to recognize a number of Lucky Cements proenvironment initiatives including installation of Waste Heat Recovery Plant at its production facilities and actively participating in the President of Pakistans Forestation Program to support the cause and contribute towards a cleaner environment. NFEH is affiliated with United Nations and is supported by Ministry of Environment, Government of Pakistan.
Recognitions from Chamber of Commerce and Industry: 1. Karachi Chamber of Commerce and Industry: Awarded the Export Trophy to Lucky Cement for highest exports of cement from Pakistan 2. Khyber Pakhtunkhwa Chamber of Commerce and Industry: Awarded the following distinctions:

Top Sales Tax Payer Top Income Tax Payer Top Exporter Top Importer Exports Trophy 2008 - 2009
Accolade from the Government of Pakistan:
Performance Par Excellence Award to Chairman of Lucky Cement, Mr. Yunus Tabba International honors:Young Global Leader Award 2010 by World Economic Forum (WEF) Acknowledging the professional accomplishments, distinguished leadership and commitment to shaping a better future, World Economic Forum bestowed Mr. Muhammad Ali Tabba, CEO of Lucky Cement with the honor of Young Global Leader in 2010. The World Economic Forum is a multi-stakeholder community of global decision-makers in which the Young Global Leaders (YGL) represent the voice for the future and the hopes of the next generation. The diversity of the YGL community and its commitment to shaping a better future through action-oriented initiatives of public interest is even more important at a time when the world is in need of new energy to solve intractable challenges Businessman of the Year Gold Medal Award presented to our Chairman, Mr. Muhammad Yunus Tabba. Top Income Taxpayer Award presented to Lucky Cement Limited Top Sales Taxpayer Award presented to Lucky Cement Limited. Top Importer Award presented to Lucky Cement Limited Top Exporter Award presented to Lucky Cement Limited. Export Trophy Winner presented to Lucky Cement Limited.
Achievements The financial year 2008-2009 concluded as the best ever performing year in the history of our Company. This landmark was achieved despite difficult business environment in domestic and export markets. During this year, Lucky Cement was able to achieve the following distinctions: Record gross sales revenue of Rs.30.915 billion; which is 48% higher then last year. Record net sales revenue of Rs.26.330 billion; which is 55% higher than last year. Record operating profit of Rs.7.240 billion; which is 135% higher than last year. Record after tax profits of Rs.4.596 billion with earnings per share of Rs.14.21 Also during this year, Lucky Cement has also completed a range of projects that will play a pivotal role in enhancing the financial performance of the Company for the years to come: Successful operation of another 1.25 mtpa Production Line at Karachi Plant; bringing the total annual production capacity of the Company to 7.75 mtpa. The Company has increased the capacity of its Karachi Plant by adding this line which has a capacity of 4,200 tons per day. Successful conversion of Pezu Plant Captive power generation units to gas based power generation. This is first of its kind experience in Pakistan for such a huge capacity
generators. Inauguration of the first ever loose cement export terminal owned by the Company at the Karachi Port
INNOVATION
One of the key factors which played a major role in exponential growth of Lucky Cement and giving it a remarkable edge over competitors, is the revolutionary idea of movement of loose cement from plant to sea ports in bulk quantities through specialized and unique vehicles called Bulkers. These first-of-its-kind bulkers are also capable of off-loading loose cement into carrier ships directly through a unique compressor system installed on each vehicle; thus playing a major role in increasing export capacity of the Company and making it a market leader in the country. The first bulk transporting system was rolled out from factory in February 2007 when it started off with only 29 vehicles. Today, Lucky Cement has its own fleet of around 77 bulkers and a full-fledged workshop to cater to the maintenance requirements of these vehicles. There is also a state-of-the-art online tracking system for efficient control of the movement of these bulkers throughout their routes. Loose Cement Storage and Ship Loading Terminal at Karachi Port Lucky Cement has successfully started operation of its export oriented loose cement storage and ship loading terminal at Berth -25 West Wharf at Karachi Port. This is a state-
of-the-art project based on latest European technology and first of its kind in the South East Asian and Middle East Region. The total storage capacity of this terminal is 24,000 tons of loose cement which is divided into four steel fabricated silos with individual storage capacity of 6,000 tons each. The loading capacity of this terminal is 10,000 to 12,000 tons per day of loose cement depending upon the size and construction of vessel(s). The heighest single day rate of loading loose cement into sea going vessel achieved by the Company is 14,202 tonnes. The loose cement is first loaded / pumped into the storage silo(s) as buffer stock at port through compressors from the Bulkers (specialized cement transport trucks) bringing loose cement from the Karachi Plant approx 90 Kms from the Karachi Port. On arrival of ships, the loose cement is pumped directly into sea going vessels from storage facility through complete automatic machinery operated through PLC from the Central Control Room. The loose cement is fluidized (mixed with air) through the aerated floor of the silos to behave like liquid and then it is pumped into the hatches of sea going vessels under complete piping system connected with a ship loader through pneumatic air generated from the heavy compressors. With changing environment, technology, industrial structures and strategies, innovation has become the central point of all industries. Keeping this in mind, Lucky Cement has taken steps to explore the export potential of loose cement in Pakistan. This was achieved through the implementation of innovative ideas like bulkers and cement storage terminal.
PRODUCTS
Lucky Cement aims at producing cement to suit every user. The following types of cement are available: 1. Ordinary Portland Cement 2. Sulphate Resistant Cement ORDINARY PORTLAND CEMENT (OPC) Ordinary Portland cement is available in darker shade as well as in light shades in Lucky Star with different brand names to suit the requirement of users. It is used in all general constructions especially in major prestigious projects where cement is to meet stringent quality requirements; it can be used in concrete mortars and grouts etc. Ordinary Portland cement is compatible/consumable with admixture/ retarders etc. SULPHATE RESISTANT CEMENT (SRC)
Sulphate resistant Cements best quality is to provide effective and long lasting strength against sulphate attacks and is very suitable for constructions near sea shores as well as for canals linings. It provides very effective protection against alkali attacks BRANDS AVAILABLE AT LUCKY CEMENT
Lucky CEMENT (REGULAR)
Lucky STAR
QUALITY OF CEMENT
ISO CERTIFICATION Lucky's Cement plant is one of the best maintained plants of Pakistan and is managed by qualified and expert cement field specialists. The Company has also got ISO 9001:2000 certifications, for manufacturing and sales of cement by UKAS Quality Management, Pakistan National Accreditation Council and Moody International. QUALITY MANAGEMENT Lucky Cement always gives major emphasis in manufacturing high quality cement through stringent quality control techniques and computerized control systems using state of the art sophisticated equipments like Distributed Control System (DCS), Programmable Logic Controllers (PLCs) and on line X-Ray Analyzers. The Company has got one of the best equipped laboratories, having all facilities for the analysis of raw material, semi furnished product, furnished product and fuel, to ensure the supply of high quality product to market.
The quality of Companys cement has been tested and found to be superior in many respects to the specifications mentioned in Pakistan and British Standards. SUPERIOR STRENGTH, OPTIMUM SETTING TIMES AND MINIMUM EXPANSION These are the three benchmarks adopted by Lucky Cement Limited which is emerging to be the largest cement plant of Asia and committed to provide the best quality cement to its customers around the globe through stringent quality control and application of most modern quality control techniques. SUPERIOR STRENGTH The compressive strength is a very important factor of cement. The Ordinary Portland Cement achieves its maximum strength in 28 days. The Pakistan standard PSS 232-1883 (R) & British Standard EN 197 Class 42.5 N provides for 28 days strength of 5000Psi and 5950 Psi respectively for mortar cubes. As compared to this Lucky Cement has a 28 days compressive strength of more than 7,000 psi to bear heavy loads.
OPTIMUM SETTING TIME Optimal initial & final setting times are ensured by adopting special production parameters using most modern control techniques SOUNDENESS By using most modern Kiln feeding system, it is ensured that lime entering into the Kiln should be in such a shape that it should totally combine with oxides during the burning process. The result is that the frees lime content is very low and soundness of Lucky Cement is less than 1 mm which is far better than 10 mm prescribed by Pakistan Standard PSS 232-1983 ( R) and / or British Standard EN 197 Class 42.5 N Lucky Power Generators is one of the best maintained power generation facilities of the country and is maintained and operated round the clock by expert engineers and technicians. VARIETY TO SUIT EVERYONE Lucky Cement aims at producing cement to suit every user. At present, it is producing Grey Portland Cement and also Sulphate Resistant cement. The customers are able to get
Portland Cement both in dark shade as well as in light shade with different brand names to suit the requirement of user. The Portland cement specifically made for prefabrication industry with a lower setting time is also available. In addition, the plant also produce Slag cement for specific users.
CERTIFICATION
Products of lucky cement are known for their quality. Acknowledging Lucky Cements Efforts for constantly maintaining the product quality; Pakistani and many international bureaus of standards have accredited it with the following distinctions Bureau of Indian Standards South African Bureau of Standards
INVESTOR RELATIONSHIP
S. No. Categories of Shareholders Number of Shares Held Shareholders Percentage
1 2 3 4 5 6 7 8 9 10
Individuals Investment Companies Insurance Companies Joint Stock Companies Leasing Companies Modarabas Financial Institutions Charitable Trusts Mutual Fund Others Total:
9,077 27 18 180 1 12 45 4 44 35 9,443
154,057,415 47,721,531 3,873,568 46,908,374 5,000 168,489 33,733,037 5,036,002 20,447,900 11,423,684 323,375,000
47.64 14.76 1.20 14.51 0.00 0.05 10.43 1.56 6.32 3.53 100.00
Associated Companies, undertakings and related parties (name wise details):
No. of shares
Lucky Energy Limited Younus Textile Mills Limited Younus Textile (Private) Limited Lucky Knits (Private) Limited NIT & ICP (namewise details): National Bank of Pakistan, Trustee Department (NIT) Directors, CEO and their spouse and minor children (namewise details): Mr. Muhammad Yunus Tabba (Chairman / Director) Mrs. Khairunnisa W/o. Muhammad Yunus Tabba (Spouse) Mr. Muhammad Ali Tabba (Chief Executive / Director) Mrs. Feroza Tabba W/o. Muhammad Ali Tabba (Spouse) Mr. Muhammad Sohail Tabba (Director) Mrs. Saima Sohail W/o. Muhammad Sohail Tabba (Spouse) Mr. Imran Yunus Tabba (Director) Mrs. Meher Imran W/o. Imran Yunus Tabba (Spouse) Mr. Javed Yunus Tabba (Director) Mrs. Rahila Aleem (Director) Mrs. Mariam Tabba Khan (Director) Mr. Manzoor Ahmed (Director) Executive Banks, Development Finance Institutions, Non-Banking Financial Institutions: Insurance Companies Modarabas Mutual Funds Shareholders holding ten percent or more voting interest (namewise details) Details of trading in the shares by the Directors, CEO, CFO, Company Secretary and their spouses and minor children: None of the Directors, CEO, CFO, Company Secretary and their spouses and minor Children has traded in the shares of the Company during the year.
12,082,875 8,906,100 3,977,500 150,000 18,688,925
9,839,300 8,062,500 11,657,775 645,000 12,397,775 6,070,000 12,885,275 6,070,000 18,966,550 5,314,662 3,975,162 NIT Nominee 32,250 33,733,037 3,873,568 168,489 20,447,900 None
KEY FINANCIAS FIGURES
Annual Report We have audited the annexed balance sheet of LUCKY CEMENT LIMITED as at 30 June 2009 and the related profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the company's management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:
A. in our opinion, proper books of account have been kept by the company as required
by the Companies Ordinance, 1984; B. in our opinion: the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied; (ii) the expenditure incurred during the year was for the purpose of the company's business; and (iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company; C. in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the company's affairs as at 30 June 2009 and of the profit, its cash flows and changes in equity for the year then ended; and
(i)
D.
in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIIIof 1980),
Without qualifying our opinion, we draw attention to note 13 to the financial statements wherein the justification for recognising a claim of refund of excise duty amounting to Rs.538.8 million has been fully explained
NEWS & ANNOUNCEMENTS

Annual Environment Excellence Award Lucky Cement Limited received the 7th Annual Environment Excellence Award by National Forum for Environment and Health (NFEH). NFEH is affiliated with United Nations and is supported by Ministry of Environment, Government of Pakistan. Brand of the Year 2009 Lucky Cement Limited has been recognized as the Brand of the Year 2009 in the category of Cement. The Brands of the Year Award is the first-of-its-kind hallmark for Brand Recognition in Pakistan. It aims to highlight and encourage the best brands of the Country CEO Muhammad Ali Tabba was honored as Young Global Leader 2010 CEO Muhammad Ali Tabba was honored as Young Global Leader 2010 by World Economic Forum for his professional accomplishments, distinguished leadership and commitment to shaping a better future Lucky Cement honored with CSR National Excellence Award Lucky Cement Limited received the CSR National Excellence Award 2009 for its active and continuous contribution in Corporate Social Responsibility The management of Lucky Cement has entered a MoU with M/s Oracle Coal Fields The management of Lucky Cement has entered a memorandum of understanding MoU with M/s Oracle Coal Fields PLC, the UK developers of 1.4 billion tons coal deposits in Pakistan, for the supply of indigenous coal for its cement plants. This MoU will not only encourage the exploration and mining of indigenous coal available in abundance at Thar Coal Field but will also reduce the import of coal and foreign exchange savings for the country, Lucky Cement has singed a MoU with (KESC)
Lucky Cement has singed a memorandum of understanding MoU with Karachi Electric Supply Company (KESC) for the supply of 49.5 MW of electricity. This power is generated from Lucky Cements Karachi plant. Global warming and the dangers of GHG Lucky Cement, being aware of Global warming and the dangers of GHG, has decided to play an active role in participating in reduction of global warming and creating an environmental friendly atmosphere. In this regard Lucky cement has taken a step to contribute in this Global effort to control carbon emission. Lucky Cement Limited is now in the process of installing a waste heat recovery system which will utilize the waste heat generated during clinker production into electrical power with zero emission of carbon and without consuming any fuel. This effort of producing 25 MW electricity, although a costly effort , but looking at the circumstances both nationally and internationally will help in contributing in production of electricity in a nation where power generation is a main crisis and in a world which feels the dangers to environment and global warming.
CORPORATE SOCIAL RESPONSIBILITY
EDUCATION
Karachi School for Business and Leadership (KSBL) Project
The Hub School Project SCHOLARSHIPS Institute of Business Administration (IBA) Institute of Business Management (IoBM) Scholarship for studies at Ghulam Ishaq Khan (GIK) institute, NWFP The Jinnah Foundation School
OTHER CHARITIES Swat IDPs Rehabilitation WWF PAKISTAN Women and Children Hospital - Ghazni Khel, NWFP Lucky Welfare Dispensary - Pezu, NWFP GROUP INTERVENTIONS Aziz Tabba Foundation

Incorporated in 1987 Launched various humanitarian projects in the fields of health, education and housing. Provides financial support to Aziz Tabba kidney center and Tabba Heart Institute
Aziz Tabba Kidney Center

Providing dialysis facilities at very subsidized rates since last fourteen years Treats patients without any discrimination, financial or otherwise 24 dialysis machines catering to an average 100 dialysis per day working round the click State-of-the-art health and laboratory facilities
Tabba Heart Institute

State-of-the-art 120 bed hospital Treated more than 30,000 patients since inception four years ago
CHAPTER # 3 FRAMEWORK ANALYSIS OF COSTING AND FINANCIAL ISSUES OF CLINKER
HYPOTHESIS
Social science research, and by extension business research, uses a number of different approaches to study a variety of issues. This research may be a very informal, simple process or it may be a formal, somewhat sophisticated process. Regardless of the type of process, all research begins with a generalized idea in the form of a research question or a hypothesis. A research question usually is posed in the beginning of a research effort or in a specific area of study that has had little formal research. A research question may take the form of a basic question about some issue or phenomena or a question about the relationship between two or more variables. For example, a research question might be: "Do flexible work hours improve employee productivity?" Another question might be: "How do flexible hours influence employees' work?" A hypothesis differs from a research question; it is more specific and makes a prediction. It is a tentative statement about the relationship between two or more variables. The major difference between a research question and a hypothesis is that a hypothesis predicts an experimental outcome. For example, a hypothesis might state: "There is a positive relationship between the availability of flexible work hours and employee productivity." Hypotheses provide the following benefits: 1. They determine the focus and direction for a research effort. 2. Their development forces the researcher to clearly state the purpose of the research activity. 3. They determine what variables will not be considered in a study, as well as those that will be considered. 4. They require the researcher to have an operational definition of the variables of interest.
The worth of a hypothesis often depends on the researcher's skills. Since the hypothesis is the basis of a research study, it is necessary for the hypothesis be developed with a great deal of thought and contemplation. There are basic criteria to consider when developing a
hypothesis, in order to ensure that it meets the needs of the study and the researcher. A good hypothesis should: 1. Have logical consistency. Based on the current research literature and knowledge base, does this hypothesis make sense? 2. Be in step with the current literature and/or provide a good basis for any differences. Though it does not have to support the current body of literature, it is necessary to provide a good rationale for stepping away from the mainstream. 3. Be testable. If one cannot design the means to conduct the research, the hypothesis means nothing. 4. Be stated in clear and simple terms in order to reduce confusion. HYPOTHESIS TESTING PROCESS Hypothesis testing is a systematic method used to evaluate data and aid the decisionmaking process. Following is a typical series of steps involved in hypothesis testing: 1. State the hypotheses of interest 2. Determine the appropriate test statistic 3. Specify the level of statistical significance 4. Determine the decision rule for rejecting or not rejecting the null hypothesis 5. Collect the data and perform the needed calculations 6. Decide to reject or not reject the null hypothesis Each step in the process will be discussed in detail, and an example will follow the discussion of the steps.
DETERMINING THE APPROPRIATE TEST STATISTIC
The appropriate test statistic (the statistic to be used in statistical hypothesis testing) is based on various characteristics of the sample population of interest, including sample size and distribution. The test statistic can assume many numerical values. Since the value of the test statistic has a significant effect on the decision, one must use the appropriate statistic in order to obtain meaningful results. Most test statistics follow this general pattern: For example, the appropriate statistic to use when testing a hypothesis about a population means is: In this formula Z = test statistic, mean of the sample, = mean of the population, = = standard deviation of the sample, and = number in the sample. SPECIFYING THE STATISTICAL SIGNIFICANCE SEVEL As previously noted one can reject a null hypothesis or fail to reject a null hypothesis. A null hypothesis that is rejected may, in reality, be true or false. Additionally, a null hypothesis that fails to be rejected may, in reality, be true or false. The outcome that a researcher desires is to reject a false null hypothesis or to fail to reject a true null hypothesis. However, there always is the possibility of rejecting a true hypothesis or failing to reject a false hypothesis. Rejecting a null hypothesis that is true is called a Type I error and failing to reject a false null hypothesis is called a Type II error. The probability of committing a Type I error is termed and the probability of committing a Type II error is termed . As the value of increases, the probability of committing a Type I error increases. As the value of increases, the probability of committing a Type II error increases. While one would like to decrease the probability of committing of both types of errors, the reduction of results in the increase of and vice versa. The best way to reduce the probability of decreasing both types of error is to increase sample size. The probability of committing a Type I error, , is called the level of significance. Before data is collected one must specify a level of significance, or the probability of committing a Type I error (rejecting a true null hypothesis). There is an inverse relationship between a
researcher's desire to avoid making a Type I error and the selected value of ; if not making the error is particularly important, a low probability of making the error is sought. The greater the desire is to not reject a true null hypothesis, the lower the selected value of . In theory, the value of can be any value between 0 and 1. However, the most common values used in social science research are .05, .01, and .001, which respectively correspond to the levels of 95 percent, 99 percent, and 99.9 percent likelihood that a Type I error is not being made. The tradeoff for choosing a higher level of certainty (significance) is that it will take much stronger statistical evidence to ever reject the null hypothesis. DETERMINING THE DECISION RULE Before data are collected and analyzed it is necessary to determine under what circumstances the null hypothesis will be rejected or fail to be rejected. The decision rule can be stated in terms of the computed test statistic, or in probabilistic terms. The same decision will be reached regardless of which method is chosen. COLLECTING THE DATA AND PERFORMING THE CALCULATIONS. The method of data collection is determined early in the research process. Once a research question is determined, one must make decisions regarding what type of data is needed and how the data will be collected. This decision establishes the bases for how the data will be analyzed. One should use only approved research methods for collecting and analyzing data. DECIDING WHETHER TO REJECT THE NULL HYPOTHESIS This step involves the application of the decision rule. The decision rule allows one to reject or fail to reject the null hypothesis. If one rejects the null hypothesis, the alternative hypothesis can be accepted. However, as discussed earlier, if one fails to reject the null he or she can only suggest that the null may be true
TERMINOLOGIES
Clinker:
The incombustible residue, fused into an irregular lump, that remains after the combustion of coal. A partially vitrified brick or a mass of bricks fused together.
Fly-Ash:
Fine particulate ash sent up by the combustion of a solid fuel, such as coal, and discharged as an airborne emission or recovered as a byproduct for various commercial uses.
Bricklayer:
A person skilled in building with bricks.
Pozzolan:
A siliceous volcanic ash used to produce hydraulic cement. Any of various artificially produced substances resembling pozzuolana ash.
Alkali:
A carbonate or hydroxide of an alkali metal, the aqueous solution of which is bitter, slippery, caustic, and characteristically basic in reactions. Any of various soluble mineral salts found in natural water and arid soils.
Slurry:
A thin mixture of a liquid, especially water, and any of several finely divided substances, such as cement, plaster of Paris, or clay particles
Kiln:
Any of various ovens for hardening, burning, or drying substances such as grain, meal, or clay, especially a brick-lined oven used to bake or fire ceramics
Fluidized:
A roasting process in which finely divided solids are suspended in a rising current of air (or other fluid), producing a fluidized bed; used in the calcinations of various minerals, in Fischer-Tropsch synthesis, and in the coal industry.
Majeure:
Events outside the control of the parties. These events are acts of man, nature, governments and regulators, or impersonal events. Contract performance is forgiven or extended by the period of force majeure.
Embark:
Cause to board a vessel or aircraft: stopped to embark passengers. To enlist (a person or persons) or invest (capital) in an enterprise
DATA COLLECTION
Data collection is a term used to describe a process of preparing and collecting data - for example as part of a process improvement or similar project. The purpose of data collection is to obtain information to keep on record, to make decisions about important issues, to pass information on to others. Primarily, data is collected to provide information regarding a specific topic. Data collection usually takes place early on in an improvement project, and is often formalized through which often contains the following activity. 1. Pre collection activity Agree goals, target data, definitions, methods 2. Collection data collection 3. Present Findings usually involves some form of sorting analysis and/or presentation. Prior to any data collection, pre-collection activity is one of the most crucial steps in the process. It is often discovered too late that the value of their interview information is discounted as a consequence of poor sampling of both questions and informants and poor elicitation techniques. After pre-collection activity is fully completed, data collection in the field, whether by interviewing or other methods, can be carried out in a structured, systematic and scientific way.
Quantitative and Qualitative Data collection methods

The Quantitative data collection methods rely on random sampling and structured data collection instruments that fit diverse experiences into predetermined response categories. They produce results that are easy to summarize, compare, and generalize. Quantitative research is concerned with testing hypotheses derived from theory and/or being able to estimate the size of a phenomenon of interest. Depending on the research question, participants may be randomly assigned to different treatments. If this is not feasible, the researcher may collect data on participant and situational characteristics in order to statistically control for their influence on the dependent, or outcome, variable. If the intent is to generalize from the research participants to a larger population, the researcher will employ probability sampling to select participants.
Typical quantitative data gathering strategies include:
Experiments/clinical trials.
Observing and recording well-defined events (e.g., counting the number of patients waiting in emergency at specified times of the day). Obtaining relevant data from management information systems. Administering surveys with closed-ended questions (e.g., face-to face and telephone interviews, questionnaires etc). (http://www.achrn.org/quantitative_methods.htm)
Interviews
In Quantitative research (survey research), interviews are more structured than in Qualitative research. Face -to -face interviews have a distinct advantage of enabling the researcher to establish rapport with potential participants and therefore gain their cooperation. These interviews yield highest response rates in survey research. They also allow the researcher to clarify ambiguous answers and when appropriate, seek follow-up information. Disadvantages include impractical when large samples are involved time consuming and expensive. Telephone interviews are less time consuming and less expensive and the researcher has ready access to anyone on the planet that has a telephone. Disadvantages are that the response rate is not as high as the face-to- face interview as but considerably higher than the mailed questionnaire. The sample may be biased to the extent that people without phones are part of the population about whom the researcher wants to draw inferences. Computer Assisted Personal Interviewing (CAPI): is a form of personal interviewing, but instead of completing a questionnaire, the interviewer brings along a laptop or handheld computer to enter the information directly into the database. This method saves time involved in processing the data, as well as saving the interviewer from carrying around hundreds of questionnaires. However, this type of data collection method can be expensive to set up and requires that interviewers have computer and typing skills.
Questionnaires
Paper-pencil-questionnaires can be sent to a large number of people and saves the researcher time and money. People are more truthful while responding to the questionnaires regarding controversial issues in particular due to the fact that their responses are anonymous. But they also have drawbacks. Majority of the people who receive questionnaires don't return them and those who do might not be representative of the originally selected sample. Web based questionnaires: A new and inevitably growing methodology is the use of Internet based research. This would mean receiving an e-mail on which you would click on an address that would take you to a secure web-site to fill in a questionnaire. This type of research is often quicker and less detailed. Some disadvantages of this method include the exclusion of people who do not have a computer or are unable to access a computer. Also the validity of such surveys are in question as people might be in a hurry to complete it and so might not give accurate responses. Questionnaires often make use of Checklist and rating scales. These devices help simplify and quantify people's behaviors and attitudes. A checklist is a list of behaviors,characteristics,or other entities that the researcher is looking for.Either the researcher or survey participant simply checks whether each item on the list is observed, present or true or vice versa. A rating scale is more useful when a behavior needs to be evaluated on a continuum. They are also known as Likert scales. Qualitative data collection methods play an important role in impact evaluation by providing information useful to understand the processes behind observed results and assess changes in peoples perceptions of their well-being. Furthermore qualitative methods can because to improve the quality of survey-based quantitative evaluations by helping generate evaluation hypothesis; strengthening the design of survey questionnaires and expanding or clarifying quantitative evaluation findings. These methods are characterized by the following attributes:
they tend to be open-ended and have less structured protocols (i.e., researchers may change the data collection strategy by adding, refining, or dropping techniques or informants) they rely more heavily on iteractive interviews; respondents may be interviewed several times to follow up on a particular issue, clarify concepts or check the reliability of data they use triangulation to increase the credibility of their findings (i.e., researchers rely on multiple data collection methods to check the authenticity of their results) generally their findings are not generalizable to any specific population, rather each case study produces a single piece of evidence that can be used to seek general patterns among different studies of the same issue
DATA PROCESSING:
Data processing and analysis should start in the field, with checking for completeness of the data and performing quality control checks, while sorting the data by instrument used and by group of informants. Data of small samples may even be processed and analyzed as soon as it is collected.
Why is it necessary to prepare a plan for processing and analysis of data?

Such a plan helps the researcher assure that at the end of the study:

All the information (s)he needs has indeed been collected, and in a standardized way; He has not collected unnecessary data which will never be analyzed.
The plan for data processing and analysis must be made after careful consideration of the objectives of the study as well as of the tools developed to meet the objectives. When making a plan for data processing and analysis the following issues should be considered:

Sorting data, Performing quality-control checks, Data processing, and Data analysis.
In my research I followed the above mentioned procedure for data processing. I collected the Data from both primary and secondary resources. I had the brief discussion with the Manager Finance of Lucky Cement Mr. Ehtasham ud din. I also had discussion with my teacher and friends. For secondry data approch I collected the data from Internet Searching. I got much information from some international web sites but most I focused on the Pakistani web sites. Some informative books related to economic and cement industry of Pakistan also helped me to complete this thesis. I got some information from print media e. g Magazines and newspaper.
HYPOTHESIS TESTING
1. High Production cost for clinker production is major issue for the clinker production. 2. Law in Order conditions in Pakistan has affected the all sector of market. 3. High cost affects the selling Price for end user and it affects the demand for small users. 4. Energy crises, for both electricity and gas increase the cost. 5. Government strategy affecting the high coat and profitability of cement industry of Pakistan.
RATIO ANALYSIS
The major financial statements of a company are the balance sheet, income statement and cash flow statement (statement of sources and applications of funds). These statements present an overview of the financial position of a firm to both the stakeholders and the management of the firm. But unless the information provided by these statements is analyzed and interpreted systematically, the true financial position of the firm cannot be understood. The analysis of financial statements plays an important role in determining the financial strengths and weaknesses of a company relative to that of other companies in the same industry. The analysis also reveals whether the company's financial position has been improving or deteriorating over time.
Financial Ratio Analysis

Financial ratio analysis involves the calculation and comparison of ratios which are derived from the information given in the company's financial statements. The historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and its investment attractiveness. Financial ratios are essentially concerned with the identification of significant accounting data relationships, which give the decision-maker insights into the financial performance of a company.
ADVANTAGES OF RATIO ANALYSIS: The advantages of ratio analysis can be summarized as follows: Ratios facilitate conducting trend analysis, which is important for decision making and forecasting. Ratios highlight the factors associated with successful and unsuccessful firm. They also reveal strong firms and weak firms, overvalued and undervalued firms. Helps in planning: It helps in planning and forecasting. Ratios can assist management, in its basic functions of forecasting. Planning, co-ordination, control and communications. Makes inter-firm comparison possible. Ratios analysis also makes possible comparison of the performance of different divisions of the firm. The ratios are helpful in deciding about their efficiency or otherwise in the past and likely performance in the future. Help in investment decisions: It helps in investment decisions in the case of investors and lending decisions in the case of bankers etc. DISADVANTAGES OF RATIO ANALYSIS: 1. Accounting Information Different Accounting: - Policies The choices of accounting policies may distort intercompany comparisons. The business may opt not to revalue its asset because by doing so the depreciation charge is going to be high and will result in lower profit. Creative accounting: - The businesses apply creative accounting in trying to show the better financial performance or position which can be misleading to the users of financial accounting. 2. Information problems Ratios are not definitive measures: - Ratios need to be interpreted carefully. They can provide clues to the companys performance or financial situation. But on their own, they cannot show whether performance is good or bad. Ratios require some quantitative information for an informed analysis to be made. Outdated information in financial statement: - The figures in a set of accounts are likely to be at least several months out of date, and so might not give a proper indication of the companys current financial position.
Historical costs not suitable for decision making: - IASB Conceptual framework recommends businesses to use historical cost of accounting. Where historical cost convention is used, asset valuations in the balance sheet could be misleading. Ratios based on this information will not be very useful for decision making.
Financial statements contain summarized information: -Ratios are based on financial statements which are summaries of the accounting records. Through the summarization some important information may be left out which could have been of relevance to the users of accounts. The ratios are based on the summarized year end information which may not be a true reflection of the overall years results. Interpretation of the ratio: - It is difficult to generalize about whether a particular ratio is good or bad. For example a high current ratio may indicate a strong liquidity position, which is good or excessive cash which is bad. Similarly Non current assets turnover ratio may denote either a firm that uses its assets efficiently or one that is under capitalised and cannot afford to buy enough assets. 3. Comparison of performance over time Price changes: -Inflation renders comparisons of results over time misleading as financial figures will not be within the same levels of purchasing power. Changes in results over time may show as if the enterprise has improved its performance and position when in fact after adjusting for inflationary changes it will show the different picture. Technology changes: - When comparing performance over time, there is need to consider the changes in technology. The movement in performance should be in line with the changes in technology. For ratios to be more meaningful the enterprise should compare its results with another of the same level of technology as this will be a good basis measurement of efficiency.
Changes in accounting policy: - Changes in accounting policy may affect the comparison of results between different accounting years as misleading. The problem with this situation is that the directors may be able to manipulate the results through the changes in accounting policy. This would be done to avoid the effects of an old accounting policy or gain the effects of a new one. It is likely to be done in a sensitive period, perhaps when the businesss profits are low. Impact of seasons on trading - As stated above, the financial statements are based on year end results which may not be true reflection of results year round. Businesses which are affected by seasons can choose the best time to produce financial statements so as to show better results. For example, a tobacco growing company will be able to show good results if accounts are produced in the selling season. This time the business will have good inventory levels, receivables and bank balances will be at its highest. While as in planting seasons the company will have a lot of liabilities through the purchase of farm inputs, low cash balances and even nil receivables. 4. Inter-firm comparison Different financial and business risk profile: - No two companies are the same, even when they are competitors in the same industry or market. Using ratios to compare one company with another could provide misleading information. Businesses may be within the same industry but having different financial and business risk. One company may be able to obtain bank loans at reduced rates and may show high gearing levels while as another may not be successful in obtaining cheap rates and it may show that it is operating at low gearing level. To un informed analyst he may feel like company two is better when in fact its low gearing level is because it cannot be able to secure further funding. Ratio analysis is useful, but analysts should be aware of these problems and make adjustments as necessary. Ratios analysis conducted in a mechanical, unthinking manner is dangerous, but if used intelligently and with good judgment, it can provide useful insights into the firms operations.
CHAPTER # 4 RATIO ANALYSIS
RATIO ANALYSIS :
A statistic has little value in isolation. Hence, a profit figure of Rs.100 million is meaningless unless it is related to either the firms turnover (sales revenue) or the value of its assets. Accounting ratios attempt to highlight the relationships between significant items in the accounts of a firm. Financial ratios are the analysts microscope; they allow them to get a better view of the firms financial health than just looking at the raw financial statements Ratios are used by both internal and external analysts
Internal uses
Planning Evaluation of management
External uses
Credit granting Performance monitoring Investment decisions Making of policies
CATEGORIES OF FINANCIAL RATIOS:

The accounting ratios can be grouped in to six categories: 1. Liquidity Ratios shows the extent to which the firm can meet its financial obligations. 2. Asset Management Ratios shows how effectively the firm manages its assets. 3. Debt Management Ratios examine the degree to which a firm uses debt financing or financial leverages. 4. Profitability Ratios relates profits to sales and assets. 5. Market Value Measures are a measure of the return on investment.
RATIO ANALYSIS OF LUCKY CEMENT

LIQUIDITY RATIOS
A fully liquidity analysis requires the use of cash budgets, but by relating the amount of cash and other current assess to current obligations, ratio analysis provides a quick, easy-to-use measure of liquidity. Current ratio: Current ratio= Current Asset-Current Liabilities = 4455494000 - 4752035000 Current ratio = 0.938 times ANALYSIS: Although in both years the position of the company to pay off its short term debt is not very good. It is necessary for the company that its current ratio remains above 1 time to meet its short term obligations and in the case of lucky cement the current ratio is declining because the short obligations (liabilities) are increasing at a faster pace than its current assets. Quick ratio Quick ratio= Current Asset- Inventory- Current Liabilities = 4455494000 - 431418 000- 4752035000 Quick ratio= 0.847 times ANALYSIS: Here the Quick Ratio of year 2007 is declining because company is holding huge amount of inventory as compared previous year. The quantitative sales of company is 4.64 mpta against the last year sale of 2.2 mpta because there is a growth in Pakistani cement industry and there is overall an increase in sale of the cement so thats why there is a need to hold much. Bigger amount of inventory as compared to year 2006 and the quick ratio of both years is less than 1
ASSET MANAGEMENT RATIOS

Asset Management Ratio tells us how efficient company utilizes its total assets for generating sales. Inventory turnover Inventory turnover = Sales/Avg inventory = 8054101000/431418000 Inventory turnover= 18.669 times ANALYSIS: Inventory Turnover Ratio indicates the effectiveness of the inventory management practices of the firm. The inventory turnover is less. but as the whole cement industry is growing and the company is maintaining a big amount of inventory as compare to the inventory so thats why the inventory turnover is decreasing and the inventory turnover ratio. Account Receivables Account Receivables = Trade debts+ other receivables = 98389000+83912000 = 182301000 Average collection period = 182301000 * 365 = 8054101000 Average collection period = 8.262 days ANALYSIS: Credit policy is defined as the maximum time period allowed to the customer to pay back. The average collection period is 8.262 days which means that the firm is able to collect its receivables within approximately 10 days. However, There could be many reasons for this increase in average collection period such as, problem in management, lack of incentive given to its customers or undependable customer.
Fixed Asset turnover Fixed Asset turnover= Sales/Fixed Asset = 8054101000/19165108000 Fixed Asset turnover = 0.42 times ANALYSIS: The fixed turnover ratio measures how effective the firm uses plant and equipment. The role of fixed asset is to support the sales. The fixed Asset turnover ratio is 0.616 Total Asset turnover Total Asset turnover= Sales/Total Asset = 8054101000/23622777000 Total Asset turnover = 0.341 times ANALYSIS: The final asset management ratio the total asset turnover ratio measures the turnover of all the firm assets and help us to identify when problem occur that is a problem in fixed assets or in current assets..
DEBT MANAGEMENT RATIO

Shows the extent to which the firm is financed by debt. Debt ratio Debt ratio = Total Debt /Total Asset = 16553144000/23622777000 Debt ratio = 70.1 % ANALYSIS: The debt to equity ratio last was 70.1% which shows that 70.1% of financing through debt. However now the debt to equity ratio decreased to 63.6% which shows that the company curtails its financing through debts although there is an decline in the risk the company facing but still the firm debt financing on the higher side as compared to ideal situation which is 60% equity & 40% debt. Time interest earned Time interest earned= EBIT /Interest = 2770075000/80458000 Time interest earned= 34.429 times ANALYSIS: Indicates a firms ability to cover the interest charges. The company is not able to cover the interest expense at a higher margin of safety.
PROFITABILITY RATIOS
This ratio shows the combined effect of liquidity, asset management and debt management ratios. Profit margin Profit margin = Net income/Sales = 1935950000 /8054101000 Profit margin = 24% ANALYSIS: Profit margin declined because of the high cost which occurs because of inefficient operations and heavy use of debt. Basic Earning Power Basic Earning Power= EBIT/Total Asset = 2770075000/23622777000 Basic Earning Power= 11.7% ANALYSIS: This ratio shows the raw earning power of the firm asset before the influence of taxes and leverage and it is useful for comparing firm with difference tax situations and different degrees of financial leverage. Return on Asset Return on Asset= Net income/Total Asset = 1935950000/23622777000 Return on Asset = 8.19 % ANALYSIS: The Return on Assets gradually rose in year 2007, to 9.9% from 8.19%, in year 2006. Total asset increased by 8.8%.This shows that the company uses its total assets more efficiently over these years which also increased net income over the years. This ratio shows that how much company has earned on its assets.
Return on equity Return on equity = Net income/Common equity = 1935950000 /7069633000 Return on equity = 27.4% ANALYSIS: This ratio is the most important ratio for investor point of view. This ratio shows that how much investors get return on their money that they have invested in company stocks.
CHAPTER # 5 CONCLUSION
CONCLUSION:
In this research report I illustrated the various issues related to costing of the clinker product faced by cement industry of Pakistan and world. Worldwide clinker is used for huge projects of construction due to its high prices. Normally, for construction of house mostly people use the common Portland cement. Annual cement industry shipments are currently estimated at $10.0 billion for 2008; down from $15.0 billion in 2006. U.S. cement production is widely dispersed with the operation of 113 cement plants in 36 states. The top five companies collectively operate 54.4% of U.S. clinker capacity with the largest company representing 15.9% of all domestic clinker capacity. An estimated 80.0% of U.S. clinker capacity is owned by companies headquartered outside of the U.S. Cement consumption is dependent on the time of year and prevalent weather conditions. Nearly two-thirds of U.S. cement consumption occurs in the six months between May and October. The seasonal nature of the industry can result in large swings in cement and clinker (unfinished raw material) inventories at cement plants over the course of a year. Cement producers will typically build up inventories during the winter and ship them during the summer. In Pakistan, Growth of cement industry is rightly considered a barometer for economic activity. Cement industry is indeed a highly important segment of industrial sector that plays a pivotal role in the socio-economic development. Though the cement industry in Pakistan has witnessed its lows and highs in recent past, it has recovered during the last couple of years and is buoyant once again. The market share if Cement industry is as such that since large number of manufacturers are in the market and are targeting the entire market through the formation of Cartel. So the dominancy of market share is yet to be analyzed by us. 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 growth rate of seven per cent per year. We need to decrease the high cost factor for all products and we need to make it sure that the required demand of clinker is available in the market for the users. I further conclude that in terms of competition in export markets, we have observed that Cement exports started in FY02 to Afghanistan that is still a major market; Iraqi market can become a potential target after peace is restored; India and Iran are the major competitors for Pakistan in the Middle Eastern region; Upcoming capacity expansions in Iran and other GCC countries will create tough competition for Pakistan; Export prices are presently touching USD 75/ton in the exports market, however they are likely to come down as new capacities comes online.
Pakistan is rich in cement raw material. Currently many cement plants are operating in private sector. Pakistan Cement Industry has huge potential for export of cement to neighboring countries like India, U.A.E, Afghanistan, Iraq & Russian States. There has been a robust growth of cement demand seen both in domestic and exports market. We only need to utilize the resources available. Raw material is idle in Pakistan. Clinker product in Pakistan has some draw backs. Clinker in 50-kg bag or Jumbo bag not available for export also Clinker shall only be exported in bulk (Loose). The commitment of the Seller shall be subject to the policy of the Government of Pakistan and Force Majeure; Firm prices based on FOB Pakistan Port and C&F Destinations shall be subject to the following conditions. I further conclude that Cement industry is currently enjoying historically high prices, margins and utilization rates. Historically, lower capacity utilization rates have resulted in price wars among manufacturers. Effect of capacity utilization levels will start to decline from 1QFY07. Lower sales volume and high leverage due to expansion will create problems for players to meet debt obligations. This is likely to trigger price wars as players will try to gain market share. Price wars will lower margins creating further problems for players. We expect price reduction of 10% in FY07 and 5% in FY08. Finally, costing issues of clinker are increasing worldwide. Due to not having the demand in bulk, the cost increases. While in Pakistan, Raw material is available but it is not being utilized properly. In Pakistan the cost of clinker is also affected by the energy crises. Firms have to pay highly for energy.
REFERENCES:
The Daily Financials The Business Recorder The Nation Weekly Economiest
The global cement industry

(By Sui Pheng Low, Ong Bee Tan)
Cement and concrete science & technology

(By S. N. Ghosh)
o o o o o o o
http://www.scribd.com/ www.worldcement.com www.lucky-cement.com www.investing.businessweek.com www.cement.org www.pakistaneconomist.com www.oppapers.com

Asif Nafees Cement Thesis

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NEWPORTS INSTITUTE OF COMMUNICATION & ECONOMICS

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

Sir Asim Mashkoor

THE COSTING AND FINANCIAL ISSUES OF CLINKER

Sir Asim Mashkoor

Chief Executive Officer

NEWPORTS INSTITUTE OF COMMUNICATION AND ECONOMICS

This Research Report

All Stages Of Life

M. Asif Nafees ACKNOWLEDGEMENT

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

CHAPTER # 1 INTRODUCTION TO COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

OBJECTIVES: Following are the basic objectives of this research: -

To determine the cost issues for the production of clinker.

THE COSTING AND FINANCIAL ISSUES OF CLINKER

PROBLEMS: Problems of clinker industry can be described as follows:

To decrease the additional cost of transportation, handling and grinding of coal.

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

INTRODUCTION OF CEMENT INDUSTRY IN PAKISTAN:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

RELATED GOVERNMENTAL REGULATIONS:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

7.6% 9.8% 12.7% 7.1% 5.5%

THE COSTING AND FINANCIAL ISSUES OF CLINKER

NEW PRODUCT DEVELOPMENT:

CAPICITY EXPENSION CYCLE:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

Capacity expansions are targeted at domestic markets:

DEMAND AND EXPENSION:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

Governments development spending shall continue to rise due to:

EARTHQUAKE REHABILITION TO BOOST DEMAND:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

COMPETIOTION IN EXPORT MARKETS:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

PROBLEM OF OVERSUPPLY SITUATION:

FINANCIAL OBLIGATIONS WILL DETERMINE PRICE STRATEGY:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

PRICE REDUCTIONS ARE LIKELY IN THE COMING YEARS:

HISTORY OF CEMENT INDUSTRY IN PAKISTAN:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

GROWTH OF PAKISTAN CEMENT INDUSTRY:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

CONTRIBUTION OF CEMENT INDUSTRY IN PAKISTANS ECONOMY:

THE COSTING AND FINANCIAL ISSUES OF CLINKER

THE COSTING AND FINANCIAL ISSUES OF CLINKER

PRODUCTION OF CEMENT INDUSTRY

THE COSTING AND FINANCIAL ISSUES OF CLINKER

Browse Major Pakistan Cement Plants in left menu

THE COSTING AND FINANCIAL ISSUES OF CLINKER