CEMENT INDUSTRY IN PAKISTAN

GROUP MEMBERS
MUHAMMAD JUNAID MAZHAR Reg No: Che-01-48 MUHAMMAD NASEEM NAWAZ Reg No: Che-01-52 KHAQAN MAJEED Reg No: Che-01-21 ADIL FAHEEM Reg No: Che-01-84 HASNAIN ALI QURESHI Reg No: Che-01-17

Date: February 26, 2010

History & Introduction:

Growth of cement industry is rightly considered a barometer for economic activity.

1921: First cement plant was developed in Wah. 1947: At the time of independence in 1947 there were four cement factories with an installed capacity of 470,000 tonnes per annum. These units were located at Karachi, Rohri, Dandot and Wah. 1956-66:

In 1956 Pakistan Industrial Development Corporation (PIDC) established two plants at Daudkel and Hyderabad and subsequently more plants were established in the private sector. Some expansion took place but could not keep pace with the economic development. 1976-77: The industry was nationalized in 1972 and the State Cement Corporation of Pakistan (SCCP) was established following the Economic Reforms Order, 1972. As a result of nationalization, a total of 10 cement units with an installed capacity of 2.8 million tons per annum were transferred to the SCCP. Effective price control was also vested with the SCCP and for a long time the industry operated under a regime of strict regulation and price control. While the cement industry was working under state control, the SCCP established five new units with an installed capacity of 1.8 million tons per annum. 1985-86: In 1985-1986 the cement industry was deregulated and private sector was allowed to establish cement plants. But bulk of the capacity was controlled by the SCCP which had effective control in the fixation of prices. Severe shortage of cement and price deregulation prompted the private sector to establish more plants. Seven units were established in the private sector before commencement of the process of privatization in 1991. 1990-2007: 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) whiles the south with installed production capacity of 8.89 million tons (20 percent), compete for the domestic market of over 19 million tons.

Fiscal Performance 2008-09:

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 2008-09 and earn approximately $700 million. 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 tones 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 200809 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. 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. 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.

Companies:

Importance:

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. 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.

Pakistan's Cement Market:

It is divided into two distinct regions, North and South. The northern region comprises the Punjab, NWFP, Azad Kashmir and upper parts of Baluchistan, whereas the southern region comprises the entire province of Sindh and lower parts of Baluchistan. Traditionally, the southern region has always been surplus in cement production but with the establishment of more plants in the northern parts of the country the region has become almost self-sufficient in supply of cement. Million units needed every year is for urban areas. With greater urbanization the demand for cement is expected to grow at an average of nearly 7% per annum. The demand for cement for infrastructure units is expected to grow with the commencement of work on motorways, power plants, Islamabad New City, Karachi Package and Ghazi Brotha dam. If all these projects are implemented as per schedule, the demand for cement is expected to grow at a higher rate.

Installed capacity
Cement Plants in Northern Region 1) Associated (Wah) 2) D.G. Khan 3) Cherat 4) Pioneer 5) Mustehkam 6) Fecto 7) Kohat (tonnes) per annum 900 1,710 720 660 660 600 330

8) Gharibwal 9) Maple Leaf 10) Dundot 11) Lucky Cement Sub-Total Cement Plants in Southern Region 12) Zeal Pak 13) Attock 14) Javedan 15) Pakland 16) Dadabhoy 17) Thatta 18) Associated (Rohri) 19) Essa Sub Total Cement Plants Under Construction 20) Saudi 21) Lucky 22) Army welfare 23) Fauji 24) Chakwal Sub-Total Grand-Total

540 1,460 480 1,200 7,580 880 660 500 540 450 280 230 150 3,690 960 1200 660 900 1,650 5,370 16,640

Tax structure:
Instead of providing any relief in the budget, the sector was further penalized with a 3% increase in sales tax to 18% and an increase in excise duty to 35%. So far, the manufacturers have been able to pass on the increase to consumers but the situation is unlikely to continue. However, the possibility of formation of a cartel cannot be ruled out. Since massive investment has been made in the sector, any reduction in price of cement can reduce profit margins of all the units.

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. Cement production capacity in the north is 35.18 million tons (80 percent) while in the south it is only 8.89 million tons. 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 2002 2003 2004 2005 2006 2007 2008 02 9.83 03 10.85 04 12.86 05 16.09 06 18.48 07 22.73 08 26.75 09 20.28

Manufacturing Units:
Number of units & Production

Year No. 1999-00 23 2000-01 22 2001-02 22 2002-03 22 2003-04 22 Source: SP, FBS

(000 MT) 9,314 9,674 9,935 11,020 13,500

Percentage growth of Cement Industry:

Year Percentage 1990-91 3.66 1999-00 - 3.33 2000-01 1.40 2001-02 1.61 2002-03 12.11 2003-04 15.00 Source: Economic Survey, SBP 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:

Table:

Bangladesh Pakistan India USA Iran Malaysia kg/capita EU China kg/capita UAE kg/capita

50 kg/capita 117 kg/capita 115 kg/capita 375 kg/capita 470 kg/capita 530 560 kg/capita 625 1095

Exports & International Markets:

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 to avail the opportunity offered, it may secure a significant share of Sri Lanka market by supplying 360,000 tons of cement annually. In 2007, the exports to Afghanistan, UAE and Iraq touched 2.13 M ton.
MATERIAL

2000-01
(Price in $) 0 14

2001-02
(Price in $)

2002-03
(Price in $)

Cement White

0
0 10737 0 10737

Cement Clinkers Cement Portland Others TOTAL

0 777 2 779

0 3182 0 3194

LIST OF CEMENT INDUSTRIES IN PAKISTAN

DG Khan Cement Company

Cement Manufacturer.

New Sales Office at Rawalpindi, at 14-17, 3rd floor, Rizwan Arcade, 109-B, Adamjee Road, Saddar, Rawalpindi. (Head Office: Nishat House, 53-A, Lawrence Road, Lahore.) Phone:051-5518834 Fax:051-5518836 email:info@dgcement.com Web: http://www.dgcement.com

DANDOT CEMENT COMPANY LTD.

Cement Manufacturers

26-Empress Road,P.O.Box:1285 Lahore. Phone:(92-42) 6365249 Fax:(92-42) 6278900 / 6365549 / 6365576 email: Web:

ANWARZAIB WHITE CEMENT LTD.

H.O. F-176,Block-2,P.E.C.H.S. 21) 4546903 / 4546902 Phone:(92-21) 4547203 Fax:email:awcl@khi.compol.com Web:Factory Information: Bholari Via Kotri, Kotri. Phone:(92-221) 870011 / 50473 (92-221)870497 ASKARI CEMENT LTD.

Cement Manufacturers Karachi.(92-

Cement Manufacturers

H.O.AWT Plaza, 4th Floor, Cantt. Rawalpindi. Phone:(92-51) Fax:(92-51) 5567750 5567814 / 5567812 / 5586218
FACTROY INFORMATION

WAH TAXILA.

ASSOCIATED CEMENT Cement Manufacturers ROHRI LTD. P.O. Rohri Sukkur. Phone:(92-71) Fax:(92-71) 650945 650111 / 760111 / 650271 / 650893 email: Web:

ATTOCK CEMENT LTD. Cement Manufactures 5th Floor, PNSC Building, M.T.Khan Road,P.O.Box:1120, Karachi. Phone:(92-21) 5611020 / 5611019 / Fax:(925611841 / 5611842 21) 5610820 email:attock@digicom.net.pk Web: Cement House Export & Domestic sale of Cement & Clinker Fax:92 213 6324715 Web:Nil

BS-1 Phone:92 334 3336333 email:cementhouse@live.com

DADABHOY CEMENT Cement INDUSTRIES LTD. Manufacturers 5th Floor, Maqbool Comm. Complex, Block 7 & 8,Jinnah Co-Op.H.S., Shahrah-e-Faisal, Karachi. Phone:(92-21) 4545706 / Fax:(92-21) 4548625 4545704 / 4543361 / 4543602 email: Web: mhdadabhoy@cyber.net.pk

KOHAT CEMENT COMPANY Cement LIMITED Manufacturers 43/1-FCC, Syed Muratib Ali Road,Gulberg-IV, Lahore. Phone:(92-42) Fax:(92-42) 5754084 5754358 / 5754357 / 5752699 email:kccl@wol.net.pk Web: Factory Information: Pindi Road, Kohat. Phone:(92-922) 560404 / (92-922) 560405 560401 / 560402 / 560403

LUCKY CEMENT LIMITED

Cement Manufacturers 6-A, Muhammad Ali H. Society, A. Aziz Hashim Tabba Street, Karachi. Phone:(92-21) 4530450 / Fax:(92-21) 4534302 4530454 / 4537390 email:luckycm@cyber.net.pk Web:http://www.luckycement.com Factory Information: Pezu District Lakki Marwat, N.W.F.P. Bannu. Phone:(92-928) 780126(92-928) 780122 780123-780124-780125

MAPLE LEAF Cement Manufacturers CEMENT FACTORY LTD. 42-Lawrence Road Lahore.
Phone:(92-42) 6305883-6278904-6278905

email: Factory Information: Skindarabad, Daud Khail, Distt. Mianwali.

Fax:(92-42) 6306049 Web:

Cement NIZAMPUR-CEMENT-PLANT Manufacturers AWT Plaza, 5th Floor, The Mall,Cantt. Rawalpindi Phone:(92-51) Fax:(92-51) 5586839 551835455183555518356 email: Web: PAKISTAN SLAG CEMENT Cement

INDUSTRIES LTD. Manufacturers Panorama Centre No.2(Dr.Plaza),Raja Ghazanfar Ali Khan Road Karachi Phone:(92-201) Fax:(92-201) 750131 750131-750130 email: Web: Factory Information: D.S.U-6,Downstream Unit, Zufiqarabad Steel Mills Karachi (Pipri) Phone:(92-21) 5219068(92-21) 5660409 5219067 PAKLAND CEMENT LIMITED Cement Manufacture rs Trade Centre, A-14, Block 7/8,K.C.H.S.,Shahrah-eFaisal, Karachi. Phone:(92-21) 4559175-4559171Fax:(92-21) 4383872-4383874 4550767 email:pakland@pakland.khi.erum.co Web: m.pk

PIONEER CEMENT LIMITED

Cement Manufacturers 7th Flr,Lakson Square Bldg.#3,Sarwar Shaheed Road, Karachi. Phone:(92-21) 5685055Fax:(92-21) 5685052-5685054-5685053 5685051 email:noonpcl@cyber.net.pk Web:

SAKHI CEMENT LTD.

Cement Manufacturers 27-D, Main Boulevard, L.C.C.H.S.Cantt. Lahore. Phone:(92-42) Fax:(92-42) 5720745 890475-891907 email: Web: THATTA CEMENT COMPANY Cement LTD. Manufacturers Progressive Plaza, Beaumont Road Karachi. Phone:(92-21) Fax:(92-21) 5683219 568277156865565219522 email: Web: Factory Information: Makli Ghulamullah Road Thatta. Phone:(92-29) 770733(92-29) 770479 770731-770735-770536 WHITE CEMENT INDUSTRIES Cement (PVT) LTD. Manufacturers 1st Floor,Ferozsons Building,32-Empress Road Lahore. Phone:(92-42) Fax: 6304136630407362789046278905 email: Web:

BESTWAY CEMENT Cement Manufacturers LTD. UBL Building,5th Floor, Jinnah Avenue, Blue Area Islamabad. Phone:(92-51) Fax:(92-51) 2272150 2206151 / 2206146 / 2206147 / 2206178 email: Web:

FAUJI CEMENT COMPANY LTD.

Cement Manufacturers

61 Harley Street,P.O.Box:84 Rawalpindi. Phone:(92-51) 5514474 / Fax:(92-51) 5517311 5514965 / 5515512 / 5525740 email:fcclho@worldtelmeca.net Web:

FECTO CEMENT LTD.

Cement Manufacturers

35,Darul-Aman-Housing Society,Block 7 & 8,Shahrah-eFaisal, Karachi. Phone:(92-21) 4530122 / Fax:(92-21) 4530123 4530120 / 4530121 / 4530124 email:cement@cyber.net.pk Web:

Factory Information:

Sangjani Islamabad. Phone:(92-51) 2296065 / 2296066

GALADARI CEMENT (GULF) LIMITED

Cement Manufacturers

Sidco Avenue Centre,3rd Floor,Tower "C" Strechen Road, Karachi. Phone:(92-21) 5683159 / Fax:(92-21) 5680529 5683158 / 5678271 email:s.a.faruqi@cyber.net.pk Web:

GHARIBWAL CEMENT LTD.

Cement Manufacturers

9th Floor,Shaheen Complex,M.R.Kiyani Road, Karachi. Phone:(92-21) Fax:(92-21) 2626770 2626796 / 2626791 / 2626792 / 2626793 email: Web:

HARYANA ASBESTOS CEMENT INDUSTRIES LTD.

Asbestos & Asbestos Products

236,Al-Noor Chamber,Preedy St.,Saddar, Karachi. Phone:(92-21) Fax: 7720358 / 7724046 email: Web:

JAVEDAN CEMENT LTD.

Cement Manufacturers

Manghopir Road,North Karachi, Karachi. Phone:(92-21) Fax:(92-21) 6980132 6909386 / 6980026 / 6980133 email: Web:

Reference:
Reference to a web site:
1. www.pakistaneconomist.com/database2/cover/c96-97.asp 2. www.encyclopedia.com/doc/1G1-18750930.html 3. www.nationsencyclopedia.com Asia and Oceania Pakistan