58586135 financial analysis of top cement companies

8/6/2019 58586135 Financial Analysis of Top Cement Companies

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Financial Analysis of Five Major Financial Analysis of Five Major

Players of Pakistan CementPlayers of Pakistan Cement

IndustryIndustry

GROUP MEMBERSGROUP MEMBERS::

Mohammad MustafaMohammad Mustafa BMEBME--663663

Faisal Bin HasanFaisal Bin Hasan BMBM--1502415024

PRESENTED TOPRESENTED TO;; Dr. Noor Dr. Noor

MBA MAJORSMBA MAJORS:: FinanceFinance

COURSE CODECOURSE CODE:: MKTMKT--606606



RESEARCH OBJECTIVERESEARCH OBJECTIVE

To know the Financial position of TopTo know the Financial position of Top

Companies of our cement industry & to take anCompanies of our cement industry & to take an

overview of Pakistan Cement Industry.overview of Pakistan Cement Industry.



PRESENTATION ROAD MAPPRESENTATION ROAD MAP

IntroductionIntroduction

Growth of Cement IndustryGrowth of Cement Industry

Current ScenarioCurrent Scenario

ProductionProduction ConsumptionConsumption

ExportsExports

Future ProspectsFuture Prospects

Giants Of Pakistan CementGiants Of Pakistan CementIndustryIndustry

Financial Analysis of Top FiveFinancial Analysis of Top FiveCement CompaniesCement Companies

Swot Analysis of CementSwot Analysis of CementIndustryIndustry

ConclusionConclusion

RecommendationsRecommendations



INTRODUCTIONINTRODUCTION--HISTORY OF OURHISTORY OF OUR

CEMENT INDUSTRYCEMENT INDUSTRY

Cement is one of the major industry of Pakistan¶s economyCement is one of the major industry of Pakistan¶s economy..

Pakistan is rich in cement raw material (Clinker,Limestone, Gypsum)Pakistan is rich in cement raw material (Clinker,Limestone, Gypsum)

Currently many cement plants are operating in private sector.Currently many cement plants are operating in private sector.

Our Cement industry has huge potential for export to neighboringOur Cement industry has huge potential for export to neighboring

countriescountries..

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

producing grey cementproducing grey cement

During 1948During 1948--58, the number of cement units increased to six.58, the number of cement units increased to six.

During the Ayub Khan era (1958During the Ayub Khan era (1958--68) the number of units increased68) the number of units increased

to 9.to 9.

Because of nationalization in Z.A . Bhuto¶s era (1971Because of nationalization in Z.A . Bhuto¶s era (1971--77) , no new77) , no new

unit was set up.unit was set up.

In the era of Zia Ul Haq (1977In the era of Zia Ul Haq (1977--88) denationalization of industrial88) denationalization of industrial

units boosted the investments with housing & construction industriesunits boosted the investments with housing & construction industries

picking up which increased the demand for cement. The number of picking up which increased the demand for cement. The number of

units increased to 23.units increased to 23.



INTRODUCTIONINTRODUCTION--HISTORY OF OUR CEMENTHISTORY OF OUR CEMENT

INDUSTRYINDUSTRY Privatization and effective price control in 1991Privatization and effective price control in 1991--92 ushered in a new era in92 ushered in a new era in

which the industry has reached a level where surplus production after which the industry has reached a level where surplus production after meeting local demand is expected yearlymeeting local demand is expected yearly

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

Currently total number of units are around 30, comprising 4 units in theCurrently total number of units are around 30, comprising 4 units in the

public sector & 25 units in the private sector.public sector & 25 units in the private sector.

The cement plants are located in every province of Pakistan.The cement plants are located in every province of Pakistan.

The industry is divided into two broad regions:The industry is divided into two broad regions: The northern region has over 87 percent share in total cement dispatches .The northern region has over 87 percent share in total cement dispatches .

Southern region contributes 13 percent to the annual cement sales.Southern region contributes 13 percent to the annual cement sales.

The provinceThe province--wise distribution of cement plants is as under:wise distribution of cement plants is as under:

ProvinceProvince UnitUnit Capacity in Million TonnesCapacity in Million Tonnes

11-- PunjabPunjab 1212 19.54819.54822-- SindhSindh 88 10.10510.105

33-- NWFPNWFP 66 12.9612.96

44-- BaluchistanBaluchistan 33 1.991.99

Total UnitsTotal Units 2929 44.60344.603

Source: All Pakistan Cement Manufacturing Association of PakistanSource: All Pakistan Cement Manufacturing Association of Pakistan

(APCMA)(APCMA)



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

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

Research ObjectivesResearch Objectives

The objective of our research was to know the past and present of The objective of our research was to know the past and present of

Pakistanµs cement Industry & to highlight the future prospects of thePakistanµs cement Industry & to highlight the future prospects of the

industry. During this study we did the financial analysis of top five major industry. During this study we did the financial analysis of top five major

cement industry players in Pakistan.cement industry players in Pakistan.

Research MethodologyResearch Methodology

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

aa QualitativeQualitative approach was found feasible by usapproach was found feasible by us

Data CollectionData Collection: It: It was done through:was done through:

Newspapers, Internet, BooksNewspapers, Internet, Books All Pakistan Cement Manufacturers Association Reports All Pakistan Cement Manufacturers Association Reports

Economic Survey of Pakistan, Federal Bureau of Statistics Publications,Economic Survey of Pakistan, Federal Bureau of Statistics Publications,

State Bank of Pakistan Annual ReportsState Bank of Pakistan Annual Reports



Cement Industry of PakistanCement Industry of Pakistan--

GrowthGrowth The growth of cement industry isThe growth of cement industry is

slow but sure sinceslow but sure sinceindependence.independence.

We have analyzed the trend sinceWe have analyzed the trend since1990.1990.

Due to political instability and lackDue to political instability and lackof availability of funds for publicof availability of funds for public

sector development program,sector development program,cement industry of Pakistan wascement industry of Pakistan wasin the recession phase andin the recession phase andregistered an average growth rateregistered an average growth rateof 2.96% for the period from 1990of 2.96% for the period from 1990to 2002.to 2002.

For the period from 2003 to 2007For the period from 2003 to 2007cement industry of Pakistan hadcement industry of Pakistan hadregistered an average growth rateregistered an average growth rateof 20%. Another 20of 20%. Another 20--25 % growth25 % growthis expected till the end of theis expected till the end of thecurrent year.current year.

The last few years have been a goldenThe last few years have been a golden

period for cement manufacturers, whenperiod for cement manufacturers, whenthe government increased spending onthe government increased spending on

infrastructure development. Highinfrastructure development. High

commercial activity and rising demandcommercial activity and rising demand

for housing on account of higher per for housing on account of higher per

capita income has made cementcapita income has made cement

sector to take off growth in doublesector to take off growth in double

digits.digits.The demand of Pakistani cement isThe demand of Pakistani cement is

expected to continue to grow at the rateexpected to continue to grow at the rate

of 20 per cent for about four years toof 20 per cent for about four years to

come. It may then follow traditionalcome. It may then follow traditional

growth rate of seven per cent per year.growth rate of seven per cent per year.

Announcement of major dams will Announcement of major dams will

dramatically increase this demand.dramatically increase this demand.

Deregulation after accession of Deregulation after accession of

Pakistan to WTO is expected to openPakistan to WTO is expected to open

the window of competition fromthe window of competition from

cheaper markets.cheaper markets.

The boost in cement sector is because of the rising construction activity in the

country, reconstruction activity in Afghanistan and increasing developmentex enditure b the overnment.




Current ScenarioCurrent Scenario

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

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

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

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

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

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

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

Shareholders EquityShareholders Equity Rs. 80.00 BillionRs. 80.00 Billion

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

Source: All Pakistan Cement Manufacturing Association of PakistanSource: All Pakistan Cement Manufacturing Association of Pakistan

(APCMA)(APCMA)



Cement Industry of PakistanCement Industry of Pakistan



ement n ustry o a stanement n ustry o a stan--

Current ScenarioCurrent Scenario Contribution to National Income by Cement Sector Contribution to National Income by Cement Sector::

The cement Industry is contributing Rs 30 billion to the national exchequer The cement Industry is contributing Rs 30 billion to the national exchequer in the form of tax. This sector has invested about Rs 100 billion in capacityin the form of tax. This sector has invested about Rs 100 billion in capacity

expansion over the last four years.expansion over the last four years.

What Is Going on in Related Sector:What Is Going on in Related Sector:

Pakistan has one of the highest population growth rates in the world. ThisPakistan has one of the highest population growth rates in the world. This

has prompted a sizable demand for housing facilities in the country. Therehas prompted a sizable demand for housing facilities in the country. There

is a lot of scope for importing latest technological advancements/hiis a lot of scope for importing latest technological advancements/hi--techtechbuilding materials.building materials.

T ax structureT ax structure:: Instead of providing any relief in the budget, the sector wasInstead of providing any relief in the budget, the sector was

further penalized with an increase in sales tax to. So far, the manufacturersfurther penalized with an increase in sales tax to. So far, the manufacturers

have been able to pass on the increase to consumers but the situation ishave been able to pass on the increase to consumers but the situation is

unlikely to continue.unlikely to continue.

Latest Situation Mar Latest Situation Mar--Apr 2011 Apr 2011:T :T he prices of cement have increased oncehe prices of cement have increased oncemore which is affecting the construction industry because they cannot buymore which is affecting the construction industry because they cannot buy

cement at a expensive rate. There is a lot of demand for construction after cement at a expensive rate. There is a lot of demand for construction after

earth quake & recent floods & increasing population; but due to heavy priceearth quake & recent floods & increasing population; but due to heavy price

of cement; the construction industry cannot make new homes in abundanceof cement; the construction industry cannot make new homes in abundance

b/c they cannot sell them at a higher price due to lowering of property rates.b/c they cannot sell them at a higher price due to lowering of property rates.

People nowadays don¶t buy property at a high price.People nowadays don¶t buy property at a high price.




ProductionProduction

There are 29 cement production units in the country. Upto May 2010, theThere are 29 cement production units in the country. Upto May 2010, thetotal installed cement production capacity is 44.603 million tonnes. By thetotal installed cement production capacity is 44.603 million tonnes. By the

end of June 2011, the installed cement production capacity is expected toend of June 2011, the installed cement production capacity is expected to

touch the level of 46.871 million tonnes.touch the level of 46.871 million tonnes.

The cement demand would increase in future due to government policies asThe cement demand would increase in future due to government policies as

the Pakistan People¶s Party¶s (PPP¶s) slogan has always been µthe Pakistan People¶s Party¶s (PPP¶s) slogan has always been µrotiroti,, kaprakapra

aur aur makanmakan¶ (bread, clothing and housing). In this regard a statement of the¶ (bread, clothing and housing). In this regard a statement of thegovernment confirmed that it would encourage industries and constructgovernment confirmed that it would encourage industries and construct

small dams.small dams.

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

11-- Ordinary Portland Cement (OPC)Ordinary Portland Cement (OPC)

22-- SulphateSulphate Resisting Cement (SRC)Resisting Cement (SRC)

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

44-- White CementWhite Cement

M ain Utilities used for Cement Production:M ain Utilities used for Cement Production:

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

22-- ElectricityElectricity

33-- Water Water



Cement Industry of PakistanCement Industry of Pakistan--ProductionProduction

Cement Plants:Cement Plants:

www.cement.com.pk



Product type:Product type:

Since cement is a specialized product, requiring sophisticated infrastructureSince cement is a specialized product, requiring sophisticated infrastructure

and production location. So, most of the cement industries in Pakistan areand production location. So, most of the cement industries in Pakistan are

located near/within mountainous regions that are rich in clay, iron andlocated near/within mountainous regions that are rich in clay, iron and

mineral capacitymineral capacity..

Production FY10:Production FY10:

North ZoneNorth Zone Inst.Inst. CpyCpy (Clinker) Inst.(Clinker) Inst. CpyCpy (Cement)(Cement)

34,012,85734,012,857 35,713,50035,713,500

South ZoneSouth Zone Inst.Inst. CpyCpy (Clinker) Inst.(Clinker) Inst. CpyCpy (Cement)(Cement)8,316,1908,316,190 8,889,5008,889,500

G.T (N+S) 42,329,047G.T (N+S) 42,329,047 44,603,00044,603,000

Projected 2010Projected 2010--20112011

44,489,04744,489,047 46,871,00046,871,000

Current Situation:Current Situation: The industry is now calling on the government to step in, as profits take aThe industry is now calling on the government to step in, as profits take a

beating. High energy costs for all, in addition to the cost of transportingbeating. High energy costs for all, in addition to the cost of transporting

imported coal to producers in the north of the country, has placed aimported coal to producers in the north of the country, has placed a

significant financial burden on producers that has reportedly left many onsignificant financial burden on producers that has reportedly left many on

the verge of collapse. Though the cost of cement production has risenthe verge of collapse. Though the cost of cement production has risen

exponentially, it is difficult to pass that price rise on to consumers in such aexponentially, it is difficult to pass that price rise on to consumers in such adepressed market.depressed market.

Cement Industry of PakistanCement Industry of Pakistan--ProductionProduction




ConsumptionConsumption Per capita consumption of cement is an indicator of rate with which anyPer capita consumption of cement is an indicator of rate with which any

country is developing. Unfortunately per capita consumption of cement incountry is developing. Unfortunately per capita consumption of cement inPakistan is less if we compare it with other developing countries. Pakistan inPakistan is less if we compare it with other developing countries. Pakistan inthe recent past was trailing behind all other developing countries in thethe recent past was trailing behind all other developing countries in theregion with lowest per capita consumption of cement.region with lowest per capita consumption of cement.

This less consumption is due to the negligence given to the constructionThis less consumption is due to the negligence given to the constructionsector. However in last few years consumption of cement showed some risesector. However in last few years consumption of cement showed some risedue to increased commercial activities, infrastructural development anddue to increased commercial activities, infrastructural development andincreasing demand of constructing houses. However, some circles are alsoincreasing demand of constructing houses. However, some circles are alsocarrying an impression that the cement manufacturers and the cementcarrying an impression that the cement manufacturers and the cementdealers have formed a cartel to create an artificial shortage of cement in thedealers have formed a cartel to create an artificial shortage of cement in themarket with the rise in demandmarket with the rise in demand

Per Capita Consumption at 70 kgs. in Pakistan is one of the lowest in thePer Capita Consumption at 70 kgs. in Pakistan is one of the lowest in theworld. According to a study conducted by Qworld. According to a study conducted by Q--Consult, 42 countries of theConsult, 42 countries of theworld having similar per capita income as that of Pakistan have DOUBLEworld having similar per capita income as that of Pakistan have DOUBLEper capita cement consumption than that of Pakistan. This is indicative of per capita cement consumption than that of Pakistan. This is indicative of the fact that in Pakistan resource allocation of the Government is notthe fact that in Pakistan resource allocation of the Government is notdevelopment oriented. This problem needs to be addressed by the Planningdevelopment oriented. This problem needs to be addressed by the PlanningDivision in Islamabad.Division in Islamabad.




ExportsExports The cement industry of Pakistan entered the export markets a fewThe cement industry of Pakistan entered the export markets a few

years back, and has established its reputation as a good qualityyears back, and has established its reputation as a good qualityproduct .Pakistan is currently ranked fifth in the world in cementproduct .Pakistan is currently ranked fifth in the world in cement

exports after a huge increase of 47 percent in exports during last fiscalexports after a huge increase of 47 percent in exports during last fiscal

year. Pakistan cement factories continue to make significant progressyear. Pakistan cement factories continue to make significant progress

in cement exports.in cement exports.

Currently, the export demand is expected to be from India along withCurrently, the export demand is expected to be from India along with

other countries like Gulf Cooperation Council (GCC) countries, due toother countries like Gulf Cooperation Council (GCC) countries, due torising oil pricesrising oil prices--led economic growth. More countries like South Africaled economic growth. More countries like South Africa

which imported cement from Pakistan for football stadiums for thewhich imported cement from Pakistan for football stadiums for the

World Cup and Sri Lanka also approached Pakistani companies for World Cup and Sri Lanka also approached Pakistani companies for

cement imports. However, export depends on factors such as: abilitycement imports. However, export depends on factors such as: ability

to produce cement at Rs 85 per bag.to produce cement at Rs 85 per bag.

Some of the big players from Pakistan who can possibly play a major Some of the big players from Pakistan who can possibly play a major role in the export of cement to India are Lucky Cement, DG Khanrole in the export of cement to India are Lucky Cement, DG Khan

Cement Co, Maple Leaf Cement, Attock Cement, among others.Cement Co, Maple Leaf Cement, Attock Cement, among others.

We are leading exporter of Ordinary Portland Cement (Grade 42.5 N/R),We are leading exporter of Ordinary Portland Cement (Grade 42.5 N/R),

SulphateSulphate Resistant Cement (SRC) and Slag Cement from Pakistan. Our Resistant Cement (SRC) and Slag Cement from Pakistan. Our

popular export destinations are India, South Asia, Gulf region,popular export destinations are India, South Asia, Gulf region,

Afghanistan, South Africa and many African countries.Afghanistan, South Africa and many African countries.




ExportsExports Ex port FY05 Ex port FY05- -10:10:

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

Years Afg.

via land

(Cement)

Ind.

Via sea & land

(Cement)

Other

Count

ries

via

sea(Ceme

nt)

Clinke

r

Other

Count

riesvia

sea

Total

Exports

(Cement

&

Clinker )

Percentage

Increase

Or decrease

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

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

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

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

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

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




ExportsExportsEx port Outlook:Ex port Outlook:

There was sluggishness in the growth of cement exports inThere was sluggishness in the growth of cement exports inPakistan during the first nine months of FY09/10, which can bePakistan during the first nine months of FY09/10, which can beexplained by examining the slowdown in construction in the GCC.explained by examining the slowdown in construction in the GCC.However, there was significant growth in the cement export figures toHowever, there was significant growth in the cement export figures toother African nations, and so many Pakistani cement manufacturingother African nations, and so many Pakistani cement manufacturingcompanies are actively targeting this marketcompanies are actively targeting this market

On the export front, depreciation of rupee has rendered PakistaniOn the export front, depreciation of rupee has rendered Pakistanicement as a highly attractive option. The north has primarilycement as a highly attractive option. The north has primarilycontributed to the impressive increase in exports.contributed to the impressive increase in exports.

Afghanistan accounts for 28 percent of the exports Afghanistan accounts for 28 percent of the exports

Studies have shown that cement demand is highly correlated withStudies have shown that cement demand is highly correlated withthe growth rate of GDP. Recently, the ministry of finance has further the growth rate of GDP. Recently, the ministry of finance has further revised the GDP growth target downward to 3.4 percent from 3.5revised the GDP growth target downward to 3.4 percent from 3.5

percent, which will further erode cement demand.percent, which will further erode cement demand. Companies exporting cement from the landCompanies exporting cement from the land--locked north of thelocked north of the

country via sea have suffered the loss of many export orders due tocountry via sea have suffered the loss of many export orders due tothe devastating transportation charges from their plants to the ports.the devastating transportation charges from their plants to the ports.

The first nine months of the current FY10The first nine months of the current FY10--11 have seen the exports11 have seen the exportsdecline by 14.46 % .decline by 14.46 % .

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



ement Industry o Pak stanement Industry o Pak stan--

Future ProspectsFuture Prospects The cement industry tends to rely on growth in agriculture income, along withThe cement industry tends to rely on growth in agriculture income, along with

government spending on infrastructure. However in 2011, there will be nogovernment spending on infrastructure. However in 2011, there will be no

demand from these two important sectors. On the contrary, further fallout fromdemand from these two important sectors. On the contrary, further fallout fromthe flooding will result in large demands on the government finances, while thethe flooding will result in large demands on the government finances, while the

majority of farmers in Pakistan will have limited funds due to the extensivemajority of farmers in Pakistan will have limited funds due to the extensive

destruction of crops and the resultant decrease in income.destruction of crops and the resultant decrease in income.

Right now, the future prospects of the Pakistan cement industry are good. ARight now, the future prospects of the Pakistan cement industry are good. A

manifold increase in cement exports to African nations and the Middle Eastmanifold increase in cement exports to African nations and the Middle East

should occur. Additionally, there is massive reconstruction taking place in bothshould occur. Additionally, there is massive reconstruction taking place in both

Iraq and Afghanistan, which should rely extensively on cement imports fromIraq and Afghanistan, which should rely extensively on cement imports from

Pakistan.Pakistan.

It is possible that the cement industry in Pakistan may undergo widespreadIt is possible that the cement industry in Pakistan may undergo widespread

growth in 2014, as a result of projected regional and local demand.growth in 2014, as a result of projected regional and local demand.

The overall future of Pakistan Cement is bright b/c after earth quake & floodingThe overall future of Pakistan Cement is bright b/c after earth quake & flooding

there is a huge demand for constructing new houses. The population isthere is a huge demand for constructing new houses. The population is

increasing rapidly creating more demand for houses & cement. Moreover increasing rapidly creating more demand for houses & cement. Moreover people are moving from villages to cities in search for jobs & better conditionspeople are moving from villages to cities in search for jobs & better conditions

creating more demand for housing. The government should decrease duties oncreating more demand for housing. The government should decrease duties on

the sector so that its price becomes low & it is consumed locally morethe sector so that its price becomes low & it is consumed locally more

beneficially. There is also a need to find better export avenues other than thebeneficially. There is also a need to find better export avenues other than the

ones they already have. Power shortage also affects all industries includingones they already have. Power shortage also affects all industries including

cement sector. There is a need to develop more cheap electricity projects tocement sector. There is a need to develop more cheap electricity projects to

fulfill the demand of electricity by the industrial sector .fulfill the demand of electricity by the industrial sector .



Giants of Pakistan Cement IndustryGiants of Pakistan Cement Industry--

Attock CementAttock Cement Attock Cement Pakistan Limited (ACPL) is a public limited company, listed onAttock Cement Pakistan Limited (ACPL) is a public limited company, listed on

the Karachi Stock Exchange since June 2002. Main business of the company isthe Karachi Stock Exchange since June 2002. Main business of the company ismanufacturing and sales of cement. ACPL is part of themanufacturing and sales of cement. ACPL is part of the PharaonPharaon Group, whichGroup, which

in addition to investment in cement industry has diversified stakes in Pakistanin addition to investment in cement industry has diversified stakes in Pakistan

mainly in the oil and gas sector, power and real estate sector.mainly in the oil and gas sector, power and real estate sector.

The project is a PakThe project is a Pak--Saudi ventureSaudi venture

ACPL's manufacturing plant is located inACPL's manufacturing plant is located in TehsilTehsil Hub, DistrictHub, District

LasbelaLasbela,, BalauchistanBalauchistan, at a distance of about 45 kilometers north, at a distance of about 45 kilometers northwest of Karachi. ACPL has attained ISO 9001:2000 and ISO 14000west of Karachi. ACPL has attained ISO 9001:2000 and ISO 14000certifications from Lloyds Register Quality Assurance (LRQA) incertifications from Lloyds Register Quality Assurance (LRQA) in2002 and 2006. ACPL is making substantial contribution to the2002 and 2006. ACPL is making substantial contribution to thecountry's economy.country's economy.

The Plant's original capacity was 2000 TPD of Clinker and it wasThe Plant's original capacity was 2000 TPD of Clinker and it wasthe first plant in the country to be based on the latestthe first plant in the country to be based on the latest

SUSPENSION, PRESUSPENSION, PRE--HEATER/PREHEATER/PRE--CALCINATION, dry processCALCINATION, dry processtechnology which results in substantial savings in fuel and energytechnology which results in substantial savings in fuel and energycosts besides balanced plant operationscosts besides balanced plant operations

The cement manufactured and being marketed under theThe cement manufactured and being marketed under the³FALCON´ brand is of the highest standard and truly the market³FALCON´ brand is of the highest standard and truly the marketleader.leader.




D.G.KhanD.G.Khan CementCement D.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, isD.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is

the largest cementthe largest cement--manufacturing unit in Pakistan with a productionmanufacturing unit in Pakistan with a productioncapacity of 5,500 tons clinker per day. It has a countrywide distributioncapacity of 5,500 tons clinker per day. It has a countrywide distribution

network and its products are preferred on projects of national repute bothnetwork and its products are preferred on projects of national repute both

locally and internationally due to the unparallel and consistent quality. It islocally and internationally due to the unparallel and consistent quality. It is

listed on all the Stock Exchanges of Pakistan.listed on all the Stock Exchanges of Pakistan.

DGKCC was established under the management control of State CementDGKCC was established under the management control of State Cement

Corporation of Pakistan Limited (SCCP) in 1978. DGKCC started itsCorporation of Pakistan Limited (SCCP) in 1978. DGKCC started itscommercial production in April 1986 with 2000 tons per day (TPD) clinker commercial production in April 1986 with 2000 tons per day (TPD) clinker

based on dry process technology. Plant & Machinery was supplied by UBEbased on dry process technology. Plant & Machinery was supplied by UBE

Industries of Japan.Industries of Japan.

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

the government.the government.

DG Khan Cement Co. Ltd., production processes are environment friendlyDG Khan Cement Co. Ltd., production processes are environment friendly

and comply with the World Bank¶s environmental standards. It has beenand comply with the World Bank¶s environmental standards. It has been

certified for ³Environment Management System´ ISO 14001 by Qualitycertified for ³Environment Management System´ ISO 14001 by Quality

Assurance Services, Australia. The company was also certified for ISO Assurance Services, Australia. The company was also certified for ISO--

9002 (Quality Management System) .By achieving this landmark, DG Khan9002 (Quality Management System) .By achieving this landmark, DG Khan

Cement became the first and only cement factory in Pakistan certified for Cement became the first and only cement factory in Pakistan certified for

both ISO 9002 & ISO 14001.both ISO 9002 & ISO 14001.




Maple Leaf CementMaple Leaf Cement At the time of privatization in 1992, the capacity of Maple Leaf to At the time of privatization in 1992, the capacity of Maple Leaf to

produce Ordinary Portland Cement (OPC) was 1000 tonnes per dayproduce Ordinary Portland Cement (OPC) was 1000 tonnes per day

((tpdtpd). A second plant of 4000). A second plant of 4000 tpdtpd was commissioned in 1998 and awas commissioned in 1998 and a

third plant of 6700third plant of 6700 tpdtpd came into production in 2006. It increased thecame into production in 2006. It increased the

total capacity to 11,700total capacity to 11,700 tpdtpd. The capacity of White Cement has also. The capacity of White Cement has also

increased from 100increased from 100 tpdtpd to 500tpd with the addition of a new plant.to 500tpd with the addition of a new plant.This plant also has provisions for doubling the capacity to 1000tpd.This plant also has provisions for doubling the capacity to 1000tpd.

Presently Maple Leaf cement has 9% of the market share of OPCPresently Maple Leaf cement has 9% of the market share of OPC

and is a leading brand in Pakistan with a diverse customer base. It isand is a leading brand in Pakistan with a diverse customer base. It is

also the largest producer of White Cement in the country with 80%also the largest producer of White Cement in the country with 80%

of market share. .of market share. .

In order to ensure the highest efficiency and process control theIn order to ensure the highest efficiency and process control the

plants comprise of equipment with the latest design and technology.plants comprise of equipment with the latest design and technology.

To maintain the highest quality standards a laboratory is also setTo maintain the highest quality standards a laboratory is also set

up at site for the testing of raw materials and cement. All Maple Leaf up at site for the testing of raw materials and cement. All Maple Leaf

plants comply with National Environment Control standards.plants comply with National Environment Control standards.

Maple Leaf has developed a niche market for specialized cement such asMaple Leaf has developed a niche market for specialized cement such asSRC (SRC (SulphateSulphate Resistant Cement).Resistant Cement).




LefrageLefrage CementCement Lafarge Pakistan Cement (LP) is a part of Lafarge, world leader of constructionLafarge Pakistan Cement (LP) is a part of Lafarge, world leader of construction

materials. The statematerials. The state--of of--thethe--art plant commenced Commercial Operations inart plant commenced Commercial Operations inDecember 2006 with an annual cement production capacity of 2.5m tons,December 2006 with an annual cement production capacity of 2.5m tons,

The plant is located atThe plant is located at KalarKalar KaharKahar, District, District ChakwalChakwal in thein theprovince of Punjab, an area rich in lime stone reserves. The qualityprovince of Punjab, an area rich in lime stone reserves. The qualityof lime stone in this area is considered to be the best in the region.of lime stone in this area is considered to be the best in the region.In addition to Ordinary Portland Cement (OPC) the plant can alsoIn addition to Ordinary Portland Cement (OPC) the plant can alsoproduceproduce SulphateSulphate Resistant Cement (SRC) with the packagingResistant Cement (SRC) with the packagingoptions of 50 kg bags, 1.5 tons, 2 tons jumbo bags and bulkoptions of 50 kg bags, 1.5 tons, 2 tons jumbo bags and bulkcarriers.carriers.

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

LP¶s aim of being at the forefront in creating foundations for aLP¶s aim of being at the forefront in creating foundations for aprosperous tomorrow is backed by the Company¶s philosophy of prosperous tomorrow is backed by the Company¶s philosophy of

providing outstanding value to its customers, a safe andproviding outstanding value to its customers, a safe andstimulating work environment for its employees, superior returnsstimulating work environment for its employees, superior returnsfor its shareholders and special focus on social responsibility andfor its shareholders and special focus on social responsibility andenvironmental protectionenvironmental protection

LP is committed to providing outstanding value to its customers, aLP is committed to providing outstanding value to its customers, asafe and stimulating work environment for its employees andsafe and stimulating work environment for its employees andsuperior returns for its shareholders.superior returns for its shareholders.



nanc a na ys s o op venanc a na ys s o op ve

Cement CompaniesCement Companies--

Profit & Loss Statement AnalysisProfit & Loss Statement Analysis Profit & Loss Ratios:Profit & Loss Ratios:

Profitability Ratios:Profitability Ratios:

1) Gross profit margin:1) Gross profit margin:

Gross profit margin is computed by dividing earnings before interest and taxesGross profit margin is computed by dividing earnings before interest and taxes

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

operating revenue.operating revenue.

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

20082008 20092009 20102010

11-- D. G. Khan CementD. G. Khan Cement 32%32% 16%16% 17%17%

22-- Lucky CementLucky Cement 26%26% 37%37% 33%33%

33-- Attock CementAttock Cement 22%22% 32%32% 26%26%

44-- Maple Leaf CementMaple Leaf Cement 17%17% 32%32% 22%22%

55-- Lafarge CementLafarge Cement 13%13% 12%12% 12%12%

2 ) Net Profit M argin:2 ) Net Profit M argin:

Net profit margin is computed by dividing net income by total operatingNet profit margin is computed by dividing net income by total operating

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

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



Financial Analysis of Top FiveFinancial Analysis of Top Five


Profit & Loss Statement AnalysisProfit & Loss Statement Analysis20082008 20092009 20102010

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

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

33-- Attock Cement Attock Cement 8.70%8.70% 17.54%17.54% 13.26%13.26%

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

55-- Lafarge CementLafarge Cement --16.70%16.70% --15.73%15.73% --13.78%13.78%Net Profit Margin Illustrated in Chart:Net Profit Margin Illustrated in Chart:



3 ) Operating Profit M argin:3 ) Operating Profit M argin:

Operating Profit MarginOperating Profit Margin == EBIT / SALESEBIT / SALES

20082008 20092009 20102010

11-- D. G. Khan CementD. G. Khan Cement 12.11%12.11% 18.76%18.76% 13.89%13.89%

22-- Lucky CementLucky Cement 18.14%18.14% 27.41%27.41% 17.31%17.31% 33-- Attock Cement Attock Cement 16.57%16.57% 24.78%24.78% 19.12%19.12%

44-- Maple Leaf CementMaple Leaf Cement 5.74%5.74% 16.28%16.28% 3.74%3.74%

55-- Lafarge CementLafarge Cement 0.90%0.90% --0.29%0.29% 0.90%0.90%

I nterest Coverage Ratio:I nterest Coverage Ratio:One of the most traditional of the coverage ratios is the interest coverageOne of the most traditional of the coverage ratios is the interest coverage

ratio, or times interest earned. This ratio is simply the ratio of earning beforeratio, or times interest earned. This ratio is simply the ratio of earning before

interest and taxes for a particular reporting period to the amount of interestinterest and taxes for a particular reporting period to the amount of interest

charges for the period to the amount of interest charges for the period..charges for the period to the amount of interest charges for the period..



Profit & Loss Statement AnalysisProfit & Loss Statement Analysis





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

expenseexpense 20082008 20092009 20102010

11--D. G. Khan CementD. G. Khan Cement --0.140.14 0.300.30 0.190.19

22--Lucky CementLucky Cement 21.1321.13 3.723.72 4.194.19

33--Attock CementAttock Cement 2.832.83 12.4712.47 17.8817.88

44--Maple Leaf CementMaple Leaf Cement --0.370.37 --0.290.29 --1.251.25

55--Laf arge CementLaf arge Cement --0.830.83 --1.041.04 --0.940.94

E arning per S hare:E arning per S hare:

Earning per share is calculated Profit after Tax divided by No. of Ordinary shares, itEarning per share is calculated Profit after Tax divided by No. of Ordinary shares, it

shows current rate of per share of the company.shows current rate of per share of the company.

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

20082008 20092009 20102010

11-- D. G. Khan CementD. G. Khan Cement --.021.021 1.961.96 0.720.72

22-- Lucky CementLucky Cement 9.849.84 14.2114.21 9.709.70

33-- Attock Cement Attock Cement 6.036.03 20.6920.69 11.7411.74

44-- Maple Leaf CementMaple Leaf Cement --1.961.96 --2.782.78 --6.946.94

55-- Lafarge CementLafarge Cement --1.011.01 --0.970.97 --0.720.72

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



Balance Sheet AnalysisBalance Sheet Analysis

Balance Sheet RatiosBalance Sheet Ratios

Liquidity Ratios:Liquidity Ratios:

1) Current ratio:1) Current ratio:

The most widely used measure of shortThe most widely used measure of short--term debt paying ability is the currentterm debt paying ability is the current

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

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

20082008 20092009 20102010

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


33-- Attock CementAttock Cement 1.511.51 2.432.43 2.622.62

44-- Maple Leaf CementMaple Leaf Cement 0.810.81 0.520.52 0.540.54

55-- Lafarge CementLafarge Cement 0.730.73 0.310.31 0.260.26

2 ) Quick Ratio :2 ) Quick Ratio :

Inventory and preInventory and pre--paid expenses are the least liquid of the current assets.paid expenses are the least liquid of the current assets.

Therefore same short term creditors prefer the quick ratio to the current ratioTherefore same short term creditors prefer the quick ratio to the current ratio

as a measure of short term solvency.as a measure of short term solvency.

Financial Analysis of Top Five

Cement Companies-

Balance Sheet Analysis





Balance sheet AnalysisBalance sheet Analysis Quick RatioQuick Ratio = Current asset = Current asset ± ± inventory / current liabilitiesinventory / current liabilities

20082008 20092009 20102010




44-- Maple Leaf CementMaple Leaf Cement 0.750.75 0.460.46 0.480.4855-- Lafarge CementLafarge Cement 0.550.55 0.210.21 0.190.19

Debt Ratios:Debt Ratios:

1) Debt to T otal Asset Ratio:1) Debt to T otal Asset Ratio:

It highlights the relative importance of debt financing to the firm by showing theIt highlights the relative importance of debt financing to the firm by showing the

percentage of the firm¶s assets that are supported by debt financing. It is derived bypercentage of the firm¶s assets that are supported by debt financing. It is derived by

dividing a firm¶s total debt by its total assetsdividing a firm¶s total debt by its total assets Debt to T otal Asset Debt to T otal Asset == total debt/ total asset total debt/ total asset

20082008 20092009 20102010




44-- Maple Leaf CementMaple Leaf Cement 0.680.68 0.740.74 0.800.8055-- Lafar e CementLafar e Cement 0.500.50 0.500.50 0.550.55





Balance sheet AnalysisBalance sheet Analysis 2) Debt to Equity :2) Debt to Equity :

The debt equity ratio is the value of total debt divided by the book value of equityThe debt equity ratio is the value of total debt divided by the book value of equity

which implies how much time total liabilities are greater than the share holder equity.which implies how much time total liabilities are greater than the share holder equity.

Debt to Equity Debt to Equity == total debt / equity total debt / equity

20082008 20092009 20102010

11-- D. G. Khan Cement=D. G. Khan Cement= 0.730.73 1.041.04 0.770.7722-- Lucky CementLucky Cement 0.840.84 0.650.65 0.530.53


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


Asset Activity Ratios: Asset Activity Ratios:

1) Inventory T urnover Ratio:1) Inventory T urnover Ratio:

Measures how many times the inventory has been turned over (sold) during the year;Measures how many times the inventory has been turned over (sold) during the year;

Inventory T urnover Ratio=Inventory T urnover Ratio= Cost of Goods Sold / Inventory Cost of Goods Sold / Inventory

20082008 20092009 20102010





20082008 20092009 20102010


44-- Maple Leaf Cement=Maple Leaf Cement= 14.9614.96 15.8215.82 21.1821.18


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

The relationship of net sales to total assets is known as the total assetThe relationship of net sales to total assets is known as the total asset

turnover, or capital turnover ratio. Measures relative efficiency of totalturnover, or capital turnover ratio. Measures relative efficiency of total

assets to generate sales.assets to generate sales.

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

20082008 20092009 20102010




44-- Maple Leaf CementMaple Leaf Cement 0.300.30 0.590.59 0.520.52




Balance sheet AnalysisBalance sheet Analysis



Total Asset Turnover I llustrated in Chart:Total Asset Turnover I llustrated in Chart:



Balance sheet AnalysisBalance sheet Analysis

Detailed Balance Sheets of major companies provided in

Annexure B





Cash Flow Statement AnalysisCash Flow Statement Analysis

Year 2008 2009 2010

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

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

Attock 110,957 871,826 442,109

Maple Leaf 104,134 99,932 73,265

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

Cash & Cash Eqvivalents at the end of year

With regards to cash flow statements Attock Cement has the best cash flow

currently followed by Lucky Cement & Maple Leaf..

Fi i l A l i f T FiFi i l A l i f T Fi





Analysis of Statement of Changes inAnalysis of Statement of Changes inEquity / CapitalEquity / Capital Total Equity / Capital at the end of year

Year 2008 2009 2010

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

Lucky 18,655,423 23,251,972 25,095,929

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

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

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

DG Khan Cement holds the highest equity currently (FY!0)

followed by Lucky Cement & Lafrage Cement..

Detailed Statements of Changes in Equity of major companies

provided in Annexure D..



SWOTSWOT Analysis of CementAnalysis of Cement

IndustryIndustry

StrengthsStrengths Availability of Raw Material Availability of Raw Material

Imported Machinery and plants are available in most of companiesImported Machinery and plants are available in most of companies

Pakistan already established its position as an exporter of cement Pakistan already established its position as an exporter of cement

and clinker in the regionand clinker in the region Availability of foreign investment and loans Availability of foreign investment and loans

The compressive strength is a very important f actor of cement.The compressive strength is a very important f actor of cement.The Portland cement achieves its maximum strength in 28 daysThe Portland cement achieves its maximum strength in 28 days

Cement industries in Pakistan are currently operating at theirCement industries in Pakistan are currently operating at theirmaximum capacitymaximum capacity

E ffect of GDP:E ffect of GDP:

Following eff ects of GDP govern the growth of cement industry in Following eff ects of GDP govern the growth of cement industry in Pakistan:Pakistan:

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



SWOT Analysis of CementSWOT Analysis of Cement

IndustryIndustry Cement demand growth rate was double the GDP growth rate in last threeCement demand growth rate was double the GDP growth rate in last three

year year

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

H ousing demand to grow H ousing demand to grow

Government¶s development spending shall continue to riseGovernment¶s development spending shall continue to rise

Most of the cement plants, that used to operate on furnace oil, have nowMost of the cement plants, that used to operate on furnace oil, have now

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

production.production.

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

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

still at a very low level of technology and the existing industrialstill at a very low level of technology and the existing industrialbase is very narrowbase is very narrow




IndustryIndustry

The customer has no choice at all to switch between two brands of cementThe customer has no choice at all to switch between two brands of cement

due to cartel of all of the cement manufacturers in Pakistandue to cartel of all of the cement manufacturers in Pakistan

The freight charges are a massive 20% of the retail pricesThe freight charges are a massive 20% of the retail prices

Consumers face a tough decision with regards to prefer which brand over Consumers face a tough decision with regards to prefer which brand over

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

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

their conversion to coal, which is widely available in the country, thetheir conversion to coal, which is widely available in the country, the

government has given incentives for imported plant and equipment for coalgovernment has given incentives for imported plant and equipment for coal

firing units.firing units.

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

dramatically increase demand..dramatically increase demand..

SWOT A l i f C tSWOT A l i f C t




IndustryIndustry Deregulation after accession of Pakistan to WTO is expected to open theDeregulation after accession of Pakistan to WTO is expected to open the

window of competition from cheaper markets. There may be no tariff after window of competition from cheaper markets. There may be no tariff after this deregulation on import of cement allowing its entry into Pakistan fromthis deregulation on import of cement allowing its entry into Pakistan from

cheaper market at lower rate.cheaper market at lower rate.

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

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

A price war was witnessed which ended up with no conqueror. Similar A price war was witnessed which ended up with no conqueror. Similar

apprehensions exist for the future when there will be plenty of excessapprehensions exist for the future when there will be plenty of excess

capacity.capacity.

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

but its price in international markets has gone upbut its price in international markets has gone up

Instead of appreciating the marketing skills of cement manufacturers toInstead of appreciating the marketing skills of cement manufacturers to

explore new markets for cement, the industry is being pressurizedexplore new markets for cement, the industry is being pressurized

constantly by Governmentconstantly by Government

Burden of increased manufacturing costs due to heavy taxation borned byBurden of increased manufacturing costs due to heavy taxation borned by

the consumers..the consumers..



Cement Industry of PakistanCement Industry of Pakistan



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

affects all the industries including cement industry. The economic crisisaffects all the industries including cement industry. The economic crisis

which hit the entire world is another element which is affecting the cementwhich hit the entire world is another element which is affecting the cementindustry businessindustry business

Government of Pakistan should make a concrete strategy and control theGovernment of Pakistan should make a concrete strategy and control the

law and order situationlaw and order situation

During this Project We did Financial Analysis of top five companies of During this Project We did Financial Analysis of top five companies of

Pakistan cement Industry along with a brief overview of overall PakistanPakistan cement Industry along with a brief overview of overall PakistanCement Industry. Our Financial analysis included Profit & Loss StatementCement Industry. Our Financial analysis included Profit & Loss Statement

analysis, Balance Sheet analysis, Cash Flow Statement Analysis, Financialanalysis, Balance Sheet analysis, Cash Flow Statement Analysis, Financial

Ratio Analysis, and Statement of changes in capital of top five Major Ratio Analysis, and Statement of changes in capital of top five Major

Companies of Pakistan Cement Industry.Companies of Pakistan Cement Industry.

According to our analysis Attock Cement is one of the best with regards to According to our analysis Attock Cement is one of the best with regards to

Net Profit having a net profit of 13.26% Attock Cement is also the highest if Net Profit having a net profit of 13.26% Attock Cement is also the highest if we see its Earning per Share in the market which is Rs.11.74. Attockwe see its Earning per Share in the market which is Rs.11.74. Attock

Cement¶s Current ratio is also the best right now which is 2.62Cement¶s Current ratio is also the best right now which is 2.62

The Debt to asset ratio of Attock Cement is also the best or lowest which isThe Debt to asset ratio of Attock Cement is also the best or lowest which is

0.24 which means it relies on debt financing the least of all the five0.24 which means it relies on debt financing the least of all the five

companies..companies..



Attock Cement¶s Debt to equity ratio is also the lowest which is 0.31. Attock Cement¶s Debt to equity ratio is also the lowest which is 0.31.

Inventory turnover of Lucky Cement is the best with 27.15 %. AttockInventory turnover of Lucky Cement is the best with 27.15 %. Attock

Cement has the best Total Asset turnover which is 1.09.Cement has the best Total Asset turnover which is 1.09.

With regards to cash flow statements Attock Cement has the best cash flowWith regards to cash flow statements Attock Cement has the best cash flow

currently (FY10) with cash flow of Rs.442109 followed by Lucky Cementcurrently (FY10) with cash flow of Rs.442109 followed by Lucky Cement

Rs.333629 & Maple Leaf Rs.73265.Rs.333629 & Maple Leaf Rs.73265.

When we went through the Statement of Changes in Equity of topWhen we went through the Statement of Changes in Equity of topcompanies we found that D.G Khan Cement has the highest equity currentlycompanies we found that D.G Khan Cement has the highest equity currently

(FY10) with over 26.5 m followed by Lucky Cement 25 m & Lafarge Cement(FY10) with over 26.5 m followed by Lucky Cement 25 m & Lafarge Cement

8.8 m.8.8 m.

For FY 08 Lucky Cement can be termed as the best with regards to major For FY 08 Lucky Cement can be termed as the best with regards to major

financial ratios b/c its N.P & EPS was the best of the five.financial ratios b/c its N.P & EPS was the best of the five.

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

We can conclude by stating that Attock Cement is the best cementWe can conclude by stating that Attock Cement is the best cement

company currently (FY10) with regards to major financial statement analysiscompany currently (FY10) with regards to major financial statement analysis

followed closely by Lucky Cement..followed closely by Lucky Cement..

ConclusionConclusion



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

state of affairs compared to other industries. The demand for cement is highstate of affairs compared to other industries. The demand for cement is high

both locally & abroad. The future prospects for its augmentation are bright &both locally & abroad. The future prospects for its augmentation are bright &

optimistic. We recommend the following measures to improve the industryoptimistic. We recommend the following measures to improve the industry

further so that it¶s production & export can be increased for bringing foreignfurther so that it¶s production & export can be increased for bringing foreign

exchange in to the Pakistan µs exchequer:exchange in to the Pakistan µs exchequer:

Special Rebate should be given to the Cement exporting companies.Special Rebate should be given to the Cement exporting companies.

Import Duties should be very low on the import of machinery & other Import Duties should be very low on the import of machinery & other

equipments required for commencing a Cement Manufacturing Plant soequipments required for commencing a Cement Manufacturing Plant so

that more companies enter the Cement Market.that more companies enter the Cement Market.

MFI (Most Favored Industry) status should be initiated by the GovernmentMFI (Most Favored Industry) status should be initiated by the Government

& Cement Industry of Pakistan should be given MFI status in order to boost& Cement Industry of Pakistan should be given MFI status in order to boost

production & export b/c our Cement Industry has a great potential to grow inproduction & export b/c our Cement Industry has a great potential to grow in

the future.the future.

The government should develop communication network so thatThe government should develop communication network so that

transportation cost can be reducedtransportation cost can be reduced



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

very high too b/c more & more people are moving from villages to townsvery high too b/c more & more people are moving from villages to townscreating more demand for housing projects. The Construction industrycreating more demand for housing projects. The Construction industry

wants to buy more cement but it cannot buy cement at a high price b/cwants to buy more cement but it cannot buy cement at a high price b/c

people are not ready or cannot afford houses at high prices. Also due topeople are not ready or cannot afford houses at high prices. Also due to

population rise there is a increasing demand for more houses but since thepopulation rise there is a increasing demand for more houses but since the

prices of cement are high; Construction Companies are redundant to makeprices of cement are high; Construction Companies are redundant to make

houses at high prices. The problem with Construction industry is that if theyhouses at high prices. The problem with Construction industry is that if they

buy cement at a high price; they would build houses at expensive pricesbuy cement at a high price; they would build houses at expensive prices

too, considering their own profit margin also but a major chunk of peopletoo, considering their own profit margin also but a major chunk of people

cannot afford houses at expensive prices. Therefore cement prices shouldcannot afford houses at expensive prices. Therefore cement prices should

be brought down substantially & immediately.be brought down substantially & immediately.

The power shortage affects every industry including Cement . StepsThe power shortage affects every industry including Cement . Stepsshould be taken to make more small dams b/c a large dam likeshould be taken to make more small dams b/c a large dam like TarbelaTarbela

takes almost ten years to complete., Import power stations from China &takes almost ten years to complete., Import power stations from China &

Iran at cheaper price , low dependence on thermal power which is costly &Iran at cheaper price , low dependence on thermal power which is costly &

Special Consideration should be given to Industrial Units with regards toSpecial Consideration should be given to Industrial Units with regards to

Load Shedding which happens almost throughout the year..Load Shedding which happens almost throughout the year..



THANK YOUTHANK YOU

58586135 financial analysis of top cement companies

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