Pakistan Cement Industry Analysis

palmy cementumum This report studies LUCKY cementum as a tar bum about against different companies studied as a basis for corresponding analysis in the industriousness. well-situated cement is the largest cementumumum manufacturer in Pakistan and its upcoming expansion in Karachi impart hook on its content from 6. 5mntpa to 9mntpa, further cementing its blob as the market leader. booming cement bound was incorpo esteemd in Pakistan on September 18, 1993 beneath the Companies Ordinance, 1984 (the Ordinance). The sh atomic number 18s of the union are quoted on only the troika stock exchanges in Pakistan.The club has as well issued GDRs which are angle of diped and traded on the Professional Securities Market of the London railway line Exchange. moving in compose firmament cementum labor PRODUCTS AND run Lucky cement aims at producing cement to type ein truth user. The following types of cement are available ORDINARY PORTLAND cementum (OPC) commonplace Po rtland cement is available in darker refinement as rise up as in crystalize shades in Lucky Star with different brand name calling to suit the requirement of users. sulfate RESISTANT CEMENT (SRC)Sulphate insusceptible cements best tincture is to provide effectual and long lasting intensity against sulphate attacks and is precise(prenominal) suitable for constructions near sea shores as well as for nominateals linings. It provides very effective protection against alkali attacks. The union currentlyproduces fin brands * Lucky Cement * Lucky Star * Lucky Gold * Chairman * Luckysulphate resistant cement(SRC) CUSTOMERS AND END MARKETS Lucky Cement aims at producing cement to suit every user.At present, it is producing Grey Portland Cement and as well Sulphate repellent cement. The nodes 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 prefab rication perseverance with a lower restoreting time is likewise available. In gain, the set besides produce convert cement for specific users. statistical distri besidesion CHANNELS Dealers, retailers and chock up makers are the integral part of Lucky Cements gross revenue strategy.This strong ne devilrk of much than 200 dealers, turn up at strategic locations passim the country, has enabled the gild to bring into being an impressive distri exactlyion system and access to markets at even the remote parts of the country. monetary indite 30-Jun 30-Jun 30-Jun 30-Jun 2008 2009 2010 2011 Restated PKR Reclassified PKR Gross win security deposit 25. 69% 37. 26% 32. 55% 33. 48% EBITDA permissiveness 23. 91% 31. 77% 23. 07% 25. 87% EBIT coast 18. 14% 27. 41% 17. 31% 19. 83% lolly Income border 15. 79% 17. 45% 12. 08% 15. 26% emergence on Invested Capital 9. 06% 19. 2% 11. 17% 12. 63% surpass On fair-mindedness 14. 35% 19. 77% 12. 50% 14. 29% harvest-time On As sets 7. 82% 11. 97% 8. 18% 9. 63% supplement proportionality 3. 84% 1. 82% 2. 33% 1. 99% Debt to score hoodization 45. 51% 39. 43% 34. 49% 32. 60% favourableness The cyberspaceability of the fede balancen is instead justly, and shows an upward trend, which outhouse be seen by the fiscal proportions of the dissolute. on that point was a slight fudge in the socio-economic class 2010, but then affix considerably in category 2011. This was chief(prenominal)ly im inimputableable to the precipitate in the cost of labor for Lucky Cement ( moderate in the cost of raw materials).The prospects of the telephoner are bright, which are demonstrated by high up net income strand and extradite on invested cracking proportions. GROWTH write Lucky Cement is developing at a brisk pace, as the bpetroleumers suit cement fabrication is facing a delectable scenario, which is in like mien demonstrated by high counter on truth and surpass on assets dimension. The play al ong is also compensable its assuranceors back shown by the decrease in supplement and debt to centre capitalisation ratios, which is a positive sign for the firm, and shows that it is growing at a considerable rate. RETURN ON INVESTMENTThe return on investment of Lucky Cement from solar daytimes 2008-2011 is supra 10% on average, which is quite a mighty number, and shows the profitability of the firms investments. It is 12. 63% in year 2011, and displays a favorable scenario for Lucky Cement. address pen The credit rating visibility of the bon ton shows a positive sign as the firms debt to aggregate capitalization ratio declined from 45. 51% in year 2008, to 32. 60% in year 2011. Moreover, the supplement ratio of Lucky Cement has also seen a decline, which shows that the company is compensable back its debts and is maintaining a decent credit visibleness among its lenders and suppliers.ATTOCK CEMENT Attock Cement Pakistan throttle (ACPL) is a prevalent limited com pany, listed on KSE since 2002. principal(prenominal) business of the company is manufacturing and gross revenue of cement. ACPL, is part of the Pharaon Group, which in addition to investment to cement sedulousness has change stakes in Pakistan mainly in the oil and gas sector, power and real estate sector. The Attock Cement look was conceived and the company was incorporated in 1981, the ready finally commenced commercial production on June 1, 1988. The project is a Pak Saudi joint venture and involved initial capital outlay of around Rs 1. gazillion with foreign exchange component of around US $ 45 million. This made it one of the largest enterprises in the mysterious sector. Pharaon Commercial Investment bon ton extra holds 84. 06% of total paid up share capital whereas the popular public holds a total of 15. 94% shares. avocation write sphere of influence Cement Industry PRODUCTS AND service The main product of the Company is ORDINARY PORTLAND CEMENT (OPC) but in addition to this ACPL also produces SULPHATE RESISTANT CEMENT (SRC) and PORTLAND BLAST FURNACE CEMENT (PBFC), which sells downstairs the registered brand name of FALCON CEMENT in the market. distribution CHANNELS At ACPL sales and Marketing police squad focuses on delighting customers through making available feeling products at the market place. ACPL has a network of dealers all around Pakistan. ACPL keep on recognizing the efforts of its dealers through yearly incentive plans based on their sales slaying. sales and marketing forces lead in taking initiatives before of the competitors. Few example of ACPL faster first admit the export of clinker to the UAE and Qatar, along with cement exports to Iraq. FINANCIAL PROFILE 30-Jun 30-Jun 30-Jun 30-Jun 2008 2009 2010 2011 Restated PKR Reclassified PKR Gross cabbage borderline 22. 27% 31. 80% 25. 53% 20. 23% EBITDA Margin 24. 22% 28. 56% 20. 12% 14. 69% EBIT Margin 16. 20% 22. 99% 16. 59% 11. 52% Net Income Margin 8. 69% 17. 54% 13. 25% 8% m other on Invested Capital 14. 06% 32. 07% 19. 23% 13% call in On honor 12. 31% 31. 24% 18. 84% 11. 80% buckle under On Assets 7. 41% 21. 41% 14. 40% 8. 83% Leverage Ratio 1. 93% 0. 90% 1. 08% 1. 54% Debt to total capitalization 39. 84% 31. 47% 23. 56% 25. 11% PROFITABILITYThe profitability of Attock Cement is quite satisfactory too but non as good as Lucky Cement. The companys gross profit margin was very low as analyzed to that of Lucky Cement, however, the firms net profit margin is at par. It can be seen that Attock Cement has to a greater extent operating expenses as canvassd to Lucky Cement, which it require to cut and achieve efficiency, to contradict with the profitability performance of Lucky Cement. GROWTH PROFILE Attock Cement has a very fluctuating, or rather, a very inconsistent product rate, as can be seen by the return on equity and return on assets ratios.Both the ratios were fairly decent in the year 2008, but then both power saw a dec line in consecutive years 2009 and 2010, after which they came back to an acceptable level in year 2011. RETURN ON INVESTMENT The return on investment of Attock Cement was again very unpredictable, fluctuating drastically between years 2008-2011. It moved(p) a very high 32. 07% in year 2009, but then declined to a level which was like to that in year 2008. Overall, the return on invested capital was at a satisfactory level as differentiated to Lucky Cement, which shows the positive nature of the companys investments. CREDIT PROFILEThe credit profile of Attock Cement is a fairly acceptable one, as can be seen by the decreasing leverage and debt to total capitalization ratios. This agent that Attock Cement, like Lucky Cement, is also paying back its creditors and suppliers, which will mean that the lenders will be happy to lend money and raw materials to the company, as theyre able to meet their financial obligations effectively. D. G. caravansary CEMENT D. G. Khan Cement Company express mail (DGKCC), a unit of Nishat group, is the largest cement-manufacturing unit in Pakistan with a production capacity of 5,500 stacks clinker per day.It has a countrywide distribution network and its products are best-loved on projects of national repute both topically and internationally due to the unparallel and consistent select. It is list on all the Stock Exchanges of Pakistan. occupation PROFILE SECTOR Cement Industry PRODUCTS AND SERVICES There are two types of cement products of D. G. Khan * Ordinary Portland Cement * Sulphate Resistant Cement DISTRIBUTION CHANNELS Two different products are produced at DGKCC namely Ordinary Portland Cement and Sulphate Resistant Cement.These products are marketed through two different brands * DG brand Elephant brand Ordinary Portland Cement * DG brand Sulphate Resistant Cement DG KhanCement Companysupplies cement throughout Pakistan especially in the provinces of Punjab, Sind and Baluchistan. This extensive distribution is ach ieved through following regional sales offices * Lahore regional Sales Office * Multan regional Sales Office * Rawalpindi Regional Sales Office * DG Khan Regional Sales Office * Karachi Regional Sales OfficeThese regional sales offices operate in assigned areas and have netweork of dealers in each area to achieve uttermost sales in their territories. Moreover, direct sales are also make to institutional Clients for projects. FINANCIAL PROFILE 30-Jun 30-Jun 30-Jun 30-Jun 2008 2009 2010 2011 Restated PKR Reclassified PKR Gross Profit Margin 15. 51% 31. 61% 17. 93% 24. 00% EBITDA Margin 21. 25% 28. 05% 19. 24% 17. 91% EBIT Margin 10. 25% 20. 33% 10. 74% 10. 32% Net Income Margin 0. 24% 2. 46% 1. 61% 0. 95% kick in on Invested Capital 2. 9% 8. 55% 3. 77% 3. 93% Return On faithfulness 0. 01% 2. 12% 1. 01% 0. 60% Return On Assets 0. 06% 1. 03% 0. 56% 0. 36% Leverage Ratio 8. 73% 4. 17% 6. 61% 5. 91% Debt to total capitalization 43. 12% 51. 54% 44. 45% 40. 16% PROFITABILITY The pr ofitability of DG Khan Cement is very low and unsatisfactory as compared to the other two companies in the cement industry, Lucky and Attock Cement Ltd. DG Khan Cement is paying a healthy amount as interest expense, which can be seen by the lower net income margin ratio of the firm, ranging from 0. 4-2. 46%. However, the EBIT and EBITDA margins of DG Khan Cement were quite satisfactory, and at par with the other two companies in the industry. GROWTH PROFILE DG Khan Cement has a very poor ontogenesis rate, unequivocal by the very low return on equity and return on assets ratios. The growth of the company is badly hampered by the interest expense and the debt the firm has taken. Further more, the debt to total capitalization ratio of the company is also very high (higher than the other two companies in the industry), which was more than 50% in year 2009.These are negative implications for the company, and the investors must be unhappy with the performance of the firm. RETURN ON INV ESTMENT The return on invested capital for DG Khan Cement was also quite inadequate when comparing with that of Lucky and Attock Cement. It was 2. 39% in year 2008, change magnitude to 8. 55% in year 2009, after which it settled on a level between 3-4% in years 2010-2011. This trouble was again due to the high debt ratio and unchewable interest payments made by the company, because of which the return on investments were very low as compared to its competitors.CREDIT PROFILE As opposed to its competitors, DG Khan Cement has a really horrific credit profile, as it is maintaining its debt to total capitalization and leverage ratios at a very high level and took up more lend in the year 2009, due to which its profitability is also getting affected adversely, and also its creditors and suppliers will be unwilling to lend DG Khan Cement more in the future, doubting the firms ability to pay them back, as it already has bully amounts to be received from the company. FECTO CEMENTEstabl ished at Sangjani, near Islamabad, the ISO 90012000 advised Fecto Cement Limited is Pakistans first anti-pollution cement manufacturing instal and also the first of its kind in southernmost Asia. As one of the most integrated manufacturing units in the country, it has a rated capacity to produce 600,000 tonnes of clinker per annum BUSINESS PROFILE SECTOR Cement Industry DISTRIBUTION CHANNELS It supplies cement throughout Pakistan through a huge properly maintained distribution trans adjust consisting of wholesalers, retailers and finally to the customers. FINANCIAL PROFILE 2008 2009 2010 2011 Gross Profit Margin 8. 3% 23. 21% 5. 26% 18. 33% EBITDA Margin -2. 64% 13. 88% -7. 77% 5. 42% EBIT Margin -51. 03% 11. 96% -10. 04% 2. 78% Net Income Margin -3. 53% 9. 49% -7. 17% 1. 98% Return on Invested Capital -4. 67% 13. 74% -8. 02% 2. 47% Return On Equity -13. 80% 33. 80% -30. 20% 8. 93% Return On Assets -51. 50% 15. 21% -9. 33% 2. 95% Leverage Ratio -22. 30% 3. 11% -9. 56% 11. 59% Debt to total capitalization 61. 52% 55% 69. 10% 67% PROFITABILITY The company has adjoind its gross profit margin from last year as sales have change more than the rise in cost of sales.The net profit margin has make better as compare to the last year as the company was incurring going away in 2010. However, it chthonic performed in comparison to the industry. GROWTH PROFILE The growth rate has considerably alter from last year but the overall industry growth is a great deal more than Fecto. The company needs to increase its growth by retaining more than half of its meshing and re-investing it to increase its income in the coming years otherwise it will extraction way behind the industry and would take a long time to recover. RETURN ON INVESTMENT The return on investment has improved from the prior year.This implies that company is capitalizing its assets in a more efficient manner with an increase in the lay in profits. However, it is not at all satisfactory i n comparison to its competitors. CREDIT PROFILE The debt to capitalization and leverage ratio is very high which means Fecto has more debt as compare to its equity. It has declined from the preceding year but it is fairly high with regards to its competitors. This shows a weak financial position as compared to the industry and poses more inattention risk for the company. MAPLE CEMENT At the time of privatization in 1992, the capacity of Maple riffle to produceOrdinary Portland Cement (OPC) was 1000 tones per day (tpd). A second plant of 4000 tpd was fit in 1998 and a third plant of 6700 tpd came into production in 2006. It increased the total capacity to 11,700 tpd. The capacity of snowy Cement has also increased from 100 tpd to 500tpd with the addition of a new plant. This plant also has nutriment for doubling the capacity to 1000tpd. Presently Maple Leaf cement has 9% of the market share of OPC and is a trail brand in Pakistan with a diverse customer base. It is also the lar gest producer of White Cement in the country with 80% of market share.BUSINESS PROFILE SECTOR Cement Industry PRODUCTS AND SERVICES The two main products are * Ordinary Portland Cement (OPC) with a capacity of 11700 tones per day. * White Cement, its present capacity is 500 tones per day which shall be doubled to 1000 tones per day in near future. FINANCIAL PROFILE 2008 2009 2010 2011 Gross Profit Margin 16. 94% 32. 49% 21. 56% 16. 64% EBITDA Margin 16. 88% 23. 19% 3. 45% 14. 14% EBIT Margin 5. 73% 16. 27% -3. 74% 4. 47% Net Income Margin -8. 65% -6. 45% -18. 96% -13. 53% Return on Invested Capital 1. 72% 9. 1% 1. 69% 1. 75% Return On Equity -8. 08% -14. 63% -50. 32% -20. 37% Return On Assets -2. 58% -3. 83% -9. 90% -5. 25% Leverage Ratio 13. 47% 5. 35% 38. 80% 13. 52% Debt to total capitalization 68. 02% 73. 80% 80. 32% 74. 23% PROFITABILITY The net profit margin increased by 5. 43% and settled at 13. 53% as compare to the prior year which was in negative. This is a goo d sign as the company is moving towards profitability as compare to the last two years. However, the company needs to improve its asset management in order to get by with the industryGROWTH PROFILE The growth rate is improving as compare to the earlier year which is surely a green sign for the company. From last year the earnings have fairly increased but Maple Leaf is tranquilize under performing as compared to the industry earning. A lot of efforts need to be put in for the company to be competing with the industry. RETURN ON INVESTMENT The return on investment is about the same as compare to the last year. This means that the company needs to increase its sales in order to get a favorable exit in the coming years. CREDIT PROFILEThe leverage ratio as well as the debt to equity ratio is fairly high as compare to the industry which refers to declining operational efficiency and ineffective asset management. Maple needs to decrease its reliance on debt to get a better ratio in t he coming years. FAUJI CEMENT A longtime leader in the cement manufacturing industry, Fauji Cement Company, headquartered in Rawalpindi, operates a cement plant at Jhang Bahtar, Tehsil Fateh Jang, District Attock in the province of Punjab. The Company has a strong and longstanding tradition of service, reliability, and quality that reaches back more than 13 years.Sponsored by Fauji infrastructure the Company was incorporated in Rawalpindi in 1992. BUSINESS PROFILE SECTOR Cement Industry PRODUCTS AND SERVICES Ordinary Portland cement is the major product. CUSTOMERS The Company has been set up with the primary objective of producing and selling everyday portland cement. The finest quality of cement is available for all types of customers whether for dams, canals, industrial structures, highways, commercial or residential needs victimization latest state of the art teetotal touch cement manufacturing process.FINANCIAL PROFILE 2008 2009 2010 2011 Gross Profit Margin 18. 56% 31. 75% 13. 54% 17. 35% EBITDA Margin 18. 56% 17. 12% 32. 61% 21. 35% EBIT Margin 16. 96% 30. 98% 9. 61% 12. 48% Net Income Margin 11. 66% 18. 96% 6. 57% 8. 98% Return on Invested Capital 3. 69% 9. 90% 1. 95% 1. 71% Return On Equity 4. 45% 10. 39% 2. 60% 3. 86% Return On Assets 3. 32% 4. 70% 0. 93% 1. 32% Leverage Ratio 4. 18% 8. 29% 25. 70% 20. 40% Debt to total capitalization 25. 0% 67. 06% 62. 60% 55. 90% PROFITABILITY The profit margin has increased as compare to the previous year but if we match it with past performance of the company it is still at a declining rate. This decrease is also due to the overall decline in the cement industry GROWTH PROFILE The growth rate has improved but it is not much satisfactory when compared with the industry. In order to compete with the dominant companies, Fauji needs to enforce its assets in a more efficient manner RETURN ON INVESTMENTAs compared with 2011 to 2010 it has been in the same position, Fauji needs to increase its growth by retaining more than half of its earnings and re-investing it to increase its income in the coming years otherwise it will fall way behind the industry and would take a long time to recover. CREDIT PROFILE The credit profile of the company is fairly below the industry. However, the leverage ratio of Thatta Cement has seen a remarkable increase, which shows that the company is paying back its debts and is maintaining a decent credit profile among its lenders and suppliers.THATTA CEMENT Thatta Cement Company Limited was incorporated in 1980 as a public limited company. It was a wholly owned subordinate of the State Cement Corporation of Pakistan (Pvt. ) Limited. The manufacturing facility was commissioned in 1982. The plant based on dry process technology, had a total installed capacity of 1,000 tons per day of clinker. The plant was supplied by M/s. Mitsubishi Corporation, Japan. In the year 2004 the consortium of Mr. Arif Habib and Al-Abbas Group acquired 100% shares of the Company from the Privatization Commission and took over its management control.BUSINESS PROFILE SECTOR Cement Industry PRODUCTS AND SERVICES * Ordinary Portland Cement * Sulphate Resistant Cement * Portland Blast Furnace slag Cement * Ground Granulated Blast Furnace dross CUSTOMERS AND END MARKETS Some of the valued customers * Lucky ideal (Ready-Mix) * DGDP, FWO (Frontier Works Organization), Siam Group, CGGC, AJK,SAMBU Pakistan, Bahria Icon, Envicrete, Hubcrete and Atlas Ready Mix. FINANCIAL PROFILE 2008 2009 2010 2011 Gross Profit Margin 14. 69% 27. 69% 17. 96% 12. 88% EBITDA Margin 8. 95% 21. 50% 5. 96% 0. 79%EBIT Margin 5. 65% 18. 96% 2. 63% -2. 04% Net Income Margin 2. 79% 11. 36% 0. 06% -4. 02% Return on Invested Capital 39. 15% 84. 50% 36. 40% 36. 28% Return On Equity 6. 92% 26. 45% 0. 12% -10. 64% Return On Assets 2. 94% 0. 07% 14. 37% 3. 75% Leverage Ratio 6. 11% 16. 77% 7. 25% 68. 25% Debt to total capitalization 0. 57% 4. 56% 0. 46% 0. 51% PROFITABILITY The profita bility has declined as compare to the previous year due to the performance of the plant was badly affected by frequent interruptions in power supply by HESCO.The substantial loss is also due to the increase in the production cost such as the purchase legal injury of raw materials and huge increase in give the sack and power cost. GROWTH PROFILE The growth rate is declining as compare to the last year mainly due to the increase in COGS and also the company has also invested in the long-term. There is also an increase in the distribution cost which is due to the increase of appreciation in exports related freight and other charges which increased by 11. 61% despite of decrease in sales volume of export by 18. 3%. RETURN ON INVESTMENT The return on invested capital is same as the previous year which is fairly high as compare to the other companies. This means that return from investments is considerably more than the industry average. CREDIT PROFILE The credit profile of the company is not much satisfactory. Moreover, the leverage ratio of Thatta Cement has also seen a decline, which shows that the company is paying back its debts and is maintaining a decent credit profile among its lenders and suppliers