4. Introduction
Cement is one of the essential industries
of a country. Besides playing key role in
the development of physical
infrastructure and generating economic
activity in a number of downstream
industries especially construction, it also
contributes significantly towards
government receipts
5. Historical background:
The cement industry in Pakistan has grown gradually
with the passage of time.
At the time of independence 1947 only one or two units
were producing gray cement in the country .
During the decade of 1948-58 number of cement units
increased to six
During Ayub Khan’s era in 1958 the economy started
growing up therefore , therefore construction activities
boomed and to meet the growing demand of cement
new units were set up.the number of cement plants
increased to 14 and the production capacity also
increased to 2.5 million tons
6. Conti…
During the period of Zulfiqar Ali Bhutto all
industrial units , including cement industry were
nationalized therefore no new units were set up
during 1971-77.
During the period of general Zia- ul- Haq , 1977-
88 , denationalization of the industrial units
started which boosted investment tempo
Thus the number of units increased from 9-23.
7. Conti…
Pakistan is fortunate to be rich in the
deposits of limestone, clay, and gypsum,
which constitute basic raw material for
manufacturing of cement. Inspite of having
abundant raw materials it couldn’t meet
the domestic demand therefore Pakistan
had to import cement from 1971-1985.
8. Current scenario
The country at present has 29 cement plants
with an installed capacity of producing around 37
million tones
Cement’s demand side of the equation is pretty
strong on the back of higher Public Sector
Development Program, an increasing number
of real-estate development projects for
commercial and residential use,
Pakistan exports cement especially in
Afghanistan, Sri Lanka, Bangladesh and
Vietnam, & India.
The first nine months (Jul-March) of FY08,
production has demonstrated a healthy increase
of 18.0 percent.
9. Conti…
Currently there are 21 listed companies with a
total market capitalization of Rs.115.4 billion
($1.9 billion).
Some of the infrastructure development projects
including building of 250,000 houses in five
years, new canals, highways, buildings and new
dams (like Diamir-Basha Dam), announced in
the budget 2007-08 have already been
undertaken which would help further raise local
cement demand.
Lucky Cement, is the largest with the highest
sales with the capacity of 1.26 million tons.
10. Conti…
then Fauji cement with 2.1 million tons, being
the next.
According to the Cement Manufacturers
Association, total production reached 168.3mt
during FY2007/08
Cement production registered a robust growth of
18.2 percent in FY08
The exports were 2996 metric tonnes
total installed capacity having risen by 5.84
million ton to 36.1 million ton.
11. Conversion to coal
In 1999-2000 cement plants started converting to coal, a
much cheaper heating fuel than furnace oil, thereby
reducing the cost of production.
Conversion of entire cement industry would require
around 2.5 million tons of coal annually .
If all the cement plants switcheover to coal and capacity
utilization remains the same, the industry will be able to
save over Rs 5 billion annually.
It will also save foreign exchange currently being spent
on import of furnace oil.
12. COST PER TON OF CEMENT
Fuel Fuel
quantity
Rate
Furnace oil 88 kg Rs.11,370/tonn
e
Local coal
(south)
170kg Rs.3,000/tonne
Local coal
(north)
170kg Rs.3,450/tonne
13. Types of cement
ORDINARY PORTLAND CEMENT: It is the most widely
used cement it is commonly used our daily life .it is
popular because of its uniformity and excellent quality
and preferred in general construction and buildings.
SLAG CEMENT: It is useful for foundation work,
plastering etc. It is chemical and heat resistant and of
course it is economical as compared with other cements.
SUPER SULPHATE RESISTING CEMENT (SSRC):
This cement is manufactured by mixing lime stone, clay
and silica sand and iron ore. Its use is recommended for
construction of basement foundation, especially in areas
with high water table and near the sea etc.
14. Conti…
SULPHATE RESISTANT CEMENT: This cement has
been developed as compromise cement having good
properties of SSRC and OPC, . Its strength development
is better than SSRC. It could be used in preference to
OPC at sites having moderate concentration of salt.
WHITE CEMENT: It has lesser contents of iron, which
makes its color white. It is primarily used for decorative
purposes. It can be colored to various light shades and
used for inside and outside surface finish work of
buildings. It is also used for making colored tiles, colored
cement, colored slates and roof tiles etc.
15. Raw materials
The basic raw material for the
manufacturing of cement is mainly
Limestone , clay and gypsum that is
found extensively in several regions in
Pakistan.
16. Employment in construction sector
It provides job to about 7% of the total
employed labor force, that is constant
since many years.
17. FY06-07
Lucky cement, capitalizing on its size, location and early
expansion, is the largest and has therefore reaped the
most benefit of growing cement sales.
The company in nine months dispatched 2.45 million
tons cement in the local market and exported
917000metric tons, registering a growth of 97 percent
and 254 percent, respectively.
D.G Khan and Bestway Cement comes next which
recorded sales growth of 14 percent and 93 percent.
18. Conti…
The growth rate was 22.5% as compared to
previous FY 13.5%
cement sales rose by 26 percent during July-
December against 12 percent of the same
period of last fiscal year.
The exports value was Rs. 8864 million .and
major market Afghanistan and UAE.
Central Board of Revenue (CBR) allowed duty
drawback at the rate of Rs 25.08 per ton on
export of cement. The duty drawback facility was
effective from September 27, 2006.
19. Conti…
Exemptions from federal excise duty & sales tax
on exported cement and lower domestic prices
in first half of the current fiscal year were the key
factors for the rise in cement exports during the
period under review.
Per capita consumption of cement rose from
117kg on FY06 to 131kg in FY07
20. 1990’s
The total sales in 1991-92 were 7.24 million tons which
went up to 9.91 million tons in 1999-2000, an increase of
only 2.67 m tons , production and growth also reduced
Some of the reasons are:
Industrial production went down especially in the second
half of the 1990s as about 4,000 manufacturing units
became sick.
Along with them, the banks which financed them became
sicker, and adequate new investment was not coming
forth to create new production capacities,
while many of the old units became obsolete.
Cartel formation by the manufacturers
Decline in public sector development program
21. Reasons of loss in FY2000-01
The cement sector recorded a loss of
Rs. 1.75 billion in 2000-01
Reason being:
High prices of furnace oil and cost of
power
Development expenditure and
construction activities reduced
Exports reduced by Rs.28 million
22. Boom in 2003-04
During the six months July – December 2003
capacity utilization was 92% than previous six
months 66%
The industry made a profit of Rs.5 billion
(listed firms) & after tax profit of Rs.4.7 billion
Reasons being:
Growth rate was 15% with a production of 18660
million tons, whereas in 2002-03 production
was 11020m tons with a growth of 12.11%.
23. Conti…
Exports to Afghanistan doubled , In 2002 export
was 106523 tons , whereas in 2003 it reached
423000 tons.
House finance schemes by Financial institutions
were promoted
Construction activities & remittances from
abroad increased especially from USA
Cement production increased by 3.6% & cost of
production reduced due to switching from
furnace oil to coal fired plants
24. Conti…
Value of exports increased to Rs.1572 million
from Rs.635 million in FY2002-03.
CED rate reduced by 25%
Under public sector development program
construction of Gwadar port, national highway
and motorway projects , construction of Dams
and Kohat tunnel were the major projects.
25. Exports
The value of the cement exports increased over
the years , its major export markets is
Afghanistan, India, Iraq & UAE
Till the year 2007 130,000 tonnes cement has
been exported to India
According to All-Pakistan Cement Manufacturers
Association (APCMA), cement exports showed
growth of 72 per cent to 2.081 million tons for
the 10 months (July-April, 2006-07), from 1.209
million tons in the comparable period of last
year.showing an increase of 110 percent .
26. Value of exports Rs.million
2000-01 47
2001-02 198
2002-03 635
2003-04 1572
2004-05 3650
2005-06 6227
2006-07 8864
27. Conclusion
The cement sector in Pakistan started with its
actual boom since year 2000 onwards.
Reasons are numerous but off the most
prominent is the September 11th
disaster which
resulted in dollar inflow, and expansion in
construction & real state.
Govt also play a part as development programs
and housing schemes increased.
Moreover elections 2002 & political conditions
made the environment suitable for investments
and development projects.
