industrial analysis of Pakistan Cement Industry. in this you get an idea wether invest in cement sector or not.

1. INDUSTRIAL ANALYSIS OF
CEMENT INDUSTRY
PRESENTED BY:
ABDULLAH SOHAIL
SAAD NASIR
HAZIQ HUSSAIN SATTI
MARIA TAYYAB

2. INTRODUCTION:
• Cement Is The Most Important, And Widely Used, Building Material In The Modern Age.
• It’s Used In Homes, In Office Buildings, Roads, Bridges And Infrastructure.
• Pakistan Is The 14th Largest Country To Produce Cement.
• There Are 24 Plants Of Cement In Pakistan
➢Northern Region 80%
➢Southern Region 20 %

3. BACKGROUND OF CEMENT INDUSTRY:
• The Cement Industry Of Pakistan Has Come Since 1947.
➢Annual Production Of Cement : 300,000 Tons Per Year.
➢Total Installed Capacity : 470,000 Tons Per Year.
• In 1921 The First Cement Factory Was Established.
• By 1954, The Demand For Cement Was Much Greater Than Installed Capacity.
Required Million Ton Annually But Only About 660,000 Tons Were Being Supplied.

4. CONTD
• The Pakistan Industrial Development Corporation (PIDC) Took The Initiative Of Expanding
Production In The Country.
• Two Cement Factories Were Established At
➢Zeal Pak With Installed Capacities : 240,000 Tons
➢Maple Leaf With Installed Capacities: 100,000 Tons

5. SALIENT FEATURES OF CEMENT INDUSTRY
OF PAKISTAN:
As Per All Pakistan Cement Manufacturer Association:
• The Installed Production Capacity Of Cement Is 57 Million Tons As Per March 2019.
• Local Dispatched 29.45 Million Ton
➢ North Region: 23.20 Million Tons
➢ South Region:6.45 Million Tons

6. CONTD
• Export 5.13 Million Ton
➢North Region: 1.99 Million Tons
South Region: 3.14 Million Tons
• The Main Export Markets Of The Cement Industry Are Afghanistan, India, And Others.
• In The Year 2018-19 (9 Months) The Capacity Utilization Is Of 80.71% Whereas In The Year 2017-
18 It Was 85.87%.
• On Average Its Per Capita Utilization Is 140kg.

7. MAIN PLAYERS IN THE MARKET:
TABLE
Company Installed Capacity (%)
Bestway cement 18
Lucky Cement 16
D.G Khan cement 13
Fauji Cement 6
Maple Leaf Cement 6
Attock Cement 6
Dewan Cement 5
Askari cement 5
Kohat Cement 5
Cherat Cement 5
Other 15
Total 100
GRAPH

8. TREND

10. LIFE CYCLE
•STABILIZATION PHASE
➢Less Players
➢Growth Rate

11. CHALLENGES:
➢FLATNESS IN DEMAND
▪ PSDP
▪ Local Consumption
➢HIGH MARKUP RATES
➢CURRENCY DEPRECIATION

12. CONTD
➢REDUCTION IN ALLOCATION OF THE PSDP
▪ Government policy
▪ Delay In CPEC
➢Higher Interest Rates
▪ 5.75% TO 10.75%
▪ Lower Construction Financing

13. CONTD
➢Increase In Production Cost
▪ Variable cost is more
▪ Coal prices
➢Exports With Neighbors
➢Gearing

14. FINANCIAL INDICATORS

15. NET PROFIT MARGINS
2016 2018
FAUJI 38% 22%
LUCKY 19% 17%
ATTOCK 21% 16%
BESTWAY 26% 25%

16. OPERATING PROFIT MARGINS
2016 2018
FAUJI 8% 5%
LUCKY 27% 19%
ATTOCK 12% 5%
BESTWAY 14% 10%

17. MARKET PRICE
2016 2018
FAUJI 36 22
LUCKY 740 345
ATTOCK 240 124
BESTWAY 174 129

18. PROMISING FUTURE OF PAKISTAN CEMENT
INDUSTRY:
•Quality
•Impact Of CPEC
•Budget
•Naya Pakistan Housing Scheme

20. COMPETITIVE RIVALRY
• GROSS PROFIT MARGINS UP TO 30-40%
• NO INNOVATION, OPC (ORDINARY PORTLAND
CEMENT)
• NO QUALITY CHANGE
• PRICING POWER
• MAJOR FIRMS AND THEIR MARKET SHARE
COMPANY MARKET
SHARE
LUCKY CEMENT 19%
BEST WAY CEMENT 14%
DG KHAN CEMENT 11%
MAPLE LEAF CEMENT 8%
FAUJI CEMENT 7%
TOTAL 59%

21. THREATS OF
NEW ENTRANTS
•HIGH SETUP COST:
➢190 MILLION INITIAL COST
➢150 MILLION CAPITAL EXPENDITURE EVERY YEAR.
•COLLUSION BETWEEN FIRMS:
➢FINED 6.35 BILLION IN 2009 BY COMPETITION
COMISION OF PAKISTAN
➢STILL UNDER PROBE OF MONOPLY CONTROL
AUTHORITY
•HIGH TAXES BY GOVERNMENT

22. THREATS OF
SUBSTITUTE
•PAKISTANI BINTONITE
➢JEHANGIRA BENTONITE
➢LOW COST
➢HIGH AVAILABILITY
➢HIGH STRENGTH
•GYPSUM PLASTER
➢HIGH RESERVES
➢LOW COST

23. BARGAINING POWER OF BUYERS
• GOVERNMENT:
➢FOR LARGE SCALE PROJECTS
➢PROVIDE HIGH REVENUE TO CEMENT INDUSTRY
➢HIGH BARGAINING POWER.
• DOMESTIC:
➢60% CONSUMPTION
➢LESS BARGAINING POWER.
• EXPORTS:
➢TO INDIA AND AFGHANISTAN AND SOME OTHER COUNTRIES
➢VIA LAND AND SEA
➢LESS BARGAINING POWER.

24. BARGAINING
POWER OF
SUPPLIERS
•RAW MATERIALS
➢LIMESTONE
➢CLAY
➢IRON ORE
➢GYPSUM
(ALL THESE RAW MATERIALS ARE VASTLY AVAILABLE IN
PAKISTAN)
➢FUEL
➢33% OF THE COST OF CEMENT INDUSTRY IS OF ITS FUEL
THAT IS COAL
➢COAL IS IMPORTED BY WHOLE CEMENT INDUSTRY
➢SUPPLIERS HAVE HIGH BARGAINING POWERS

25. FACTORS AFFECTING CEMENT INDUSTRY
• ECONOMICAL
➢Inflation
➢Interest Rate
• NON ECONOMICAL
➢Consumer Sentiments
➢Geographic Location

26. • INFLATION
➢Not a perfect competition in cement
industry
➢High variable cost (33% of fuel cost is
incurred and this fuel is also imported so
inflation affects it highly)
• INTEREST RATE
➢Interest Rate Increased From 5.75% In
2016 To 10.75% In 2019
➢This Increase In Interest Rate Has A
Negative Effect On Stock Prices Of Industry
Company 2016 2017 2018 2019
STOCK PRICES
Best way 180 245 135 97
Fauji cement 44 45 25 17
Lucky cement 615 960 632 365
Dg khan
cement
240 132 70 57
Maple leaf
cement
122 67 28 20

27. •CONSUMER SENTIMENTS:
➢There is much inflation in Pakistan
➢People are more concerned about fulfilling their necessities
➢Less spending more saving
•GEOGRAPHIC LOCATION
➢ 80% Plants Are In North Region Of Pakistan
➢Coal Is Imported Via Sea.

28. SWOT ANALYSIS
Strengths:
A strong industry.
Maintained growth of production and exports.
An easy access to its production resources.
Good reputation in the international market.
Opportunities:
Future potential growth
Emerging export market
Construction industry boom in market
Research to develop new products
Weaknesses:
Cost of transport
Lack of research and development
Facing lack of funds to take up new projects.
Lacking in professional expertise within the
industry.
Threats:
Supply of inferior coal and high cost of imported
coal
High incidence of taxes
High input cost
Decline in profitability

29. PEST
ANALYSIS
Political
Economical
Social
Technological

31. THANK YOU