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Forestalling uptick in construction, Pakistan’s cement manufacturer plans expansion

Expecting a surge in construction activity and a rise in demand for construction materials, one of Pakistan’s leading manufacturers of cement Maple Leaf Cement Factory Limited is planning to increase its capacity.

As per Bloomberg, the company is considering enhancing its production capacity by 7,000 tons a day, and the proposal is in the final stages.

Maple Leaf Cement Factory Limited set up in 1960 as a public limited company. It is part of the Kohinoor Maple Leaf Group, with Kohinoor Textile Mills Limited as its holding company. The company seeks to take advantage of the recent government-announced construction package, which aims to uplift the economic activity and aid the economy to recover during Covid-19.

Just days ago, a number of cement manufacturers announced to increase their cement production, Kohat Cement Company Limited (KOHC) announced that it would be setting a multi-billion rupees cement manufacturing plant in Punjab.

As per the company statement, the Board of Directors of the company has approved the setting up of 7000-10000 TPD Cement Manufacturing Plant.

Furthermore, Fauji Cement Company Limited (FCCL) also informed that it has decided to invest in additional cement capacity.

The company has approved the setting up of Greenfield Cement Manufacturing Plant of 2.05 million tonnes per annum at Dera Ghazi Khan, Punjab.

It is pertinent to inform that Maple Leaf Cement saw a 5 percent increase in sales revenue during 1QFY21 year on year. This was a direct result of increase in sales price as a result of growing demand; the latter in turn was a result of growth in the construction sector.

Source: BR

Fauji Cement announces to setup Greenfield Cement Manufacturing Plant in Punjab

Riding the wave of an uptick in construction activity, Fauji Cement Company Limited (FCCL) has decided to invest in additional cement capacity.

“Consequent to construction activity picking up and significant spend on infrastructure, expected to continue, the Board of Directors of the company have decided to invest in additional cement capacity,” announced the company on Friday.

The BoD of the company in its meeting held today, has approved the setting up of Greenfield Cement Manufacturing Plant of 2.05 million tonnes per annum at Dera Ghazi Khan, Punjab.

The company informed that the equity portion of the expansion will be funded through Internal Cash Generation.

The total project cost will be announced after conclusion on negotiation with the suppliers and contractors. The construction work on the project is expected to commence within current financial year and is expected to have a construction period of about 2.5 years.

Fauji Cement Company Limited was set up as a public limited company and commenced operation in 1997. It began with a production capacity of 3700 tons per day that grew to 11000 tons per day.

The company’s revenue rose by nearly 30 percent during 1QFY21 year on year. The company managed to curtail its cost of production that reduced to 78.4 percent, compared to 86 percent seen in 1QFY20. This was achieved through “maximising its own power generation from its gas engines and solar plants to rationalise the power cost which is one of the major cost components”. Thus, the company managed to double its net margin during 1QFY21 year on year to 12.7 percent

Source: BR

FCCL expects double-digit growth in cement despatches this year

The management of Fauji Cement Company Limited (FCCL) is expecting a double-digit growth in cement despatches for the financial year 2019-20 (FY21), it was revealed during a corporate briefing.

An additional 2.5MW solar capacity will also come online during 3QFY21 (Jan-2021), taking total capacity to 17.5MW. 

Shankar Talreja, deputy head of research at Topline Securities Limited, said the company has signed a shared services agreement with Askari Cement, which can result in annual savings to the tune of Rs90-Rs100 million. 

He said the company is in advance stages of acquiring a no-objection certificate (NOC) to set up a greenfield cement plant in DG Khan. 

“More details regarding the expansion will be shared over the next 3-6 months. The expansion can come with a capital structure of 60pc debt and 40pc equity,” Talreja informed. “Due to the reduction in peak power tariff, the management expects savings of Rs25-30 million. Similarly, if discounted tariff materializes (on incremental consumption), management sees savings to the tune of Rs80-85 million.” 

According to the management, cement demand from the amnesty scheme has yet to kick in, as most of the projects are in the registration phase. 

Talreja said that if the input costs do not increase, then cement prices are likely to remain stable. “Current market share of Fauji Cement (8.0-8.5pc) is likely to sustain till next expansions.” 

He predicted that Dasu and Bhasha dam will generate cement demand of 2.5 million tonnes and 3.5-4.5 million tonnes, respectively, over a period of 5-6 years. “There is good progress on Dasu dam, however, work on Bhasha dam work may start gradually,” he concluded.


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