Final Report Cement Industry Pakistan

TABLE OF CONTENT
CHAPTER 1 4
INTRODUCTION TO THE INDUSTRY 8
TYPES OF CEMENT PRODUCED WORLDWIDE 8
TYPES OF CEMENT AVAILABLE IN INTERNATIONAL MARKET 8
TYPES OF CEMENT PRODUCED IN PAKISTAN 9
LIST OF CEMENT MANUFACTURED IN PAKISTAN AND GLOBALLY 11
LIST OF CEMENT COMPANIES SITUATED IN PAKISTAN 12
CEMENT FIRMS IN PAKISTAN 14
CEMENT PRODUCTION IN INDUSTRY 17
MARKET SHARE OF THE FIRMS IN CEMENT INDUSTRY 19
TABLE OF FIGURE
Figure 1: OPC....................................................................................................9
Figure 2: Slag Cement.....................................................................................10
Figure 3: SRPC................................................................................................10
Figure 4: White Cement...................................................................................10
Figure 5..........................................................................................................12
Figure 6: Askari Cement Plant..........................................................................14
Figure 7: D.G. Khan Cement Plant....................................................................14
Figure 8: Lucky Cement Plant...........................................................................14
Figure 9: Maple Leaf Cement Plant...................................................................14
Figure 10: Pioneer Cement...............................................................................15
Figure 11: Attock Cement................................................................................15
Figure 12: Kohat Cement Company...................................................................15
Figure 13: Fauji Cement Company.................................................................15
Figure 14: Dandot Cement...............................................................................15
Figure 15: Bestway Cement.............................................................................16
Figure 16: market share of cement in Pakistan.................................................19
Figure 17........................................................................................................23
Figure 18........................................................................................................31
Figure 19: Plant sites of Lucky Cement.............................................................38
Figure 20........................................................................................................40
Figure 21........................................................................................................43
1
Figure 22........................................................................................................45
Figure 23........................................................................................................56
Figure 24........................................................................................................61
Figure 25: Cement industry Cost classification..................................................63
Figure 26........................................................................................................72
Figure 27........................................................................................................84
Figure 28........................................................................................................87
Figure 29........................................................................................................89
TABLE OF TABLES
Table 1: Cement produced in Pakistan and globally...........................................11
Table 2: Firms in cement industry in Pakistan...................................................13
Table 3: Different types of Cement produced by different firms in Pakistan.......17
Table 4: Production of cement in Pakistan in last 4 years..................................18
Table 5: Geographical location of cement industry............................................20
Table 6: total production in Pakistan Cement industry......................................22
Table 7: total employment in Pakistan Cement industry....................................23
Table 8: Export of cement by Pakistan..............................................................24
Table 9: Expected export cement demand........................................................25
Table 10: cement exports................................................................................26
Table 11: cement exports in 2007-08................................................................27
Table 13: imports & exports analysis................................................................28
Table 14: Pakistan Trade statistics of cement industry......................................28
Table 15: NEW PLANTS OPENED IN CEMENT INDUSTRY PAKISTAN......................29
Table 16: Evolution of cement industry in Pakistan...........................................29
Table 17: Historical development of cement industry........................................35
Table 18: chronology of Cement Industry..........................................................36
Table 19..........................................................................................................37
Table 20: head office and principal offices of Lucky Cement..............................37
Table 21: key financial ratios of Lucky Cement..................................................39
Table 22: export and local sales of Lucky Cement.............................................39

2
Table 23: location of head office and principal office of D.G.khan Cement..........41
Table 24: income statement of D.G.khan Cement..............................................42
Table 25: balance sheet of D.G.khan Cement....................................................42
Table 26: location of head offices and regional offices of Bestway Cement.........43
Table 27: key data of Bestway Cement Company, 2001-08.................................44
Table 28: location of head office and other office of APCMA..............................45
Table 29: average cement price (yearly)...........................................................62
Table 30: firm’s selling price, 2009...................................................................62
Table 31: selling price of products in cement industry, 2009.............................62
Table 32: Determinants of fixed and variable costs of a cement industry...........64
Table 33: average cement manufacturers’ cost.................................................65
Table 34: job descriptions of cement industry...................................................74
Table 35: Market shares of cement firms..........................................................79
Table 36: SWOT i Matrix...................................................................................95
TABLE OF TABLES
Table 1: Cement produced in Pakistan and globally...........................................11
Table 2: Firms in cement industry in Pakistan...................................................13
Table 3: Different types of Cement produced by different firms in Pakistan.......17
Table 4: Production of cement in Pakistan in last 4 years..................................18
Table 5: Geographical location of cement industry............................................20
Table 6: total production in Pakistan Cement industry......................................22
Table 7: total employment in Pakistan Cement industry....................................23
Table 8: Export of cement by Pakistan..............................................................24
Table 9: Expected export cement demand........................................................25
Table 10: cement exports................................................................................26
Table 13: imports & exports analysis................................................................28
Table 14: Pakistan Trade statistics of cement industry......................................28
Table 15: NEW PLANTS OPENED IN CEMENT INDUSTRY PAKISTAN......................29
3
Table 16: Evolution of cement industry in Pakistan...........................................29
Table 17: Historical development of cement industry........................................35
Table 18: chronology of Cement Industry..........................................................36
Table 19..........................................................................................................37
Table 20: head office and principal offices of Lucky Cement..............................37
Table 21: key financial ratios of Lucky Cement..................................................39
Table 22: export and local sales of Lucky Cement.............................................39
Table 23: location of head office and principal office of D.G.khan Cement..........41
Table 24: income statement of D.G.khan Cement..............................................42
Table 25: balance sheet of D.G.khan Cement....................................................42
Table 26: location of head offices and regional offices of Bestway Cement.........43
Table 27: key data of Bestway Cement Company, 2001-08.................................44
Table 28: location of head office and other office of APCMA..............................45
Table 29: average cement price (yearly)...........................................................62
Table 30: firm’s selling price, 2009...................................................................62
Table 31: selling price of products in cement industry, 2009.............................62
Table 32: Determinants of fixed and variable costs of a cement industry...........64
Table 33: average cement manufacturers’ cost.................................................65
Table 34: job descriptions of cement industry...................................................74
Table 35: Market shares of cement firms..........................................................79
Table 36: SWOT i Matrix...................................................................................95
4
Table 36: SWOT i Matrix
TABLE OF EQUATIONS
Equation 1: cost of production for cement industry...........................................66
Equation 2: Pricing Model for a cement industry...............................................66
5
Equation 2: Pricing Model for a cement industry
CHAPTER 1
INTRODUCTION TO THE INDUSTRY
TYPES OF CEMENT PRODUCED WORLDWIDE

Cements that are used for construction are divided into two main categories based
on cement properties, hydraulic or non-hydraulic. Although only certain types of

cement are commonly utilized today, there are several different types of cement
that can be created. Various types of cement are possible by blending different
proportions of gypsum, clinker, and other additives together.
6
Non-Hydraulic Cement
Non-hydraulic cement is cement which cannot harden while in contact with water,
as compared to hydraulic cement which can. When non-hydraulic cement is utilized
in construction, it must be kept dry so that it will hold the structure. Due to the
difficulties related with waiting long periods for drying, non-hydraulic cement is
rarely used in current market.
Hydraulic Cement
Hydraulic cements are cements that have the ability to set and harden after being
combined with water. Hydraulic cement is made mainly from limestone, certain
clay minerals, and gypsum, which are burned together in a high temperature.
Hydraulic cement is the main cement utilized in modern day construction.
TYPES OF CEMENT AVAILABLE IN INTERNATIONAL

MARKET
1. Portland cement
2. Portland cement blend
3. Portland Blast furnace Cement
4. Portland Fly ash Cement
5. Portland Pozzolan Cement
6. Portland Silica Fume cement
7. Masonry Cement
8. Expansive Cement
9. White blended cement
10.Colored cement
11.Very finely ground cement
12.Pozzolan-lime cement
13.Slag-lime cement
14.Super sulfated cements
15.Calcium aluminate cements
16.Calcium sulfoaluminate cements
17.Natural Cements
7
18.Geopolymer cements
19.Sulphate resistance cement
TYPES OF CEMENT PRODUCED IN PAKISTAN

Cement industry is indeed a highly important segment of industrial sector that
plays a vital role in the socio-economic development. Since cement is a specialized
product, requiring sophisticated infrastructure and production location. Mostly of
the cement companies in Pakistan are located near mountainous regions that are
rich in clay, iron and mineral capacity. Cement industries in Pakistan are currently
operating at their maximum capacity due to the boom in commercial and industrial
construction within Pakistan. Although a large number of cement varieties are
produced in different countries of the world, Pakistan has been producing following
types of cement.
1. Ordinary Portland cement
2. Portland Blast Furnace Slag Cement
3. Sulphate Resisting Cement
4. White Cement
1. Portland cement
It is the most popular type of cement, formerly known as Ordinary
Portland Cement (OPC), CEM I. It is the cement that has been most
commonly used throughout the world in building works.
Figure 1: OPC
2. Portland blast furnace slag cement

The Slag Cement of the Portland Blast Furnace is a type of cement
that is hydraulic and is manufactured in a blast furnace. The
manufacture of Portland Blast Furnace Slag Cement requires 75%
less energy than that for the production of the Portland cement.
The low cost of production of Portland Blast Furnace Slag Cement
8
makes it cheaper than Portland cement. It is for this reason that in recent years,
the sales of Portland Blast Furnace Slag Cement have increased.
Figure 2: Slag Cement
3. Sulphate Resistance
SRPC is a special type of CEM I cement. However, it is not the only
sulphate-resisting cement available; various factory-made
composite cements are also sulphate-resisting. SRC is specially
used in sea and coastal areas as it offers greater resistance to
chemical attack from sulphate and dissolved salts and alkalies
present in sea and saline waters.
Figure 3:
SRPC
4. White Cement
White Portland cement is a unique kind of Portland cement. It is
different from ordinary Portland cement. It is of white color, instead
of a dull grey one. White cement is frequently chosen by architects
for use in white, off-white or coloured concretes that will be
exposed, inside or outside buildings, to the public's gaze.
Figure 4:
White Cement
LIST OF CEMENT MANUFACTURED IN PAKISTAN

AND GLOBALLY
The table below describes the types of cement manufactured in Pakistan and
Worldwide:
9
Cement Manufactured Manufactured
in Pakistan Globally
1 Portland cement ✔ ✔
2 Portland cement blends ✔
3 Portland Blast furnace Cement ✔ ✔
4 Portland Fly ash Cement ✔
5 Portland Pozzolan Cement ✔
6 Portland Silica Fume cement ✔
7 Masonry Cement ✔
8 Expansive Cement ✔
9 White blended cement ✔ ✔
10 Colored cement ✔
11 Very finely ground cement ✔
12 Rapid Hardening Portland ✔
Cements
13 Pozzolan-lime cement ✔
14 Slag-lime cement ✔
15 Super sulfated cements. ✔
16 Calcium aluminate cements ✔
17 Calcium sulfoaluminate ✔
cements
18 "Natural" Cements ✔
19 Geopolymer cements ✔
20 Sulphate resistance cement ✔ ✔
Table 1: Cement produced in Pakistan and globally
10
LIST OF CEMENT COMPANIES SITUATED IN
PAKISTAN
Figure 5
The industry comprises of 29 firms (19 units in the north and 10 units in the south),
with the production capacity of 44.09 million tons. The north’s with production
capacity of 35.18 million tons (80 percent) while the south with production capacity
of 8.89 million tons (20 percent), compete for the domestic market of over 19
million tons. There are four foreign companies, three armed forces companies and
16 private companies listed in the stock exchanges. The industry is divided into two
broad regions, the northern region and the southern region.
The table below shows the company’s included in the Cement Industry of Pakistan:
11
S. no Company
Northern Zone
1 Askari Cement Ltd
2 Bestway Cement-I
3 Cherat Cement*
4 Dandot Cement Limited*
5 Dewan Cement Limited*
6 D.G. Khan Cement (KK)*
7 D.G. Khan Cement-II *
8 Fauji Cement Company*
9 Flying Cement Limited*
10 Fecto Cement*
11 Gharibwal Cement Ltd*
Kohat Cement Company
12 Limited*
13 Lucky Cement (Karachi)*
14 Maple Leaf Cement
15 Mustehkam Cement*
16 Pakistan Cement
17 Pioneer Cement*
18 Bestway Cement Chakwal-II
Askari Cement Ltd.
19 (Nazimpur)
Southern Zone
20 A.C. Rohri Cement Limited
21 Al-Abbas Cement Limited*
22 Attock Cement*
23 Dadabhoy Cement Limited*
24 Javedan Cement Limited*
Pakistan Slag Cement
25 Limited
12
26 Thatta Cement Limited*
27 Zeal Pak Cement Limited
8 Lucky Cement (pezu)*
29 Bestway Cement (Chakwal)
Table 2: Firms in cement industry in Pakistan
* Companies listed with KSE
CEMENT FIRMS IN PAKISTAN

Askari Cement
Askari cement has two plants, one in Wah and the other in
Nizampur which has been installed by Army Welfare Trust.
The main product is ordinary Portland cement which is
supplied in polypropylene as well as in paper bags of 50kg
each. Total Capacity of both lines is 4000 tonnes per day.
Figure 6:
Askari Cement Plant
D.G. Khan Cement

D.G. Khan Cement Company Limited (DGKCC) is one of the
largest cement-manufacturing units in Pakistan with a
production capacity of 5,500 tons clinker per day. It has a
countrywide distribution network. Its main products are
ordinary Portland cement and sulphate resistance cement.
Figure 7: D.G. Khan Cement Plant
Lucky Cement
Lucky Cement has been successful in establishing its brand
in several export markets including Middle East, India, Sri
Lanka and East and South African countries. It has a daily
production capacity of 4,200 tons per day. Its main products
are Ordinary Portland cement (OPC), Sulphate resistant
cement and Slag cement.
Figure 8: Lucky Cement Plant
13
Maple Leaf Cement
Maple Leaf produces Ordinary Portland Cement (OPC),
white cement and sulphate resistance cement. It is the
largest producer of White Cement in the country with the
market share of 80% in the production of White Cement.
Figure 9: Maple Leaf Cement Plant
Pioneer Cement
The Company's factory is located at Khushab. Its major
products are
• Ordinary Portland Cement
• Sulphate Resistant Cement
Figure 10: Pioneer Cement
Attock Cement
Main business of the Company is Manufacturing and sales of
cement. Its main products are ordinary Portland cement,
sulphate resistance cement and Portland blast furnace slag
cement.
Figure 11: Attock
Cement
Kohat Cement Company Limited

It is engaged in manufacturing of Grey (OPC) and White
Cements. The plant is located in Kohat about 60 kilometers
from Peshawar.
Figure 12: Kohat

Cement Company
14
Fauji Cement Company
The Headquarter of Fauji Cement Company is located in
Islamabad; it operates a cement plant at District Attock in
the province of Punjab. Its main product is ordinary Portland
cement.
Figure 13: Fauji Cement

Company
Dandot Cement Limited

The Plant is situated at P D Khan, District Jhelum, in the
province of Punjab, in northern Pakistan. It is a superior dry
process plant. They produce Ordinary Portland Cement.
Figure 14: Dandot Cement
Bestway Cement
Bestway Cement Limited is a part of the renowned
Bestway Group of UK. In response to the Government of
Pakistan call for non-resident Pakistanis to Invest in
Pakistan, Bestway Group invested in cement sector in the
shape of Bestway Cement Limited. It has two production
plants, one is in Hattar, Haripur in NWFP and the second
plant is in chakwal. The Group’s cement manufacturing
capacity is set to exceed 6.0 million tonnes per annum,
making Bestway the second largest cement producer in
the country. It manufactures Ordinary Portland Cement, Sulphate Resistant Cement
and Low Alkali Ordinary Portland Cement.
Figure 15: Bestway
Cement
15
16
S. Company Types of Cement
no Produced
OP B.F SR White
C Slag
Northern Zone
1 Askari Cement Ltd ✔
2 Askari Cement Ltd. ✔
Nizampur
3 Bestway Cement ✔ ✔
4 Bestway Cement- chakwal ✔ ✔
5 Cherat Cement ✔
6 Dandot Cement Limited ✔
7 Dewan Cement Limited ✔ ✔
8 D.G. Khan Cement ✔ ✔
9 D.G. Khan Cement – KK ✔ ✔
10 Fauji Cement Company ✔
11 Flying Cement Limited ✔
12 Fecto Cement ✔
13 Gharibwal Cement Ltd ✔
14 Kohat Cement Company ✔ ✔
Limited
15 Lucky Cement (Karachi) ✔ ✔ ✔
16 Maple Leaf Cement ✔ ✔ ✔
17 Mustehkam Cement ✔
18 Lafarge Pakistan Cement ✔ ✔
19 Pioneer Cement ✔ ✔
Southern Zone
20 A.C. Rohri Cement Limited ✔ ✔ ✔
21 Al-Abbas Cement Limited
22 Attock Cement ✔ ✔ ✔
23 Dadabhoy Cement Limited ✔ ✔ ✔
24 Javedan Cement Limited ✔ ✔ ✔
25 Pakistan Slag Cement
Limited
26 Thatta Cement Limited ✔ ✔ ✔
27 Zeal Pak Cement Limited
28 Lucky Cement (pezu) ✔ ✔ ✔
29 Pakland cement limited ✔ ✔ ✔
17
CEMENT PRODUCTION IN INDUSTRY
Table 3: Different types of Cement produced by different firms in

Pakistan
18
The bar chart below shows the
Cement Production production of cement in
Year (Million tons)
Pakistan in last 4 years.
2006 18.22
2007 24.22
2008 23.59
2009 44.09
Table 4: Production of cement in Pakistan in last 4 years
19
Chart 1: Production of cement in Pakistan in last 4 years
MARKET SHARE OF THE FIRMS IN CEMENT

INDUSTRY
The market share of the cement company’s in Pakistan is as follows:
20
Figure 16: market share of cement in Pakistan
Chart 2: market shares of firms in cement industry
Cement Company Market Share (%)

Fauji cement 6
Maple leaf 7
Askari cement 11
DG cement 13
Bestway cement 12
Lucky cement 16
Others 35
21
CHAPTER 2
INDUSTRY DIMENSION AND STATISTICS
GEOGRAPHICAL LOCATION OF CEMENT INDUSTRY
LOCATION NO.OF COMPANIES

Karachi 3
Islamabad 2
Hyderabad 1
Sukkar 1
Chakwal 4
Lasbela 1
Lahore 1
Kohat 1
Dadu 2
khushab 2
Pezu 1
Attock 1
D.G.Khan 1
Haripur 4
Nowshera 2
Wah 1
Thatta 1
Total 29
Table 5: Geographical location of cement industry
22
Below is the geographical location of firms present in Pakistan cement industry
Chart 3: Geographical locations of firms in cement industry
23
TOTAL PRODUCTION IN PAKISTAN CEMENT
INDUSTRY
Year Cement Production

(million tons)
1991 (June) 7.649
After 2002-3, most of the cement
1992 (June) 8.115
manufacturers expanded their
1993 (June) 8.348
operations, and increased production.
1994 (June) 8.158
This sector has invested about $1.5
1995 (June) 8.159
billion in capacity expansion over the
1996 (June) 9.458
last six years.
1997 (June) 9.539
1998 (June) 9.29 The operating capacity of cement in
1999 (June) 9.546 1991 was 8 million tons, which increased

2000 (June) 9.969 to become 18 million tons by 2005-06
2001 (June) 9.876 and by end of 2007 rose to above 37
2002 (June) 9.988 million tones. Recently, the industry
2003 (June) 11.41 comprises of 29 firms with the
2004 (June) 13.344 production capacity of 44.09 million
2005 (June) 17.112 tons. The north has production capacity
2006 (June) 19.512 of 35.18 million tons while the south has
2007 (June) 36.841 production capacity of 8.89 million tons.
2008(June) 35.01 The northern region contributes 80% to
2009 (June) 44.09
the annual cement sales while the unit
based in the southern region contributes 20% to the annual cement sales.
24
Table 6: total production in Pakistan Cement industry
TOTAL EMPLOYMENT
Figure 17
The company in cement sector takes their people as one of the most valuable
assets, they view their human resource as the competitive advantage therefore
they ensure that they employ only those people who are self-motivated and
professionally qualified. They also take into consideration that their business goal
are realized through such diverse work force providing equal opportunities without
any discrimination on the basis of cast, creed, gender and religion.
25
Ta
ble 7: total employment in Pakistan Cement industry
Cement industry is also serving the nation by providing job opportunities and
presently more than 150,000 persons are employed directly or indirectly by the
industry.
TOTAL EXPORT BY PAKISTAN CEMENT INDUSTRY
The industry had exported 7.716 million tons cement during the year 2007-08 and
had earned $450 million. Cement exports during January 2009 went up by 30% to
0.81 million tons as compared to 0.623 million tons in January 2008.
Pakistan is ranked 5th in the world’s cement exports. According to the Global
cement report, China maintained first position, while Japan got second position.
Third largest cement exporter in world is Thailand, followed by Turkey. Pakistan
now at 5th position has left Germany behind which now stands at 6th position.
26
Table 8: Export of cement by Pakistan
The cement industry of Pakistan entered the export markets a few years back, and
has established its reputation as a good quality product. In 2007, 130,000 tons
cement was exported to India. In 2007, the exports to Afghanistan, UAE and Iraq
touched 2.13 million tons. Sri Lanka has recently shown interest to import 30,000
tons cement from Pakistan every month. At present, the economies of major
countries are facing recession, but Pakistan’s cement sector is still maintaining a
healthy growth.
Below is the estimated export demand to neighboring countries
27
Table 9: Expected export cement demand
Popular destinations for export of cement from Pakistan
Chart 4: popular destinations for export in cement industry

We are leading exporter of Ordinary Portland Cement, Sulphate Resistant Cement
(SRC) and Slag Cement from Pakistan. Our popular export destinations are India,
South Asia, Gulf region, Afghanistan, South Africa and many African countries.
Below is the chart of cement exports during HY’08:
28
Table 10: cement exports
PERCENTAGE SHARE OF FIRMS IN EXPORT
Chart 5: percentage
shares in exports
market, 2008
29
EXPORT DISPATCHES
2007-2008
Months |----------Cement----------| Clinker
Afghanistan India Other (Sea)
July 221,028 - 194,739 25,330
Aug 265,620 - 260,488 49,402

Sept 257,354 11,316 226,158 53,804
Oct 192,774 37,557 194,711 35,455
Nov 257,598 47,363 176,738 84,955
Total 1,194,374 96,236 1,052,834 248,946
Table 11: cement exports in 2007-08
2008-2009
Mon |----------Cement----------| Clinker Total
Afghanista
n India Other (Sea) (Sea)
July 268,334 54,300 384,210 106,159 813,002
Aug 262,968 59,498 370,840 93,888 787,194
Sep 219,202 75,221 457,307 145,198 896,928
Oct 238,336 37,567 509,469 214,894 1,000,266
Nov 275,410 67,534 506,555 115,387 964,886
294,12
Total 1,264,250 0 2,228,381 675,525 4,462,275
Growth- 205.62
% 5.85% % 111.66% 171.35% 72.13%
Table 12: cement exports in 2008-09
30
TOTAL IMPORTS
IMPORTS & EXPORTS ANALYSIS

Cement Imports
Nil
Cement Exports
The export may reach to $ 500 million increase

during 2008. Because Afghanistan is Pakistan’s
largest cement export market.
Table 13: imports & exports analysis
PAKISTAN TRADE STATISTICS OF CEMENT

INDUSTRY
YEAR IMPORT EXPORT(million
tons)
1997 Nil 0.990
1998 Nil 0.100
1999 Nil 0.101
2000 Nil 0.104
2001 Nil 0.107
2002 Nil 0.430
2003 Nil 1.160
2004 Nil 1.565
2005 Nil 1.505
2006 Nil 2.453
2007 Nil 2.689
2008 Nil 7.716
2009(up to October) Nil 11.00
31
Table 14: Pakistan Trade statistics of cement industry
NEW PLANTS OPENED IN CEMENT INDUSTRY

PAKISTAN
In FY08, Pakistan cement industry brought in 5.84 million tons of new capacity of
cement production taking the total cement capacity to 36.1 million tons. This
includes:
Table 15: NEW PLANTS OPENED IN CEMENT INDUSTRY PAKISTAN
D.G.Khan’s new khairpur plant
Maple leaf’s new productions line of 2.1 million tons each and some
other additions of 1.8 million tons.
Lucky cement with its two new lines of 1.26 million tons capacity of
each.
Fuji cement with its 2.1 million tons new line is expected to come
online.
The Chakwal Group, which acquired management control of Dandot
Cement, is setting up another cement plant, Chakwal Cement
32
The figure below shows the change in the industries of the Cement sector till 1997
Table 16: Evolution of cement industry in Pakistan
PLANTS CLOSED IN CEMENT INDUSTRY PAKISTAN

The cement industry was not performing well in 90’s and mid 90’s. they had to bear
huge losses because of overall low economic activity causes low demand of cement
both from private and public sector. Costly furnance oil, increase in electricity price
and imported craft paper was the main reason of poor cashflow of the cement
sector. Due to massive losses number of units closed down because of their poor
cashflow.
33
CHAPTER 3
HISTORY OF THE CEMENT INDUSTRY
34
AT THE TIME OF INDEPENENCE
The development of cement sector has made rapid strides, both in public and
private sectors during last two decades. The history of cement industry in Pakistan
dates back to 1921 when the first plant was established at Wah.
Pakistan has come a long way since independence in 1947 when the country had
inherited four cement plants having total installed capacity of 0.5 million tons, all of
which were controlled from India. These units were located at Karachi, Rohri,
Dandot and Wah. During the decade of 1948-58, the number of cement units
increased to six.
Figure 18
AYUB KHAN’S ERA

During the Ayub era the economy started to grow and the construction activities
underwent a boom. In 1956 Pakistan Industrial Development Corporation (PIDC)
established two plants at Daudkel and Hyderabad and subsequently more plants
were established in the private sector. However these expansions that took place in
1956–66 could not keep pace with the economic development and the country had
to resort to imports of cement in 1976-77 and continued to do so till 1994-95.
Pakistan is fortunately rich in the deposits of limestone, clay and gypsum, which
constitute basic raw materials for manufacturing of cement. In spite of having
abundant raw materials and rising growth in demand of cement, only five cement
factories were established during the initial thirty years of independence, with
aggregate capacity of 3.2 million tones.
35
Among these units one was established in Hyderabad (Sind) in the public sector. It
was called Zeal Pak and was set up in 1956. Another unit in the public sector was
known as Maple Leaf which was established in the province of Punjab in the same
year. Three units were set up during 1965-66 in the private sector. These were
Javedan in Sind, Gharibwal and Mustehkam in the province of Punjab.
NATIONALIZATION IN BHUTTO’S ERA

After nationalization of industries in early seventies, cement industry remained
under the control of government till late seventies. During this period, growth in
demand of cement was around 7 per cent per annum, whereas new capacities were
not coming up to match with the demand. Consequently, Pakistan had to import
cement for a long period, which reached to a level of 1.3 million tones in the year
1981-82. Import of cement continued from 1971 to 1985. Its scarcity also
hampered the development process in the country.
During the period of Zulfiqar Ali Bhutto all the industrial units, including cement
industry, were nationalized, therefore, no new unit was set up during 1971-77. The
industry was nationalized in 1972 and the State Cement Corporation of Pakistan
(SCCP) was established following the Economic Reforms Order, 1972, and was
given the responsibility to manage the production of cement in the country.
As a result of nationalization, a total of 10 cement units with an installed capacity of

2.8 million tones per annum were transferred to the SCCP. Effective price control
was also vested with the SCCP and for a long time the industry operated under a
regime of strict regulation and price control. While the cement industry was
working under state control, the SCCP established five new units with an installed
capacity of 1.8 million tones per annum.
DE-NATIONALIZATION IN ZIA-UL-HAQ’S ERA
36
During the period of General Zia-ul-Haq, 1977-88, denationalization of industrial
units boosted the investments. Housing and construction industries picked up and
the demand for cement increased. Thus, the number of cement units increased
from 9 to 23 and finally 24. After the change in government in 1977, private sector
was allowed to establish cement plants. As a result, seven projects having a
capacity of 2.54 million tons were installed in private sector and simultaneously,
State Cement Corporation of Pakistan also put four projects having a capacity of 1.6
million tons, enhancing the total capacity of the country to over 8.5 million tons by
the end of 1990.
PRIVATIZATION IN NAWAZ SHARIFF’S ERA

During the regime of Nawaz Sharif the industry went through major transformation.
The industry was privatized in 1990 which led to setting up of new plants. The
government embarked upon an ambitious privatization programme and eight units
were privatized. The units working under the SCCP control are old and inefficient
using 'wet process' whereas the units established in the private sector are new,
efficient and use 'dry process'. With the privatization of cement units after 1990,
The SCCP lost its control over the supply of cement and controlled less than 25% of
the total installed capacity in the country which was shrinking with the
establishment of more plants in the private sector and expansion in the privatized
units.
At that time there was an acute shortage of cement in the Northern areas of the
country. In the first half of nineties, Pakistan had to import cement which led to the
increase in cement prices exorbitantly making cement companies to earn very high
profits. This tempted some of the existing units like Cherat, Pakland, Dadabhoy, Ac
Wah, D.G. Khan, Maple Leaf and Kohat to go for expansion in their plants.
Simultaneously, 5 more new projects with aggregated capacity of 5 million tons

came on the stream. As such, production capacity went up to 16 million tons by the
end of 2000. The five new units in the private sector were Pioneer (Punjab) 1994,
37
Lucky (NWFP) 1996, Askari (NWFP) 1997, Fauji (Punjab) 1997 and Best Way (NWFP)
1998. Privatization and effective price decontrol in 1991-92 heralded a new era in
which the industry has reached a level where surplus production after meeting local
demand is expected in 1997.
GENERAL MUSHARRAF’S ERA
In the year 1999-2000 the cement industry survived from its earlier crisis of excess
production and low demand and resultant under cutting and unhealthy competition.
It came out of red because of joint strategy to tailor production to the market
requirements. This helped the industry to achieve a price level which not only
covered the cost of production but also left some margin of profit to the
manufacturers. This agreed sale price was also accepted by the consumers.
Chart 6: Growth in no. of units

The industry is again on the war-path against its own members. The dispute arose
in Sept. 2000 when the government levied sales tax on the cement industry.
Immediately after, however, the government allowed 4 cement units established in
the NWFP and Baluchistan extension from payment of sales tax till June 2001.
The remaining 19 cement plants operating in Punjab and Sind who were bound to
pay sale tax amounting to about Rs. 20 per bag, could not compete with the four
privileged one. These four units Best Way, AWT Cement, Lucky Cement were
allowed sales tax exemption under an SR0 issued between 1992 and 96 allowing
38
tax exemption to all industrial units set up in NWFP & Baluchistan. The present
government allowed this exemption to only cement industries located in these
areas till June 2001.
HISTORICAL DEVELOPMENT OF CEMENT INDUSTRY

 1947(Bad era): Only four units were producing grey cement
in the country.
 1948-58: The number of cement units
increased to six
 1958-68(Boom era/Ayub era): The cement units
increased from 6-9
 1971-77(Nationalization/Bhutto era): No new
units were setup
 1977-78(Denationalization): Cement units
increased from 9 to 23
 90’s(Dark era /Cement sector had to bear massive losses):
24 units
 Current scenario: 29
players are operating
Table 17: Historical development of cement industry
CHRONOLOGY
39
YEARS EVENTS
1921 The first cement plant established at Wah.

1947 Pakistan inherited four cement plants having total installed capacity of 0.5
million tons
1948-58 The number of cement units increased to six
1956 PIDC established two plants at Daudkel and Hyderabad
1956 Zeal Pak and Maple Leaf were established
1961 Javedan Cement factory was installed as vallika cement
1965-66 Javedan , Gharibwal and Mustehkam cement were set up in the private
sector
1976-85 Started importing cement *
1972 Industry was nationalized and no new units were set up
1972 State Cement Corporation of Pakistan (SCCP) was Established
1981-82 Imports reached 1.3 million tons
1977-88 Denationalization of industrial units boosted the investments.
1977 Number of cement units increased from 9 to 24
1981 Attock Cement factory was established
1990 industry was privatized and eight units were privatized
1992 Production increased by 96% to 7.2 million tons than the previous years
1992-96 tax exemption to all industrial units set up in NWFP & Balochistan till June
2001
Pakistan continued to import till 1995 to meet the acute shortage of cement
1994-95 in the northern areas, which led to increase in prices
1996 Production increased by 21% approx than the previous year
1999-00 crisis of excess production and low demand
2000 production capacity went up to 16 million tons
2000 government levied sales tax on the cement industry
2005-06 two new units were installed
2006-07 The installed capacity increased by 44% to 35 million tons from 24.3 million
tons
2006-07 Exports increased by 41.5% to 2.13 million ton from 1.505 million tons
2007 Cement sales registered a growth of 31% to 17.53 million tons versus 13.25
million tons in 2006
2008 Highest ever dispatches in the history of Cement industry of Pakistan with
the growth if 25% same time last year from 1,823,496 to 2,821,216 metric
tons
40
Table 18: chronology of Cement Industry
CHAPTER 4
PROFILES OF MAJOR PLAYERS
There are three major players in the Cement industry of Pakistan Lucky Cement,
D.G. Khan Cement and best way cement. According to the market share of 2008
lucky Cement occupy 18%, D.G. Khan 13% and
Best way Cement 12%
LUCKY CEMENT
Table 19
YEAR OF FORMATION
Lucky Cement Limited is a Pakistan- based company engaged in manufacturing and
marketing of cement. It first factory was established in 1996 in Pezu, district of
North West Frontier Province (N.W.F.P). According to Wikipedia, it is the largest
cement producer in Pakistan and is the only company with presence in both zones
(north and south)
41
LOCATION OF HEAD OFFICE AND PRINCIPAL OFFICES
Offices • Karachi (Head office)
• Islamabad (Marketing Head Office)
• Lahore
• Quetta
• Peshawar
• Multan
• D.I.Khan
Table 20: head office and principal offices of Lucky Cement
PRODUCTS OFFERED
The Company offers three types of cement:
1. Ordinary Portland cement
2. Sulphate resistant cement
3. Slag cement.
These products are offered under various brand names, including Lucky Cement
(Regular), Lucky Star, Lucky Gold and Lucky Sulphate Resistant Cement (SRC).
Ordinary Portland cement is available in darker shade, as well as in light shades
with different brand names. Slag cement is also available for specific user
requirements.
LOCATION OF MAJOR FACTORIES

There are two factories of lucky cement
Plant 1: Pezu, District Lakki Marwat in North West Frontier Province (NWFP),
42
Plant 2: Main Highway in Karachi Sindh.
Figure 19: Plant sites of Lucky Cement
KEY FINANCIAL RATIOS

Below is the key financial ratios of lucky cement limited, 2008-09
Table 21: key financial ratios of Lucky Cement
43
IMPACT ON INDUSTRY
The strength of lucky cement is its largest capacity and better coverage because of
its two plants. Lucky Cement Limited is the largest manufacturer and exporter of
cement in Pakistan. The company has the highest export market share of 30%
Jul08 –Jun 09
Jul07 - Jun08
Table 22: export and local sales of Lucky Cement
Chart 7: lucky cement exports 2009
44
D.G.KHAN CEMENT
Figure 20
YEAR OF FORMATION
DGKCC was established under the State Cement Corporation of Pakistan Limited
(SCCP) in 1978. DGKCC started its commercial production in April 1986 with 2000
tons per day, clinker based on dry process technology. Plant & Machinery was
supplied by Industries of Japan. Nishat Group acquired DGKCC in 1992 under the
privatization initiative of the government.

Head office • Lawrence road, Lahore
Regional sales • D.G.Khan

Offices • Karachi
• Rawalpindi
• Multan
45
Table 23: location of head office and principal office of D.G.khan Cement
PRODUCTS OFFERED
The Company's main activities are to manufacture and distribute:
• Ordinary Portland
• Sulphate resistant cement.
These products are marketed through two different brands, DG brand & Elephant
brand Ordinary Portland Cement and DG brand Sulphate Resistant Cement.

There are two factories of D.G.Khan Cement Company
FACTORY 1: khofli sattai, Distt. Dera ghazi khan
FACTORY 2: choa saidan shah road, khairpur, tehsil kallar kahar, distt. Chakwal
FINANCIAL RATIOS
Below is the income statement of D.G.khan Company, 2004-08
46
Table 24: income statement of D.G.khan Cement
Below is the balance sheet of D.G.Khan Company, 2004-08
Table 25: balance sheet of D.G.khan Cement
IMPACT ON INDUSTRY
D.G.Khan has a high impact over cement industry as it has maximum market at
southern Punjab and northern Sind. It is the second largest manufacturing
Company of cement in Pakistan. D.G.Khan cement holds second position in cement
industry after lucky cement; this is because the company has second largest
installed capacity in the industry. It’s the first one to explore exports to the Indian
market through sea.
47
BEST WAY CEMENT
Figure
21
YEAR OF FORMATION
Bestway Cement Limited is part of the Bestway Group of the United Kingdom. In
response to successive governments’ efforts to attract foreign investment in the
country Bestway Group has invested heavily in Pakistan. In 1994 Bestway Group
started work on the cement plant in the under developed area of Hattar, Haripur in
the North West Frontier Province, Pakistan. Its initial investment was of US$120
million.
Head office • Islamabad( head office)

• Rawalpindi( marketing head office)
Regional • Lahore
Offices • Peshawar
Table 26: location of head offices and regional offices of Bestway Cement
PRODUCTS OFFERED
The Company's principal activity is to produce and sell cement in Pakistan. Its main
products are
• Ordinary Portland cement
• Sulphate Resistant Cement.
48
Factory 1: Bestway Cement Hattar, Haripur
Factory 2: Chakwal unit 1&2, village Tatral
Factory 3: Mustehkam Cement, Haripur
IMPACT ON INDUSTRY
Bestway Company has a positive impact on cement industry as it has latest
technologies for its quality assurance and most of its product is exported to
Afghanistan. Apart from the usual quality control equipment, Bestway’s laboratories
are equipped with technologies such as X-ray Fluorescent Analyzers and
Diffractometers which were introduced in Pakistan for the first time by Bestway.
FINANCIAL RATIOS
Below is the key data of Bestway Cement Company, 2001-08
49
Table 27: key data of Bestway Cement Company, 2001-08
TRADE UNION OF CEMENT INDUSTRY

All PAKISTAN CEMENT MANUFACTURERS ASSOCIATION
(APCMA)
YEAR OF FORMATION
APCMA is the collective voice of all the cement
manufacturers of Pakistan. It is registered under Trade
Organization Ordinance 2007. It was established on
14th of September 1992 under the Companies Ordinance 1984.
Figure 22
50
LOCATION OF HEAD OFFICE AND PRINCIPAL OFFICES OF APCMA
Offices • Lahore (Head office)

• Karachi
Table 28: location of head office and other office of APCMA
KEY RESPONSIBILITIES OF APCMA

1. To create an understanding amongst the private sector cement
manufacturers of Pakistan for the following purpose :
a. To increase the production of cement
b. To improve the quality of cement produced and to increase exports
c. To avoid undercutting in the sales price
d. To create healthy circumstances for production and sales of cement.
2. To protect, safeguard and promote the interest of its members
3. To help coordination and ensuring co-operation amongst its members to

attain primary objectives.
4. To identify and strengthen industry’s role in the economic development of

the country
5. To help and solve all the problems either faced by the cement manufacturers
as a whole or by individual cement manufacturers
6. Provides up-to-date statistical data/information to the industry and other

agencies
7. To make representations to the government or other authorities for and on

the behalf of cement manufacturers in general and the trade in particular
8. To convene when necessary conferences and seminars at such times and

such places as may be determined for the promotion of cement industry in
Pakistan.
9. Focuses infrastructural problems (Rail, Coal, Power, etc) and suggests

suitable measures for their solution.
51
10.Interacts for Industry's problems with the Government and co-ordinates
various activities with other bodies.
REGULAR EVENTS OF APCMA

• Annual elections
The elections for the management and President are held every year in
which 80% participation of the members is mandatory.
• Annual General Meeting
The General Meeting of the association is held annually at the head office of
APCMA in Karachi. The meeting is presided by the Chairman APCMA and
upcoming issues , yearly progress, The Announcement of final result of
election of members of executive committee and office bearers and Approval
of annual audited accounts of APCMA.
FAILURE OF APCMA
Price war was started in 2006 which was resulted due to market saturation by
major cement plant expansion. DGKK was the first player to destabilize the
established industry, set prices in order to transfer its excess production capacity
On 21st Feb, 2007 the govt. has given one week deadline to APCMA to bring down
the unjustified cement prices or face action including ban on export. The
government of Pakistan held a detailed inquiry and ordered All-Pakistan Cement
Manufacturers Association (APCMA) to increase production and reduce the price of
cement to its original level.
APCMA Expected the yearly sale to grow by five per cent however total dispatches
had increased by an insufficient two per cent in 2008-09.
Competition authorities in Pakistan fined about $77 million on 20 cement

companies found guilty of operating as a cartel and raising prices under mutual
agreement.
ACHIEVEMENTS OF APCMA
• Took measures to bring prices to normal levels on in 2006
52
• Suspend export of cement from the 6th April 2006 to 30th April 2006, which
resulted in the availability of additional 200,000 tons of cement in the
domestic market
• Increased the capacity utilization from 86% to 92 % of total installed
capacity, which brought an additional 91,000 tons of cement every month.
• Reduction in excise duty by Rs 10 per bag which enabled stability in cement
prices this year (2009)
53
CHAPTER 5
WTO’S REGULATIONS AND ITS ECONOMIC
IMPACT
Pakistan was one of the WTO’s members when it was established in 1995. There is
a considerable impact of WTO on all sectors of Pakistan's economy. Pakistan’s
domestic industry faces problems of increased imports and unfair practices under
the global trade regime. Pakistan through national legislation has come up with
anti-dumping laws against dumping, countervailing duties laws against subsidies
and safeguard action laws against surge of imports in order to protect its domestic
industry.
1. DUMPING
A product is considered dumped if the export price is less than the price charged
for the like product in the exporting country. Thus, one identifies dumping simply
by comparing prices in two markets.
Anti-Dumping Duties Ordinance 2000
Pakistan through Anti-dumping Ordinance, 2000 has repealed the Import of Goods
Ordinance, 1983 and has given effect to WTO provisions relating to imposition of
anti-dumping duties in order to offset dumping. This Ordinance has also provided a
framework for investigation and determination of dumping and injury in respect of
goods imported into Pakistan. The rules made by Pakistan in this regard are Anti-
Dumping Duties Rules, 2001.
Agreement on Anti-Dumping
The Agreement on Anti-dumping elaborates the provisions of Article VI of GATT

1994. The GATT provides the right to the contracting parties to apply anti-dumping
measures i.e. measures against imports of a product at an export price below its
“normal value”, if such dumped imports caused injury to a domestic industry in the
territory of the import contracting party.
54
2. SUBSIDY
Subsidy contains three basic elements:
(i) A financial contribution
(ii) By a government or any public body within territory of a WTO Member
(iii) Which confers a benefit?
All three of these elements must be satisfied in order for a subsidy to exist
Countervailing Duties Ordinances, 2000
The basic aim of these provisions is either to prohibit or to restrain the use of
subsidies by a WTO Member that affects the interests of other Members. However,
the rules permit the importing country to take remedial measures, which could take
the form of countervailing duties on subsidized imports. Pakistan through
Countervailing Duties Ordinance, 2000 has given effect to WTO provisions relating
to imposition of countervailing duties to offset such subsidies. This has been done
by providing a framework for investigation and determination of such subsidies and
injury in respect of goods imported into Pakistan. The rules made by Pakistan in this
regard are Countervailing Duties Rules, 2002.
Agreement on Subsidies and Countervailing measures
The Uruguay Round Agreement on Subsidies and Countervailing Measures (SCM)

lays down rules on the subsidies for industrial products and on countervailing duties
to counteract the effects of subsidies. Subsidies are divided into three categories;
prohibited subsidies, actionable subsidies and non-actionable subsidies. Export
subsidies and those contingents on the use of domestic as opposed to imported
products are categorized as prohibited subsidies. However, least developed
countries (LDC’s) and developing countries with per capita income of less than $
1,000 are exempt from this restriction and may use prohibited subsidies. Non-
actionable subsidies include those for research and development, for backward
regions and for environmental regions. All the remaining subsidies are actionable
subsidies.
55
3. SAFEGUARD ACTIONS
Safeguard measures are defined as "emergency" actions with respect to increased
imports of particular products, where such imports have caused or threaten to
cause serious injury to the importing Member's domestic industry.
Safeguard Measures Ordinance of 2002
Pakistan through Safeguard Measures Ordinance, 2002 has given effect to the
provisions of Article XIX of the General Agreement on Tariffs and Trade, 1994, and
to the WTO Agreement on Safeguards for the imposition of safeguard measures.
This has been done by providing a framework for investigation and determination
of serious injury or threat of serious injury caused by products imported into
Pakistan. The rules made by Pakistan in this regard are Safeguard Measures Rules,
2003.
Agreement on Safeguards
Whereas the agreements on anti-dumping and SCM provide remedies for domestic
producers if they are hurt by unfair imports, the Agreement on Safeguards provides
remedies for domestic producers injured by fairly traded imports. It allows the use
of temporary protective measures but sets rules to guard against the abuse of such
measures.
REGULATIONS OF THE OTHER INTERNATIONAL

TREATIES
There was increasing pressure from international governing bodies, such as the ILO
and WTO and other organizations like the International Confederation of Free Trade
Unions (ICFTU), with regard to the issues of labour rights, the role of unions and
labour standards involving the Therefore, it is crucial for both the international
community and the Pakistanis people to seek a more informed perspective on the
current situation and the future engagement of the Pakistanis economy into the
global economic system, as well as Pakistan’s future economic and political
reforms.
56
LAWS RELATED TO THE CEMENT INDUSTRY
S.R.O. 386 (I)/94.- In exercise of powers conferred by section 230 and 506 of the
Companies Ordinance, 1984 (XLVII of 1984), read with the Finance Division
Notification No. S.R.O. 698 (I)/86, dated the 2nd July, 1986, the Corporate Law
Authority is pleased to make the following Order, the same having been previously
published as required by sub-section (I) of section 506 of the said Ordinance,
namely:-
CEMENT INDUSTRY ORDER 1994
A. Short title, application and commencement
(1) This Order may be called the Cement Industry, Order 1994.
(2) This Order shall apply to every company engaged in production, processing and
manufacturing of clinker or cement or both.
(3) It shall come into force on such date as the Corporate Law Authority may, by
Notification in the official Gazette, appoint.
B. Maintenance of records
(1) Every company shall, in respect of each financial year commencing on or after
the commencement of this Order, keep cost accounting records, containing inter-
alia the particulars specified in the Schedule to this Order.
(2) The records referred to in sub-paragraph (1) shall be kept in such a way as to
make it possible to calculate from the particulars entered therein the cost of
production and cost of sales of each of the products referred to in sub-paragraph
(2) of paragraph (1) separately, during a financial year.
(3) Where a company is manufacturing any other product in addition to clinker or

cement or both, the particulars relating to the utilization of materials, labor and
57
other items of cost in so far as they are applicable to such other product shall not
be included in the cost of clinker or cement or both.
(4) It shall be the duty of every person referred to in sub-section (7) of section 230
of the Companies Ordinance, 1984 (XLVII of 1984), to comply with the provisions of
subparagraph
(1), (2) and (3) in the same manner as they are liable to maintain financial accounts
required under section 233 of the said Ordinance.
C. Penalty
If a company contravenes any of the provisions of this Order, such company and
every officer thereof referred to in sub-paragraph (4) of paragraph 2 shall be
punishable under sub-section (7) of section 230 of the Companies Ordinance (XLVII
of 1984), 1984.
ECONOMIC IMPACT OF WTO ON CEMENT INDUSTRY

PAKISTAN
Pakistan follow must follow the role of WTO. Before WTO agreement there was a
serious disconnect between the needs of the industry and the availability of special
skills suited to the needs of the industry. There was no data available so that the
industry could match the needs and the skills available in the domestic manpower
market. It was also pointed out that the existing number of technical and vocational
centers had been languishing for the past several years. These were usually run
and managed by the Provincial the Governments while the provincial the
Governments do not.
Industries that have recently developed and have become capable of competing
with foreign firms are more likely to meet the challenge of increased Changing
patterns of HRM in Pakistan trade and undergo restructuring to consolidate their
businesses and become more competitive.
58
The demand of Pakistani cement is expected to continue to grow at the rate of 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 will dramatically increase
this demand. Deregulation after accession of Pakistan to WTO is expected to open
the window of competition from cheaper markets. There may be no tariff after this
deregulation on import of cement allowing its entry into Pakistan from cheaper
market at lower rate. Cement from cheaper markets may also block Pakistan’s
export of cement to its neighboring countries.
WTO regime will have no negative impact on the operation of the cement sector.
On the other hand it is felt that WTO might offer opportunities for exporting
cement/clinker to the neighboring countries.
Pakistan is a signatory to the WTO and cannot keep its eyes shut to the realities.
What Pakistan needs to do is to make the best of a given situation and try and
develop a strategy to get maximum benefit from globalization and WTO.
• The local industry now cannot be protected with the use of quotas or very
high tariffs. The government needs to build a very strong network of Anti-
dumping and countervailing duties to protect the local industry against the
onslaught of unfair foreign competition.
• The developing countries including Pakistan face problems in hiring law firms
to advice on WTO related issues, which is a constraining factor in seeking
relief from Dispute Settlement Body (DSU). This underscores the need to
train local lawyers with WTO expertise.
• Our survival lies in enhancing credibility through adoption of international
quality standards, but Pakistan has a long way to go in obtaining certification
of ISO’s and other standards. A proper policy is required in this direction
which should involve both public and private quarters to address this issue.
• Special policies are needed for sectors which are working under deletion
program such as automobiles and engineering goods so that they could
become efficient in shortest possible time.
59
ECONOMIC IMPACT OF WTO ON CEMENT INDUSTRY
IN OTHER COUNTRIES
CHINA
China has benefited from joining WTO others have suffered due to the loss of
domestic industries. In China, foreign investment is playing an increasingly
important role in shaping up the Chinese market. China is the world's second
largest cement exporter, accounting for about 17% of total global cement trade.
WTO accession should not have much of an impact on the cement industry, as tariff
on cement and clinker dropped only from 12 percent to 10 percent in 2001 and is
not due to fall any further. In sum, China's experience reveals a success story
because domestic protection has not stood at high levels before joining WTO.
INDIA
As India accepts the WTO norms of free trade, the cement industry's survival,
similar to the whole industrial sector, in the changing scenario grossly depend on
the competitiveness of the Indian product in comparison with major cement
producing countries in the world like Korea, Indonesia, Japan and others.
Domestically, the growth of cement plants at various stages in the Indian cement
industry is always affected by the government policies. The policies of control on
cement for a long time followed by consecutive partial and total decontrol have
contributed to the gradual opening up of the market for cement producers.
Countries that have already reduced their tariff rates before joining WTO, more
likely will benefit from entry, though, countries with high tariff rates that need to
liberalize their domestic markets to imports suddenly will more likely tackle with
potential losses.
60
CHAPTER 6
INCENTIVES
INCENTIVES OFFERED TO CEMENT INDUSTRY IN
PAKISTAN
• Government has charged Rs.750 excise duty on per ton, plus 15 percent
sales tax on cement. It is proposed that the government should reduce
excise duty by Rs 450 per ton in the forthcoming budget while the remaining
half should be eliminated altogether along with the special excise duty.
Besides this, sales tax should not be charged on excise duty paid value.
• The government has reduced customs duty on Pet Coke to 5% Customs duty
on imported coal has been exempted.
• The share for development projects have increased. The Budget for Annual
Development Plan has been improved.
INCENTIVES OFFERED TO CEMENT INDUSTRY

PAKISTAN IN PAST
• During the period of General Zia-ul-Haq, 1977-88, denationalization of
industrial units boosted the investments. Housing and construction industries
picked up and the demand for cement increased. Thus, the number of
cement units increased from 9 to 23.
• Excise duty on cement was reduced by 25 percent to reduce the cost of
construction.
• The government has followed the policy of deregulation and decontrol under
which the price of cement was determined by market forces
• In order to promote growth in the cement sector, the Government of Pakistan
has allowed duty-free import of plant and machinery not manufactured
locally.
• The ban on export was lifted as the completion of new cement plants
reduced prices down to Rs300 and below.
61
• The government's proposal to shift export of cement from Karachi to Gwadar
to give business to Gwadar. Cement exporters are facing heavy demurrages
at Karachi ports and therefore shifted 20 percent workload of Port Qasim and
Karachi Port to Gwadar Port.
INCENTIVES ASKED BY CEMENT INDUSTRY

PAKISTAN
• Although things are improving but much is needed to be done to sustain the
strength of the sector in the days to come.
• With the full conversion of cement sector to the coal firing system, Pakistan
is saving about $70 million on the import of furnace oil per annum. This is
resulting in a low price per bag of cement and is encouraging domestic
demand for cement.
• The annual demand for cement in the neighboring countries, which are not
the producers of the cement, always offer good prospects for export of
cement from Pakistan, provided the government agrees to allow moderate
relaxation in taxes.
• Besides current export trend to Afghanistan, there is sufficient scope of
export in the countries like Bangladesh, Sri Lanka, Singapore, Egypt,
Myanmar, Vietnam, Malaysia and Nepal. All these countries are not the
producers of the cement and meet their cement needs through imports.
• Another factor to keep this sector alive is to use cement in the construction
of the huge national project of Gwadar port in Baluchistan, Karachi-Makran
coastal highways. The use of cement in the huge network of irrigation canals
and new dam projects can also contribute in bridging the gap between
demand and supply in the cement sector.
• Government of Pakistan should provide subsidies to the cement industry for
the purchase of electricity.
• Government of Pakistan should provide infrastructure to the cement industry
to setup new factories.
• Proper workshops that are held under the supervision of experts so that the
practical knowledge is properly imparted to the labor.
62
• The cement industry can use reward and bonuses to increase the
motivational and performance level of the labor force.
• Foreign and local experts should be hired to do the research and
development.
• Plants that have completed their working life should be phased out and new
plants should be imported or setup up locally.
• Government of Pakistan should provide funds to the cement industry so that
they can import new plants.
• Better machinery and management should be used to become cost efficient
and competitive.
BENEFITS PROVIDED BY CEMENT INDUSTRY TO

OVERALL SOCIETY
Figure 23
The capacity of cement plants increased to 33 million tons at the end of year 2006
as compared to 21 million tons in January 2006, showing an increase of about 57
per cent. On the other hand, the country’s domestic demand is around 22 million
tons.
• Demand is expected to remain strong with the continuation of major
infrastructural projects.
• Pakistan ranked 5th cement exporter in World. The cement industry of
Pakistan has established its reputation as a good quality product.
• Despite an excess supply of 11 million tons in 2008, it is estimated that the
price would increase in domestic as well in regional markets that may surely
boost the profitability and give relief to the industry on its new investment.
63
• Cement industry has been playing significant role for the uplift of our
economy by contributing billions of rupees into the national exchequer in the
shape of sales tax, excise duty and income tax. The Company has been
earning precious foreign exchange for the country through export proceeds.
The Company also brought foreign investment of US $110 million in the year
2008.
• Cement has made a significant contribution for the export of cement and
earning of precious foreign exchange for the country which was needed
badly. And cement industry have 35% share in the overall export of cement
from the country
INCENTIVES OFFERED TO CEMENT INDUSTRY IN

OTHER COUNTRIES
• India is offering tax incentives for setting up new cement capacities which
offers an advantage to the new players by allowing them to retain the sales
tax collected from consumers. New entrepreneurs have chance to enter the
field. This is why the Indian cement industry is the most fragmented in the
world. It is a peculiar situation where none of the players have a market
share of over 12 per cent making it impossible to maintain a price discipline.
• Government of India has increased allocation for national highways,

Jawaharlal Nehru National Urban Renewal Mission and urban housing which
have boosted confidence among the cement industry.
• To encourage local production of cement, the Nigerian government has

approved a series of measures.
a. It has banned the importation of bagged cement and made

restrictions on the issuance of cement import licenses
b. A levy has been introduced on 500 naira (US$3.37) per tons on all
cement imports to assist in the development of local capacity through
the establishment of a cement training institute in Nigeria.
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c. Reinstatement of tariff incentive for imported spare parts and
machinery to cement manufacturers.
d. Two to three years duty-free period of importation for machinery,

equipment and spare parts to cover the plant building phase and the
first two years of commencement of production.
e. Tax deductible incentives on investments in system conversion to

coal firing
f. Removal of all forms of restrictions on the importation of gypsum.
g. Reduction of import duty on gypsum to a maximum of 5% until local

production on commercial basis is achieved.
• Venezuela nationalized its cement industry in order to boost construction

because the foreign companies exported cement while the Venezuelan
market suffered from high prices and shortages.
CHAPTER 7
PRODUCTION PROCESS
MATERIALS AND ENERGY

The following raw material is required in the production process
1. Lime stone: This raw material is company owned and is extracted from the near
by mountains. Limestone has the highest composition in the cement product. 75%
to 80% of the cement constitutes of limestone
2. Clay: Clay is another natural resource. This raw material is also company owned.
15% to 20% of cement composition comprises of clay
3. Iron Ore: Iron Ore is the only resource that is bought from contractors. Iron Ore
is added in small quantities and it helps to strengthen the cement.
4. Gypsum: Gypsum acts as a retarding agent. It slows down the hardening

process which in turn gives the constructor enough time to use it which in turn
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gives the constructor enough time to use it. Again it is taken from nearest
mountains.
5. Fuel: It is used mainly for power generation. Furnace oil is used mainly for power
generation. Initially the companies was relying on WAPDA for power supply but now
the companies have their own electricity generation plant that provides up to 50%
of the total requirements. With the increase of furnace oil prices the companies are
expected to move to adopt coal as a more cost efficient and environmentally
friendly fuel for kiln firing. Today the management is exploring possibilities of
alternative and cheaper fuel such as waste firing etc.
1. PORTLAND CEMENT
Two different processes, "dry" and "wet," are used in the manufacture of Portland
cement in Pakistan. Rock is the main raw material in the production of cement and
the first step after quarrying in both processes is the primary crushing. Mountains
of rock are fed through crushers capable of handling pieces as large as an oil drum.
The first crushing reduces the rock to a maximum size of about 6 inches. The rock
then goes to secondary crushers or hammer mills for reduction to about 3 inches or
smaller.
Wet process:
In the wet process, the raw materials, properly proportioned, are then ground with
water, thoroughly mixed and fed into the kiln in the form of a ”slurry" (containing
enough water to make it fluid).
Dry process:
In the dry process, raw materials are ground, mixed, and fed to the kiln in a dry
state. In other respects, the two processes are essentially alike.
The raw material is heated to about 2,700 degrees F in huge cylindrical steel rotary
kilns lined with special firebrick. Kilns are frequently as much as 12 feet in diameter
large enough to accommodate an automobile and longer in many cases than the
height of a 40-story building. Kilns are mounted with the axis inclined slightly from
the horizontal. The finely ground raw material or the slurry is fed into the higher
66
end. At the lower end is a roaring blast of flame, produced by precisely controlled
burning of powdered coal, oil or gas under forced draft.
As the material moves through the kiln, certain elements are driven off in the form
of gases. The remaining elements unite to form a new substance with new physical
and chemical characteristics. The new substance, called clinker, is formed in pieces
about the size of marbles.
Clinker is discharged red-hot from the lower end of the kiln and generally is brought
down to handling temperature in various types of coolers to lower the clinker to
handling temperatures. Cooled clinker is combined with gypsum and ground into a
fine gray powder. The clinker is ground so fine that nearly all of it passes through a
No. 200 mesh (75 micron) sieve. This fine gray powder is Portland cement.
2. WHITE PORTLAND CEMENT

In addition to the eight types of Portland cement, a number of special purpose
hydraulic cements are manufactured. Among these is white Portland cement which
is produced in Pakistan. White Portland cement is identical to gray Portland cement
except in color. During the manufacturing process, manufacturers select raw
materials that contain only negligible amounts of iron and magnesium oxides, the
substances that give gray cement its color. White cement is used whenever
architectural considerations specify white or colored concrete or mortar.
PRODUCTION PROCESS OF CEMENT
67
Chart 8: flowchart of cement manufacturing process
68
CHAPTER 8
PRICING AND COSTING
After having a detailed analysis about the regulatory requirements and incentives
provided to the industry, it is essential to understand the basic cost structure of a
cement industry. It explains the cost classification of a cement industry,
determinants of fixed and variable costs and average price range of different types
of cement produced in Pakistan. Finally a pricing model has been proposed which
might be applied by any cement industry.
PRICE LIST OF PRODUCTS IN CEMENT INDUSTRY

PAKISTAN
In April, 2009 a bag of cement was being

sold at Rs 310 on average at retail level,
which was decreased to Rs. 270 per bag
due to a large stock of cement bags left
with the cement manufacturers. APCMA
has reduced prices to dispose of its huge
stock, which left with them, as the India
has recently cancelled an order of over
25,000 tons of cement.
Figure 24
While the main reason of this reduction is that there are reports that Government
has slashed its development budget by Rs 118 billion which shows that
construction work in future will go downward further. The cement prices might
further decline due to market circumstances.
69
AVERAGE CEMENT PRICE
In 2005 Rs.335 5okg/bag
In 2006 Rs. 430 50kg/bag.
In 2007 Rs. 315 50kg/bag.
In 2008 Rs. 220 50kg/bag.
In 2009 Rs. 270 50 kg/bag
Table 29: average cement price (yearly)
After the decline in cement rate different companies are selling their brands at
Rs.270 per 50kg bag.
FIRM’S SELLING PRICE, 2009

Maple leaf Cement Rs.270 50
kg/bag
DGK Cement Rs. 270 50
kg/bag
Lucky cement Rs. 270 50
kg/bag
Table 30: firm’s selling price, 2009
PRODUCT LINE 50KG PER BAG (Rs)

Ordinary Portland Cement 270
White Cement 350
Slag Cement 250
Sulphate resistant 315
Cement
Table 31: selling price of products in cement industry, 2009
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CEMENT PRODUCTION COST CLASSIFICATION
Figure 25: Cement industry Cost classification
DETERMINANTS OF FIXED AND VARIABLE COSTS

The following table shows the determinants of fixed and variable costs for a cement
industry
TYPE OF DETERMINANTS
COST
VARIABLE DIRECT COST
COSTS Purchase of raw and packing material
Fuel and power cost
Store and spares (including repair and
maintenance)
Purchased equipment cost
Purchases equipment installed
Instrumentation installed
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conveyer belt installed
Electrical installed
Building (including services)
Land
Yard improvement
Services facilities
INDIRECT COST
Engineering and supervision
Construction expense
Legal expense
Contractor fee
Contingency
Salaries and wages
FIXED COSTS Depreciation
Selling and administrative expense
Financial expense
Miscellaneous expense
Table 32: Determinants of fixed and variable costs of a cement industry
Following are the average cement manufacturers’ costs with respective percentage
components. In 2008 Average industry cost of cement bag/50Kg = Rs.193
Source: CCP Internal Research
72
Table 33: average cement manufacturers’ cost
PROPOSED PRICING MODEL

The pricing model we have formulated has the following cost components:
• COST OF PRODUCTION (C)
Its total fixed cost and total variable cost for producing cement. (Base price)
• EXCISE DUTY (ED)
Tax charged on the Cement manufacturers for the cement produced within the
country. The federal excise duty is Rs 900 per ton
• SALES TAX (GST)
Tax based on the cost of the cement purchased and collected directly from the
manufacturers. The general sales tax is 16% on the duty-paid price of cement per
ton in Pakistan.
• AVERAGE FREIGHT AND UNLOADING (FR)
Transportation of cement to the end-user, the freight and transport cost up to Rs

500 per ton or Rs 15-25 per 50-kg bag depending upon the distance involved
• WHOLESALER /DEALERS COMMISSION (C)
Producers sell 50-kg, paper-sack bags of cement to wholesale dealers for cash
payment in advance. In this way, manufacturers can recover their working capital
investment and, in the process, pass off the title and risk to dealers who bear all
costs related to transport, insurance, in-carriage damage, if any, and stock spoilage
due to lack of use. Dealers’ margins range around Rs 175-200 per ton or Rs 4.50-Rs
5.00 per 50 kg bag. Retailer margin is a relatively low Rs 2-3 per 50 kg bag.
• MANUFACTURERS PROFIT (MP)
The overall demand-supply matrix allows some cement manufacturers earn 10 per
cent return on equity, which ensures sufficient profitability for them to continue to
manufacture and sell cement.
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COST OF PRODUCTION {C(x)}
C(x) =V.C(x) +F.C(x)
Equation 1: cost of production for cement industry
Where V.C(x) is the variable cost of cement per ton
F.C(x) is the fixed cost for of cement per ton
The model thus formulated is as follows:
P(x) = C(x) +ED +GST +FR +C +MP

Equation 2: Pricing Model for a cement industry
Where, P= Price of Cement per ton
C(x) = Cost of production of cement per ton or the base price
ED=Excise Duty per ton
GST= General sales tax
FR= Freight charges per ton
C= Wholesaler/dealers commission
MP= Manufacturers Profit
CHAPTER 9
KEY ISSUES AND THEIR SOLUTIONS
74
KEY ISSUES IN THE ECONOMY THAT IMPACT
CEMENT INDUSTRY
 The Pakistani currency has been depreciating. This has caused a greater
problem to the industries who have taken loans in the foreign exchange
currencies.
 According to the federal bureau of statistics, Pakistan hit record inflation

during 2008. The SBP, in order to control the inflation, tightened the
monetary policies by increasing the interest rates. The increase in the
interest rates made the industries pay more interest against the long term
loans that they had borrowed at lower interest rates.
 The investors in the cement sector are well aware of the importance of
technology in the present day and they realize the returns they can get using
advance technologies. The cement factories such as D.G. cement, lucky
cement and may other factories is using latest technologies. However, the
old cement industries such as maple leaf are now shifting towards the new
technology as well.
 Main component of the cost is fuel. Pakistan's cement industry has converted
their plants to coal considering it to be the cheapest fuel, but its price in
international markets has gone up by more than 300 percent in the last one
year, which directly relate increasing the cost of Production.
Certain factors that affect the growth of cement industry are as follows:
• Slow construction activities in the country badly upsets domestic sale of
cement.
• Higher GDP growth has positive impact on cement demand.
• Reconstruction work in result of earthquake boosts construction material
demand
• Four large Dams (Bhasha Daimer Dam, Munda Dam, Akhori Dam and Neelum
Jhelum) are announced by government. Construction of these dams will
generate demand of 3.7 million tons.
75
PROPOSED SOLUTION
• Federal Excise Duty and GST over Cement industry should be reduced. It’s
being treated as a luxury item for the purpose of taxes and duties.
• The local cement industry faces high fuel costs. The government has given
incentives in order to facilitate their conversion to coal, which is widely
available in the country.
• High Freight charges should be reduced as it’s affecting negatively the
domestic demand of cement.
• Government of Pakistan should stress on factors that increase the GDP
• Government of Pakistan should do its upmost to control the instability in the
country.
to setup new factories
• Government of Pakistan should provide incentives to the cement industry so
that they can import new plants.
IMPACT OF POLITICAL PARTIES ON THE CEMENT

INDUSTRY
• Low domestic cement demand in the country is due to the political
uncertainty.
• The political stability in Pakistan is at unrest. Due to this, the cement
factories are facing problems regarding the investments they have made.
• The stock market has shown sheer down fall since the political unrest.
Although the market share index showed improvement after the resignation
of Pervez Musharraf on 18th of August. But still the failure to restore the
judges on time and many other issues has made the share index to slope
downward once again.
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KEY HURDLES IN MARKETING
• Since cement is a specialized product, requiring sophisticated infrastructure
and production location. So, most of the cement industries in Pakistan are
located near/within mountainous regions that are rich in clay, iron and
mineral capacity. Structure of Cement industry in Pakistan is as such that
there is not much substitutability to buyers. Which shows that the Cross
elasticity of demand is negligible.
• Consumers face a tough decision with regards to prefer which brand over
which because of the similar pricing of cement industry.
• A price war was witnessed which ended up with no conqueror. Similar
apprehensions exist for the future. Any hurdle in the growth of cement
demand may force the sector into the price war. Yet, we expect cement
manufacturers to act wise and learn lesson from the history. Any mistake,
similar to the one made in the last decade, will again drive the sector into
the era where all are losers with no winner.
• Containers are used for transportation purposes and even trains when
cement is required urgently from north to south or vice versa. As for exports,
ships are launched from ports but the cost of transportation faced by firms is
so high that at maximum they can reach till South Africa for exports and the
price gets out of budget when the ship reaches USA
• Not much of innovation is possible in this industry. Intense rivalry can make
it difficult for smaller firms to survive.
• Firms cannot compromise much on the prices. It is hardly possible for any
firm to get an edge due to price.
PROPOSED SOLUTION
• Measures should be taken to insure that the customers are not exploited by
the cement industry.
• Cement industry should enter into long term contracts with cement
transporters to gain discounts and seek reduced transport prices.
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• Cement industry can enter in to contracts with international logistics
transportation companies such as Mersk to export cement to USA in huge
volumes at low cost
• When the big companies are forming an association, small manufactures
should be also considered as otherwise they would go out of business.
AVAILABILITY OF FINANCE
Cement plant is a highly capital intensive business which requires a lot of
investment which only a Giant company or Group can afford. In old times, when
cement plants were established, comparatively less investment was required.
There were also banks, banker’s equity etc that provided loans easily. Now only self
financing exists which a bank provides and they sees the feasibility of the project.
A new plant should be established after wide market research in an industry where
the capacity is already in surplus. This could be possible only if production cost is
targeted. The old cement plants were not established keeping in mind the
production cost. Nowadays about 70% cost constitutes the energy cost. If a
company focuses on lowering the energy cost, making efficient use of
technologically advanced machinery then the production cost would apparently be
low. There is always a potential for such plants.
Types of loans provided to the industry
Short term loans:
Short term loans are obtained against the current assets of the company. When the
company requires a short term loan it sends a request for the loan to the bank. The
banks or other financiers put down their facilities in a term sheet against which
they can provide the loan to the company.
Long term Loans:
The long term loans are obtained against the fixed assets of the company. These
assets must be insured by the insurance company. This is the basic requirement for
the bank. When the company requires a huge amount of loan it contacts to the
78
bank for the loan. The bank than forms a group with other banks in order to
arrange the amount. A finance agreement is signed by both the parties and the
loan is given under the agreed terms and conditions.
TRADE ISSUES
• Import policy regarding construction equipment is not reorganized.
• Trade policy does not facilitate contractors.
• Regulatory framework discourages international contractors/consultants.
• Shortage of Electricity or power break down is a major constraint as the
frequent restoring to load shedding is causing an adverse effect on the trade
and industry.
• Duties on import of Fuel
• Strict procedures for registration of contractors by Pakistan Engineering
Council (PEC).
• Audit should play a positive role.
PROPOSED SOLUTIONS
• Custom duty over the import of pet coke should be withdrawn as its’
negatively affects the cement industry.
KEY HUMAN RESOURCE ISSUES IN CEMENT

INDUSTRY
• Shortage of qualified and skilled manpower at all levels is an important issue.
• Another issue is lack of training facilities for the development of required
human resources.
• Human resource policies of clients, contractors and consultants need
improvement.
• Fully skilled and semi skilled workers in search of opportunities have gone to
the Middle East and other foreign countries.
• Some contractors and consultants lack professional management.
79
• Inadequate research and development.
• Limit use of IT in industry.
PROPOSED SOLUTIONS
• Availability of qualified and skilled manpower should be given priority by
government
• The training facilities should be developed at fast track.
development.
• Proper workshops that are held under the supervision of experts so that the
practical knowledge is properly imparted to the labor.
• Better machinery and management should be used to become cost efficient
and become competitive.
CHAPTER 10
HUMAN RESOURCE REQUIREMENTS and Key
Issues
Human resource is a critical element of any industry. It is one major cost as well as
an asset for an industry and therefore the human resource requirements must be
studied for a complete analysis of any industry. This chapter therefore explains the
human resource requirements of the cement industry of Pakistan.
80
HUMAN RESOURCE REQUIREMENTS
The human resource requirements of the cement
industry are generalized and explained below. They
include all the basic factors required to build an efficient
human resource and to look after the welfare of the
employees. Better performance can improve company’s
reputation and can lead the company up to a certain
benchmark. The requirements include:
Figure 26
RECRUITMENT AND SELECTION

The recruitment is done on the basis of experience and qualification and having
extra skills and abilities in order to work in the cement industry. There are two
sources to recruit employees:
1. Internal search
2. External search
The source of recruitment depends on the nature of the job, whether it is for the
upper management or for the lower staff.
1. Internal Search
The very first preferred source of recruitment by the company is the internal
search. The policy of the company is to promote – from – within – when ever –
possible. When ever there is any vacancy in the company, the upper management
posts the notice for the “position open” on the bulletin board in the factory or the
office. The internal search depends on the nature of the job, i.e. what sort of
qualification and skills are required for the job available. Incase, no candidate from
with in the company is eligible for the job according to the job specifications, or the
company’s management wishes to look for diversified and variety of talented
candidates, then the company moves towards the external search.
2. External Search
81
The company does recruitment for the out side candidate through advertisements
in the news papers. This is the most frequently used channel by the company. How
ever the company can also advertise on the internet as well on their company’s
website
And selection is done on two bases:

• Through source basically from the upper management and political party
pressure
• On merit basis
TRAINING AND DEVELOPMENT

Basically training of employees is done after the recruitment and selection process.
Training is provided to those who are newly employed and old employees who need
training in order to learn the newly introduced technology, to cope with the
increasing trends of the cement industry worldwide.
In Maple leaf, management training takes place regularly at the head cities from
where the technical operations are controlled. The head cities include Lahore and
Islamabad. Training is also conducted abroad mostly in Denmark since most of the
industries machinery has been imported from Denmark. Technical collaboration for
skill development programs are also being conducted in Germany, Sweden, Turkey
and Egypt.
PERFORMANCE APPRAISAL
The performance appraisal is done according to the employee’s work progress and
providing their best output in achieving the company’s desired goals. The appraisal
criterion that is being used by the company is the feed back from the supervisor
about the subordinate.
EMPLOYEE BENEFITS AND COMPENSATIONS

The human resource management plans for employee’s salaries and compensation
and providing them incentives on the basis of their performance. The general
employee salary and benefit package includes
• Basic Salary
• Bonuses
82
• House allowance
• Free medical benefits
• Subsidized utility bills
• Education allowance for employee children
JOB TITLE, DESCRIPTION AND SPECIFICATION

JOB TITLES
• Project Manager
• Civil Engineer
• Sales Executive
• Business Development Executive
• Marketing Executive
• Accountant
• Project Engineer
• Quantity Surveyor
• Safety Officer
• Site Engineer
• Front Officer Executive
• Executive Assistant
• Purchase officer
• Sales Engineer
JOB DESCRIPTIONS
Skilled Labor Unskilled Labor

Electrical Engineers Helpers
Mechanical (Killen’s Operators, Trolley Men
Crushers, Packers)
Civil Engineers Loaders

Table 34: job descriptions of cement industry
KEY DUTIES OF SKILLED EMPLOYEES:
• Responsible for safety, health and environmental activities including

implementation of policies and procedures to provide a safe work place.
83
 Responsible for manufacturing maintenance, product quality control,
administrative and human resources.
 Responsible for assuring available staff is qualified
 Consults with the General Manager on variation to agreed policies and

financial matters
 Responsible to assure reliable and safe equipment operation according to

cement industry standards.
 Assures produced cement meets market requirements.
 Maintains good employee relationship.
 Initiates actions to improve profit performance.
 Prepares and reviews annual operating budget according to policy and under
the guidance of the General Manager.
 Obeys company policy.
JOB SPECIFICATIONS
Required knowledge, skills and abilities:
Knowledge of:
Concrete tools, techniques, and practices
Concrete and cement mixtures and their elementary properties.
Concrete pipe installation.
Ability to:
Perform a broad range of supervisory responsibilities over others.
Read simple plans, make measurements
Understand and follow oral and written instructions in the English language (for
skilled labor)
Work in a variety of weather conditions with exposure to the outdoor elements.
Move heavy objects (50 pounds or more) long distances (greater than 20 feet).
Operate trucks and equipment in a skilful and safe manner.
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Bend or stoop repeatedly or continually over time.
Travel across rough, rocky, or uneven surfaces at construction sites.
Additional Requirements:
Individuals must be physically capable of operating the vehicles safely, possess a

valid driver's license and have an acceptable driving record.
Pre-employment drug testing is required
ACCEPTABLE EXPERIENCE AND TRAINING:
One year of experience as a skilled cement finisher in this work is required. Other
combinations of experience and education that meet the minimum requirements
may be substituted.
TRAINING INSTITUTE THAT PROVIDES TECHNICAL/

MANGERIAL HUMANRESOURCE
There is not any specific institute available for training of individuals in cement
industry in Pakistan. Training is being conducted by particular firms usually
provided to the skilled labor, designed to meet the objectives of the organization.
In its ongoing activities to provide effective services, firms are seeking to attract
high caliber professionals to take up and achieve its objectives. This initiative is
aimed at strengthen its presence to further enhance its effectiveness. Human
Resources Department is responsible for various activities that include manpower
planning, recruitment and selection, formulating, developing and implementing
Human Resources Policies and procedures, managing employee benefits and
compensation etc.
On the other hand Pakistan Institute of management (PIM) is an institute which is

working under government and individuals can attend short managerial courses
conducted by the institute. PIM is playing an important role in promoting the
85
management training/education. It effectively covers very sharp and important
courses related to different areas. It is part of ministry of industries and production.
CHAPTER 11
PORTER’S SIX FORCES MODEL
After an extensive study of regulatory requirements, incentives, pricing, costing

and issues of the industry, now we need to provide an analysis and formulate a
strategic plan for the Cement industry. The first model for the analysis is the
Porter’s six forces model which essentially includes six forces. These six forces
include:
• Internal Rivalry
• Bargaining power of suppliers
• Bargaining power of buyers
• Threat of new entrants
• Threat of substitutes
• Government intervention
INTERNAL RIVALRY BETWEEN EXISTING PLAYERS

Concentration
The Rivalry exists on the basis of increased productivity. There is a strong
competition among the local manufacturing firms including Lucky Cement,
D.G.Khan Cement, Bestway Cement and Askari Cement. Local competition is so
strong that there is no fear of international rivalry.
Fixed / Variable Cost

The cement rates are set by Government and All Pakistan Cement Manufacturing
Association (APCMA). The cost of production includes 60% the cost of Energy
sources. Coal, furnace oil and Gas are used as a source of Energy. Gas is obtained
from gas lines and whereas Pakistan has huge Coal resource but still we import coal
because our coal contains high percentage of sulphur.
86
We have been using furnace oil as fuel earlier but due to increase in its prices we
have started using coal as its substitute. Coal is used however because the
pressure required for using gas to heat the kiln is not adequate. The factors which
increases the cost for cement include the inflationary trends, increasing
construction work in the country, the increase of oil prices in international market
and political circumstances of the country. Better machinery and management
should be used to become cost efficient and competitive.
Differentiation
All manufacturers compete on the basis of quality. Inter firm competition is so
intense that major players compete with each other on marginal product
differentiation.
Capacity
Pakistan cement industry is expanding its capacity to get the proper advantage of
strong demand of cement in different countries. Capacity of cement production
varies from company to company. The capacity of cement production is 37 million
tons last fiscal year. The production capacity of cement in 2009 is 44.09 million
tons.
This sector has invested about $1.5 billion in capacity expansion over the last six
years. Cement production capacity in the north is 35.18 million tons (80 percent)
while in the south it is only 8.89 million tons (20 percent). The cement
manufacturers in 2007-08 added around eight million tons to the capacity.
Pricing Behavior
Firms cannot compromise much on the prices. It is hardly possible for anyone to get
an edge due to price. The pricing behavior mostly depends upon the market trend.
Pricing behavior changes with the change in the fuel prices and with political
instability in the country. The cement price in our country keeps on changing.
Recently, reduction has been done in cement prices. In April 2009, the 50 kg bag of
cement was sold at Rs 310/- which has reduced to Rs 270/-
The change in cement price occur because the cement manufacturers wants to
dispose the huge stock of cement left with them as India has recently cancelled an
87
order of 25,000 tons. On the other hand there are reports that Government of
Pakistan has cut the budget therefore there are chances that construction work will
go down further and the cement price will be further reduced.
Market/ Company Growth

Housing sector is one of the major drivers of growth for the cement industry, it
consume roughly 40% of cement demand. Lucky cement has production facilities in
Pezu (Production capacity: 13,000 Tons clinker per day) as well as in Karachi
(Production capacity: 8000 Tons clinker per day) it has the tendency to become the
hub of cement production in Asia.
Whereas D.G.khan has a

Cement Market Share production capacity of 5,500
Company ton clinker per day. It has a
Lucky cement 16%
countrywide distribution
DG cement 13%
network and its products are
Bestway cement 12%
preferred due to the
consistent quality. It is list on all the Stock Exchanges of Pakistan.
Bestway Cement is a Company driven by quality consciousness and efficiency. At

Bestway, quality is assured through systematic and effective adoption,
implementation, monitoring and continuous enhancement of quality control
systems using latest methods of analyses.
Table 35: Market shares of cement firms
Formation of cartels becomes a problem for small manufacturers as they are left
alone in the market and their due share in the market is not respected. Not much of
innovation is possible in this industry. Intense rivalry can make it difficult for
smaller firms to survive.
88
BARGAINING POWER OF SUPPLIERS
Supplier Concentration
The cement supply chain is dominated by coal or fuel and power. The price of fuel
is directly related to the cost of oil. The price is determined by international market
and an individual company does not have the power to influence it. The Prices of
both coal and power are determined by the government. To mitigate the high costs
of power the cement players have set up captive power plants. Monopolistic control
of these external cost elements result in high bargaining power with government.
Coal is found in all the four provinces of Pakistan but because our coal contain high
percentage of sulphur, our cement industry is not able to use local coal as a source
of energy and therefore has to import coal from different countries at high prices
like for example china.
However the domestic coal is not of a very high quality but the processing and
blending the local coal with the imported one can produce required heating content
that is much cost-effective than the furnace oil.
According to the data of the All Pakistan Cement Manufacturing Association of mid-
2007, the cost of cement production per tons by furnace oil was around Rs2, 083
whereas the cost of production per tons by coal was Rs8, 68, saving Rs1, 215 per
tons. Similarly, the saving per bag was Rs60.75, which is a huge difference.
Pakistan is fortunately rich in the deposits of limestone, clay and gypsum, which
constitute basic raw materials for manufacturing of cement and the country can
feed these material to existing cement plants for more than 100 years. This
ensures both cheap and smooth supply of raw materials but proximity to raw
materials supply is not a major competitive advantage.
Iron Ore is the only resource that is bought from contractors. Iron Ore is added in
small quantities and it helps to strengthen the cement.
Threat of forward integration

Since coal or fuel and power are supplied by the government there is minor threat
of forward integration.
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BARGAINING POWER OF BUYERS
Availability of Information
The cement industry has very low bargaining power of buyers as it is a government
regulated industry. Cement rates are set by Government and APCMA. Buyers can
choose cement on the base of marginal product differentiation e.g. high
commission.
Switching Cost
Cost-cutting strategy is followed by almost all cement manufacturers. Though,
some large manufacturers like Lucky Cement also follow the differentiation
strategy, but only to some extent. The switching cost of buyer in cement industry is
low because cement prices offered are almost same; the only thing which matters
is the quality and durability of cement.
Price Sensitivity
Prices of cement vary due to geographical location however it effects very little
price changes due to 20% freight cost in the total cost of cement manufacturing.
Recently, Freight charges of 50 Kg bag of cement are between Rs 15 -25
(depending upon the distance). Containers are used for transportation purposes
and even trains when cement is required urgently from north to south or vice versa.
As for exports ships are launched from ports but the cost of transportation faced by
firms is so high that at maximum they can reach till South Africa for exports and
the price gets out of budget when the ship reaches USA.
Retail sales constitute about 80 percent of the total sales and the rest is
institutional sales. The retail buyers don’t have any bargaining power while the
institutional buyers get a discount of 5 to 10 percent as they buy cement in bulk.
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THREAT OF NEW ENTRANTS
Absolute Cost Advantage
The cost and exports may be affected due to weakness of the US dollar. Companies
which can have a sustainable low cost position will have a competitive advantage.
The major players in Pakistan do seem to have a similar cost position. The cost
advantage in cement industry is critical. Since pricing is similar so production
capacity can provide a vague idea with regards to the market share of all
the players.
Economies of Scale
The key barriers would be economies of scale which would favor the bigger players
like lucky, D.G.Khan cement Company etc. Economies of scale are mostly achieved
through maximum utilization of installed capacity of cement plants. While the firms
did encourage a competition, the biggest problem of cement industry is the idle
capacity of various players. As many cement players are not operating at there full
capacity.
Brand Equity/Reputation
Lucky cement does have large brand equity since it is the largest cement
manufacturing firm of the country. However, since the people are not price
sensitive, they are brand loyal to that cement firm which provides them better
quality.
High Capital Requirements

Entry barriers are not too high in the cement industry. The technology is also
available but the major constraint is capital which a big player will have access to.
Cement plant is a highly capital intensive business which requires a lot of
investment which only a Giant company or Group can afford.
In old times, when cement plants were established, comparatively less investment
was required. The loans were provided easily however now the bank provides the
loan after they see the feasibility of the project. A new plant should be established
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after extensive market research in an industry where the capacity is already in
surplus.
Strict Policies and Regulations

• Due to higher interest rates and inflationary concerns are likely to make it
disadvantageous for investors to enter the construction industry.
• Government has imposed high excise duty over cement.
• Government has imposed custom duty over import of petcoke.
• Reduction in the capital budget is expected in the coming year due to which
the construction work will go down and there will be a decrease in cement
demand.
THREAT OF SUBSTITUTES
Available Alternatives
There is no threat of direct substitutes for cement. However, bitumen in road and
engineering plastic in building offer some element of competition
GOVERNMENT INTERVENTION
The government policies are in favor of cement industry. Due to government
favorable policies the cement sector got the highest growth rate of 21.11% among
all industries in Pakistan in the year 2006-07.
The government is considering allowing further concessions and additional

incentives for cement export, with a view to increase overall export volume. These
measures will immensely help in promoting and protecting high investments made
in cement sector in recent years. The Government is improving its Law & Order to
Support Export.
Pakistan has sought USD 17billion funding from international lenders for the
construction of three dams by 2016 which will be needed to avert flood, drought
and energy crisis. Construction of these large dams will generate demand of
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3.7million tons of cement. Government should reduce the duties over import of
petcoke.
APCMA is the trade union of cement industry in Pakistan. It is the collective voice of
all the cement manufacturers of Pakistan. It is registered under Trade Organization
Ordinance 2007. Its main responsibilities are
• To increase the production of cement.
• To improve the quality of cement produced and to increase exports.
• To avoid undercutting in the sales price.
• To create healthy circumstances for the production and sales of cement.
According to the budget policy of 2008-09 by the end of June 2011, the installed
cement production capacity will touch to the level of 49.579 million tones. A
specialized coal, clinker & cement terminal is planned to be setup in Port Qasim
Karachi. The exercise duty will remain at preceding level.
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CHAPTER 12
CONTEXT ANALYSIS
The last and the most extensive analysis of the industry is the Context Analysis.
This analysis includes all the issues and factors identified throughout the project. In
the end, a strategic plan is proposed for the cement industry to be followed.
Context analysis for the cement industry is done in the following steps:
• Defining the market
• Trend Analysis (PESTLE)
• Competition Analysis
-Competition level
-Competition forces
-Competition strategies
• Opportunities and Threats
• Industrial Analysis
-Strength and Weaknesses
• SWOT-i matrix
• Strategic Plan
DEFINING THE MARKET

The cement industry mainly provides the services of construction. These services
include the following:
• House building
• Building roads
• Construction of Dams, Bridges etc
Figure 27
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TREND ANALYSIS
The trend analysis is done on the basis of all the factors influencing an industry
which are not in the control of individual players. These include political, economic,
social, technological, legal and environmental factors.
POLITICAL FACTORS
Political factors include Government regulations and define both formal and
informal rules under which the firms operate. The rule and regulations that the
cement industries follow are as follows:
Employment Laws
 The labor policy issued by the Government of Pakistan lays down the
limitation for the growth of trade unionism, the protection of workers' rights,
the settlement of industrial disputes, and the right of workers' grievances.
 At present, the labor policy as approved in year 2002 is in force. The

minimum wages for unskilled worker is Rs. 2,500. The minimum threshold of
income for taxation of salaried individuals has been enhanced from Rs.
150,000 to 180,000 per annum.
Political stability
 The present situation regarding the political stability is negative in Pakistan.
 This political instability has been in process since attack of 9/11, 2001.
 This instability has affected the businesses adversely.
 The poor security situation and uncertainty leading up to the parliamentary

elections in February have caused a capital flight from Pakistan, and its
rupee currency has fallen 13% against the US dollar since January 2008.
However, the stepping down of Pervaiz Musharraf as president has shown
some hope for the reviving of the political stability.
 More over, the geographical region where Pakistan is located, having the
neighbors such as India and Afghanistan, and the pertaining international
situation regarding the war against terrorism, not only the direct investors
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have stepped back even the investors who have made investments in the
country are backing up.
 The demonstrations, social unrest, suicidal attacks and terrorist’s attacks on

different areas as well are highest risks to the company’s operations.
ECONOMIC FACTOR
Economic factors affect the purchasing power of potential customers and the firm’s
cost of capital. Following are the factors affecting the macro economy:
Economic growth
 The manufacturing sector growth continued 8.4 % in 2007, which is slightly

more moderate than 10 % for the year 2006.
 The industry also suffered from a drastic decline in profitability as the

combined industry profits declined by 56% from Rs 12.3 billion in FY06 to Rs
5.3 billion in FY'07.
 Growth in Pakistan’s exports and imports slowed sharply in 2007. The rate
for exports fell to 3.4%, for imports to 6.9%.
 Pakistan has formulated economic policies that will help the Pakistani
economy to grow stronger but the recent political violence and uncertainties
could slow down the growth.
Inflation rate
 Pakistan, with a population of about 16 million people has undergone a
remarkable macro economic growth during last few years, but the core
problems of the economy are still unsolved. Inflation is one of these core
problems.
 The inflation in year 2008 has recorded to be the highest according to the
Federal Bureau of Statistics.
 Consumer Price jumped to 17.21% in March 2008 according to the statistics

given by Federal Bureau of Statistics.
 The Pakistan inflation accelerated at its fasted speed and the inflation is still
increasing. The reason behind this is that in April 2008 the fuel prices
climbed 8.6 percent and the tension among the political leaders increase.
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Interest rates
 The monetary policy of Pakistan is controlled by the state bank of Pakistan.
 The state bank, in order to control the inflation has taken measures and
tightened up the monetary policies.
 Pakistan has raised its main interest rate by 1 percentage point to 13 % to

help fight inflation.
Exchange rates
The exchange rates of Pakistan with respect to the U.S. dollar, has declined. The
Pakistani rupee has depreciated in 2007. In other words we can say that the value
of the rupee has fallen as the time passed by.
SOCIAL FACTORS
Figure 28
Health consciousness
 Health consciousness among the people of Pakistan has been increasing day
by day.
 The citizens of Pakistan are getting aware of their duties in order to maintain
the healthy environment.
 Government is taking several steps in order to educate, how important it is

for the people to live in the healthy environment.
 The government discourages the operation of the industries with in the city
by charging these factories with environmental charges.
 In spite of this discouragement, there are many factories that are running
inside the city, discharging poisonous gases and chemicals. By the passage
of time, the people as well along with the government are discouraging such
activities.
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TECHNOLOGICAL FACTORS
Automation
 This is the era of high competition
 The Pakistani industries not only have to compete among them selves but
with the international market as well.
 Pakistan is steadily automating particularly its development sectors to rouse

quality production and ensure skilled management, as it would ensure a
good place for the country in the global competitive market.
Technology incentives
 According to the report issued by the ministry of technology, the government

will invest in various fiscal and non-fiscal incentives to nurture, develop, and
promote the use of IT in organizations, to increase their efficiency and
productivity.
 The strategies focus on promotion of industry through incentives, recognition

of software development, creation of investment friendly environment, and
building investors confidence
Rate of technological change
 In recent years, technology has been seen to be progressing at very fast rate
all over the world. It has helped to raise income and lessen poverty in the
developing countries.
 The change in technology can be seen in the Pakistani industries as well.
LEGAL FACTORS
Tax Policies
According to the tax memorandum 2008, the cement industries have to

bear the following rules:
 The tax rates on telephones will be collected at the rate of 10 % of the

amount exceeding Rs. 1000.
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 General sales tax is enhanced from 15 % to 16 % including sales tax on
services under the Provincial Sales Tax Ordinance, etc.
 Due to the increase in the general rates of sales tax, the rate sales tax on
the natural gas has been increased from 24 % to 25 %.
 Excise Duty on cement (that includes Portland cement, slag cement,

sulphate cement and white cement) has been reduced from Rs. 900 to Rs.
700 per ton.
 The rate of tax for the collection at the import stage for all imports of
goods has been reduced to 2 % from 5 % except that of petcoke.
 According to the tax memorandum 2008, the importer will not be taxed at
the importing stage of goods such as mineral fuels.
ENVIRONMENTAL FACTOR
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Figure 29
Emission of carbon dioxide and sulphur dioxide are making some of air pollution at
thermal power plant and in the cement industry in Pakistan. These not only cause
nausea and potential health hazards to human beings. They also damage
landscape and wildlife. The Government is restricting the industries to minimize the
pollution. So changes are required in plants to remove the pollution creating
methods of production and introduce new technology which are user friendly.
Environment regulations
At present Pakistan industries follow the Pakistan Environmental Protection Act,

1997.
 The Pakistan government has now become conscious of the environmental

pollution.
 It has set some specific laws that all the manufacturing industries have to
follow according to the Pakistan Environmental Protection act, 1997.
COMPETITION ANALYSIS
COMPETITION LEVEL
The competition level in cement industry of Pakistan is always high. All the firms
are competing with each other by providing better services and offering lesser
prices. The competition level can be studied on the following basis:
• Need of customer
• Brand Competition
• Product Quality
Cement firms are putting more efforts to meet buyer’s requirement and provide
superior quality of services. The main attribute buyer associate with cement is its
durability.
COMPETITOR FORCES
The competitor forces analysis is done on the basis of six forces: rivalry,
substitutes, threat of new entrant, buyer power, and supplier power and
government interventions.
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Substitutes
There is no threat of direct substitutes for cement. However, bitumen in road and
engineering plastic in building offer some element of competition.
Internal Rivalry
In cement industry the Rivalry exists on the basis of increased productivity. The
cement rates are set by Government and APCMA therefore all manufacturers
compete on the basis of quality. Inter firm competition is so intense that major
players compete with each other on marginal product differentiation.
Buyer’s power
The cement industry has very low bargaining power of buyers as it is a government
regulated industry. The switching cost of buyer in cement industry is also low
because cement prices offered are almost same. Prices of cement vary due to
geographical location however it effects very little price changes due to 20% freight
cost in the total cost of cement manufacturing.
Supplier’s power
The cement industry has high bargaining power of suppliers. We import coal and
petcoke from foreign countries.
New Entrants
Entry barriers are not too high in the cement industry. The technology is also
available but the major constraint is capital requirement. Cement plant is a highly
capital intensive business which requires a lot of investment.
Government intervention
The government is considering allowing further concessions and additional

incentives for cement export, with a view to increase overall export volume.
COMPETITOR STRATEGIES
Competitor strategy refers to how firms in an industry compete with each other.
The two main competitor strategies are:
• Cost cutting strategy
• Differentiation strategy
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Cost cutting strategy
Cost-cutting strategy is followed by almost all cement manufacturers. To decrease
the high costs of power the cement players have set up captive power plants.
Differentiation strategy
The firm uses differentiation strategy to be unique in the industry. The difference in
cement manufacturing firms is on the bases of price, quality and product usage.
INDUSTRIAL ANALYSIS
The industry analysis is based on the organizations within the industry. The internal
and external analysis is as follows:
Opportunities and Threats

Opportunities
Construction of large dams
Construction of four large dams will generate demand of 3.7mn tons as

construction activities start. Extent of demand generation will depend on size of
dam.
Improved access to regional market
Afghanistan is Pakistan’s largest cement export market. The prospects for cement
exports seem bright in the medium term due to rising domestic cement demand.
Pakistan also achieved improved access to India after the complete removal of the
12.5 percent custom duty on Portland cement imports from January 2007, showing
improved export opportunities for Pakistan.
Demand of Pakistani cement by Russia
Fresh enquiries have been received from Russia and buyers are quoting very
attractive prices as Pakistani cement quality is of very high standard and holds
good strength.
Earthquake in China
In the month of May china is hit by severe earthquake having the magnitude of 7.8
rector scale. This earthquake has caused the serious destruction in china. This
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disaster is also an opportunity for Pakistan cement industry to export cement to
china.
High prices of cement in the international market
Cement exports are expected to rise by a massive 107 per cent due to the primary
source of overall cement growth in FY08, the high exports outstanding to the
cement supply shortage in India and Middle East which lead to rocketing cement
prices in the region.
Increase in demand of cement due to the up coming sports event
South Africa is schedule to host the football world cup of 2010 due to which they
need to make the football stadiums for the World Cup and Sri Lanka are also
expected to approach Pakistani companies for cement imports because Sri Lanka to
co-host the cricket world cup of 2011.
Threats
Indian industry is also expanding its cement capacity
Presently, India faces an acute cement shortage in its Southern states of Tamil ado
and Madras and in north Punjab. However, reports indicated that the Indian
industry is also working on a fast track to expand their capacity in these regions to
off-set the shortfall and this can convert India from dependent importers to
potential exporters.
High energy prices
Recently cement industry of Pakistan is facing high energy prices due to increase in
the international prices of coal and oil. As our coal contain high percentage of
sulphur. Due to which Pakistan cement industry is not able to use local coal as a
source of energy and import coal from different countries at high prices.
High finance and depreciation cost
As Pakistan cement industry is expanding its capacity to get the proper advantage
of strong demand of cement in different countries. The total industry installed
capacity is expected to reach 49.1 million tons per annum by FY10 and because of
higher expansion, finance and depreciation cost is also going to rise by the FY10.
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Decrease profitability due to competition in cement industry
The increase in competition among the players has decreased the prices of cement
in the local market. The cement manufacturers decrease the prices of there
products in order to get high market as compared to its competitor.
High level of taxation
Presently, the cement industry of Pakistan is heavily burdened due to levy of

Federal Excise Duty @ Rs. 700 per ton and General Sales Tax @ 16% on duty paid
value. In addition to Federal Excise Duty and General Sales Tax, cement industry is
also paying the provincial taxes (Excise Duty) on acquiring of raw material for
production of cement i.e. limestone and clay. A comparison of taxation and retail
prices with other regional countries revealed that taxation in Pakistan is highest
while cement retail prices are lowest.
INTERNAL ANALYSIS
Strengths
Cement export to India through railway
Most of the cement export to India is through railway. In order to facilitate cement
export to India, the railways has increase its frequency of trains to India from
Pakistan. This step has been taken by Pakistan Railways in order to increase
cement export to India, which is regarded as a highly profitable market.
Use of Coal
At present most of the cement companies have switch to coal or gas as their basic
fuel. The cost of cement production per ton by furnace oil was around Rs2, 083
whereas the cost of production per ton by coal was Rs8, 68, saving Rs1, 215 per
ton.
Cheaper labor
The labor of Pakistan is very cheap. This is the important strength of the cement
industry as the cement companies of Pakistan has to pay less to there labor which
result in saving of there income which later on can be utilized in the expansion of
cement plant.
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Good Government Policies
Government policies are in the favor of cement sector. Due to the government
favorable policies the cement sector gets the highest growth rate of 21.11% among
all the industries of Pakistan in year 2006-07. The total industry installed capacity is
expected to reach 49.1 million tons per annum by FY10
High Quality of Cement
Pakistan produces good quality of cement. This is the main reason due to which
recently Russia is offering high price for Pakistani cement. Globally Pakistan is
recognized for producing good quality of cement due to which countries like
Afghanistan, India, Middle East and some African countries prefer to import cement
from Pakistan.
Weaknesses
Increase freight charges
Exporters of the cement often complain that railways freight charges for carrying
cement from Lahore city to the border of India are Rs500 per ton ($8 per ton) while
it covers only 35 km. Against this, they say on the Indian side, the freight is only $3
per ton for bringing goods from Chandigarh to the border area. Cement exports
have been badly hit by high fee that is being charged by trucks and also by foreign
shipping companies for the transport of cement from Pakistan to India. This
increase in freight charges effect our exports.
Logistic Problem
Some of the cement companies of Pakistan have received orders from Russia with a
price tag of Rs 860 per bag. But our service is the biggest hurdle in the way as our
transportation system is not good enough to transport cement to Russia due to
which our cement companies might lose the chance to capture the Russian market
which is a highly profitable market.
Usage of Paper bag
Pakistani cement companies export their cement in paper bags because paper bags
are cheap as compared to plastic bags. But the Cement exported in paper bags is
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against the International standards and companies have to pack the cement in
plastic bag.
Idle capacity of various players
The biggest problem of cement industry is the idle capacity of various players. As
many cement players are not operating at there full capacity.
SWOT-I MATRIX
OPPORTUNITIES THREATS
STRENG
○ Even though coal is readily
TH ○ Most of the cement
available in Pakistan but we
companies have
import coal because local
switch to coal as their
coal available contain high
basic fuel to reduce
percentage of sulphur.
the cost of production
○ We shouldn’t completely
per ton of cement.
○ Cement export to focus over Indian market
because little political
India has increased as
differences can terminate
Indian market is highly
the contract.
profitable.
○ Due to political instability
○ Government policies
there are chances that new
are in little favour of
Government takeover and
cement sector as it
impose new rules and
has reduced the
regulations.
excise duty over
cement.
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WEAKNESSES ○ There is an ○ Freight charges for carrying
opportunity for us to cement from Lahore city to
focus over other the border of India are high.
markets rather than ○ The Cement exported in
only focusing the paper bags is against the
Indian market. International standards and
○ Pakistani cement it should be packed in
companies export plastic bags.
their cement in paper ○ Fluctuating fuel prices can
bags because paper have a negative impact on
bags are cheap as the revenues which can
compared to plastic discourage foreign investors.
bags.
Table 36: SWOT i Matrix
STRATEGIC PLAN
A strategic plan is proposed for the cement industry of Pakistan which needs to be
followed by the Government, APCMA and individual firms equally.
Revising APCMA Policy

The government needs to set up a professional committee comprising of
representatives from largest cement manufacturing firms. This committee should
analyze the current scenario of the country, issues of the industry and must
formulate a more constructive Policy accordingly.
Encouraging Foreign Investment

Foreign investments in terms of private firms should be encouraged. This would
increase the competition and would improve the level of services.
Efficient use of technology

The cement firms in Pakistan have been able to improve themselves in terms of
technological advancements. Better machinery and management should be used to
become cost efficient and become competitive.
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Merit based hiring
Hiring on merit basis should be promoted in all the cement manufacturing firms in
order to minimize the impact of political parties in these organizations.
Increased Marketing Efforts

The marketing for cement must be increased. Television and radio advertisement
should also be considered apart from the billboards and hoardings.
OTHER STRATEGIES
• Proper workshops should be arranged under the supervision of experts so
that the practical knowledge is properly imparted to the labor.
development.
• Plants that have completed their working life should be phased out and new
plants should be imported or setup up locally.
• Measures should be taken to provide proper gas supply to the cement
industry.
to setup new factories
• The construction programs undertaken by the previous government should
not be abandoned.
• Government of Pakistan should do its upmost to control the instability in the
country.
• Cement industry can enter in to contracts with international logistics
transportation companies such as Mersk to export cement to USA in huge
volumes at low cost.
• Better cement storage facilities should be made i.e. air and moisture proof
bag should be made to increase the shelf life of cement.
• Cement industry should enter into long term contracts with cement
transporters to gain discounts and seek reduced transport prices.
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• When the big companies are forming quantity based cartels, small
manufactures should be also considered as otherwise they would go out of
business.
CONCLUSION
The industry should review its price structure and not lose sight of fact that its
survival and sustainability lies in consolidating its domestic market as the
construction boom in neighboring markets may not last long. The industry needs to
have a long-term vision. It is essentially important for it also to adopt measures to
reduce its present production cost further by improving production efficiency,
conserving energy and employing advanced techniques, such as installation of
advanced process controls and developing bulk handling system.
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Material sciences are developing rapidly the world over, and advanced construction
materials are being produced, in particular, for enhancing quality, strength and
efficiency in the concrete construction. The industry should, therefore, make
investment in advanced cement technologies, over short and long term horizons, in
the wake of recent destruction due to earthquake.
Consolidation is needed for industry stability because of following reasons:
 Cartels are unstable by their nature.
 Industry needs one or two dominant players for long-term

sustainability in prices and profits
 Top four players command 35% of market share in the industry

that will be increased to 46% in FY08.
 World norm is that top four players have more than 60% market
share
 Consolidation process will be needed to increase market share of

larger players rather than going for capacity expansions
 We may see acquisitions in the industry as the industry goes

through overcapacity cycle
ANNEXURE 1
Cement exports rise to $750 million
Tuesday, June 23, 2009

By By Khalid Mustafa
ISLAMABAD: The cement industry, despite being affected by the global economic
110
crisis, has managed to boost exports to $750 million in fiscal year 2008-09.
“Being an irregular sector if compared with textile, the cement industry

increased exports to $750 million,” a senior official at the Ministry of Industries
told The News. “Though the industry has been given relief of Rs200 per ton in
central excise duty, it is to be fully passed on to end-consumers. This means the
price of a cement bag will fall by Rs10 from July 1.”
Before the budget relief, the cement industry was paying Rs900 as central
excise duty which has been reduced to Rs700 per ton. Despite a cut in the Public
Sector Development Programme to just Rs219 billion owing to which domestic
cement consumption has dropped sharply, the industry has performed well in
foreign markets in these times of worldwide recession.
The official said the government has extended Rs40 billion to the textile industry
as research and development support, but other sectors like cement, which has
fared well, were given no further relief in duty drawback for exports. The official
said that in 1997, the Nawaz government had provided duty drawback of Rs24
per ton on exports but its impact has now become negligible keeping in view
general sales tax on limestone, 30 per cent depreciation in currency and
transportation charges to the port city of Karachi. Eighty-five per cent cement
production is being done in northern parts of the country.
When contacted, All Pakistan Cement Manufacturers Association General

Chairman (Retd) Rehmat said that land transportation cost and port handling
charges stand at $25 per ton and if the duty drawback facility is enhanced to
Rs120 per ton ($1.5), exports will easily increase to $1.5 billion.
Rehmat said that the government collects Rs30 billion as revenue from the
cement industry, but if the duty drawback of Rs24 per ton is not increased then
the cement industry may lose its foreign market.
To a question, he said that if the government edges up the duty drawback

facility, the government will absorb a hit of Rs1.2 billion per annum through
guaranteed Rs29 billion revenues in return. “Now the ball is in government’s
court.”
To a question, he said that Pakistan has explored the markets of Afghanistan,

Iraq, Sri Lanka, India and Sudan. He said more orders from Sri Lanka are on the
cards in the next financial year as the Lankan government wants to build
infrastructure which was destroyed in the civil war with Tamil Tigers. “Since the
war is over, Pakistan’s cement industry will have more orders from Sri Lanka.”
He said that if the government remains stuck to next years’ PSDP, then the
cement consumption would also enhance manifold if kept in view the
construction of Diamer Bhasha dam, Neelum-Jhelum hydropower project and
many other national highways. To a question he said that cement production
capacity has increased to 43 million tons from 10 million tons in 2003-04 with
huge investment of Rs200 billion.
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ANNEXURE 2
112
Taxable ceiling of salaried class increased; NTN made compulsory
Sunday, June 14, 2009

ISLAMABAD: The government on Saturday took various taxation measures to fetch
Rs69.1 billion in four major taxes in order to achieve FBR’s revenue collection target
of Rs1.374 trillion while at the same time announced a number of relief measures in
the Budget 2009-10.
The government proposed imposition of carbon surcharge on POL products and CNG
with varied rates to generate Rs134 billion in fiscal 2009-10 as non-tax revenue,
putting burden on the consumers but helping the government to bridge its yawning
deficit gap of 4.9 per cent of the GDP.
The PPP-led regime said goodbye to the slogan of ‘facilitation’ pursued by the
Musharraf regime and took certain measures by reviving powers of income tax, sales
tax and customs high-ups to detect tax dodgers through improved enforcements.
“The carbon surcharge is aimed at bringing transparency in fixing prices of POL

products. It will be fixed tax, which will be charged at different rates for different POL
products,” Adviser to PM on Finance Shaukat Tarin explained while talking to The
News on Saturday night.
He said the FBR target of Rs1.374 billion did not include the carbon surcharge. It will
help in collecting Rs134 billion.
According to Finance Bill 2009-10, the government imposed Rs8 per litre carbon
surcharge on high-speed diesel, Rs10 per litre on motor spirit, Rs6 per litre on
kerosene oil, Rs3 per litre on light diesel oil, Rs14 per litre on HOBC and Rs6 per kg
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on compressed natural gas (CNG).
However, according to technical briefing given by the members of four respective

taxes of the FBR on Saturday after the announcement of budget, the government
imposed federal excise duty on documented services including advertisements on
print media, increased tax rates on all kinds of cigarettes, levied 20 paisas per short
messaging service (SMS) on mobiles as well as doubled the CVT rates on transaction
of immovable property from 2 per cent to 4 per cent. Withholding tax on imports
was doubled in the Finance Bill 2009-10 which was increased from 2% to 4%.
The government also imposed income tax at the rate of 5 per cent on taxpayers who
will declare income of Rs one million in returns in order to provide help to the
Internally Displaced Peoples (IDPs) disturbed by the ongoing military operation in
Malakand Division. In order to support the IDPs in their rehabilitation a new tax is
being proposed to be charged on bonus income of corporate executives @ 30% of
the bonus. This is a one time levy and payable for tax year 2009 only.
The government also slapped 16 per cent federal excise duty on advertisements in
newspapers, periodicals, hoarding boards, pole signs, signboards and shop boards.
The FED at the rate of 16% in VAT mode (value added tax) has been levied on
fund/non-fund services provided by banking companies and non-banking financial
companies, services provided by the port and terminal operators at import stage
and services provided by stock brokers.
On three different brackets for imposing tax on cigarettes, the FBR has proposed
Rs4.75 per ten cigarettes as FED on retail price of packet up to Rs10. On retail price
from Rs10 to 19, the FED at the rate of Rs4.75 per ten cigarettes will be charged
plus 70% over every incremental rupee. On retail price of over Rs19 per packet, 64%
FED will be levied.
The indenting commission is proposed to be taxed at the rate of 5% from earlier rate
of 1 per cent. The scope of advance tax collection on purchase of new locally
114
ANNEXURE 7
Portland cement early in the 19th century by burning powdered limestone and
clay in his kitchen stove. By this crude method he laid the foundation for an
industry which annually processes literally mountains of limestone, clay, cement
rock, and other materials into a powder so fine it will pass through a sieve capable
of holding water. Cement is so fine that one pound of cement contains 150
billion grains.
115
Portland cement, the basic ingredient of concrete, is a
closely controlled chemical combination of calcium, silicon,
aluminum, iron and small amounts of other ingredients to
which gypsum is added in the final grinding process to
regulate the setting time of the concrete. Lime and silica
make up about 85% of the mass. Common among the materials used in its
manufacture are limestone, shells, and chalk or marl combined with shale, clay,
slate or blast furnace slag, silica sand, and iron ore.
Each step in manufacture of Portland cement is checked by frequent chemical

and physical tests in plant laboratories. The finished product is also analyzed and
tested to ensure that it complies with all specifications.
Two Manufacturing Processes
Two different processes, "dry" and "wet," are used in the manufacture of portland
cement.
When rock is the principal raw material, the first step

after quarrying in both processes is the primary
crushing. Mountains of rock are fed through crushers
capable of handling pieces as large as an oil drum. The
first crushing reduces the rock to a maximum size of
about 6 inches. The rock then goes to secondary
crushers or hammer mills for reduction to about 3 inches or smaller.
In the wet process, the raw materials, properly proportioned, are then ground with
water, thoroughly mixed and fed into the kiln in the form of a "slurry" (containing
enough water to make it fluid). In the dry process, raw materials are ground, mixed,
and fed to the kiln in a dry state. In other respects, the two processes are
essentially alike.
The raw material is heated to about 2,700 degrees F in

huge cylindrical steel rotary kilns lined with special
firebrick. Kilns are frequently as much as 12 feet in
diameter large enough to accommodate an automobile
116
and longer in many instances than the height of a 40-story building. Kilns are
mounted with the axis inclined slightly from the horizontal. The finely ground raw
material or the slurry is fed into the higher end. At the lower end is a roaring blast
of flame, produced by precisely controlled burning of powdered coal, oil or gas
under forced draft.
As the material moves through the kiln, certain elements are driven
off in the form of gases. The remaining elements unite to form a new
substance with new physical and chemical characteristics. The new
substance, called clinker, is formed in pieces about the size of marbles.
Clinker is discharged red-hot from the lower end of the kiln and
generally is brought down to handling temperature in various
types of coolers. The heated air from the coolers is returned to
the kilns, a process that saves fuel and increases burning
efficiency
117
118
119
ANNEXURE 8
Pricing
Another problem faced earlier by the Industry was the high taxation. The general
sales tax (GST) was 186% higher than India. The impact of this tax and duty
structure resulted in almost 40% increase in the cost of a cement bag (50 Kg). A
bag in India earlier cost Rs. 160 as compared to Rs. 220 in Pakistan. In the budget
of 2003-04, a duty cut of 25% was permitted to the cement sector with assurance
from the cartel to pass on this benefit to the consumers. In 2006, the price of a bag
went up to Rs. 430 however in 2007 it has stabilized at Rs. 315 per bag. In mid
2008, cement prices stabilized further at Rs. 220 per bag.
The Government has reduced central excise duty (CED) on cement in the budget
for 2007-08 in order to boost construction activity.
Average industry cost of cement bag/50Kg = Rs.193
Average industry price of cement bag/50Kg = Rs.235
Domestic Demand
Local demand in the country for the year 2008-09 is expected to be around 20
million tons. Domestic demand is expected to grow at 13% Capacity growth rate
(CAGR) during next five years. Certain factors will also affect the growth of cement
industry as well. These are as follows:
Strong GDP growth
Ø Higher GDP growth has positive impact on cement demand.
Ø Cement demand growth rate was double the GDP growth rate in last three years.
Housing sector growth
120
Ø Housing projects consume roughly 40% of cement demand.
Ø Low interest rates, post 9/11 remittances’ inflow, and real estate boom have
helped housing sector growth.
Government Development Expenditures
Ø Government development expenditures count for one third of total cement

consumption.
Ø Increase in PSDP – from Rs.80 bn in 1999 to Rs.520 bn in 2007.
Ø Infrastructure development in a region triggers private development projects

having even positive impact on cement demand.
Earthquake Rehabilitation
Ø Earthquake losses of October 8th are estimated at $ 5.2bn
Ø Reconstruction work will boost construction material demand
Ø Reconstruction work is expected to generate cement demand of 4mn tons over

next 3-4 years
Announcement of large Dams
Ø Construction of four large dams will generate demand of 3.7mn tons. Bhasha
Daimer Dam, Munda Dam, Akhori Dam and Neelum Jhelum.
Per Capita Cement Consumption
Pakistan currently has a per capita consumption of 131kg of cement, which is

comparable to that for India at 135kg per capita but substantially below the World
Average 270kg and the regional average of over 400kg for peers in Asia and over
600kg in the Middle East.
Cement demand remained stagnated during 90’s owing to lack of development

activities. In 1997, per capita consumption was 73 kg in both Pakistan and India. By
121
2005-06, consumption in India rose to become 115 kg/capita whereas ours rose to
117 kg/capita. A comparison of few countries in 2005:
Bangladesh 50 kg/capita
Pakistan 117 kg/capita
India 115 kg/capita
USA 375 kg/capita
Iran 470 kg/capita
Malaysia 530 kg/capita
EU 560 kg/capita
China 625 kg/capita
UAE 1095 kg/capita
Challenges to Cement Industry
The cost and exports may be affected due to weakness of the US dollar causing
coal, electricity charges and freight prices, comprising 65 to 70 percent of the cost.
The PSDP allocation for 2009 has been cut by Rs 75 billion and feared further cuts
would curtail cement demand.
Major capacities of countries like India and Iran are expected to come online by
FY10 and onwards which are likely to convert these countries from dependent
importers to potential exporters.
Moreover, this current rising trend is expected to be short-lived due to higher

interest rates and inflationary concerns are likely to make it disadvantageous for
investors to enter the construction industry. In addition to this, to control real
estate prices the government is considering imposing a tax on it.
Major General Rehmat Khan, Chairman of All Pakistan Cement Manufacturers

Association (APCMA), told Business Recorder, “cement industry is getting Rs 24 per
ton as day duty drawback for export of cement which needs to be revised. In view
of today’s calculation for duty drawback, which works out to Rs 130 per ton, he
proposed that duty drawback be increased to Rs 130 per ton, instead of Rs 24 per
ton.”
122
Referring to taxation on cement, he said that cement dispatches are subject to
payment of federal excise duty @ Rs 900 per ton, general sales tax @ 16 percent,
special excise duty @ 1 percent, marking fee @ 0.1 percent of ex-factory price,
besides provincial duties and taxes. These taxes come to around Rs 96 per bag
which is the highest in the world. Cement, it appears, is being treated as a luxury
item for the purpose of taxes and duties.
He proposed that the government should reduce excise duty by Rs 450 per ton in
the forthcoming budget while the remaining half should be eliminated altogether
along with the special excise duty. Besides this, sales tax should not be charged on
excise duty paid value.
He also proposed withdrawal of customs duty on Pet Coke and remove it from
negative list for import from India because cement industry imports Coal and Pet
Coke as fuel for production and customs duty on imported coal is zero while on Pet
Coke it is charged @ 5 percent.
123
BIBLIOGRAPHY
(, 2009)
http://www.cement.com.pk/cement/pakistan-cement-industry.html
(, 2004 - 2005)
http://www.attockcement.com/
()
www.lucky-cement.com
(, 1999-2009)
http://www.cementchina.net/
(, 2009)
http://en.wikipedia.org/wiki/Economy_of_pakistan
(, 2005)
http://www.dgcement.com/
()
http://en.wikipedia.org/wiki/WTO
()
http://www.pakboi.gov.pk/word/Cement.doc
(, 2007)
http://www.mca.gov.pk/Downloads/Cement_Report-new.pdf
124
(Rohail, 2009)
http://economicpakistan.wordpress.com/2009/02/01/cement-industry/
()
http://nwfp.gov.pk/nwfpgov/Departments/BOS/nwfpdev-statis-prices-tab-173.php
(Rana, 2009)
http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-
newspaper/business/pr-urged-to-rationalise-lahoreattari-freight-rates-cement-
export
(Mirza)
http://www.trcb.com/business/business/why-trade-and-industry-in-pakistan-not-
flourishing-4136.htm
(RIZVI, 2000)
http://www.pakistaneconomist.com/issue2000/issue52/i&e1.htm
()
http://www.pakboi.gov.pk/ABM_Slides/Construction/Pvt/Attock%20Cement.pdf
(BASHAR, 2001)
(Qasim, 2008)
www.thenews.com.pk/daily_detail.asp?id=123450
()
www.pakistan.gov.pk
(Sabir)
http://www.jang.com.pk/thenews/investors/aug2004/if.htm
(, 2009)
http://www.bestway.com.pk/
(, 2007)
http://www.igisecurities.com.pk/pdf/Pakistan-Cement-Sector-Review-May-
2007.pdf
125
(, 1994) http://www.secp.gov.pk/corporatelaws/pdf/may_14_94.pdf
()
http://www.wto.org/
(, 2003-2008 )
http://www.wtopunjab.gov.pk/#
(, 2007) www.dawn.com/2007/01/11/ebr3.htm
(, 2001)
(Butt)
http://www.brecorder.com/index.php?
id=1439&currPageNo=1&query=&search=&term=&supDate=
(, 2009)
http://whizzmag.blogspot.com/2009/05/cement-industry-of-pakistan.html
(, 2005-06)
www.statpak.gov.pk/depts/index.html
(, 2007-08)
www.scribd.com/doc/4780452/Lucky-Cement-Annual-Report-2007
(, 2007-08)
www.dgcement.com/financials
(, 1999)
http://www.cementchina.net/
(, 2008)
http://www.finance.gov.pk/
126

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Final Report Cement Industry Pakistan

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TABLE OF CONTENT

Figure 2: Slag Cement.....................................................................................10

Figure 4: White Cement...................................................................................10

Figure 6: Askari Cement Plant..........................................................................14

Figure 7: D.G. Khan Cement Plant....................................................................14

Figure 8: Lucky Cement Plant...........................................................................14

Figure 9: Maple Leaf Cement Plant...................................................................14

Figure 10: Pioneer Cement...............................................................................15

Figure 11: Attock Cement................................................................................15

Figure 12: Kohat Cement Company...................................................................15

Figure 13: Fauji Cement Company.................................................................15

Figure 14: Dandot Cement...............................................................................15

Figure 15: Bestway Cement.............................................................................16

Figure 16: market share of cement in Pakistan.................................................19

Figure 19: Plant sites of Lucky Cement.............................................................38

Figure 25: Cement industry Cost classification..................................................63

Table 2: Firms in cement industry in Pakistan...................................................13

Table 3: Different types of Cement produced by different firms in Pakistan.......17

Table 4: Production of cement in Pakistan in last 4 years..................................18

Table 5: Geographical location of cement industry............................................20

Table 6: total production in Pakistan Cement industry......................................22

Table 7: total employment in Pakistan Cement industry....................................23

Table 8: Export of cement by Pakistan..............................................................24

Table 9: Expected export cement demand........................................................25

Table 10: cement exports................................................................................26

Table 11: cement exports in 2007-08................................................................27

Table 12: cement exports in 2008-09................................................................27

Table 13: imports & exports analysis................................................................28

Table 14: Pakistan Trade statistics of cement industry......................................28

Table 15: NEW PLANTS OPENED IN CEMENT INDUSTRY PAKISTAN......................29

Table 16: Evolution of cement industry in Pakistan...........................................29

Table 17: Historical development of cement industry........................................35

Table 18: chronology of Cement Industry..........................................................36

Table 20: head office and principal offices of Lucky Cement..............................37

Table 21: key financial ratios of Lucky Cement..................................................39

Table 22: export and local sales of Lucky Cement.............................................39

Table 24: income statement of D.G.khan Cement..............................................42

Table 25: balance sheet of D.G.khan Cement....................................................42

Table 27: key data of Bestway Cement Company, 2001-08.................................44

Table 28: location of head office and other office of APCMA..............................45

Table 29: average cement price (yearly)...........................................................62

Table 30: firm’s selling price, 2009...................................................................62

Table 31: selling price of products in cement industry, 2009.............................62

Table 32: Determinants of fixed and variable costs of a cement industry...........64

Table 33: average cement manufacturers’ cost.................................................65

Table 34: job descriptions of cement industry...................................................74

Table 35: Market shares of cement firms..........................................................79

Table 36: SWOT i Matrix...................................................................................95

Table 2: Firms in cement industry in Pakistan...................................................13

Table 3: Different types of Cement produced by different firms in Pakistan.......17

Table 4: Production of cement in Pakistan in last 4 years..................................18

Table 5: Geographical location of cement industry............................................20

Table 6: total production in Pakistan Cement industry......................................22

Table 7: total employment in Pakistan Cement industry....................................23

Table 8: Export of cement by Pakistan..............................................................24

Table 9: Expected export cement demand........................................................25

Table 10: cement exports................................................................................26

Table 11: cement exports in 2007-08................................................................27

Table 12: cement exports in 2008-09................................................................27

Table 13: imports & exports analysis................................................................28

Table 14: Pakistan Trade statistics of cement industry......................................28

Table 15: NEW PLANTS OPENED IN CEMENT INDUSTRY PAKISTAN......................29

Table 17: Historical development of cement industry........................................35