Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
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 3: SRPC................................................................................................10
Figure 5..........................................................................................................12
Figure 17........................................................................................................23
Figure 18........................................................................................................31
Figure 20........................................................................................................40
Figure 21........................................................................................................43
1
Figure 22........................................................................................................45
Figure 23........................................................................................................56
Figure 24........................................................................................................61
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 19..........................................................................................................37
Table 26: location of head offices and regional offices of Bestway Cement.........43
TABLE OF TABLES
Table 1: Cement produced in Pakistan and globally...........................................11
3
Table 16: Evolution of cement industry in Pakistan...........................................29
Table 19..........................................................................................................37
Table 23: location of head office and principal office of D.G.khan Cement..........41
Table 26: location of head offices and regional offices of Bestway Cement.........43
4
Table 36: SWOT i Matrix
TABLE OF EQUATIONS
Equation 1: cost of production for cement industry...........................................66
5
Equation 2: Pricing Model for a cement industry
CHAPTER 1
INTRODUCTION TO THE INDUSTRY
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.
7
18.Geopolymer cements
19.Sulphate resistance 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
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
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 ✔ ✔
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
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.
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
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.
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
19
Chart 1: Production of cement in Pakistan in last 4 years
20
Figure 16: market share of cement in Pakistan
21
CHAPTER 2
INDUSTRY DIMENSION AND STATISTICS
22
Below is the geographical location of firms present in Pakistan cement industry
23
TOTAL PRODUCTION IN PAKISTAN CEMENT
INDUSTRY
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.
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.
27
Table 9: Expected export cement demand
28
Table 10: cement exports
Chart 5: percentage
shares in exports
market, 2008
29
EXPORT DISPATCHES
2007-2008
Months |----------Cement----------| Clinker
Afghanistan India Other (Sea)
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
Nil
Cement Exports
31
Table 14: Pakistan Trade statistics of cement industry
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
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
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.
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.
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.
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.
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.
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.
CHRONOLOGY
39
YEARS EVENTS
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
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.
Plant 1: Pezu, District Lakki Marwat in North West Frontier Province (NWFP),
42
Plant 2: Main Highway in Karachi Sindh.
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
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.
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.
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
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.
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
LOCATION OF MAJOR FACTORIES
Factory 1: Bestway Cement Hattar, 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
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
5. To help and solve all the problems either faced by the cement manufacturers
as a whole or by individual cement manufacturers
The elections for the management and President are held every year in
which 80% participation of the members is mandatory.
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.
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.
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
54
2. SUBSIDY
Subsidy contains three basic elements:
All three of these elements must be satisfied in order for a subsidy to exist
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.
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.
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.
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:-
(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
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.
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.
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.
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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.
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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.
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• 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.
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.
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.
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• 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
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.
CHAPTER 7
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.
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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
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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.
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Chart 8: flowchart of cement manufacturing process
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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.
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.
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CEMENT PRODUCTION COST CLASSIFICATION
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
Following are the average cement manufacturers’ costs with respective percentage
components. In 2008 Average industry cost of cement bag/50Kg = Rs.193
72
Table 33: average cement manufacturers’ cost
Its total fixed cost and total variable cost for producing cement. (Base price)
Tax charged on the Cement manufacturers for the cement produced within the
country. The federal excise duty is Rs 900 per ton
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.
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.
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
C= Wholesaler/dealers commission
CHAPTER 9
KEY ISSUES AND THEIR SOLUTIONS
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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.
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.
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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.
• Government of Pakistan should provide infrastructure to the cement industry
to setup new factories
• Government of Pakistan should provide incentives to the cement industry so
that they can import new plants.
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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.
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.
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
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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.
PROPOSED SOLUTIONS
• Availability of qualified and skilled manpower should be given priority by
government
• The training facilities should be developed at fast track.
• Foreign and local experts should be hired to do the research and
development.
• Proper workshops that are held under the supervision of experts so that the
practical knowledge is properly imparted to the labor.
• The cement industry can use reward and bonuses to increase the
motivational and performance level of the labor force.
• 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.
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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
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
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.
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• House allowance
• Free medical benefits
• Subsidized utility bills
• Education allowance for employee children
JOB DESCRIPTIONS
Prepares and reviews annual operating budget according to policy and under
the guidance of the General Manager.
JOB SPECIFICATIONS
Required knowledge, skills and abilities:
Knowledge of:
Ability to:
Understand and follow oral and written instructions in the English language (for
skilled labor)
Move heavy objects (50 pounds or more) long distances (greater than 20 feet).
84
Bend or stoop repeatedly or continually over time.
Additional Requirements:
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.
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.
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
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.
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.
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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.
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.
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
91
after extensive market research in an industry where the capacity is already in
surplus.
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.
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
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.
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.
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.
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
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.
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 state bank, in order to control the inflation has taken measures and
tightened up the monetary policies.
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.
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.
97
TECHNOLOGICAL FACTORS
Automation
The Pakistani industries not only have to compete among them selves but
with the international market as well.
Technology incentives
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.
LEGAL FACTORS
Tax Policies
98
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 %.
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
99
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
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
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:
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.
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.
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.
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
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.
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.
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.
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
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
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.
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.
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.
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.
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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.
OTHER STRATEGIES
• Proper workshops should be arranged under the supervision of experts so
that the practical knowledge is properly imparted to the labor.
• 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.
• Measures should be taken to provide proper gas supply to the cement
industry.
• Government of Pakistan should provide infrastructure 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.
109
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.
World norm is that top four players have more than 60% market
share
ANNEXURE 1
110
crisis, has managed to boost exports to $750 million in fiscal year 2008-09.
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.
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.
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Taxable ceiling of salaried class increased; NTN made compulsory
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.
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
113
on compressed natural gas (CNG).
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.
Two different processes, "dry" and "wet," are used in the manufacture of portland
cement.
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.
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.
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:
Ø Cement demand growth rate was double the GDP growth rate in last three years.
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.
Earthquake Rehabilitation
Ø Construction of four large dams will generate demand of 3.7mn tons. Bhasha
Daimer Dam, Munda Dam, Akhori Dam and Neelum Jhelum.
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.
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
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