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Cement Manufacturing & itsCorrelation of Banking Finance.

A CASE STUDY OF PAKISTAN

By

Hamid Ahmed Khan

NI-W8-MBA-0360

A Thesis

Submitted to

MR. ASIM MASHKOOR

In partial fulfillment of the requirement for the degree of

Masters in Business Administration (Finance)

April 2010)



TABLE OF CONTENTS

S/No. PARTICULARS P/No.

Chapter 01 INTRODUCTION TO CEMENTMANUFACTURING

1.1 Introduction

1.2 Scope & objective of Cement Industry

1.3 Problems & Opportunities of CementIndustry

1.4 Research Methodologies

CHAPTER02 THEORATICAL LITRATURE REVIEWREGARDING

CEMENT MANUFACTURING

2.1 Cement Information

2.2 Types of cement

2.2.1 Rapid Hardening cement

2.3 Decorative cement Oil Well & other Specialpurpose

2.4 Different types of cement

2.5 Cement Manufacturing Process

2.6 Resources Condition of that sector

2.7 People (labor)

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CHAPTER02

THEORATICAL LITRATURE REVIEWREGARDING

CEMENT MANUFACTURING

2.8 Pakistan Cement Industry

2.9 Industry Future

2.10 Major Decision in budget 2008-2009

2.11 Global Cement Production

2.12 World Cement producers & Global cementTrade & shipping

2.13 Demand of Cement Industry

2.14 Pakistan Cement Industry Overview

2.15 Cement Sector to Face Rising Costs,slowdown in Demand in FY09

2.16 Pakistan ,s Foreign Investment Policy

Chapter 3 FRAMEWORK OF ANALYSIS

3.1 Hypothesis Analysis

3.2 Terminologies of Industry

3.2.1 Data Collection

3.2.2 Data Processing

3.2.3 Hypothesis Testing

3.2.4 Analysis of Data

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3.3 Expected Problem of Analysis

Chapter 4 IMPLICATION AND CONCEPTUALFRAMEWORK OF CEMENT INDUSTRY

4.1 Comparison of Cement industry & itsMeasurement

4.2 Future Scope of Cement

Chapter 5 CONCLUSION

5.1 Conclusion

5.2 Bibliography/References

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1.1 INTRODUCTION The cement industry has grown rapidly since the reform and opening-up.Now it has become one of the pillar industries for national economydevelopment in Pakistan. The cement industry in Pakistan has come along way since independence when the country had less than half amillion tonnes per annum production capacity. By now it has exceeded 10million tonnes per annum as a result of establishment of new

manufacturing facilities and expansion by the existing units. Privatizationand effective price decontrol in 1991-92 heralded a new era in which theindustry has reached a level where surplus production after meeting localdemand is expected in 1997.

Pakistan has remained a net importer of cement but due to theprivatization of units operating under state control and subsequentexpansion program by the new owners supported by financial has pushedthe industry to a point where the country is bound to reach an oversupplysituation. However, the recent increase in energy cost providesopportunity for the efficient units based on dry process to sustain thesituation for a relatively longer period. It would also be possible becausethe expansion by the existing units and establishment of new units arebeing delayed.

Pakistan's cement market is divided into two distinct regions, North andSouth. The northern region comprises the Punjab, NWFP, Azad Kashmirand upper parts of Baluchistan, whereas the southern region comprisesthe entire province of Sindh and lower parts of Baluchistan. Traditionally,the southern region has always been surplus in cement production butwith the establishment of more plants in the northern parts of the countrythe region has become almost self-sufficient in supply of cement.

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1.2 Scope & objective of Cement Industry

SCOPE:

It may be recalled that in 1947, Pakistan had inherited 4 cement plantshaving total installed capacity of 0.5 million tons. These four units at thattime were controlled by India. These inherited cement plants howeverwere closed when they come to their age after 50 years of theiroperations. During early 30 years of independence, five cement unitswere established with aggregate capacity of 3.2 million tons of production.Among these units one was established in Hyderabad Sindh in the publicsector. It was called Zeal Pak and was set up in 1956. Another unit in thepublic sector was known as Maple Leaf which was established in theprovince of Punjab in the same year. Three units were set up during 1965-66 in the private sector. These were Javedan in Sindh, Gharibwal andMustehkam in the province of Punjab. After nationalization of industries inearly 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 werenot coming up to match with the demand. Consequently, Pakistan had tostart importing cement in 1976-77 and continued to import cement till1994-95.

After the change in the government in 1977, private sector was allowed toestablish cement plants. As a result of change in policy, seven projectshaving capacity of 2.54 million tons were installed in private sector andsimultaneously, State Cement Corporation of Pakistan (SCCP) also broughtin 4 more units with a total capacity of 1.6 million tons. Resultantly, thetotal capacity of the cement industry enhanced to the level of 8.5 milliontons by the end of 1990.

Those units came in the public sector were Thatta Cement in Sindh,(1983), Dandot(Punjab) 1983, Kohat (NWFP) 1983 and D.G.Khan (Punjab)1985.

The units allowed in the private sector were Cherat (NWFP) 1985, Pakland(Sindh) 1985, Attock (Balochistan) 1986, Dadabhoy (Sindh) 1988, Essa(Sindh) 1988, Fecto (Punjab) 1989 and Anwarzeb White Cement (Sindh)1988.

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According to a report of ICMAP, in the early nineties, the SCCP was themarket leader hence the private sector had to pursue the policies of thepublic sector in fixing the prices of cement. With more depreciated plantsin its fold, combined cost of production of plants of SCCP was on lower

side. They had a price mechanism whereby surplus profits of depreciatedplants were allocated to the new plants having higher depreciation costand financial changes. The level of cement prices fixed by SCCP thereforeremained on the lower side. With the privatization of cement units after1990, SCCP lost its control over the supply of cement. At that time therewas an acute shortage of cement in the Northern areas of the country. Inthe first half of nineties, Pakistan had to import cement which led to theincrease in cement prices exorbitantly making cement companies to earnvery high profits. This tempted some of the existing units like Cherat,Pakland, Dadabhoy, Ac Wah, D.G. Khan, Maple Leaf and Kohat to go forexpansion in their plants. Simultaneously, 5 more new projects withaggregated capacity of 5 million tons came on the stream. As such,production capacity went up to 16 million tons by the end of 2000. Thefive new units in the private sector were Pioneer (Punjab) 1994, Lucky(NWFP) 1996, Askari (NWFP) 1997, Fauji (Punjab) 1997 and Best Way(NWFP) 1998.

OBJECTIVE:Pakistan has been ranked fifth in the list of world’s top cement exporters.According to the Global Cement Report, China ranks first with 26mntonnes in exports, followed by Japan (12mn tones), Thailand and Turkey.Pakistan overtook Germany by exporting 11mn tonnes of cement duringlast fiscal year.

1. To find out the reason behind high rates tax corporative withneighboring country.

2. To find out the idea about future expression.

3. To determine the reason that why Investor loose their confidence.

4. To find out that the lower capacity will reduce & fulfill benefit of Investor.

5. To determine the Fact of increase International coal Price.

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1.3 Problems & Opportunities of CementIndustry

Problems:

With regards to the competition in export markets, we have observedfollowing behaviors of cement industry in Pakistan:

1. Cement exports started in FY02 to Afghanistan that is still a majormarket.

2. Iraqi market can become a potential target after peace is restored.

3. India and Iran are the major competitors for Pakistan in the MiddleEastern region.

4. Upcoming capacity expansions in Iran and other GCC countries willcreate tough competition for Pakistan.

5. Export prices are presently touching USD 75/ton in the exportsmarket, however they are likely to come down as new capacitiescomes online.

OPPURTUNITIES:

The cement sector in Pakistan had a notable performance in fiscal year2007-08 as prices surged from Rs270 per 50kg bag to a record Rs400.

A shortage of cement in India and the Middle East meant exports inparticular were remarkably healthy throughout the year. The country’scement companies have excess capacities, which were exported to theMiddle East, Africa, Afghanistan and India at a premium price.

The biggest exporter in the industry is Lucky Cement, which exports 47per cent of its produce. Lucky has fared better than other cement

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companies. The cement sector’s profitability declined by 69 per centduring the first nine months of FY 2007-08, but Lucky’s profitabilityincreased by 50 per cent

1. The local cement industry faces high upfront fuel costs. In order tofacilitate their conversion to coal, which is widely available in thecountry, the government has given incentives for imported plantand equipment for coal firing units.

2. The demand of Pakistani cement is expected to continue to grow atthe rate of 20 per cent for about four years to come. It may thenfollow traditional growth rate of seven per cent per year.Announcement of major dams will dramatically increase this

demand.

3. Deregulation after accession of Pakistan to WTO is expected to openthe window of competition from cheaper markets. There may be notariff after this deregulation on import of cement allowing its entryinto Pakistan from cheaper market at lower rate. Cement fromcheaper markets may also block Pakistan’s export of cement to itsneighboring countries. Global market has vigorously taken up theadvantage of economy of scales and multinational giants nowcontrol more than 40 per cent of world production (China notincluded). The recent acquisition of Chakwal Cement by an Egyptiangiant, Orascom may be a beginning of such an entry in Pakistan bymultinationals. New avenues for export of cement are opening upfor the indigenous industry as Sri Lanka has recently shown interestto import 30,000 tons cement from Pakistan every month. If theindustry is able for avail the opportunity offered, it may secure asignificant share of Sri Lanka market by supplying 360,000 tons of cement annually.

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1.4 RESEARCH METHODOLOGY Nature of Study

“An exploratory and descriptive study”

The research is exploratory & descriptive by there nature because thesubject will be analyze on the data gather through primary and secondarysources. To gather these sources basically will be undertaken.

Study Setting

“Field study in a non-contrive setting”

Research will be a correlation study and will be conducted in a non-contrive setting. As I can’t temper and manipulate the variables, so I willhave relied field study.

Time Horizon

“One shot or cross-sectional study”

This study is cross-sectional study and that is gathered just once, ourlimited period of time in order to research question.

Once all the data is gathered it will be carefully analyzed and results willbe g=based on the collected data.

Research Method

This research is descriptive study, conducted in natural non-contrive

setting aimed at gathering maximum information. All the techniques areusd together accurate and up-to-date information regarding the issue. This research study is mainly based on the secondary data to fulfill therequirement of this project.

The secondary data is also available about this study, which is very helpfulfor me in preparing this research study.

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CHAPTER #2

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2.1 Cement Information

“Cement” is a material with adhesive and cohesive properties that makesit capable of bonding mineral fragment into a compact and rigid mass.

The word cement seems to have been derived from the middle ageEnglish “cyment”, and Latin “caementum”. The latter word “caementum“meant rough quarried stone or chips of marble from which a kind of mortar was made more than 2000 years ago in Italy. During the middleAges term “cement” or “segment” generally was made for a mortar.Common lime, hydraulic lime, gypsum plaster, “pozzolana”, natural and

Portland cement are few of the material, which are used for cementingpurposes. These cementing materials may be classified into two groups:

Non-Hydraulic:

Non-hydraulic cement do not have the ability to set and hardenunder water but requires carbon dioxide from air to harden e.g. non-hydraulic lime and plaster of Paris. Their cementing prosperityarises from the re absorption of gases that were expelled duringtheir processing. Their products of hydration are not resistant towater.

Hydraulic:

Hydraulic cement is defined as cement having the ability to set anddevelop strength in air or under water and which are insoluble inwater after they have set. Such cement harden even in the absenceof air and form a solid product which is stable in water and can besafely used in all structures in contact with water. Hydraulic cement

includes hydraulic limes, Portland cement (both basic and blended),oil-well cement, white cement, colored cement, high alumnacement, expensive cement regulated and hydrophobic cement etc.

Quarrying and crushing

The primary raw material for cement manufacture is calcium carbonate orlimestone. This is obtained from the quarry where, after the removal of overburden, the rock is blasted, loaded into trucks and transported to thecrusher. A multistage crushing process reduces the rock to stone less than

25 mm in diameter. Most modern cement factories are located close to a

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Quality assurance

Extensive sampling and testing during the manufacturing process ensuresthe consistency and quality of the end product. Testing takes place at the

stages of the manufacturing process indicated by the symbol.Cement dispatch

Cement is dispatched either in bulk or packed in 50 kg bags anddistributed from the factory in rail trucks or road vehicles. The 50kg bagsare either packed directly onto trucks or can be palletized. The pallets canbe covered by a layer of plastic to offer further protection from theelements.

2.2 Types of Cement: The types of special cement now being produced can be roughly classifiedin the following six categories according to the special purpose for whichthese have been designed. These are:

1. Rapid hardening cement.

2. Cement resistant to chemical attack of certain soil and aggregates.

3. Low heat of hydration cement.

4. Better protecting cement for steel reinforcement.

5. Better workability and whether resisting cement.

6. Decorative cement and other special cement.

2.2.1Rapid Hardening Cement:

Under this category following two cement have the desiredproperties of fast development of strength viz. the Portland RapidHardening Cement and High Aluminum Cement. “Their specificcharacteristics are as follows:

• Rapid Hardening Cement (Type III of A.S.T.M):

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This cement has high early strength, its equal to or betterthan 3 Days’ strength of OPC. This is achieved by having highcontents of tricalcium silicates in its composition. It is mostlyused in intended to release the framework within 24 hours or

so for subsequent use in the mass production of RCCelements.

The respective 1,2,3,7 and 28 days’ strengths (in equivalentP.S.I figures) of this cement under British specifications,German standard, and A.S.T.M. Japanese and Pakistanstandards for mortar cubes are as follows:

B.S.German

StandardAstm Japanese Pakistan

1 day strength - - 1800 923 -

2 days strength - 4350 - - -

3 days strength 4200 - 3500 1846 4205

7 days strength - - - 3266 5220

28 daysstrength

6670 7975 - 4686 6670

The difference in strengths given above is basically due todifference in all standards the 3 days strength is nearly 1-1/2to 2 times of O.P.C. The disadvantages of this cement besideits higher cost are its high heat of hydration, which renders itunsuitable for mass concreting projects.

• High Aluminum Structural Cement:

This cement is used where very rapid setting and very high

early strength are required. This cement has strength at oneday nearly equal to 28 days strength of O.P.C. Its setting is sofast that it must be put in place within a few minutes of itsmixing. It is generally used in plugging leakage in dams etc. orputting in pile foundations where limited time is available forsetting of cement before the seepage water build up occurs.In Pakistan it has been used in some specific locations interbela dam. Abroad it has been used in buildings where itwas found essential to remove the framework after one or two

days.

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This cement besides its high cost has the disadvantages of the highheat of hydration and retrogression in strength in time. There havebeen some structural failures due to miscalculation of its finalstrength after some years of use especially in humid and hot

atmosphere. This cement has however excellent heat registeringqualities and is therefore extensively used in Kilns, boilers andFurnace linengings. Cement resistant to chemical attack especiallyof Sulphate and Organic acids or Soil and active Silica of aggregate.In this category the following cement can be included:

2-A Highly Sulphate Resistant Cement

2-B Moderately Sulphate Resisting Cement

2-C Portland Blast France Slag Cement.

2-D pozzolana Cement

2-E Low Alkali Cement

2-A Highly Sulphate Resisting Cement H.F.R.C

The most important and the most widely used chemicalresistant cement is H.S.R.C cement High concentration of sulphate salts is present in seawater and in the soil nearseashores. These salts are sometimes present in soil and inthe submit water even thousands of miles away from the sea.Even Terbela Dam site was found not free from sulphate andH.S.R.C had to be used in foundations at the site. The sulphatesalt severally attack concrete can start within months. Thiscement has lower 3 days strength than OPC and also itscapacity to protect reinforcement steel in structures exposedto atmosphere action is lower than OPC and hence not

recommended for usual R.C.C. work in super structures.

2-B Moderately Sulphate Resisting Cement (M.S.R.C.)

This cement has been developed as a compromise Cementhaving the good properties of sulphate resistance to someextent and of good alkalinity like that of OPC which useful for

reinforcement protection and also of early strengthdevelopment better than Highly Sulphate Resisting Cement.

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No standard exists for this cement in the B.S and P.S.specifications but under ASTM it is designed as Type II. Thethree days minimum strength of OPC, H.S.R.C & H.S.R.C is1800, 1200 and 1500 PSI respectively under ASTM.

This cement though better than H.S.R.C in many respects isnot as resistant to sulphate as H.S.R.C and should not be usedin foundations near the seashore. Incidentally the O. P.cement produced in most of the Cement Factories aroundKarachi are confirming to the ASTM specifications for this typeII and hence more resistant to mild sulphate attack than thecement produced in the factories in other parts of country.

2-C Portland Blast Furnace Slag Cement:

This cement has well to moderate resistance to sulphateattack from soil. This cement has some other very desirablequalities of stability details of which follow below under item3C.

2-D Pozzolana Cement:

This cement has well to moderate resistance to sulphateattack from seawater or soil containing sulphate.

2-E Low Alkali Cement:

This is a variety of ordinary Portland cement in which the total alkalicontents of cement has been controlled to remain below 0.6%. With

this reduced percentage of alkali contents the danger of alakie of cement attacking the active silica contents of aggregate is eliminated.Generally we do not have active aggregate of this type in Pakistan buton each large scale-concreting project, test of alkali aggregatereaction must be performed to enshore safety of the project. Certainvarieties of Chert-stone found in Pakistan contain active Silica andwould require low alkali for making concrete.

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3. Low Heat of Hydration Cement:

Normal and Rapid Hardening Cement generate lot of heat during thesetting and hardening process so much so that the structure under

concreting can crack. This can occur especially while poring largemesses of concrete in confine spaces like those of Dam and Bridgepier foundations. In order to avoid this problem cement of low Heatof hydration have been developed some of which are as listed below:

3-A Low Hear of Hydration Cement (type IV of A.S.T.M.)

3-B Portland blast Furnace Slag Cement

3-C Pozzolana Cement

3-D Super Sulphate Cement

3-A Low Hear of Hydration Cement (type IV of A.S.T.M.):

This is cement specially meant for the concreting of structureswhere large masses of concrete have to be poured at onetime. Generally it is specified that heat of hydration on 7 days

will not exceed 250Kg. This is achieved by making this cementwith larger percentage of di-calcium silicates in its contentsthan normally presents in OPC. In A.S.T.M this cement isdesignated as type IV and under BS as LHP. Under Germanstandards its type is LAHORE with symbol as N.W. while the

Japanese equivalent is type L.H.P with symbol as M.H.C. Thedisadvantage of this cement is its slow development of strength and is therefore not used at sited where rapidhardening or other specific qualities are required.

3-B Slag Cement:

This is another variety of low heat cement. Grinding 35% to 65% of granulated blast furnace slag with ordinary Portlandcement clinker produces it. The higher the slag content, thelower are the 3 and 7 days strengths but better is theresistance to chemical attack. Under German standards asmuch as 90% slag can be used with type HOZ cement andunder Japanese standard up to 70% in the type BSCC. This

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cement is slower hardening compared to OPC- its strengthcompared to OPC in ASTM being as follows:

OPC B.F SLAG CEMENT

3 days strength 1,800 7607 days strength 2,800 1,400

28 days strength 4,000 3,000

This cement besides being a low heat cement has also theadvantage of being medley sulphate resistant although itcannot replace the highly sulphate resistance cement formarine piles and foundations. This cement has excellentresistance to weak organic acids present in the soil and has

also the very desirable quality of protecting reinforcementsteel better than any other cement.

3-C Pozzolana:

Grinding various proportions of natural pozzolana, tars orvolcanic ash with ordinary Portland clinker makes this cement.It is very good cement in the sense that it has good

workability properties in addition to having low heat andmoderate sulphate resisting properties. It has been usedextensively in the 37KM long causeway connecting Dhahranwith Bahrain in the gulf. So far in Pakistan we have not beenable to locate useful pozzolana deposits, but there isindication that there may be good deposits of this material inthe overburden of coal deposits of Sindh.

3-D Super Sulphate Cement: This is another variety of low heat cement. Its standards existunder B.S but not under A.S.T.M. it is made by grinding about70-80% B. F. Slag with about 10% gypsum and 1-2 % Portlandclinker or lime. This cement is also middy resistant to sulphateattack. It is very finely ground cement and its early strength at3 day is comparable to OPC although under the BS its 7 daysstrength is required to be comparable to at least the 3 daysstrength of OPC. This cement is also good masonry cementdue to its good workability but it can be used in RCC and other

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Resisting Cement and each concrete thus made is more workableand attains higher weather resisting property compared to theirnon-air entrained versions.

Blended Hydraulic and Masonry Cement and Grouts:

This cement is basically made for plastering and grouting. Standardshave been laid down for this cement both in the British and ASTMspecifications. In fact under ASTM there are at least 10 versions of Masonry cement. Some of the standards are for OPC based cementwith or without air entraining agents while others are for sulphateresistance and low heat versions. This masonry cement is made byaddition of plasticizing materials like lime, ground silica, slag or

Pozzolana and air- entraining agents’ etc. Portland Cement clinkersduring grinding.

2.3 Decorative Cement Oil Well and other Special Purpose Cement:

This cement is basically of properties similar to O.P.C except that itis made from such raw materials, which contain the least amountsof coloring pigments like traces of iron, manganese and chrome.Basically this cement has higher Tricalcium Aluminates in itscontents than OPC and therefore subjects to sharp attack bysulphate from any source.

2.4 Different Types of Cement –From British Cement Association;

Sustainability and Factory-Made Cements:

Integration of sustainability into all its operations now sets the UK cementindustry's agenda. For cements to remain viable, their embodied energy

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and carbon footprint must be reduced over time without jeopardizingproduct performance. The increasing availability of cements such as CEMII types for use in concrete, mortar and grout plus the continuedproduction of niche Masonry cements for use only in mortar will help the

industry to meet its social and environmental obligations and achievenecessary economic objectives.

Until now, Portland cement CEM I, of strength classes 42,5 or 52,5, hasbeen the 'traditional' cement in the UK, although it is the least sustainabletype given its high proportion of cement clinker. Greener, moresustainable 'non-CEM I' cement solutions incorporating lower proportionsof clinker are now generally available in both bulk supply and packed inbags. Use of these non-CEM I factory-made cements should become moreand more widespread as prudent specifies include a cement's

sustainability credentials within their specification criteria.

Factory-Made Composite Cements:

Used here, the expression, 'factory-made composite cements' means anycement that comprises Portland cement clinker combined (undergroundor blended) with one or more additional inorganic constituents plus anoptimized amount of set-regulator (gypsum). The additional constituentsare selected from materials such as power station fly ash, blast furnaceslag and limestone, all already familiar to UK concrete, mortar andgrouting practice. Therefore, in terms of the British/European standard forcommon cements, BS EN 197-1, factory-made composite cements, arecollectively, types: CEM II, CEM III, CEM IV and CEM V i.e. any 'non-CEM I'cement specified in the standard. Such a use of the term aligns with theUK concrete sector's traditional understanding but is wider than is impliedby the standard itself wherein two particular cements, CEM II/M and CEMV, include the word 'composite' in their names. In general, the appropriateuse of factory-made composite cements delivers performance equal tothat of concrete containing CEM I cement and under certain conditions,can improve on the durability performance achieved.

Furthermore, in the case of use in masonry mortars within the generalityof exposure conditions, factory-made composite cements can achieve thesame level of performance on a one-to-one basis as a CEM I cement withinthe same traditional volume mix proportions.

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Portland cement (CEM I):Formerly known as ordinary Portland cement (OPC), CEM I ismanufactured to conform to British Standard BS EN 197-1. CEM I is thecement that has been most commonly used throughout the world in civilengineering and building works. Concretes and mortars made using CEM Iare versatile, durable and forgiving of poor construction practice. Inaddition, specific properties can be enhanced by altering either thecement-making recipe or the size of the particles and so producingdifferent cements. However, CEM I is the least sustainable type and use of alternatives is in the ascendancy.

Sulfate-Resisting Cements: The traditional sulfate-resisting cement used in the UK has been sulfate-resisting Portland cement (SRPC), conforming to BS 4027. SRPC is aspecial type of CEM I cement manufactured to contain a high content of iron oxide in order to limit the amount of the mineral phase tricalciumaluminates (C3A) and thereby increase its sulfate resistance. Additionally,SRPC is normally low alkali cement which benefits concrete in resistingthe alkali silica reaction (ASR). However, it is not the only sulfate-resistingcement available. Various factory-made composite cements are alsosulfate-resisting including the generally available CEM II/B-V type of Portland-fly ash cement containing at least 25% of fly ash. Such CEM II/B-

V cements are permitted for use in the same wide-range of sulfateexposure conditions as is SRPC and are also low in reactive alkalis.Moreover, SRPC is a type of CEM I cement with a high clinker content, it isno longer manufactured in the UK and is becoming more difficult tosource. Consequently, greener sulfate-resisting composite cements willcontinue to grow in importance.

Rapid Hardening Portland Cements:

Rapid hardening versions of CEM I cements are available. The averageparticle size is smaller in these cements and they gain strength morequickly than do ordinary CEM I types. They generate more heat in theearly stages and can be useful in cold weather concreting. However, theirprincipal use is in manufacturing precast concrete units where the highearly strength of the concrete permits quick re-uses of moulds andformwork.

Cements described as either rapid-setting or extra rapid hardening maybe mixtures of CEM I and a non-Portland cement such as calcium

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aluminates or calcium sulfoaluminate and will tend to both set and harden(gain strength) very quickly.

White Cement:

White cement is a Portland cement CEM I made from specially selectedraw materials, usually pure chalk and white clay (kaolin) containing verysmall quantities of iron oxides and manganese oxides. White cement isfrequently chosen by architects for use in white, off-white or coloredconcretes that will be exposed, inside or outside buildings, to the public'sgaze.

Masonry Cement:Masonry cements, as their name suggests, are designed for use inmasonry mortars for bricklaying, block laying, rendering and plasteringwork. They are generally mixtures of Portland cement CEM I plus selectedmineral additions (e.g. limestone or hydrated lime) and chemicaladmixtures such as air-entraining plasticizers that form tiny bubbles of airin the mortar. Masonry cements are used with sands and water to produceworkable, cohesive mortars that are freeze/thaw resistant in the fresh wetand hardened states.

Expansive Cements:Concretes, based on most cement types, tend to shrink in volume as theydry out. Expansive cements are designed to either compensate for thisshrinkage or to lead to an overall increase in volume compared to theconcrete when first placed. They tend to be mixtures of Portland andcalcium sulfoaluminate clinkers, optimized for gypsum content.

Environmental Cements:

In principle, environmental cements are of two types, neither of whichconforms to any strict definition: those that are formulated to treat andencapsulate environmental residues and those designed to limit theenvironmental impact of manufacture in comparison with traditionalcements by reducing energy usage, virgin raw materials and/oratmospheric emissions.

The first type covers a range of compositions and properties, although

many are Portland cement-based, they are specifically formulated to treatand remediate contaminated soils, sludges and wastes. The use of these

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cements in situ, produces a new construction product, for example acement-bound soil, a practice/product that in time is set to replace thetime-expired dig and dump philosophy.

The second type of environmental cements tend to be described by theirmanufacturers as eco-cements or low energy/low carbon cements and aredifferentiated by process, raw materials, properties and uses. There is awide range of these non-Portland 'alternative cements' and their potentialis being monitored closely.

Non-Portland Cements:

These products tend to embody less energy and have an inherently

smaller 'carbon footprint' than most cements based on Portland cementclinker; this means that during manufacture comparatively less energy isused and less carbon dioxide is emitted. In principle, this makes suchcements more sustainable and therefore potential candidates toeventually replace Portland cements in whole or in part. However,whether such non-Portland cements will simply satisfy niche markets oroccupy a more major role in construction depends crucially on thegeographical/geological availability of the raw materials used in theirmanufacture. Limestone, the principal raw material in Portland cement

clinker production is geologically abundant and hence it forms the basisfor the 'global binder' Portland cement CEM I. By and large, the rawmaterials used to make non-Portland cements are less abundant and lesswidely dispersed.

Examples of these disparate cements publicized as possiblecandidates to be general construction materials, are: calciumsulfoaluminate-based cements (e.g. CSA-bC2S variants)geopolymeric cements (alkali aluminosilicates), magnesium-oxidebased cements and C-Fix (hydrocarbon-based). Irrespective of thecement type, extensive research on long term performance will berequired before widespread acceptance in general construction, orindeed structural applications, could be achieved. In addition, thereare a number of non-Portland cements that have established nichemarkets, some examples of these are: calcium aluminate cement(high alumina) used for refractory purposes or its rapid hardeningproperties, magnesium ox chloride cement (Sorel cement) forflooring, magnesium phosphate cement for rapid repair of roads andairport runways, alkali activated slag’s and natural/prompt cement.

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Mortar , in its most general and basic form, is referred to as Portland cement , or Type one cement, and is created by burning limestone withother materials at 1450 degrees Celsius. The result is then ground to

produce a fine powder, which becomes one of the components of concrete. However, altering the amounts of the other materials in theburnt mixture yields several different types of Portland cement, each typehaving unique properties and strengths. The type of mortar used inbuilding a structure should be chosen based on the structure’s purposeand environment.

Because structures have various chemical and physical requirements,eight different types of Portland cement are manufactured. These eighttypes are simply referred to as Type one, Type two, Type three, Type four,

Type five, and Type one-A, Type two-A, and Type three-A. Types onethrough five are distinctly different, while Types one-A, two-A, and three-Aare modified versions of their counterparts.

The first five distinct types of mortar will first be discussed, as well as theirsuggested uses. Type one cement is suitable for most basic constructionuses. Type two is best for structures built in hot environments, or in soil orwater high in sulfate. For projects requiring strength at an early stage,

Type two is ideal because it provides more strength within one week than

the other types. Type four is useful in limiting heat caused by hydrationand is therefore used in massive concrete undertakings, such as dams.When soil or water is high in chemicals, Type five should be used becauseit is manufactured to resist chemical erosion.

The final three types of mortar are known as the air-entrained cements,because they have microscopic air bubbles added to their mixtures toincrease the durability of the concrete. Air-entrained cements areespecially useful in environments that have repetitive freezes. Types one-A, two-A, and three-A are similar in properties to types one, two, andthree; the air-entrained cements simply contain air bubbles.

2.5 Cement Manufacturing Process :

1. The cement manufacturing process begins when limestone, the basicraw material used to make cement, is transported by rail to the Edmontonplant from the Cadomin limestone quarry 220 kilometers west of Edmonton.

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http://www.wisegeek.com/what-is-mortar.htm

http://www.wisegeek.com/what-is-portland-cement.htm


http://www.wisegeek.com/what-is-limestone.htm

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http://www.wisegeek.com/what-is-limestone.htm

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2 . The limestone is combined with clay, ground in a crusher and fed intothe additive silos. Sand, iron and bottom ash are then combined with thelimestone and clay in a carefully controlled mixture which is ground into a

fine powder in a 2000 hp roller mill.

3. Next, the fine powder is heated as it passes through the Pre-Heater Tower into a large kiln, which is over half the length of a football field and4.2 meters in diameter. In the kiln, the powder is heated to 1500 degreesCelsius. This creates a new product, called clinker, which resemblespellets about the size of marbles.

4. The clinker is combined with small amounts of gypsum and limestoneand finely ground in a finishing mill. The mill is a large revolving cylindercontaining 250 tonnes of steel balls that is driven by a 4000 hp motor.

The finished cement is ground so fine that it can pass through a sievethat will hold water.

5. The cement manufacturing process consists of many simultaneous andcontinuous operations using some of the largest moving machinery in

manufacturing. Over 5000 sensors and 50 computers allow the entireoperation to be controlled by a single operator from a central controlroom.

2.6 Resources condition of that sector

MATERIALS AND ENERGY:

The following raw material is required in the production process which arefrequently available in Pakistan.

1. Lime stone: This raw material is extracted from the near by mountains. Limestonehas the highest composition in the cement product. 75% to 80% of the cement constitutes of limestone.

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2. Clay:Clay is another natural resource. This raw material is also companiesowned. 15% to 20% of cement composition comprises of clay .

3. Iron Ore:Iron Ore is the only resource that is bought from contractors. Iron Oreis added in small quantities and it helps to strengthen the cement.

4. Gypsum:Gypsum acts as a retarding agent. It slows down the hardeningprocess, which in turn gives the constructor enough time to use it.Again it is taken from nearest mountains.

5. Furnace oil:It is used mainly for power generation. Initially the companies wasrelying on WAPDA for power supply but now the companies have thierown electricity generation plant that provides upto 50% of the totalrequirements. With the increase of furnace oil prices the companiesare expected to move to adopt coal as a more cost efficient andenvironmentally friendly fuel for kiln firing. Today the management isexploring possibilities of alternative and cheaper fuel such as waste

firing etc.

2.7 People (Labor):

Pakistan is one of the countries having low labor cost as an advantage. The direct labor that works in cement companies includes both Skilled and

unskilled labors:

Skilled Labour Unskilled Labours

• Electrical (DCS System Engineers) Helpers

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• Mechanical( Killens Operators) Trolley Men

• Cement Mill Packers, Crushers, Packers)

• Civil Engineers Loaders

The companies in cement sector take their people as one of its mostvaluable assets they view their human resource as a competitiveadvantage therefore they ensure that their employees only those peoplethat are self motivated and professionally qualified. They also take intoconsideration that their business goals are realized through such diverse

work force providing equal opportunities without any discrimination on thebasis of cast, creed, gender and religion:

Land:

The land that has the factories and used for accommodation is owned bymost of companies. There is enough space to accommodate new plants if the need arises.

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2.8 PAKISTAN CEMENT INDUSTRY (Operational Units Data)

2.9 Industry Future:

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The cement demand would increase in future due to Government policiesas the Pakistan People’s Party’s (PPP’s) slogan has always been ‘roti,kapra aur makan’ (bread, clothing and housing). In this regard astatement of the new government confirmed that it would encourageindustries and construct small dams. Pakistan's economy, PACRA saidgrew impressively during last five years with an average GDP growth rateof around 7%. Cement industry has a positive correlation with the GDPgrowth rate. The major domestic demand drivers are public sectordevelopment programs (infrastructure), real estate and industrialconstruction.

But on other hand there are many factors, which can create manyproblems in Pakistan cement industry. According to the analysts of Pakistan Credit Rating Agency (PACRA) the cement sector is currentlyfacing stern challenges emanating from a wide spectrum of socio-economic risks including contracting economic activities, and high inputcosts. These negative developments, along with the prevailing creditcrunch and rising interest rates, have further constrained the industry'sprospects.

The conducive economic environment not only fuelled the local demandbut also provided impetus for capacity expansion. Resultantly, theindustry added significant capacity recently, while several new productionlines are scheduled to commence operations shortly. During this period,the cement manufacturers also established export operations by cateringto the growing demand of regional economies. This, while stabilizing thelocal cement prices, had a positive impact on capacity utilization andmargins. Although the local demand dwindled significantly in the firstquarter of FY 09 (around 15% declines), strong growth in exports has

provided support to the industry in the form of largely sustained capacityutilization and price stability. However, given the global recession, exportdemand is expected to come down.

This would negatively impact the margins and put pressure on local pricesthat could lead to a price war among producers. The looming supplyoverhang scenario in the sector could potentially worsen the situation.Profitability of the sector has come under pressure due to high energycost (comprising around 50% of total raw material costs) and increasing

financial expenses.

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Keeping these developments in view, the outlook on the sector is negativewhich implies that PACRA perceives downward pressure on the ratingswithin the industry, especially for high leveraged entities. PACRA, as partof its on going surveillance, is monitoring all developments very closely,

and may take a client specific rating action wherever it is deemedappropriate. However, the cost and exports may be affected due toweakness of the US dollar causing coal, electricity charges and freightprices, comprising 65 to 70 percent of the cost. The PSDP allocation hasbeen cut by Rs 75 billion and feared further cuts would curtail cementdemand. Major capacities of countries like India and Iran are expected tocome online by FY10 and onwards which are likely to convert thesecountries from dependent importers to potential exporters.

Moreover, this rising trend is expected to be short-lived due to higherinterest rates and inflationary concerns are likely to make itdisadvantageous for investors to enter the construction industry. Inaddition to this, to control real estate prices the government isconsidering imposing a tax on it.

2.10 MAJOR DECISIONS IN Budget 2008-2009:

1. Federal excise duty on cement has been raised to Rs 900 per Tonnefrom the existing base of Rs 750 per tonne.

2. The Finance Bill seeks to extend exemption on ready mix concreteblocks. Previously, building blocks of cement were only exempted

under this Schedule.

3. Despite the fact that cement constitutes as one of the basicnecessities for shelter, the policy makers have subjected thecement sector to the highest taxation in the region. The levy of General Sales Tax (GST) on cement is Rs660 per ton in Pakistan ascompared to Rs320 in India. it is said that Pakistan has one of thehighest tax rates on cement in the Asian region. The impact of such

tax and duty structure has resulted in almost 40 per cent increase in

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the cement price per 50 kg bag when compared to Indiasuppressing demand for Pakistan cement.

2009 global cement consumption stabilizationfollowed by 2010 recovery:

Source: Portland Cement Association, Skokie, Ill.

World cement consumption is expected to decline 1.7 percent in 2009, amodest drop cushioned by a roughly 4.0 percent growth in utilization byChina and India. According to a recent PCA report, gains in those twonations, which together account for 58 percent of the world’s cementconsumption, will mask the harsh downturns predicted for many of theglobal cement markets. Among developing economies, consumption isanticipated to decline nearly 16 percent during 2009.

Although world governments are engaged in massive stimulus programs,early projects most likely will be low in cement intensities. Jobs such as

bridge work, which has higher cement intensities but longer design times,will materialize full force in 2010,when worldwide cement consumptionwill yield a 3.7 percent gain. “The magnitude of the global economicstimulus programs currently under way is unprecedented,” says PCA Chief Economist Ed Sullivan. “This is concentrated, however, in developedcountries. Emerging economies, with the exception of China and India, areexpected to lag one year behind.”

Sullivan expects global consumption figures to reach 2.65 billion metrictons in 2009, down from 2.7 billion in 2008. To gauge how drastic andrapid the world economic decline is, in Sullivan’s October 2007 globalforecast, he had anticipated cement consumption in the neighborhood of 2.82 billion metric tons by 2008. In his current report, Sullivan predictscontinued worldwide growth rates of 7.7 percent (to 2.96 billion metrictons) and 6.9 percent (3.17 billion metric tons) in 2011 and 2012,respectively.

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2.11 GLOBAL CEMENT PRODUCTION:

Recent years have seen the cement industry grow dynamically with most

of the actions taking place in emerging economies. Despite the ongoingfinancial crisis the global economy is facing, the need for housing andcontinued government investments in infrastructure development byemerging economies is offsetting downturn in mature markets. Though, atpresent, demand is growing, but at a decelerated pace, the phase ismomentary. Long-term projections indicate healthy demand growths, asworld economy stabilizes and construction activity picks up across globalmarkets into the next decade.

China, followed by India, United States, Japan and Russia, represent thelargest producers and consumers of cement worldwide. Other countriesfeaturing prominently on the global cement space include Spain, SouthKorea, Italy, Iran, Turkey, and Brazil. Significant capacity expansions inChina, India, Saudi Arabia, UAE, Turkey, Egypt, and Brazil are underwayand planned for the next few years.

Cement: A Global Strategic BusinessReport:Portland cement is the most widely consumed cement variety worldwide.

The largest geographic market is Asia-Pacific, and the fastest growth isforecast to take pace in the Middle East & Africa and Asia-Pacific markets.In fact, China alone consumes more than half the global Portland cement.

Blended cement, the less environment polluting varieties, would seedemand grow in the next few years, as their favorable environmentalprofile and excellent performance wins end-user interest. Again Asia-Pacific represents the largest geographic market, though share of Europealso stands out. Fastest growth would take place in Asia-Pacific, asdemand is expected to increase over the forecast years.

In terms of market, China remains the largest regional market, whereConstruction Contractors, followed by Concrete Products Producers

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represent the largest markets for cement. The fastest growing market,however, would be Ready-mix Concrete Producers, as they benefit fromban imposed by the Chinese government on mortar and concrete mixingat construction sites.

Meanwhile, the second largest regional market, India, would see cementdemand advance the fastest for the Ready-mix Concrete Producersmarket. Though demand from Consumers, the largest cement market,would continue to grow, it would lose share to Ready-mix ConcreteProducers and Concrete Products Producers markets.

The global marketplace is characterized by participants such as Lafarge(France), Holmic (Switzerland), CEMEX (Mexico), Heidelberg Cement(Germany) and Ital cementi (Italy), which represent the five leadingmanufacturers of cement. Other international cement makers includeBuzzi Unicem (Italy), Cimpor (Portugal), CRH (Ireland), VotorantimCimentos (Brazil), Sumitomo Osaka Cement (Japan), TaiheiyoCement (Japan), and Anhui Conch (China). Other leading regionalmarket leaders include: Anhui Conch, China Shanshui, China NationalBuilding Material, and Tangshan Jidong in China; and ACC, Ambuja

Cement, Grasim, UltraTech, and India Cements in India.

"Cement:

A Global Strategic Business Report" from Global Industry Analysts, Inc.provides a comprehensive review of market trends, drivers, productprofile, players, competition, recent developments, mergers, acquisitions,and other strategic industry activities. Analysis is presented for majorgeographic markets such as the United States, Japan, Europe, Asia-Pacific,Latin America, and Middle East & Africa. Global and regional analytics areprovided for product segments including Portland cement, BlendedCement, and Special / Other Cement.

Demand is also analyzed in terms of end-use sectors including ResidentialBuilding sector, Non-Residential Building sector, and Non-building sectorfor select markets. Cement demand is also analyzed by markets includingReady-mix Concrete Producers, Construction Contractors, ConcreteProducts Producers, Consumer, and Other for major markets, including

China and India.

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2.12 World Cement Producers

Country 2007 2008 2009

(By Principal Production of Cement

Brazil 39500 39500 40000

China 626500 705000 750000

Egypt 24500 23000 26000

France 19839 20000 20000

Germany 28034 30000 28000

India 100000 100000 110000

Indonesia 31100 33000 34000

Iran 26650 30000 31000

Italy 39804 40000 40000

Japan 76550 71800 72000

Korea, Republic of 52012 55500 56000Mexico 29966 31100 31500

Russia 35100 37700 40000

Saudi Arabia 20608 21000 23000

Spain 40512 42500 40000

Thailand 27913 31700 35000

Turkey 30120 32600 33000USA 90450 91300 92600

Other Countries 361000 360000 360000

World Total 1700000 1800000 1860000

(Source : Mineral Commodity Summaries.)

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2.12 Global Cement Trade & Shipping –

Future Outlook to 2015

The world cement trade and shipping sector is a complexcombination of a wide variety of regular movements and sporadicshort-term opportunistic shipments

FOR IMMEDIATE RELEASE

Jul 02, 2008 – Global Cement Trade & Shipping - Future Outlook

to 2015

the world cement trade and shipping sector is a complex combination of awide variety of regular movements and sporadic short-term opportunisticshipments. A high volume of trade represents movements betweencompanies under the umbrella of the same multinational cement group,whilst independent cement traders are still a major factor determiningprice levels and patterns of trade.

Construction booms and downturns can alter the regional cement tradeprofile dramatically – as witnessed in recent years in many of the world’sleading markets. Similarly, the rush to build new production capacity tomeet future demand can make significant volumes of cement and/orclinker available for export, with the location of the plant and inlandlogistics determining the economic feasibility of overseas shipments.

A further layer of complexity is imposed by the variability of shippingcosts – bulk carrier freight rates are determined by factors outside the

cement sector, but they can radically alter the cost competitiveness of supplies from one country in a variety of world markets. The volatility of shipping costs – as witnessed over the past 4 years – therefore providesan extra layer of uncertainty for the future prospects of trade patterns andvolumes.

Global Cement Trade & Shipping - Future Outlook to 2015 examines indetail the recent development of cement trade patterns and volumes, andprovides an insight into the likely future outlook over the period to 2015.

This is based not only on the cement production/consumption outlook forindividual markets throughout the world, and therefore the implications

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for import requirements and export availability, but also on the likelyfuture development of the specialist cement carrier fleet and the generalbulk carrier sector. With extensive development ahead for the sizes of bulk carrier of most relevance to the cement sector, the outlook for

cement shipping via this mode is highly uncertain, especially given theextent of market uncertainty over the future path for shipping freightrates.

For the specialist cement carrier sector, Global Cement Trade & Shipping -Future Outlook to 2015 includes a highly detailed set of analyses of thecurrent fleet, and an examination of the likely forward development,based on the age profile and trends in new vessel ordering.

Global Cement Trade & Shipping - Future Outlook to 2015 providesinvaluable independent analysis on the development of cement shippingand trade throughout the world in the period to 2015. It represents themost up-todate and comprehensive examination of the trade and shippingof cement ever published, and is essential reading for all parties with aninterest in this sector.

Table of Contents: - SECTION 1 INTRODUCTION & EXECUTIVE SUMMARY

Includes an overview of the Report’s structure, as well as a summary of the methodology underlying the analyses.

This Section also includes a summary of the most significant points andconclusions drawn from the main body of the Report. They are presentedin the order of the corresponding Sections for ease of reference.

SECTION: 2 OVERVIEW:

WORLD CEMENT TRADE 1970-2005 This Section provides detailed analysis of the key developments in world

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cement and clinker trade over the past 35 years, with most emphasis onthe recent years of extensive trade volume and structure development.Attention is focussed on the main factors underlying trade developments,and the importance of seaborne shipments within the trade aggregate.

SECTION: 3

EUROPE Imports and exports by European countries dominate world trade,although a large part of the European trade total comprises inlandmovements between neighboring countries. This Section includesfull discussion and analysis of regional trade volumes and patterns,as well as examination of the trade profile in recent years for keyimport markets and export sources.

The Section is sub-divided into:

3.1 Overview3.2 The European Union3.3 Other Europe

SECTION 4 :THE AMERICAS

The US cement market has been the world’s leading destination forcement & clinker exports in recent years, as cement consumptionlevels have far exceeded domestic capacity. Whilst there has beenan import level fall in recent years, there is now a resurgence inimport levels as demand continues to expand – this Sectionexamines the scale and structure of US import demand, andexamines the main sources of supply for the US market.

Latin America includes a number of traditional cement exporters toworld markets. Export availability has varied of late, according tothe scale of domestic cement consumption growth, but therecontinue to be a number of significant trade flows from Central &South American countries, mainly within the region but also to moredistant markets. Import penetration among the leading cementmarkets is varied, but has changed in recent years. This Section

includes in-depth appraisal of recent/current developments for

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imports & exports for all the main markets and suppliers in theregion.

4.1 North America4.2 Central & South America.

SECTION 5:

AFRICA & THE MIDDLE EAST

Africa includes a number of import-dependent markets, both in terms of finished cement and clinker for grinding operations. Large-scale capacityexpansion has seen import requirements decline and export availabilityemerge in recent years in key markets, with an associated radicalchange in the pattern of trade flows.

Similarly in the Middle East, capacity expansion has funded exportgrowth for certain States, whilst ever-expanding domestic cementconsumption and the aftermath of conflict in the region has promptedlarge-scale imports in others. The result is a complex evolving trade

structure.

For each of these regions, the overall regional profile at the current timeand over recent years is examined and discussed, before detailedindividual country analyses are presented for the key import marketsand exporting countries.

5.1 Africa

5.2 Middle East

SECTION 6:

EAST ASIA The traditional major roles played by Japan and South Korea in Asia andPacific markets have been supplanted in recent years by the sheer scaleof expansion of exports from China. Whilst these have been largely

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destined for trans-Pacific or intra-Asia movements, supplies from Chinaand the region have also been shipped to a wide variety of marketsworld-wide.

At the same time, the region includes a number of significant cement andclinker import markets, supported by the involvement of the region’slarge cement companies in import facilities overseas. Detailedexaminations of the regional and national import/export profiles arepresented and discussed all the major countries in the region.

Export

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2.13 Demand of cement industry :

Local cement demand fell by 13pc in FY09

Local cement demand witnessed a decline of 13 percent Y-o-Y in FY09 at19.4 million tons versus 22.4 million tons in FY08.

According to the data released by the All Pakistan Cement ManufacturersAssociation (APCMA), Pakistan cement sector concluded FY09 with dismalsales performance by witnessing a meagre 2 percent Y-o-Y growth at30.8m tons.

The growth in overall cement sales mainly came from the record highcement exports during the year. After six years of consecutive YoY

growth, the domestic cement market depicted a declining pattern in thewake of lukewarm construction activities amid economic slowdown, highinterest rates, liquidity crunch and cut in infrastructure spending both inpublic and private sectors, during the year.

During FY09, domestic cement plants operated at 74 percent capacityutilization level as compared to 81 percent in the last year. The decline inutilization level was mainly the function of lower domestic demand andaddition of new capacities during the year. The utilization for thedomestic market stood at 46 percent as against the previous year’s levelof 60 percent.

On the other hand, the utilization level for export sales recorded at 27percent versus 21 percent in FY08. The rising export demand helped thelocal cement industry to operate at an optimum level during the year.

With the shrinkage in domestic cement demand, Pakistan’s per capitacement consumption at the end of FY09 is recorded at 120kg versus139kg a year earlier - representing a decline of 14 percent. The decline is

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2.15 Cement sector to face rising costs,slowdown in demand in fy09:

The fiscal 2008-2009 is being marked as a challenging year for cementmanufacturers as the sector would face the rising costs and a slow downin demand with exports growing by 50 per cent during the period.

The cement sales showed strong growth of 24pc as exports registered agrowth of 147pc over the period and played a key role while local salesremaining subdued with 6 percent growth with regional capacityexpansions yet to come online, local cement manufacturers remain in astrong position to capitalize on export sales over fiscal 2009.

They said that rising input costs, particularly coal and a high interest ratescenario are likely to keep pressure on the bottom line. However,increasing exports should help the manufacturers pass on the impact.According to the latest numbers issued by the All Pakistan CementPakistan Association (APCMA), cement dispatches for Jun 2008 summedup to 2.77 million tons and a shift in trend from local to export sales isevident. Around 67 percent of total dispatches were local sales while theremaining 33percent are attributed to exports with a significant increase

over last year; in Jun 2007 exports accounted for about 18percent of total dispatches.Cement sales for fiscal 2008 registered at 30.11mn tons with exportscontributing approximately 26percent compared to 13percent in fiscal2007.

Talking about exports sales, which may boost margins, the industrysources said that cement manufacturers spent most of last year buildingrelationships with foreign clients and applying for quality certificates. Theexports sales are expected to increase further during fiscal 2009.

There is expectations that higher exports would help in boosting marginsfollowing the dual effect of reducing excess supply in the local marketwhich will help prevent a price war and economies of scale. Onceregional capacities come online, export growth is expected to slow downespecially in India and the Middle East. However, local manufacturers arealso exploring other potential markets such as Sri Lanka, Africa andEurope to offload their surplus capacities. Local demand is also expectedto pick up once political and economic uncertainty clears.

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Local cement demand fell 13 percent inFY09:

Pakistan cement sector ended FY09 with local sales witnessing a meager2 percent Y-o-Y growth at 30.8 million tonnes, data released by AllPakistan Cement Manufacturers Association said.

According to the data, the growth in overall cement sales mainly camefrom the record high cement exports during the year.

“After six years of consecutive YoY growth, the domestic cement marketdepicted a declining pattern in the wake of lukewarm constructionactivities amid economic slowdown, high interest rates, liquidity crunchand cut in infrastructure spending both in public and private sectors,”Muhammad Rehan Khan, analyst at First Capital said.

Considering the fact that there is a direct relationship between theeconomic growth and cement demand of the country, Pakistan’s cementindustry has started to bear the brunt of ongoing economic slowdownwith a notable decline in domestic dispatches of the year.

Local cement demand witnessed a decline of 13 percent Y-o-Y in FY09 at19.4 million tonnes versus 22.4 million tonnes in FY08. As per data,northern cement market recorded a decline of 17 percent at 15.9 milliontonnes, whereas the southern market posted a growth of 4 percent at 3.5million tonnes during FY09.

As far as dispatches of June 2009 are concerned, it remained 11 percenthigher at 1.84 million tones over the preceding month’s level of 1.65million tonnes. However, this still depicts a fall of 1 percent on Y-o-Ybasis.

Despite global economic turmoil, the country’s cement exporting playershave managed to depict upbeat performance by exporting 11.40 milliontonnes of cement – an all time high level depicting a phenomenal growth

of 47 percent. “This is indeed a remarkable progress since the start of exports in FY02 when the industry was only able to export 0.11 million

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tonnes of cement – comparing with FY09’s cement exports this translatesinto a CAGR of 95 percent”.

Interestingly, during June 2009, the industry also achieved the highest

ever monthly exports of 1.22 million tonnes with 35 percent capacityutilization.

However, during FY09, domestic cement plants operated at 74 percentcapacity utilization level as compared to 81 percent in the last year. Thedecline in utilization level was mainly the function of lower domesticdemand & addition of new capacities during the year.

The utilization for the domestic market stood at 46 percent, as against

the previous year’s level of 60 percent. On the other hand, the utilizationlevel for export sales recorded at 27 percent versus 21 percent in FY08. The rising export demand helped the local cement industry to operate atan optimum level during the year, he said.

With the shrinkage in domestic cement demand, Pakistan’s per capitacement consumption at the end of FY09 is recorded at 120 kg versus 139kg a year earlier - representing a decline of 14 percent.

The current level of per capita cement consumption ranks Pakistan asone of the lowest penetrated markets in the region, therefore indicatinga vast potential for cement demand growth in the longer run, analystsaid.

During the last fiscal year FY09, cement industry witnessed additions of 5million tonnes capacity (7 million tonnes in FY08). Now, the total cementproduction capacity of the industry stands at 42 million tons as againstthe end-June level of 37 million tonnes.

Cement price to go up

All Pakistan Cement Manufacturing Association (APCMA) is all set toincrease the prices of cement by 5 to 6 rupees per bag in the next coupleof days due to hike in their cost of production, reliable sources told TheNation on Tuesday.

An official of APCMA told that due to higher prices of petroleum products,the cost of production had increased which was compelling the

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manufactures to enhance the prices of cement by Rs 5 to Rs 6 per bag.He further said that on one side, the government provided some relief tothe cement industry by decreasing the federal excise duty (FED) in newfederal budget but, on the other, it increased the prices of petroleum

products, which enhanced the cost of production.

It is pertinent to mention here that Federal Board of Revenue (FBR) in therelief measures for the ongoing fiscal year, 2009-10, has reduced theFED on cement from Rs 900 per metric tonne to Rs 700. The decisionwas aimed to provide cement at cheaper rates to the consumers toencourage construction activities in the country. The APCMA on this cutthe prices by Rs 10 per bag and brought it to Rs 345. However, now itwould be raised to Rs 350 per bag in the next two to three days.

The government on July 1 increased the prices of petroleum products by10 to 15 per cent, which resulted in hike of prices of all commodities.Economic slowdown, uncertain political and security situation andbudgetary constraints hampered construction activities in the country inthe last fiscal year and resultantly, local cement production was droppedby 14pc. Last year, government cut the Public Sector DevelopmentProgramme (PSDP) by Rs 118b, from Rs 337b to Rs 219b, due to

economic meltdown and this was the major reason that affected the saleand demand of cement. However, the official of APCMA was optimisticthat the cement industry would boost in the ongoing financial year(2009-10), as the government had increase the volume of PSDP in thecurrent budget.

Cement industry fears plant closures amid fallingprices:

Many cement plants would be shutting down in the near future if thecurrent cement market prices prevail any longer, a senior executive of DGK Cement revealed. Talking to journalists visiting the DGK Cement atKhairpur, he said that at present the most efficient cement factories inPakistan are suffering a loss of Rs35 to Rs45 per bag and only the unitswith capacity to sustain the loss will survive. General Manager Works DGKhan Cement plant Khairpur Dr. Arif Bashir said that the cement industry

is facing over Rs75 billion of loans, a steep loss curve of Rs40 per bag inthe local market and uncompetitive prices in the international market. In

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his presentation on the cement sector of Pakistan, Dr Arif Bashir said thatwhile the cost of production is high, owing to rising fuel and energycosts, the domestic demand of cement has dropped by 13.44 per cent in2009. The only saving grace for the cement industry at present was that

cement exports increased by 47.4 per cent, he added. Bahsir said thatthe cement industry has invested around $6 billion in expanding itscapacity from 16.72 million tons in 2002 to 41.76 million tons in 2009.

The industry has contributed Rs30 billion as direct taxes to theexchequer, he added. Pakistan, he said has exported over 11 million tonsin 2009, earning foreign exchange of about $750 million. The time to actand capture the global market is now as the cement industry of Pakistan

would face tough competition in the export market when Indian, Iranianand Saudi Arabian plants would come on stream and enter the exportsmarket. Replying to a question about what could be the solution; Dr.Bashir suggested that the government should work out a formula inconsultation with the cement manufacturers to decide the floor priceallowing a margin of profit. He also suggested that the government canalso help the cement industry from closing down by giving them somerelief on the high cost of fuel energy, as this constitutes 45 per cent of the over-all cost of production and if the government helps the cementindustry the market demand for Pakistani Cement will reap massiveforeign exchange and industrial development in Pakistan. If thegovernment immediately helps the industry by removing thetransportation bottlenecks in the way of exports of consignments to Indiaand to the ports of Karachi, the existing world demand, he said, showsthat we can increase our exports to India and other African and MiddleEastern countries.

2.16 Pakistan’s Foreign Investment Policy:

The investment policy regime has been liberalized with most economicsectors open for foreign involvement.

The Government has therefore liberalized its investment policy,promoted a stronger and faster enabling framework and opened upalmost all sectors for foreign investment while offering tax and other

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incentives for investment as well as enabling 100% ownership for foreigninvestment in many areas. The new Investment Policy provides equalinvestment opportunities for both domestic and foreign investors.

The Government has decided to give “priority industry” status for foreigninvestment into information technology, oil and gas exploration, mining,leather production, corporate farming, livestock and dairy, financialbusiness and trade, infrastructure, tourism, housing and constructionsectors. Complete freedom of choice has been provided on where tolocate an activity

Employee issues

Pakistan is one of the countries having low labor cost as an advantage.But like U.K, Pakistan also have minimum wage legislation, laws of prohibition of child labor, working conditions at work, health and safetyregulations and labor rights Act, and termination of employment laws.

Strength Of Sector Which Attract Investors:

Pakistan provides relatively strong protection for foreign investors, itranks

19th worldwide on protecting investors, according to World Bank report

Doing Business In South Asia 2008.It attract in many ways:

Availability Of Raw Material:

Abundance of natural resources makes it an ideal place to set-up cementplants. And which can give high turnover to foreign companies in cementindustry.

Duty Free Port of Gwadar:

Pakistan was previously relying on its Karachi port for the shipment of itsimports and exports. It was over crowded and expensive. Pakistan hasbuilt a new deep sea port at Gwadar in the strategically important

Province of Balochistan bordering with Iran. This port has been declaredduty free, on top of this cheaper labor makes it the cheapest port in the

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Excise Duty

In budget 2008-2009 the federal excise duty on cement has been to Rs900 per tonnes from the existing base of Rs 750 per tonnes.

Current Duty Rate & Subsidies Provided By Government:

The Cement industry in Pakistan has to pay Federal Excise duty atRs.950/ton as compared with Rs. 750 / ton, 16% sales Tax as comparedwith 15% and high utilities bills like electricity, gas etc

On top of all the issues is the harassment of the industry by differentgovernment departments, industry sources said. They said that PakistanStandard Control Authority had filed criminal cases against the cementmanufacturers.

The Competitive Commission of Pakistan is also chasing the industry,accusing it of forming cartel and initiated cases against a number of units, sources said.

The adverse impact of slow exports of cement to India started to emergein December 2008 as lesser orders have been received by exporters.

In the first quarter of 2008-09, a spokesman for All Pakistan CementManufactures Association (APCMA) remarked that any setback to cementindustry may increase the price to as high as Rs. 1600/- approx per bag.

Price to manufacture one bag of cement has risen to Rs. 375.60 / bag in2008 from Rs. 228.21 / bag in 2007. Electricity has risen by 20%.

Ministry of Science and Technology has levied an additional tax factor at

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0.1% of ex factory price which amounts to Rs. 3 per bag.

CHAPTER# 3FRAMEWORK OF ANALYSIS

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3.1 HYPOTHESIS ANALYSIS

A hypothesis (from Greek ὑπόθεσις [iˈpoθesis]) consists either of a

suggested explanation for an observable phenomenon or of a reasoned

proposal predicting a possible causal correlation among multiple

phenomena. The term derives from the Greek , hypotithenai meaning "toput under" or "to suppose." The scientific method requires that one can

test a scientific hypothesis. Scientists generally base such hypotheses on

previous observations or on extensions of scientific theories . Even though

the words "hypothesis" and "theory" are often used synonymously in

common and informal usage, a scientific hypothesis is not the same as a

scientific theory . A hypothesis is never to be stated as a question, but

always as a statement with an explanation following it. It is not to be aquestion because it states what the experimenter thinks will occur.

Hypotheses are usually written in the "if-then form": If X, then Y.

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http://en.wikipedia.org/wiki/Greek_language


http://en.wikipedia.org/wiki/Scientific_method

http://en.wikipedia.org/wiki/Testable

http://en.wikipedia.org/wiki/Observation

http://en.wikipedia.org/wiki/Theory




http://en.wikipedia.org/wiki/Scientific_method

http://en.wikipedia.org/wiki/Testable

http://en.wikipedia.org/wiki/Observation





3.2 TERMINOLOGIES OF INDUSTRY APCMA All Pakistan Cement Manufactures Association

UK United Kingdom

FED Federal excise duty

FBR Federal Board of Revenue

PSDP Public Sector Development Programme

APCMA All Pakistan Cement Pakistan Association

FY Financial year

MSRC Moderately Sulphate Resisting Cement

PACRA Pakistan Credit Rating Agency

GST General Sales Tax

HFRC Highly Sulphate Resisting Cement

OPC ordinary Portland cement

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SRPC sulfate-resisting Portland cement

ASR Alkali silica reaction

WAPDA Water and power development authority

RS Rupees

GCC Gulf Cooperation Council

GDP Gross domestic product

3.2.1 DATA COLLECTION

Data collection is a term used to describe a process of preparing andcollecting data - for example as part of a process improvement or similarproject. The purpose of data collection is to obtain information to keep onrecord, to make decisions about important issues, to pass information onto others.

1. Primary data

2. Secondary data

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http://en.wikipedia.org/wiki/Data

http://en.wikipedia.org/wiki/Process_improvement


http://en.wikipedia.org/wiki/Process_improvement



1. Primary data: -

In primary data collection, you collect the data yourself using methodssuch as interviews and questionnaires.

2. Secondary data: -

All methods of data collection can supply quantitative data (numbers,statistics or financial) or qualitative data (usually words or text).Quantitative data may often be presented in tabular or graphical form.Secondary data is data that has already been collected by someone elsefor a different purpose to yours. For example, this could mean using:

• data collected by a hotel on its customers through its guest historysystem

• data supplied by a marketing organization

• annual company reports

• Government statistics.

3.2.2 Data Processing

Data processing, data are defined as numbers or characters that representmeasurements from observable phenomena. A single datum is a singlemeasurement from observable phenomena. Measured information isthen algorithmically derived and/or logically deduced and/or statisticallycalculated from multiple data. ( Evidence ). Information is defined as eithera meaningful answer to a query or a meaningful stimulus that cancascade into further queried.

I collected lot of rice related data through the different web sites like

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http://en.wikipedia.org/wiki/Number

http://en.wikipedia.org/wiki/Character_(computing)

http://en.wikipedia.org/wiki/Measurement

http://en.wikipedia.org/wiki/Datum

http://en.wikipedia.org/wiki/Evidence

http://en.wikipedia.org/wiki/Information

http://en.wikipedia.org/wiki/Query


http://en.wikipedia.org/wiki/Number

http://en.wikipedia.org/wiki/Character_(computing)

http://en.wikipedia.org/wiki/Measurement

http://en.wikipedia.org/wiki/Datum

http://en.wikipedia.org/wiki/Evidence

http://en.wikipedia.org/wiki/Information

http://en.wikipedia.org/wiki/Query



google.com. My topic is cement Production and the role of bank in thisfield. So I was searching the data about the role of bank in the productionof rice.I wanted to know about its reasons and their impact on Pakistan’seconomy and I got through my research.

3.2.3 Hypothesis Testing

Hypotheses: A hypothesis is a specific statement of prediction. Itdescribes in concrete (rather than theoretical) terms what you expectwill happen in your study. Not all studies have hypotheses.Sometimes a study is designed to be exploratory. There is no formalhypothesis, and perhaps the purpose of the study is to explore somearea more thoroughly in order to develop some specific hypothesis orprediction that can be tested in future research. A single study mayhave one or many hypotheses.

(1) High interest rate is the biggest hurdle in the credit enhancement incement sector.

(2) Banks can not Assessment of overall loan requirement because of manufacturing company have not pay off power due to shortage of demand exports.

(3) In the first quarter of 2008-09, a spokesman for All Pakistan Cement

Manufactures Association (APCMA) remarked that any setback to cement

industry may increase the price to as high as Rs. 1600/- approx per bag.

Price to manufacture one bag of cement has risen to Rs. 375.60 / bag in 2008

from Rs. 228.21 / bag in 2007. Electricity has risen by 20%.

(4) On top of all the issues is the harassment of the industry by differentgovernment departments, industry sources said. They said thatPakistan Standard Control Authority had filed criminal cases against

the cement manufacturers.

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(5) The adverse impact of slow exports of cement to India started to

emerge in December 2008 as lesser orders have been received by

exporters.

3.2.4 Analysis of Data

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LUCKY Cement Company Limited

1. Current ratio : current asset Current liability

2009: 8,887,578 = 1.10 %

8,059,980

2008: 7,896,754 = 1.02 %

7,686,897

2. Quick, or acid test, ratio : current assets- inventories

Current liability

2009: 654,014 – 137,451 = 0.19 2628,010

2008: 5294,083 – 230,089 =2.06

2454,761

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2009 2008

1.10 1.02

2009 2008

0.19 2.06



3. Debt equity ratio : Total debtsShareholder equity

2009: 11755,812 = 1.21%9690,689

2008: 3170,512 = 0.34%9283,981

4. Debt ratio : total debts

Total assets

2009: 11755,812 = 0.54 %21,446,501

2008: 3170,512 = 0.25 %12,454,493

FAUJI CEMENT COMPANY:

1. Current ratio : current asset

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2009 2008

0.54 0.25

2009 2008

1.21 0.34



Current liability

2009: 1654,014 = 0.62 %

2628,010

2008: 5294,083 = 2.1 %2454,761

2. Quick, or acid test, ratio : current assets- inventoriesCurrent liability

2009: 654,014 – 137,451 = 0.19 2628,010

2008: 5294,083 – 230,089 =2.06

2454,761

3. Debt equity ratio : Total debtsShareholder equity

2009: 11755,812 = 1.21%9690,689

2008: 3170,512 = 0.34%9283,981

4. Debt ratio : total debts

Total assets

2009: 11755,812 = 0.54 %21,446,501

2008: 3170,512 = 0.25 %

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2009 2008

0.62 2.1

2009 2008

0.54 0.25

2009 2008

0.19 2.06

2009 2008

1.21 0.34



12,454,493

3.3 EXPECTED PROBLEM OF ANALYSIS These problems may cause the production in Pakistan.

1. High excise duty as compared to other countries.

2. Heavy taxes on the cement bag itself.

3. The production costs of cement in Pakistan are high.

4. Electricity rates and transportation costs are also high because of thehigh prices of POL in a falling world oil market.

5. The financial burden of the industry keeps soaring; consumption in thecountry has fallen sharply.

Any of the above problems may cause the rice production negate

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Chapter# 4IMPLICATION AND CONCEPTUALFRAMEWORK OF CEMENT MANUFACTURING

4.1 COMPARISION OF CEMENT INDUSTRY & ITSMEASUREMENT

Ratios LUCKY CEMENT FAUJI CEMENT

COMPANY COMPANY

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1-Current Ratio0.62

2-Quick Ratio0.19

3-Debt Equity Ratio1.21

4- Debt Ratio0.54

4.1 CEMENT MANUFACTURING & ITSCOORELATION WITH BANKS

4.2 FUTURE SCOPE OF CEMENT

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The cement industry of Pakistan entered the export markets a few yearsback, and has established its reputation as a good quality product. Thelatest information is that India will import more cement from Pakistan. Sofar 130,000 tones cement has been exported to the

neighboring country.

The last few years have been a golden period for cementmanufacturers,when the government increased spending oninfrastructure development. High commercial activity and rising demandfor housing on account of higher per capita income has kept cement off take growth in double digits.

During the financial year-07, cement sales registered a growth of 31percent to 17.53 million tones as against 13.5 million tones soldlast year. The cement sales during July-February-08 showed anincrease, both in domestic and regional markets to 18.17 milliontones. The domestic sales registered an increase of 7.2 percent to14.4 million tones in the current period as compared to 13.5 milliontones last year whereas exports stood at 3.7 million tones asagainst 1.8 million tones in the corresponding period last year,showing an increase of 110 percent.

The cement sector is contributing Rs 30 billion to the nationalexchequer in the form of taxes. This sector has invested about Rs 100billion in capacity expansion over the last four years. There are fourforeign companies, three armed forces companies and 16 privatecompanies listed in the stock exchanges. The industry is divided intotwo broad regions, the northern region and the southern region. Thenorthern region has over 87 percent share in total cement dispatcheswhile the units based in the southern region contributes 13 percent tothe annual cement sales.

The cement demand grew 19 percent and 13 percent during FY05 andFY06 respectively. During the first nine months of FY07-08, productionincreased by 30 percent as compared to last year. The demand forcement was forecasted to grow by 26 percent during FY07 and 17percent in FY08. The per capita consumption of cement has risen from117 kg in FY06 to 131 kg in FY07.

The main factors behind increase in demand of cement were: 60 percenthigher Public Sector Development Projects (PSDP) allocation, seven

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percent GDP growth, increasing number of real estate developmentprojects for commercial and residential use, developing export marketand expected construction of mega dams. The operating capacity of cement in FY05 and FY06 was 18 million and 21million tones, which rose

to 37 million tones by the end of FY07.

The cement manufacturers added eight million tones to the capacity andthe total production was expected to be 45 million tones by the end of 2010. It may result in a supply glut of 11 million, nine million and sevenmillion tones in 2008, 2009 and 2010 respectively.

Despite an excess supply of 11 million tones in 2008, it is estimatedthat the price would increase in domestic as well in regional markets

that may surely boost the profitability and give relief to theindustry on its new investment.

The cement demand would increase in future due to government policiesas the Pakistan People’s Party’s (PPP’s) slogan has always been ‘roti,kapra aur makan’ (bread, clothing and housing). In this regard astatement of the new government confirmed that it would encourageindustries and construct small dams.

As cement capacity is increasing to cater the rising domestic andregional demand, it started facing a tougher time because of pricefall after the first quarter of FY06 due to increase in supply, energyprices started surging and higher expansion led to mounting financeand depreciation costs. After reaching Rs 430 per bag at the retaillevel earlier last year, cement prices fell sharply during 2007.Average cement prices were Rs 220 per bag as on April 27, 2008, ascompared to Rs 315 per bag in 2006.

However, the cost and exports may be affected due to weakness of theUS dollar causing coal, electricity charges and freight prices,comprising 65 to 70 percent of the cost. The PSDP allocation has beencut by Rs 75 billion and feared further cuts would curtail cementdemand. Major capacities of countries like India and Iran are expected tocome online by FY10 and onwards which are likely to convert thesecountries from dependent importers to potential exporters.

Moreover, this rising trend is expected to be short-lived due tohigher interest rates and inflationary concerns are likely to make itdisadvantageous for investors to enter the construction industry. In

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addition to this, to control real estate prices the government isconsidering imposing a tax on it.

The export may reach to $ 500 million increase during 2008. Data for

the first quarter of FY08 shows that Afghanistan is Pakistan’s largestcement export market. The prospects for cement exports seem bright inthe medium term due to rising domestic as well as regional cementdemand. Pakistan also achieved improved access to India after thecomplete removal of the 12.5 percent custom duty on Portland cementimports in this country from January 2007, showing improved exportopportunities for Pakistan. India is planning to import more cement fromPakistan to stabilize prices in the market and the government wants abalance in demand and supply of cement in the current fiscal year.

The import of cement from Pakistan has increased manifold during lastfour months. India has registered a number of Pakistani cementmanufacturers, a requirement to facilitate import of cement. Pakistanhas already increased the frequency of trains from one to three in aweek to carry cement from Pakistan to Wagah border. Due to boom inthe construction industry, India needs cement in bulk to meet its growingneeds. The success of the sector depends on exports, its profitabilityfrom depressed local prices and cost appreciation. The exports for FY08have already surpassed the last whole year’s export of 3.19 million tonesand are likely to reach to 6.67 million tones in 2008.

The targets for exports for 2009 and 2010 are set to be 9.99 millionand 10 million tones respectively. Currently, the export demand isexpected to be from new inductee India along with other countries likeGulf Cooperation Council (GCC) countries, due to rising oil prices-ledeconomic growth. More countries like South Africa to make the footballstadiums for the World Cup and Sri Lanka are also expected to approachPakistani companies for cement imports. However, export depends on

factors such as: ability to produce cement at Rs 85 per bag. Exportstrategy should be made for at least three years, 2008-10, after whichnew plant will start production in the region. In the meantime industryshould explore new markets for export or ready to lower prices of cement in local market.

The sharp decline in cement prices were due to domestic competitionamong producers has dampened the profitability of the industry. To copewith this situation the manufacturers have strengthen cartel to set

minimum cement prices. The example was marketing arrangement thatincreased cement prices to the extent of 20 percent despite coal prices

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have gone down in the international market to $124 from nearly $ 140 inNovember 2007 to January 2008.

To break-up cartel the Competition Commission of Pakistan raided the

offices of Association of Cement Manufacturers of Pakistan andconfiscated computers and office record. The association condemnedthis action and said it is against business norms. They said thecommission is blaming cement manufacturers for making a cartel for thelast 10 years but could not able to prove it. The capital structure of cement companies may change as most of the expansions during lasttwo to three years have been debt financed and companies are expectedto retire these debts rapidly during next three to five years. Moreover,the slow down in economy may occur due to political uncertainty whichmight result in reducing cement demand in future. However, in case of construction of hydro-powered dams, there will be a sudden jump in thelocal sales of those companies located near these dams.

ConclusionCement industry is indeed a highly important segment of industrial

sector that plays a pivotal role in the socio-economic development. Though the cement industry in Pakistan has witnessed its lows and highsin recent past, it has recovered during the last couple of years and isbuoyant once again. With its 27 factories producing 14.68 million tonesto 10.4 million tones in the north and 4.2 million tones in the south - itpays a heavy 45 per cent excise duty compared to 25 per cent in Indiaand 10 percent in the Philippines, Indonesia and Egypt and 7 per cent in

Thailand. In addition there are heavy taxes on the cement bag itself. Theproduction costs in Pakistan are high. The electricity rates andtransportation costs are also high because of the high prices of POL in afalling world oil market. Wages have also been rising. At the current

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completethsis final hamid

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