Cement Industry Analysis

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  • Topic: Portland cement, Cement, Ground granulated blast furnace slag
  • Pages : 33 (9811 words )
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  • Published : May 8, 2012
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CEMENT INDUSTRY OF PAKISTAN

Table of Contents
EXECUTIVE SUMMARY1
INTRODUCTION TO THE INDUSTRY2
HISTORY OF THE CEMENT INDUSTRY2
TYPES OF CEMENT PRODUCED WORLDWIDE6
TYPES OF CEMENT PRODUCED IN PAKISTAN7
PLAYERS9
CEMENT PRODUCTION IN INDUSTRY13
MARKET SHARE OF THE FIRMS IN CEMENT INDUSTRY14
GEOGRAPHICAL LOCATION OF CEMENT INDUSTRY15
CARTELIZATION16
CONTRIBUTION MADE BY CEMENT18
EXPORTS19
All PAKISTAN CEMENT MANUFACTURERS ASSOCIATION (APCMA)21
INCENTIVES23
RAW MATERIALS25
PRICING AND COSTING25
PRICE LIST OF PRODUCTS IN CEMENT INDUSTRY PAKISTAN25
DETERMINANTS OF FIXED AND VARIABLE COSTS27
KEY ISSUES AND THEIR SOLUTIONS29
KEY ISSUES IN THE ECONOMY29
AVAILABILITY OF FINANCE30
TRADE ISSUES30
KEY HUMAN RESOURCE ISSUES IN CEMENT INDUSTRY31
PORTER’S SIX FORCES MODEL32
SWOT MATRIX38
OPPORTUNITIES38
THREATS38
CONCLUSION39
BIBLIOGRAPHY40

EXECUTIVE SUMMARY
This report discusses the progress and operations of the cement industry of Pakistan. If we go through the history of the industry since 1947 the cement sector has made rapid strides in both public and private sectors , increasing from just 4 units in 1947 to 29 today. The industry comprises of 29 firms (19 units in the north and 10 units in the south), with the production capacity of 44.09 million tons. The north with production capacity of 35.18 million tons (80 percent) while the south with production capacity of 8.89 million tons (20 percent), compete for the domestic market of over 19 million tons. There are four foreign companies, three armed forces companies and 16 private companies listed in the stock exchanges. Pakistan produces 4 main types of cements namely Ordinary Portland cement, Portland Blast Furnace Slag cement, Sulphate Resisting Cement and White Cement. Cement industries in Pakistan are currently operating at their maximum capacity due to the boom in commercial and industrial construction within Pakistan. In early 2000s, most of the cement manufacturers expanded their operations, and increased production. This sector has invested about $1.5 billion in capacity expansion over the last six years. The operating capacity of cement in 1991 was 8 million tons, which increased to become 18 million tons by 2005-06 and by end of 2007 rose to above 37 million tones. Cement industry is also serving the nation by providing job opportunities and presently more than 150,000 persons are employed directly or indirectly by the industry. The cement industry of Pakistan is a major player in export markets, and has established its reputation as a good quality product. Pakistan is ranked 5th in the world’s cement exports.

All PAKISTAN CEMENT MANUFACTURERS ASSOCIATION (APCMA) is the collective voice of all the cement manufacturers of Pakistan. Its main role is to increase cement production and quality, safeguard interests of its members and identify and strengthen the cement industry’s role in the economic development of the country. The APCMA and the Government of Pakistan have provided many incentives over the years to help increase or stablize cement production and capacity utilization. The industry however faces many challenges. Falling currency, poor technology, high inflation, high fuel expenses, lack of construction are some of the key factors which hinder growth of cement industry. Also the industry requires high initial investment and investors are often discouraged by non-faciliating trade policies such as excess duties, electricity shortages and shortage of qualified and skilled manpower. Porters five forces model provides an analysis and helps formulate a strategic plan for the Cement industry. There is a strong rivalry between existing players on the basis of increased productivity. The cement supply chain is dominated by coal or fuel and power, and with rising fuel costs suppliers of fuel have higher supplier bargaining powers. The cement industry has very low bargaining...
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