Cement Industry of Pakistan

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| 2010|
| THE CEMENT INDUSTRY OF PAKISTAN|
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ECONOMICS TERM REPORT
PRESENTED TO: DR. MUHAMMAD NISHAT
GROUP MEMBERS (BBA I-III):
SOHAIB BIN SHAHID
FAIZAN AHMAD KHAN
UMER FARIQ
SARA PERVEZ
AMNA FATIMA
TABLE OF CONTENTS

1. OVERVIEW Page 3-6 2. ISSUES FACED BY PAKISTAN CEMENT INDUSTRY 3.1. Growth Pattern of Cement Industry Page 7-8 3.2. Demand Page 8-9 3.3. Supply Page 10-11 3.4. Cartelization Page 11-12 3.5. Taxation Page 12-13 3. CONCLUSION Page 13 4. BIBLIOGRAPHY Page 14

Overview
Structure:
The cement industry in Pakistan has an oligopolistic market structure which means that these companies have great market power and have the opportunity to make massive profits. The industry is marked by a strong cartel that regulates the prices, market share and production of cement in the country. The cartel restricts the market share of each manufacturer based on its productive capacity, but no company is allowed more than 10% of the market share. However, some manufacturers enjoy brand equity and charge higher prices. All Pakistan Cement manufacturers Association (APCMA) represents the industry to the government and coordinates with them regarding the polices related to cement industry. Major companies are Lucky cement, Dera Gazi Cement, Maple Leaf Cement .etc. History and Growth:

A healthy Cement Industry is considered a benchmark of development in any country of the world. In Pakistan also, Cement is one of the major economic sector but this was not the case in the initial years after the independence of Pakistan. Pakistan got 4 cement plants as a result of the partition of sub-continent with an installed capacity of 0.5 million tons. Pakistan has always been abundant with minerals which are the basic raw materials for the manufacturing of cement. Despite this fact, only a few plants were established during the initial 30 years. Due to various privatization and expansion processes, 29 cement plants are operating currently with an installed capacity of 44.09 million tons (19 units in north and 10 units in south). Exports:

Cement industry has provided with much needed foreign exchange through its continuous growth of exports. Pakistan is ranked the 5th largest cement exporter in the world, and its exports experienced a growth of 65% to reach approx. 11 million tons and an earning of $700 million in FY09, and the exports could reach 13 to 14 million by the end of this fiscal year. Major importers of Pakistani cement are the Neighboring and Middle Eastern nations with Sri Lanka and Iraq emerging as new markets for Pakistani cement. However, Pakistan is expected to face tough challenges from India and China in the future after declining economies to scale and higher interest rates in recent years. Socio-Economic Development

Cement industry is a significant segment of Pakistan’s export revenue and plays a pivotal role in socio-economic development. The cement sector is currently contributing above Rs 30 billion to the national exchequer in the form of taxes, and providing employment to around 150,000 people directly or indirectly. The industry contributes to approx....
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