In 1947, Pakistan inherited 4 cement plants having total installed capacity of 0.5 million tons. Over the next 20 years, five cement units were established with aggregate production capacity of 3.2 million tons. Among these units Zeal Pak and Javedan were established in Sindh in the public sector. Maple Leaf, Gharibwal and Mustehkam were established in the province of Punjab. In 1972, the cement industry was nationalized which stopped further addition to capacity until 1977 when the private sector was again allowed to establish cement plants. During the 1980s, the private sector established seven new plants and the State Cement, the Government owned corporation established four new plants. During the first half of the 1980s, the increasing volumes and profits combined with the promise of higher increasing requirements in a growing economy and the expected implementation of ambitious Five-Year plans, private investors felt prompted to go ahead with the setting of five new plants viz Pioneer, Attock, Lucky, Fauji and Bestway.
In1991-92, the cement industry went through a major transformation, heralding a new era of privatization and effective price decontrol inline with a range of other public industries. There were also expansions in existing units at Maple Leaf and D.G. Khan and optimizations at D.G. Khan, Kohat and Attock. Since then the industry has gone through tremendous increase in capacity during last few years as a result of correct forecast of the entrepreneurs about growing demand in the region. At present the country has 26 cement producing companies with an installed capacity of producing around 44.82 million tons of cement mainly Portland cement. The industry is divided into two broad regions, the northern region and the southern region.
The geographical wise breakup of production capacity is as under:
ProvinceUnits Capacity (Million Tons)percentage
North Zone 19 35.93 80
South Zone 10 8.89 20
In terms of local market share the northern region has around 80 percent share in total cement dispatches while the units in the southern region contribute 20 percent to the annual local cement dispatches. There are projects in pipeline and the total industry installed capacity is expected to reach 51.80 million tons per annum by FY2011.
INDUSTRY DYNAMICS – FEATURES
The cumulative average growth since partition was at around 7%. During the last 5 years the cement demand registered average growth of around 20% mainly because of following factors,
• Launching of Mega Public Sector Projects;
• Revival of housing sector; and
• Increased exports to regional markets
Export potential has further increased due to reconstruction in Iraq, Afghanistan and huge demand coming from UAE, other Gulf markets and from Africa.
Industry outlook has improved considerably due to change in fuel source from Furnace oil / Gas to Coal. At present industry is also working on various alternate fuel sources. If successful, such projects would help in reducing the cost of production of cement in Pakistan and would make the cement production cost competitive vis a vis regional competitors.
• LOCAL CEMENT DESPATCHES DURING LAST 5 YEARS
| | | | | |FINANCIAL |NORTH ZONE |GROWTH |SOUTH ZONE | |YEAR |(TONS) |% |(TONS) |
• GROWTH IN EXPORT DEMAND OF CEMENT DURING LAST 5 YEARS
• CORRELATION BETWEEN GDP GROWTH AND LOCAL CEMENT DEMAND
INDUSTRY PERFORMANCE AND FINANCIAL REVIEW DURING THE YEAR 2009 - 2010...