Cherat Cement becomes sixth-largest producer in Pakistan

Cherat Cement Co Ltd (CHCC) has become the sixth-largest cement producer with eight per cent market share in Pakistan following the successful installation and commissioning of Cement Line III at the Lakrai plant, Nowshera district, Khyber Pakhtunkhwa. The new line has a clinker capacity of  more than 6700tpd and features a waste heat recovery plant.
 
With this expansion, the company has increased its total cement capacity to more than 4.5Mta. The project was completed well before schedule and in record time, according to Yasir Masood, executive director and chief financial officer of Ghulam Farooq Group, which runs Cherat Cement Ltd, at the corporate briefing session of the group, held at Pakistan Stock Exchange in Karachi yesterday.
 
Mr Masood said that the installation has enhanced CHCC's domestic market share and will enable it to achieve higher operational efficiency.
 
Key highlights of briefing
CHCC's local dispatches remained flat at 2.1Mt during FY19 while market demand declined by 2.2 per cent YoY in the same period. The company expects local cement demand to post a three per cent YoY contraction for FY20. It is expected that the drop in demand can be reversed if the government allocates more funds to the development of construction projects, particularly dams and housing projects.
 
For now, CHCC's management expects another year of subdued demand where local demand may post a single-digit decline in FY20 as well. The government's documentation drive (CNIC condition) may also hamper sales activity, especially in the north, as most retailers still have reservations regarding this.
 
Replying to a question, Mr Masood stated that Afghanistan is a prime market for the company. CHCC  hopes that the ongoing political solution and withdrawal of American Forces, followed by the allocation of US development initiatives in Afghanistan, will lead to a rise in cement demand.
 
Being the cement producer located nearest to the key Torkham border post between Afghanistan and Pakistan, CHCC has good access to the export market of Afghanistan. Export volumes have increased lately (15 per cent YoY growth in FY19) post the devaluation of the Pakistani rupee (improved retention price on exports).
 
Power plant
For its newly-installed dual-fired captive power plants, CHCC is in negotiations with relevant authorities to receive lower-cost uninterrupted gas supply to reduce its dependence on the expensive power supply from PESCO (which is expected to be resolved within 1-2 months).