DG Khan Cement to get low-rate loan soon

DG Khan Cement to get low-rate loan soon
Published: 02 February 2006

DG Khan Cement, to help trimming its financial charges, has entered into an agreement with a consortium of lenders in the country for converting its foreign currency loan into rupee loan, as it is less expensive (reports the Business Recorder)

According to sources close to capital market, the cement maker would acquire the loan of Euro 35m soon, as the company is reaching its financial close. The loan, to be acquired by DG Khan, would help the entity to pay off substantial rupee loans received from local banks to expand its production. According to an analyst, following the agreement the financial charges of the company would be reduced sharply as the loan rates received from domestic banks ranged from 8 to 11 per cent, while the credit line from the consortium of banks would be at three per cent per annum.

As per the annual report of DG Khan Cement, its sales in the year ended June 30, 2005 amounted to Rs 5.279 billion, up from Rs 3.882 billion. The net earnings for the period amounted to Rs 1.682 billion, as compared with Rs 794 million.

The future outlook of the cement sector, according to several analysts, appeared to be quite bright on government’s plan to build five dams in the country in the next ten years. The consumption of cement would go up, benefiting the already profitable sector. The cement share prices have fared extremely well during the last two fiscal years. More incentives from the government and expectation of increase in cement prices in the coming quarter would boost the earnings of the sector.