Attock Cement Ltd is planning to expand its existing plant by increasing output to 3000 tonnes per day, costing Rs 3.5 billion, with likely to commencing production from next year. This was stated by Chief Executive, Babar Bashir Nawaz at a financial close of the plant where consortium of banks, including Faysal Bank Ltd, Habib Bank Ltd, National Bank Ltd, KASB Bank and other financial institutions have planned to finance Rs 2.5 billion to the company’s expansion plan.
Babar said that the expansion involved financing to the tune of Rs 3.5 billion, out of which the company was to raise Rs 1 billion from its own resources. "The company has almost spent Rs 600 million on this project without any bank borrowing," he added.
Giving a brief insight on the cement industry, the Attock Cement chief executive said that the sector went into a crisis from 1998 onwards, primarily because of the over-capacity situation. While the capacity increased from 10Mt to about 16Mt, cement consumption remained stagnant at around 9.5Mt, with the result that the average capacity utilisation of the industry fell to around 60 percent during next four years.
It was only from 2003 onwards, that the cement sector started to show signs of recovery because of revival of the country’s economy and the return of partial stability in Afghanistan, Babar said.
He said that the recorded growth in cement demand of 15 per cent in 2003 and 20 per cent in 2004, clearly showed the light at the end of the tunnel and the investors, both from within and outside the cement sector, started re-assessing the possibilities of further expanding their capacities, to meet the increased cement demand in coming years.
"Strong GDP growth, commencement of large infrastructure development projects by the government, expected construction of dams and prospects of large exports to Afghanistan would lead to greater consumption of the cement in the country", Babar said.
Bashir said that Falcon, the brand of Attock Company, is the highest-priced cement in Pakistan, and fetches a premium of around Rs 25 to Rs 30 per bag.