Pakistan’s Lucky Cement to benefit from duty cut
Pakistan’s biggest cement maker, Lucky Cement, stands to reap major benefits from the decision by Dubai to lift custom duties on cement and steel.
Dubai said on Wednesday it had decided to lift custom duties on cement and steel until further notice to control rising costs of building materials.
"Obviously, we will benefit the most from this development as we are the best placed," Abid Ganatra, director of finance at Lucky Cement, told Reuters on the weekend.
Lucky Cement, which has a production capacity of 6.55Mta, and exported 1.8Mt in the first eight months of the 2007/08 fiscal year (July-June), accounts for 40 percent of Pakistan’s total cement exports.
Lucky has a plant near the port in the city of Karachi, which analysts said gave it an edge to export to the Middle East.
"Having a plant near Karachi, Lucky is able to significantly cut down on transport costs, compared with others," said Bilal Hameed, analyst at JS Global Capital Ltd.
According to Ganatra, 56 percent out of Lucky’s total exports are going to the Gulf region. The rest is exported to India, Sri Lanka, and African countries.
Pakistani cement exports soared 140 percent to a record 4.26Mt in the first eight months of the current fiscal year, compared with 1.77Mt shipped the previous year.
Analysts said other Pakistani companies would also benefit from the duty cut as Pakistani cement is relatively cheap.
"Cement prices in the UAE have jumped by 40 per cent in only 2008, whereas cement prices in Pakistan have been declining this fiscal year," said Hameed.
Lucky Cement also plans to issue global depositary receipts (GDRs) by the end of the fiscal year to raise funds for expansion.
"The market is very conducive to GDRs and there is interest," said Ganatra.
"We plan to issue them very shortly, definitely before the end of the fiscal year."
Lucky Cement plans to raise its cement manufacturing capacity by 2.5Mta by building two additional lines in Karachi.
Published under Cement News
