Takeover at Essa Cement

A group of financiers and an industrialist have jointly took over Essa Cement Limited, by paying liabilities of the company against the majority shareholding. “We saw it as a good investment opportunity,” said Arif Habib, a stockbroker and former chairman of the Karachi Stock Exchange (KSE). “We think the company’s capacity was underutilised and its earnings can be improved with some efforts.”  The enhanced construction activity and the estimates of further improvement in the country’s economy indicates better business chances for the cement sector in the future, he added. But he refused to give details about cost of the transaction.

According to sources the group has stopped the plant for ten to fifteen days in order to complete the takeover. However, by now no downsizing or lay off has been reported.  The company’s plant is situated 86km from Karachi port, at Nooriabad Industrial Area in Kalo Kohar District Dadu. The plant includes loading equipment for both loose and packed cement.

Due to the recent improvement in demand for cement, the company managed to sell 338,618t of cement during the year ended June 30, 2002 with an increase of 26 percent as against 268,121t sold during the previous year. However, despite increase in sales in line with the overall growth of cement sector, the company’s financial charges and other expenses kept it from any major improvement in bottom line.

According to a research report, Essa Cement operated its plant at 53 per cent utilisation during financial year 2004 owing to a major breakdown in the company’s plant, which is now under repair and maintenance. The report said like all other cement companies Essa Cement is in process of negotiation with the Chinese suppliers for the expansion of its plant capacity in order to maintain its market share in the domestic market.