ATTOCK CEMENT LIMITED

FMID Spring 2022

Submitted to: Saad Rafi

Submitted by:

Aymen Maniar (20191-26703)

Abeeha Batool (20191-25829)

About Attock Cement Limited Company
ACPL (Attock Cement Pakistan Limited) was founded in 1981 with an initial investment of Rs 1.5 billion,
including a $45 million foreign exchange component. In 1988, the firm began commercial production
with a clinker facility capable of producing 2,000 tonnes per day (approx. 0.6 million tonnes annually).
The firm now has a manufacturing capacity of 3 million tonnes per year, thanks to a series of expansions,
the most recent of which was completed in FY18. The Company now operates three production units at
its sites, one of which is located in Hub, Balochistan. ACPL has also formed a subsidiary, a limited liability
company, in Iraq to invest in a cement grinding plant in a joint venture with the Iraq-based Al Geetan
Commercial Agencies. Attock Cement has a 60% stake in the firm. The mill, which cost $24 million to
build, has a capacity of 0.9 million tonnes. ACPL is the first and only firm in Pakistan to have received ISO
17025 accreditation from the Pakistan National Accreditation Council. In addition, we are ISO 9001:2015
QMS, ISO 14001:2015 EMS, and OHSAS 18001-2007 certified. The choice of Falcon as a Trademark by
ACPL is far from random. We aspire to develop a product that ensures our position as the undisputed
market leader in the cement business, taking inspiration from the fastest bird in the sky recognised for
its adaptability, tenacity, strength, and endurance.

Industry Overview
The construction sector accounts for 2.53% of Pakistan’s GDP, which employs 7.7% of the population.
Around the world, the per capita cement consumption is 507kg whereas if we compare it to Pakistan, it
has the lowest per capita cement consumption is 257.4kg. The Total Industry capacity stands at 69.1Mn
tons, which is divided into two regions: North (52.6Mn) and the South (16.5Mn). According to the All-
Pakistan Cement Manufacturers Association (APCMA), Pakistan has currently 18 registered cement
companies, having 50 production lines across Pakistan. Out of the 18 registered companies, 16
companies are listed on the PSX with market capitalization of PKR 607Bn.

Most of the capacity is concentrated in the North region because there is a higher population density
and there are major infrastructure developments including dams and highways. Whereas South
contributes to local sales as well as cement exports due to the proximity of the sea.

Industry performance is cyclical with overall macroeconomic conditions such as GDP growth.

Industry Sales
For the fiscal year 2021, industry sales were recorded at 57.2MN tons, distributed in north 42.1Mn tons
and the South 14.3Mn tons.
In terms of geography, local sales account for 85% of total sales whereas the exports account for 15% of
total sales.

In terms of prices, according to latest available data, retail prices in the North are around PKR 735/bag
and PKR 755/bag in the South.

Industry Supply Side | Production

The sector has witnessed some major increases in cement capacity over the last two decades due to the
rising demand of cement in the country. The first phase started in Fiscal Year 2007 which was completed
in Fiscal Year 2012, the second phase was initiated in fiscal year 2013 and 2014.

Recently, top five cement companies have announced expanding their production capacities, which
would increase 18MLn tons to the total cement production capacity of Pakistan, which will make a total
of approx. 81mln tons.

The expansions are based on several factors. Recently, there has been new projects such as Naya
Pakistan Housing Program, CPEC related activities, and construction of dams has led to the sector
players to go into expansion.

Cost Break up – Supply Side

Industry Demand side | Local
The demand of cement in Pakistan is highly correlated to the Government of Pakistan’s spending in
development projects through Public Sector Development Program (PSDP). Despite declining PSDP, local
cement dispatches were around 40mln MTs in the past few years which was supported by CPEC related
projects and due to an increase in local construction activity.

The Government of Pakistan has announced a construction relief package during Fiscal year 2020. This
package had included tax incentives, waivers, developers, and property owners. The most important
incentive of the package is the one that didn’t require people to declare their source of income before
they had investments into construction projects, this will eventually increase private investment in
construction related projects.

Industry Demand side | Export

Pakistan exported 7.847 MMT of cement and clinker during the fiscal year 2020.

In the last few years, Afghanistan and India were the major cement exports markets for Pakistan. Due to
a lot of tension between India and Pakistan in the year 2019, there was heavy duty imposed by India on
Pakistani goods and this led to a suspension of Pakistan’s cement exports to India.

Export of cement to South Africa through sea routes was also decreased after South Africa imposed anti-
dumping duty on Pakistan’s cement products in 2016.

Whereas in Afghanistan, the exports also decreased due to cheaper Iranian cement influx into the
country. Whereas on the other hand, exports to Bangladesh have grown substantially as the cement
industry in Bangladesh relies on imported raw material.

Top 4 Shareholders
Company Analysis

The Risk Score is a relevant measure for the assessment of a stock attractiveness. Attock Cement
Pakistan Limited shows a Risk Score of 4.00.
0 corresponds to a very high risk and 10 corresponds to a very low risk."
The Risk Score for Attock Cement Pakistan Limited is higher than its peer group's. This means that Attock
Cement Pakistan Limited is less risky than its peer group.
What happened during Covid-19?
The building business in Pakistan was first badly harmed by Covid-19-imposed limitations and a loss of
consumer appetite. However, the sector quickly recovered thanks to prompt action. The government
has taken steps such as recognizing building as an "industry" and offering a historic incentive package for
a total economy of PKR 1.2 trillion The foregoing, together with the expansion of the Amnesty Scheme,
banks' commitment to devote 5% of their private credit portfolio to construction financing, and
subsidized markup housing funding led to the spike in demand. 

Furthermore, operations under the Public Sector Development Program (PSDP) received a boost, with
the government allocating PKR 1,324 billion under the national PSDP for FY21, with 91 percent usage,
according to the Ministry of Finance. Dams and other significant infrastructure projects, such as
motorways, are examples of this. Remittances (a significant construction demand driver, particularly in
rural regions) also boosted demand, with FY21 remittances reaching a new record of USD 29.4 billion, up
27% year on year. According to the Pakistan Economic Survey, building activity increased by 8.3 percent
in FY21 (2020-21). Overall cement dispatches increased by 20% year over year to 57.4 million tonnes,
with local cement dispatches increasing by 20% to 28.1 million tonnes. In addition, demand for
associated industries such as steel and PVC increased significantly. The TSL Long-Steel Universe (AGHA,
MUGHAL, and ASTL) produced 816,000 tonnes in FY21, up 19 percent from 687,000 tonnes in FY20.
Engro Polymer & Chemicals Limited (Pakistan's sole PVC manufacturer) reported 193,000 tonnes of PVC
sales in FY21, up 22% year on year.
INCOME STATEMENT
Balance Sheet