Fauji Cement, a listed company, is all set to make its second production-line operational before the end of April, officials said.
“The commissioning of our new production line is just four to five weeks away from now,” said Shahid Ghazanfer, General Manager Operations at Fauji Cement Company Limited (FFCL).
The company claimed in its annual report for 2009-2010 that its new plant would be the single largest production line of clinker in Pakistan with a production capacity of 7,200 tons per day.
Another official of the company, who requested anonymity, estimated the total cost of the new production line close to Rs20 billion. He added that their existing line was producing 3,700 tons of clinker a day. “The new line is being erected parallel to our existing plant at Taxila - 45 kilometer away from Rawalpindi.”
To construct the new plant, the company has heavily borrowed from local and international banks and lending agencies. It also avoided paying dividends to its shareholders in 2009-2010.
According to its report for Jul-Dec 2010, Fauji Cement had a total long term financing of Rs13.51 billion as on December 31, 2010, and it was liable to pay all its debt by 2018.
Asked if it would be suitable for the company to start production from its new line at a time when the consumption of cement had declined in the country and most companies were running in losses, Ghazanfer said that their focus would be more on exports of cement to Afghanistan.
From July 2010 to February 2011, the sales of Pakistan’s cement in national and international markets stood at 19.70 million tons, 10.48 percent lower than last year’s.
He said Fauji Cement was running in profits thanks to its latest technology. The two plants of the company run on coal.
The company posted a profit after tax of Rs251.13 million in the half-year ended December 31, 2010, against Rs193.62 million the company had earned in the same period of previous year.
Share of the company closed at Rs4.18 on Tuesday at the Karachi Stock Exchange.
A spokesman of All Pakistan Cement Manufacturers Association said that the addition of Fauji Cement’s line would enhance the country’s total capacity by 2.68 million tons to 43.91 million tons. He claimed that the capacity utilisation of the industry had been declining since 2004-05 when it hit a peak of 91.32 percent. In 2009-10, it dropped to 76.53 percent and to 71.66 in the first eight months of current fiscal.
Asad Siddiqui, an analyst at InvestCap, said the cement demand would rise soon for reconstruction work in flood-hit areas. “Mega projects like dams are also in the offing.”
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