Lucky Cement, which claims to be the largest manufacturer of cement in Pakistan, has entered into a couple of joint ventures for making investment in international projects, besides expending and diversifying its business locally, according to a notification of the company to the Karachi Stock Exchange (KSE) on Thursday.
Muhammad Abid Ganatara, secretary of Lucky Cement, said that the company has entered into joint ventures in cement plants in DR Congo, Africa, and Iraq.
“The plant and machinery for the project [in Africa] has been negotiated and finalised with a renowned European supplier and the terms of the project financing are under process of negotiations with the development financial institutions and multilateral agencies,” the notice said.
Besides, the company has also entered into joint venture investment in cement grinding facility in Iraq.
“The contract for the supply of plant and machinery for this project has been signed and the project team, as well as civil contractors, have been mobilised at the project site,” it said.
An industry source said that the demand for Pakistani cement is on the higher side in Africa and Lucky Cement aimed at capturing that opportunity. The project would also help the company save logistic cost of cement exports to the African countries, said source.
“The logistic cost of cement exports remained one of the major hurdles in increasing such exports from Pakistan,” said another industry source, on the condition of anonymity.
“The cost factor is causing continuous decline in exports for the last several quarters.”
Moreover, Iraq has been destructed due to the war on terror and it needs to be reconstructed. Therefore, making investment in cement plant in Iraq would also help the company realise higher earnings. Besides, the company could also export cement to nearby countries such as Qatar and other GCC countries, he said.
Lucky Cement also reported to investment equity in an associated company for 50MW wind farm project. “The power generation licence and the requisite approval from the authority concerned for the acceptance of upfront tariff have been obtained.
The project team is actively engaged in negotiations of concession documents and financing close with the stipulated timeframe,” according to the company notice.
The company also reported successful supply of uninterrupted electricity to Hyderabad Electric Supply Company (HESCO) with effect from July 1, averaging a supply of over 20MW per hour during the quarter ended September 30.
As part of its diversification strategy, the company being part of Yunus Brothers Group (YGB)-led consortium has signed a share purchase agreement with ICI Omicron B.V. for the acquisition of 75.81 percent shares in ICI Pakistan, it said.
It has been agreed that YBG would pay a total of Rs13.05 billion (Rs186.42 per share) to ICI Omicron B.V. for the acquisition.
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