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A project presented on the business trend the light of Financial & Production outcomes of Cement
Industry in Pakistan. Subject has choice on the basis of company size in terms of Financial Volume.
For this purpose, three market Leaders in Cement Industry of Pakistan has described the overview at
a glance and a common-size analysis has made to analyze the Industry Growth.

Best way Cement Company Limited (BCCL)

Fauji Cement Company Limited (FCCL)

Lafarge Cement Company Limited (LCCL)

BESTWAY GROUP OF COMPANY – BESTWAY CEMENT COMPANY
LIMITED:

Bestway Cement Limited is part of the Bestway Group of the United Kingdom. Bestway
Group was founded by Sir Mohammed Anwar Pervez nearly thirty three years ago on what could
be best described as one man’s vision and passion. The Group has a well diversified portfolio
incorporating within its folds cement manufacturing, global banking, wholesale cash & carry
business, a string of retail outlets, real estate investment, ethnic food and beverage import and
distribution and milling of rice. Recently the group has embarked upon a large power generation
project in Pakistan thus further diversifying its operations and revenue base.

Over the last three decades the Group has achieved remarkable success and positioned
itself amongst United Kingdom’s top 10 privately owned companies. The second largest cement
producer in Pakistan and joint owner of Pakistan’s third largest bank, United Bank Limited. The
group is the largest overseas Pakistani investor with investments in excess of US Dollars 1
billion and a global workforce of over 22,000 people spread over four continents. In just over
decade Bestway’s cement production capacity is set to more than quadruple to over 6.0 million
tonnes per annum

In early 1992 when the Group decided to set up its first cement plant it faced multiple
challenges mainly due to a lack of credibility as a business due to the absence of a track record in
Pakistan. The domestic economy was highly inhospitable characterized by high interest rates,
high inflation and low liquidity leading to a general economic and political inertia. It has
however successfully exhibited its managerial dynamism and technical excellence in setting up
and managing the manufacturing facilities and achieving market dominance through its
diversification strategy by investing in the local cement industry and continues to be bullish
about Pakistan. Even during the period of economic slowdown and recession in the country in
the late 1990’s which adversely affected the profitability of the industry Bestway was able to
record pretax profits even at 60% capacity utilization. The Company has been amongst the
leaders in the recent market boom, operating at above 100% of its installed capacity.
 In 1994 work was started on the cement plant in the under developed area of Hattar,
Haripur in the North West Frontier Province, Pakistan. This was an initial investment of US$120
million. The contract for the supply of main plant was signed with Mitsubishi Corporation of
Japan in June 1995. Hattar plant’s initial capacity was 1.0 million tonnes per annum. In 2002, at
a cost of US$20 million, plant capacity was enhanced to 1.15 million tonnes per annum to meet
the ever increasing demand for quality cement. Owing to the management’s insight on growing
market demand and the potential to export, in 2004 the plant’s capacity was further upgraded to
1.25 million tonnes of clinker production.

Prior to 2001 production at Bestway Cement was being carried out using furnace oil as
fuel. The management’s proactive decision in anticipation of a further hike in oil prices lead to
modification of its plant to operate on natural gas. The timely and strategic decisions of the
management have enabled the Company to maintain its current market share of around 8% and
its position as the lead exporter. Bestway Cement was listed on the Karachi Stock Exchange in
February 2001 and since listing its market capitalization has grown by approximately 850%
making Bestway Cement one of the largest companies by market capitalization. Bestway
enjoyed more than 8% of the market share of the domestic market.

In February 2004 owing to the growth in market demand, Bestway Group took the
strategic decision of expanding its operations through the setting up of a 1.8 million tonnes per
annum cement plant near Village Tatral of District Chakwal, Punjab Province, Pakistan. This is
the Group’s second Greenfield development project at a cost of US$ 140 million.

In May 2006 the Group announced plans for the establishment of a second 1.8 million
tonnes per annum capacity plant adjacent to our existing operations in Chakwal at a cost of
US$180.0 million

The Company recorded sales of Rs. 18,486 million compared to Rs. 19,577 million during the
preceding year. Net turnover amounted to Rs. 13,333 million compared to Rs. 14,815 million
in the corresponding period last year, which represents a decrease of 10%, after payment
of Rs. 4,290 million towards Sales Tax and Excise Duty and Rs. 863 million as rebates and
discounts to customers. Gross Profit decreased to Rs. 1,768 million from Rs. 4,770 million
last year. The drop in sales, net turnover and gross profit was primarily caused by
significantly lower selling prices due to fierce competition.

Finance cost decreased to Rs.2,223 million for the year ended 30 June 2010 from Rs. 2,286
million last year. Loss before taxation for the year ended 30 June 2010 stood at Rs. 1,412
million as compared to profit of Rs.1,205 million for the previous year. Loss after taxation for
the year ended 30 June 2010 amounted to Rs.1,209 million as compared to profit of Rs.974
million last year. Loss per share of the Company for the year ended 30 June 2010 on its paid
up capital stood at Rs.3.71 as compared to last year's EPS of Rs. 3.17.
Sr Basis of Analysis Description 2006 2007 2008 2009 2010
.
#
1 Current Ratio (Times) Current Assets/Current Liability 0.76 0.82 0.70 0.65 0.52

2 Debt Equity Ratio Total Debt/Total Equity 2.73 3.08 2.71 2.44 3.01
(Times)

3 Debt Ratio Total Debt/Total Assets 73.08 75.52 73.02 70.89 75.09

4 Gross Profit Margin % Sales-COGS/Sales 50.48 17.93 13.47 32.20 13.27

5 Net Profit Margin % Net Income/Net Sales 26.98 0.91 2.25 6.57 -9.07

6 Return on Assets % Net Income/Total Assets 6.80 0.22 0.66 3.45 -4.30

7 Return on Equity % Net Income/Share Holder's Equity 52.37 2.02 7.09 29.90 -37.11

8 Total Asset Turnover Net Sales/Avg. Total Assets 0.25 0.25 0.29 0.52 0.47
(Times)
 FOUJI CEMENT COMPANY LIMITED

A longtime leader in the cement manufacturing industry, Fauji Cement Company, headquartered
in Islamabad, operates a cement plant at Jhang Bahtar, Tehsil Fateh Jang, and District Attock in
the province of Punjab. The Company has a strong and longstanding tradition of service,
reliability, and quality that reaches back more than 13 years. Sponsored by Fauji Foundation, the
Company was incorporated in Rawalpindi in 1992.

The cement plant operating in the Fauji Cement is one of the most efficient and best maintained
in the Country and has an annual production capacity of 1.165 million tons of cement. The
quality portland cement produced at this plant is the best in the Country and is preferred in the
construction of highways, bridges, commercial and industrial complexes, residential homes, and
a myriad of other structures, fundamental to Pakistan's economic vitality and quality of life.

In line with the Cement Industry, Fauji Cement has signed a contract with Polysius, a German
cement plant manufacturing firm for installation of state of the art, the largest single line (7200
tons per day of clinker) ever commissioned in Pakistan. Meaningful expansion will help the
Company to expand its market share. The project will be Inshallah commissioned in the 2nd
quarter of 2011.
Sr. Basis of Analysis Description 2006 2007 2008 2009 2010
#
1 Current Ratio (Times) Current Assets/Current 1.25 1.35 2.16 0.81 0.63
Liability
2 Debt Equity Ratio Total Debt/Total Equity 0.6 0.38 0.09 0.4 0.57
(Times)

3 Fixed Assets turnover Net Sales/Fixed Assets 0.97 0.81 0.5 0.28 0.16
(Times)

4 Gross Profit Margin % Sales-COGS/Sales 51.12 31.52 18.56 31.75 13.54

5 Net Profit Margin % Net Income/Net Sales 47.64 28.74 16.96 30.98 9.61

6 Quick Ratio (Times) Current Assets- 1.13 1.23 2.06 0.74 0.6
Inventories/Current
Liability

7 Return on Assets % Net Income/Total Assets 19.42 10.1 3.32 4.7 0.93

8 Total Asset Turnover Net Sales/Avg. Total 0.69 0.54 0.28 0.25 0.14
(Times) Assets
 Lafarge Cement Company Limited (LCCL)

Lafarge Pakistan Cement (LP) is a part of Lafarge, world leader of construction materials. The
state-of-the-art plant commenced Commercial Operations in December 2006 with an annual
cement production capacity of 2.5m tons, thus becoming the largest production line in Pakistan.
LP is proud of its product PAKCEM which is the leader on all quality scales. PAKCEM is the
first cement in Pakistan to comply with European Standards (EN 197) and Indian Standards (IS
12269) also far exceeding requirements of Pakistani Standard (PS 232).

LP’s aim of being at the forefront in creating foundations for a prosperous tomorrow is backed
by the Company’s philosophy of providing outstanding value to its customers, a safe and
stimulating work environment for its employees, superior returns for its shareholders and special
focus on social responsibility and environmental protection.

Lafarge Pakistan Cement (LP) is a subsidiary of Lafarge, world leader of building materials with
its corporate headquarter in Paris, France. Lafarge is world leader in Cement and Aggregates,
and number three in Concrete and Gypsum.

Lafarge extracts resources from the heart of the earth to make materials to bring to the heart of
life. Present in 76 countries, the Group responds to the world's demand for housing and
infrastructure. Lafarge is driven by the needs of its customers, shareholders, local communities
and architects. The Group creates high value-added solutions which encourage creativity whilst
leaving a lighter trace on the world.

Lafarge believes that ongoing advances in building materials must integrate respect for people,
their different needs and their environment. This strong conviction is reflected in a strategy
which combine industrial know-how with performance, value creation, respect for employees
and local cultures, environmental protection and conversation of natural resources and energy.
\

Sr. Basis of Analysis Description 2006 2007 2008 2009 2010

#
1 Current Ratio (Times) Current Assets/Current 0.21 0.91 0.73 0.31 0.26
Liability
2 Debt Equity Ratio Total Debt/Total Equity 1.37 0.67 0.70 0.69 0.69
(Times)

3 Debt Ratio Total Debt/Total Assets 0.50 0.33 0.37 0.34 0.30

4 Fixed Assets turnover Net Sales/Fixed Assets 0.01 0.22 0.41 0.46 0.40
(Times)

5 Gross Profit Margin % Sales-COGS/Sales (1.60) (0.12) 0.13 0.12 0.12

6 Net Profit Margin % Net Income/Net Sales (0.43) (0.12) (0.17) (0.16) (0.14)

7 Quick Ratio (Times) Current Assets- 0.16 0.80 0.55 0.21 0.18
Inventories/Current
Liability

8 Return on Assets % Net Income/Total Assets (0.002) (0.024) (0.057) (0.065) (0.049)

9 Return on Equity % Net Income/Share Holder's (0.01) (0.05) (0.11) (0.13) (0.11)
Equity

10 Total Asset Turnover Net Sales/Avg. Total 0.005 0.195 0.338 0.413 0.353
(Times) Assets