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Kashif Habib

Big China, Iran Markets, Low Retention And Anti-Dumping Steps Pushing Cement Exports Down

Interview with Mr. Kashif Habib – Chief Executive, Power Cement Limited

PROFILE:

Mr Kashif A. Habib is the Chief Executive of Power Cement Limited. He completed his articleship from A. F. Ferguson & Co. Being a member of Institute of Chartered Accountants of Pakistan, he gained experience pertaining to different sectors serving clients spanning to financial, manufacturing and service industries. His experience includes being Executive Director of different cement and fertilizer companies of the Arif Habib Group.

While telling us about his organization, he said, “Power Cement Limited aims to be recognized nationally and internationally as a successful cement producer. To become a profitable organization and exceed the expectations of our customers and stockholders by producing and marketing competitive and high quality products through concentration on quality, business values and fair play is our mission. Our production capacity is 3,150 tons per day and we are currently planning to increase it to 11,300 tons per day. We manufacture superior quality cement which has allowed us to capture a sizeable chunk of the market share. We believe in quality with responsibility therefore we have installed state-of-the-art European technology bag houses to control emissions.”

PAGE: WHAT ARE YOUR VIEWS ABOUT CEMENT PRODUCTION AND EXPORT?

KASHIF HABIB: Current cement production capacity is 44.6 million tons and current export for year 2016-17 is 4.6 million tons and local consumption is 35.65 million tons. Therefore, the capacity utilization is approximately 90%.

Export: For last three years, the local market has increased where as the export volume has decreased to 4.6 million tons in 2016-17 from 5.872 million tons in 2015-16 and 7.19 million tons in 2014-15. The reasons for decline in exports are:

1: Owing to low retention in exports as compared to retention of local market, the companies tend to sell in the local market first then try to sell the remaining quantities in the export markets.

2: Competition from China and Iran has reduced Pakistan’s share in some markets like South Africa, Tanzania, Mozambique & U.A.E.

3: Anti-dumping duty was introduced in countries like South Africa to support local manufacturers.

However, with Power Cement Limited & D. G. Khan Cement expansions in South Region, there will be an increase in export volumes to countries and regions like Sri Lanka, South Africa, India and East Africa because of high grade cement production (quality advantage, low cost of production and proximity of plants in South Region to sea).

PAGE: IS PAKISTAN GOING TO BE ONE OF THE LEADING CEMENT PRODUCERS IN THE WORLD?

KASHIF HABIB: The leading cement producer in the world is China with a production of 2,400 million tons per annum. Currently Pakistan’s installed capacity is 45 million tons which is going to be increase to 60 million tons by the year 2020.

PAGE: HOW WOULD YOU COMMENT ON FOREIGN AND LOCAL INVESTMENT IN THE CEMENT SECTOR OF PAKISTAN?

KASHIF HABIB: The new lines of 15 million tons per annum include Power Cement Limited, which has foreign equity shareholders. Similarly some other plants also have equity partners in the shape of foreign investment but largely this cement sector is attracting local investors.

PAGE: WHAT IS YOUR TAKE ON LOCAL CONSUMPTION OF CEMENT?

KASHIF HABIB: The local consumption of cement in 2016-17 was 35.65 million tons and the average growth rate in the last five years is 8 percent. However, with mega projects like China-Pakistan Economic Corridor (CPEC), dams & power plants will increase the annual growth rate to 11 percent. The current local demand is almost 80 percent of capacity. Therefore by 2019, the current capacity of 44.6 million tons will be required to meet local demand. Thereafter in next 3 years, the demand will be touching 60 million mark, which is 100 percent of projected capacity increase of new lines.

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