Cement: BESTWAY CEMENT COMPANY LIMITED - Analysis of Financial Statements Financial Year 2003 - H Year 2009.

Bestway Cement Company Limited (BWCL) is a subsidiary of Bestway Group of United Kingdom. Bestway Cement was listed on Karachi Stock Exchange in February 2001. The company is a major manufacturer and seller of cement. It has a market share of 8% in the domestic market.

Bestway has been a major exporter to Afghanistan and recently it began exporting to India, Africa and Middle East. Bestway Group decided to set-up its first cement plant in Pakistan in 1992. The company commenced work on its first cement plant at Hattar, Haripur in NWFP with an initial investment of US $120 million. The plant's initial capacity was 0.99 million tonnes per annum. Hattar's capacity was enhanced to 1.17 million tonnes per annum in 2002 owing to increased domestic demand. In 2005, the plant's capacity was further increased to 1.20 million tonnes per annum of clinker. During FY'07, the clinker production at Hattar reached at 1.14 million tonnes and cement production at 1.17 million tonnes.

Initially, the cement plant at Hattar used furnace oil as fuel. Around 2001, the plant was converted to operate on natural gas. This was a prudent step towards achieving cost efficiency as a hike in petroleum prices was anticipated. In 2003, the plant was converted from gas to coal with an investment of around US $10 million. Now, the Bestway Cement Hattar can operate on all the three major fuels. These measures have reduced the energy cost component, which at times constituted about 65% of the total production cost of the company.

In 2004, BWCL set up a new cement plant near Village Tatral of District Chakwal in Punjab to meet the growing cement demand in the domestic market. The plant had a cement capacity of 1.8 million tonnes per annum and cost US $140 million. The plant was fully functional and production started in June 2006. In FY07, cement production and clinker production at Chakwal was 1.119 million tonnes and 1.061million tonnes, respectively.

In an attempt to increase its presence in the cement industry, BWCL bought 85.3% stake in Mustehkam Cement Limited in 2005. The plant had a capacity of 0.63 million tonnes per annum and was close to BWCL's plant at Hattar. BWCL planned a project of upgrading and modernizing Mustekham plant to a capacity of 0.9 million tonnes per annum.

In May 2006, the company announced plans for setting up of a second 1.8 million tonnes per annum capacity plant adjacent to the plant in Chakwal at a cost of US $180.0 million. With such major capacity expansion plans the company's cement manufacturing capacity was set to exceed 6.0 million tonnes per annum by FY08, making Bestway the second largest cement producer in the country.

Bestway Cement's capacity expansion has been in line with the trend of the entire cement sector. The overall production capacity of the cement sector increased substantially to 38.95 million tonnes at the end of 3QFY08 as compared to 30.1 million tonnes at the same time in FY07.

The cement sector of Pakistan showed an impressive growth of 24.3% in the cement dispatches during FY08. Total cement dispatches grew from 24.22 million tonnes in FY07 to 30.11 million tonnes in FY08. There was a 6.5% growth in local cement dispatches as demand for cement in the domestic market rose due to increased construction activity and government spending on infrastructure …