MIRA INFORM REPORT

Report Date :

04.03.2014

IDENTIFICATION DETAILS

Name :	POWER CEMENT LIMITED

Formerly Known as:	AL-ABBAS CEMENT LIMITED

Registered Office :	Arif Habib Center 23, M.T .Khan Road, Karachi - 74000

Country :	Pakistan

Financials (as on) :	30.06.2013

Date of Incorporation :	01.12.1981

Com. Reg. No.:	0009067

Legal Form :	Public Limited Company

Line of Business :	Engaged in manufacturing, selling and marketing of cement

No. of Employees	273

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate

Payment Behaviour :	No Complaints

Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – december 01, 2013

Country Name

Previous Rating

(30.09.2013)

Current Rating

(01.12.2013)

Pakistan

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

pakistan ECONOMIC OVERVIEW

Decades of internal political disputes and low levels of foreign investment have led to slow growth and underdevelopment in Pakistan. Agriculture accounts for more than one-fifth of output and two-fifths of employment. Textiles account for most of Pakistan's export earnings, and Pakistan's failure to expand a viable export base for other manufactures has left the country vulnerable to shifts in world demand. Official unemployment is under 6%, but this fails to capture the true picture, because much of the economy is informal and underemployment remains high. Over the past few years, low growth and high inflation, led by a spurt in food prices, have increased the amount of poverty - the UN Human Development Report estimated poverty in 2011 at almost 50% of the population. Inflation has worsened the situation, climbing from 7.7% in 2007 to almost 12% for 2011, before declining to 10% in 2012. As a result of political and economic instability, the Pakistani rupee has depreciated more than 40% since 2007. The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis. Although the economy has stabilized since the crisis, it has failed to recover. Foreign investment has not returned, due to investor concerns related to governance, energy, security, and a slow-down in the global economy. Remittances from overseas workers, averaging about $1 billion a month since March 2011, remain a bright spot for Pakistan. However, after a small current account surplus in fiscal year 2011 (July 2010/June 2011), Pakistan's current account turned to deficit in fiscal year 2012, spurred by higher prices for imported oil and lower prices for exported cotton. Pakistan remains stuck in a low-income, low-growth trap, with growth averaging about 3% per year from 2008 to 2012. Pakistan must address long standing issues related to government revenues and energy production in order to spur the amount of economic growth that will be necessary to employ its growing and rapidly urbanizing population, more than half of which is under 22. Other long term challenges include expanding investment in education and healthcare, adapting to the effects of climate change and natural disasters, and reducing dependence on foreign donors.

Source : CIA

Business Name

POWER CEMENT LIMITED

(FORMERLY: AL-ABBAS CEMENT LIMITED)

Full Address

Registered Address

Arif Habib Center 23, M.T .Khan Road, Karachi - 74000, Pakistan

Tel #	92 (21) 32468231, 32, 32468350, 51
Fax #	92 (21) 32463209

Short Description Of Business

a.	Nature of Business	The Company’s principal activity is manufacturing, selling and marketing of cement.
b.	Established	01 december1981
c.	Registration #	0009067

Factory Location

Nooriabad Industrial Area, Kalo

Kohar District, Jamshoro,

Sindh, Pakistan

Branches

In Karachi & Lahore

Auditors

KPMG Taseer Hadi & Co.

(Chartered Accountants)

Legal Status

Power Cement Limited - formerly Al-Abbas Cement Industries Limited was established as a private limited company on 1 December 1981 and was converted into a Public Limited Company on 9 July 1987 and is listed on Karachi and Lahore Stock Exchanges.

Details of Directors

Names

Designation

Mr. Nasim Beg

Mr. Muhammad Kashif Habib

Mr. Samad A.Habib

Mr. Muhammad Ejaz

Mr. M. Yousuf Adil

Mr. Syed Salman Rashid

Mr. Muhammad Yahya Khan

Chairman

Chief Executive Officer

Director

Shareholders

Categories

Percentage (%)

Directors, Chief Executive, their spouse and minor children

Associated Companies Undertakings & Related Parties

NIT / ICP

Public Sector Companies & Corporations

Banks, Development Finance Institutions and Non Banking Financial Institutions

Insurance Companies

Foreign

Modarabas & Mutual Funds

General Public (Local)

Others

8.95

83.81

0.22

0.00

0.67

0.18

0.54

0.00

5.27

0.35

Associated Companies

· Arif Habib Corporation, Pakistan.

· Fatima Fertilizer Company Limited, Pakistan.

· Pak Arab Fertilizers Limited, Pakistan.

· Arif Habib Limited, Pakistan.

· Arif Habib Commodities (Pvt) Limited, Pakistan.

· MCB-Arif Habib Savings & Investments Limited, Pakistan.

· Sachal Energy Development (Pvt) Limited, Pakistan.

· Aisha Steel Mills Limited, Pakistan.

· Javedan Corporation Limited, Pakistan.

· Arif Habib REIT Management (Pvt) Limited, Pakistan.

· Safe Mix Concrete (Pvt) Limited, Pakistan.

· Thatta Cement Company Limited, Pakistan.

· Rotocast Engineering Company (Pvt) Limited, Pakistan.

Products

The Company’s principal activity is manufacturing, selling and marketing of cement

Number of Employees

273

Plant Capacity

(Clinkers)

2013 2012 (Metric Tons) (Metric Tons)

Installed Capacity 900,000 900,000

Actual production of cement 577,160 498,997

Annual Sales Volume

Years

In Pak Rupees

2012

2013

2,930,152,000/-

3,511,774,000/-

Distributors / Agents

Mainly exist at major cities of Pakistan

Bankers

(1) Al-Baraka Islamic Bank Limited, Pakistan.

(2) Allied Bank Limited, Pakistan.

(3) Bank Alfalah Limited, Pakistan.

(4) Bank Islami Pakistan Limited, Pakistan.

(5) Habib Bank Limited, Pakistan.

(6) Meezan Bank Limited, Pakistan.

(7) National Bank of Pakistan, Pakistan.

(8) Standard Chartered Bank (Pakistan) Limited, Pakistan.

(9) Summit Bank Limited, Pakistan.

(10) United Bank Limited, Pakistan.

Overview

Pakistan’s Cement Industry witnessed a modest growth of 2.8% at the close of the financial year ended 30th June 2013 achieving total sales volumes of 33.5 million tons as compared to last year sales volume of 32.5 million tons. The domestic demand registered an increase of 5% and achieved volume of 25.1 million tons against last year volume of 23.9 million tons. The improvement can be mainly attributed to normal growth due to population and urbanization. Export volumes declined by 2% and achieved a volume of 8.4 million tons as compared to prior year’s volume of 8.6 million tons. Despite the slow growth in domestic consumption, your Company has increased its market share to 2.08% in the domestic market as compared to 2.01% in the last year. The local sales volume of the company has registered an increase of 8% achieving a volume of 522,036 metric tons as compared to 482,419 metric tons in the last year.

Future Outlook

The Government in the recent budget has allocated substantial funds for public sector development projects and its full utilization will be a key factor for increase of cement demand in the domestic market for the coming financial year. In the current year, utilization of development funds in infrastructure projects is expected which will support growth in consumption of cement. Improvement in the agricultural sector due to better support prices and better crop is expected to make a positive impact on the consumption of cement also. Export sales volume which has been declining for the last three consecutive years may continue its gradual decline in 2014-15 due to decline of exports to India on account of decline Indian rupee parity. However, the increase in domestic market is expected to more than offset the export decline. The Company’s growth is mainly associated with certain risk factors such as increasing inflation fuel prices and law and order situation. In order to maximize potential and improve performance, management is leaned towards improving operational excellence and will continue to concentrate on process improvements and material management strategies. Going forward your Company is pushing hard to capitalize the business opportunities available with the export and local market.

Foreign Exchange Rates

Currency	Unit	Pakistani Rupee
US Dollar	1	Rs. 105.65
UK Pound	1	Rs. 176.00
Euro	1	Rs. 145.00

Comments

Subject Company was established in 1981 and is engaged in manufacture and sale of cement. Current management is reported as experienced, respectable and having satisfactory means of their own. Trade relations are reported as fair. Payments are usually correct and as per commitments. Subject can be considered for normal business dealings at usual trade terms and conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.86
UK Pound	1	Rs.103.52
Euro	1	Rs.85.31

INFORMATION DETAILS

Report Prepared by :

MNL

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.