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Report No. : |
330774 |
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Report Date : |
11.07.2015 |
IDENTIFICATION DETAILS
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Name : |
CHERAT CEMENT COMPANY LIMITED |
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Registered Office : |
Modern Motors House, Beaumont Road, Karachi - 75530 |
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Country : |
Pakistan |
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Financials (as on) : |
30.06.2014 |
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Date of Incorporation : |
25.05.1981 |
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Com. Reg. No.: |
0008617 |
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Legal Form : |
public limited company by shares |
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Line of Business : |
Manufacture,
Marketing & Sale of Cement. |
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No. of Employees : |
514 |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
|
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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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 – March 31, 2015
|
Country Name |
Previous Rating (31.12.2014) |
Current Rating (31.03.2015) |
|
Pakistan |
B1 |
B1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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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-fourth of output and two-fifths of
employment. Textiles account for most of Pakistan's export earnings, and
Pakistan's failure to diversify its exportshas left the country vulnerable to
shifts in world demand. Official unemployment was 6.9% in 2014, but this fails
to capture the true picture, because much of the economy is informal and
underemployment remains high. Pakistan’s human development continues to lag
behind most of the region.. As a result of political and macroeconomic
instability, the Pakistani rupee has depreciated more than 40% since 2007. The
government agreed to an International Monetary Fund Standby Arrangement in
November 2008 to preventa balance of payments crisis, but the IMF ended the
Arrangement early because of Pakistan’s failure to implement required reforms.
The economy has stabilized, it continues to underperform and foreign investment
has not returned to levels seen during themid-2000’s, due to investor concerns
related to governance, electricity shortages, , and a slow-down in the global
economy. Remittances from overseas workers, averaging more than$1 billion a
month, remain a bright spot for Pakistan. After a small current account surplus
in fiscal year 2011 (July 2010/June 2011), Pakistan's current account turned to
a deficit where it remained through 2014, spurred by higher prices for imported
oil and lower prices for exported cotton. In September 2013, after facing
balance of payments concerns, Pakistan entered into a three-year, $6.7 billion
IMF Extended Fund Facility. The Sharif government has since made modest
progress implementing fiscal and energy reforms, and in December 2014 the IMF
described Pakistan’s progress as “broadly on track.” Pakistan remains stuck in
a low-income, low-growth trap, with growth averaging about 3.5% per year from
2008 to 2014. Pakistan must address long standing issues related to government
revenues and the electricity and natural gas sectorsin 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.
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Source
: CIA |
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Business Name |
CHERAT CEMENT COMPANY LIMITED
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Registered Address |
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Modern Motors House,
Beaumont Road, Karachi - 75530, Pakistan |
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Tel # |
92 (21) 35683567, 35683566 |
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Fax # |
92 (21) 35683425 |
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Email |
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a. |
Nature of Business |
Principally engaged in manufacture, marketing & sale of Cement |
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b. |
Year Established |
May 25, 1981 |
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c. |
Registration No. |
0008617 |
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(1) 1st Floor, Betani Arcade,
Jamrud Road, Peshawar, Pakistan. (2) 3, Sunder Das Road, Lahore, Pakistan. (3) 1st Floor, Razia Sharif, Plaza, Jinnah Avenue, Blue
Area, Islamabad, Pakistan |
Village Lakrai, P.O. Box 28,
Nowshera, Pakistan
|
Ernst & Young Ford Rhodes Sidat Hyder (Chartered
Accountants) |
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The Company was incorporated in Pakistan as a public limited company
by shares in the year 1981. The Company started commercial production in May
1985 and is listed at Karachi, Lahore & Islamabad Stock Exchanges of
Pakistan. |
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Names |
Designation |
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Mr. Omar Faruque Mr. Azam Faruque Mr. Akbarali Pesnani Mr. Shehryar Faruque Mr. Tariq Faruque Mr. Javaid Anwar Mr. Saquib H. Shirazi Mr. Aamir Amin |
Chairman Chief Executive Director Director Director Director Director Director |
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Categories |
Shareholding (%) |
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Directors, their spouses(s) and minor
children Associated Companies, Undertakings and
related parties Executives Public Sector Companies & Corporations Banks, Development Finance Institutions,
Non-Banking Finance Companies, Insurance Companies, Takaful, Modarabas &
Pension Funds Mutual Funds General Public Others |
5.00 25.00 --- --- 10.00 20.00 35.00 5.00 |
A. Subsidiary
None
B. Associated Companies
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(1) Faruque (Pvt) Limited, Pakistan. (2) Cherat Papersack Limited, Pakistan. (3) Cherat Electric Limited,
Pakistan. (4) Mirpurkhas Sugar Mills Limited, Pakistan. (5) Greaves Pakistan (Pvt.) Limited, Pakistan. (6) Greaves Airconditioning (Pvt.) Ltd, Pakistan. (7) Greaves CNG (Pvt.) Ltd,
Pakistan. (8) Cherat Packaging Limited, Pakistan. (9) Madian Hydropower Limited, Pakistan. (10) Zensoft (Pvt) Limited, Pakistan. (11) Greaves Engineering (Pvt.) Limited,
Pakistan. (12) Unicol Limited,
Pakistan. |
Principally engaged
in manufacture, marketing & sale of Cement
514
The comparative production figures of clinker
and cement are stated under:
2014 2013
(In tons) (In tons)
Annual installed capacity 1,000,000
1,000,000
Cement 846,525
958,135
Note:
Actual production is less than the installed capacity due to planned maintenance shut down and in line with the industry demand
|
Years |
(In Pak Rupees) |
|
2013 2014 |
6,294,376,000/- 6,451,330,000/- |
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Subject mainly import from Companies belongs
to European Countries, China, Taiwan, Japan, Korea, Malaysia, Canada &
U.K. |
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Mainly exist at major cities of Pakistan |
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(1) Allied Bank Ltd, Pakistan. (2) Bank Al Habib Ltd, Pakistan. (3) Bank Alfalah Ltd, Pakistan (4) Dubai Islamic Bank Pakistan Ltd,
Pakistan. (5) Faysal Bank Ltd, Pakistan. (6) Habib Bank Ltd, Pakistan. (7) MCB Bank Ltd, Pakistan. (8) Meezan Bank Ltd, Pakistan. (9) National Bank of Pakistan. (10) NIB Bank Ltd, Pakistan. (11) Samba Bank Ltd, Pakistan. (12) Standard Chartered Bank (Pakistan)
Ltd. (13) Soneri Bank Ltd, Pakistan. (14) The Bank
of Punjab, Pakistan. |
Encouraging steps taken to revive the economy and announcement of large infrastructural projects by the government have started to positively impact all sectors of the economy. Despite challenging political and security environment in the country and a crippling energy crisis, the performance of the cement industry remained promising with a growth of 2.54% in cement consumption over the previous year. While domestic demand increased by 4.34%, demand in the North of the country recorded an increase of 6.56%. However, exports declined by 2.84% this year mainly because of drop in exports to Afghanistan.
Despite decline in dispatches, stable cement prices during the year under review resulted in an increase in the sales revenue of the Company by 2%. During the year, the Company faced considerable challenge from rising costs of production due to escalation in prices of major input items. Significant increase in electricity tariff and imposition of fuel price adjustment levy following the decision of the Honorable Supreme Court has increased the production costs for the Company. However, improved liquidity position helped trim down finance costs during the year.
Pursuant to our earlier announcement of our intention to expand the capacity of cement plant. keeping in view the expected rise in the domestic demand for cement, the Company has decided to install another production line at its existing site in Nowshera, Khyber Pakhtunkhwa Province. The Plant will be acquired from M/s. Tianjin Cement Industry Design and Research Institute Company Limited (TCDRI). TCDRI is the largest cement plant manufacturer in China and has wide experience of installing cement plants worldwide and also in Pakistan. The plant will have a production capacity of over 1,300,000 tons per annum. The new line is expected to be commissioned in 30 months time. The term loan for the project has been arranged and the letter of credit for the import of foreign component has been established by the Company. The total cost of the project is approximately Rs. 12 billion.
The Company
contributed over Rs.1.50 billion to the government treasury in shape of taxes,
excise duty, income tax and sales tax.
Despite the economic challenges and the energy crisis in the country,
the cement industry has performed well during the year. Economic measures taken
by the government are having positive impact on the macroeconomic indicators of
the country. The current government has initiated several infrastructural
projects, with especial focus on constructing highways, dams, energy related
projects and housing projects especially in the northern part of the country,
which is the main market for the Company. Furthermore, greater spending by
private sector has resulted in rise in construction related activities, which
is fueling the demand for cement. It is, therefore, expected that the domestic
demand shall increase considerably and play an increasingly important role in
higher cement dispatches in both the medium and long-term. In such a scenario,
the addition of a new cement line at existing location will not only enhance
the domestic market share of the Company, but will also allow it to achieve
economies of scale and optimize the use of its existing resources by better
allocation of fixed costs. Furthermore, political situation in Afghanistan is
also expected to become clearer soon, which may provide boost to the
reconstruction activities in the country. Your company shall benefit immensely
from increase in the demand for cement due to its ideal location.
·
KCCI
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APCMA
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FPCCI
|
Currency |
Unit |
Pakistani Rupee |
|
US Dollar |
1 |
Rs. 102.80 |
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UK Pound |
1 |
Rs. 159.65 |
|
Euro |
1 |
Rs. 113.50 |
Ghulam Faruque Group enjoys excellent
credibility in the Pakistani Business Circle. The Subject Group is engaged in
diversified activities which include Cement, Paper, Power Generation, Sugar
Manufacturing & Information Technology etc. Group is well known and
directors are resourceful and experienced businessmen. Trade relations are
reported as fair. Payments to creditors etc are reported as normal. 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.63.38 |
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|
1 |
Rs.97.65 |
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Euro |
1 |
Rs.70.43 |
INFORMATION DETAILS
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Analysis Done by
: |
RAS |
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Report Prepared
by : |
NIT |
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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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 |
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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 |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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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 |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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-- |
NB |
New Business |
-- |
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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%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.