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Business

July 13, 2018

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Maple Leaf Cement’s 7,300 tons/day plant to begin production next year

KARACHI: Maple Leaf Cement is expected to begin production from its new Rs25 billion plant of 7,300 tons/day by next year, bringing its total grey cement capacity up to 18,000 tons per day, a bourse filing said on Thursday.

“Commercial production from new line of 7,300 tons per day is expected to commence within 4th quarter of the current financial year,” Maple Leaf Cement said in a statement to Pakistan Stock Exchange.

Maple Leaf is setting up an additional dry process production line of 7,300 tons/day grey clinker production, a brown field expansion at the company’s existing site in Iskandarabad to enhance total grey cement capacity up to 18,000 tons/day.

The total project cost is estimated at Rs25 billion, including the impact of recent rupee devaluation.

“Project is being financed approximately 17 percent by way of right issue, 51 percent through bank loans and the rest from internal cash generation,” the cement maker said.

The company, after signing engineering, procurement and construction contract, has opened a letter of credit in March last year in favour of a Danish plant supplier FL Smith A/S for supply and setting up of the production line.

“Letter of credit for supply and setting up of engineering and equipment of complete cement plant from FL Smith A/S Denmark, amounting to Euro 79.6 million, approximately Rs11 billion, have been established through National Bank of Pakistan,” Maple Leaf Cement said.

“Till the quarter ended June 30, 2018, total 100 shipments of approximately 89 percent have been received amounting to Euro 65.7 million.” The shipments will keep coming through the tenor of letter of credit.

Maple Leaf Cement awarded the contract for the civil construction and mechanical erection to Descon Engineering Limited.

“The construction work at site is in full swing and approximately 60 percent of civil work has been compared,” the company said. “Further plant erection work has also started and 14 percent has been completed till June 30.”

In May, DG Khan Cement kick-started of the country’s biggest cement plant with around 9,000 tons/day capacity at an estimated cost of over $300 million as construction sector is booming in the market seeing a double-digit growth in the commodity’s demand.

Cement industry dispatched 45.893 million tons in 2017/18 as against 40.315 million tons in 2016/17. This was the highest ever growth posted by the industry in the history owing to infrastructure development and private construction works.

Maple Leaf Cement increased output to 2.642 million tons during the nine months period of the last fiscal year of 2017/18 as compared to 2.199 million tons in the corresponding period a year earlier.

This growth is attributed to increased private sector construction activities, accelerated materialisation of public sector development programs and demand from China Pakistan Economic Corridor-related projects.

Reduction in average sales price in domestic market compressed net retention per ton for grey cement.

“This decline in retention was triggered mainly due to increase in federal excise duty on local cement by 25 percent (from Rs1,000 per metric ton to Rs1,250/metric ton), effective 1 July, 2017,” Maple Leaf Cement said in a document. “Grey cement selling prices in local market have shown an upward trend in the last two months and is expected to sustain till yearend.”

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