Industry Overview:

Cement Sector Performance at Glance The balance sheet size of the cement sector improved with YoY growth of
12.09 percent or with an increase of Rs 61.23 billion, to reach Rs 567.64 billion in FY17 from Rs 506.41 billion in
FY16. Shareholders’ equity also improved by 11.44 percent over the previous year to stand at Rs 361.19 billion in
the current year. Higher sales painted optimistic picture for the cement sector with a growth of 2.67 percent in the
current year. Cost of sales shows a YoY increase of 7.50 percent due to which the profit after tax of the sector
decreased by 4.11 percent in the current year, showing Rs 87.60 billion in FY17 as compared to Rs 91.36 billion in
FY16.
Analysis of Assets
Non-current Assets of the sector stood at Rs 403.03 billion in FY17 as compared to Rs 354.53 billion in FY16
reflecting a YoY increase of 13.68 percent. Long term investments moved up to Rs 43.83 billion in FY17 from
Rs36.14 billion in FY16, recording an increase of 21.26 percent in FY17. Capital work in progress moved from
Rs20.28 billion in FY16 to Rs 69.82 billion in the FY17, showing an increase of 244.23 percent in the current
year. Operating fixed assets after deducting accumulated depreciation in FY17 declined with YoY decrease of 2.10
percent when compared with FY 16, indicating a decrement of production capacity of cement sector. Current
assets increased from Rs 151.88 billion in FY16 to Rs 164.60 billion in FY17, reflecting a YoY increase of 8.38
percent or Rs 12.72 billion in the current year. Inventories increased to Rs 22.12 billion in the current year from Rs
16.58 billion in the previous year. Cash and bank balances which constitute 26.46 percent share of current assets
increased by 5.95 percent in FY17. Other current assets demonstrated 19.43 percent increase but short term
investments showed a YoY decline of 20.87 percent respectively in the current year.

Non-Current Assets Of Cement industry

Non-Current Assets 2012 2013 2014 2015 2016 2017

Capital working progress 5,372,736 8,525,394 13,086,601 17,521,499 20,283,040 69,820,199

Operating fixed assets at cost 295,666,463 322,794,94 340,688,21 369,076,158 392,301,308 386,057,731
9 4
Operating fixed assets after
237,154,01 241,802,43
deducting accumulated 220,891,351 258,237,331 276,452,559 270,644,250
9 1
depreciation
Intangible assets 157,972 8,173,505 7,853,747 18,875,524 18,104,425 16,731,800
Long term investments 17,230,935 16,752,261 21,763,174 32,519,626 36,143,375 43,825,739
Other non-current assets 3,632,377 5,134,558 4,809,889 6,072,932 3,542,025 2,010,248

Current Assets 2012 2013 2014 2015 2016 2017

Cash & bank balance 3,463,935 9,806,413 18,258,742 30,481,424 41,107,584 43,554,632
Inventories 11,486,310 25,169,802 19,947,719 19,950,686 16,583,327 22,118,168
Trade Debt / accounts 4,121,810 5,797,842 7,270,831 8,114,222 9,118,937 10,519,709
receivables
Short term loans and advances 3,461,853 4,952,244 5,642,985 6,528,154
Short term investments 12,065,956 21,830,883 33,273,022 33,261,733 32,206,348 25,486,170
Other current assets 33,781,145 35,713,248 40,041,425 38,251,114 47,221,400 56,397,042

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 Non-Current Assets (Industry Overall)
400,000,000

350,000,000

300,000,000

250,000,000
Capital working progress Operating fixed assets at cost
200,000,000 Operating fixed assets after Intangible assets
deducting accumulated
150,000,000 depreciation
Long term investments Other non-current assets
100,000,000

50,000,000

0
2016
2017

Current Assets (Cement Industry Overall)

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Analysis of Shareholders’ Equity and Liabilities
Shareholders’ equity beefed up to Rs 361.19 billion in FY17 from Rs 324.11 billion in FY16. Issued and paid-up
capital (I & PC) decreased by 14.39 billion or 20.14 percent in FY17 as compared to FY16, this is because of
merger of Pakcem Limited (which was prior Lafarge Pak. cement Ltd.) into Bestway Cement Limited with ratio
10:1. Reserves and un-appropriate profit showed an increase of 21.81 percent and 24.40 percent respectively in
FY17 over.

Share Holders Equity 2012 2013 2014 2015 2016 2017

Issued, Subscribed & Paid 73,819,289 73,432,748 76,084,802 75,242,193 71,463,808 57,071,397
up capital
Reserves 59,035,580 96,906,635 153,287,177 187,665,430 231,582,758 282,079,550
un-appropriated profit(loss) 0 0 61,513,281 84,608,519 113,015,621 140,593,211

Surplus on revaluation of
26,256,585 37,936,150 22,766,974 19,845,705 21,067,726 22,035,031
fixed assets

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Current liabilities increased with YoY growth of 17.23 percent and reach at Rs 96.66 billion in FY17 from Rs
82.45 billion in FY16. Trade credits & other account payable increased by 12.12 percent in FY17. Short term
borrowing showed a significant increase of 76.64 percent as it reached at Rs 27.28 billion in FY17 from Rs 15.44
billion in FY16. Non-current liabilities also increased by 9.97 percent and reached to 109.80 billion in FY17. Long
term borrowing which constituted 46.78 percent share of non-current liabilities in FY17, showed a YoY increase
of 12.41 percent. Employee benefits obligations increased from Rs 2.49 billion to Rs 2.95 billion in FY17 over
FY16.

Non-Current Liabilities 2012 2013 2014 2015 2016 2017

Long term borrowings 43,856,404 48,099,561 40,285,829 52,842,356 45,687,560 51,359,509
Subordinated loans /
Sponsor's loans
Debentures/TFCs (bonds
11,033,000 9,943,000 3,460,000 3,460,000 3,160,000 3,110,000
payable)
Employees benefit
892,380 1,045,254 848,541 2,100,306 2,494,129 2,954,643
obligations
Other non-current liabilities 18,973,468 30,426,222 37,388,449 38,763,200 48,501,835 52,370,954

Current Liabilities 2012 2013 2014 2015 2016 2017

Trade credit & other
40,416,138 47,127,216 51,136,704 57,332,175
accounts payables
Short term borrowings 36,150,630 23,506,848 14,797,828 15,047,632 15,443,509 27,280,123
Current portion of non-
12,656,674 17,471,663 10,330,674 6,448,062
current liabilities
Other current liabilities 42,187,191 52,761,507 9,577,022 8,672,634 5,537,302 5,594,667

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Operating Efficiency and Ratio Analysis
Sales of cement sector remained in the positive trajectory in the current year. A rise of 2.67 percent or Rs 7.97
billion was recorded in overall sales of which Rs 16.91 billion raise were against local sales. However, exports
sales dropped by Rs 8.94 billion in the current year as compared to the previous year. Cost of sales increased by Rs
13.89 billion or 7.50 percent in the current year to stand at Rs 199.15 billion. Slight rise in sales and significant
increase in the cost of sales caused to decrease in gross profit to Rs 5.92 billion or YoY decline of 5.24 percent in
FY17. Profit before and after tax also showed a decrease of 4.11 percent and 2.63 percent respectively in FY17
when compared with FY16. Ratio analysis showed not good performance of the sector in FY17. All ratios
portrayed negative performance of Sector. Net profit margin, a ratio of profit after tax to sales moved down from
21.55 to 20.44. Sector showed lower efficiency with reference to the utilization of its assets and equity in FY17 as
compared to FY16. Return on assets decrease from 13.19 to 11.65, and return on equity also decline from 21.18 to
18.26 in the current year as compared to the previous year. Assets turnover decreased to 0.57 in FY17 from 0.61 in
FY16.

Business Overview:
Cherat Cement Company Limited was incorporated in 1981. Its main business activity is manufacturing,
marketing and sale of Ordinary Portland Cement. The Company is amongst the pioneers of the cement industry in
Pakistan and is the number 1 cement in its region. The Company’s annual installed capacity is now in excess of 4.5
million tons. The Company is registered on Pakistan Stock Exchange Limited and is also an ISO 9001 and 14001
certified. CCCL has installed their 3rd Cement line at its current location with an annual clinker capacity of 2.1
million tons.
PRODUCTION & SEGMENT WISE SALES REVIEW OF YOUR COMPANY
Comparative production and sales figures are provided under:

2016-2017 2015-2016
Clinker production 1,518,520 897,440
Cement production 1,489,489 1,042,450
Domestic sales (cement and clinker) 1,340,226 818,617

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Export sales 204,226 218,528
1,544,452 1,037,145
There was a 49% increase in the overall dispatches of the company from last year. Commencement of dispatches
from Cement Line II from January 2017 coupled with increased construction activities in the country has resulted
in a 64% rise in the local cement sales of the Company. However, closure of Torkham border during the year for
over a month, badly affected the exports of cement to Afghanistan, which declined by 7% during the year.

FINANCIAL PERFORMANCE
Following an increase in cement dispatches, the sales revenue of the company also rose by around 36% i.e. Rs.
2.57 billion over last year. During the year, there was an increase in costs of production due to rise in international
prices of coal and oil, which led to increase in variable costs. Furthermore, the company has also recorded
depreciation expense and finance cost pertaining to Cement Line II, which were capitalized during the year. The
company has started to realize the benefits of economies of scale following the expansion of cement line II. There
was an increase in the other income from last year on account of receipt of dividend income on investments made
by the company, sale of scrap material, and reversal of provision made against Workers Welfare Fund made in
previous years following the decision of the Honorable Supreme Court in favor of the taxpayers. The company has
availed the benefit of tax exemption announced by the government for investment in Khyber Pakhtunkhwa and
aluchistan provinces for the Cement Line II and the tax provision has been made accordingly. For the year ended
June 30, 2017 the company has posted a historical after tax profit of Rs. 1.95 billion.

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 2016-2017 2015-2016 Increased By %
Net Sales 9,645,399 7,079,368 36.25%
Gross Profit 3,213,118 2,634,061 21.98%
Profit Before Tax 2,509,791 2,147,367
Profit After Tax 2,132,119 1,956,562

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