Abdur Rehman 23513 Assignment 2

Riphah International University
Engineering Management
Assignment 2
Business Policy and Strategy
Group Members:
 Muhammad Taha Siddiqui 23376

 Abdur Rehman 23513
 Muhammad Ali Raza 23377
 Hamza Saleem 23381
Submitted TO:
Dr. Samad
Program:
MS-EM
Introduction
Lucky Cement Limited, is a part of Yunus Brothers Group a prominent business group in Pakistan and
the largest stakeholder in cement industries. This group operates several companies these are: Lucky
Cement, Gadoon Textile Mills, Lucky Energy Ltd, Yunus Textile Mills, Fazal Textile Mills, Tabba Heart
Institute, Tabba Kidney Institute, shares 55% of ICI Pakistan, shares 71.55% of Kia Lucky Motors and
many other small industries are being under their administrative control.
Lucky Cement Ltd has set up 02 overseas cement projects. 1 st cement plant was established in the
Democratic Republic of Congo in 2011 sharing with a local company, 2nd Green Field cement plant was
installed at Samawah, Iraq, production capacity 1.2 million tons per an um which was started in January,
2021. Lucky Cement Ltd has developed a supercritical coal-based power plant at Port Bin Qasim, Karachi
having capacity of 1×660 MW electricity.
Lucky Cement Company was incorporated in 1993, production was started on commercial base in 1996.
It became the largest cement producer by 2005 and become the latest cement exporter in Pakistan by
2006. Lucky Cement Ltd has two main cement plants in Pakistan: Pezu cement plant was established in
Lucky Marwat District having a capacity of 12.15 million tons per year. The other cement plant was
installed at the main supper highway (Karachi to Hyderabad) production capacity of 7.75 million tons per
year. Lucky Cement Ltd is the single exporter of loose cement in the country. It has its own transportation
and storages of 24000 tons of loose cement for export at Karachi Port Terminal.
Lucky Cement Ltd intended to expand the Pezu plant with a capacity of 3.15 million tons per year. This
expansion will be completed within 1.5 to 2 years. The total cost will be announced after negotiations
with suppliers and contractors. It keeps on continuous support uplifting of society in health and education.
It is determined to create a healthy and secure environment for the entire workforce and stakeholders. LC
provide financial support to deserving students studying in recognized national and international
universities. As reported Lucky Cement (Pvt) is a leading, successful and profit achieving throughout its
history.
Financial Ratios
We have selected Liquidity ratio and Profitability ratios to identify the key strengths and weaknesses
of Lucky cement Ltd. For this purpose, we have analyzed the 4-years balance sheets of lucky cement Ltd.
Liquidity ratio:
Liquidity ratio is a measure of a company’s ability to pay off debt obligations without increase in external
capital through the calculation of metrics including current ratio and quick ratio.
The current ratio for the year 2016, can be calculated as follows:
Current assets
C urrent ratio=
Current Liabilities
From Balance Sheet Year 2016

Total Current Asset 39407717

Total Current Liabilities 8563850

Current Ratio 4.601636
The quick ratio for the year 2016, can be calculated as follows:
Current assests−Inventories
Quick ratio=
Current Liabilities
From Balance Sheet Year-2016


Inventories 5,993,969


Quick Ratio 3.90172





Inventories 5894079


Quick Ratio 4.366166





Inventories 7783111


Quick Ratio 2.68063





Inventories 6809724


Quick Ratio 1.384122
CURRENT RATIO
5.00199732855 6
284 4.60163559613
959 5
3.27380997111 4
121
3
1.73887606738
559 2
0
2019 2018 2017 2016
QUICK RATIO
4.366166257564 5
01 3.901720371094 4.5
78
4
2.680630485241 3.5
03 3
2.5
1.384121958674 2
21
1.5
1
0.5
0
2019 2018 2017 2016
Years
Profitability Ratio:
 Profit Margins on sales
Years
2019 2018 2017 2016
Net Income Available to
Common Stockholders 10,538,595 12,079,216 13,695,893 12,974,443
Sales 48,021,399 47,541,724 45,687,043 45,222,089
Profit margins on sales (%) 22% 25% 30% 29%
Profit margins on sales (%)

35%
30% 29%
25% 30%
22% 25%
20%
15%
10%
5%
0%
0%
2019 2018 2017 2016
Years
 Basic Earning Power
Years
2019 2018 2017 2016
EBIT 12,221,215 15,118,655 18,778,253 18,400,222
Total Assets 125,089,214 108,999,117 97,337,365 85,922,406
Basic Earning Power 10% 14% 19% 21%
Basic Earning Power 25%

21%
19%
20%
14%
15%
10%
10%
5%
0%
0%
2019 2018 2017 2016
Years
 Return on total assets(ROA)
Years
2019 2018 2017 2016
Net income available to common
stockholders 10,538,595 12,079,216 13,695,893 12,974,443
Total Assets 125,089,214 108,999,117 97,337,365 85,922,406
Return on Total Assets 8% 11% 14% 15%
Return on Total Assets (ROA)

15% 16%
14%
14%
11% 12%
8% 10%
8%
6%
4%
0% 2%
0%
2019 2018 2017 2016
Years
 Return onCommon Equity(ROE)
Years
2019 2018 2017 2016
Net income available to common
10,538,595 12,079,216 13,695,893 12,974,443
stockholders
Common equity 94,318,417 86,366,822 79,784,981 69,322,838
Return on common equity (ROE) 11% 14% 17% 19%
Return on common equity (ROE)

19% 20%
17%
18%
14% 16%
14%
11%
12%
10%
8%
6%
4%
0% 2%
0%
2019 2018 2017 2016
Years
Internal Factor Evaluation (IFE)

Following are the steps involved in doing the Internal Factor Evaluation for Lucky Cement:
 List down the substantial internal factors (strengths & weaknesses) that might have impact on the
functional areas of the organization under discussion.
 The next step is to assign the weights (in percentage) to each of the listed factors. The sum of all
the weights must be equal to “100”.
 Start giving each key Internal factor a ranking from 1 to 4 to reflect how well the company's
existing plans responds to the identified factors. The ratings indicates:
4 = major strength
3= minor strength
2= minor weakness
1= major weakness
Here, the number “1” & “2” are dedicated to indicate the weakness and “3” & “4” are dedicated
to indicate the strength.
 Determine the weighted score by multiplying the weight assigned to each factor by its
corresponding rating.
 The final step is to calculate the total weighted score of the organization (Lucky cement) by
adding up the weighted score of each factor to reach the consensus.
 Strengths
1. Monetary Well sound.
Lucky Cement is a part of "Yunus Brother Group" financially sound, affluent and the wealthiest
cement producing and exporting company. As per an annual report of 2019 - 2020, the total assets
were Rs.138868 Million and net profit Rs.3343 Million. Lucky Cement is listed on Pakistan Stock
Exchanges and the London stock exchange.
2. Best quality products.
Lucky Cement tends to focus on high-quality production by taking extreme quality measures with the
help of a computerized control system, having the best-equipped laboratories to ensure consistency at
the national and international standards. The excellent quality of the products is applauded by
construction companies and the real estate sector. Its high-quality products have been accredited at
the international level.
3. Physical resources.
Lucky Cement established enormous infrastructures, meet all current and latest technology
requirements. L.C. plants are situated in the areas, having huge depositories of natural raw material of
good quality. The strategic position entails at Karachi seaport, set up its own modern storage, the
capacity of 24000 Mtn of loose cement for storage and export.
4. Skilled and experienced workforce.
The employees of LC have 20 years of services experience. they are trained and skilled in multi
functions. The employees are theoretically and practically well trained in all facets of the
requirement. The expertise of human resources meets all industry needs. Training programs are
scheduled to keep up the working standard of the workforce.
5. Updating current programs.
LC has developed the latest IT system. All operational units are connected by vast networking. From
raw material receiving to the finished product, marketing is comprehensively controlled and guided
through programming.
 Weakness
1. Extravagant capital expenditures.
Lucky Cement comprises mega projects having a large number of pay roles and an enormous fleet of
vehicles for transportation is much expensive. It is being increased due to continuous hiking fuel
prices. This burden further stresses the economy of the company when the peace of the country
deteriorates.
2. Enhancing in cost of products.
The cost of products boosts high due to increasing extravagant expenses. All these factors; the
devaluation of the currency, hindrance in construction pace, Government negative regulation against
industries, increasing cost of raw material, agitation and strike of labour union is usually the reason
for climbing the cost of products.
3. Increasing the cost of transport.
Lucky cement owns a big fleet by which the products (loose and packed) are shifted in bulk quantity
for deliveries to all types of customers spread across the Country. Mining, excavating vehicles,
bulldozers, trailers, dumpers and bucket loaders etc which added further expenses in terms of fuel and
its operators.
4. Insufficient marketing.
The competitors have occupied markets mostly of rural areas and in urban areas also. There are
several other cement manufacturers, launched their products at comparatively low prices with the best
advertising. This is a major threat for Lucky Cement Limited, therefore it just has to take measures in
this regard.
5. Turnover intention of employees.
Compare with the other cement industries employee’s turnover intention rate is high. After retirement
lack of facilities, i.e. low gratuity and other benefits compel the workers to deviate from their jobs.
This site must be addressed by the management to curtail the turnover intention of their employees.
INTERNAL FACTOR EVALUATION (IFE) MATRIX FOR LUCKY CEMENT

Strengths Weight Rating Rating Score
1- Monetary well sound 15% 4 0.60
2- Best quality products 10% 4 0.40
3- Physical resources 12% 3 0.36
4- Skilled and experienced workforce 15% 3 0.45
5- Updating current programs 9% 4 0.36
Weakness
1- Extravagant capital expenditures 7% 1 0.07
2- Enhancing in cost of products 8% 2 0.16
3- Increasing the cost of transport 6% 1 0.06
4- Insufficient marketing 8% 1 0.08
5- Turnover of employees 10% 2 0.20
Total Weighted Score 100% 2.74
“The total weighted score of 2.74, which is slightly above the average point, indicates that the Lucky
cement has strong internal position”.
External Factor Evaluation

Environmental scanning is the process through which an organization gathers data for external
opportunities and threats to make future decisions.
Environmental scanning can be done by analyzing the trends occurring in the market place, by identifying
the advantage thatcompetitor is having over us, new technologies that can affect our productivity and
efficiency, what we are doing and what can be done to provide our customers with top of the services,
foreseeing the economy and how it going to affect our business in the future and some other factors.
Following are the steps involved in doing the External Factor Evaluation (EFE) for Lucky Cement:
 List down the substantial external factors (opportunities & threats) that might have impact on the
organization under discussion.
 The next step is to assign the weights (in percentage) to each of the listed factors. The sum of all
the weights must be equal to “100”.
 Start giving each key external factor a ranking from 1 to 4 to reflect how well the company's
existing plans responds to the identified factors. The ratings indicates:
4 = superior response
3= above average response
2= average response
1= poor response
 Determine the weighted score by multiplying the weight assigned to each factor by its
corresponding rating.
 The final step is to calculate the total weighted score of the organization (Lucky cement) by
adding up the weighted score of each factor to reach the consensus.
 Opportunities
1. Market penetration.
Find new markets in the remote and northern areas of Pakistan. The demand for cement is rapidly
increased in Gulf countries. A significant share can be availed by effective marketing procedure in
Gulf and other foreign contraries for enhancement in export. Through marketing strategy and utilizing
of the best advertising techniques should penetrate the national and international markets.
2. Extension in infrastructures.
Even though Luck Cement owns modern infrastructure but it will be inadequate in future. The
consumption demand for cement is increasing rapidly within the country and abroad, especially in
Middle east countries. The Government of Pakistan has also introduced low price housing schemes.
Given the above Lucky Cement must have to plan for the extension of infrastructure to keep a
constant position in the supply of cement products.
3. Enhancing demand on account of a growing population.
This is a global challenge to meet the requirements of a growing population. The growing populace
ratio in our country is remarkably increasing. Therefore, cities and villages are being extended day by
day, the housing schemes are planned by private construction companies and numerous numbers of
civil contractors are taking a massive part in the construction. Therefore, Lucky Cement Limited may
strive in preplanning to meet the increasing demand for their products.
4. Reduction of cost.
The cost of products is one of the main features that affect directly profit, it must be reduced for the
success of the company. The cost of LC products is slightly high compare to market price that can be
reduced by applying; To reduce the cost of raw materials by investing in mining zones, replacement
of obsolete equipment with the latest, implementation of modern programming, reduce energy
consumption, take austerity measures and curtail in extravagant expenses.
5. Retain the Best workforce.
It is the prime obligation of the Administration to retain the learned and experienced employees with
the organization. For this purpose, administration have to contrive to; encourage better performance
by applauding, rewards in the shape of certificate, promotion or increasing fringe benefits. Annual
increment and time scale schedule to be revised for to increase the sublime relationship employees.
 Threats
1. Taxation.
The Government tends to increase the taxation and undue impose it at multiplying figures that
impacts negatively on the financial condition of the company. Lucky Cement is a prominent taxpayer
in the industry sector already. The industries in Pakistan are still under development position and not
stable as the in European countries. Such as the Government of Pakistan must pay heed to this
quarter.
2. Fluctuation in Foreign exchange rates.
Uncertainly position of the country's economic effect as the continual devaluation of the national
currency rate caused severely suffering from export products. A lower exchange rate of domestic
currency makes more expensive imported materials. It causes higher inflation in the country impacts
the high cost of materials and labor wages. ultimately the cost of products increases then reduce the
sale and profits.
3. Competitive stress on prices.
The products price of Lucky Cement is higher than relatively products of other cement industries. The
opposition companies are striving hard to reduce prices. This a real threat. which must be noticed by
the management. LC should take effective actions to reduce the cost of their products.
4. Uncertainty on the political situation in the country.
The political situation of the country affects all walks of life but it plays a very important role in
cement industries. Unsustainable conditions and commotion are the stumbling blocks in the
production of cement. The real estate and the construction work are mostly stopped. The previous
projects of the Government were halted and the programs for new projects are delayed also.
5. Unity of opposite industries.
The union of opposition creates intentionally hurdling in the market sector. The rival products possess
a big share in the regional and local market. It will deprive of Lucky Cement the massive selling pace.
This threat will be countered by utilizing administrative means and correlating network
 Poster’s five forces model
1. Low, bargaining power of supplier (competition among suppliers is high)

2. Low, bargaining power of customer (market is huge, high volume of product)
3. High, competition among firms (competing firms are large in number, size of industries is
large)
4. Low, threat of Alternative product (high cost in switching, fewer options, substantial products)
5. Low, threat of new competitor (large amount of investment required, limitation of raw material)
EXTERNAL FACTOR EVALUATION (EFE) MATRIX FOR LUCKY CEMENT

Opportunities Weight Rating Rating Score
1- Find the market in Gulf countries 18% 3 0.54
2- Extension in infrastructures 9% 3 0.27
3- Enhancing demand on account of a growing population 11% 4 0.44
4- Reduction of cost by increasing production 13% 3 0.39
5- Find new consuming areas in the north of the country 7% 2 0.14
Threats
1- Taxation 6% 3 0.18
2- Fluctuation in foreign exchange rates 10% 3 0.30
3- Competitive streets on prices 5% 2 0.10
4- Uncertainty on the political situation in the country 11% 3 0.33
5- Unity of opposite industries 10% 2 0.20
Total Weighted Score 100% 2.89
“The total weighted score of 2.89, which is above the average point 2.5, indicates that the Lucky cement
has strong position to respond to the external factors”.

Abdur Rehman 23513 Assignment 2

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Abdur Rehman 23513 Assignment 2

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Riphah International University

 Muhammad Taha Siddiqui 23376

From Balance Sheet Year-2017

From Balance Sheet Year 2018

From Balance Sheet Year-2019

 Profit Margins on sales

Profit margins on sales (%)

 Basic Earning Power

Basic Earning Power 25%

 Return on total assets(ROA)

Return on Total Assets (ROA)

 Return onCommon Equity(ROE)

Return on common equity (ROE)

Internal Factor Evaluation (IFE)

INTERNAL FACTOR EVALUATION (IFE) MATRIX FOR LUCKY CEMENT

External Factor Evaluation

 Poster’s five forces model

1. Low, bargaining power of supplier (competition among suppliers is high)

EXTERNAL FACTOR EVALUATION (EFE) MATRIX FOR LUCKY CEMENT

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