INTRODUCTION

THE ORGANIZATION:
A longtime leader in the cement manufacturing industry, Fauji Cement Company,
headquartered in Islamabad, operates a cement plant at Jhang Bahtar, Tehsil Fateh
Jang, District Attock in the province of Punjab. The Company has a strong and
longstanding tradition of service, reliability, and quality that reaches back more than
11 years.

A VIEW OF FAUJI CEMENT PLANT AT JHANG BAHTAR

The cement plant operating in the Fauji Cement is one of the most efficient and best
maintained in the Country and has an annual production capacity of 1.165 million
tons of cement. The quality portland cement produced at this plant is the best in the
Country and is preferred in the construction of highways, bridges, commercial and
industrial complexes, residential homes, and a myriad of other structures needing
speedy strengthening bond, fundamental to Pakistan's economic vitality and quality
of life. Fauji Cement Company Limited was sponsored by Fauji Foundation and
incorporated as a public limited company on 23 November 1992. It obtained the
Certificate of Commencement of Business on 22 May 1993. The Company has been
setup with primary objective of producing and selling Ordinary Portland Cement
(OPC). For the purpose of selection of sound process technology, state of the art
equipment, civil design and project monitoring, local and foreign consultants were
engaged. The Company entered into a contract with World renowned cement plant
manufacturers M/s F.L. Smidth to carry out design, engineering, procurement,
manufacturing, delivery, erection, installation, testing and commissioning at site of a
new, state of the art, cement plant including all auxiliary and ancillary equipment,

complete in all respects for the purpose of manufacturing a minimum of 3,000 tpd
clinker and corresponding quantity of Ordinary Portland Cement as per Pakistan/
British Standard Specifications. The contract came into force on 1 January 1994.
Physical work on the project started in August 1994Commissioning activities started
in May 1997 generally remained smooth and trouble free, which enabled first batch
of clinker production on 26 September 1997 followed by cement production in
November 1997. Subsequently in 2005, the Plant capacity was increased to 3,700
tons of clinker per day i.e. 3,885 tons of cement per day.

BUSINESS PATTERN:
The Company has been set up with the primary objective of producing and selling
ordinary Portland cement. The finest quality of cement is available for all types of
customers whether for dams, canals, industrial structures, highways, commercial or
residential needs using latest state of the art dry process cement manufacturing
process.

COMPANYS MISSION:
FCCL while maintaining its leading position in quality of cement and through greater
market outreach will build up and improve its value addition with a view to ensuring
optimum returns to the shareholders.

COMPANYS VISION:
To transform FCCL into a role model cement manufacturing Company fully aware of
generally accepted principles of corporate social responsibilities engaged in nation
building through most efficient utilization of resources and optimally benefiting all
stake holders while enjoying public respect and goodwill.

COMPANYS STRATEGIES:
We shall achieve our vision by maintaining high quality product, relentless pursuit of
customer satisfaction, empowering FCCL employees to lead cement industry and
achieve manufacturing excellence, producing superior returns to our shareholders.
COMPETITORS:
Following are some important competitors of Fauji Cement.
Lucky Cement
Best way Cement
D.G. khan Cement

STRUCTURE:
The companys management structure consists of Board of Directors, Committees
and Companys Management.

BOARD OF DIRECTORS:
Lt. Gen Hamid Rab Nawaz, HI (M) (Retd)
Lt. Gen Javed Alam Khan, HI (M) (Retd)
executive/MD
Mr. Qaiser Javed
Mr. Riyaz H. Bokhari, IFU
Brig. Arif Rasul Qureshi, SI (M) (Retd)
Brig. Rahat Khan, SI (M) (Retd)
Dr. Nadeem Inayat
Brig. Liaqat Ali (Retd)
Brig. Munawar Ahmed Rana (Retd)
Brig. Shabbir Ahmed (Retd)
Secretary

Chairman
Chief
Director
Director
Director
Director
Director
Director
Director
Company

HUMAN RESOURCE COMMITTEE

Dr. Nadeem Inayat
Mr. Qaiser Javed
Brig Liaqat Ali (Retd)
Brig Shabbir Ahmed (Retd)

President
Member
Member
Secretary

AUDIT COMMITTEE
Mr. Qaiser Javed
Mr. Riyaz H. Bokhari
Brig Rahat Khan (Retd)
Dr. Nadeem Inayat
Brig Shabbir Ahmed (Retd)

President
Member
Member
Member
Secretary

TECHNICAL COMMITTEE
Brig Rahat Khan (Retd)
Brig Arif Rasul Qureshi (Retd)
Brig Liaqat Ali (Retd)
Mir Khawar Saleem, Director (Project)

President
Member
Member
Secretary

COMPANYS MANAGEMENT:

Future Value:
(General Formula: FV t = P0 (1+i)t )
The future value of share price from 2007 to 2014
(Assumed Data)
Present value
= Rs. 16
Interest Rate
= 10%

No. of years

=8

Future Value in 2007:

2008:
FV1
FV1
FV1
FV1

=
=
=
=

P0 (1+i) 1
16 (1+10%)
16 (1.1)1
Rs. 17.6

Future Value in
FV2

FV2
FV2

= P0 (1+i) 2
FV2
= 16 (1+10%)
= 16 (1.1) 2
= Rs. 19.36

Future Value in 2009:

2010:

Future Value in

P0 (1+i) 3
16 (1+10%)
16 (1.1)3
Rs. 21.296

FV4
= P0 (1+i) 4
FV4
= 16 (1+10%)
= 16 (1.1) 4
= Rs. 23.43

FV3
FV3
FV3
FV3

=
=
=
=

FV4
FV4

Future Value in 2011:

2012:

Future Value in

P0 (1+i) 5
16 (1+10%)
16 (1.1) 5
Rs. 25.77

FV6
= P0 (1+i) 6
FV6
= 16 (1+10%)
= 16 (1.1) 6
= Rs.28.35

FV5
FV5
FV5
FV5

=
=
=
=

FV6
FV6

Future Value in 2013:

2014:

Future Value in

P0 (1+i) 7
16 (1+10%)
16 (1.1) 7
Rs. 31.18

FV8
= P0 (1+i) 8
FV8
= 16 (1+10%)
= 16 (1.1) 8
= Rs.34.30

FV7
FV7
FV7
FV7

=
=
=
=

FV8
FV8

Present Value:

(General Formula:PV0 = FV

/ (1+i) n)

The present value of share price from 2007 to 2014

(Assumed Data)
Interest Rate = 10%
No of years = 8 years

Present value of 2014:

2013:

Present value of

PV0
PV0
PV0
PV0

= FV1 / (1+i) 1
=34.30 / (1+10%)
= 34.30/ (1.10) 1
= Rs. 31.18

PV0 = FV1 / (1+i) 2

PV0 =34.30/ (1+10%) 2
PV0 = 34.30/ (1.10)
PV0 = Rs. 28.35

Present value of 2012:

of 2011:
PV0
PV0
PV0
PV0

= FV1 / (1+i) 3
=34.30/ (1+10%)
= 34.30/ (1.10) 3
= Rs.25.77

Present value
PV0 = FV1 / (1+i) 4
PV0 =34.30/ (1+10%)
PV0 = 34.30/ (1.10) 4
PV0 = Rs. 23.43

Present value of 2010:

2009:
PV0
PV0
PV0
PV0

= FV1 / (1+i) 5
=34.30/ (1+10%)
= 34.30/ (1.10) 5
= Rs. 21.296

= FV1 / (1+i) 7
=34.30/ (1+10%)
= 34.30/ (1.10) 7
= Rs. 17.60

PV0 = FV1 / (1+i) 6

PV0 =34.30/ (1+10%)
PV0 =34.30/ (1.10) 6
PV0 = Rs. 19.36

Present value of
PV0 = FV1 / (1+i) 8
PV0 =34.30/ (1+10%)
PV0 = 34.30/ (1.10) 8
PV0 = Rs. 16

Present & Future Value

(2007-to-2014)
Years

Present value

Future Value

2007
2008
2009
2010
2011
2012
2013
2014

16
17.6
19.36
21.296
23.43
25.77
28.35
31.18

17.6
19.36
21.296
23.43
25.77
28.35
31.18
34.30

Annuity:

Present value of

Present value of 2008:

2007:
PV0
PV0
PV0
PV0

An annuity is a series of payments made at fixed intervals of time. Examples of

annuities are regular deposits to a savings account, monthly home mortgage
payments, monthly insurance payments and pension payments.
There are two types of annuities.
Ordinary Annuity
Annuity due

Ordinary Annuity:
A series of equal payments made at the end of each period over a fixed amount of
time.

Future value of annuity:

Present value of annuity
Number of year
=5
Interest rate
1

= 18,500
= 10 %

10 %
18,500

18,500

18,500

18,500
27085.85

18,500

24623.5
22385
20350
18,500
=
FVA5 =
FVA5 =
(1.10)0
FVA5 =
FVA5

112944.35

R(1+i)4 + R(1+i)3+ R(1+i)2 + R(1+i)1 + R(1+i)0

18,500 (1.10)4 + 18,500 (1.10)3+ 18,500 (1.10)2 + 18,500 (1.10)1 + 18,500
27085.85 + 24623.5 + 22385 + 20350 + 18,500
= Rs. 112944.35

Present value of annuity:

Future value of annuity = 18,500
Number of year
=5
Interest rate
= 10 %

10 %
18,500

PVA5 =
PVA5 =
(1.10)5
PVA5 =
PVA5 =

18,500

18,500

18,500

18,500
20350
22385
24623.5
27085.85
29794.435
= 124238.79

R/(1+i)1 + R/(1+i)2 + R/(1+i)3+ R/(1+i)4 + R/(1+i)5

18,500/(1.10)1 + 18,500/(1.10)2+ 18,500/(1.10)3 + 18,500/(1.10)4 + 18,500/
20350 + 22385 + 24623.5 + 27085.85 + 29794.435
124238.79

Annuity due:
An annuity whose payment is to be made at the beginning, rather than at the end of
the period.

Future value of annuity:

Present value of annuity
Number of year
=5
Interest rate
0

1
10 %
18,500
18,500

= 18,500
=10 %

3
18,500

18,500

18,500
32210.2
29282
26620
24200
22000
= 134312.2

FVA5 = R(1+i)5 + R(1+i)4 + R(1+i)3+ R(1+i)2 + R(1+i)1

FVA5 =18,500 (1.10)5 + 18,500 (1.10)4 + 18,500 (1.10)3+ 18,500 (1.10)2 + 18,500
(1.10)1
FVA5 = 29794.435 +27085.85 + 24623.5 + 22385 + 20350
FVA5= Rs. 124238.785

Present value of annuity:

Future value of annuity = 20000
Number of year= 5
Interest rate 10 %
0

10 %
18,500

18,500

18,500

18,500

18,500
18,500
20350
22385
24623.5
27085.85
= 112944.35

PVA5 =
PVA5 =
(1.10)4
PVA5 =
PVA

R/(1+i)0 + R/(1+i)1 + R/(1+i)2+ R/(1+i)3 + R/(1+i)4

18,500/(1.10)0 + 18,500/(1.10)1 + 18,500/(1.10)2+ 18,500/(1.10)3 + 18,500/
18,500 + 20350 + 22385 + 24623.5 + 27085.85
= Rs. 112944.35

Dividend:
The Dividend per share is provided in 2007 is Rs. 4. The growth rate is 6% and the
value of k is 12%. Now find the future dividends and their present value.
D = Rs. 4
YEARS

Formula

DIVIDEN
D

Formula

PRICE

(PVD

2008

D1=4(1+.06)

4.24

4.24/0.06

70.67

2009

D2=4.24
(1+.06)
D3=4.495
(1+.06)
D4=4.764
(1+.06)

4.495

4.495/0.06

74.92

4.764

4.764/0.06

79.40

5.050

5.050/0.06

84.17

2010
2011

PRESENT
VALUES
n

= D n/ (1+k)
n
)

4.24/(1+0.12)1
=3.79
4.495/(1+0.12)2
=3.58
4.764/(1+0.12)3
=3.40
5.050/(1+0.12)4
=3.21

2012

D1=5.050
(1+.06)

5.353

5.353/0.06

89.23

5.353/(1+0.12)5
=3.04

Present value by using formula:

P

PVDt

P
P

= 3.79+3.58+3.40+3.21+3.04
= Rs. 17.02

EARNING PER SHARE:

Earnings per share = earnings after tax / Total no. of shares
FOR 2007:
Earnings per share = 646.323million / 13,79.815 million
Earnings per share = Rs. 0.47
FOR 2008:
Earnings per share = 413.598million / 13,79.815 million
Earnings per share = Rs. 0.30
FOR 2009:
Earnings per share = 1,007.623million / 13,79.815 million
Earnings per share = Rs. 0.73
FOR 2010:
Earnings per share = 250.179million / 13,79.815 million
Earnings per share = Rs. 0.18
FOR 2011:
Earnings per share = 425.661million / 13,79.815 million
Earnings per share = Rs. 0.30
FOR 2012:
Earnings per share = 552.590million / 13,79.815 million
Earnings per share = Rs. 0.40