Comparison with industry (Q4):

DG Khan Cement has x% market share in the cement industry, and consequently is the 3rd largest player
in Pakistan. It posted a 5year Revenue CAGR of 26% compared to industry’s CAGR of 33%. Its gross
margins have averaged (5 year) at 38.2% compared to industry’s average of 39.9%. Therefore,
company’s profitability metrics stand at industry’s average.

Past mergers & acquisitions:

Besides organic expansion, mergers & acquisitions have been rampant in cement industry; implying
economies of scale & scope:

 Pioneer cement acquired Galadari cement (1mtpa, non-operational) in FY18

 Bestway, Lucky, Pioneer submitted bids to acquire Dewan Cement’s plant in FY17. Mega
Conglomerate (owner of Pioneer cement) is in the final stages of negotiations.
 Bestway acquired Ecocem Ltd in FY15.
 Bestway acquired Pakcem (Lafarge) Ltd (2.5mtpa) in FY14.
 Acquisition of Pakistan Cement by Lafarge SA (FY09)
 Bestway acquired Mustehkam Cement Ltd (1mtpa, non-operational) in FY06.
 Pakland Cement and Saadi Cement acquired by Dewan Cement in FY04.

Closed or liquidated cement plants:

 Javedan Cement converted to housing society; Naya Nazimabad

 Dadabhoy Cement

For Q2:

HHI of 1,311 implies cement industry has medium concentration.

Concentration ratio: 4-firm concentration ratio of 55% implies highly oligopolistic market.