CREDIT RISK ANALYSIS

D.G. KHAN CEMENT COMPANY PVT

LIMITED
Institute of Business and Information and Technology
Industry Overview:

Cement is one of major industries of Pakistan. Pakistan is rich in cement raw

material. Currently many cement plants are operating in private sector.
Pakistan Cement Industry has huge potential for export of cement to
neighbouring countries like India, U.A.E, Afghanistan, Iraq & Russian States.
There has been a robust growth of cement demand seen both in domestic
and exports market during the financial year ended June 30, 2007. The
industry achieved an overall growth of 32% with domestic demand of
cement increased by 24.95% whereas the exports increased by 111.86%.
The overall growth achieved by many cement factories for the year under
review was 111.29% consisting of domestic and export markets at 71.02%
and 335.12% respectively.

Pakistan Cement industry has been successful to capture export markets of

various GCC and African countries which are new markets for the Country
other than the conventional export markets of Afghanistan and Iraq.

Major Cement
Companies
D.G. Khan Cement Pakistan Cement
Company

Maple Leaf Cement Dewan Cement Limited

Cherat Cement Gharibwal Cement Ltd

Attock Cement Askari Cement Ltd

Pioneer Cement Fauji Cement Company

Lucky Cement Bestway Cement

Fecto Cement Mustehkam Cement

Company Overview:

D.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is the
largest cement-manufacturing unit in Pakistan with a production capacity of
5,500 tons clinker per day. It has a countrywide distribution network and its
products are preferred on projects of national repute both locally and
internationally due to the unparallel and consistent quality. It is list on all the
Stock Exchanges of Pakistan.

DGKCC was established under the management control of State Cement

Corporation of Pakistan Limited (SCCP) in 1978. DGKCC started its
commercial production in April 1986 with 2000 tons per day (TPD) clinker
based on dry process technology. Plant & Machinery was supplied by UBE
Industries of Japan.

Acquisition of DGKCC by Nishat Group

Nishat Group acquired DGKCC in 1992 under the privatization initiative of the
government. Starting from the privatization, the focus of the management
has been on increasing capacity as well as utilization level of the plant. The
company undertook the optimization by raising the capacity immediately
after the privatization by 200tpd to 2200tpd in 1993.

Power Generation

For continuous and smooth operations of the plant uninterrupted power

supply is very crucial. The company has its own power generation plant
along with WAPDA supply. The installed generation capacity is 23.84 MW.

Environmental Management

DG Khan Cement Co. Ltd., production processes are environment friendly

and comply with the World Bank’s environmental standards. It has been
certified for “Environment Management System” ISO 14001 by Quality
Assurance Services, Australia. The company was also certified for ISO-9002
(Quality Management System) in 1998. By achieving this landmark, DG Khan
Cement became the first and only cement factory in Pakistan certified for
both ISO 9002 & ISO 14001...
Board of Directors

Mrs. Naz Mansha Chairperson/Director

Mian Raza Mansha Chief Executive/Director

Saqib Elahi Director

Khalid Qadeer Qureshi Director

Mohammad Azam Director

Zaka ud din Director

Inayat Ullah Niazi Director & Chief Financial Officer

Products
D.G Khan Cement is currently offering in the following two categories of
cement.

o Ordinary Portland Cement

o Sulphate Resistant Cement

Ordinary Portland cement

Exceptional Strength

At DGKCC the chemical composition and grinding fineness are

closely monitored to ensure that both Pakistani and British
standards are surpassed and our customers get cement of
exceptional strength.

Ideal Setting Time

In order to allow sufficient time for application, cement must

have a quick initial settings time. However once in place, the
final settings should not take too long. At DGKCC ideal initial
and final setting times are maintained.

Sulphate Resistant Cement

Low C3A Content
Sulphate salts present in these soil combine with moisture and tri-calcium
alumnate (C3A) , one of the constituents of cement to form a compound
known as Sulpho. Alumnate off Hydrated Calcium. This compound is highly
expansive and gradually results in the destruction of concrete. However, if a
C3A content is very low , it is rendered inert and there is thus no reaction at
all. British and Pakistani standards specify that in a Sulphate Resistant
Cement, the C3A content must not exceed 3.5%. D.G Sulphate Resistant
Cement has a much lower C3A content, making the cement highly effective
against Sulphate attacks.

Low Heat of Hydration

Heat of hydration is the heat generated on reaction of cement and water.
This is undesirable because it produces a corresponding thermal expansion
which deforms the concrete. Upon cooling down, there is a thermal
contraction which causes the concrete to crack. D.G Sulphate Resistant
Cement has a low heat of hydration making it EXTREMELY SUITABLE for BULK
POURING and MASS CONCRETING.

High Strength
As with any type of cement, strength is the fundamental property of
Sulphate Resistant Cement D.G. Sulphate Resistant Cement achieves high
strength through finer grinding and better particle distribution. In term of
strength,, it not only exceeds by far the standards specified for Sulphate
Resistant Cement, but also exceeds those of Ordinary Portland cement

Low Alkali Content

Certain aggregates contain alkali sensitive ingredients, which
under unfavorable conditions , can result in expansion leading
to cracking of concrete. The presence of alkali also causes
staining and other undesirable effects on concrete. American
Standards specify that a cement can be termed low-alkali if its
alkali content does not excced 0.6% D.G. Sulphate Resistant
Cement has an alkali content below 0.6 and a unique distinction
of being a Sulphate Resistance Cement that can also be classified as low -
alkali cement.
Marketing

Two different products are produced at DGKCC namely Ordinary Portland

Cement and Sulphate Resistant Cement. These products are marketed
through two different brands:

o DG brand & Elephant brand Ordinary Portland Cement

o DG brand Sulphate Resistant Cement