CEMENT INDUSTRY

GROUP MEMBERS
• ARSHAD HUSSAIN
• UMAR FAROOQ
• ABRAR AHMAD
• MUHAMMAD AQIB
 INTRODUCTION
 Pakistan’s manufacturing sector constitutes as the second largest sector of the

country’s economy contributing 13.5 percent to GDP and generating biggest

number of industrial career opportunities with technology transfer.

The major reason for the existence of this industry is the availability of the raw

materials. Pakistan has unlimited reserves of limestone and clay, which can

support the industry for another 50-60 years.

The annual production of the cement at the time of the creation of Pakistan was
only 300,000 tones per year. By 1954 the production increased to 660,000
tones per annum against a demand of 1,000,000 tones per annum.
 Continued..
At this time PIDC (Pakistan Industrial Development Corporation) took initiative and

established two cement factories Zeal Pak (240,000 tones) and Maple Leaf (100,000

tones) having a capacity of 340,000 tones, thereby increasing the production to

1,000,000 tones per annum Pakistan is among the world’s fastest-growing

construction markets and is predicted to grow an average 12 percent yearly for the

next five years especially because of China-Pakistan Economic Corridor (CPEC) mega

projects. The cement sector is aiming to even raise its capacity, riding a wave of

Chinese-financed infrastructure projects across Pakistan.

 KEY DRIVER
Political
 A large number of government infrastructure and housing projects are under construction,

led to the increase of cement demand in Pakistan.

 Export increased to AFGHANISTAN

 The price of cement is primarily controlled by the coal rates, power tariffs, railway

tariffs, freight etc. government controls all of these prices.

 Government is also one of the biggest consumers of the cement in the country.
 Continued..
 INDIA removed PAKISTAN name from the list of Most favoured nation

 Tension arise between both countries

 All kind of import and export has been stopped

 Speed of developmental projects in country slowed down

 Work stopped partially on CPEC because of insufficiency of funds and bad political situations
 ECONOMIC
 Providing employment to more than one hundred thousand people.

 Different skilled & unskilled people such as, Labors, engineers and other professional

people render their services in this industry.

 The cement industry generates Rs. 30 billion of tax revenue for the country.

 China has agreed to invest 42 billion US dollars in infrastructure development of

Pakistan.

 The major projects include roads (Khunjrab - Gawadar Highway - 2,400 KM), (Karachi -

Lahore motorway - 1,060 KM), rails, ports (Gwadar port), Dams (Dassu & Bhasha dams),

energy and special economic zones.

 SCENARIO BUILDING

Focus on Developmental Projects by Government

Less More

Economic Bad S1: Worst S2: Fair

Conditions
Good S3: Favorable S4: Excellent

S: Situation
 ALTERNATIVE PLANS

 1).Worst: Focus on exports

 2). Fair: Increase the efficiency of distribution channels to reach each and

every customer

 3). Favorable: Relationship development with government

 4). Excellent: Focus to increase the productivity to meet the increasing

demand
PORTER’S FIVE FORCES MODEL
 1: THREAT OF NEW ENTRANTS
 High level of entry barriers

 Entering the industry is expensive

 High initial investments and fixed costs

 The location of the cement plant becomes crucial

 Access to raw materials is controlled by existing players

 Distribution channel are controlled by existing players

 Legislation and government action

 2: POWER OF BUYERS
 Bargaining power of buyer is High, because

 Buyer purchases product in high volume

 There are concentrated buyers

 Customers are price-sensitive

 Switching cost is low

 Buyer competition threat is low

 3: POWER OF SUPPLIERS

 Supplier bargaining power is likely to be high

 The market is dominated by a few large suppliers

 There are no substitutes for the particular input

 Supplier competition threat moderate

 4: THREAT OF SUBSTITUTES

 No effective substitutes for cement exist

 5: COMPETITIVE RIVARLY

 High competitive market exists

 There are many players of about the same size, 24 players.

 There is not much differentiation between players and their products, hence,

there is much price competition

 There is high fixed cost

 Exit barriers are also high due to high fixed cost

 COMPLEMENTARY PRODUCTS

 Sand

 Gravel etc