Attock Cement, to extend its operation and production capacity, has finally placed a bid price for the acquisition Al-Abbas Cement, sector analyst, Furqan Punjani, said in his report on Tuesday.
In a meeting with company's management, it was disclosed that now a bid price has been placed for acquisition against the nameplate capacity of 0.9 million tonnes, Al-Abbas Cement's effective capacity is less.
The full advantage of nameplate capacity can only be achieved after de-bottlenecking by Attock Cement, he said adding, the company expects the response from Al-Abbas to be received this month (July).
He said that the actual per tonne cost of inland freight in the last quarter (4QFY10) stood at $1.04 per tonne or (Rs 89 per tonne) from company to seaport. The inland freight subsidy is expected to stand around Rs 12-15 million (Rs 0.13-0.17 per share). Furthermore, meetings are underway for reimbursement of inland freight and the amount is expected to be received next month, he maintained.
However, the ministry of finance had not released the 35 percent 'inland freight subsidy' that was pledged to cement exporters in March.
The company expresses the view that rising trend in cement prices is due to higher energy and coal costs, as industry has now started to pass on the impact, he said adding that the hike in prices is likely to continue moving forwards. Furthermore, the management expects FY11 to bode well for the industry, as the local as well as export demand would keep dispatches on the higher side.
Regarding export market, the company is still getting better margins in countries like Sri Lanka and some African countries. The company's strategy would be to uncover export potential.
Earlier, a Memorandum of Understanding (MoU) was signed between two cement companies for the proposed deal.
The company witnessed a small increase in total dispatches of four percent to 1.8 million tones, lower than industry growth rate because the company has already achieved 100 percent capacity utilization. Local dispatches for the company improved by eight percent to 1.3 million tones, compared to 1.2 million tonnes in FY09, whereas the exports remained almost flat at 0.5 million tonnes.
It is noteworthy that the company is famous for its brand mane 'Falcon cement' in the local market. Besides local sales, the company also exports cement to countries like Sri Lanka, Middle East and African states. Attock is the second largest cement exporter from southern region with plant capacity of 1.8 million tonnes.
However, according to the data released by APCMA (All Pakistan Cement Manufacturers Association), industry has witnessed higher volumetric growth during FY10. Local cement dispatches during out going year stood at 24 million tonnes, up 14 percent versus 21 million tonnes in FY09. However, exports witnessed the impact of global slowdown as it remained flat at 11 million tonnes during FY10.
