FCCL expects double-digit growth in cement despatches this year

LAHORE: The management of Fauji Cement Company Limited (FCCL) is expecting a double-digit growth in cement despatches for the financial year 2019-20 (FY21), it was revealed during a corporate briefing.

An additional 2.5MW solar capacity will also come online during 3QFY21 (Jan-2021), taking total capacity to 17.5MW. 

Shankar Talreja, deputy head of research at Topline Securities Limited, said the company has signed a shared services agreement with Askari Cement, which can result in annual savings to the tune of Rs90-Rs100 million. 

He said the company is in advance stages of acquiring a no objection certificate (NOC) to set up a green field cement plant in DG Khan. 

“More details regarding the expansion will be shared over the next 3-6 months. The expansion can come with a capital structure of 60pc debt and 40pc equity,” Talreja informed. “Due to reduction in peak power tariff, the management expects savings of Rs25-30 million. Similarly, if discounted tariff materializes (on incremental consumption), management sees savings to the tune of Rs80-85 million.” 

According to the management, cement demand from the amnesty scheme has yet to kick in, as most of the projects are in the registration phase. 

Talreja said that if the input costs do not increase, then cement prices are likely to remain stable. “Current market share of Fauji Cement (8.0-8.5pc) is likely to sustain till next expansions.” 

He predicted that Dasu and Bhasha dam will generate cement demand of 2.5 million tonnes and 3.5-4.5 million tonnes, respectively, over a period of 5-6 years. “There is good progress on Dasu dam, however, work on Bhasha dam work may start gradually,” he concluded.